cbdMD Delivers on Sequential Revenue Growth and Positive Net Income for Q3 2024

cbdMD Achieves Significant Reduction in Operating Loss as Operational Efficiencies Significantly Improve in Q3 2024

Charlotte, North Carolina–(Newsfile Corp. – August 14, 2024) – cbdMD, Inc. (NYSE American: YCBD) (NYSE American: YCBD-PA) one of the nation’s leading and most highly trusted and recognized CBD companies, and operator of the leading CBD brands cbdMD and Paw CBD, along with its new functional mushroom brand ATRx Labs today announced our financial results for our third quarter of fiscal 2024 ending June 30, 2024.

This quarter, cbdMD made significant strides in its strategic objectives. Year-over-year, operational losses improved markedly, shrinking from $1.8 million in the third quarter of fiscal 2023 to $0.38 million in the third quarter of fiscal 2024.

“I am incredibly proud of what our team has accomplished this quarter,” said Ronan Kennedy, CEO & CFO of cbdMD. “Profitability has been our top priority, and we’ve made meaningful progress in the fiscal third quarter. We committed to optimizing our cost structure, and as of August, we’ve delivered on those promises. With gross margins up, SG&A expenses down, and the best non-GAAP adjusted EBITDA result in our Company’s history, we are moving in the right direction. While revenue growth in our category remains challenging, our focus remains on driving profits and enhancing shareholder value.”

Financial Highlights from our Third Quarter of Fiscal 2024:

• Net sales totaled $5.1 million for the June 30, 2024 quarter or a decrease of 15% compared to $6.1 million for the prior year comparative fiscal quarter, but up 18% sequentially. For the nine months ended June 2024, Net sales totaled $14.9 million as compared to $18.4 million for the prior year period.

• We reported direct to consumer (DTC) net sales of $3.9 million or 76% of total net sales in the third quarter of fiscal 2024, a decrease from $4.9 million, or 20% from the third quarter of fiscal 2023, but an increase of 9% sequentially.

• We reported wholesale net sales of $1.2 million in the third quarter of fiscal 2024, an increase from $1.1 million, or 10% from third quarter of fiscal 2023.

• Our gross profit for the third quarter of fiscal 2024 totaled 65% in compared to 63% in the second quarter of fiscal 2023.

• Our loss from operations was $0.38 million during the third quarter of fiscal 2024 as compared to a loss of $1.8 million in third quarter of fiscal 2023.

• Our non-GAAP adjusted loss from operations during the third quarter of fiscal 2024 was approximately $0.08 million as compared to our non-GAAP adjusted loss from operations during the third quarter of fiscal 2023 of approximately $0.60 million, despite the decrease in overall revenue. This is the lowest non-GAAP adjusted EBITDA loss since cbdMD went public at the end of calendar 2018. For the nine months ended June 30, 2023 we reported non-GAAP EBITDA loss of $1.3 million as compared to $4.0 million in the prior year comparative period.

• Net income for the third fiscal quarter of 2024 was approximately $0.46 million, as compared to a net loss for the third fiscal quarter of 2023 of approximately $1.7 million. The improvement in the third fiscal quarter of 2024 was principally attributable to a $0.85 million non cash gain as a result of a reduction in the fair value of our convertible notes as well as operating improvements.

• Net loss attributable to common shareholders for third fiscal quarter of 2024 was approximately $0.5 million, or $0.15 per share, as compared to a net loss for the third fiscal quarter of 2023 of approximately $2.8 million, or $1.16 per share. The decrease in net loss in the third fiscal quarter of 2024 was principally attributable to operating improvements.

• At June 30, 2024, we had negative working capital of approximately $567,000. Our working capital is reduced by approximately $3.7 million of accrued dividend payments. At September 30, 2023 we had working capital of approximately $3.4 million, which was reduced by approximately $0.7 million for accrued dividends payable. In addition, at June 30, 2024 we had cash on hand of approximately $2.3 million as compared to cash on hand of approximately $1.8 million at September 30, 2023.

Highlights for the Third Quarter of 2024 and Notable Business Updates

• On June 5, 2024, the Company received notification from the NYSE American that the Company is no longer in compliance with NYSE American’s continued listing standards. The notice provided that the Company must submit a plan of compliance by July 5, 2024 addressing how it intends to regain compliance with the continued listing standards by December 5, 2025. The Company timely submitted the plan to the NYSE American on July 5, 2024, advising of actions the Company intends to take to regain compliance with the continued listing standards. The Company expects to receive a response from NYSE American in mid August 2024.

• During the quarter, several convertible promissory notes holders elected to convert some of their accrued interested and principal balance, resulting in 714,229 common shares being issued during the third fiscal quarter of 2024. Approximately $1.075 million remains on the principal balance of the promissory notes.

• The Company has satisfied the recent agreements with its former landlord on the Red Oak Lease and effective August 1, 2024 has terminated its former executive office lease, eliminating the right of use asset and future lease liability from its balance sheet. The Company continues to have past due rent payable owed the landlord and continues to attempt to negotiate an amicable settlement. The Company’s current facilities are sufficient for its current and future operations.

• The Company believes it has achieved over $200,000 in monthly operating costs savings as of August 2024. While it anticipates lower operating costs, it plans on increasing marketing costs during the fiscal fourth quarter of fiscal 2024.

We will host a conference call at 4:20 p.m., Eastern Time, on Wednesday, August 14, 2024, to discuss our June 30, 2024, third quarter of fiscal 2024 financial results and business progress.

CONFERENCE CALL DETAILS

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-free¹ CBD products, including NSF Certified for Sport® 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 products. Our Paw CBD brand of pet products includes veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our ATRx brand of natural functional mushroom support. To learn more about cbdMD and our comprehensive line of U.S. grown, THC-free¹ CBD oil and Full Spectrum products as well as our other brands, please visit www.cbdmd.com, www.pawcbd.com, or ATRxlabs.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, continued cost reductions, potential need for additional working capital, continued listing on the NYSE American, settlement of past due lease obligations, future profitability, development and sales of new products, 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, 2023 as filed with the Securities and Exchange Commission (the “SEC”) on December 22, 2023, as amended on January 29, 2024, 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 THC-free is defined as below the level of detection using validated scientific analytical methods.

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.

(1) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.

(2) Represents expenses incurred in relation to M&A and financing activities during the nine months ended June 30, 2024.

(3) Represents non-cash expense incurred as a credit provided to GNC to replace expired product.

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