cbdMD Reduces Year over Year Net Loss from Operations by $3.0 Million

cbdMD leads with Strategic Improvements and is Building Momentum with ATRx Line

Charlotte, North Carolina--(Newsfile Corp. - February 13, 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 - its flagship brand cbdMD, its animal health brand Paw CBD, today announced our financial results for our first quarter of fiscal 2024 ending December 31, 2023.

For the first quarter of Fiscal 2024, we continued to make strong year over year progress on our turnaround. Year over year we improved our operating loss from $4.1 for the first quarter of fiscal 2023 to $1.1 million for the first quarter of fiscal 2024.

"We continued to make strong year over year improvements to our operating income during the first quarter. During the quarter we focused on addressing some larger strategic goals which culminated with the launch of our hempMD brand and functional mushroom brand, ATRx Labs. This diversification allows us to access markets and channels more challenging to CBD while still attracting consumers focused on utilizing natural product to improve their daily lives. While still early, the positive reception, including the Wholefoods Magazine 2024 Natural Choice nominations, and growing commitments around our ATRx Line are promising indicators of our strategic direction," says Ronan Kennedy, cbdMD's Interim CEO & CFO.

The Company recently closed on new financing, supported by several existing shareholders that will help provide additional working capital and to fund expansion of our ATRx Labs line and further bolster our balance sheet.

The Company also continues to focus on marketing and sales efforts, highlighted by the recent appointment of a new Vice President of Wholesale. This move is part of a broader strategy to ensure the organization has the right resources and optimizes vendor relationships to pave the way for revenue growth and improved profitability.

cbdMD remains steadfast in its commitment to delivering exceptional value to its customers and shareholders alike, as it continues to navigate through its strategic initiatives and explore new avenues for growth and profitability.

Financial Highlights from our First Quarter of Fiscal 2024:

• Net sales totaled $5.4 million for the December 31, 2024 quarter or a decrease of 12% compared to $6.1 million for the prior year comparative fiscal quarter.

• We reported direct to consumer (DTC) net sales of $4.4 million or 82.3% of total net sales in the first quarter of fiscal 2024, a decrease from $4.9 million, or 10% from first quarter of fiscal 2023.

• Our gross profit for the quarter totaled 66% in compared to 59% in the first quarter of fiscal 2023.

• Our loss from operations was $1.1 million during the first quarter of fiscal 2024 as compared to a loss of $4.1 million in first quarter of fiscal 2023.

• Our non-GAAP adjusted loss from operations during the first quarter of fiscal 2024 was approximately $0.69 million as compared to our non-GAAP adjusted loss from operations during the first quarter of fiscal 2023 of approximately $2.65 million, despite the decrease in overall revenue.

• Net loss attributable to common shareholders for first quarter of 2024 was approximately $1.97 million, or $0.67 per share, as compared to a net loss for the first fiscal quarter of 2023 of approximately $4.96 million, or $3.70 per share. The improvement in the first fiscal quarter of 2024 was principally attributable to a $3 million reduction in operating expenses.

• At December 31, 2023, we had working capital of approximately $1.4 million and cash on hand of approximately $1.5 million as compared to working capital of approximately $3.4 million and cash on hand of approximately $1.8 million at September 30, 2023.

Highlights for the First Quarter of 2024 and Notable Business Updates

• The Company launched into Sprouts Markets in December of 2023 and looks to further expand during 2024.

• The Company launched its ATRx Labs and HempMD brands onto Amazon USA during the quarter and is looking to accelerate revenue through this channel during 2024. The Company has received orders for several ATRx Labs functional mushroom products from a national retailer which it anticipates shipping in the coming months.

• The Company recently announced raising gross proceeds of $1.25 million through a series of senior secured discounted convertible notes.

• In an effort to clean up the Company's capital structure, the Company has included a new proposal in its proxy statement for its annual meeting to amend its certificate of incorporation to convert each share of its Series A Convertible Preferred Stock and accrued dividends into 6 shares of common stock.

We will host a conference call at 4:20 p.m., Eastern Time, on Tuesday, February 13, 2024, to discuss our December 31, 2023, first quarter of fiscal 2024 financial results and business progress.

CONFERENCE CALL DETAILS

Tuesday February 13, 2024, 4:20 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:	0714
Webcast/Webcast Replay link- available through February 13, 2025: https://www.gowebcasting.com/13171

 

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.

No Offer or Solicitation

This press release is for informational purposes only and shall not constitute a solicitation of a proxy, consent or authorization with respect to the amendment proposal. This communication may be deemed to be solicitation material in respect of the proposed amendment to cbdMD, Inc.'s Series A preferred stock designation included as a proposal in the Company's preliminary proxy statement for its 2024 annual meeting. In connection with the proposed amendment, the Company had filed with the SEC a preliminary proxy statement and will mail to shareholders a definitive proxy statement in connection with the solicitation of proxies for its annual 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, in their entirety, because they will contain important information about the Company and the proposed amendment.

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, 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.

	cbdMD, INC.
	CONSOLIDATED BALANCE SHEETS
	DECEMBER 31, 2023 AND SEPTEMBER 30, 2023
	(Unaudited)
				December 31,			September 30,
				2023			2023
	Assets
	Cash and cash equivalents		$	1,504,844		$	1,797,860
	Accounts receivable			1,102,180			1,216,090
	Inventory			3,554,395			4,052,972
	Inventory prepaid			188,250			182,675
	Prepaid sponsorship			29,473			70,061
	Prepaid expenses and other current assets			986,821			750,383
	Total current assets			7,365,963			8,070,041
	Other assets:
	Property and equipment, net			790,349			716,579
	Operating lease assets			3,060,405			3,350,865
	Deposits for facilities			132,203			138,708
	Intangible assets, net			3,046,248			3,219,090
	Investment in other securities, noncurrent			700,000			700,000
	Total other assets			7,729,205			8,125,242
	Total assets		$	15,095,168		$	16,195,283
	CONSOLIDATED BALANCE SHEETS
	DECEMBER 31, 2023 AND SEPTEMBER 30, 2023
	(continued)
				December 31,			September 30,
				2023			2023
	Liabilities and shareholders' equity
	Current liabilities:
	Accounts payable		$	1,566,633		$	1,906,319
	Accrued expenses			3,102,468			1,484,441
	Operating leases - current portion			1,302,663			1,277,089
	Note payable			-			2,492
	Total current liabilities			5,971,764			4,670,341
	Long term liabilities:
	Long term liabilities			-			9
	Operating leases - long term portion			2,066,050			2,403,286
	Contingent liability			20,611			90,363
	Total long term liabilities			2,086,661			2,493,658
	Total liabilities			8,058,425			7,163,999
	cbdMD, Inc. 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, 2,961,056 and 2,960,573 shares issued and outstanding, respectively			2,961			2,961
	Additional paid in capital			183,389,556			183,387,095
	Accumulated deficit			(176,360,774	)		(174,363,772	)
	Total cbdMD, Inc. shareholders' equity			7,036,743			9,031,284
	Total liabilities and shareholders' equity		$	15,095,168		$	16,195,283

 

	cbdMD, INC.
	CONSOLIDATED STATEMENTS OF OPERATIONS
	FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 and 2022
	(Unaudited)
					December 31,			December 31,
					2023			2022
	Gross Sales			$	5,375,630		$	6,240,526
	Allowances				(225	)		(155,308	)
	Total Net Sales				5,375,405			6,085,218
	Cost of sales				1,817,907			2,517,452
	Gross Profit				3,557,498			3,567,766
	Operating expenses				4,623,333			7,613,947
	Loss from operations				(1,065,835	)		(4,046,181	)
	Decrease of contingent liability				69,752			61,000
	Interest expense (income)				(418	)		29,119
	Loss before provision for income taxes				(996,501	)		(3,956,062	)
	Benefit for income taxes				-			-
	Net Loss				(996,501	)		(3,956,062	)
	Preferred dividends				1,000,501			1,000,502
	Net Loss available to cbdMD, Inc. common shareholders			$	(1,997,002	)	$	(4,956,564	)
	Net Loss per share:
	Basic and diluted earnings per share				(0.67	)		(3.70	)
	Weighted average number of shares Basic and Diluted:				2,960,945			1,341,277

 

	cbdMD, INC.
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
	FOR THE THREE MONTHS ENDED DECEMBER 31 2023 and 2022
	(Unaudited)
					December 31,			December 31,
					2023			2022
	Net Loss Income			$	(996,501	)	$	(3,956,062	)
	Comprehensive Loss				(996,501	)		(3,956,062	)
	Preferred dividends				(1,000,501	)		(1,000,502	)
	Comprehensive Loss attributable to cbdMD, inc. common shareholders			$	(1,997,002	)	$	(4,956,564	)

 

	cbdMD, INC.
	CONSOLIDATED STATEMENT OF CASH FLOWS
	FOR THE THREE ENDED DECEMBER 31, 2023 and 2022
	(Unaudited)
					December 31,			December 31,
					2023			2022
	Cash flows from operating activities:
	Net Loss			$	(996,501	)	$	(3,956,062	)
	Adjustments to reconcile net (income) loss to net
	cash used by operating activities:
	Stock based compensation				1,772			79,446
	Restricted stock expense				689			43,449
	Write off of prepaid assets due to termination of contractual obligation				-			884,892
	Marketing stock amortization				-			-
	Inventory and materials impairment				-			-
	Intangibles amortization				172,842			277,354
	Depreciation				110,864			100,112
	Impairment of Goodwill and other intangible assets				-			-
	Gain on sale of fixed assets				-			-
	Decrease in contingent liability				(69,752	)		(61,000	)
	Realized and unrealized loss of Marketable and other securities				-			-
	Termination benefit				-			-
	Extinguishment of Paycheck Protection Program Loan				-			-
	Amortization of operating lease asset				290,459			276,636
	Changes in operating assets and liabilities:
	Accounts receivable				67,169			549,111
	Deposits				6,505			105,898
	Inventory				498,577			(434,695	)
	Prepaid inventory				(5,575	)		340,799
	Prepaid expenses and other current assets				(195,850	)		(226,670	)
	Accounts payable and accrued expenses				142,292			39,204
	Operating lease liability				(311,661	)		(287,547	)
	Deferred revenue / customer deposits				182,290			203,341
	Collection on discontinued operations accounts receivable				-			1,375
	Cash used by operating activities				(105,880	)		(2,064,357	)
	Cash flows from investing activities:
	Proceeds from sale of other investment securities				-			-
	Purchase of property and equipment				(184,635	)		(177,370	)
	Cash used by investing activities				(184,635	)		(177,370	)
	Cash flows from financing activities:
	Proceeds from issuance of common stock				-			-
	Note payable				(2,501	)		(125,341	)
	Preferred dividend distribution				-			(1,000,502	)
	Cash used by financing activities				(2,501	)		(1,125,843	)
	Net decrease in cash				(293,016	)		(3,367,570	)
	Cash and cash equivalents, beginning of period				1,797,860			26,411,424
	Cash and cash equivalents, end of period			$	1,504,844		$	23,043,854
	Supplemental Disclosures of Cash Flow Information:
					2023			2022
	Cash Payments for:
	Interest expense			$	11,614		$	2,638
	Non-cash financial activities:
	Preferred dividends accrued but not paid			$	1,000,501		$	-

 

	cbdMD, Inc.
	SUPPLEMENTAL FINANCIAL INFORMATION
	RECONCILIATION OF NON-GAAP ADJUSTED LOSS FROM OPERATIONS
	(unaudited)
					Three Months			Three Months
					Ended			Ended
					December 31,			December 31,
					2023			2022
	GAAP loss from operations			$	(1,065,835	)	$	(4,046,181	)
	Adjustments:
	Depreciation & Amortization				283,706			377,466
	Employee and director stock compensation (1)				16,542			137,144
	Other non-cash stock compensation for services (2)				-			884,893
	Mergers and Acquistions and financing transaction expenses (3)				67,599			-
	Non-GAAP adjusted loss from operations			$	(697,988	)	$	(2,646,678	)

 

(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 expenses incurred in relation to M&A and financing activities during the quarter ended December 31, 2023.

Contacts:

Investors:
cbdMD, Inc.
Ronan Kennedy
Chief Financial Officer
IR@cbdmd.com
(704) 445-3064

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