Charlotte, North Carolina–(Newsfile Corp. – August 10, 2023) – cbdMD, Inc. (NYSE American: YCBD) (NYSE American: YCBDpA), one of the nation’s leading and most highly trusted and recognized CBD companies, and operator the leading CBD brands – including its flagship brand cbdMD, and its animal health brand Paw CBD, today announced our third quarter of fiscal 2023 results.
For the third quarter of fiscal 2023 Net Loss improved to $1.7 million on sales of $6.1 million as compared to a $31.6 million Net Loss on sales of $8.6 million in the prior year comparative quarter. Excluding the $30.7 million of goodwill and intangible impairment, loss from operations improved from $2.3 million loss to a $1.8 million loss. Year over year saw significant improvements in SG&A costs and more disciplined organization.
“We have had a dynamic and eventful quarter, marked by significant capital markets activity, a strategic re-platforming of our website, and dedicated efforts in new product innovation. I am tremendously proud of our team’s unwavering focus, which allowed us to sustain our revenue base, achieve progress in our adjusted EBITDA, and establish a foundation for future enhancements. We remain highly optimistic about some of the exciting opportunities in our pipeline.
Our unwavering commitment to profitability is resolute, with a keen eye on achieving break-even EBITDA in the near-term. As cbdMD’s Interim CEO and CFO, I am enthused by the dedication shown by our team as we strive towards this goal,” notes Ronan Kennedy. “We view the upcoming proxy vote for our common and preferred shareholders as pivotal. This vote stands to fortify our capital structure, while unlocking potential liquidity for our preferred shareholders, and opening up more transformational strategic activity that is stymied by our current capital structure.”
This quarter’s accomplishments reflect not only our diligence but our readiness to seize the opportunities that lie ahead. As we move forward, we remain focused on enhancing shareholder value and steering cbdMD towards a prosperous and rewarding future.”
Financial Highlights from our Third Quarter of Fiscal 2023:
Highlights for the Third Quarter and Notable Business Updates
We will host a conference call at 4:30 p.m., Eastern Time, on Thursday, August 10, 2023, to discuss our June 30, 2023, third quarter financial results and business progress.
CONFERENCE CALL DETAILS
| Thursday August 10, 4:30 p.m. Eastern Time | ||
| USA/Canada: | 800-319-4610 | |
| International: | 604-638-5340 | |
| Teleconference Replay dial in: | ||
| USA/Canada: | 855-669-9658 | |
| International: | 412-317-0088 | |
| Replay Passcode: | 0366 | |
| Webcast/Webcast Replay link- available through August 10, 2024: https://www.gowebcasting.com/12672 | ||
About cbdMD, Inc.
cbdMD, Inc. is one of the leading and most highly trusted and most recognized cannabidiol (CBD) brands with a comprehensive line of U.S. produced, THC-free1CBD products as well as our new Full Spectrum products. Our cbdMD brand currently includes high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD sleep aids and CBD drink mixes and an array of Farm Act compliant Delta 9 products1. Our Paw CBD brand of pet products includes veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our CBD Botanicals brand of beauty and skincare products including facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care. To learn more about cbdMD and our comprehensive line of U.S. grown, THC-free2 CBD oil and Full Spectrum products, please visit www.cbdmd.com, follow cbdMD on Instagram and Facebook, or visit one of the thousands of retail outlets that carry cbdMD’s products.
Forward-Looking Statements
This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements can be identified using words such as ”should,” ”may,” ”intends,” ”anticipates,” ”believes,” ”estimates,” ”projects,” ”forecasts,” ”expects,” ”plans,” and ”proposes.” These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict. You are urged to carefully review and consider any cautionary statements, including but not limited to expectations on our ability to continue as a going concern, increasing our revenues, cost reductions, potential need for additional working capital, future profitability, results from clinical studies and other disclosures, including the statements made under the heading “Risk Factors” in cbdMD, Inc.’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022 as filed with the Securities and Exchange Commission (the “SEC”) on December 15, 2022 and as amended on December 20, 2022 and May 3, 2023 and our other filings with the SEC. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of cbdMD, Inc. and are difficult to predict. cbdMD, Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. The information which appears on our websites and our social media platforms, including, but not limited to, Instagram and Facebook, is not part of this press release.
1 Total hemp-derived Delta 9 THC concentration does not exceed 0.3% by weight. Consuming this product could result in the consumer failing a drug test for marijuana.
2 THC-free is defined as below the level of detection using validated scientific analytical methods.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed amendment to cbdMD, Inc.’s Series A preferred stock designation. In connection with the proposed amendment, the Company will file with the SEC and will mail to shareholders a definitive proxy statement in connection with the solicitation of proxies for its special meeting, and the Company may file other documents with the SEC regarding the proposed amendment. THE COMPANY’S SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE PROPOSED AMENDMENT. Shareholders will be able to obtain free copies of the proxy statement and other relevant materials (when they become available) and other documents filed by the Company with the SEC at the SEC’s web site at www.sec.gov. Copies of the proxy statement and the filings that will be incorporated by reference therein may also be obtained, without charge, from the Company’s website, www.cbdmd.com, under the heading “Investor Relations” or by contacting the Company’s Investor Relations at (704) 445-3064 or ir@cbdmd.com.
Participants in Solicitation
The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed amendment. Information regarding the Company’s directors and executive officers is available in its proxy statement filed with the SEC on January 4, 2023. Additional information regarding these persons and their interests in the proposed amendment is included in the proxy statement relating to the proposed amendment that has been filed with the SEC. These documents can be obtained free of charge from the sources indicated above.
Non-GAAP Financial Measures
This press release includes a financial measure that excludes the impact of certain items and therefore has not been calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). cbdMD, Inc. has included adjusted loss from operations because management uses this measure to assess operating performance in order to highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The adjusted operating loss has not been prepared in accordance with GAAP. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, net loss from operations as an indicator of our operating performance. Further, this non-GAAP financial measure, as presented by cbdMD, Inc., may not be comparable to similarly titled measures reported by other companies. cbdMD, Inc. has attached to this press release a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure.
| cbdMD, INC. | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| JUNE 30, 2023 AND SEPTEMBER 30, 2022 | ||||||
| (Unaudited) | ||||||
| June 30, | September 30, | |||||
| |
2023 | |
2022 | |||
| Assets | ||||||
| Cash and cash equivalents | $ | 2,846,739 | $ | 6,720,234 | ||
| Accounts receivable | 111,740 | 1,447,831 | ||||
| Accounts receivable – discontinued operations | – | 1,375 | ||||
| Marketable securities, at cost | – | – | ||||
| Investment other securities | – | 1,000,000 | ||||
| Inventory | 4,276,957 | 4,767,373 | ||||
| Prepaid sponsorship | 61,227 | 1,372,845 | ||||
| Prepaid expenses and other current assets | 1,794,221 | 701,945 | ||||
| Total current assets | 9,090,884 | 16,011,603 | ||||
| Other assets: | ||||||
| Property and equipment, net | 699,953 | 823,310 | ||||
| Operating lease assets | 3,637,761 | 4,477,841 | ||||
| Deposits for facilities | 138,708 | 244,606 | ||||
| Intangible assets | 17,002,485 | 17,834,549 | ||||
| Investment in other securities, noncurrent | 1,400,000 | 1,400,000 | ||||
| Total other assets | 22,878,907 | 24,780,306 | ||||
| Total assets | $ | 31,969,791 | $ | 40,791,909 | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| DECEMBER 31, 2022 AND SEPTEMBER 30, 2022 | ||||||
| (continued) | ||||||
| (Unaudited) | ||||||
| June 30, | September 30, | |||||
| 2023 | 2022 | |||||
| Liabilities and shareholders’ equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 1,411,811 | $ | 2,036,558 | ||
| Deferred revenue | 1,716,541 | 2,060,762 | ||||
| Accrued expenses | 1,251,987 | 1,178,683 | ||||
| Note payable | 4,135 | 9,609 | ||||
| Total current liabilities | 4,384,474 | 5,285,612 | ||||
| Long term liabilities: | ||||||
| Long term liabilities | 819 | 125,491 | ||||
| Operating leases – long term portion | 2,730,545 | 3,680,375 | ||||
| Contingent liability | 122,230 | 276,000 | ||||
| Total long term liabilities | 2,853,594 | 4,081,866 | ||||
| Total liabilities | 7,238,068 | 9,367,478 | ||||
| shareholders’ equity: | ||||||
| Preferred stock, authorized 50,000,000 shares, $0.001 | ||||||
| par value, 5,000,000 and 500,000 shares issued and outstanding, respectively | 5,000 | 5,000 | ||||
| Common stock, authorized 150,000,000 shares, $0.001 | ||||||
| par value, 2,855,230 and 1,348,125 shares issued and outstanding, respectively | 2,855 | 1,348 | ||||
| Additional paid in capital | 183,212,202 | 178,841,646 | ||||
| Accumulated deficit | (157,488,334 | ) | (147,423,563 | ) | ||
| Total shareholders’ equity | 25,731,723 | 31,424,431 | ||||
| Total liabilities and shareholders’ equity | $ | 32,969,791 | $ | 40,791,909 | ||
| cbdMD, INC. | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2023 and 2022 | ||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Three months | Three months | Nine Months | Nine Months | |||||||||
| Ended | Ended | Ended | Ended | |||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Gross Sales | $ | 6,462,965 | $ | 8,868,093 | $ | 19,288,155 | $ | 28,673,718 | ||||
| Allowances | (343,585 | ) | (275,200 | ) | (843,538 | ) | (1,130,117 | ) | ||||
| Total Net Sales | 6,119,380 | 8,592,893 | 18,444,617 | 27,543,601 | ||||||||
| Cost of sales | 2,273,839 | 2,660,185 | 7,015,803 | 10,176,085 | ||||||||
| Gross Profit | 3,845,541 | 5,932,708 | 11,428,814 | 17,367,516 | ||||||||
| Operating expenses | 5,669,194 | 8,282,931 | 18,699,293 | 31,690,915 | ||||||||
| Impairment of Goodwill and other intangible assets | – | 30,776,436 | – | 48,959,721 | ||||||||
| Loss from operations | (1,823,653 | ) | (33,126,659 | ) | (7,270,479 | ) | (63,283,120 | ) | ||||
| Realized and Unrealized loss on marketable and other securities | – | – | – | (33,352 | ) | |||||||
| Decrease of contingent liability | 44,771 | 1,943,000 | 153,771 | 8,246,000 | ||||||||
| Gain on sale of assets | – | 88,769 | – | 88,769 | ||||||||
| Restructuring expense | – | (602,092 | ) | – | (602,092 | ) | ||||||
| Other income | 9,725 | 62,390 | 59,269 | 137,377 | ||||||||
| Interest income (expense) | (1,246 | ) | (1,551 | ) | (5,831 | ) | (6,871 | ) | ||||
| Loss before provision for income taxes | (1,770,403 | ) | (31,636,143 | ) | (7,063,270 | ) | (55,453,289 | ) | ||||
| Benefit for income taxes | – | – | – | – | ||||||||
| Net Loss | (1,770,403 | ) | (31,636,143 | ) | (7,063,270 | ) | (55,453,289 | ) | ||||
| Preferred dividends | 1,000,501 | 1,000,501 | 3,001,503 | 3,001,503 | ||||||||
| Net Loss available to cbdMD, Inc. common shareholders | $ | (2,770,904 | ) | $ | (32,636,644 | ) | $ | (10,064,773 | ) | $ | (58,454,792 | ) |
| Net Loss per share: | ||||||||||||
| Basic earnings per share | (1.16 | ) | (24.81 | ) | (4.26 | ) | (44.41 | ) | ||||
| Diluted earnings per share | (1.16 | ) | (24.81 | ) | (4.26 | ) | (44.41 | ) | ||||
| Weighted average number of shares Basic: | 2,379,633 | 1,318,151 | 2,360,908 | 1,316,205 | ||||||||
| Weighted average number of shares Diluted: | 2,379,633 | 1,318,151 | 2,360,908 | 1,316,205 | ||||||||
| cbdMD, INC. | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2023 and 2022 | ||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Three months | Three months | Nine Months | Nine Months | |||||||||
| Ended | Ended | Ended | Ended | |||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Net Loss | $ | (1,770,403 | ) | $ | (31,634,143 | ) | $ | (7,063,270 | ) | $ | (55,453,289 | ) |
| Comprehensive Loss | (1,770,403 | ) | (31,634,143 | ) | (7,063,270 | ) | (55,453,289 | ) | ||||
| Preferred dividends | (1,000,501 | ) | (1,000,501 | ) | (3,001,503 | ) | (3,004,503 | ) | ||||
| Comprehensive Loss attributable to cbdMD, inc. common shareholders | $ | (2,770,904 | ) | $ | (32,634,644 | ) | $ | (10,064,773 | ) | $ | (58,454,792 | ) |
| cbdMD, INC. | ||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
| FOR THE NINE MONTHS ENDED JUNE 30, 2023 and 2022 | ||||||
| (Unaudited) | ||||||
| Nine Months | Nine Months | |||||
| Ended | Ended | |||||
| June 30, | June 30, | |||||
| 2023 | 2022 | |||||
| Cash flows from operating activities: | ||||||
| Net Loss | $ | (7,063,270 | ) | $ | (55,453,289 | ) |
| Adjustments to reconcile net loss to net | ||||||
| cash used by operating activities: | ||||||
| Stock based compensation | 130,879 | 424,455 | ||||
| Restricted stock expense | 105,101 | 504,650 | ||||
| Write off of prepaid assets due to termination of contractual obligation | 884,892 | – | ||||
| Issuance of stock for services | – | – | ||||
| Marketing stock amortization | – | 717,174 | ||||
| Inventory and materials impairment | – | 878,142 | ||||
| Intangibles Amortization | 832,063 | 607,025 | ||||
| Depreciation | 300,726 | 770,335 | ||||
| Impairment of goodwill and other intangible assets | – | 48,959,721 | ||||
| Decrease in contingent liability | (153,771 | ) | (8,246,000 | ) | ||
| Realized and unrealized loss of Marketable and other securities | – | 33,350 | ||||
| Amortization of operating lease asset | 840,079 | 863,768 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | 336,091 | (116,861 | ) | |||
| Deposits | 105,898 | 284,977 | ||||
| Inventory | 424,079 | (174,479 | ) | |||
| Prepaid inventory | 66,337 | 2,939 | ||||
| Prepaid expenses and other current assets | 996,462 | (1,088,579 | ) | |||
| Accounts payable and accrued expenses | (1,172,306 | ) | (1,149,456 | ) | ||
| Operating lease liability | (876,526 | ) | (872,656 | ) | ||
| Deferred revenue / customer deposits | 203,341 | 3,723 | ||||
| Collection on discontinued operations accounts receivable | 1,375 | 9,592 | ||||
| Cash used by operating activities | (4,038,550 | ) | (13,041,469 | ) | ||
| Cash flows from investing activities: | ||||||
| Other securities | 1,000,000 | – | ||||
| Proceeds from sale of assets | (322,017 | ) | ||||
| Purchase of property and equipment | (177,369 | ) | (462,221 | ) | ||
| Cash flows from investing activities | 822,631 | (784,238 | ) | |||
| Cash flows from financing activities: | ||||||
| Proceeds from issuance of common stock | 2,474,072 | – | ||||
| Note payable | (130,145 | ) | (31,044 | ) | ||
| Preferred dividend distribution | (3,001,503 | ) | (3,001,003 | ) | ||
| Cash flows from financing activities | (657,576 | ) | (3,032,047 | ) | ||
| Net increase (decrease) in cash | (3,873,495 | ) | (16,857,754 | ) | ||
| Cash and cash equivalents, beginning of period | 6,720,234 | 26,411,424 | ||||
| Cash and cash equivalents, end of period | $ | 2,846,739 | $ | 9,553,670 | ||
| Supplemental Disclosures of Cash Flow Information: | ||||||
| 2023 | 2022 | |||||
| Cash Payments for: | ||||||
| Interest expense | $ | 1,247 | $ | 6,817 | ||
| Non-cash financial activities: | ||||||
| Issuance of shares in exchnage for a360 credit | $ | 1,531,999 | $ | – | ||
| Issuance of Contingent earnout shares: | $ | – | $ | 908,000 | ||
| cbdMD, Inc. | ||||||||||||
| SUPPLEMENTAL FINANCIAL INFORMATION | ||||||||||||
| RECONCILIATION OF NON-GAAP ADJUSTED LOSS FROM OPERATIONS | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months | Three Months | Nine Months | Six Months | |||||||||
| Ended | Ended | Ended | Ended | |||||||||
| March 31, | March 31, | March 31, | March 31, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| GAAP (loss) from operations | $ | (1,823,653 | ) | $ | (33,126,659 | ) | $ | (7,270,479 | ) | $ | (62,283,120 | ) |
| Adjustments: | ||||||||||||
| Depreciation & Amortization | 375,579 | 435,910 | 1,132,789 | 1,377,361 | ||||||||
| Employee and director stock compensation (1) | 61,017 | (938,285 | ) | 315,982 | 851,517 | |||||||
| Other non-cash stock compensation for services (2) | – | – | 884,892 | – | ||||||||
| Inventory adjustment (3) | – | – | – | 878,142 | ||||||||
| Impairment of goodwill and other intangible assets (4) | – | 30,776,436 | – | 48,805,436 | ||||||||
| Accrual for severance | – | 107,261 | 129,761 | 129,761 | ||||||||
| a360 trade credit | 778,703 | – | 887,039 | – | ||||||||
| Accrual / expenses for discretionary bonus | – | – | – | 150,000 | ||||||||
| Non-GAAP adjusted (loss) from operations | $ | (608,354 | ) | $ | (2,745,337 | ) | $ | (3,920,016 | ) | $ | (10,090,903 | ) |
(1) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(2) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(3) Represents an operating expense related to inventory loss related to regulatory changes impacting labels and packaging and obsolete/expired inventory.
(4) Represents non-cash goodwill impairment of $30,776,436 during the June 2022 quarter in addition to 13,898,285 of non-cash goodwill and impairment of the cbdMD trademark of $4,285,000 during the balance of the nine months ended June 2022.
Contacts:
Investors:
cbdMD, Inc.
Ronan Kennedy
Interim Chief Executive Officer and Chief Financial Officer
IR@cbdmd.com
(704) 445-3064
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/176820
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