cbdMD Reports Record First Quarter Fiscal 2020 Net Sales of $10.14 Million


Ryan Allway

February 16th, 2020

News, Top News


CHARLOTTE, N.C.–(BUSINESS WIRE)–cbdMD, Inc. (NYSE American: YCBD, YCBD PR A) (the “Company”), a leading cannabidiol (CBD) consumer brands company, reported today its first fiscal 2020 quarter ended December 31, 2019 results, the highlights of which were:

  • The Company reported record net sales of $10,148,236, a year-over-year quarterly increase of approximately 285% (which is based upon the pre-acquisition and post-acquisition net sales of the brand which the Company acquired in late December 2018).
  • The Company reported its net sales for the quarter were approximately 67% through its e-commerce channel and 33% through its retail brick and mortar channel.
  • The Company reported its gross profit margin as a percent of net sales were 63.5% as compared to 64.4% in prior year same period and an improvement from our last quarter ending September 30, 2019, which was 56.7%.
  • The Company reported a quarterly loss from operations of $6,112,598, of which approximately $965,000 was non-cash items. Total operating expenses related to marketing, advertising, sponsorship and affiliate commissions were approximately $5 million for the quarter, of which $1.2 million was an accelerated license fee for the Life Time Fitness Agreement.
  • The Company reported a $16,898,006 decrease in the Company’s non-cash contingent liability and net income before provision for income tax of $10,730,665.
  • The Company reported net income for the first quarter of fiscal 2020 of $12,863,029 or $0.45 cents per diluted share.
  • The Company reported $3,661,210 in cash at December 31, 2019, which gave no effect to the subsequent follow-on firm commitment common stock offering which resulted in approximately $16.9 million of net proceeds on January 14, 2020.

“cbdMD is reporting another record quarter of revenue growth, we are fully financed and expect to achieve cash flow breakeven by the end of this fiscal year. In calendar 2019, our first full year of CBD sales, we generated over $33 million in total net sales, which was well ahead of our initial expectations of $20 million. We believe that we have built two of the leading CBD brands in America, cbdMD and Paw CBD. While our common share price has been negatively impacted by the current investor sentiment in the cannabis sector, we believe we are a bright spot in the overall industry,” said Martin Sumichrast, Chairman and co-CEO of the Company.

“We continue to drive online sales through the use of various digital marketing tactics, athlete and major league partnerships, and high traffic affiliate programs. Currently we have over 222,000 active e-commerce subscribers, an increase of over 10% since last quarter. On the brick and mortar side of our business, we are growing the amount of retail stores who currently carry our brands. Our retail reach is now over 5,300 retail doors, an increase of over 1,000 doors since last quarter and we have also increased our international presence and are now currently selling to wholesale customers in 16 international markets, up from 10 last quarter,” continued Mr. Sumichrast.

“During calendar 2019, we invested heavily in brand development and acquiring brand building assets as well as our physical infrastructure with full scale manufacturing, distribution and warehousing facilities. During calendar 2020, our focus is on deploying and activating these assets while containing our overall advertising and marketing costs. We continue to invest in R&D and testing to ensure the safety and quality of our products. Every batch of finished goods are tested with a full panel by an ISO certified testing laboratory to ensure the quality and purity, as well as to ensure we meet our label claims for potency, ” continued Mr. Sumichrast.

“Our brands have also received leading brand recognition in the CBD industry. In July, 2019, the Brightfield Group, one of the leading predictive analytics and market research firms for the legal CBD industry, named cbdMD a Top 10 domestic brand in two booming categories, Topicals and Skincare/Beauty. In November 2019, in a newly released survey conducted by Brightfield of more than 3,500 CBD users, cbdMD ranked the highest in terms of overall consumer satisfaction as well as the highest in unaided consumer awareness of any of the top 20 CBD brands. In the animal health side of our business, Paw CBD was recently ranked by the Brightfield Group as one of the top five brands in the animal CBD market. Most recently, we announced a plan to start a joint venture with holistic pet foods leader Halo, Purely for Pets® (“Halo®”), a premium, natural pet food brand with a rich 30-year operating history,” added Mr. Sumichrast.

CONFERENCE CALL DETAILS

Thursday, February 13, 2020, 4:15 p.m. Eastern Time

Domestic:

1-844-602-0380

International:

1-862-298-0970

Replay dial in – Available through January 18, 2020

Domestic:

1-877-481-4010

International:

1-919-882-2331

Replay ID:

56986

Webcast Replay link – available through March 18, 2020:

https://www.investornetwork.com/event/presentation/56986

About cbdMD, Inc.

cbdMD, Inc. (NYSE American: YCBD and NYSE American: YCBD PR A) owns and operates the nationally recognized consumer cannabidiol (CBD) brand cdbMD, whose current products include CBD gummies, CBD tinctures, CBD topical, CBD bath bombs, CBD oils and CBD pet products. cbdMD, Inc. is a nationally recognized consumer cannabidiol (CBD) brand whose current products include CBD tinctures, CBD gummies, CBD topicals, CBD bath bombs, and CBD pet products. cbdMD is also the proud partner with the Big 3 Basketball League, Barstool Sports, Bellator MMA, (a subsidiary of Viacom: NASDAQ:VIA), Life Time Fitness and Nitro Circus. To learn more about cbdMD, Inc. and our comprehensive line of over 100 SKU’s of U.S. produced, THC-free CBD products, please visit: www.cbdmd.com or follow cbdMD on Instagram and Facebook or visit one of the over 4,000 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 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, 2019 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.

cbdMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND SEPTEMBER 30, 2019

(Unaudited)

December 31,

September 30,

2019

2019

Assets

Current assets:

Cash and cash equivalents

$

3,661,310

$

4,689,966

Accounts receivable

670,182

1,425,697

Accounts receivable other

160,137

160,137

Accounts receivable – discontinued operations

875,331

1,080,000

Marketable securities

136,527

198,538

Investment other securities

600,000

600,000

Deposits

28,365

6,850

Merchant reserve

412,979

519,569

Inventory

5,307,217

4,301,586

Inventory prepaid

1,141,211

903,458

Deferred issuance costs

16,828

93,954

Prepaid software

187,220

206,587

Prepaid equipment deposits

868,589

868,589

Prepaid expenses and other current assets

808,275

688,104

Total current assets

14,874,171

15,743,035

Other assets:

Property and equipment, net

2,157,980

1,715,557

Operating lease assets

7,704,109

Deposits for facilities

755,383

754,533

Intangible assets, net

21,635,000

21,635,000

Goodwill

54,669,997

54,669,997

Total other assets

86,922,469

78,775,087

Total assets

$

101,796,640

$

94,518,122

cbdMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND SEPTEMBER 30, 2019

(continued)

(Unaudited)

December 31,

September 30,

2019

2019

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable

$

3,625,073

$

3,021,271

Accrued expenses

531,958

681,269

Operating leases – short term liabilities

1,044,611

Note payable

279,606

Customer deposit – related party

7,339

Total current liabilities

5,481,248

3,709,878

Long term liabilities:

Long term liabilities

363,960

Note payable

182,975

Operating leases – long term liabilities

6,906,193

Contingent liability

33,701,994

50,600,000

Deferred tax liability

2,240,300

Total long term liabilities

40,791,162

53,204,260

Total liabilities

46,272,410

56,914,138

cbdMD, Inc. shareholders’ equity:

Preferred stock, authorized 50,000,000 shares, $0.001 par value, 500,000 and 0 shares issued and outstanding, respectively

500

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

27,720,356 and 27,720,356 shares issued and outstanding, respectively

27,720

27,720

Additional paid in capital

102,256,769

97,186,524

Accumulated deficit

(46,760,759

)

(59,610,260

)

Total cbdMD, Inc. shareholders’ equity

55,524,230

37,603,984

Total liabilities and shareholders’ equity

$

101,796,640

$

94,518,122

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018

(Unaudited)

Three months

Three months

Ended

Ended

December 31,

2019

December 31,

2018

Sales

$

10,412,491

$

683,730

Sales related party

Total Gross Sales

10,412,491

683,730

Allowances

(264,255

)

(218,042

)

Net sales

10,148,236

465,687

Net sales related party

Total Net Sales

10,148,236

465,687

Cost of sales

3,700,537

165,492

Gross Profit

6,447,699

300,196

Operating expenses

12,560,297

1,391,812

Income (Loss) from operations

(6,112,598

)

(1,091,617

)

Realized and Unrealized gain (loss) on marketable securities

(62,010

)

Decrease of contingent liability

16,898,006

Interest income

7,267

37,686

Income (loss) before provision for income taxes

10,730,665

(1,053,931

)

Benefit for income taxes

2,240,300

133,000

Net Income (Loss) from continuing operations

12,970,965

(920,931

)

Net Loss from discontinued operations, net of tax (Note 15)

(41,202

)

(1,268,111

)

Net Income (Loss)

12,929,763

(2,189,042

)

Net Loss attributable to non-controlling interest from discontinued operations (Note 15)

(79,149

)

Preferred dividends

66,734

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

$

12,863,029

$

(2,109,893

)

Net Income (Loss) per share:

Basic earnings per share

$

0.46

$

(0.21

)

Diluted earnings per share

0.45

Weighted average number of shares Basic:

27,720,356

10,052,960

Weighted average number of shares Diluted:

28,553,856

10,052,960

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018

(Unaudited)

Three months

Three months

Ended

Ended

December 31,

2019

December 31,

2018

Net Income (Loss)

$

12,929,763

$

(2,189,042

)

Other Comprehensive Income:

Continued operations – Net Unrealized Gain (Loss) on Marketable Securities, net of tax

Comprehensive Income (Loss)

12,929,763

(2,189,042

)

Comprehensive Income (loss) attributable to non-controlling interest

(79,149

)

Preferred dividends

(66,734

)

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

$

12,863,029

$

(2,109,893

)

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018

(unaudited)

Three Months Ended
December 31,

Three Months Ended
December 31,

2019

2018

Cash flows from operating activities:

Net income (loss)

$

12,929,763

$

(2,189,042

)

Adjustments to reconcile net income (loss) to net

cash used by operating activities:

Stock based compensation

542,574

143,673

Restricted stock expense

138,000

Impairment on discontinued operations asset

38,002

Depreciation and amortization

113,252

64,414

Gain on settlement of Note

(20,000

)

Increase/(Decrease) in contingent liability

(16,898,006

)

Realized and unrealized loss of marketable securities

62,011

1,578,976

Non-cash lease expense

382,432

Non-cash consideration received for services

(407,500

)

Changes in operating assets and liabilities:

Accounts receivable

755,515

(113,629

)

Accounts receivable – related party

204,902

Other accounts receivable

(8,865

)

Note receivable

(6,000

)

Note receivable – related party

156,147

Deposits

(22,365

)

Merchant reserve

106,590

(25,090

)

Inventory

(1,005,631

)

(13,833

)

Prepaid inventory

(237,753

)

Prepaid expenses and other current assets

(100,803

)

184,300

Marketable securities

174,327

Accounts payable and accrued expenses

454,490

(329,680

)

Operating lease liability

(318,758

)

Note payable

268,115

(308,627

)

Deferred revenue / customer deposits

(7,339

)

(114,375

)

Cash provided by discontinued operations

166,667

Deferred tax liability

(2,240,300

)

(133,000

)

Cash used by operating activities

(4,873,544

)

(1,162,902

)

Cash flows from investing activities:

Net cash used for merger

(1,177,669

)

Purchase of intangible assets

(79,999

)

Purchase of property and equipment

(555,674

)

(9,925

)

Cash used by investing activities

(555,674

)

(1,267,593

)

Cash flows from financing activities:

Proceeds from issuance of common stock

6,356,997

Proceeds from issuance of preferred stock

4,421,928

Preferred dividend distribution

(66,734

)

Deferred issuance costs

45,368

(177,521

)

Cash provided by financing activities

4,400,562

6,179,476

Net increase (decrease) in cash

(1,028,656

)

3,748,981

Cash and cash equivalents, beginning of period

4,689,966

4,282,553

Cash and cash equivalents, end of period

$

3,661,310

$

8,031,534

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018

(unaudited) (continued)

Supplemental Disclosures of Cash Flow Information:

Three Months ended
December 31,

Three Months Ended
December 31,

2019

2018

Cash Payments for:

Interest expense

$

8,221

$

203

Non-cash financial activities:

Warrants issued to secondary selling agent

$

178,513

$

86,092

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

$

$

1,352,000

Contacts

Investors:
John Weston
Director of Investor Relations
[email protected]
704-249-9515

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

Ryan Allway

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.


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