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cbdMD Reports Q3 Net Sales Increase 42% Sequentially to Over $8 Million

CHARLOTTE, N.C.--(BUSINESS WIRE)--

Company Provides Guidance of $24M-$26M in Net Sales for Fiscal Year Ending September 2019

Company Provides Guidance of $80M-$90M in Net Sales for Fiscal Year Ending September 2020

cbdMD, Inc. (NYSE American: YCBD), reported today that in its fiscal quarter ended June 30, 2019, the company generated total net sales of $8,044,000 up 42% sequentially from the March 31, 2019 quarter and over 500% from the June 30th, 2018 quarter, (which was prior to the December, 2018 acquisition of the brand).

FINANCIAL HIGHLIGHTS:

  • Total net sales in the quarter ended June 30, 2019 were $8,044,336 up 42% sequentially from the March 31, 2019 quarter and over 500% from the June 30th, 2018 quarter (which was prior to the December, 2018 acquisition of the brand). Total gross sales in the quarter ended June 30, 2019 were $9,784,199 million and allowances for the quarter were $1,739,863.
  • Gross profit was $5.1 million in the third quarter ended June 30, 2019, representing a margin of 63% of net sales, in line with gross margins reported in the March 31, 2019 quarter.
  • Working capital increased to $19.8 million at June 30, 2019, up from working capital of $12.3 million at March 31, 2019. Cash on hand was $11.6 million as of June 30, 2019.
  • Ecommerce sales platform generated approximately 60% of net sales.
  • Secured retail store placement to over 3,000 doors from approximately 600 in December 2018.
  • The loss from operations for the quarter was $8,260,000 of which $2.1 million was a non-cash impairment charge of intangible assets related to the prior licensing and brand management businesses (IM1 and EE1) and $2 million was a non-cash charge related to stock option expenses.
  • The fully diluted net loss for the quarter was $1.19 per share or $27.7 million of which 78% or $21.5 million was attributed to the change in the value of the contingent liability related to acquisition of the cbdMD brand. The change in value was primarily related to the increase in the company’s stock price during the June quarter.

cbdMD, Inc. also announced net sales guidance:

  • Fiscal year ending September 2019, net sales guidance of $24 million to $26 million.
  • Fiscal year ending September 2020, net sales guidance of $80 million to $90 million.

“Our strong third quarter results place us in a great position to exceed established revenue targets for the first year of operations for cbdMD,” stated Martin A. Sumichrast, Chairman and co-CEO of cbdMD. “Moreover, we believe we are now on track to reach the five-year earn-out hurdle of $300 million in aggregate net revenue by the end of calendar 2021, full two years ahead of schedule.”

“We’ve increased the number of locations cbdMD products are available in by 500% since the acquisition of the brand last December, and with the building momentum of retailer acceptance subsequent to the passage of the Farm Bill, we are pursuing every opportunity available to us vigorously as we continue to work to build cbdMD into the top recognized brand in the industry,” continued Sumichrast.

“To secure our leadership position in the CBD industry and create a truly world-class brand in one of the most exciting market opportunities globally, we continue to strategically invest in growing valuable partnerships and sponsorships with world-class athletes that resonate with our customers. In the June quarter we signed several significant sponsorships, including professional golfer and 12-time PGA Tour winner Bubba Watson, Ice Cube’s Big 3 basketball league, Bellator MMA, and Nitro Circus,” stated Scott Coffman, founder of the brand and co-CEO of cbdMD.

“We believe our sponsorship initiatives really set us apart as we seek to grow market share. While many of our peers continue to see challenges in the restrictive advertising environment surrounding CBD, we believe we’ve created a strong competitive advantage that puts our brand in front of tens of millions of potential consumers globally. We’re applying this same approach to our newly launched pet brand “Paw CBD” and anticipate great results from these efforts as we move forward. Overall, I couldn’t be prouder of what our team has accomplished since the merger and look forward to sharing ongoing successes with our shareholders in the months and quarters ahead,” concluded Sumichrast.

 

CONFERENCE CALL DETAILS

 

Wednesday, August 14, 2019, 4:15 p.m. Eastern Time

 

Domestic:

1-844-407-9500

International:

1-862-298-0850

 

 

Replay dial in – Available through September 14, 2019

 

Domestic:

1-877-481-4010

International:

1-919-882-2331

Replay ID:

53043

 

Webcast Replay link – available through November 14, 2019:
https://www.investornetwork.com/event/presentation/53043

About cbdMD, Inc.

cbdMD, Inc. (NYSE American: YCBD) owns and operates the nationally recognized consumer cannabidiol (CBD) brand cbdMD whose current products include CBD tinctures, CBD gummies, CBD topical, CBD bath bombs, CBD oils, and CBD pet products. The company also operates licensing and corporate brand management businesses as well as the products division.

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, including, without limitation, statements made with respect to the expansion of the consumer market for CBD products and our ability to increase our market share, our limited operating history, our ability to expand our business and significantly increase our revenues, our ability to effectively leverage our brand partnerships and sponsorships, our ability to effectively compete in our market, our ability to achieve our net sales guidance, and our ability to report profitable operations in the future. 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, 2018 as filed with the Securities and Exchange Commission (the "SEC") on December 12, 2018, our Quarterly Report on Form 10-Q for the period ended June 30, 2019 as filed with the SEC on August 14, 2019 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.  

 
 
 

cbdMD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2019 AND SEPTEMBER 30, 2018

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

September 30,

 

 

 

 

 

 

 

 

 

 

2019

 

2018

 

Assets

 

 

Current assets:

 

Cash and cash equivalents

$

11,633,213

$

4,282,553

 

Accounts receivable

 

562,800

 

307,874

 

Accounts receivable - related party

 

 

 

 

 

 

 

1,103,628

 

 

1,537,863

 

Accounts receivable other

 

 

 

 

 

 

 

276,795

 

 

1,743,874

 

Deposits

 

 

 

 

 

 

 

6,850

 

 

-

 

Merchant reserve

 

 

 

 

 

 

 

626,160

 

 

-

 

Marketable securities

 

 

 

 

 

 

 

880,132

 

 

1,050,961

 

Investment other securities

 

 

 

 

 

 

 

1,159,112

 

 

1,159,112

 

Note receivable

 

 

 

 

 

 

 

 

 

486,000

 

 

459,000

 

Note receivable - related party

 

 

 

 

 

 

 

 

 

-

 

 

156,147

 

Inventory

 

3,116,458

 

123,223

 

Inventory prepaid

 

 

 

 

 

 

 

 

 

643,649

 

 

-

 

Deferred issuance costs

 

 

 

 

 

 

 

 

 

-

 

 

28,049

 

Prepaid consulting agreement

 

 

 

 

 

 

 

 

 

-

 

 

200,000

 

Prepaid rent

 

 

 

 

 

 

 

 

 

60,000

 

 

180,000

 

Prepaid services with stock

 

 

 

 

 

 

 

 

 

198,000

 

 

-

 

Prepaid equipment - deposit

 

 

 

 

 

 

 

 

 

889,673

 

 

-

 

Prepaid expenses and other current assets

 

543,607

 

561,491

 

Total current assets

 

22,186,077

 

11,790,147

 

 

 

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

1,016,757

 

53,480

 

Goodwill

 

 

 

 

 

 

 

55,133,697

 

 

-

 

Intangible assets, net

 

22,572,097

 

3,173,985

 

Total other assets

 

78,722,551

 

3,227,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

100,908,628

$

15,017,612

 

 
 
 

cbdMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2019 AND SEPTEMBER 30, 2018
(continued)

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

June 30,

 

September 30,

 

 

 

 

 

 

 

2019

 

 

 

2018

 

Liabilities and shareholders' equity

Current liabilities:

Accounts payable

$

1,886,395

 

$

473,717

 

Accounts payable - related party

 

 

 

 

 

 

 

 

-

 

 

 

7,860

 

Deferred revenue

 

 

 

 

 

 

 

 

4,585

 

 

 

161,458

 

Customer deposit - related party

 

 

 

 

 

 

 

 

34,404

 

 

 

-

 

Accrued payroll

 

 

 

 

 

 

 

 

326,537

 

 

 

-

 

Accrued expenses

 

77,985

 

 

6,920

 

Accrued expenses - related party

 

 

 

 

 

 

 

 

-

 

 

 

320,000

 

Total current liabilities

 

2,329,906

 

 

969,955

 

Long term liabilities

 

 

 

 

 

 

 

 

Other long term liabilities

 

 

 

 

 

 

-

 

 

 

7,502

 

Contingent liability

 

 

 

 

 

 

70,600,000

 

 

 

-

 

Deferred tax liability

 

 

 

 

 

 

2,833,000

 

 

 

21,000

 

Total long term liabilities

 

 

 

 

 

 

73,433,000

 

 

 

28,502

 

Total liabilities

 

 

 

 

 

 

75,762,906

 

 

 

998,457

 

cbdMD, Inc. shareholders' equity (deficit):

Preferred stock, authorized 50,000,000 shares, $0.001 par value, no shares issued and outstanding

 

-

 

 

-

 

Common stock, authorized 150,000,000 shares, $0.001 par value, 27,720,356 and 8,123,928 shares issued and outstanding, respectively

 

27,720

 

 

 

8,124

 

Additional paid in capital

 

96,130,158

 

 

21,781,095

 

Accumulated other comprehensive income (loss)

 

 

 

 

 

 

 

-

 

 

 

(2,512,539

)

Accumulated deficit

 

(70,782,736

)

 

(6,669,497

)

Total cbdMD, Inc. shareholders' equity

 

25,375,142

 

 

12,607,183

 

Non-controlling interest

 

(229,420

)

 

1,411,972

 

Total shareholders' equity

 

25,145,722

 

 

14,019,155

 

Total liabilities and shareholders' equity

$

100,908,628

 

$

15,017,612

 

 
 
 
 

cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2019 AND 2018
(Unaudited)

 

 

 

Three months

 

 

Three months

 

 

Nine months

 

 

Nine months

 

 

 

Ended

 

 

Ended

 

 

Ended

 

 

Ended

 

 

 

June 30,

2019

 

 

June 30,

2018

 

 

June 30,

2019

 

 

June 30,

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

9,784,199

 

 

$

1,851,116

 

 

$

19,042,098

 

 

$

5,440,653

 

Sales related party

 

 

-

 

 

 

1,350,000

 

 

 

-

 

 

 

1,550,000

 

Total Gross Sales

 

 

9,784,199

 

 

 

3,201,116

 

 

 

19,042,098

 

 

 

6,990,653

 

Allowances

 

 

(1,739,863

)

 

 

(2,686

)

 

 

(4,075,381

)

 

 

(23,558

)

Net sales

 

 

8,044,336

 

 

 

1,848,430

 

 

 

14,966,717

 

 

 

5,417,095

 

Net sales related party

 

 

-

 

 

 

1,350,000

 

 

 

-

 

 

 

1,550,000

 

Total Net Sales

 

 

8,044,336

 

 

 

3,198,430

 

 

 

14,966,717

 

 

 

6,967,095

 

Cost of sales

 

 

2,959,198

 

 

 

1,106,706

 

 

 

5,584,868

 

 

 

1,858,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

5,085,138

 

 

 

2,091,724

 

 

 

9,381,849

 

 

 

5,108,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses excluding impairment losses

 

 

11,230,914

 

 

 

1,464,239

 

 

 

18,680,857

 

 

 

4,089,006

 

Impairment of intangible assets

 

 

2,114,334

 

 

 

-

 

 

 

2,114,334

 

 

 

-

 

Operating expenses

 

 

13,345,248

 

 

 

1,464,239

 

 

 

20,795,190

 

 

 

4,089,006

 

Income (Loss) from operations

 

(8,260,110

)

 

 

627,485

 

 

 

(11,413,341

)

 

 

1,019,438

 

Realized and Unrealized gain (loss) on marketable securities

 

 

(497,451

)

 

 

-

 

 

 

(1,705,069

)

 

 

 

-

(Increase) of contingent liability

 

 

(21,547,606

)

 

 

-

 

 

 

(52,461,680

)

 

 

 

-

Gain (loss) on disposal of property and equipment

 

 

-

 

 

 

-

 

 

 

(34,333

)

 

 

(69,311

)

Interest income (expense)

 

 

14,211

 

 

 

(232

)

 

 

76,330

 

 

 

(737

)

Income (loss) before provision for income taxes

 

 

(30,290,956

)

 

 

627,253

 

 

 

(65,538,093

)

 

 

949,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit (Provision) for income taxes

 

 

1,088,000

 

 

(62,000

)

 

 

2,296,000

 

 

(6,000

)

Net Income (Loss)

 

 

(29,202,956

)

 

 

565,253

 

 

 

(63,242,093

)

 

 

943,390

 

Net Gain (Loss) attributable to noncontrolling interest

 

 

(1,503,707

)

 

 

359,179

 

 

(1,641,391

)

 

 

465,848

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

(27,699,249

)

 

$

206,074

 

$

(61,600,702

)

 

$

477,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(1.19

)

 

$

0.03

 

$

(4.22

)

 

$

0.06

Diluted

 

$

-

 

$

0.03

 

$

-

 

$

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares Basic:

 

 

23,193,793

 

 

 

8,075,341

 

 

 

14,585,619

 

 

 

7,614,621

 

Weighted average number of shares Diluted:

 

 

 

 

 

 

8,092,931

 

 

 

 

 

 

 

7,637,012

 

 
 
 
 

cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2019 AND 2018
(unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended June 30,

 

Nine Months Ended June 30,

 

 

 

 

 

 

 

 

 

2019

 

 

 

2018

 

Cash flows from operating activities:

Net loss

$

(63,242,093

)

$

943,390

 

Adjustments to reconcile net loss to net cash used by operating activities:

Stock based compensation

 

2,022,812

 

 

386,719

 

Restricted stock expense

 

 

 

 

 

92,000

 

 

 

39,100

 

Issuance of stock / warrants for service

 

 

 

 

 

289,750

 

 

 

478,002

 

Intangible impairment

 

 

 

 

 

2,114,334

 

 

 

-

 

Inventory impairment

 

 

 

 

 

-

 

 

 

102,124

 

Depreciation and amortization

 

272,121

 

 

169,788

 

Gain on settlement of Note

 

 

 

 

(20,000

)

 

 

-

 

Increase/(Decrease) in contingent liability

 

 

 

 

52,461,680

 

 

 

-

 

Realized and unrealized loss of marketable securities

 

 

 

 

1,705,069

 

 

 

-

 

Loss on sale of property and equipment

 

 

 

 

-

 

 

 

69,311

 

Non-cash consideration received for services

 

 

 

 

(470,000

)

 

 

(3,404,502

)

Changes in operating assets and liabilities:

Accounts receivable

 

399,074

 

 

(45,502

)

Accounts receivable – related party

 

204,902

 

 

(637,675

)

Other accounts receivable

 

 

 

 

(298,754

)

 

 

(1,204,003

)

Other accounts receivable – related party

 

 

 

 

 

 

236,364

 

Note receivable

 

 

 

 

(27,000

)

 

 

(450,000

)

Note receivable – related party

 

 

 

 

156,147

 

 

 

114,802

 

Merchant reserve

 

 

 

 

(199,907

)

 

 

-

 

Inventory

 

(2,581,958

)

 

10,340

 

Prepaid expenses and other current assets

 

(717,894

)

 

(980,952

)

Marketable securities

 

 

 

 

701,593

 

 

 

-

 

Accounts payable and accrued expenses

 

1,073,211

 

 

(324,785

)

Accounts payable and accrued expenses – related party

 

(313,591

)

 

(470,905

)

Deferred revenue / customer deposits

 

(380,804

)

 

121,916

 

Deferred tax liability

 

(2,296,000

)

 

6,000

 

Cash used by operating activities

 

(9,055,308

)

 

(4,840,368

)

 

Cash flows from investing activities:

Net cash used for merger

 

 

 

 

 

 

(1,167,295

)

 

 

-

 

Purchase of investment other securities

 

 

 

 

 

 

-

 

 

 

(300,000

)

Purchase of intangible assets

 

 

 

 

 

 

(79,999

)

 

 

(360,000

)

Purchase of property and equipment

 

(359,421

)

 

(2,465

)

Cash used by investing activities

 

(1,606,715

)

 

(662,465

)

 

Cash flows from financing activities:

Proceeds from issuance of common stock

 

 

 

 

 

 

19,009,897

 

 

 

10,927,535

 

Note Payable – related party

 

 

 

 

(764,300

)

 

 

-

 

Deferred issuance costs

 

 

 

 

 

 

(232,914

)

 

 

(285,086

)

Cash provided by financing activities

 

18,012,683

 

 

10,642,449

 

Net increase (decrease) in cash

 

7,350,660

 

 

5,139,616

 

Cash and cash equivalents, beginning of period

 

4,282,553

 

 

284,246

 

Cash and cash equivalents, end of period

 

 

 

 

 

$

11,633,213

 

 

$

5,423,862

 
 
 
 

cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2019 AND 2018
(unaudited) (continued)

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

Nine Months ended June 30,

 

Nine Months Ended June 30,

 

 

 

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

Cash Payments for:

 

 

 

 

 

 

 

Interest expense

 

 

 

 

$

36,418

 

$

505

 

 

 

 

 

 

 

 

Non-cash financial activities:

Warrants issued to secondary selling agent

 

 

 

$

309,592

 

$

171,600

Equity investment exchange to be issued in the future

 

 

 

$

-

 

$

160,000

Stock received for prior period services, adjusted for other accounts receivable write down prior to receipt

 

 

 

$

1,352,000

 

$

-

Adoption of ASU 2016-01

 

 

 

$

2,512,539

 

$

-

 
 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20190814005540/en/