Monday, October 25, 2021
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cbdMD Reports Third Quarter Fiscal 2021 Results

Year-Over-Year Net Sales Remain Steady of $10.6 Million, Resulting in Record Trailing Twelve Month Net Sales of Over $46.4 Million

Earnings of $.02 Per Share for the Quarter

Due To Product Production Delays from Vendors on New Product Launches, Company Reduces Q1 Fiscal 2022 Net Sales Guidance to Range of $14.9 million to $15.5 million

CHARLOTTE, N.C.–(BUSINESS WIRE)–cbdMD, Inc. (NYSE American: YCBD, YCBDpA), one of the nation’s leading and most highly trusted and recognized cannabidiol (CBD) brands, today announced its financial results and its business highlights for its third quarter and nine months ended June 30, 2021.

magicalbutter  

Financial highlights for the Quarter Ended June 30, 2021:

  • Net sales of $10.6 million for the third quarter of fiscal 2021 remained steady year-over-year resulting in record trailing twelve-month net sales of over $46.4 million.
  • Gross profit margin for the third quarter of fiscal 2021 remained strong at approximately 68%, up from 65% in the prior year’s third quarter.
  • E-commerce direct-to-consumer net sales were $7.8 million, a decrease of 4.9% from the prior year’s third fiscal quarter.
  • Wholesale (including brick and mortar retail customers) net sales were $2.7 million, an increase of 13.7% from the prior year’s third fiscal quarter.
  • Paw CBD (our award-winning CBD pet brand) had net sales of $1.5 million, an increase of 20.6% from the prior year’s third fiscal quarter.
  • Quarterly operating expenses for the third quarter of fiscal 2021 were $13.9 million, an increase of 40.6% as compared to the third quarter of fiscal 2020 at $8.2 million.
  • Loss from operations increased to $6.7 million for the third quarter of fiscal 2021 compared to $1.4 million from the prior year’s third fiscal quarter.
  • Non-GAAP adjusted operating loss increased to $5.4 million, compared to $187,000 from the prior year’s fiscal quarter, and for the nine months ending June 30, 2021, our non-GAAP adjusted operating loss decreased by 15.2% to $8.5 million compared to $10.1 million for the prior year’s nine month period.
  • Net income attributable to common shareholders for the third quarter of fiscal 2021 was approximately $977,000, or $0.02 per share, as compared to net loss of approximately $9.1 million, or $(0.18) per share from the prior year’s third fiscal quarter. Our net income attributable to common shareholders was principally attributable to a decrease of approximately $6.9 million in the non-cash contingent liability which is associated with earnout shares which may be issued under the terms of the December 2018 acquisition of Cure Based Development (which owned the cbdMD brand).
  • As of June 30, 2021, we had working capital of approximately $23.2 million and cash on hand of approximately $18.9 million as compared to working capital of approximately $16.0 million and cash on hand of approximately $14.8 million at September 30, 2020.
  • Due to production delays from vendors on new product launches, we are now are revising our net sales guidance for the first quarter of fiscal 2022 ending December 31, 2021 from range of $15.5 million to $16.25 million to range of $14.9 million to $15.5 million, or 20-25% YOY sales growth for the December, 2021 quarter.

Business highlights since the start of the third quarter of fiscal 2021 include:

  • Expanded upon our award-winning sleep products, adding higher CBD strength tinctures and soft gels with additional levels of CBN.
  • Launched cbdMD Therapeutics subsidiary to advance cannabinoid science and clinical studies and launched an initial animal health study in collaboration with Colorado State University’s Veterinary Program to study impact of our proprietary CBD on osteoarthritis.
  • Renewed our NSF certification; underwent the US Hemp Authority audit, receiving our seal of approval on May 10, 2021; underwent the National Animal Supplement Council (NASC) audit, receiving their prestigious Quality Seal of approval early August 2021.
  • Signed an exclusive sponsorship agreement as the Official CBD Partner of the NOBULL CrossFit Games.
  • Signed a sponsorship agreement with Master Champion and 9 Time PGA Tour Winner, Patrick Reed, who is now on Team cbdMD.
  • Extended our partnership with Bellator MMA.
  • Closed on the public offering of 8.0% Series A Cumulative Convertible Preferred Stock for total gross proceeds of $16.5 Million.
  • Acquired directcbdonline.com, adding a leading CBD marketplace, an online seller of CBD brands and products, providing access to their customer intelligence and database.
  • Announced the addition of new role of Chief Revenue Officer.

“We continue to build upon our success and develop our science and infrastructure, which we believe will drive shareholder value and separate our brands from our competition. We believe that our proven ability to innovate our marketing as well as deliver award winning products to our consumers will achieve significant and lasting market brand recognition and consumer acceptance for our cbdMD, Paw CBD and cbdMD Botanicals brands,” said Martin Sumichrast, Chairman and Co-CEO of cbdMD, Inc.

cbdMD, Inc. will host a conference call at 4:15 p.m., Eastern time, on Thursday, August 12, 2021, to discuss the company’s third quarter fiscal 2021 financial results and business progress.

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CONFERENCE CALL DETAILS

 

Title:

cbdMD Second Quarter 2021 Earnings Call

Event Date:

Thursday, August 12, 2021 – 4:15 PM Eastern Time

Event Link:

Webcast URL

https://www.webcaster4.com/Webcast/Page/2206/41216

Webcast Replay Expiration:

Thursday, August 12, 2022

 

Participant Numbers:

Toll Free: 888-506-0062

International: 973-528-0011

Entry code (not required): 233626

Replay Number:

Toll Free: 877-481-4010

International: 919-882-2331

Replay Passcode: 41216

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. Our cbdMD brand currently includes over 130 SKUs of high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD bath salts, CBD sleep aids and CBD drink mixes. Our Paw CBD brand of pet products includes over 45 SKUs of veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our CBD Botanicals brand of beauty and skincare products features 15 SKUs, including facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care. To learn more about cbdMD and their comprehensive line of U.S. grown, THC-free1 CBD oil products, please visit www.cbdmd.com, follow cbdMD on Instagram and Facebook, or visit one of the 6,000 retail outlets that carry cbdMD products.

1 THC-free is defined as below the level of detection using validated scientific analytical methods.

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 by the use of 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 and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You are urged to carefully review and consider any cautionary statements 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, 2020 as filed with the Securities and Exchange Commission (the “SEC”) on December 22, 2020, Item 1A. Risk Factors, contained in our Quarterly Report on Form 10-Q for the period ended June 30, 2021 as filed with the SEC on August 12, 2021 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.

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, 2021 AND SEPTEMBER 30, 2020
 
(Unaudited)
June 30,September 30,

2021

2020

Assets
 
Current assets:
Cash and cash equivalents

$

18,984,012

 

$

14,824,644

Accounts receivable

 

1,467,598

 

 

911,482

Accounts receivable – discontinued operations

 

18,467

 

 

447,134

Marketable securities

 

13,412

 

 

26,472

Investment other securities

 

1,000,000

 

 

250,000

Inventory

 

4,738,418

 

 

4,603,360

Inventory prepaid

 

673,588

 

 

288,178

Prepaid software

 

 

 

174,308

Prepaid sponsorship

 

1,628,418

 

 

1,203,300

Prepaid expenses and other current assets

 

1,459,300

 

 

983,374

Total current assets

 

29,983,213

 

 

23,712,252

 

 

 

Other assets:

 

 

 

Property and equipment, net

 

2,775,203

 

 

3,183,487

Operating lease assets

 

5,929,300

 

 

6,851,357

Deposits for facilities

 

529,583

 

 

790,708

Intangible assets, net

 

21,635,000

 

 

21,635,000

Goodwill

 

54,669,997

 

 

54,669,997

Total other assets

 

85,539,083

 

 

87,130,549

 

 

 

Total assets

$

115,522,296

 

$

110,842,801

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CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2021 AND SEPTEMBER 30, 2020
(continued)
 
(Unaudited)
June 30,September 30,

2021

2020

Liabilities and shareholders’ equity
 
Current liabilities:
Accounts payable

$

3,144,380

 

 

$

2,850,421

 

Deferred revenue

 

755

 

 

 

 

Accrued expenses

 

2,362,024

 

 

 

2,769,920

 

Operating leases – current portion

 

1,184,839

 

 

 

1,159,098

 

Paycheck Protection Program loan, current portion

 

 

 

 

854,000

 

Note payable

 

58,488

 

 

 

55,639

 

Total current liabilities

 

6,750,486

 

 

 

7,689,078

 

 

 

 

Long term liabilities:

 

 

 

Long term liabilities

 

124,226

 

 

 

264,367

 

Paycheck Protection Program loan

 

 

 

 

602,100

 

Operating leases – long term portion

 

5,137,552

 

 

 

6,010,208

 

Contingent liability

 

7,751,104

 

 

 

16,200,000

 

Deferred tax liability

 

130,000

 

 

 

895,000

 

Total long term liabilities

 

13,142,882

 

 

 

23,971,675

 

 

 

 

Total liabilities

 

19,893,368

 

 

 

31,660,753

 

 

 

 

cbdMD, Inc. shareholders’ equity:

 

 

 

Preferred stock, authorized 50,000,000 shares, $0.001 par value, 2,800,000 and 500,000 shares issued and outstanding, respectively

 

2,800

 

 

 

500

 

Common stock, authorized 150,000,000 shares, $0.001 par value, 56,973,815 and 52,130,870 shares issued and outstanding, respectively

 

56,974

 

 

 

52,131

 

Additional paid in capital

 

158,198,042

 

 

 

126,517,784

 

Accumulated deficit

 

(62,628,889

)

 

 

(47,388,367

)

Total cbdMD, Inc. shareholders’ equity

 

95,628,927

 

 

 

79,182,048

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

115,522,295

 

 

$

110,842,801

 

cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021 and 2020
 
Three MonthsThree MonthsNine MonthsNine Months
Ended Ended Ended Ended
June 30,June 30,June 30,June 30,

2021

2020

2021

2020

 
Gross Sales

$

11,352,585

 

$

10,809,387

 

$

36,941,917

 

$

30,925,678

 

Allowances

 

(792,062

)

 

(172,842

)

 

(2,254,481

)

 

(741,861

)

Total Net Sales

 

10,560,523

 

 

10,636,545

 

 

34,687,436

 

 

30,183,817

 

Cost of sales

 

3,370,952

 

 

3,748,024

 

 

10,444,353

 

 

10,180,637

 

 
Gross Profit

 

7,189,571

 

 

6,888,521

 

 

24,243,083

 

 

20,003,180

 

 
Operating expenses

 

13,865,191

 

 

8,226,029

 

 

36,846,371

 

 

33,053,962

 

(Loss) from operations

 

(6,675,620

)

 

(1,337,508

)

 

(12,603,288

)

 

(13,050,782

)

Realized and Unrealized gain (loss) on marketable and other securities, including impairments

 

(18,623

)

 

(30,849

)

 

526,940

 

 

(906,011

)

Gain (loss) on extinguishment of debt

 

1,466,113

 

 

 

 

1,466,113

 

 

 

(Increase) decrease of contingent liability

 

6,871,000

 

 

(7,580,000

)

 

(10,500,000

)

 

30,580,000

 

Interest (expense) income

 

(2,582

)

 

3,436

 

 

(23,573

)

 

46,311

 

Income (loss) before provision for income taxes

 

1,640,288

 

 

(8,944,921

)

 

(21,133,808

)

 

16,669,518

 

 
Benefit for income taxes

 

(103,000

)

 

 

 

765,000

 

 

2,240,300

 

Net (Loss) Income from continuing operations

 

1,537,288

 

 

(8,944,921

)

 

(20,368,808

)

 

18,909,818

 

Net (Loss) from discontinued operations, net of tax (Note 14)

 

 

 

(7,781

)

 

 

 

(48,983

)

Net (Loss) Income

 

1,537,288

 

 

(8,952,702

)

 

(20,368,808

)

 

18,860,835

 

Preferred dividends

 

560,281

 

 

100,050

 

 

1,220,610

 

 

266,800

 

 
Net (Loss) Income attributable to cbdMD, Inc. common shareholders

$

977,007

 

$

(9,052,752

)

$

(21,589,418

)

$

18,594,035

 

 
Net (Loss) Income per share:
Basic earnings per share

 

0.02

 

 

(0.18

)

 

(0.43

)

 

0.45

 

Diluted earnings per share

 

0.02

 

 

 

 

(0.43

)

 

0.44

 

Weighted average number of shares Basic:

 

56,676,326

 

 

51,335,648

 

 

52,793,872

 

 

41,411,261

 

Weighted average number of shares Diluted:

 

61,431,643

 

 

 

 

52,793,872

 

 

42,534,519

 

cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021 AND 2020
(Unaudited)
 
Three MonthsThree MonthsNine MonthsNine Months
Ended Ended Ended Ended
June 30,June 30,June 30,June 30,

2021

2020

2021

2020

 
Net (Loss) Income

$

1,537,288

 

$

(8,952,702

)

$

(20,368,808

)

$

18,860,835

 

Comprehensive (Loss) Income

 

1,537,288

 

 

(8,952,702

)

 

(20,368,808

)

 

18,860,835

 

 
Preferred dividends

 

(560,281

)

 

(100,050

)

 

(1,220,610

)

 

(266,800

)

Comprehensive (Loss) Income attributable to cbdMD, inc. common shareholders

$

977,007

 

$

(9,052,752

)

$

(21,589,418

)

$

18,594,035

 

 
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cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2021 AND 2020
(unaudited)
 
Nine MonthsNine Months
EndedEnded
June 30,June 30,

2021

2020

 
 
Cash flows from operating activities:
Net (Loss) Income

$

(20,368,808

)

$

18,860,835

 

Adjustments to reconcile net (income) loss to net cash used by operating activities:
Stock based compensation

 

807,523

 

 

1,391,271

 

Restricted stock expense

 

1,137,583

 

 

138,001

 

Marketing stock amortization

 

660,232

 

 

 

Issuance of stock / warrants for service

 

98,605

 

 

84,450

 

Inventory and materials impairment

 

 

 

233,372

 

Impairment on discontinued operations asset

 

 

 

45,783

 

Depreciation and amortization

 

719,856

 

 

499,394

 

Other than temporary impairment other securities and other accounts receivable

 

 

 

760,000

 

Increase/(Decrease) in contingent liability

 

10,500,000

 

 

(30,580,000

)

Realized and unrealized loss of Marketable and other securities

 

(526,939

)

 

146,011

 

Merchant reserve settlement

 

 

 

132,657

 

Termination benefit

 

495,568

 

 

 

Extinguishment of Paycheck Protection Program Loan

 

(1,466,113

)

 

 

Non-cash lease expense

 

922,057

 

 

878,986

 

Changes in operating assets and liabilities:
Accounts receivable

 

(556,116

)

 

710,629

 

Deposits

 

261,125

 

 

(147,166

)

Merchant reserve

 

 

 

386,912

 

Inventory

 

(135,058

)

 

(2,329,112

)

Prepaid inventory

 

(385,410

)

 

621,573

 

Prepaid expenses and other current assets

 

(141,393

)

 

1,007,374

 

Accounts payable and accrued expenses

 

(603,216

)

 

(480,424

)

Operating lease liability

 

(846,914

)

 

(766,289

)

Note payable

 

 

 

42,968

 

Deferred revenue / customer deposits

 

4,478

 

 

(7,339

)

Collection on discontinued operations accounts receivable

 

428,667

 

 

333,333

 

Deferred tax liability

 

(765,000

)

 

(2,240,300

)

Cash used by operating activities

 

(9,759,273

)

 

(10,277,081

)

 
Cash flows from investing activities:
Purchase of other investment securities

 

(210,000

)

 

 

Purchase of property and equipment

 

(311,572

)

 

(1,851,746

)

Cash provided (used) by investing activities

 

(521,572

)

 

(1,851,746

)

 
Cash flows from financing activities:
Proceeds from issuance of common stock

 

 

 

16,771,756

 

Proceeds from issuance of preferred stock

 

15,798,115

 

 

4,421,928

 

Paycheck Protection Program Loan

 

 

 

1,456,100

 

Note payable

 

(137,292

)

 

 

Preferred dividend distribution

 

(1,220,610

)

 

(266,800

)

Deferred issuance costs

 

 

 

62,197

 

Cash provided by financing activities

 

14,440,213

 

 

22,445,181

 

Net increase (decrease) in cash

 

4,159,368

 

 

10,316,354

 

Cash and cash equivalents, beginning of period

 

14,824,644

 

 

4,689,966

 

Cash and cash equivalents, end of period

$

18,984,012

 

$

15,006,320

 

 
Supplemental Disclosures of Cash Flow Information:
 
Nine MonthsNine Months
EndedEnded
June 30,June 30,

2021

2020

 
Cash Payments for:
Interest expense

$

23,573

 

$

26,126

 

 
Non-cash financial activities:
Issuance of Contingent earnout shares:

$

12,600,000

 

$

 

Warrants issued to representative

$

254,950

 

$

524,113

 

 
cbdMD, Inc.
SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM OPERATIONS
 
Three MonthsThree MonthsNine MonthsNine Months
Ended Ended Ended Ended
June 30,June 30,June 30,June 30,

2021

2020

2021

2020

 
 
(Unaudited)
 
GAAP (loss) from operations

$

(6,675,620

)

$

(1,337,508

)

$

(12,603,288

)

 

(13,050,782

)

Adjustments:
Depreciation

 

246,533

 

 

211,937

 

 

719,856

 

 

499,394

 

Employee and director stock compensation (1)

 

959,319

 

 

388,185

 

 

2,049,326

 

 

1,447,861

 

Other non-cash stock compensation for services (2)

 

28,650

 

 

 

 

97,721

 

 

97,721

 

Inventory adjustment (3)

 

 

 

316,922

 

 

 

 

483,315

 

One-time abnormal inventory adjustment (4)

 

50,000

 

 

233,373

 

 

50,000

 

 

233,373

 

Accrual for severance

 

 

 

 

 

703,022

 

 

 

Accrual / expenses for discretionary bonus

 

150,000

 

 

 

 

450,000

 

 

222,500

 

Non-GAAP adjusted (loss) from operations

$

(5,391,118

)

$

(187,091

)

$

(8,533,363

)

$

(10,066,619

)

 

(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 adjustment after performing a physical inventory account.

(4) Represents an operating expense related to inventory loss related to regulatory changes impacting labels and packaging

Contacts

PR:

5W Public Relations

cbdMD@5wpr.com
(212) 999-5585

Investors:

cbdMD, Inc.

John Weston

Director of Investor Relations

John.Weston@cbdMD.com
(704) 249-9515

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