Positive Near-Term Sales Trend Expected, Significant Operational Adjustments Implemented
cbdMD, Inc. (NYSE American: YCBD) (NYSE American: YCBDpA), one of the nation's leading and most highly trusted and recognized CBD companies, and operator of three of the leading CBD brands -- its flagship brand cbdMD, its animal health brand Paw CBD and its beauty and skincare brand cbdMD Botanicals, -- today announced our financial results for March 31, 2022, as we generated $9.6 million in net sales or an increase of 3.3% sequentially.
'Sales trends have firmed-up and we expect an upward trajectory as we continue through calendar 2022. New sales and marketing strategies have been implemented and near-term results are showing promise. Our cost structure has been significantly adjusted which we believe will result in a reduction in future cost and expenses by over 25% or $10 million per year. Going forward, we expect that as our sales growth returns and as our infrastructure becomes more streamlined, our operational results should improve. Our goal is to maintain a cost structure which will yield a positive adjusted EBITDA at quarterly net sales which we achieved in our prior fiscal year. Since our CBD sales commenced in 2018, we have fulfilled over 1.5 million customer orders which have generated over $125 million in net sales. We believe that our premium brands provide a compelling customer experience at a competitive price point. Our expansion into new categories and markets show promise. We have had numerous regulatory and research and development achievements this past quarter which we believe will result in our brands mainstream acceptance as the regulatory climate codifies. Our market share continues to remain strong, and we are optimistic about our future,' said Martin Sumichrast, Chairman & co-CEO.
Financial Highlights from our March 31, 2022, Quarter:
Achievements from our March 31, 2022, Quarter:
We will host a conference call at 4:30 p.m., Eastern Time, on Friday, May 13, 2022, to discuss our March 31, 2022, second quarter financial results and business progress.
CONFERENCE CALL DETAILS
Friday, May 13, 2022, 4:30 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:
8972
Webcast/Webcast Replay link- available through May 13, 2023: https://www.gowebcasting.com/11834
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 as well as our new Full Spectrum 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 and Full Spectrum products, please visit www.cbdmd.com, follow cbdMD on Instagram and Facebook, or visit one of the thousands of retail outlets that carry cbdMD's 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 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 cost reductions, 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, 2021 as filed with the Securities and Exchange Commission (the 'SEC') on December 17, 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.
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.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2022 AND SEPTEMBER 30, 2021
(Unaudited)
March 31,
September 30,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
13,336,850
$
26,411,424
Accounts receivable
2,045,602
1,113,372
Accounts receivable - discontinued operations
1,375
10,967
Marketable securities
-
33,351
Investment other securities
1,000,000
1,000,000
Inventory
4,713,041
5,021,867
Inventory prepaid
519,128
551,519
Prepaid sponsorship
1,474,350
1,212,682
Prepaid expenses and other current assets
1,236,744
1,147,178
Total current assets
24,327,090
36,502,360
Other assets:
Property and equipment, net
2,334,619
2,561,574
Operating lease assets
5,025,669
5,614,960
Deposits for facilities
138,708
529,583
Intangible assets, net
18,389,258
23,003,929
Goodwill
42,772,685
56,670,970
Total other assets
68,660,939
88,490,016
Total assets
$
92,988,029
$
124,992,376
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2021 AND SEPTEMBER 30, 2021
(continued)
(Unaudited)
March 31,
September 30,
2022
2021
Liabilities and shareholders' equity
Current liabilities:
Accounts payable
$
2,746,837
$
2,978,914
Deferred revenue
1,840,797
2,727,612
Accrued expenses
1,136,018
1,151,150
Note payable
61,483
59,470
Total current liabilities
5,785,135
6,917,146
Long term liabilities:
Long term liabilities
77,732
108,985
Operating leases - long term portion
4,278,733
4,859,058
Contingent liability
2,823,000
9,856,000
Total long term liabilities
7,179,465
14,824,043
Total liabilities
12,964,600
21,741,189
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, 58,352,213 and 57,783,340 shares issued and outstanding, respectively
59,352
57,783
Additional paid in capital
179,116,064
176,417,269
Accumulated deficit
(99,156,987
)
(73,228,865
)
Total shareholders' equity
80,023,429
103,251,187
Total liabilities and shareholders' equity
$
92,988,029
$
124,992,376
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2022 AND 2021
Three Months
Three Months
Six Months
Six Months
Ended
Ended
Ended
Ended
March 31,
March 31,
March 31,
March 31,
2022
2021
2022
2021
Gross Sales
$
9,948,858
$
12,457,386
$
19,805,625
$
25,520,568
Allowances
(319,972
)
(658,775
)
(854,917
)
(1,393,654
)
Total Net Sales
9,628,886
11,798,611
18,950,708
24,126,914
Cost of sales
3,186,564
3,643,127
7,514,874
7,073,402
Gross Profit
6,442,322
8,155,484
11,435,834
17,053,512
Operating expenses
11,452,700
12,323,207
23,407,984
22,981,180
Impairment of Goodwill and other intangible assets
-
-
18,183,285
-
Loss from operations
(5,010,378
)
(4,167,723
)
(30,155,435
)
(5,927,668
)
Realized and Unrealized gain (loss) on marketable and other securities, including impairments
-
2,852
(33,352
)
545,562
Decrease (increase) of contingent liability
353,000
(8,871,000
)
6,303,000
(17,371,000
)
Other income (expense)
2,249
-
72,987
-
Interest (expense) income
(2,086
)
(10,603
)
(5,320
)
(20,990
)
Loss before provision for income taxes
(4,657,215
)
(13,046,474
)
(23,818,120
)
(22,774,096
)
Benefit for income taxes
-
536,000
-
868,000
Net Loss
(4,657,215
)
(12,510,474
)
(23,818,120
)
(21,906,096
)
Net Loss
(4,657,215
)
(12,510,474
)
(23,818,120
)
(21,906,096
)
Preferred dividends
1,000,500
560,280
2,001,002
660,330
Net Loss attributable to cbdMD, Inc. common shareholders
$
(5,657,715
)
$
(13,070,754
)
$
(25,819,122
)
$
(22,566,426
)
Net Loss per share:
Basic earnings per share
(0.10
)
(0.24
)
(0.44
)
(0.43
)
Diluted earnings per share
(0.10
)
(0.24
)
(0.44
)
(0.43
)
Weighted average number of shares Basic:
58,966,979
53,471,607
59,073,963
52,793,872
Weighted average number of shares Diluted:
58,966,979
53,471,607
59,073,963
52,793,872
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2022 AND 2021
Three Months
Three Months
Six Months
Six Months
Ended
Ended
Ended
Ended
March 31,
March 31,
March 31,
March 31,
2022
2021
2022
2021
Net (Loss) Income
$
(4,657,215
)
$
(12,510,474
)
$
(23,818,120
)
$
(21,906,096
)
Comprehensive (Loss) Income
(4,657,215
)
(12,510,474
)
$
(23,818,120
)
$
(21,906,096
)
Preferred dividends
(1,000,500
)
(560,280
)
$
(2,001,002
)
$
(660,330
)
Comprehensive (Loss) Income attributable to cbdMD, inc. common shareholders
$
(5,657,715
)
$
(13,070,754
)
$
(25,819,122
)
$
(22,566,426
)
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2022 and 2021
Six Months
Six Months
Ended
Ended
March 31,
March 31,
2022
2021
Cash flows from operating activities:
Net Loss
$
(23,818,120
)
$
(21,906,096
)
Adjustments to reconcile net (income) loss to net
cash used by operating activities:
Stock based compensation
797,096
451,527
Restricted stock expense
837,267
547,140
Marketing stock amortization
339,520
-
Issuance of stock / warrants for service
-
155,695
Inventory and materials impairment
878,142
-
Intangibles amortization
329,671
-
Depreciation
600,750
473,324
Impairment of Goodwill and other intangible assets
18,183,285
-
Increase/(Decrease) in contingent liability
(6,303,000
)
17,371,000
Realized and unrealized loss of Marketable and other securities
33,350
(5,562
)
Termination benefit
-
352,279
Amortization of operating lease asset
589,291
611,298
Changes in operating assets and liabilities:
Accounts receivable
(932,230
)
(936,983
)
Deposits
390,875
1,125
Inventory
(569,316
)
271,815
Prepaid inventory
32,391
(190,451
)
Prepaid expenses and other current assets
(354,752
)
44,408
Accounts payable and accrued expenses
(1,129,614
)
(1,366,373
)
Operating lease liability
(595,457
)
(540,664
)
Deferred revenue / customer deposits
10,723
(41,418
)
Collection on discontinued operations accounts receivable
9,592
424,917
Deferred tax liability
-
(868,000
)
Cash used by operating activities
(10,670,536
)
(5,151,019
)
Cash flows from investing activities:
Proceeds from sale of other investment securities
-
(750,000
)
Purchase of property and equipment
(373,795
)
(226,542
)
Cash provided (used) by investing activities
(373,795
)
(976,542
)
Cash flows from financing activities:
Proceeds from issuance of preferred stock
-
15,798,115
Note payable
(29,240
)
(123,268
)
Preferred dividend distribution
(2,001,002
)
(660,330
)
Cash provided by financing activities
(2,030,242
)
15,014,517
Net increase (decrease) in cash
(13,074,573
)
8,886,955
Cash and cash equivalents, beginning of period
26,411,424
14,824,644
Cash and cash equivalents, end of period
$
13,336,851
$
23,711,600
Supplemental Disclosures of Cash Flow Information:
2022
2021
Cash Payments for:
Interest expense
$
-
$
-
Non-cash financial activities:
Issuance of Contingent earnout shares:
$
730,000
$
11,271,000
Warrants issued to representative
$
-
$
254,950
cbdMD, Inc.
SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM OPERATIONS
Three Months
Three Months
Six Months
Six Months
Ended
Ended
Ended
Ended
March 31,
March 31,
March 31,
March 31,
2022
2021
2022
2021
GAAP (loss) from operations
$
(5,010,378
)
$
(4,167,723
)
$
(30,155,435
)
$
(5,927,668
)
Adjustments:
Depreciation
600,750
240,517
600,750
473,323
Employee and director stock compensation (1)
754,207
825,833
1,634,363
1,090,007
Other non-cash stock compensation for services (2)
-
33,358
-
69,071
Inventory adjustment (3)
-
-
878,142
-
Write down of legacy accounts receivable (4)
-
-
-
-
Impairment of goodwill and other intangible assets (5)
-
-
18,029,000
-
Accrual for severance
22,500
299,610
22,500
703,022
Accrual / expenses for discretionary bonus
-
-
150,000
300,000
Non-GAAP adjusted (loss) from operations
$
(3,632,921
)
$
(2,768,404
)
$
(8,840,680
)
$
(3,292,245
)
(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 operating expense related to inventory loss related to regulatory changes impacting labels and packaging and obsolete/expired inventory.(4) Write down of legacy accounts receivable.(5) Represents non-cash goodwill impairment of $13,898,285 and impairment of the cbdMD trademark of $4,285,000.
Contacts:
Investors:cbdMD, Inc.John WestonDirector of Investor Relationsjohn.weston@cbdmd.com (704) 249-9515
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Original Source of the original story >> cbdMD Reports Sequential Increase in Net Sales
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