cbdMD Reports Q3 Net Sales Increase 42% Sequentially to Over $8 Million

CHARLOTTE, N.C.–(BUSINESS WIRE)–cbdMD, Inc. (NYSE American: YCBD), reported today that in its fiscal quarter ended June 30, 2019, the company generated total net sales of $8,044,000 up 42% sequentially from the March 31, 2019 quarter and over 500% from the June 30^th, 2018 quarter, (which was prior to the December, 2018 acquisition of the brand).

“Moreover, we believe we are now on track to reach the five-year earn-out hurdle of $300 million in aggregate net revenue by the end of calendar 2021, full two years ahead of schedule.”

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FINANCIAL HIGHLIGHTS:

• Total net sales in the quarter ended June 30, 2019 were $8,044,336 up 42% sequentially from the March 31, 2019 quarter and over 500% from the June 30^th, 2018 quarter (which was prior to the December, 2018 acquisition of the brand). Total gross sales in the quarter ended June 30, 2019 were $9,784,199 million and allowances for the quarter were $1,739,863.
• Gross profit was $5.1 million in the third quarter ended June 30, 2019, representing a margin of 63% of net sales, in line with gross margins reported in the March 31, 2019 quarter.
• Working capital increased to $19.8 million at June 30, 2019, up from working capital of $12.3 million at March 31, 2019. Cash on hand was $11.6 million as of June 30, 2019.
• Ecommerce sales platform generated approximately 60% of net sales.

• Secured retail store placement to over 3,000 doors from approximately 600 in December 2018.

• The loss from operations for the quarter was $8,260,000 of which $2.1 million was a non-cash impairment charge of intangible assets related to the prior licensing and brand management businesses (IM1 and EE1) and $2 million was a non-cash charge related to stock option expenses.

• The fully diluted net loss for the quarter was $1.19 per share or $27.7 million of which 78% or $21.5 million was attributed to the change in the value of the contingent liability related to acquisition of the cbdMD brand. The change in value was primarily related to the increase in the company’s stock price during the June quarter.

cbdMD, Inc. also announced net sales guidance:

• Fiscal year ending September 2019, net sales guidance of $24 million to $26 million.
• Fiscal year ending September 2020, net sales guidance of $80 million to $90 million.

“Our strong third quarter results place us in a great position to exceed established revenue targets for the first year of operations for cbdMD,” stated Martin A. Sumichrast, Chairman and co-CEO of cbdMD. “Moreover, we believe we are now on track to reach the five-year earn-out hurdle of $300 million in aggregate net revenue by the end of calendar 2021, full two years ahead of schedule.”

“We’ve increased the number of locations cbdMD products are available in by 500% since the acquisition of the brand last December, and with the building momentum of retailer acceptance subsequent to the passage of the Farm Bill, we are pursuing every opportunity available to us vigorously as we continue to work to build cbdMD into the top recognized brand in the industry,” continued Sumichrast.

“To secure our leadership position in the CBD industry and create a truly world-class brand in one of the most exciting market opportunities globally, we continue to strategically invest in growing valuable partnerships and sponsorships with world-class athletes that resonate with our customers. In the June quarter we signed several significant sponsorships, including professional golfer and 12-time PGA Tour winner Bubba Watson, Ice Cube’s Big 3 basketball league, Bellator MMA, and Nitro Circus,” stated Scott Coffman, founder of the brand and co-CEO of cbdMD.

“We believe our sponsorship initiatives really set us apart as we seek to grow market share. While many of our peers continue to see challenges in the restrictive advertising environment surrounding CBD, we believe we’ve created a strong competitive advantage that puts our brand in front of tens of millions of potential consumers globally. We’re applying this same approach to our newly launched pet brand “Paw CBD” and anticipate great results from these efforts as we move forward. Overall, I couldn’t be prouder of what our team has accomplished since the merger and look forward to sharing ongoing successes with our shareholders in the months and quarters ahead,” concluded Sumichrast.

Webcast Replay link – available through November 14, 2019:
https://www.investornetwork.com/event/presentation/53043

About cbdMD, Inc.

cbdMD, Inc. (NYSE American: YCBD) owns and operates the nationally recognized consumer cannabidiol (CBD) brand cbdMD whose current products include CBD tinctures, CBD gummies, CBD topical, CBD bath bombs, CBD oils, and CBD pet products. The company also operates licensing and corporate brand management businesses as well as the products division.

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, 2018 as filed with the Securities and Exchange Commission (the “SEC”) on December 12, 2018, our Quarterly Report on Form 10-Q for the period ended June 30, 2019 as filed with the SEC on August 14, 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.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.