cbdMD Reports First Quarter Fiscal 2021 ResultsPosted by On



CHARLOTTE, N.C.–()–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 First Quarter 2021 Earnings Call

Event Date:

Tuesday, February 9, 2021 – 4:15 PM Eastern Time

Event Link:

Webcast URL

https://www.webcaster4.com/Webcast/Page/2206/39768

Webcast Replay Expiration:

Wednesday, February 9, 2022

Participant Numbers:

Toll Free: 888-506-0062

International: 973-528-0011

Entry code (not required): 117414

Replay Number:

Toll Free: 877-481-4010

International: 919-882-2331

Replay Passcode: 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, 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 and Paw CBD products.

1 THC-free 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.

cbdMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND SEPTEMBER 30, 2020

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

2020

2020

Assets

 

Current assets:

Cash and cash equivalents

$ 28,763,812

$ 14,824,644

Accounts receivable

1,021,554

911,482

Accounts receivable – discontinued

operations

 

 

 

 

 

 

24,717

 

447,134

Marketable securities

 

 

 

 

 

 

29,181

 

26,472

Investment other securities

 

 

 

 

 

 

250,000

 

250,000

Deposits

 

 

 

 

 

 

 

 

 

40,198

Inventory

4,383,501

4,603,360

Inventory prepaid

 

 

 

 

 

 

 

 

336,362

 

288,178

Prepaid software

 

 

 

 

 

174,308

Prepaid equipment deposits

 

 

 

 

 

40,197

Prepaid sponsorship

 

 

 

 

1,069,600

 

1,203,300

Prepaid expenses and other current assets

1,496,721

902,979

Total current assets

37,375,449

23,712,252

 

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

 

 

Property and equipment, net

3,084,321

3,183,487

Operating lease assets

 

 

 

 

 

 

6,547,278

 

6,851,357

Deposits for facilities

 

 

 

 

 

 

766,708

 

790,708

Intangible assets, net

21,635,000

21,635,000

Goodwill

 

 

 

 

 

 

 

54,669,997

 

54,669,997

Total other assets

86,703,304

87,130,549

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$ 124,078,753

$ 110,842,801

CONDENSED CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND SEPTEMBER 30, 2019

(continued)

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

 

 

 

 

 

 

 

 

2020

 

2020

Liabilities and shareholders’ equity

 

Current liabilities:

Accounts payable

$ 2,174,529

$ 2,850,421

Deferred revenue

 

 

 

 

 

 

 

22,440

 

45,141

Accrued expenses

 

 

 

 

 

 

 

2,301,154

 

2,724,779

Operating leases – current portion

 

 

 

 

 

 

 

1,242,608

 

1,159,098

Paycheck Protection Program loan, current

portion

 

 

 

 

 

 

 

939,826

 

854,000

Note payable

 

 

 

 

 

 

 

56,573

 

55,639

Total current liabilities

6,737,130

7,689,078

 

Long term liabilities:

 

 

 

 

 

 

 

 

Long term liabilities

 

 

 

 

 

 

264,367

Note payable

 

 

 

 

 

153,957

 

Paycheck Protection Program loan

 

 

 

 

 

516,274

 

602,100

Operating leases – long term portion

 

 

 

 

 

5,688,746

 

6,010,208

Contingent liability

 

 

 

 

 

24,700,000

 

16,200,000

Deferred tax liability

 

 

 

 

 

563,000

 

895,300

Total long term liabilities

 

 

 

 

 

31,621,977

 

23,971,675

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

 

38,359,107

 

31,660,753

 

 

 

 

 

 

 

 

 

cbdMD, Inc. shareholders’ equity:

Preferred stock, authorized 50,000,000 shares, $0.001

par value, 2,800,000 and 500,000 shares issued

and outstanding, respectively

2,800

500

Common stock, authorized 150,000,000 shares, $0.001

par value,

52,130,870 and 52,130,870 shares issued and

outstanding, respectively

52,131

52,131

Additional paid in capital

142,548,752

126,517,784

Accumulated deficit

(56,884,037)

(47,388,367)

Total cbdMD, Inc. shareholders’ equity

85,719,646

79,182,048

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$ 124,078,753

$ 110,842,801

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019

 

 

 

 

Three months

 

 

Three months

 

 

 

 

Ended

 

 

Ended

 

 

 

 

December 31,

2020

 

 

December 31,

2019

 

 

 

 

 

 

 

 

 

Gross Sales

 

 

$

13,131,946

 

 

$

10,412,491

 

Allowances

 

 

 

(803,643

)

 

 

(264,255

)

Total Net Sales

 

 

 

12,328,303

 

 

 

10,148,236

 

Cost of sales

 

 

 

3,430,274

 

 

 

3,700,537

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

8,898,028

 

 

 

6,447,699

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

10,657,973

 

 

 

12,560,297

 

(Loss) from operations

 

 

 

(1,759,945

)

 

 

(6,112,598

)

Realized and Unrealized gain (loss) on marketable &

other securities

 

 

 

542,710

 

 

 

(62,010

)

(Increase) decrease of contingent liability

 

 

 

(8,500,000)

 

 

 

16,898,006

 

Interest (expense) income

 

 

 

(10,386

)

 

 

7,267

 

Income (loss) before provision for income taxes

 

 

 

(9,727,621)

 

 

 

10,730,665

 

 

 

 

 

 

 

 

 

 

 

Benefit for income taxes

 

 

 

332,000

 

 

2,240,300

Net (Loss) Income from continuing operations

 

 

 

(9,395,621)

 

 

 

12,970,965

 

Net (Loss) from discontinued operations, net of

tax (Note 13)

 

 

 

 

 

 

(41,202

)

Net (Loss) Income

 

 

 

(9, 395,621)

 

 

 

12,929,763

 

Preferred dividends

 

 

 

100,050

 

 

 

66,734

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income attributable to cbdMD, Inc.

common shareholders

 

 

$

(9,495,671

)

 

$

12,863,029

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income per share:

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

$

(0.18)

 

$

0.46

Diluted earnings per share

 

 

 

(0.18)

 

 

 

0.45

 

Weighted average number of shares Basic:

 

 

 

52,130,870

 

 

 

27,720,356

 

Weighted average number 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 months

 

 

Three

months

 

 

 

 

Ended

 

 

Ended

 

 

 

 

December 31,

2020

 

 

December

31,

2019

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income

 

$

(9,395,621)

 

 

$

12,929,763

Comprehensive (Loss) Income

 

 

(9,395,621)

 

 

 

12,929,763

 

 

 

 

 

 

 

 

 

 

Preferred dividends

 

 

(100,050)

 

 

 

(66,734

)

Comprehensive (Loss) Income attributable to

cbdMD, Inc. common 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

Ended

December 31,

 

Three Months

Ended

December 31,

 

2020

 

2019

Cash flows from operating activities:

  

Net (Loss) Income

 

 

(9,395,621

)

 

$

12,929,763

 

Adjustments to reconcile net (income) loss to net

  

cash used by operating activities:

  

Stock based compensation

 

 

248,894

 

 

 

542,574

 

Restricted stock expense

 

 

15,279

 

 

 

138,000

 

Issuance of stock / warrants for service

 

 

35,712

 

 

 

 

Impairment on discontinued operations asset

 

 

 

 

 

38,002

 

Depreciation and amortization

 

 

232,658

 

 

 

113,252

 

Increase/(Decrease) in contingent liability

 

 

8,500,000

 

 

 

(16,898,006

)

Realized and unrealized loss of marketable and other securities

 

 

(542,709

)

 

 

62,011

 

Termination benefit

 

 

305,326

 

 

 

 

Non-cash lease expense

 

 

304,080

 

 

 

382,432

 

Changes in operating assets and liabilities:

  

Accounts receivable

 

 

(110,072

)

 

 

755,515

 

Deposits

 

 

24,000

 

 

 

(22,365

)

Merchant reserve

 

 

 

 

 

106,590

 

Inventory

 

 

219,859

 

 

 

(1,005,631

)

Prepaid inventory

 

 

(48,184

)

 

 

(237,753

)

Prepaid expenses and other current assets

 

 

(310,268

)

 

 

(100,803

)

Accounts payable and accrued expenses

 

 

(1,500,755

)

 

 

454,490

 

Operating lease liability

 

 

(237,952

)

 

 

(318,758

)

Note payable

 

 

 

 

 

268,115

 

Deferred revenue / customer deposits

 

 

(22,701

)

 

 

(7,339

)

Collection on discontinued operations accounts receivable

 

 

422,417

 

 

 

166,667

 

Deferred tax liability

 

 

(332,000

)

 

 

(2,240,300

)

Cash used by operating activities

 

 

(2,192,038

)

 

 

(4,873,544

)

   

Cash flows from investing activities:

  

Proceeds from sale of other investment securities

 

 

540,000

 

 

 

 

Purchase of property and equipment

 

 

(93,294

)

 

 

(555,674

)

Cash provided (used) by investing activities

 

 

446,706

 

 

 

(555,674

)

   

Cash flows from financing activities:

  

Proceeds from issuance of preferred stock

 

 

15,798,115

 

 

 

4,421,928

 

Note payable

 

 

(13,564

)

 

 

 

Preferred dividend distribution

 

 

(100,050

)

 

 

(66,734

)

Deferred issuance costs

 

 

 

 

 

45,368

 

Cash provided by financing activities

 

 

15,684,500

 

 

 

4,400,562

 

Net increase (decrease) in cash

 

 

13,939,168

 

 

 

(1,028,656

)

Cash and cash equivalents, beginning of period

 

 

14,824,644

 

 

 

4,689,966

 

Cash and cash equivalents, end of period

 

$

28,763,812

 

 

$

3,661,310

 

   
Supplemental Disclosures of Cash Flow Information:   
   
 

Three Months

ended

December 31,

2020

 

Three Months

ended

December 31,

2019

   
Cash Payments for:   
Interest expense 

$

3,672

 

 

 $

8,221

 

   
Non-cash financial activities: 

$

254,950

 

 

 $

178,513

 

Warrants issued to underwriter   
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 and director stock compensation (1)

264,174

680,574

Other non-cash stock compensation for services (2)

35,713

91,069

Accrual for severance

403,412

Accrual / 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.





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