Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - cbdMD, Inc. | ycbd_8k.htm |
Exhibit 99.1
cbdMD Reports Record Net Sales In Its Third Quarter Fiscal 2020
Results
Quarterly Net Sales Increased 33% To $10.6 million
Direct to Consumer (DTC) Net Sales Increased 77%
Company Expects To Reach Positive Adjusted Operating Income During
Calendar 2020
CHARLOTTE,
N.C.—August 12, 2020—(BUSINESS WIRE)--cbdMD, Inc. (NYSE
American: YCBD, YCBD PR A) (the “Company”), one of the
leading, highly trusted, and most recognized cannabidiol (CBD)
brands, reported today record net sales of $10.6 million in its
third fiscal 2020 quarter ended June 30, 2020.
“cbdMD
reported its single biggest quarterly net sales in its history. Our
decisions to concentrate on building brand equity for award winning
cbdMD and Paw CBD brands, as well as and focus on our e-commerce
strength, has paid off. We have separated ourselves from our
competitors and demonstrated that we can grow market share and be
fiscally responsible at the same time, with our GAAP and non-GAAP
operating results improving by 80% and 96%, respectively, from the
comparable periods in fiscal 2019. With $15 million in cash on hand
at June 30, 2020, we believe we have more than enough financial
strength to grow our operations for the foreseeable future, absent
any additional unforeseen impact from COVID-19,” said Martin
Sumichrast, the Company’s Chairman and co-Chief Executive
Officer.
The
highlights from the June 2020 quarter were:
●
The Company
reported net sales of $10.6 million for the three months ended June
30, 2020, a year-over-year quarterly increase of approximately 33%
and a sequential quarterly increase from the three months ended
March 31, 2020 of approximately 13%.
●
The Company
reported record quarterly e-commerce, direct to consumer (DTC) net
sales of $8.2 million, an increase of 77% year-over-year and a
sequential quarterly increase of approximately 21%. The
Company’s e-commerce, direct to consumer (DTC) sales
accounted for in excess of 77% of total net sales in the June 2020
quarter, an increase from 58% from prior year’s
quarter.
●
The Company’s CBD pet brand, Paw CBD,
reported an approximate 64%
increase in net sales from its March 2020 quarter of approximately
$750,000 to approximately $1,229,000 for its June 2020
quarter.
●
The Company
reported a gross profit margin of 64.7% as a percent of net sales
as compared to 63.4% for the comparable period in fiscal 2019 and
adjusted non-GAAP gross profit margin as a percent of net sales was
67.7% as compared to a 65% in the comparable period in fiscal
2019.
●
The Company
reported an 80% year-over-year improvement in its GAAP loss from
operations of ($1,337,508) as compared to ($6,466,639) in the
comparable 2019 period.
●
The Company
reported a 96% year-over-year improvement in its non GAAP adjusted
loss from operations of ($187,092) as compared to ($5,019,541) in
the comparable fiscal 2019 period after adjusting for the
following: a non-cash inventory adjustment of $311,000, a non-cash
stock option expense of $388,000, a depreciation expense of
$233,000 and a non-cash charge of $233k for old
inventory.
●
The Company
reported a net loss of ($9,052,752), or $(0.18) per share, which
was mainly due to a non-cash expense of approximately $7.58 million
in the Company’s contingent liability which is associated
with earnout shares which may be issued under the terms of the
December 2018 acquisition of Cure Based Development.
●
Working capital was
$19.7 million and cash on hand was approximately $15 million at
June 30, 2020, respectively.
●
CBD Industries, LLC, the Company’s wholly owned manufacturing
and distribution subsidiary, was recently added to NSF
International’s dietary supplements Good Manufacturing
Practice (GMP) registration.
|
CONFERENCE CALL DETAILS
|
|
|
Wednesday,
August 12, 2020, 4:15 p.m. Eastern Time
|
|
|
Domestic:
|
1-844-407-9500
|
|
International:
|
1-862-298-0850
|
|
Replay dial in – Available through September 12,
2020
|
|
|
Domestic:
|
1-877-481-4010
|
|
International:
|
1-919-882-2331
|
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Replay
ID:
|
36267
|
Webcast Replay link – available through September 12,
2020:
https://www.webcaster4.com/Webcast/Page/2206/36267
About cbdMD, Inc.
cbdMD, Inc. is a nationally recognized consumer cannabidiol (CBD)
brand whose current products include CBD tinctures, CBD capsules,
CBD gummies, CBD topicals, CBD bath bombs, and CBD pet products.
cbdMD is also a proud partner of Bellator MMA and Life Time, Inc.,
and has one of the largest rosters of professional sports athletes
who are part of “Team cbdMD.” To learn more about cbdMD
and our comprehensive line of over 100 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
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 net
sales, our ability to effectively leverage our brand partnerships
and sponsorships, our ability to effectively compete in our market,
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 amended,
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.
____________________
Non-GAAP Financial Measures
This
press release includes certain financial measures that exclude the
impact of certain items and therefore have not been calculated in
accordance with U.S. generally accepted accounting principles
(“GAAP”). The Company has included adjusted income
(loss) from operations and adjusted gross profit because management
uses this measure to assess operating performance, in order to
highlight trends in the Company’s business that may not
otherwise be apparent when relying on financial measures calculated
in accordance with GAAP. Neither adjusted income (loss) from
operations nor adjusted gross profit has not been prepared in
accordance with GAAP. These non-GAAP financial measures should not
be considered as alternatives to, or more meaningful than, net
income (loss) and gross profit margins as indicators of the
Company’s operating performance. Further, these non-GAAP
financial measures, as presented by the Company, may not be
comparable to similarly titled measures reported by other
companies. The Company has attached to this press release a
reconciliation of these non-GAAP financial measures to their most
directly comparable GAAP financial measures.
Contact:
Investors:
John
Weston
Director
of Investor Relations
john.weston@cbdmd.com
704-249-9515
cbdMD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2020 AND SEPTEMBER 30, 2019
|
|
(Unaudited)
|
|
|
|
June
30,
|
September
30,
|
|
|
2020
|
2019
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash
and cash equivalents
|
$15,006,319
|
$4,689,966
|
|
Accounts
receivable
|
715,205
|
1,425,697
|
|
Accounts
receivable other
|
-
|
160,137
|
|
Accounts
receivable – discontinued operations
|
700,884
|
1,080,000
|
|
Marketable
securities
|
52,527
|
198,538
|
|
Investment
other securities
|
-
|
600,000
|
|
Deposits
|
-
|
6,850
|
|
Merchant
reserve
|
-
|
519,569
|
|
Inventory
|
6,397,326
|
4,301,586
|
|
Inventory
prepaid
|
281,885
|
903,458
|
|
Deferred
issuance costs
|
-
|
93,954
|
|
Prepaid
software
|
-
|
206,587
|
|
Prepaid
equipment deposits
|
201,698
|
868,589
|
|
Prepaid
expenses and other current assets
|
755,906
|
688,104
|
|
Total
current assets
|
24,111,750
|
15,743,035
|
|
|
|
|
|
Other
assets:
|
|
|
|
Property
and equipment, net
|
3,067,909
|
1,715,557
|
|
Operating
lease assets
|
7,119,289
|
-
|
|
Deposits
for facilities
|
706,852
|
754,533
|
|
Intangible
assets, net
|
21,635,000
|
21,635,000
|
|
Goodwill
|
54,669,997
|
54,669,997
|
|
Total
other assets
|
87,199,047
|
78,775,087
|
|
|
|
|
|
Total
assets
|
$111,310,797
|
$94,518,122
|
cbdMD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2020 AND SEPTEMBER 30, 2019
(continued)
|
|
(Unaudited)
|
|
|
|
June 30,
|
September 30,
|
|
|
2020
|
2019
|
|
Liabilities and shareholders' equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$1,825,135
|
$3,021,271
|
|
Accrued
expenses
|
1,396,983
|
681,269
|
|
Operating
leases – short term liabilities
|
1,109,585
|
-
|
|
Note
payable
|
54,720
|
-
|
|
Customer
deposit – related party
|
-
|
7,339
|
|
Total current liabilities
|
4,386,423
|
3,709,878
|
|
|
|
|
|
Long
term liabilities:
|
|
|
|
Long
term liabilities
|
-
|
363,960
|
|
Note
payable
|
182,714
|
-
|
|
Paycheck
Protection Program loan
|
1,456,100
|
-
|
|
Operating
leases - long term liabilities
|
6,305,422
|
-
|
|
Contingent
liability
|
15,400,000
|
50,600,000
|
|
Deferred
tax liability
|
-
|
2,240,300
|
|
Total long term liabilities
|
23,344,236
|
53,204,260
|
|
|
|
|
|
Total liabilities
|
27,730,659
|
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,
|
|
|
|
51,345,648
and 27,720,356 shares issued and outstanding,
respectively
|
51,346
|
27,720
|
|
Additional
paid in capital
|
124,558,046
|
97,186,524
|
|
Accumulated
deficit
|
(41,029,754)
|
(59,610,260)
|
|
Total cbdMD, Inc. shareholders’ equity
|
83,580,138
|
37,603,984
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
$111,310,797
|
$94,518,122
|
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2020 AND
2019
(Unaudited)
|
|
Three months
|
Three months
|
Nine months
|
Nine months
|
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
|
June 30,
2020
|
June 30,
2019
|
June 30,
2020
|
June 30,
2019
|
|
|
|
|
|
|
|
Total
Gross Sales
|
10,809,387
|
9,734,459
|
30,925,678
|
18,170,667
|
|
Allowances
|
(172,842)
|
(1,729,310)
|
(741,861)
|
(4,063,252)
|
|
Total Net Sales
|
10,636,545
|
8,005,149
|
30,183,817
|
14,107,414
|
|
Cost of sales
|
3,748,024
|
2,929,160
|
10,180,637
|
5,009,187
|
|
|
|
|
|
|
|
Gross
Profit
|
6,888,521
|
5,075,989
|
20,003,180
|
9,098,228
|
|
|
|
|
|
|
|
Operating
expenses
|
8,226,029
|
11,542,628
|
33,053,962
|
18,683,905
|
|
Income
(Loss) from
operations
|
(1,337,508)
|
(6,466,639)
|
(13,050,782)
|
(9,585,677)
|
|
Realized
and Unrealized gain (loss) on marketable securities
|
(30,849)
|
(13,162)
|
(146,011)
|
(77,802)
|
|
(Increase)
Decrease of contingent liability
|
(7,580,000)
|
(21,547,606)
|
30,580,000
|
(52,461,680)
|
|
Impairment
on investment other securities
|
-
|
-
|
(600,000)
|
-
|
|
Impairment
accounts receivable other
|
|
-
|
(160,000)
|
-
|
|
Interest income (expense)
|
3,436
|
6,229
|
46,311
|
50,189
|
|
Income (loss) before provision for income taxes
|
(8,944,921)
|
(28,021,178)
|
16,669,518
|
(62,074,970)
|
|
|
|
|
|
|
|
Benefit
(Provision) for income
taxes
|
-
|
1,088,000
|
2,240,300
|
2,296,000
|
|
Net Income (Loss) from continuing
operations
|
(8,944,921)
|
(26,933,178)
|
18,909,818
|
(59,778,970)
|
|
Net Income (Loss) from discontinued operations, net of
tax (Note 16)
|
(7,781)
|
(2,269,778)
|
(48,983)
|
(3,463,123)
|
|
Net Income (Loss)
|
(8,952,702)
|
(29,202,956)
|
18,860,835
|
(63,242,093)
|
|
Net Gain (Loss) attributable to
noncontrolling
interest
|
-
|
(1,503,707)
|
-
|
(1,641,391)
|
|
Preferred dividends
|
100,050
|
-
|
266,800
|
-
|
|
|
|
|
|
|
|
Net Income (Loss) attributable to cbdMD, Inc. common
shareholders
|
$(9,052,752)
|
$(27,699,249)
|
$18,594,035
|
$(61,600,702)
|
|
|
|
|
|
|
|
Net Income (Loss) per share:
|
|
|
|
|
|
Basic
earnings per share
|
$(0.18)
|
$(1.19)
|
$0.45
|
$(4.22)
|
|
Diluted
earnings per share
|
$-
|
$-
|
$0.44
|
$-
|
|
|
|
|
|
|
|
Weighted
average number of shares Basic:
|
51,335,648
|
23,193,793
|
41,411,261
|
14,585,619
|
|
Weighted
average number of shares Diluted:
|
|
|
42,534,519
|
|
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2020 AND
2019
(Unaudited)
|
|
Three months
|
Three months
|
Nine months
|
Nine months
|
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
|
June 30,
2020
|
June 30,
2019
|
June 30,
2020
|
June 30,
2019
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
$(8,952,702)
|
$(29,202,956)
|
$18,860,835
|
$(63,242,093)
|
|
Comprehensive Income (Loss)
|
(8,952,702)
|
(29,202,956)
|
18,860,835
|
(63,242,093)
|
|
|
|
|
|
|
|
Comprehensive
Income (loss) attributable to non-controlling interest
|
-
|
(1,503,707)
|
-
|
(1,641,391)
|
|
Preferred
dividends
|
(100,050)
|
-
|
(266,800)
|
-
|
|
Comprehensive Income (Loss) attributable to cbdMD, Inc. common
shareholders
|
$(9,052,752)
|
$(27,699,249)
|
$18,594,035
|
$(61,600,702)
|
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2020 AND 2019
(unaudited)
|
|
Nine Months
Ended June 30,
|
Nine Months
Ended June 30,
|
|
|
2020
|
2019
|
|
Cash
flows from operating activities:
|
|
|
|
Net Income
(loss)
|
$18,860,835
|
$(63,242,093)
|
|
Adjustments
to reconcile net (income) loss to net
|
|
|
|
cash
used by operating activities:
|
|
|
|
Stock
based compensation
|
1,391,271
|
2,022,812
|
|
Restricted
stock expense
|
138,001
|
92,000
|
|
Issuance
of stock / warrants for service
|
84,450
|
289,750
|
|
Intangible
impairment
|
-
|
2,114,334
|
|
Inventory
and materials impairment
|
233,372
|
-
|
|
Impairment
on discontinued operations asset
|
45,783
|
-
|
|
Depreciation
and amortization
|
499,394
|
272,121
|
|
Gain on
settlement of Note
|
-
|
(20,000)
|
|
Other
than temporary impairment other securities and
other
accounts receivable
|
760,000
|
-
|
|
Increase/(Decrease)
in contingent liability
|
(30,580,000)
|
52,461,680
|
|
Realized
and unrealized loss of marketable securities
|
146,011
|
1,705,069
|
|
Merchant
reserve settlement
|
132,657
|
-
|
|
Non-cash
consideration received for services
|
-
|
(470,000)
|
|
Non-cash
lease expense
|
878,986
|
-
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Accounts
receivable
|
710,629
|
399,074
|
|
Accounts
receivable – related party
|
-
|
204,902
|
|
Other
accounts receivable
|
-
|
(298,754)
|
|
Note
receivable
|
-
|
(27,000)
|
|
Note
receivable – related party
|
-
|
156,147
|
|
Deposits
|
(147,166)
|
-
|
|
Merchant
reserve
|
386,912
|
(199,907)
|
|
Inventory
|
(2,329,112)
|
(2,581,958)
|
|
Prepaid
inventory
|
621,573
|
-
|
|
Prepaid
expenses and other current assets
|
1,007,374
|
(717,894)
|
|
Marketable
securities
|
-
|
701,593
|
|
Accounts
payable and accrued expenses
|
(480,424)
|
1,073,211
|
|
Accounts
payable and accrued expenses – related party
|
-
|
(313,591)
|
|
Operating
lease liability
|
(766,289)
|
-
|
|
Note
payable
|
42,968
|
-
|
|
Deferred
revenue / customer deposits
|
(7,339)
|
(380,804)
|
|
Collection
on discontinued operations accounts receivable
|
333,333
|
-
|
|
Deferred
tax liability
|
(2,240,300)
|
(2,296,000)
|
|
Cash used by
operating activities
|
(10,277,081)
|
(9,055,308)
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
Net
cash used for merger
|
-
|
(1,167,295)
|
|
Purchase
of intangible assets
|
-
|
(79,999)
|
|
Purchase
of property and equipment
|
(1,851,746)
|
(359,421)
|
|
Cash used by
investing activities
|
(1,851,746)
|
(1,606,715)
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
Proceeds
from issuance of common stock
|
16,771,756
|
19,009,897
|
|
Proceeds
from issuance of preferred stock
|
4,421,928
|
-
|
|
PPP
loan
|
1,456,100
|
-
|
|
Note
Payable – related party
|
-
|
(764,300)
|
|
Preferred
dividend distribution
|
(266,800)
|
-
|
|
Deferred
issuance costs
|
62,197
|
(232,914)
|
|
Cash provided by
financing activities
|
22,445,180
|
18,012,683
|
|
Net increase
(decrease) in cash
|
10,316,353
|
7,350,660
|
|
Cash and cash
equivalents, beginning of period
|
4,689,966
|
4,282,553
|
|
Cash
and cash equivalents, end of period
|
$15,006,319
|
$11,633,213
|
cbdMD, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2020 AND 2019
(unaudited)
(continued)
Supplemental Disclosures of Cash Flow Information:
|
|
Nine Months
ended June 30,
|
Nine Months
Ended June 30,
|
|
|
2020
|
2019
|
|
|
|
|
|
Cash Payments
for:
|
|
|
|
Interest
expense
|
$26,126
|
$36,418
|
|
|
|
|
|
Non-cash financial
activities:
|
|
|
|
Warrants issued to
secondary selling agent
|
$524,113
|
$309,592
|
|
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
|
|
|
|
|
cbdMD, Inc.
SUPPLEMENTAL
FINANCIAL INFORMATION
RECONCILIATION OF ADJUSTED INCOME (LOSS) FROM
OPERATIONS
(Unaudited)
|
|
Three months
|
Three months
|
|
|
Ended
|
Ended
|
|
|
June 30,
2020
|
June 30,
2019
|
|
|
|
|
|
GAAP Income
(Loss) from
operations
|
(1,337,508)
|
(6,466,639)
|
|
|
|
|
|
Adjustments:
|
|
|
|
Inventory
adjustment (1)
|
316,922
|
-
|
|
Non-cash stock
related expense (2)
|
388,185
|
1,389,224
|
|
Depreciation
expense
|
211,937
|
57,874
|
|
One-time abnormal inventory
adjustment (3)
|
233,372
|
-
|
|
Adjusted Income (loss) from operations
|
(187,092)
|
(5,019,541)
|
|
|
Three months
|
|
Three months
|
|
|
|
Ended
|
Ended
|
||
|
|
June 30,
2020
|
June 30,
2019
|
||
|
|
|
|
|
|
|
GAAP net sales
|
10,636,545
|
|
8,005,149
|
|
|
GAAP cost of
sales
|
3,748,024
|
|
2,929,160
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Inventory
adjustment (1)
|
316,922
|
|
130,795
|
|
|
Adjusted
cost of sales
|
3,431,102
|
|
2,798,365
|
|
|
Adjusted Gross Profit
|
7,205,443
|
67.7%
|
5,206,784
|
65.0%
|
(1)
Amount represents
an adjustment after performing a physical inventory
account.
(2)
Represents non-cash
expense related to options, warrants, restricted stock expenses
that have been amortized during the period.
(3)
Amount represents an operating expense related to inventory loss
related to regulatory changes impacting labels and
packaging.