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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 Fourth Quarter Net Sales of $9.54
Million
cbdMD Represented in Over 4,000 Retail Doors in 11
Countries
CHARLOTTE,
N.C.—December 18, 2019—(BUSINESS WIRE)--cbdMD, Inc.
(NYSE American: YCBD, YCBD PR A) (the “Company”), a
leading cannabidiol (CBD) consumer brand, reported today that in
its fourth fiscal quarter ended September 30, 2019, the Company
generated net sales (unaudited) of $9.54 million and its audited
net sales for the fiscal year ended September 30, 2019 were $23.7
million.
In
fiscal 2019, the Company discontinued certain legacy operations not
related to its CBD business, effective September 30, 2019, which
reduced net sales for fiscal 2019 from approximately $24.6 million
or by $888,000. On an unaudited pro forma basis, assuming the
Company had closed the acquisition of the its CBD business on
October 1, 2018 instead of December 20, 2018, the Company’s
net sales for the fiscal year ended September 30, 2019 were $26.8
million.
The
Company’s gross profit margin as a percent of net sales was
61.4% for fiscal 2019 and 56.7% for the fourth quarter fiscal 2019.
The Company’s unaudited fourth quarter gross profit margin as
a percent of net sales was impacted due to relabeling and packaging
changes and increased wholesale sales. On a preliminary unaudited
basis, in the first quarter of fiscal 2020 the Company’s
gross profit margin as a percent of net sales is consistent with
2019 average and we expect to maintain this margin throughout
fiscal 2020.
The
Company reported unaudited net income for the fourth quarter fiscal
2019 of approximately $7.6 million. Net income was impacted by the
following non-cash items: the gain on the contingent liability of
$20,000,000, a tax benefit of $63,000, a loss of marketable
securities in the amount of $527,000, a stock compensation expense
of $574,000 and a one-time charge for discontinued operations of
$5,927,773.
Net
income for the fiscal year ended September 30, 3019 was a loss of
$50.4 million or $2.82 cents per share. Net income was impacted by
the following non-cash items: a stock compensation expense of
approximately $2,685,000 depreciation and amortization of $178,000,
and expense for the issuance for stock/warrants for services of
$290,000, an impairment on intangible assets of $436,000, the loss
on marketable securities of $103,000 an impairment of investment
other securities $502,000, the decrease on contingent liability of
$32,461,680, a provision for income taxes of $2,359,000, a one-time
loss from discontinued operations of $5,927,773 and net loss
attributable to non-controlling interest of $929,000.
“We
are extremely proud of that fact that cbdMD is reporting another
quarter of record revenue and we believe that this trend will
continue. In just one year, we have built two of the leading CBD
brands in America, cbdMD and Paw CBD. We have built an
infrastructure that is more advanced than most of our competitors
in the US CBD industry, with over 130 total SKU’s, 170
employees, 11 departments, full scale manufacturing, distribution
and warehousing facilities. Building this infrastructure now has
been an important part of our plan, since we envision significant
growth over the next several years” said Martin Sumichrast,
Chairman & co-CEO of the Company.
“We
continue to
experience rapid growth and our
sales metrics continue to remain very strong as we continue to
drive online sales through the use of gorilla marketing, social
media, athletic sponsorships, and influencer affiliate programs. As
of November 2019, we had over 200,000 active e-commerce
subscribers, our average repeat online order exceeded $130 per
order and our online customer re-order rate increased throughout
the year. These are very strong metrics. On the brick and mortar
side of our business, we are
also experiencing tremendous success in growing the amount
of retail stores who currently carry
our brands. Our retail reach is now over 4,000 retail doors
and climbing. We have started to add national retailers as well as
travel retailers. Our wholesalers have experienced demand for our
products in several international markets and they are now
reselling our products in 10 international markets including the
United Kingdom, Costa Rica, Bermuda,
Guam, Peru, South Africa, Ireland, Guatemala, Belize, and
Mexico” continued Mr. Sumichrast.
“The
sponsorship and influencer partnerships we have built are
first-in-class in the CBD industry and include The BIG3, Life Time
Fitness, The World Surf League, Supercross, Nitro Circus, ARX
(Rallycross) and Bellator (MMA). Our social media reach is enhanced
by our podcast relationships that include some of the biggest names
in podcast, including Barstool Sports. Our Team cbdMD Athletes,
including PGA Golfer Bubba Watson, Olympians Kerri Walsh Jennings,
and Lolo Jones, MMA Champions Jorge Masvidal and Daniel Cormier,
Rally Cross superstars like Ken Block and professional skateboarder
Ryan Sheckler to name a few, continue to be tremendous ambassadors
for our brand. Now that we have assembled all of these assets, we
will be activating significant campaigns in fiscal 2020 with all
our partners and ambassadors. We believe this will help accelerate
the brand building momentum we have built in fiscal 2019, convert
more customers to cbdMD and Paw CBD, which will result in more
market share and ultimately additional growth of our brands”
added Mr. Sumichrast.
1
“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 not only a Top 10 domestic brand in two booming categories,
Topicals and Skincare/Beauty, but also named cbdMD the “Brand
To Watch", in part saying, "Trend followers should look to emulate
cbdMD's efforts, using creativity and strategy to move
forward”. And in November, 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
addition, according to media intelligence and monitoring company
Meltwater, cbdMD had the highest “share of voice”
throughout the entire CBD Industry for the three months ended
September 30, 2019” added Mr. Sumichrast.
“Our
flagship pet line, Paw CBD, is also growing strong. Paw CBD’s
product offering consists of a comprehensive line of CBD pet
products for dogs, cats and horses that includes 34 unique
SKU’s. The brand is currently sold via independent pet store
channels and online at www.cbdMD.com,
with the goal of big box retail deployment in fiscal 2020.
And despite only being a few months to market, Paw CBD has
already received top honors, as Pet Business Magazine
named Paw CBD's Calming Turkey CBD Soft Chews the top CBD
product for pets in their dog calming aids category. Our
goal is for Paw CBD to be in over 1,000 retail stores, grooming
salons and veterinary clinics by the end of calendar 2020”
added Mr. Sumichrast.
“We are spending a significant amount of our budget on
R&D and testing to ensure the safety and quality of our
products. We have established a secure supply chain with
dedicated, 2018 Farm Bill compliant hemp farms and extraction
facilities to ensure the highest quality and integrity of the raw
materials we use. 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. All of our products are manufactured
pursuant to GMP standards, and we are scheduled for a GMP
third-party certification on an upgraded manufacturing facility
before the end of the year. We intend to conduct third party
GMP audits multiple times per year to ensure our continued
compliance and to seek NSF GMP and Product certifications in
2020. Safety testing is conducted on our formulations, and we
are currently exploring options with regards to both GRAS and NDI
applications with the FDA. In fiscal 2020 we will be
conducting further safety testing on new formulations and also plan
to initiate clinical trials in anticipation of submitting claims
substantiation to the FDA. We are also in the process of
obtaining our NASC certification, which many larger retailers in
the pet industry require for product placement”
continued Mr. Sumichrast.
“We
believe expanding our market share, growing our revenue base and
attaining top brand recognition are the most important elements as
we head into fiscal 2020. While we have invested significantly to
achieve high growth we are focused on attaining positive cash flow
from operations, which we believe we can now achieve by October
2020. We still anticipate a 250% increase in sales from fiscal 2019
to fiscal 2020, but as we begin to focus on cash flow, we are
adjusting our net sales guidance to between $62 million and $70
million for fiscal year ending September 30, 2020. This new revenue
guidance is based on a trajectory of approximately 55% e-commerce
sales and 45% retail brick and mortar sales. This guidance does not
include the addition of any potential significant mass retail
relationships, many of which we are in the process of
developing” concluded Mr. Sumichrast.
CONFERENCE CALL DETAILS
|
|
Wednesday,
December 18, 2019, 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), LifeTime 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 3,000 retail outlets that carry cbdMD
products.
2
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") on December 18, 2019
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
3
CBDMD, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2019 AND 2018
|
2019
|
2018
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$4,689,966
|
$4,282,553
|
Accounts
receivable
|
1,425,697
|
307,874
|
Accounts
receivable - related party
|
-
|
1,537,863
|
Accounts
receivable other
|
160,137
|
1,743,874
|
Accounts
receivable – discontinued operations
|
1,080,000
|
-
|
Marketable
securities
|
198,538
|
1,050,961
|
Investment
other securities
|
600,000
|
1,159,112
|
Note
receivable
|
-
|
459,000
|
Note
receivable – related party
|
-
|
156,147
|
Deposits
|
6,850
|
-
|
Merchant
reserve
|
519,569
|
-
|
Inventory
|
4,301,586
|
123,223
|
Inventory
prepaid
|
903,458
|
-
|
Deferred
issuance costs
|
93,954
|
28,049
|
Prepaid
consulting agreement
|
-
|
200,000
|
Prepaid
rent
|
-
|
180,000
|
Prepaid
software
|
206,587
|
-
|
Prepaid
equipment deposits
|
868,589
|
-
|
Prepaid
expenses and other current assets
|
688,104
|
561,491
|
Total
current assets
|
15,743,035
|
11,790,147
|
|
|
|
Other
assets:
|
|
|
Property
and equipment, net
|
1,715,557
|
53,480
|
Deposits
for facilities
|
754,533
|
-
|
Intangible
assets, net
|
21,635,000
|
3,173,985
|
Goodwill
|
54,669,997
|
-
|
Total
other assets
|
78,775,087
|
3,227,465
|
|
|
|
Total
assets
|
$94,518,122
|
$15,017,612
|
4
CBDMD, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2019 AND 2018
(continued)
|
2019
|
2018
|
Liabilities
and shareholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$3,021,271
|
$473,717
|
Accounts
payable – related party
|
-
|
7,860
|
Deferred
revenue
|
-
|
161,458
|
Accrued
expenses
|
681,269
|
6,920
|
Accrued
expenses – related party
|
-
|
320,000
|
Customer
deposit – related party
|
7,339
|
-
|
Total
current liabilities
|
3,709,878
|
969,955
|
|
|
|
Long term
liabilities
|
|
|
Long
term liabilities
|
363,960
|
7,502
|
Contingent
liability
|
50,600,000
|
-
|
Deferred
tax liability
|
2,240,300
|
21,000
|
Total long term
liabilities
|
53,204,260
|
28,502
|
|
|
|
Total
liabilities
|
56,914,138
|
998,457
|
|
|
|
cbdMD, Inc.
shareholders' equity:
|
|
|
Preferred stock,
authorized 50,000,000 shares, $0.001 par value, no shares issued
and outstanding
|
-
|
-
|
Common stock,
authorized 150,000,000 shares, $0.001 par value,
|
|
|
27,720,356
and 8,123,928 shares issued and outstanding,
respectively
|
27,720
|
8,124
|
Additional paid in
capital
|
97,186,524
|
21,781,095
|
Accumulated other
comprehensive income (loss)
|
-
|
(2,512,539)
|
Accumulated
deficit
|
(59,610,260)
|
(6,669,497)
|
Total
cbdMD, Inc. shareholders' equity
|
37,603,984
|
12,607,183
|
Non-controlling
interest
|
-
|
1,411,972
|
Total
shareholders' equity
|
37,603,984
|
14,019,155
|
|
|
|
Total
liabilities and shareholders' equity
|
$94,518,122
|
$15,017,612
|
5
CBDMD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018
|
2019
|
2018
|
Sales
|
$28,023,848
|
$-
|
Sales
related party
|
55,596
|
459,091
|
Total
Gross Sales
|
28,079,444
|
459,091
|
Allowances
|
(4,427,893)
|
-
|
Net
sales
|
23,595,955
|
-
|
Net
sales related party
|
55,596
|
459,091
|
Total Net Sales
|
23,651,551
|
459,091
|
Costs
of sales
|
9,136,677
|
104,010
|
Gross profit
|
14,514,873
|
355,081
|
|
|
|
Operating
expenses excluding impairment losses
|
28,875,186
|
-
|
Impairment
of intangible assets
|
436,578
|
-
|
Operating
expenses
|
29,311,764
|
2,152,149
|
Income (loss) from
operations
|
(14,796,891)
|
(1,797,068)
|
Realized
and unrealized gain (loss) on marketable securities
|
(102,716)
|
-
|
Impairment
on investment other securities
|
(502,560)
|
-
|
(Increase)
decrease of contingent liability
|
(32,461,680)
|
-
|
Interest
income
|
75,071
|
-
|
Income (loss) before provision
for income taxes
|
(47,788,776)
|
(1,797,068)
|
Provision
for income taxes
|
2,359,000
|
-
|
Net Income (loss) from
continuing operations
|
(45,429,776)
|
(1,797,068)
|
Net
Income (loss) from discontinued operations, net of tax (Note
15)
|
(5,927,773)
|
1,859,902
|
|
|
|
Net Income (loss)
|
$(51,357,549)
|
62,834
|
Net Income (loss) attributable to non-controlling interest from
discontinued operations (Note 15)
|
(929,323)
|
474,909
|
Net Income (loss) attributable to common shareholders
|
$(50,428,226)
|
$(412,075)
|
|
|
|
Earnings (Loss) per share
|
|
|
Continuing
operations
|
$(2.54)
|
$(0.23)
|
Discontinued
operations
|
(0.28)
|
0.18
|
Basic
earnings per share
|
$(2.82)
|
$(0.05)
|
Basic
weighted average number of shares
|
17,887,247
|
7,742,644
|
|
|
|
Diluted
|
|
|
Continuing
operations
|
$-
|
$-
|
Discontinued
operations
|
-
|
0.18
|
Diluted
earnings per share
|
$-
|
$-
|
Diluted
weighted average number of shares
|
17,887,247
|
7,749,942
|
6
CBDMD, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018
|
2019
|
2018
|
|
|
|
Net
Income (Loss)
|
$(51,357,549)
|
$62,834
|
Other
Comprehensive Income:
|
|
|
Continued
operations – Net Unrealized Gain (Loss) on Marketable
Securities, net of tax of $0
|
-
|
(130,026)
|
Discontinued
operations - Net Unrealized Gain (Loss) on Marketable Securities,
net of tax of $0
|
-
|
(2,382,513)
|
Comprehensive Income (Loss)
|
(51,357,549)
|
(2,449,705)
|
|
|
|
Comprehensive
Income (loss) attributable to non-controlling interest
|
(929,323)
|
474,909
|
Comprehensive Income (Loss) attributable to cbdMD, Inc. common
shareholders
|
$(50,428,226)
|
$(2,924,614)
|
7
CBDMD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018
|
2019
|
2018
|
Cash
flows from operating activities:
|
|
|
Net income
(loss)
|
$(51,357,549)
|
$62,834
|
Adjustments
to reconcile net loss to net
|
|
|
cash
used by operating activities:
|
|
|
Stock
based compensation
|
2,458,530
|
639,631
|
Restricted
stock expense
|
230,000
|
39,100
|
Depreciation
and amortization
|
289,574
|
222,546
|
Issuance
of stock / warrants for services
|
289,750
|
496,502
|
Realized
and unrealized (gain)/loss on marketable securities
|
2,439,996
|
-
|
Impairment
on investment other securities
|
502,560
|
-
|
Inventory
impairment
|
-
|
262,343
|
Impairment
on discontinued operations
|
3,398,438
|
-
|
Payment
in-kind interest
|
(30,000)
|
-
|
Loss on
sale of property and equipment -discontinued
operations
|
39,013
|
69,311
|
Increase/(decrease)
in contingent liability
|
32,461,680
|
-
|
Intangible
impairment
|
436,578
|
240,000
|
Non-cash
consideration received for services provided
|
(470,000)
|
(3,404,502)
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
60,155
|
(499,373)
|
Accounts
receivable - related party
|
(462,137)
|
(492,577)
|
Other
accounts receivable
|
2,737
|
(1,890,434)
|
Other
accounts receivable – related party
|
-
|
236,364
|
Inventory
|
(3,123,437)
|
255,894
|
Note
receivable
|
-
|
(459,000)
|
Note
receivable – related party
|
156,147
|
120,228
|
Deposits
|
(761,383)
|
-
|
Merchant
reserve
|
(93,316)
|
-
|
Prepaid
inventory
|
(903,458)
|
-
|
Proceeds
from sale of securities
|
410,094
|
-
|
Prepaid
consulting agreement
|
-
|
(200,000)
|
Prepaid
rent
|
180,000
|
(180,000)
|
Prepaid
expenses and other current assets
|
(963,044)
|
(529,335)
|
Accounts
payable and accrued expenses
|
2,280,726
|
285,156
|
Accounts
payable and accrued expenses – related party
|
(7,502)
|
(951,824)
|
Deferred
Revenue/customer deposits
|
(416,619)
|
120,041
|
Deferred
tax liability
|
(2,425,000)
|
(16,000)
|
Cash
used by operating activities
|
(15,377,467)
|
(5,573,095)
|
|
|
|
Cash
flows from investing activities:
|
|
|
Net
cash used for merger
|
(916,555)
|
-
|
Purchase
of other investment securities
|
-
|
(300,000)
|
Purchase
of intangible assets
|
(50,000)
|
(360,000)
|
Purchase
of property and equipment
|
(1,198,618)
|
(23,559)
|
Cash provided by
(used by) investing activities
|
(2,133,850)
|
(683,559)
|
8
CBDMD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018
(continued)
Cash
flows from financing activities:
|
|
|
Proceeds
from issuance of common stock
|
19,009,897
|
10,927,535
|
Note
payable – related party
|
(764,300)
|
-
|
Deferred
issuance costs
|
(326,868)
|
(672,574)
|
Cash provided by
financing activities
|
17,918,729
|
10,254,961
|
Net (decrease)
increase in cash
|
407,413
|
3,998,307
|
Cash and cash
equivalents, beginning of year
|
4,282,553
|
284,246
|
Cash
and cash equivalents, end of year
|
$4,689,966
|
$4,282,553
|
Supplemental Disclosures of Cash Flow Information:
|
2019
|
2018
|
|
|
|
Cash Payments
for:
|
|
|
Interest
expense
|
$39,295
|
$955
|
|
|
|
|
|
|
Non-cash financial
/ investing activities:
|
|
|
Equity investment
exchange to be issued in the future, included in Accounts
receivable other
|
$-
|
$160,000
|
Stock received for
prior period services, adjusted for other accounts receivable write
down prior to receipt – from discontinued
operations
|
$1,352,000
|
$-
|
Warrants issued to
secondary selling agent
|
$309,592
|
171,600
|
Adoption of ASU
2016-01
|
$2,512,539
|
$-
|
Acquisition of
property and equipment through a capital finance
arrangement
|
$249,100
|
$-
|
|
|
|
9