Digital Brands Group Receives Written Default Notice From Shakawe Capital, Holder Of Its $3.53M Unsecured Convertible Promissory Note; Company Disputes Certain Assertions In The Notice And Is Evaluating Potential Resolution Alternatives

On October 29, 2026, Digital Brands Group, Inc. (the "Company") received a written notice of default (the "Notice") from Shakawe Capital LLC (the "Holder"), the holder of the Company’s unsecured convertible promissory note in the principal amount of $3,529,412 issued on July 23, 2026 (the "Note") pursuant to the Securities Purchase Agreement dated July 23, 2026 (the "Purchase Agreement"), as previously reported in the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on July 24, 2026 (the "Prior Form 8-K"). In the Notice, the Holder asserted that Events of Default had occurred under the Note based on the Company’s alleged (i) failure to make a scheduled partial payment of $1,000,000 that was due on October 23, 2026 pursuant to the repayment schedule under the Note, and (ii) failure to file a registration statement by August 7, 2026, the Filing Date required under the Registration Rights Agreement entered into in connection with the Purchase Agreement (the "Registration Rights Agreement"). Capitalized terms not defined under this Item 2.04 have the meanings ascribed to them in the Note or the Registration Rights Agreement, as applicable.

In the Notice, the Holder asserted that, pursuant to Sections 2.1 and 2.2 of the Note, the Note is immediately due and payable in full at the Mandatory Default Amount, equal to 120% of outstanding principal, accrued interest and other amounts owing, plus additional amounts, including liquidated damages under the Registration Rights Agreement, arising from the alleged failure to timely file the registration statement and to repay the Note when due. The Note bears default interest of 20% per annum on amounts not paid when due. During an Event of Default, the Holder may convert the Note at the default conversion price, which is the greater of 90% of the lowest closing price in the prior five trading days and the floor price, subject to the beneficial ownership limitations and the Nasdaq 19.99% cap. The Notice states that there is no cure period under the Note and that the default is effective immediately, and that, unless the Holder receives an acceptable proposal for an extension by the end of the day on October 29, 2026, the Holder intends to engage counsel and commence legal proceedings against the Company.

The Company disputes certain of the assertions in the Notice and is evaluating potential resolution alternatives, including engaging with the Holder regarding a consensual resolution or extension, while preserving all rights, remedies and defenses available to the Company under the transaction documents and applicable law. No assurance can be given that the Company will reach an agreement with the Holder on acceptable terms or at all, or as to the timing or outcome of this matter. An acceleration of the Note, or any legal proceedings commenced by the Holder, could have a material adverse effect on the Company’s liquidity, financial condition and results of operations.