UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported)
February 26,
2020
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cbdMD, INC.
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(Exact name of registrant as specified in its charter)
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North Carolina
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001-38299
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47-3414576
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(State or other jurisdiction of incorporation or
organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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8845 Red Oak Blvd, Charlotte, NC 28217
(Address of principal
executive offices)(Zip Code)
Registrant's
telephone number, including area code: (704) 445-3060
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________________________________
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(Former name or former address, if changed since last
report)
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
☐
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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common
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YCBD
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NYSE
American
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8.0%
Series A Cumulative Convertible Preferred Stock
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YCBD PR
A
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NYSE
American
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Indicate by check mark whether the registrant is an emerging growth
company as defined in in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this
chapter).
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Emerging
growth company ☑
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If an
emerging growth company, indicate by checkmark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
Item
8.01
Other
Events.
Effective
November 8, 2019 cbdMD, Inc. and
certain of our subsidiaries including IM1, LLC (“IM1”)
and Encore Endeavor 1, LLC (“EE1”) (collectively, the
“Level Parties”) entered into a Settlement Agreement
and Mutual General Release Agreement with EEI Holdings, LLC, IM1
Holdings, LLC, Sandbox Properties, LLC (“Sandbox), kathy
ireland Worldwide, Inc., B&B Bandwidth LLC, Erik Sterling and
Jason Winters (collectively, the “kiWW Parties”), the
terms of which provided, in part, that the parties agreed to
transfer the accounts receivable of EE1 and the minority interest
of both EE1 and IM1 to us and we agreed to have all rights to
certain past contracts or customers for those entities assigned to
the minority holders. Sandbox is affiliated with and managed by
executives of kathy ireland Worldwide, Inc. As consideration,
Sandbox was obligated to cause a total payment of $1,000,000 to be
made to us, with $83,333.34 due on or before November 14, 2019 and
the remaining amount due in equal installments of $83,334.34 by the
15th
day of each month.
On
February 26, 2020, after notice of Sandbox’s non-payment of
$83,333.34 due on February 15, 2020 and Sandbox’ continued
failure to make such payment, we notified the kiWW Parties of a
default. Upon this default, under the terms of the agreement the
kiWW Parties are obligated to pay us 10% interest on the amount due
and an administrative fee of $5,000.
The
Settlement Agreement and Mutual General Release Agreement also
contains a confidentiality clause limiting our ability to disclose
certain terms of the agreement, including Sandbox’s
obligation to pay us $1,000,000. On February 26, 2020 we also
notified the kiWW Parties that the default triggered a reportable
event by us. We reached this conclusion given the material amount
owed to us by the kiWW Parties.
If
payment of all amounts due us are not received immediately, we
expect to aggressively pursue the enforcement by the kiWW Parties
of the payment terms of the Settlement Agreement and Release
Agreement. It is possible that we will be unable to collect all
amounts due us, or even if the kiWW Parties should cure the
immediate default, a subsequent default could occur.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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cbdMD,
Inc.
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Date:
February 28, 2020
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By:
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/s/
Mark S. Elliott
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Mark S.
Elliott, Chief Financial Officer and Chief Operating
Officer
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