cbdMD Reports Third Quarter Fiscal 2021 Results

Year-Over-Year Net Sales Remain Steady of $10.6 Million, Resulting in Record Trailing Twelve Month Net Sales of Over $46.4 Million

Earnings of $.02 Per Share for the Quarter 

Due To Product Production Delays from Vendors on New Product Launches, Company Reduces Q1 Fiscal 2022 Net Sales Guidance to Range of $14.9 million to $15.5 million

cbdMD, Inc. (NYSE American: YCBD, YCBDpA), one of the nation’s leading and most highly trusted and recognized cannabidiol (CBD) brands, today announced its financial results and its business highlights for its third quarter and nine months ended June 30, 2021.

Financial highlights for the Quarter Ended June 30, 2021:

• Net sales of $10.6 million for the third quarter of fiscal 2021 remained steady year-over-year resulting in record trailing twelve-month net sales of over $46.4 million.
• Gross profit margin for the third quarter of fiscal 2021 remained strong at approximately 68%, up from 65% in the prior year’s third quarter.
• E-commerce direct-to-consumer net sales were $7.8 million, a decrease of 4.9% from the prior year’s third fiscal quarter.
• Wholesale (including brick and mortar retail customers) net sales were $2.7 million, an increase of 13.7% from the prior year’s third fiscal quarter.
• Paw CBD (our award-winning CBD pet brand) had net sales of $1.5 million, an increase of 20.6% from the prior year’s third fiscal quarter.
• Quarterly operating expenses for the third quarter of fiscal 2021 were $13.9 million, an increase of 40.6% as compared to the third quarter of fiscal 2020 at $8.2 million.
• Loss from operations increased to $6.7 million for the third quarter of fiscal 2021 compared to $1.4 million from the prior year’s third fiscal quarter.
• Non-GAAP adjusted operating loss increased to $5.4 million, compared to $187,000 from the prior year’s fiscal quarter, and for the nine months ending June 30, 2021, our non-GAAP adjusted operating loss decreased by 15.2% to $8.5 million compared to $10.1 million for the prior year’s nine month period.
• Net income attributable to common shareholders for the third quarter of fiscal 2021 was approximately $977,000, or $0.02 per share, as compared to net loss of approximately $9.1 million, or $(0.18) per share from the prior year’s third fiscal quarter. Our net income attributable to common shareholders was principally attributable to a decrease of approximately $6.9 million in the non-cash contingent liability which is associated with earnout shares which may be issued under the terms of the December 2018 acquisition of Cure Based Development (which owned the cbdMD brand).
• As of June 30, 2021, we had working capital of approximately $23.2 million and cash on hand of approximately $18.9 million as compared to working capital of approximately $16.0 million and cash on hand of approximately $14.8 million at September 30, 2020.
• Due to production delays from vendors on new product launches, we are now are revising our net sales guidance for the first quarter of fiscal 2022 ending December 31, 2021 from range of $15.5 million to $16.25 million to range of $14.9 million to $15.5 million, or 20-25% YOY sales growth for the December, 2021 quarter.

Business highlights since the start of the third quarter of fiscal 2021 include:

• Expanded upon our award-winning sleep products, adding higher CBD strength tinctures and soft gels with additional levels of CBN.
• Launched cbdMD Therapeutics subsidiary to advance cannabinoid science and clinical studies and launched an initial animal health study in collaboration with Colorado State University’s Veterinary Program to study impact of our proprietary CBD on osteoarthritis.
• Renewed our NSF certification; underwent the US Hemp Authority audit, receiving our seal of approval on May 10, 2021; underwent the National Animal Supplement Council (NASC) audit, receiving their prestigious Quality Seal of approval early August 2021.
• Signed an exclusive sponsorship agreement as the Official CBD Partner of the NOBULL CrossFit Games.
• Signed a sponsorship agreement with Master Champion and 9 Time PGA Tour Winner, Patrick Reed, who is now on Team cbdMD.
• Extended our partnership with Bellator MMA.
• Closed on the public offering of 8.0% Series A Cumulative Convertible Preferred Stock for total gross proceeds of $16.5 Million.
• Acquired directcbdonline.com, adding a leading CBD marketplace, an online seller of CBD brands and products, providing access to their customer intelligence and database.
• Announced the addition of new role of Chief Revenue Officer.

“We continue to build upon our success and develop our science and infrastructure, which we believe will drive shareholder value and separate our brands from our competition. We believe that our proven ability to innovate our marketing as well as deliver award winning products to our consumers will achieve significant and lasting market brand recognition and consumer acceptance for our cbdMD, Paw CBD and cbdMD Botanicals brands,” said Martin Sumichrast, Chairman and Co-CEO of cbdMD, Inc.

cbdMD, Inc. will host a conference call at 4:15 p.m., Eastern time, on Thursday, August 12, 2021, to discuss the company’s third quarter fiscal 2021 financial results and business progress.

CONFERENCE CALL DETAILS