8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 12, 2020

cbdMD, INC.
(Exact Name of Registrant as Specified in Charter)
North Carolina	001-38299	47-3414576
---	---	---
(State or Other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

8845 Red Oak Boulevard, Charlotte, NC 28217

(Address of Principal Executive Offices)(Zip Code)

Registrant's telephone number, including area code: (704) 445-3060

not applicable
(Former Name or Former Address, if Changed Since Last<br>Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging<br>growth company ☑

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common<br>stock	YCBD	NYSE<br>American
8.0%<br>Series A Cumulative Convertible Preferred Stock	YCBD PR<br>A	NYSE<br>American

Item 7.01 Regulation FD.

On August 12, 2020, cbdMD, Inc. issued a press release announcing its financial and operating results for its third fiscal 2020 quarter. A copy of this press release is furnished as Exhibit 99.1 to this report.

Pursuant to General Instruction B.2 of Form 8-K, the information in this Item 7.01 of Form 8-K, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise be subject to the liabilities of that section, nor is it incorporated by reference into any filing of cbdMD, Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

		Incorporated by Reference			Filed or<br><br><br>Furnished<br><br><br>Herewith
No.	Exhibit Description	Form	Date Filed	Number
99.1	Press<br>release dated August 12, 2020				Furnished

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	cbdMD,<br>INC.
Date:<br>August 12, 2020	By:	/s/<br>Mark S. Elliott
		Mark S.<br>Elliott,<br><br><br>Chief<br>Financial Officer and Chief Operating Officer

ycbd_ex991

Exhibit 99.1

cbdMD Reports Record Net Sales In Its Third Quarter Fiscal 2020 Results

Quarterly Net Sales Increased 33% To $10.6 million

Direct to Consumer (DTC) Net Sales Increased 77%

Company Expects To Reach Positive Adjusted Operating Income During Calendar 2020

CHARLOTTE, N.C.—August 12, 2020—(BUSINESS WIRE)--cbdMD, Inc. (NYSE American: YCBD, YCBD PR A) (the “Company”), one of the leading, highly trusted, and most recognized cannabidiol (CBD) brands, reported today record net sales of $10.6 million in its third fiscal 2020 quarter ended June 30, 2020.

“cbdMD reported its single biggest quarterly net sales in its history. Our decisions to concentrate on building brand equity for award winning cbdMD and Paw CBD brands, as well as and focus on our e-commerce strength, has paid off. We have separated ourselves from our competitors and demonstrated that we can grow market share and be fiscally responsible at the same time, with our GAAP and non-GAAP operating results improving by 80% and 96%, respectively, from the comparable periods in fiscal 2019. With $15 million in cash on hand at June 30, 2020, we believe we have more than enough financial strength to grow our operations for the foreseeable future, absent any additional unforeseen impact from COVID-19,” said Martin Sumichrast, the Company’s Chairman and co-Chief Executive Officer.

The highlights from the June 2020 quarter were:

●

The Company reported net sales of $10.6 million for the three months ended June 30, 2020, a year-over-year quarterly increase of approximately 33% and a sequential quarterly increase from the three months ended March 31, 2020 of approximately 13%.

●

The Company reported record quarterly e-commerce, direct to consumer (DTC) net sales of $8.2 million, an increase of 77% year-over-year and a sequential quarterly increase of approximately 21%. The Company’s e-commerce, direct to consumer (DTC) sales accounted for in excess of 77% of total net sales in the June 2020 quarter, an increase from 58% from prior year’s quarter.

●

The Company’s CBD pet brand, Paw CBD, reported an approximate 64% increase in net sales from its March 2020 quarter of approximately $750,000 to approximately $1,229,000 for its June 2020 quarter.

●

The Company reported a gross profit margin of 64.7% as a percent of net sales as compared to 63.4% for the comparable period in fiscal 2019 and adjusted non-GAAP gross profit margin as a percent of net sales was 67.7% as compared to a 65% in the comparable period in fiscal 2019.

●

The Company reported an 80% year-over-year improvement in its GAAP loss from operations of ($1,337,508) as compared to ($6,466,639) in the comparable 2019 period.

●

The Company reported a 96% year-over-year improvement in its non GAAP adjusted loss from operations of ($187,092) as compared to ($5,019,541) in the comparable fiscal 2019 period after adjusting for the following: a non-cash inventory adjustment of $311,000, a non-cash stock option expense of $388,000, a depreciation expense of $233,000 and a non-cash charge of $233k for old inventory.

●

The Company reported a net loss of ($9,052,752), or $(0.18) per share, which was mainly due to a non-cash expense of approximately $7.58 million in the Company’s contingent liability which is associated with earnout shares which may be issued under the terms of the December 2018 acquisition of Cure Based Development.

●

Working capital was $19.7 million and cash on hand was approximately $15 million at June 30, 2020, respectively.

●

CBD Industries, LLC, the Company’s wholly owned manufacturing and distribution subsidiary, was recently added to NSF International’s dietary supplements Good Manufacturing Practice (GMP) registration.

CONFERENCE CALL DETAILS
Wednesday,<br>August 12, 2020, 4:15 p.m. Eastern Time
Domestic:	1-844-407-9500
International:	1-862-298-0850
Replay dial in – Available through September 12,<br>2020
Domestic:	1-877-481-4010
International:	1-919-882-2331
Replay<br>ID:	36267

Webcast Replay link – available through September 12, 2020:

https://www.webcaster4.com/Webcast/Page/2206/36267

About cbdMD, Inc.

cbdMD, Inc. is a nationally recognized consumer cannabidiol (CBD) brand whose current products include CBD tinctures, CBD capsules, CBD gummies, CBD topicals, CBD bath bombs, and CBD pet products. cbdMD is also a proud partner of Bellator MMA and Life Time, Inc., and has one of the largest rosters of professional sports athletes who are part of “Team cbdMD.” To learn more about cbdMD and our comprehensive line of over 100 SKUs of U.S. produced, THC-free1 CBD 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.

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 net sales, our ability to effectively leverage our brand partnerships and sponsorships, our ability to effectively compete in our market, 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, 2019, as amended, as filed with the Securities and Exchange Commission (the "SEC") 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 Non-THC is defined as below the level of detection using validated scientific analytical tools.

Non-GAAP Financial Measures

This press release includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company has included adjusted income (loss) from operations and adjusted gross profit because management uses this measure to assess operating performance, in order to highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. Neither adjusted income (loss) from operations nor adjusted gross profit has not been prepared in accordance with GAAP. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, net income (loss) and gross profit margins as indicators of the Company’s operating performance. Further, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. The Company has attached to this press release a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

Contact:

Investors:

John Weston

Director of Investor Relations

john.weston@cbdmd.com

704-249-9515

cbdMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 30, 2020 AND SEPTEMBER 30, 2019

	(Unaudited)
	June<br>30,	September<br>30,
	2020	2019
Assets
Current<br>assets:
Cash<br>and cash equivalents	$15,006,319	$4,689,966
Accounts<br>receivable	715,205	1,425,697
Accounts<br>receivable other	-	160,137
Accounts<br>receivable – discontinued operations	700,884	1,080,000
Marketable<br>securities	52,527	198,538
Investment<br>other securities	-	600,000
Deposits	-	6,850
Merchant<br>reserve	-	519,569
Inventory	6,397,326	4,301,586
Inventory<br>prepaid	281,885	903,458
Deferred<br>issuance costs	-	93,954
Prepaid<br>software	-	206,587
Prepaid<br>equipment deposits	201,698	868,589
Prepaid<br>expenses and other current assets	755,906	688,104
Total<br>current assets	24,111,750	15,743,035
Other<br>assets:
Property<br>and equipment, net	3,067,909	1,715,557
Operating<br>lease assets	7,119,289	-
Deposits<br>for facilities	706,852	754,533
Intangible<br>assets, net	21,635,000	21,635,000
Goodwill	54,669,997	54,669,997
Total<br>other assets	87,199,047	78,775,087
Total<br>assets	$111,310,797	$94,518,122

cbdMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 30, 2020 AND SEPTEMBER 30, 2019

(continued)

	September 30,
	2019
Liabilities and shareholders' equity
Current<br>liabilities:
Accounts<br>payable	$3,021,271
Accrued<br>expenses	681,269
Operating<br>leases – short term liabilities	-
Note<br>payable	-
Customer<br>deposit – related party	7,339
Total current liabilities	3,709,878
Long<br>term liabilities:
Long<br>term liabilities	363,960
Note<br>payable	-
Paycheck<br>Protection Program loan	-
Operating<br>leases - long term liabilities	-
Contingent<br>liability	50,600,000
Deferred<br>tax liability	2,240,300
Total long term liabilities	53,204,260
Total liabilities	56,914,138
cbdMD,<br>Inc. shareholders' equity:
Preferred<br>stock, authorized 50,000,000 shares, 0.001 par value, 500,000 and<br>0 shares issued and outstanding, respectively	-
Common<br>stock, authorized 150,000,000 shares, 0.001 par<br>value,
51,345,648<br>and 27,720,356 shares issued and outstanding,<br>respectively	27,720
Additional<br>paid in capital	97,186,524
Accumulated<br>deficit	(59,610,260)
Total cbdMD, Inc. shareholders’ equity	37,603,984
Total liabilities and shareholders' equity	$94,518,122

All values are in US Dollars.

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2020 AND 2019

(Unaudited)

	Three months	Three months	Nine months	Nine months
	Ended	Ended	Ended	Ended
	June 30,<br><br><br>2020	June 30,<br><br><br>2019	June 30,<br><br><br>2020	June 30,<br><br><br>2019
Total<br>Gross Sales	10,809,387	9,734,459	30,925,678	18,170,667
Allowances	(172,842)	(1,729,310)	(741,861)	(4,063,252)
Total Net Sales	10,636,545	8,005,149	30,183,817	14,107,414
Cost of sales	3,748,024	2,929,160	10,180,637	5,009,187
Gross<br>Profit	6,888,521	5,075,989	20,003,180	9,098,228
Operating<br>expenses	8,226,029	11,542,628	33,053,962	18,683,905
Income<br>(Loss) from<br>operations	(1,337,508)	(6,466,639)	(13,050,782)	(9,585,677)
Realized<br>and Unrealized gain (loss) on marketable securities	(30,849)	(13,162)	(146,011)	(77,802)
(Increase)<br>Decrease of contingent liability	(7,580,000)	(21,547,606)	30,580,000	(52,461,680)
Impairment<br>on investment other securities	-	-	(600,000)	-
Impairment<br>accounts receivable other		-	(160,000)	-
Interest income (expense)	3,436	6,229	46,311	50,189
Income (loss) before provision for income taxes	(8,944,921)	(28,021,178)	16,669,518	(62,074,970)
Benefit<br>(Provision) for income<br>taxes	-	1,088,000	2,240,300	2,296,000
Net Income (Loss) from continuing<br>operations	(8,944,921)	(26,933,178)	18,909,818	(59,778,970)
Net Income (Loss) from discontinued operations, net of<br>tax (Note 16)	(7,781)	(2,269,778)	(48,983)	(3,463,123)
Net Income (Loss)	(8,952,702)	(29,202,956)	18,860,835	(63,242,093)
Net Gain (Loss) attributable to<br>noncontrolling<br>interest	-	(1,503,707)	-	(1,641,391)
Preferred dividends	100,050	-	266,800	-
Net Income (Loss) attributable to cbdMD, Inc. common<br>shareholders	$(9,052,752)	$(27,699,249)	$18,594,035	$(61,600,702)
Net Income (Loss) per share:
Basic<br>earnings per share	$(0.18)	$(1.19)	$0.45	$(4.22)
Diluted<br>earnings per share	$-	$-	$0.44	$-
Weighted<br>average number of shares Basic:	51,335,648	23,193,793	41,411,261	14,585,619
Weighted<br>average number of shares Diluted:			42,534,519

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2020 AND 2019

(Unaudited)

	Three months	Three months	Nine months	Nine months
	Ended	Ended	Ended	Ended
	June 30,<br><br><br>2020	June 30,<br><br><br>2019	June 30,<br><br><br>2020	June 30,<br><br><br>2019
Net<br>Income (Loss)	$(8,952,702)	$(29,202,956)	$18,860,835	$(63,242,093)
Comprehensive Income (Loss)	(8,952,702)	(29,202,956)	18,860,835	(63,242,093)
Comprehensive<br>Income (loss) attributable to non-controlling interest	-	(1,503,707)	-	(1,641,391)
Preferred<br>dividends	(100,050)	-	(266,800)	-
Comprehensive Income (Loss) attributable to cbdMD, Inc. common<br>shareholders	$(9,052,752)	$(27,699,249)	$18,594,035	$(61,600,702)

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED JUNE 30, 2020 AND 2019

(unaudited)

	Nine Months<br>Ended June 30,	Nine Months<br>Ended June 30,
	2020	2019
Cash<br>flows from operating activities:
Net Income<br>(loss)	$18,860,835	$(63,242,093)
Adjustments<br>to reconcile net (income) loss to net
cash<br>used by operating activities:
Stock<br>based compensation	1,391,271	2,022,812
Restricted<br>stock expense	138,001	92,000
Issuance<br>of stock / warrants for service	84,450	289,750
Intangible<br>impairment	-	2,114,334
Inventory<br>and materials impairment	233,372	-
Impairment<br>on discontinued operations asset	45,783	-
Depreciation<br>and amortization	499,394	272,121
Gain on<br>settlement of Note	-	(20,000)
Other<br>than temporary impairment other securities and<br><br><br>other<br>accounts receivable	760,000	-
Increase/(Decrease)<br>in contingent liability	(30,580,000)	52,461,680
Realized<br>and unrealized loss of marketable securities	146,011	1,705,069
Merchant<br>reserve settlement	132,657	-
Non-cash<br>consideration received for services	-	(470,000)
Non-cash<br>lease expense	878,986	-
Changes<br>in operating assets and liabilities:
Accounts<br>receivable	710,629	399,074
Accounts<br>receivable – related party	-	204,902
Other<br>accounts receivable	-	(298,754)
Note<br>receivable	-	(27,000)
Note<br>receivable – related party	-	156,147
Deposits	(147,166)	-
Merchant<br>reserve	386,912	(199,907)
Inventory	(2,329,112)	(2,581,958)
Prepaid<br>inventory	621,573	-
Prepaid<br>expenses and other current assets	1,007,374	(717,894)
Marketable<br>securities	-	701,593
Accounts<br>payable and accrued expenses	(480,424)	1,073,211
Accounts<br>payable and accrued expenses – related party	-	(313,591)
Operating<br>lease liability	(766,289)	-
Note<br>payable	42,968	-
Deferred<br>revenue / customer deposits	(7,339)	(380,804)
Collection<br>on discontinued operations accounts receivable	333,333	-
Deferred<br>tax liability	(2,240,300)	(2,296,000)
Cash used by<br>operating activities	(10,277,081)	(9,055,308)
Cash<br>flows from investing activities:
Net<br>cash used for merger	-	(1,167,295)
Purchase<br>of intangible assets	-	(79,999)
Purchase<br>of property and equipment	(1,851,746)	(359,421)
Cash used by<br>investing activities	(1,851,746)	(1,606,715)
Cash<br>flows from financing activities:
Proceeds<br>from issuance of common stock	16,771,756	19,009,897
Proceeds<br>from issuance of preferred stock	4,421,928	-
PPP<br>loan	1,456,100	-
Note<br>Payable – related party	-	(764,300)
Preferred<br>dividend distribution	(266,800)	-
Deferred<br>issuance costs	62,197	(232,914)
Cash provided by<br>financing activities	22,445,180	18,012,683
Net increase<br>(decrease) in cash	10,316,353	7,350,660
Cash and cash<br>equivalents, beginning of period	4,689,966	4,282,553
Cash<br>and cash equivalents, end of period	$15,006,319	$11,633,213

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED JUNE 30, 2020 AND 2019

(unaudited) (continued)

Supplemental Disclosures of Cash Flow Information:

	Nine Months<br>ended June 30,	Nine Months<br>Ended June 30,
	2020	2019
Cash Payments<br>for:
Interest<br>expense	$26,126	$36,418
Non-cash financial<br>activities:
Warrants issued to<br>secondary selling agent	$524,113	$309,592
Stock received for<br>prior period services, adjusted for other accounts receivable write<br>down prior to receipt	$-	$1,352,000
Adoption<br>of ASU 2016-01	$-	$2,512,539

cbdMD, Inc.

SUPPLEMENTAL FINANCIAL INFORMATION

RECONCILIATION OF ADJUSTED INCOME (LOSS) FROM OPERATIONS

(Unaudited)

	Three months	Three months
	Ended	Ended
	June 30,<br><br><br>2020	June 30,<br><br><br>2019
GAAP Income<br>(Loss) from<br>operations	(1,337,508)	(6,466,639)
Adjustments:
Inventory<br>adjustment (1)	316,922	-
Non-cash stock<br>related expense (2)	388,185	1,389,224
Depreciation<br>expense	211,937	57,874
One-time abnormal inventory<br>adjustment (3)	233,372	-
Adjusted Income (loss) from operations	(187,092)	(5,019,541)
	Three months		Three months
---	---	---	---	---
	Ended		Ended
	June 30,<br><br><br>2020		June 30,<br><br><br>2019
GAAP net sales	10,636,545		8,005,149
GAAP cost of<br>sales	3,748,024		2,929,160
Adjustments:
Inventory<br>adjustment (1)	316,922		130,795
Adjusted<br>cost of sales	3,431,102		2,798,365
Adjusted Gross Profit	7,205,443	67.7%	5,206,784	65.0%

(1)

Amount represents an adjustment after performing a physical inventory account.

(2)

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

(3) Amount represents an operating expense related to inventory loss related to regulatory changes impacting labels and packaging.