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cbdMD Reports Record First Quarter Fiscal 2020 Net Sales of $10.14 Million

16:05 EST 13 Feb 2020 | Businesswire
cbdMD, Inc.

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.

 

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.

   

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

 

 

     

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

 

 

   

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

 

 

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

)

 

 

 

 

 

 

     

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

 

 

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

     

 

Investors:
John Weston
Director of Investor Relations
john.weston@cbdmd.com
704-249-9515

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