8-K
cbdMD, Inc. (YCBD)
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) February 9, 2021
| cbdMD, INC. | ||
|---|---|---|
| (Exact name of registrant as specified in its charter) | ||
| North Carolina | 001-38299 | 47-3414576 |
| --- | --- | --- |
| (State or other jurisdiction of incorporation or<br>organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
8845 Red Oak Blvd, Charlotte, NC 28217
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (704) 445-3060
| _______________________________________ |
|---|
| (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))
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 | YCBD | NYSE<br>American |
| 8.0%<br>Series A Cumulative Convertible Preferred Stock | YCBDpA | NYSE<br>American |
Indicate by check mark whether the registrant is an emerging growth company as defined in in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| 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. ☐
Item 7.01 Regulation FD Disclosure.
On February 9, 2021 cbdMD, Inc. issued a press release announcing its first quarter fiscal 2021 results. 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 Exhibit 99.1, 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 February 9, 2021 | 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>February 9, 2021 | By: | /s/ T.<br>Ronan Kennedy |
| T.<br>Ronan Kennedy, Chief Financial Officer |
ycbd_ex991
Exhibit 99.1
cbdMD Reports First Quarter Fiscal 2021 Results
YOY Net Sales Increased 22% to Record $12.3 Million
YOY e-Commerce Direct-to-Consumer Sales Jump 41% to Record $9.7 Million
Pet Brand, Paw CBD, YOY Net Sales Up 83%
Gross Profit Margin Hits All Time High of 72 %
February 9, 2021, 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 for its first quarter ended December 31, 2020.
Financial Highlights for the Quarter Ended December 31, 2020:
●
Our net sales for the first quarter of fiscal 2021 increased by 22% year-over-year to a record of $12.3 million from $10.1 million from the prior year’s quarter.
●
Our gross profit margin for the quarter increased to 72.2% from 63.5% in the prior year’s quarter.
●
We reported record quarterly E-commerce, direct-to-consumer, net sales of $9.7 million, an increase of $2.8 million, or 41%, from the prior year’s quarter and 13% sequential quarterly growth.
●
Our CBD pet brand, Paw CBD, reported in net sales in quarter increased 83%, to $1.5 million compared to $820,000 from the prior year’s quarter.
●
Our quarterly operating expenses decreased by 15% YOY to $10.7 million from $12.6 million from the prior year’s quarter, a sequential quarterly decrease of 2%.
●
Our loss from operations decreased by 71% to $1.8 million compared to $6.1 million from the prior year’s quarter.
●
Our non-GAAP adjusted operating loss decreased by 90% to $523,841, compared to $5.0 million from the prior year’s quarter.
●
Our net loss attributable to common shareholders for the quarter was approximately $9.5 million, or ($0.18) per share, as compared to net income of approximately $12.9 million, or $0.45 per share from the prior year’s quarter. Our net loss attributable to common shareholders was principally attributable to an increase of approximately $8.5 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).
●
At December 31, 2020, we had working capital of approximately $30.6 million and cash on hand of approximately $28.8 million as compared to working capital of approximately $16.0 million and cash on hand of approximately $14.8 million at September, 2020. Our working capital position was bolstered during the quarter following our receipt of approximately $15.8 million in net proceeds from our December 2020 sale of shares of our 8.0% Series A Cumulative Convertible Preferred Stock in a firm commitment underwritten public offering.
cbdMD, Inc. will host a conference call at 4:15 p.m., Eastern time, on Tuesday, February 9, 2021, to discuss the company’s first quarter fiscal 2021 financial results and business progress.
CONFERENCE CALL DETAILS
| Title: | cbdMD<br>First Quarter 2021 Earnings Call |
|---|---|
| Event Date: | Tuesday,<br>February 9, 2021 - 4:15 PM Eastern Time |
| Event Link: | Webcast<br>URL https://www.webcaster4.com/Webcast/Page/2206/39768 |
| Webcast Replay Expiration: | Wednesday,<br>February 9, 2022 |
| Participant Numbers: | Toll<br>Free: 888-506-0062International: 973-528-0011<br><br><br>Entry<br>code (not required): 117414 |
| Replay Number: | Toll<br>Free: 877-481-4010International: 919-882-2331Replay Passcode:<br>39768 |
About cbdMD, Inc.
cbdMD, Inc. is one of the leading, most highly trusted, and most recognized cannabidiol (CBD) brands, whose current products include CBD tinctures, CBD capsules, CBD gummies, CBD topicals, CBD bath bombs and CBD pet products. To learn more about cbdMD and our comprehensive line of over 130 SKUs of U.S. produced, Non-THC1 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 and Paw CBD products.
1 Non-THC is defined as below the level of detection using validated scientific analytical tools.
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 December 31, 2020 as filed with the SEC on February 9, 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.
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
cbdMD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2020 AND SEPTEMBER 30, 2020
| (Unaudited) | ||
|---|---|---|
| December<br>31, | September<br>30, | |
| 2020 | 2020 | |
| Assets | ||
| Current<br>assets: | ||
| Cash<br>and cash equivalents | $28,763,812 | $14,824,644 |
| Accounts<br>receivable | 1,021,554 | 911,482 |
| Accounts<br>receivable – discontinued operations | 24,717 | 447,134 |
| Marketable<br>securities | 29,181 | 26,472 |
| Investment<br>other securities | 250,000 | 250,000 |
| Deposits | - | 40,198 |
| Inventory | 4,383,501 | 4,603,360 |
| Inventory<br>prepaid | 336,362 | 288,178 |
| Prepaid<br>software | - | 174,308 |
| Prepaid<br>equipment deposits | - | 40,197 |
| Prepaid<br>sponsorship | 1,069,600 | 1,203,300 |
| Prepaid<br>expenses and other current assets | 1,496,721 | 902,979 |
| Total<br>current assets | 37,375,449 | 23,712,252 |
| Other<br>assets: | ||
| Property<br>and equipment, net | 3,084,321 | 3,183,487 |
| Operating<br>lease assets | 6,547,278 | 6,851,357 |
| Deposits<br>for facilities | 766,708 | 790,708 |
| Intangible<br>assets, net | 21,635,000 | 21,635,000 |
| Goodwill | 54,669,997 | 54,669,997 |
| Total<br>other assets | 86,703,304 | 87,130,549 |
| Total<br>assets | $124,078,753 | $110,842,801 |
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2020 AND SEPTEMBER 30, 2019
(continued)
| September<br>30, | |
| 2020 | |
| Liabilities<br>and shareholders' equity | |
| Current<br>liabilities: | |
| Accounts<br>payable | $2,850,421 |
| Deferred<br>revenue | 45,141 |
| Accrued<br>expenses | 2,724,779 |
| Operating<br>leases – current portion | 1,159,098 |
| Paycheck<br>Protection Program loan, current portion | 854,000 |
| Note<br>payable | 55,639 |
| Total<br>current liabilities | 7,689,078 |
| Long term<br>liabilities: | |
| Long<br>term liabilities | 264,367 |
| Note<br>payable | - |
| Paycheck<br>Protection Program loan | 602,100 |
| Operating<br>leases - long term portion | 6,010,208 |
| Contingent<br>liability | 16,200,000 |
| Deferred<br>tax liability | 895,300 |
| Total<br>long term liabilities | 23,971,675 |
| Total<br>liabilities | 31,660,753 |
| cbdMD, Inc.<br>shareholders' equity: | |
| Preferred stock,<br>authorized 50,000,000 shares, 0.001 par value, 2,800,000 and<br>500,000 shares issued and outstanding, respectively | 500 |
| Common stock,<br>authorized 150,000,000 shares, 0.001 par value, | |
| 52,130,870 and<br>52,130,870 shares issued and outstanding, respectively | 52,131 |
| Additional paid in<br>capital | 126,517,784 |
| Accumulated<br>deficit | (47,388,367) |
| Total<br>cbdMD, Inc. shareholders' equity | 79,182,048 |
| Total<br>liabilities and shareholders' equity | $110,842,801 |
All values are in US Dollars.
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019
| Three<br>months | Three<br>months | |
|---|---|---|
| Ended | Ended | |
| December<br>31,<br><br><br>2020 | December<br>31,<br><br><br>2019 | |
| Gross<br>Sales | $13,131,946 | $10,412,491 |
| Allowances | (803,643) | (264,255) |
| Total<br>Net Sales | 12,328,303 | 10,148,236 |
| Cost of<br>sales | 3,430,274 | 3,700,537 |
| Gross Profit | 8,898,028 | 6,447,699 |
| Operating<br>expenses | 10,657,973 | 12,560,297 |
| (Loss)<br>from operations | (1,759,945) | (6,112,598) |
| Realized<br>and Unrealized gain (loss) on marketable & other<br>securities | 542,710 | (62,010) |
| (Increase)<br>decrease of contingent liability | (8,500,000) | 16,898,006 |
| Interest<br>(expense) income | (10,386) | 7,267 |
| Income (loss) before provision for income<br>taxes | (9,727,621) | 10,730,665 |
| Benefit<br>for income taxes | 332,000 | 2,240,300 |
| Net (Loss) Income from continuing<br>operations | (9,395,621) | 12,970,965 |
| Net<br>(Loss) from discontinued operations, net of tax (Note<br>13) | - | (41,202) |
| Net<br>(Loss) Income | (9, 395,621) | 12,929,763 |
| Preferred<br>dividends | 100,050 | 66,734 |
| Net<br>(Loss) Income attributable to cbdMD, Inc. common<br>shareholders | $(9,495,671) | $12,863,029 |
| Net<br>(Loss) Income per share: | ||
| Basic earnings<br>per share | $(0.18) | $0.46 |
| Diluted<br>earnings per share | (0.18) | 0.45 |
| Weighted average number<br>of shares Basic: | 52,130,870 | 27,720,356 |
| Weighted average number<br>of shares Diluted: | 52,130,870 | 28,553,856 |
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(Unaudited)
| Three<br>months | Three<br>months | |
|---|---|---|
| Ended | Ended | |
| December<br>31,<br><br><br>2020 | December<br>31,<br><br><br>2019 | |
| Net (Loss)<br>Income | $(9,395,621) | $12,929,763 |
| Comprehensive (Loss)<br>Income | (9,395,621) | 12,929,763 |
| Preferred<br>dividends | (100,050) | (66,734) |
| Comprehensive<br>(Loss) Income attributable to cbdMD, Inc. common<br>shareholders | $(9,495,671) | $12,863,029 |
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(unaudited)
| Three Months<br>Ended December 31, | Three Months<br>Ended December 31, | |
|---|---|---|
| 2020 | 2019 | |
| Cash<br>flows from operating activities: | ||
| Net (Loss)<br>Income | $(9,395,621) | $12,929,763 |
| Adjustments<br>to reconcile net (income) loss to net | ||
| cash<br>used by operating activities: | ||
| Stock<br>based compensation | 248,894 | 542,574 |
| Restricted<br>stock expense | 15,279 | 138,000 |
| Issuance<br>of stock / warrants for service | 35,712 | - |
| Impairment<br>on discontinued operations asset | - | 38,002 |
| Depreciation<br>and amortization | 232,658 | 113,252 |
| Increase/(Decrease)<br>in contingent liability | 8,500,000 | (16,898,006) |
| Realized<br>and unrealized loss of marketable and other securities | (542,709) | 62,011 |
| Termination<br>benefit | 305,326 | - |
| Non-cash<br>lease expense | 304,080 | 382,432 |
| Changes<br>in operating assets and liabilities: | ||
| Accounts<br>receivable | (110,072) | 755,515 |
| Deposits | 24,000 | (22,365) |
| Merchant<br>reserve | - | 106,590 |
| Inventory | 219,859 | (1,005,631) |
| Prepaid<br>inventory | (48,184) | (237,753) |
| Prepaid<br>expenses and other current assets | (310,268) | (100,803) |
| Accounts<br>payable and accrued expenses | (1,500,755) | 454,490 |
| Operating<br>lease liability | (237,952) | (318,758) |
| Note<br>payable | - | 268,115 |
| Deferred<br>revenue / customer deposits | (22,701) | (7,339) |
| Collection<br>on discontinued operations accounts receivable | 422,417 | 166,667 |
| Deferred<br>tax liability | (332,000) | (2,240,300) |
| Cash used by<br>operating activities | (2,192,038) | (4,873,544) |
| Cash<br>flows from investing activities: | ||
| Proceeds<br>from the sale of other investment securities | 540,000 | - |
| Purchase<br>of property and equipment | (93,294) | (555,674) |
| Cash provided<br>(used) by investing activities | 446,706 | (555,674) |
| Cash<br>flows from financing activities: | ||
| Proceeds<br>from issuance of preferred stock | 15,798,115 | 4,421,928 |
| Note<br>payable | (13,564) | - |
| Preferred<br>dividend distribution | (100,050) | (66,734) |
| Deferred<br>issuance costs | - | 45,368 |
| Cash provided by<br>financing activities | 15,684,500 | 4,400,562 |
| Net increase<br>(decrease) in cash | 13,939,168 | (1,028,656) |
| Cash and cash<br>equivalents, beginning of period | 14,824,644 | 4,689,966 |
| Cash<br>and cash equivalents, end of period | $28,763,812 | $3,661,310 |
Supplemental Disclosures of Cash Flow Information:
| Three Months<br>ended December 31, | Three Months<br>Ended December 31, | |
|---|---|---|
| 2020 | 2019 | |
| Cash Payments<br>for: | ||
| Interest<br>expense | $3,672 | $8,221 |
| Non-cash financial<br>activities: | ||
| Warrants issued to<br>underwriter | $254,950 | $178,513 |
cbdMD, Inc.
SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM OPERATIONS
(Unaudited)
| GAAP (loss) from operations | $(1,759,945) | $(6,112,597) |
|---|---|---|
| Adjustments: | ||
| Depreciation | 232,806 | 113,251 |
| Employee<br>and director stock compensation (1) | 264,174 | 680,574 |
| Other<br>non-cash stock compensation for services (2) | 35,713 | 91,069 |
| Accrual<br>for severance | 403,412 | - |
| Accrual<br>/ expenses for discretionary bonus | 300,000 | 222,500 |
| Non-GAAP adjusted (loss) from operations | $(523,841) | $(5,005,203) |
(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.