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EX-99.2 - SCRIPT OF MANAGEMENT PRESENTATION - cbdMD, Inc. | ycbd_ex992.htm |
8-K - CURRENT REPORT - cbdMD, Inc. | ycbd_8k.htm |
Exhibit
99.1
cbdMD Reports Record First Quarter Fiscal 2020 Net Sales of $10.14
Million
CHARLOTTE,
N.C.—February 13, 2020—(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.
1
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.
Contact:
Investors:
John
Weston
Director
of Investor Relations
john.weston@cbdmd.com
704-249-9515
2
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
|
3
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
|
4
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
|
5
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)
|
6
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
|
7
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
|
8