EX-99.1 2 ycbd_ex991.htm PRESS RELEASE Blueprint
  Exhibit 99.1
 
cbdMD Reports Q3 Net Sales Increase 42% Sequentially to Over $8 Million
 
Company Provides Guidance of $24M-$26M in Net Sales for Fiscal Year Ending September 2019
 
Company Provides Guidance of $80M-$90M in Net Sales for Fiscal Year Ending September 2020
 
CHARLOTTE, N.C.—August 14, 2019—(BUSINESS WIRE)--cbdMD, Inc. (NYSE American: YCBD), reported today that in its fiscal quarter ended June 30, 2019, the company generated total net sales of $8,044,000 up 42% sequentially from the March 31, 2019 quarter and over 500% from the June 30th, 2018 quarter, (which was prior to the December, 2018 acquisition of the brand).
 
FINANCIAL HIGHLIGHTS:
 
●
Total net sales in the quarter ended June 30, 2019 were $8,044,336 up 42% sequentially from the March 31, 2019 quarter and over 500% from the June 30th, 2018 quarter (which was prior to the December, 2018 acquisition of the brand). Total gross sales in the quarter ended June 30, 2019 were $9,784,199 million and allowances for the quarter were $1,739,863.
 
●
Gross profit was $5.1 million in the third quarter ended June 30, 2019, representing a margin of 63% of net sales, in line with gross margins reported in the March 31, 2019 quarter.
 
●
Working capital increased to $19.8 million at June 30, 2019, up from working capital of $12.3 million at March 31, 2019. Cash on hand was $11.6 million as of June 30, 2019.
 
●
Ecommerce sales platform generated approximately 60% of net sales.
 
●
Retail store count grew to over 3,000 doors from approximately 600 in December 2018.
 
●
The loss from operations for the quarter was $8,260,000 of which $2.1 million was a non cash, impairment charge of intangible assets related to the prior licensing and brand management businesses (IM1 and EE1) and $2 million was a non-cash charge related to stock option expenses.
 
●
The fully diluted net loss for the quarter was $1.19 per share or $27.7 million of which 78% or $21.5 million was attributed to the change in the value of the contingent liability related to acquisition of the cbdMD brand. The change in value was primarily related to the increase in the company’s stock price during the June quarter.
 
cbdMD, Inc. also announced net sales guidance:
●
Fiscal year ending September 2019, net sales guidance of $24 million to $26 million.
 
●
Fiscal year ending September 2020, net sales guidance of $80 million to $90 million.
 
“Our strong third quarter results place us in a great position to exceed established revenue targets for the first year of operations for cbdMD,” stated Martin A. Sumichrast, Chairman and co-CEO of cbdMD. “Moreover, we believe we are now on track to reach the five-year earn-out hurdle of $300 million in aggregate net revenue by the end of calendar 2021, full two years ahead of schedule.”
 
 
 
 
“We’ve increased the number of locations cbdMD products are available in by 500% since the acquisition of the brand last December, and with the building momentum of retailer acceptance subsequent to the passage of the Farm Bill, we are pursuing every opportunity available to us vigorously as we continue to work to build cbdMD into the top recognized brand in the industry,” continued Sumichrast.
 
“To secure our leadership position in the CBD industry and create a truly world-class brand in one of the most exciting market opportunities globally, we continue to strategically invest in growing valuable partnerships and sponsorships with world-class athletes that resonate with our customers. In the June quarter we signed several significant sponsorships, including professional golfer and 12-time PGA Tour winner Bubba Watson, Ice Cube’s Big 3 basketball league, Bellator MMA, and Nitro Circus,” stated Scott Coffman, founder of the brand and co-CEO of cbdMD.
 
“We believe our sponsorship initiatives really set us apart as we seek to grow market share. While many of our peers continue to see challenges in the restrictive advertising environment surrounding CBD, we believe we’ve created a strong competitive advantage that puts our brand in front of tens of millions of potential consumers globally. We’re applying this same approach to our newly launched pet brand “Paw CBD” and anticipate great results from these efforts as we move forward. Overall, I couldn’t be prouder of what our team has accomplished since the merger and look forward to sharing ongoing successes with our shareholders in the months and quarters ahead,” concluded Sumichrast.
 
CONFERENCE CALL DETAILS
 
Wednesday, August 14, 2019, 4:15 p.m. Eastern Time
 
Domestic:
1-844-407-9500
International:
1-862-298-0850
 
Replay dial in – Available through September 14, 2019
 
 
Domestic:
1-877-481-4010
International:
1-919-882-2331
Replay ID:
53043
 
Webcast Replay link – available through November 14, 2019:
https://www.investornetwork.com/event/presentation/53043
 
About cbdMD, Inc.
 
cbdMD, Inc. (NYSE American: YCBD) owns and operates the nationally recognized consumer cannabidiol (CBD) brand cbdMD whose current products include CBD tinctures, CBD gummies, CBD topical, CBD bath bombs, CBD oils, and CBD pet products. The company also operates licensing and corporate brand management businesses as well as the products division.
 
 
 
 
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, 2018 as filed with the Securities and Exchange Commission (the "SEC") on December 12, 2018, our Quarterly Report on Form 10-Q for the period ended June 30, 2019 as filed with the SEC on August 14, 2019 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.
 
Contact:
 
Investors:
 
John Weston
Director of Investor Relations
john.weston@cbdmd.com
704-249-9515
 
RedChip Companies
Craig Brelsford
craig@redchip.com
407-644-4256
 
 
 
 
cbdMD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2019 AND SEPTEMBER 30, 2018
 
 
 
 
(Unaudited)
 
 
 
 
 
 
June 30,
 
 
September 30,
 
 
 
2019
 
 
2018
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
  Cash and cash equivalents
 $11,633,213 
 $4,282,553 
  Accounts receivable
  562,800 
  307,874 
  Accounts receivable - related party
  1,103,628 
  1,537,863 
  Accounts receivable other
  276,795 
  1,743,874 
  Deposits
  6,850 
  - 
  Merchant reserve
  626,160 
  - 
  Marketable securities
  880,132 
  1,050,961 
  Investment other securities
  1,159,112 
  1,159,112 
  Note receivable
  486,000 
  459,000 
  Note receivable - related party
  - 
  156,147 
  Inventory
  3,116,458 
  123,223 
  Inventory prepaid
  643,649 
  - 
  Deferred issuance costs
  - 
  28,049 
  Prepaid consulting agreement
  - 
  200,000 
  Prepaid rent
  60,000 
  180,000 
  Prepaid services with stock
  198,000 
  - 
  Prepaid equipment - deposit
  889,673 
  - 
  Prepaid expenses and other current assets
  543,607 
  561,491 
Total current assets
  22,186,077 
  11,790,147 
 
    
    
Other assets:
    
    
  Property and equipment, net
  1,016,757 
  53,480 
  Goodwill
  55,133,697 
  - 
  Intangible assets, net
  22,572,097 
  3,173,985 
Total other assets
  78,722,551 
  3,227,465 
 
    
    
Total assets
 $100,908,628 
 $15,017,612 
 
 
 
 
cbdMD, INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2019 AND SEPTEMBER 30, 2018
(continued)
 
 
 
(Unaudited)
 
 
 
 
 
 
June 30,
 
 
September 30,
 
 
 
2019
 
 
2018
 
Liabilities and shareholders' equity
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
  Accounts payable
 $1,886,395 
 $473,717 
  Accounts payable - related party
  - 
  7,860 
  Deferred revenue
  4,585 
  161,458 
  Customer deposit - related party
  34,404 
  - 
  Accrued payroll
  326,537 
  - 
  Accrued expenses
  77,985 
  6,920 
  Accrued expenses - related party
  - 
  320,000 
Total current liabilities
  2,329,906 
  969,955 
 
    
    
Long term liabilities
    
    
  Other long term liabilities
  - 
  7,502 
  Contingent liability
  70,600,000 
  - 
  Deferred tax liability
  2,833,000 
  21,000 
Total long term liabilities
  73,433,000 
  28,502 
 
    
    
Total liabilities
  75,762,906 
  998,457 
 
    
    
cbdMD, Inc. shareholders' equity (deficit):
    
    
Preferred stock, authorized 50,000,000 shares, $0.001 par value, no shares issued and outstanding
  - 
  - 
Common stock, authorized 150,000,000 shares, $0.001 par value,
    
    
  27,720,356 and 8,123,928 shares issued and outstanding, respectively
  27,720 
  8,124 
Additional paid in capital
  96,130,158 
  21,781,095 
Accumulated other comprehensive income (loss)
  - 
  (2,512,539)
Accumulated deficit
  (70,782,736)
  (6,669,497)
Total cbdMD, Inc. shareholders' equity
  25,375,142 
  12,607,183 
Non-controlling interest
  (229,420)
  1,411,972 
Total shareholders' equity
  25,145,722 
  14,019,155 
 
    
    
Total liabilities and shareholders' equity
 $100,908,628 
 $15,017,612 
 
    
    
 
 
 
 
cbdMD, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2019 AND 2018
(Unaudited)
 
 
 
Three months
 
 
Three months
 
 
Nine months
 
 
Nine months
 
 
 
Ended
 
 
Ended
 
 
Ended
 
 
Ended
 
 
 
June 30,
2019
 
 
June 30,
2018
 
 
June 30,
2019
 
 
June 30,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales
 $9,784,199 
 $1,851,116 
 $19,042,098 
 $5,440,653 
Sales related party
  - 
  1,350,000 
  - 
  1,550,000 
Total Gross Sales
  9,784,199 
  3,201,116 
  19,042,098 
  6,990,653 
 Allowances
  (1,739,863)
  (2,686)
  (4,075,381)
  (23,558)
    Net sales
  8,044,336 
  1,848,430 
  14,966,717 
  5,417,095 
  Net sales related party
  - 
  1,350,000 
  - 
  1,550,000 
Total Net Sales
  8,044,336 
  3,198,430 
  14,966,717 
  6,967,095 
   Cost of sales
  2,959,198 
  1,106,706 
  5,584,868 
  1,858,651 
 
    
    
    
    
   Gross Profit
  5,085,138 
  2,091,724 
  9,381,849 
  5,108,444 
 
    
    
    
    
Operating expenses excluding impairment losses
  11,230,914 
  1,464,239 
  18,680,857 
  4,089,006 
Impairment of intangible assets
  2,114,334 
  - 
  2,114,334 
  - 
     Operating expenses
  13,345,248 
  1,464,239 
  20,795,190 
  4,089,006 
  Income (Loss) from operations
  (8,260,110)
  627,485 
  (11,413,341)
  1,019,438 
    Realized and Unrealized gain (loss) on marketable securities
  (497,451)
  - 
  (1,705,069)
  - 
     (Increase) of contingent
       liability
  (21,547,606) )
  - 
  (52,461,680)
  - 
     Gain (loss) on disposal of property and equipment
  - 
  - 
  (34,333)
  (69,311)
   Interest income (expense)
  14,211 
  (232)
  76,330 
  (737)
  Income (loss) before provision for income taxes
  (30,290,956)
  627,253 
  (65,538,093)
  949,390 
 
    
    
    
    
  Benefit (Provision) for income taxes
  1,088,000 
  (62,000)
  2,296,000 
  (6,000)
   Net Income (Loss)
  (29,202,956)
  565,253 
  (63,242,093)
  943,390 
  Net Gain (Loss) attributable to noncontrolling interest
  (1,503,707)
  359,179 
  (1,641,391)
  465,848 
 
    
    
    
    
Net Income (Loss) attributable to cbdMD, Inc. common shareholders
 $(27,699,249)
 $206,074 
 $(61,600,702)
 $477,542 
 
    
    
    
    
Net Income (Loss) per share:
    
    
    
    
  Basic
 $(1.19)
 $0.03 
 $(4.22)
 $0.06 
  Diluted
 $- 
 $0.03 
 $- 
 $0.06 
 
    
    
    
    
 Weighted average number of shares Basic:
  23,193,793 
  8,075,341 
  14,585,619 
  7,614,621 
 Weighted average number of shares Diluted:
    
  8,092,931 
    
  7,637,012 
 
 
 
 
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2019 AND 2018
(unaudited)
 
 
 
Nine Months Ended June 30,
 
 
Nine Months Ended June 30,
 
 
 
2019
 
 
2018
 
Cash flows from operating activities:
 
 
 
 
 
 
Net loss
 $(63,242,093)
 $943,390 
Adjustments to reconcile net loss to net
    
    
  cash used by operating activities:
    
    
  Stock based compensation
  2,022,812 
  386,719 
  Restricted stock expense
  92,000 
  39,100 
  Issuance of stock / warrants for service
  289,750 
  478,002 
  Intangible impairment
  2,114,334 
  - 
  Inventory impairment
  - 
  102,124 
  Depreciation and amortization
  272,121 
  169,788 
  Gain on settlement of Note
  (20,000)
  - 
  Increase/(Decrease) in contingent liability
  52,461,680 
  - 
  Realized and unrealized loss of marketable securities
  1,705,069 
  - 
  Loss on sale of property and equipment
  - 
  69,311 
  Non-cash consideration received for services
  (470,000)
  (3,404,502)
Changes in operating assets and liabilities:
    
    
  Accounts receivable
  399,074 
  (45,502)
  Accounts receivable – related party
  204,902 
  (637,675)
  Other accounts receivable
  (298,754)
  (1,204,003)
  Other accounts receivable – related party
    
  236,364 
  Note receivable
  (27,000)
  (450,000)
  Note receivable – related party
  156,147 
  114,802 
  Merchant reserve
  (199,907)
  - 
  Inventory
  (2,581,958)
  10,340 
  Prepaid expenses and other current assets
  (717,894)
  (980,952)
  Marketable securities
  701,593 
  - 
  Accounts payable and accrued expenses
  1,073,211 
  (324,785)
  Accounts payable and accrued expenses – related party
  (313,591)
  (470,905)
  Deferred revenue / customer deposits
  (380,804)
  121,916 
  Deferred tax liability
  (2,296,000)
  6,000 
Cash used by operating activities
  (9,055,308)
  (4,840,368)
 
    
    
Cash flows from investing activities:
    
    
   Net cash used for merger
  (1,167,295)
  - 
   Purchase of investment other securities
  - 
  (300,000)
   Purchase of intangible assets
  (79,999)
  (360,000)
   Purchase of property and equipment
  (359,421)
  (2,465)
Cash used by investing activities
  (1,606,715)
  (662,465)
 
    
    
Cash flows from financing activities:
    
    
   Proceeds from issuance of common stock
  19,009,897 
  10,927,535 
   Note Payable – related party
  (764,300)
  - 
   Deferred issuance costs
  (232,914)
  (285,086)
Cash provided by financing activities
  18,012,683 
  10,642,449 
Net increase (decrease) in cash
  7,350,660 
  5,139,616 
Cash and cash equivalents, beginning of period
  4,282,553 
  284,246 
Cash and cash equivalents, end of period
 $11,633,213 
 $5,423,862 
 
 
 
 
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2019 AND 2018
(unaudited) (continued)
 
Supplemental Disclosures of Cash Flow Information:
 
 
 
Nine Months ended June 30,
 
 
Nine Months Ended June 30,
 
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
Cash Payments for:
 
 
 
 
 
 
    Interest expense
 $36,418 
 $505 
 
    
    
Non-cash financial activities:
    
    
Warrants issued to secondary selling agent
 $309,592 
 $171,600 
Equity investment exchange to be issued in the future
 $- 
 $160,000 
Stock received for prior period services, adjusted for other accounts receivable write down prior to receipt
 $1,352,000 
 $- 
Adoption of ASU 2016-01
 $2,512,539 
 $-