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press release

Dec. 17, 2021, 4:10 p.m. EST

cbdMD Reports Fiscal Year Net Sales Increased 6.2% To Record $44.5 Million

CHARLOTTE, N.C., (BUSINESS WIRE) -- cbdMD, Inc. ( NYSE American: YCBD, YCBDpA) , one of the nation’s leading and most highly trusted and recognized CBD companies, and operator of three of the leading CBD brands -- its flagship brand cbdMD , its animal health brand Paw CBD and its beauty and skincare brand cbdMD Botanicals, -- today announced its financial results for the fourth quarter and fiscal year ended September 30, 2021.

“Next week is the three-year anniversary of our company entering the CBD industry with the acquisition of Cure Based Development, the owner of our flagship brand, cbdMD. It’s also the three-year anniversary of the passage of the Farm Bill, which de-criminalized CBD in the US. In three short years we have grown from an unknown start-up brand competing against thousands of other CBD brands, outpacing the pack to firmly positioned at the top of CBD industry, with our three leading brands,” said Chairman and co-CEO, Martin A. Sumichrast.

“According to the Brightfield Group, the US CBD market experienced its most challenging year in 2021, with year-over-year growth rates expected to be nearly flat at 2.5%. Despite this anemic industry growth, cbdMD was able to outpace the industry average and record fiscal 2021 net sales of over 6% and gross sales of over 10% as compared to fiscal 2020. We were able to maintain our product pricing and firm up our product purchasing which resulted in an increase to our gross profit margin to a record high of 67% in fiscal 2021, from 63% in 2020. While our fiscal 2021 loss from operations was $19.6 million, we were able to reduce our non-GAAP adjusted operating loss by 6%. However, slower than anticipated sales in the second half of our fiscal year, our increased marketing costs in the first half of the fiscal year, (which have now been reduced), coupled with our investment into our therapeutics division, resulted in a GAAP operating loss for the fiscal 2021. While we are now seeing an increase in consumer demand as we enter our fiscal 2022 year and are optimistic that calendar 2022 will return to higher sales growth rates as our new products reach our customers and new distribution channels become available, we are withdrawing our previously announced sales guidance for the current quarter ending December 31, 2021. With that said, looking forward, our goal is to continue to outpace the overall industry growth, increase our market share, and achieve positive adjusted EBITDA. For more information about how we intend to achieve these goals, please listen to our earnings call this afternoon,” said Mr. Sumichrast.

Financial Highlights for Fiscal 2021:

Net sales increased by 6% year-over-year to a record of $44.5 million in fiscal 2021, from $41.8 million in fiscal 2020.

Our gross profit margin increased to 67% in fiscal 2021 from 63% in fiscal 2020. Our non-GAAP adjusted gross margin totaled 19.6% for fiscal 2021, as compared to 67.7% for fiscal 2020.

Our loss from operations was $19.6 million in fiscal 2021 as compared to a loss of $17.5 million in fiscal 2020 mostly because of increased in advertising spend and investing in cbdMD Therapeutics.

Our non-GAAP adjusted loss from operations in fiscal 2021 was approximately $13.6. million, compared to our non-GAAP adjusted loss from operations in fiscal 2020 of approximately $11.5 million.

Net loss attributable to common shareholders for fiscal 2021 was approximately $25.9 million, or $0.41 per share, as compared to a net income for fiscal 2020 of approximately $12.2 million, or $0.28 per share. The decrease in fiscal 2021 was principally attributable to an increase of approximately $6.7 million in the non-cash contingent liability which is associated with earnout shares which may be issued under the terms of the December 2018 acquisition of Cure Based Development (which owned the cbdMD brand).

At September 30, 2021, we had working capital of approximately $29.6 million and cash on hand of approximately $26.4 million as compared to working capital of approximately $16.0 million and cash on hand of approximately $14.8 million at September 30, 2020.

We reported record e-commerce, direct to consumer (DTC) net sales of $32.9 million, or 74.2% of total net sales in fiscal 2021, an increase of $2.5 million, or 8% increase from fiscal 2020.

Our CBD pet brand, Paw CBD, reported $5.7 million in net sales, a 27% increase in fiscal 2021, as compared to $4.5 million in fiscal 2020.

For the Quarter Ended September 30, 2021:

Our net sales for the fourth quarter of fiscal 2021 decreased by 16% year-over-year to $9.8 million from $11.7 million in the fourth quarter of fiscal 2020.

Our gross profit margin for the quarter increase to 58.6% in the fourth quarter of fiscal 2021 from 54.4% in the fourth quarter of fiscal 2020.

Our loss from operations was approximately $7.0 million compared to $4.5 million from the prior year’s quarter.

Our non-GAAP adjusted operating loss was approximately $4.8 million, compared to a $1.2 million non-GAAP adjusted operating loss from the prior year’s quarter.

We reported fourth quarter fiscal 2021 e-commerce, direct to consumer (DTC) net sales of $7.2 million, a 15% decrease from $8.6 million in the fourth quarter of fiscal 2020.

Our pet brand, Paw CBD, reported approximately $1.2 million in net sales in the fourth quarter of fiscal 2021, a decrease of 25% compared to $1.6 million from the prior year’s quarter.

cbdMD, Inc. will host a conference call at 4:15 p.m., Eastern Time, on Friday, December 17, 2021, to discuss the company’s September 30, 2021, fourth quarter and fiscal year-end financial results and business progress.

CONFERENCE CALL DETAILS

Friday, December 17, 2021, 4:15 p.m. Eastern Time
Domestic: 1-888-506-0062
International: 1-973-528-0011
Teleconference Replay dial in – Available through Saturday, January 15, 2022
Domestic: 1-877-481-4010
International: 1-919-882-2331
Replay Passcode: 43904
Webcast Link/Webcast Replay link- available through Friday, December 17, 2022:

About cbdMD, Inc.

cbdMD, Inc. is one of the leading and most highly trusted and most recognized cannabidiol (CBD) brands with a comprehensive line of U.S. produced, THC-free [1 ] CBD products as well as our new Full Spectrum products. Our cbdMD brand currently includes over 130 SKUs of high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD bath salts, CBD sleep aids and CBD drink mixes. Our Paw CBD brand of pet products includes over 45 SKUs of veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our CBD Botanicals brand of beauty and skincare products features 15 SKUs, including facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care. To learn more about cbdMD and their comprehensive line of U.S. grown, THC-free [1] CBD oil 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 using 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. 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, 2021 as filed with the Securities and Exchange Commission (the "SEC") on December 16, 2021 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.

[1] THC-free is defined as below the level of detection using validated scientific analytical methods.

Non-GAAP Financial Measures

This press release includes a financial measure that excludes the impact of certain items and therefore has not been calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). cbdMD, Inc. has included adjusted loss from operations because management uses this measure to assess operating performance in order to highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The adjusted operating loss has not been prepared in accordance with GAAP. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, net loss from operations as an indicator of our operating performance. Further, this non-GAAP financial measure, as presented by cbdMD, Inc., may not be comparable to similarly titled measures reported by other companies. cbdMD, Inc. has attached to this press release a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure.

cbdMD, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
 
 
September 30,   September 30,
2021   2020
Assets
 
Current assets:
Cash and cash equivalents $ 26,411,424   $ 14,824,644  
Accounts receivable   1,113,372     911,482  
Accounts receivable – discontinued operations   10,967     447,134  
Marketable securities   33,351     26,472  
Investment other securities   1,000,000     250,000  
Inventory   5,021,867     4,603,360  
Inventory prepaid   551,519     288,178  
Prepaid software   -     174,308  
Prepaid sponsorship   1,212,682     1,203,300  
Prepaid expenses and other current assets   1,147,178     983,374  
Total current assets   36,502,360     23,712,252  
 
Other assets:
Property and equipment, net   2,561,574     3,183,487  
Operating lease assets   5,614,960     6,851,357  
Deposits for facilities   529,583     790,708  
Intangible assets, net   23,003,929     21,635,000  
Goodwill   56,670,970     54,669,997  
Total other assets   88,381,016     87,130,549  
 
Total assets $ 124,883,376   $ 110,842,801  
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(continued)
 
 
September 30,   September 30,
2021   2020
Liabilities and shareholders' equity
 
Current liabilities:
Accounts payable $ 2,978,914   $ 2,850,421  
Deferred revenue   2,727,612     -  
Accrued expenses   1,151,150     2,769,920  
Operating leases – current portion   -     1,159,098  
Paycheck Protection Program loan, current portion   854,000  
Note payable   59,470     55,639  
Total current liabilities   6,917,146     7,689,078  
 
Long term liabilities:
Long term liabilities   108,985     264,367  
Paycheck Protection Program loan   -     602,100  
Operating leases - long term portion   4,859,058     6,010,208  
Contingent liability   9,856,000     16,200,000  
Deferred tax liability   -     895,000  
Total long term liabilities   14,824,043     23,971,675  
 
Total liabilities   21,741,189     31,660,753  
 
cbdMD, Inc. shareholders' equity:
Preferred stock, authorized 50,000,000 shares, $0.001
par value, 5,000,000 and 500,000 shares issued and outstanding, respectively   5,000     500  
Common stock, authorized 150,000,000 shares, $0.001
par value, 57,783,340 and 52,130,870 shares issued and outstanding, respectively   57,783     52,131  
Additional paid in capital   176,417,269     126,517,784  
Accumulated deficit   (73,337,865 )   (47,388,367 )
Total cbdMD, Inc. shareholders' equity   103,142,187     79,182,048  
 
 
Total liabilities and shareholders' equity $ 124,883,376   $ 110,842,801  
cbdMD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020
 
 
 
September 30,   September 30,
2021   2020
 
Gross Sales $ 47,332,085   $ 43,172,778  
Allowances   (2,851,322 )   (1,289,044 )
Total Net Sales   44,480,763     41,883,734  
Cost of sales   14,495,063     15,514,727  
 
Gross Profit   29,985,700     26,369,007  
 
Operating expenses   49,601,690     43,950,862  
(Loss) from operations   (19,615,990 )   (17,581,855 )
Realized and Unrealized gain (loss) on marketable and other securities, including impairments   546,878     (932,066 )
Gain on extinguishment of debt   1,466,113     -  
Decrease (increase) of contingent liability   (6,687,439 )   29,780,000  
Other income   29,479     -  
Interest (expense) income   (28,930 )   39,877  
Loss (income) before provision for income taxes   (24,289,889 )   11,305,956  
 
Benefit for income taxes   895,000     1,345,300  
Net (Loss) Income from continuing operations   (23,394,889 )   12,651,256  
Net (Loss) from discontinued operations, net of tax (Note 14)   -     (48,983 )
Net (Loss) Income   (23,394,889 )   12,602,273  
Preferred dividends   2,554,609     366,850  
 
Net (Loss) Income attributable to cbdMD, Inc. common shareholders $ (25,949,498 ) $ 12,235,423  
 
Net (Loss) Income per share:
Basic earnings per share   (0.47 )   0.28  
Diluted earnings per share   (0.47 )   0.28  
Weighted average number of shares Basic:   54,938,128     44,140,360  
Weighted average number of shares Diluted:   -     45,171,674  
 
 
cbdMD, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020
 
 
 
 
September 30,   September 30,
2021   2020
 
Net (Loss) Income $ (23,394,889 ) $ 12,602,273  
Comprehensive (Loss) Income   (23,394,889 )   12,602,273  
 
Preferred dividends   (2,554,609 )   (366,850 )
Comprehensive (Loss) Income attributable to cbdMD, inc. common shareholders $ (25,949,498 ) $ 12,235,423  
 
 
cbdMD, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2021 AND 2020
September 30,   September 30,
2021   2020
 
Cash flows from operating activities:
Net (Loss) Income $ (23,394,889 ) $ 12,602,273  
 
Adjustments to reconcile net (income) loss to net cash used by operating activities:
Stock based compensation   1,298,106     1,900,194  
Restricted stock expense   1,626,613     138,000  
Marketing stock amortization   871,390     -  
Issuance of stock / warrants for service   97,720     338,400  
Inventory and materials impairment   670,580     233,372  
Impairment on discontinued operations asset   -     45,783  
Depreciation and amortization   1,017,408     720,755  
Other than temporary impairment other securities and other accounts receivable   -     760,000  
Increase/(Decrease) in contingent liability   6,687,439     (29,780,000 )
Realized and unrealized loss of Marketable and other securities   (546,878 )   172,066  
Merchant reserve settlement   -     132,657  
Termination benefit   196,896     489,381  
Extinguishment of Paycheck Protection Program Loan   (1,466,113 )   -  
Non-cash lease expense   1,236,397     1,180,213  
Changes in operating assets and liabilities:
Accounts receivable   (183,735 )   514,352  
Deposits   261,125     (938,112 )
Merchant reserve   -     386,912  
Inventory   (1,009,192 )   (535,146 )
Prepaid inventory   (263,341 )   615,280  
Prepaid expenses and other current assets   525,670     645,796  
Accounts payable and accrued expenses   (104,422 )   1,479,189  
Operating lease liability   (1,159,097 )   (1,045,285 )
Deferred revenue / customer deposits   3,723     37,802  
Collection on discontinued operations accounts receivable   436,167     587,083  
Deferred tax liability   (895,000 )   (1,345,300 )
Cash used by operating activities   (14,093,433 )   (10,664,335 )
 
Cash flows from investing activities:
Proceeds from sale of other investment securities   540,000     -  
Purchase of other investment securities   (750,000 )   (250,000 )
Purchase of DirectCBDOnline.com   (2,000,000 )   -  
Purchase of property and equipment   (342,013 )   (1,320,095 )
Cash provided (used) by investing activities   (2,552,013 )   (1,570,095 )
 
Cash flows from financing activities:
Proceeds from issuance of common stock   -     16,766,106  
Proceeds from issuance of preferred stock   30,938,386     4,421,928  
Paycheck Protection Program Loan   -     1,456,100  
Note payable   (151,551 )   29,629  
Preferred dividend distribution   (2,554,609 )   (366,850 )
Deferred issuance costs   -     62,197  
Cash provided by financing activities   28,232,226     22,369,110  
Net increase (decrease) in cash   11,586,780     10,134,680  
Cash and cash equivalents, beginning of period   14,824,644     4,689,966  
Cash and cash equivalents, end of period $ 26,411,424   $ 14,824,646  
 
Supplemental Disclosures of Cash Flow Information:
2021   2020
 
Cash Payments for:
Interest expense $ 28,930 $ 33,693
 
Non-cash financial activities:
Issuance of Contingent earnout shares: $ 13,520,000 $ 4,620,000
Warrants issued to representative $ 499,587 $ 524,113
 
cbdMD, Inc.
SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM OPERATIONS
 
Three Months   Three Months   Year   Year
Ended   Ended   Ended   Ended
September 30,   September 30,   September 30,   September 30,
2021   2020   2021   2020
 
 
 
 
GAAP (loss) from operations $ (7,012,702 ) $ (4,531,072 ) $ (19,615,990 ) $ (17,581,855 )
Adjustments:
Depreciation   297,552     221,360     1,017,408     720,754  
Employee and director stock compensation (1)   1,100,362     537,943     3,149,688     1,985,803  
Other non-cash stock compensation for services (2)   -     253,950     97,721     338,400  
Inventory adjustment (3)   671,669     1,663,000     671,669     2,207,000  
Write down of legacy accounts receivable (4)   -     102,000     -     102,000  
Accrual for severance   -     489,381     703,022     489,381  
Accrual / expenses for discretionary bonus   150,000     200,000     300,000     200,000  
Non-GAAP adjusted (loss) from operations $ (4,943,118 ) $ (1,263,437 ) $ (13,676,481 ) $ (11,538,517 )
 
(1) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(2) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.
(3) Represents an operating expense related to inventory loss related to regulatory changes impacting labels and packaging and obsolete/expired inventory purchases during 2019/2020.
(4) Write down of legacy accounts receivable.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211216006040/en/

SOURCE: cbdMD, Inc.

PR:
cbdMD, Inc.
Robert Pettway
Director of Public Relations
rpettway@cbdmd.com
(423) 503-5225 Investors:
cbdMD, Inc.
John Weston
Director of Investor Relations
john.weston@cbdmd.com
(704) 249-9515

COMTEX_399127700/2456/2021-12-17T16:10:17

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