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

--Company Provides Guidance of $80M-$90M in Net Sales for Fiscal Year Ending September 2020

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 30th, 2018 quarter, (which was prior to the December, 2018 acquisition of the brand).

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 30th, 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.

 
CONFERENCE CALL DETAILS
 
Wednesday, August 14, 2019, 4:15 p.m. Eastern Time
 
Domestic:                         1-844-407-9500
International:                    1-862-298-0850
                
Replay dial in - Available through September 14, 2019
 
Domestic:                         1-877-481-4010
International:                    1-919-882-2331
Replay ID:                        53043
                

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.

 
 
 
                                                                                                                                                          cbdMD, INC.
                                                                                                                                             CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                                                             JUNE 30, 2019 AND SEPTEMBER 30, 2018
                                                                                                                                                      
                                                      (Unaudited)                    
                                                       June 30,                         September 30,
                                                         2019                               2018
                                                                                                                                                                                                                                         -------------------------------                       ------------------------------
  Assets
 
  Current assets:
                                                                                                           $                    $                    $                    $                    $                    $                    $  11,633,213                    $                    $  4,282,553
                         Cash and cash equivalents
                                                                                                          562,800        307,874
                         Accounts receivable
                                                                                                        1,103,628      1,537,863
                         Accounts receivable - related party
                                                                                                          276,795      1,743,874
                         Accounts receivable other
                                                                                                            6,850              -
                         Deposits
                                                                                                          626,160              -
                         Merchant reserve
                                                                                                          880,132      1,050,961
                         Marketable securities
                                                                                                        1,159,112      1,159,112
                         Investment other securities
                                                                                                          486,000        459,000
                         Note receivable                            
                                                                                                                -        156,147
                         Note receivable - related party            
                                                                                                        3,116,458        123,223
                         Inventory                                  
                                                                                                          643,649              -
                         Inventory prepaid                          
                                                                                                                -         28,049
                         Deferred issuance costs                    
                                                                                                                -        200,000
                         Prepaid consulting agreement               
                                                                                                           60,000        180,000
                         Prepaid rent                               
                                                                                                          198,000              -
                         Prepaid services with stock                
                                                                                                          889,673              -
                         Prepaid equipment - deposit                
                                                                                                                                                543,607        561,491
                         Prepaid expenses and other current assets
                                                                                                                                                     -------------------- -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- ----------
  Total current assets                                                                                 22,186,077     11,790,147
                                                                                       
                                                                                                                                
                          
  Other assets:                                                                                                                 
                                                                                                        1,016,757         53,480
                         Property and equipment, net
                                                                                                       55,133,697              -
                         Goodwill
                                                                                                       22,572,097      3,173,985
                         Intangible assets, net                                        
                                                                                  ------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- ----------
  Total other assets                                                                78,722,551      3,227,465
                                                                       
  Total assets                                                                        $                    $                    $                    $                    $                    $                    $                    $ 100,908,628                    $                    $ 15,017,612
                                                                                  ======================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== =========== ==================== ==================== ==========
 
 
 
 
                                                                                                                                                       cbdMD, INC.
                                                                                                                                          CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                                                          JUNE 30, 2019 AND SEPTEMBER 30, 2018
                                                                                                                                                       (continued)
                                                                                                                                                   
                                                                                            (Unaudited)                                        
                                                                                             June 30,                                             September 30,
                                                                            2019             2018     
                                                                                                                                                                                        -------------------- ----------- --------------------                      -------------------- ---------- --------------------
Liabilities and shareholders' equity
Current liabilities:
                                                        $                    $                    $                    $                    $                    $                    $                    $   1,886,395                      $                    $    473,717  
    Accounts payable
                                                               -            7,860  
    Accounts payable - related party
                                                           4,585          161,458  
    Deferred revenue
                                                          34,404                -  
    Customer deposit - related party
                                                         326,537                -  
    Accrued payroll
                                                          77,985            6,920  
    Accrued expenses
                                                               -          320,000  
    Accrued expenses - related party
                                                                                                                                                                                        -------------------- ----------- --------------------                      -------------------- ---------- --------------------
Total current liabilities                                                 2,329,906          969,955  
Long term liabilities                                                                                                                                          
                                                                                                     -            7,502  
    Other long term liabilities
                                                                                            70,600,000                -  
    Contingent liability
                                                                                             2,833,000           21,000  
    Deferred tax liability
                                                                                                                                                                                        -------------------- ----------- --------------------                      -------------------- ---------- --------------------
Total long term liabilities                                                                 73,433,000           28,502  
Total liabilities                                                                           75,762,906          998,457  
                                                                                                                                                                                        -------------------- ----------- --------------------                      -------------------- ---------- --------------------
cbdMD, Inc. shareholders' equity (deficit):
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                                               96,130,158       21,781,095  
Accumulated other comprehensive income (loss)                                     -       (2,512,539 )
Accumulated deficit                                  (70,782,736 )                        (6,669,497 )
                                     -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- -------------------- ---------- --------------------
Total cbdMD, Inc. shareholders' equity                                                                         25,375,142       12,607,183  
Non-controlling interest                                                   (229,420 )                         1,411,972  
                                                          -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- -------------------- ---------- --------------------
Total shareholders' equity                                                                  25,145,722       14,019,155  
                                                                               -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- -------------------- ---------- --------------------
Total liabilities and shareholders' equity                                                        $                    $                    $                    $                    $                    $ 100,908,628                      $                    $ 15,017,612  
                                                                               ==================== ==================== ==================== ==================== ==================== ==================== =========== ==================== ==================== ==================== ========== ====================
 
 
 
 
                                                                                                                                                                                                    cbdMD, INC.
                                                                                                                                                                                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                                                                                            FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2019 AND 2018
                                                                                                                                                                                                    (Unaudited)
                                                                                                                                                                                                
                                                                Three months                                  Three months                                   Nine months                                   Nine months                
                                                                    Ended                                         Ended                                         Ended                                         Ended                   
                                                                  June 30,                                      June 30,                                      June 30,                                      June 30,                  
                                                                                                          2019                                                                                2018                                                                                2019                                                                                2018
                                                                                       ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
                                                                                                                                                          
Sales                                                                                  $            9,784,199                        $            1,851,116                        $           19,042,098                        $            5,440,653  
Sales related party                                                                      -                  1,350,000                          -                  1,550,000  
                                                                                       -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Total Gross Sales                                                                9,784,199                  3,201,116                 19,042,098                  6,990,653  
                                                                                (1,739,863 )                                      (2,686 )                                  (4,075,381 )                                     (23,558 )
  Allowances
                                                                                       -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                                                 8,044,336                  1,848,430                 14,966,717                  5,417,095  
    Net sales
                                                                                         -                  1,350,000                          -                  1,550,000  
    Net sales related party
                                                                                       -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Total Net Sales                                                                  8,044,336                  3,198,430                 14,966,717                  6,967,095  
                                                                                 2,959,198                  1,106,706                  5,584,868                  1,858,651  
    Cost of sales
                                                                                       -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                                              
                                                                                 5,085,138                  2,091,724                  9,381,849                  5,108,444  
    Gross Profit
                                                                              
Operating expenses excluding impairment losses                                  11,230,914                  1,464,239                 18,680,857                  4,089,006  
Impairment of intangible assets                                                  2,114,334                          -                  2,114,334                          -  
                                                                                13,345,248                  1,464,239                 20,795,190                  4,089,006  
    Operating expenses
                                                                                       -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                                              (8,260,110           (8,260,110 )                                     627,485                (11,413,341 )                                   1,019,438  
    Income (Loss) from operations
                                                                                  (497,451 )                                           -                 (1,705,069 )                                             -
    Realized and Unrealized gain (loss) on marketable securities
                                                                               (21,547,606 )                                           -                (52,461,680 )                                             -
    (Increase) of contingent liability
                                                                                         -                          -                    (34,333 )                                     (69,311 )
    Gain (loss) on disposal of property and equipment
                                                                                    14,211                       (232 )                                      76,330                       (737 )
    Interest income (expense)
                                                                                       -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                                               (30,290,956 )                                     627,253                (65,538,093 )                                     949,390  
      Income (loss) before provision for income taxes
                                                                              
                                                                                 1,088,000                    (62,000 )                                   2,296,000                     (6,000 )
  Benefit (Provision) for income taxes
                                                                                       -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                                               (29,202,956 )                                     565,253                (63,242,093 )                                     943,390  
      Net Income (Loss)
                                                                                (1,503,707 )                                     359,179                 (1,641,391 )                                     465,848
  Net Gain (Loss) attributable to noncontrolling interest
                                                                                       -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                                              
Net Income (Loss) attributable to cbdMD, Inc. common shareholders                      $          (27,699,249 )                                         $              206,074                        $          (61,600,702 )                                         $              477,542
                                                                                       ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
                                                                              
Net Income (Loss) per share:                                                                     
                                                                                       $                (1.19 )                                         $                 0.03                        $                (4.22 )                                         $                 0.06
  Basic
                                                                                       $                    -                        $                 0.03                        $                    -                        $                 0.06
  Diluted
                                                                                       ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
                                                                              
Weighted average number of shares Basic:                                        23,193,793                  8,075,341                 14,585,619                  7,614,621  
Weighted average number of shares Diluted:                                               8,092,931                          7,637,012  
                                                                                       ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
 
 
 
 
                                                                                                                                                     cbdMD, INC.
                                                                                                                                   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                                                                  FOR THE NINE MONTHS ENDED JUNE 30, 2019 AND 2018
                                                                                                                                                     (unaudited)
                                                                                                                                                 
                                          Nine Months Ended June 30,                             Nine Months Ended June 30,
                                  2019             2018     
                                                                                                                                                                                    -------------------- ----------- --------------------                      -------------------- ---------- --------------------
Cash flows from operating activities:
Net loss                                $                        $                        $                        $                    $                    $                    $                    $ (63,242,093 )                                       $                    $    943,390  
Adjustments to reconcile net loss to net cash used by operating activities:
                                                                                                                               2,022,812          386,719  
    Stock based compensation                                                  
                                                                                                                                  92,000           39,100  
    Restricted stock expense                                                                     
                                                                                                                                 289,750          478,002  
    Issuance of stock / warrants for service                                                     
                                                                                                                               2,114,334                -  
    Intangible impairment                                                                        
                                                                                                                                       -          102,124  
    Inventory impairment                                                                         
                                                                                                                                 272,121          169,788  
    Depreciation and amortization                          
                                                                                                                                 (20,000 )                                 -  
    Gain on settlement of Note
                                                                                                                              52,461,680                -  
    Increase/(Decrease) in contingent liability
                                                                                                                               1,705,069                -  
    Realized and unrealized loss of marketable securities
                                                                                                                                       -           69,311  
    Loss on sale of property and equipment
                                                                                                                                (470,000 )                        (3,404,502 )
    Non-cash consideration received for services
Changes in operating assets and liabilities:
                                                                                           399,074          (45,502 )
    Accounts receivable
                                                                                                                                 204,902         (637,675 )
    Accounts receivable - related party
                                                                                                                                (298,754 )                        (1,204,003 )
    Other accounts receivable
                                                                                                                                                                     236,364  
    Other accounts receivable - related party
                                                                                                                                 (27,000 )                          (450,000 )
    Note receivable
                                                                                                                                 156,147          114,802  
    Note receivable - related party
                                                                                                                                (199,907 )                                 -  
    Merchant reserve
                                                  (2,581,958 )                            10,340  
    Inventory
                                                                                                                                (717,894 )                          (980,952 )
    Prepaid expenses and other current assets
                                                                                                                                 701,593                -  
    Marketable securities
                                                                                                            1,073,211         (324,785 )
    Accounts payable and accrued expenses
                                                                                                                                (313,591 )                          (470,905 )
    Accounts payable and accrued expenses - related party
                                                                                                                                (380,804 )                           121,916  
    Deferred revenue / customer deposits
                                                                     (2,296,000 )                             6,000  
    Deferred tax liability
                                          ------------------------ ------------------------ ------------------------ -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- -------------------- ---------- --------------------
Cash used by operating activities                                                                          (9,055,308 )                        (4,840,368 )
                                                                                            ------------------------ -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                  
Cash flows from investing activities:
                                                                                        (1,167,295 )                                 -  
    Net cash used for merger
                                                                                                 -         (300,000 )
    Purchase of investment other securities
                                                                                           (79,999 )                          (360,000 )
    Purchase of intangible assets
                                                                                          (359,421 )                            (2,465 )
    Purchase of property and equipment
                                                                   ------------------------ ------------------------ -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- -------------------- ---------- --------------------
Cash used by investing activities                                                                          (1,606,715 )                          (662,465 )
                                                                                            ------------------------ -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                  
Cash flows from financing activities:
                                                                                        19,009,897       10,927,535  
    Proceeds from issuance of common stock
                                                                                                                                (764,300 )                                 -  
    Note Payable - related party
                                                                                          (232,914 )                          (285,086 )
    Deferred issuance costs
                                                                                                                                                                                    -------------------- ----------- --------------------                      -------------------- ---------- --------------------
Cash provided by financing activities                                                                      18,012,683       10,642,449  
                                                                                            ------------------------ -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- -------------------- ---------- --------------------
Net increase (decrease) in cash                                                          7,350,660        5,139,616  
Cash and cash equivalents, beginning of period                                           4,282,553          284,246  
                                                                   ------------------------ ------------------------ -------------------- -------------------- -------------------- -------------------- ----------- -------------------- -------------------- -------------------- ---------- --------------------
Cash and cash equivalents, end of period                                                                $  11,633,213                        $  5,423,862
                                                                                                                                                                                    ==================== =========== ====================                      ==================== ==========
 
 
 
 
                                                                                                                                       cbdMD, INC.
                                                                                                                     CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                                                    FOR THE NINE MONTHS ENDED JUNE 30, 2019 AND 2018
                                                                                                                                 (unaudited) (continued)
 
Supplemental Disclosures of Cash Flow Information:
 
                                                  Nine Months ended June 30,                  Nine Months Ended June 30,
                                                             2019                                        2018
                                                                                                                                                                               ----------------------------------------                       ----------------------------------------
                                                                                                          
Cash Payments for:                                                                                                           
                                                                                                                      $               36,418                      $                  505
    Interest expense
                                                                                                                                                                               ==================== ====================                      ==================== ====================
                                                                                                          
Non-cash financial activities:
Warrants issued to secondary selling agent                                                                                               $              309,592                      $              171,600
                                                                                                                                                                               ==================== ====================                      ==================== ====================
Equity investment exchange to be issued in the future                                                                                    $                    -                      $              160,000
                                                                                                                                                                               ==================== ====================                      ==================== ====================
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                      $                    -
                                                                                                                                                                               ==================== ====================                      ==================== ====================
                                                                                                            
                                                                                                            

View source version on businesswire.com: https://www.businesswire.com/news/home/20190814005540/en/

SOURCE: cbdMD, Inc.

<img alt="" src="https://cts.businesswire.com/ct/CT?id=bwnews&sty=20190814005540r1&sid=cmtx6&distro=nx&lang=en" style="width:0;height:0" />

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


RedChip Companies
Craig Brelsford
craig@redchip.com 
407-644-4256

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