Core Insights - Herbal Oasis has announced a new distribution partnership with Beverage South, enhancing its market presence in Georgia, marking the fourth state launch in two months following Alabama, Florida, and North Carolina [1][2][3] - The THC beverage market is projected to grow significantly, with Brightfield estimating a 50% increase in US sales in 2025, reaching over $571 million [4] Company Overview - Herbal Oasis is a THC-infused social seltzer that combines cannabinoids and nootropic mushrooms, promoting a wellness-oriented, alcohol-free drinking experience [5] - cbdMD, Inc. is the parent company of Herbal Oasis, recognized as a leading brand in the cannabidiol (CBD) market, offering a range of THC-free and Delta-9 compliant products [6] Distribution Partner - Beverage South is a prominent beverage distributor in Georgia and South Carolina, operating in eight key markets and representing a diverse portfolio of beverage brands [9]

Financial Data and Key Metrics Changes - Total net sales for Q2 fiscal 2025 were $4.7 million, representing an 8.6% increase year-over-year but a 7.9% decrease from Q1 [14] - Gross profit margin remained healthy at 62% for Q2 fiscal 2025, despite increased warehouse rent and one-time CAM costs [15] - SG&A expenses decreased to $3.5 million in Q2 fiscal 2025 from $4.1 million in the prior year, primarily due to reductions in payroll and professional fees [15][16] - The net loss for Q2 fiscal 2025 was $480,000, significantly improved from a loss of $3 million in the same quarter of the previous year [16] Business Line Data and Key Metrics Changes - E-commerce direct-to-consumer sales were flat year-over-year at $3.6 million, accounting for 77% of total net sales, down from 83% in the prior year [14] - Wholesale revenue increased by 22% to $1.1 million in Q2 fiscal 2025 compared to $750,000 in the same quarter of the previous year [15] Market Data and Key Metrics Changes - The THC seltzer category is experiencing significant growth, with sales projected to exceed $4 billion by 2028, driven by a shift in consumer preferences towards functional social alternatives [11] Company Strategy and Development Direction - The company aims to drive revenue growth and achieve profitability while resolving its capital structure and regaining compliance with NYSE American listing standards [5] - The successful conversion of Series A preferred stock into common stock and the reverse stock split are seen as major milestones that simplify the capital structure and eliminate legacy obligations [6][7] - The company is focused on three revenue growth priorities: enhancing the direct-to-consumer business, expanding the wholesale business, and scaling the Herbal Oasis brand [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to regulatory changes and emphasized the importance of regulatory clarity for the long-term success of the THC seltzer category [12] - The company is committed to delivering profitable growth in 2025 and is evaluating strategic opportunities for mergers and acquisitions [19][20] Other Important Information - The company reported cash and cash equivalents of approximately $1.7 million and a working capital deficit of $3.7 million as of March 31, 2025 [17] - The company invested approximately $400,000 in inventory during the quarter to bolster key SKUs and support the rollout of the Herbal Oasis brand [18] Q&A Session Summary Question: Update on Herbal Oasis brand expansion - Management indicated that discussions with distributors began in December, with shipments starting in March and April, and further expansion into Charlotte announced in May [25][30] Question: Expectations for Herbal Oasis as a growth driver - Management expects to see contributions from the Herbal Oasis brand toward the end of 2025, with potential for material impact on top-line revenue [30] Question: Impact of preferred to common stock conversion on strategy - The conversion enhances financial flexibility and positions the company to maintain its NYSE listing, allowing for strategic investments and M&A opportunities [31][33] Question: Working capital and cash burn outlook - Management remains comfortable with the liquidity outlook through the end of fiscal 2026, despite recent cash burn trends [39][40] Question: Types of strategic activities being considered - Management is looking for opportunities that provide cost synergies and customer overlap, both within and outside the cannabinoid space [42][44]

Financial Data and Key Metrics Changes - Total net sales for Q2 2025 were $4.7 million, representing an 8.6% increase year-over-year but a 7.9% decrease from Q1 2025 [13] - Gross profit margin remained healthy at 62% for Q2 2025, despite increased warehouse rent and one-time CAM costs [14] - SG&A expenses decreased to $3.5 million in Q2 2025 from $4.1 million in the prior year, primarily due to reductions in payroll and professional fees [15] - The net loss for Q2 2025 was approximately $480,000, significantly improved from a loss of $3 million in Q2 2024 [15] Business Line Data and Key Metrics Changes - E-commerce direct-to-consumer sales were flat year-over-year at $3.6 million, accounting for 77% of total net sales in Q2 2025, down from 83% in the prior year [13] - Wholesale revenue increased by 22% to $1.1 million in Q2 2025 compared to $750,000 in Q2 2024 [14] - The company is focusing on three revenue growth priorities: enhancing direct-to-consumer business, expanding wholesale, and scaling the Herbal Oasis brand [8][10] Market Data and Key Metrics Changes - The THC seltzer category is experiencing significant growth, with sales projected to exceed $4 billion by 2028 [10] - The company is tracking active legislation in over 23 states, which is crucial for the long-term success of the THC seltzer category [11] Company Strategy and Development Direction - The company aims to drive revenue growth and achieve profitability while resolving its capital structure [5] - The successful conversion of Series A preferred stock and the reverse stock split are seen as major milestones for long-term positioning [6] - The company is exploring strategic opportunities, including M&A, to expand into new categories and customer segments [19][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to regulatory changes and emphasized a commitment to profitable growth in 2025 [19][21] - The company believes it is in a stronger position than many public peers, with no debt and a low cash burn rate [21] - Management is optimistic about the potential contributions from the Herbal Oasis brand in the latter half of 2025 [30] Other Important Information - The company has approximately $1.7 million in cash and cash equivalents, with a working capital deficit of $3.7 million as of March 31, 2025 [16] - The capital restructuring has simplified the capital structure, making the stock more investable and increasing interest from potential investors [20] Q&A Session Summary Question: Expansion plans for Herbal Oasis brand - Management indicated that discussions with distributors began in December, and shipments have started, with expectations for growth contributions by the end of 2025 [25][30] Question: Impact of preferred to common equity conversion on strategy - The conversion enhances financial flexibility and positions the company to maintain its NYSE listing, allowing for potential strategic investments [31][33] Question: Working capital situation and cash burn outlook - Management remains comfortable with the liquidity outlook through the end of fiscal 2026, aiming for improved cash generation [39][40] Question: Types of strategic activities being considered - The company is looking for opportunities that provide cost synergies and customer overlap, both within and outside the cannabinoid space [42][44] Question: Financial performance metrics for Herbal Oasis - Revenue impact from Herbal Oasis was minimal in Q2 but is expected to pick up in Q3, with a focus on volume contribution [45]

Core Insights - cbdMD, Inc. reported continued revenue growth and a trend towards profitability in the second fiscal quarter of 2025, with a revenue increase to $4.8 million from $4.3 million year-over-year [2][3] - The company successfully completed a capital structure reset through the conversion of Series A Preferred Stock, adding nearly $7 million to its equity base and achieving compliance with NYSE American listing standards [3][4] Financial Performance - Revenue for the second quarter reached $4.8 million, reflecting an increase of 11.6% compared to the prior year [2] - Operating loss narrowed significantly from $1.5 million to $0.48 million, indicating improved expense management and early success from growth initiatives [2][4] - Gross margin improved from 59% to 62% year-over-year during the second quarter [8] - Net loss attributable to common shareholders decreased to approximately $1.48 million, or $1.90 per share, compared to a net loss of approximately $4.0 million, or $10.84 per share, in the prior year [8][18] Capital Structure and Compliance - The Series A Preferred conversion on May 7, 2025, eliminated $6.7 million in accrued dividend liability and added equivalent equity value, positioning the company with a clean balance sheet and zero debt [3][4] - The company executed an 8:1 reverse stock split, resulting in approximately 8.9 million common shares outstanding as of May 15, 2025 [8] Strategic Developments - The Herbal Oasis beverage brand expanded distribution into Alabama, Florida, and North Carolina, tapping into a rapidly growing wellness category [4] - All four flavors of Herbal Oasis received medals at the 2025 High Spirits Awards, enhancing the brand's reputation and consumer appeal [4] Shareholder Engagement - The company prioritized preparations for its annual shareholder meeting and secured approval for the Series A Preferred conversion, which was critical for compliance with NYSE American standards [3][4]

PART I - FINANCIAL INFORMATION [ITEM 1. Condensed Consolidated Financial Statements](index=5&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements.) This section presents cbdMD, Inc.'s unaudited condensed consolidated financial statements for the periods ended March 31, 2025, and September 30, 2024, including balance sheets, statements of operations, comprehensive loss, cash flows, and shareholders' equity, along with detailed notes explaining significant accounting policies and financial statement items [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific points in time, detailing assets, liabilities, and equity | Metric | March 31, 2025 | September 30, 2024 | Change | % Change | | :-------------------------------- | :------------- | :----------------- | :----- | :------- | | Total Assets | $10,937,719 | $10,581,457 | $356,262 | 3.37% | | Cash and cash equivalents | $1,765,234 | $2,452,553 | $(687,319) | -28.02% | | Total Liabilities | $10,271,921 | $8,618,040 | $1,653,881 | 19.19% | | Accrued dividends | $6,672,000 | $4,671,000 | $2,001,000 | 42.84% | | Total Shareholders' Equity | $665,798 | $1,963,417 | $(1,297,619) | -66.09% | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss over specific reporting periods | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Total Net Sales | $4,749,426 | $4,376,518 | $9,862,902 | $9,751,923 | | Gross Profit | $2,959,364 | $2,580,728 | $6,359,973 | $6,138,225 | | Loss from operations | $(485,816) | $(1,550,991) | $(572,088) | $(2,616,828) | | Net Loss | $(480,757) | $(3,010,562) | $(465,662) | $(4,007,065) | | Net Loss attributable to common shareholders | $(1,481,257) | $(4,011,062) | $(2,466,663) | $(6,008,065) | | Basic and Diluted loss per share | $(1.90) | $(10.84) | $(3.67) | $(16.23) | [Condensed Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the total comprehensive loss, encompassing net loss and other comprehensive income or loss items | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Net Loss | $(480,757) | $(3,010,562) | $(465,662) | $(4,007,065) | | Comprehensive Loss | $(480,757) | $(3,010,562) | $(465,662) | $(4,007,065) | | Comprehensive Loss attributable to common shareholders | $(1,481,257) | $(4,011,062) | $(2,466,663) | $(6,008,065) | [Condensed Consolidated Statement of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over a period | Metric | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | | Net Loss | $(465,662) | $(4,007,065) | | Cash flows from operating activities | $(507,426) | $(809,948) | | Cash flows from investing activities | $(179,893) | $(180,015) | | Cash flows from financing activities | $- | $1,297,499 | | Net increase (decrease) in cash | $(687,319) | $307,536 | | Cash and cash equivalents, end of period | $1,765,234 | $2,105,396 | [Condensed Consolidated Statements of Shareholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) This section details changes in the equity accounts of the company, including common stock, preferred stock, additional paid-in capital, and accumulated deficit | Metric | March 31, 2025 | September 30, 2024 | | :----------------------------------- | :------------- | :----------------- | | Common Stock Shares Outstanding | 783,355 | 492,383 | | Common Stock Amount | $783 | $492 | | Preferred Stock Shares Outstanding | 5,000,000 | 5,000,000 | | Preferred Stock Amount | $5,000 | $5,000 | | Additional Paid in Capital | $185,194,577 | $184,033,012 | | Accumulated Deficit | $(184,534,562) | $(182,067,898) | | Total Shareholders' Equity | $665,798 | $1,963,417 | - The Company issued **89,964 shares of common stock** in January 2025 and **177,634 shares** during the first quarter of 2025 for conversions of convertible notes[84](index=84&type=chunk)[85](index=85&type=chunk). Additionally, **21,875 shares** were issued to a consultant in November 2024[86](index=86&type=chunk) - Subsequent to quarter end, all preferred stock, including declared and accrued dividends, was converted to common stock, and a **one-for-eight reverse stock split** was effected on May 6, 2025[78](index=78&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information regarding the figures presented in the financial statements - The Company effected a **one-for-eight reverse stock split** on April 17, 2025, effective May 6, 2025, impacting all share numbers in the filing[38](index=38&type=chunk)[110](index=110&type=chunk) - The Company's financial statements are prepared assuming it will continue as a going concern, despite a working capital deficit of **$3.7 million** at March 31, 2025, and a net loss of **$465,662** for the six months ended March 31, 2025[64](index=64&type=chunk). The ability to continue is dependent on improving profitability and securing additional funding[65](index=65&type=chunk) - All outstanding shares of Series A Preferred Stock were converted to Common Stock on May 6, 2025, at a ratio of one preferred share to 13 common shares, inclusive of all accumulated and unpaid dividends[78](index=78&type=chunk)[109](index=109&type=chunk). This conversion eliminated **$6.7 million** in accrued dividends as of March 31, 2025, and is expected to help regain compliance with NYSE American listing standards[141](index=141&type=chunk) Allowance for Credit Losses | Metric | March 31, 2025 | September 30, 2024 | | :-------------------------- | :------------- | :----------------- | | Credit loss allowance - beginning of period | $346,197 | $42,180 | | Credit loss provision | $388,693 | $358,339 | | Write offs | $(318,046) | $(54,322) | | Credit loss allowance - end of period | $416,844 | $346,197 | Net Sales by Channel (Six Months Ended March 31) | Sales Channel | 2025 | % of total 2025 | 2024 | % of total 2024 | | :-------------- | :----------- | :-------------- | :----------- | :-------------- | | E-commerce sales | $7,587,523 | 76.9% | $8,049,724 | 82.5% | | Wholesale sales | $2,275,379 | 23.1% | $1,702,199 | 17.5% | | Total Net Sales | $9,862,902 | 100.0% | $9,751,923 | 100.0% | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the Company's financial condition and operational results for the three and six months ended March 31, 2025 and 2024, highlighting strategic initiatives, recent developments, and key financial performance indicators [Our Company](index=27&type=section&id=Our%20Company) This section describes cbdMD, Inc.'s core business, brands, and product offerings in the CBD and functional wellness markets - cbdMD, Inc. owns and operates nationally recognized CBD brands (cbdMD, Paw CBD) and the functional mushroom brand ATRx Labs, producing and distributing hemp-derived broad and full-spectrum CBD products[115](index=115&type=chunk) - The Company's product portfolio includes tinctures, gummies, topicals, capsules, and sleep/focus/calming aids under the cbdMD brand, veterinarian-formulated products under Paw CBD, and functional mushroom products under ATRx[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - New brands include ATRx and Herbal Oasis ('Oasis'), a THC-infused social seltzer blending cannabinoids and nootropic mushrooms[118](index=118&type=chunk)[119](index=119&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) This section outlines key operational and financial events that have recently impacted the company's performance and strategic direction - Management is focused on achieving positive earnings by optimizing the product portfolio, right-sizing the cost structure, and investing in marketing for positive customer acquisition returns[121](index=121&type=chunk) - Fiscal Q1 2025 marked the first time the Company achieved sequential revenue growth, Non-GAAP Net Income (before preferred dividend accrual), and positive Non-GAAP EBITDA[121](index=121&type=chunk) - Q2 2025 revenue declined due to management's focus on securing shareholder approval for Series A Preferred stock conversion, marketing team weaknesses, and intermittent inventory shortages[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - The new hemp-derived Oasis beverage line launched in Q1 2025, secured distribution through leading alcohol distributors in Alabama, Florida, Georgia, and North Carolina, and received multiple medals at the 2025 LA Spirits Awards[125](index=125&type=chunk) [Growth Strategies](index=30&type=section&id=Growth%20Strategies) This section details the company's plans for expanding its market presence, product offerings, and revenue streams - Product innovation focuses on superior functional products with enhanced efficacy and absorption, including reformulations of sleep products and the launch of the Oasis beverage line[127](index=127&type=chunk) - The Company is expanding revenue channels by pursuing traditional retail accounts (e.g., Sprouts, GNC), adding Door Dash as a customer, and developing relationships with beer and alcohol distributors for the Oasis line[127](index=127&type=chunk) - International expansion efforts include gaining market share in Central and South America through sanitary registration approvals and growing the UK e-commerce business, including on Amazon's platform[127](index=127&type=chunk) - The Company continues to cultivate additional brands like Paw CBD and ATRx, and launched the Oasis brand[127](index=127&type=chunk). It also evaluates accretive M&A opportunities, with the elimination of Series A Preferred Stock increasing inbound opportunities[128](index=128&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20operations) This section analyzes the company's financial performance over the reporting periods, focusing on revenue, cost of sales, and operating expenses Net Sales Performance | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :---------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total Net Sales | $4,749,426 | $4,376,518 | $372,908 | 8.52% | | E-commerce sales | $3,634,793 | $3,625,719 | $9,074 | 0.25% | | Wholesale sales | $1,114,633 | $750,799 | $363,834 | 48.46% | | Metric | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | Change | % Change | | :---------------- | :------------------------------ | :------------------------------ | :----- | :------- | | Total Net Sales | $9,862,902 | $9,751,923 | $110,979 | 1.14% | | E-commerce sales | $7,587,523 | $8,049,724 | $(462,201) | -5.74% | | Wholesale sales | $2,275,379 | $1,702,199 | $573,180 | 33.67% | - Cost of sales as a percentage of net sales decreased to **37.7%** for the three months ended March 31, 2025, from **41.0%** in the prior year, primarily due to a credit provided to a customer in 2024, partially offset by increased warehouse rent[132](index=132&type=chunk) Operating Expenses | Expense Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Staff related expense | $1,247,439 | $1,384,558 | $(137,119) | -9.90% | | Accounting/legal/professional services | $287,002 | $427,630 | $(140,628) | -32.89% | | Marketing/Advertising | $1,124,246 | $979,625 | $144,621 | 14.76% | | Rent and utilities | $224,264 | $407,895 | $(183,631) | -45.02% | | All other expenses | $132,577 | $460,150 | $(327,573) | -71.19% | | **Total Operating Expenses** | **$3,445,180** | **$4,131,719** | **$(686,539)** | **-16.61%** | | Expense Category | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | Change | % Change | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----- | :------- | | Staff related expense | $2,489,318 | $2,771,424 | $(282,106) | -10.18% | | Accounting/legal/professional services | $632,413 | $880,854 | $(248,441) | -28.21% | | Marketing/Advertising | $2,125,487 | $2,372,620 | $(247,133) | -10.42% | | Rent and utilities | $363,509 | $803,206 | $(439,697) | -54.74% | | All other expenses | $439,008 | $974,335 | $(535,327) | -54.94% | | **Total Operating Expenses** | **$6,932,061** | **$8,755,053** | **$(1,822,992)** | **-20.82%** | - Overall operating expenses decreased by **$0.7 million (17%)** for the three months and **$1.8 million** for the six months ended March 31, 2025, driven by cost reduction efforts, including rental decreases from eliminating the HQ office and reduced professional, accounting, and legal expenses[135](index=135&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations and fund its operations Liquidity Overview | Metric | March 31, 2025 | September 30, 2024 | | :-------------------------- | :------------- | :----------------- | | Cash and cash equivalents | $1.8 million | $2.4 million | | Working capital deficit | $3.7 million | $1.1 million | | Accrued dividend payments | $6.7 million | $4.7 million | | Adjusted working capital (excluding accrued dividends) | $3.3 million | $2.4 million | - The Company's working capital position may not be sufficient for daily operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern[139](index=139&type=chunk) - cbdMD is not in compliance with NYSE American continued listing standards due to stockholders' equity below **$2.0 million** and **$4.0 million** thresholds[140](index=140&type=chunk). However, the post-period conversion of Series A Preferred Stock and accrued dividends to common stock (totaling **$6.7 million**) is expected to bring the Company into compliance[141](index=141&type=chunk) [Adjusted EBITDA](index=34&type=section&id=Adjusted%20EBITDA) This section presents Adjusted EBITDA, a non-GAAP financial measure, to provide insights into the company's operational performance excluding certain non-cash and non-recurring items - Adjusted EBITDA is a non-GAAP measure defined as Earnings Before Interest, Taxes, Depreciation and Amortization, excluding stock-based compensation, M&A, and financing transaction expenses[145](index=145&type=chunk) Non-GAAP Adjusted EBITDA | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | GAAP (loss) from operations | $(485,816) | $(1,550,991) | $(572,088) | $(2,616,828) | | Non-GAAP adjusted EBITDA | $(197,986) | $(678,189) | $16,831 | $(1,376,178) | - The Company achieved positive Non-GAAP Adjusted EBITDA of **$16,831** for the six months ended March 31, 2025, a significant improvement from a loss of **$(1,376,178)** in the prior year period[149](index=149&type=chunk) [Critical Accounting Policies](index=36&type=section&id=Critical%20accounting%20policies) This section outlines the significant accounting policies that require management's most difficult, subjective, or complex judgments and estimates - The preparation of financial statements requires management to make judgments, assumptions, and estimates that affect reported amounts, with significant estimates including allowances for credit losses, inventory valuation, and valuation of investments and long-lived assets[151](index=151&type=chunk) [Recent Accounting Pronouncements](index=37&type=section&id=Recent%20accounting%20pronouncements) This section discusses the impact of recently issued accounting standards on the company's financial reporting - The Company is evaluating the impacts of ASU 2023-09 (Income Taxes) and adopted ASU 2023-07 (Segment Reporting), which enhances segment disclosure requirements[68](index=68&type=chunk)[69](index=69&type=chunk) [Off Balance Sheet Arrangements](index=37&type=section&id=Off%20balance%20sheet%20arrangements) This section discloses any material off-balance sheet arrangements that could have a current or future effect on the company's financial condition - As of the report date, the Company has no undisclosed off-balance sheet arrangements that are material to its financial condition or results of operations[155](index=155&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, cbdMD, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[156](index=156&type=chunk) [ITEM 4. Controls and Procedures](index=37&type=section&id=ITEM%204.%20Controls%20and%20Procedures.) Management, including the principal executive and accounting officers, concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025. There were no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were deemed effective as of the end of the reporting period, ensuring timely and accurate information disclosure[157](index=157&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[158](index=158&type=chunk) PART II - OTHER INFORMATION [ITEM 1. Legal Proceedings](index=38&type=section&id=ITEM%201.%20Legal%20Proceedings.) There are no legal proceedings to report for the Company - The Company has no legal proceedings to disclose[160](index=160&type=chunk) [ITEM 1A. Risk Factors](index=38&type=page&id=ITEM%201A.%20Risk%20Factors.) The Company incorporates by reference risk factors from its 2024 10-K and highlights potential impacts of tariffs on imported packaging materials, which could increase costs, disrupt supply chains, and negatively affect financial condition - The Company incorporates risk factors from its 2024 10-K and specifically notes the potential for increased costs and supply chain disruptions due to tariffs on imported packaging materials[160](index=160&type=chunk)[161](index=161&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The Company has not sold any unregistered securities during the reporting period, except for those previously disclosed - No unregistered sales of equity securities occurred during the period covered by this report, other than those previously disclosed[162](index=162&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=38&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities.) There are no defaults upon senior securities to report for the Company - The Company has no defaults upon senior securities to report[163](index=163&type=chunk) [ITEM 4. Mine Safety Disclosures](index=38&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures.) Mine safety disclosures are not applicable to the Company's operations - Mine safety disclosures are not applicable to the Company's operations[164](index=164&type=chunk) [ITEM 5. Other Information](index=39&type=section&id=ITEM%205.%20Other%20Information.) This section provides the Auditor Firm ID for Cherry Bekaert LLP - The Auditor Firm ID for Cherry Bekaert LLP, the Company's external auditors, is **677**[166](index=166&type=chunk) [ITEM 6. Exhibits](index=39&type=section&id=ITEM%206.%20Exhibits.) This section lists all exhibits filed with the Form 10-Q, including merger agreements, articles of incorporation amendments, and certifications - The exhibits include various corporate documents such as merger agreements, articles of incorporation, and certifications, with recent amendments related to the automatic conversion of preferred stock and an **8-to-1 reverse stock split** effective May 6, 2025[167](index=167&type=chunk)

Group 1 - cbdMD, Inc. will host a conference call on May 15, 2025, at 4:20 p.m. Eastern Time to discuss its financial results for the second quarter of fiscal year 2025, ending March 31, 2025 [1] - The company is recognized as one of the leading and most trusted CBD brands in the United States, offering a comprehensive line of THC-free CBD products and Delta 9 products compliant with the Farm Act [2][3] - cbdMD's product offerings include veterinarian-formulated pet products under the Paw CBD brand and functional mushroom products under the ATRx brand, as well as a THC-infused social seltzer called Herbal Oasis [2]

Company Overview - Herbal Oasis is a hemp-derived THC-infused social seltzer brand that aims to redefine social interactions and promote a healthier lifestyle [1][3] - The brand is a subsidiary of cbdMD, Inc., which is recognized as a leading cannabidiol (CBD) brand with a comprehensive line of THC-free products [5] Recent Developments - Herbal Oasis has entered into a distribution agreement with Carolina Premium Beverage, allowing its products to be available in Charlotte, North Carolina, and surrounding areas starting in May 2025 [1][2] - This marks the brand's expansion into its third state within two months, following successful launches in Alabama and Florida, indicating strong growth momentum in the Southeast [2] Product Offering - Oasis is designed for health-conscious consumers seeking alternatives to alcohol, combining hemp-derived THC, CBG, and functional mushrooms to create a unique beverage experience [3] - The product is marketed as an alcohol-free option that promotes clarity, balance, and social connection [4] Strategic Partnerships - The partnership with Carolina Premium Beverage is seen as a strategic move to enhance market reach and accelerate growth in the Southeast region [4][6] - Carolina Premium Beverage has a strong market presence, serving over 2,800 retailers and positioning itself among the top 1% of beer wholesalers in the nation [6][8]

To view an enhanced version of this graphic, please visit: https://images.newsfilecorp.com/files/8580/249598_a40808d0843b1bd5_001full.jpg Herbal Oasis Social Tonic was awarded in the "Other Infused Beverage Products" category, a distinction that highlights unique formats pushing the edge of THC beverage innovation. The recognition comes just four months after the brand's national launch, marking a fast ascent for a beverage positioned as a stylish, non- alcoholic alternative for social settings. "We created ...

cbdMD, Inc. Announces Automatic Conversion Date of Series A Preferred Stock and One for Eight Reverse Split of its Common Stock Immediately Following the Automatic Conversion April 21, 2025 8:20 PM EDT | Source: cbdMD Charlotte, North Carolina--(Newsfile Corp. - April 21, 2025) - cbdMD, Inc. (NYSE American: YCBD) (NYSE American: YCBD PRA) (the "Company") one of the nation's leading and most highly trusted and recognized CBD companies, and operator of the leading CBD brands cbdMD and Paw CBD, along with its ...

Core Viewpoint - cbdMD, Inc. announced the approval of the automatic conversion of its Series A Preferred Stock into Common Stock, which is expected to enhance its capital structure and eliminate significant dividend obligations [1][2]. Group 1: Shareholder Meeting Outcomes - Shareholders approved the automatic conversion of each share of Preferred Stock into thirteen shares of Common Stock, including all accumulated and unpaid dividends as of the Mandatory Exchange Date [1]. - The conversion is projected to eliminate approximately $6.7 million in accrued dividend payments as of March 31, 2025, and $4 million in annual dividend obligations, allowing the company to reinvest this capital into growth initiatives [2]. - Seven directors were elected for a term expiring at the 2026 annual meeting, Cherry Bekaert LLP was ratified as the independent registered public accounting firm, and an amendment for a reverse stock split was approved [2]. Group 2: Company Overview - cbdMD is recognized as a leading CBD company, offering a comprehensive line of THC-free CBD products and other brands such as Paw CBD, ATRx Labs, and Herbal Oasis [3]. - The company emphasizes its commitment to producing high-quality, U.S.-grown CBD products and aims to provide wellness-focused beverages through its Herbal Oasis brand [3].