cbdMD(US:YCBD)2025-02-13 21:05Financial Performance - Total net sales for the three months ended December 31, 2024, were $5.1 million, a decrease of $0.3 million or 4.9% compared to $5.4 million in the same period of 2023[129]. - Adjusted EBITDA for the three months ended December 31, 2024, was $214,817, compared to a loss of $697,988 for the same period in 2023[150]. - The GAAP loss from operations for the three months ended December 31, 2024, was $(86,272), a significant improvement from $(1,065,835) in 2023[150]. - The company has reported losses from continuing operations in four of its five most recent fiscal years[141]. Sales and Revenue Composition - E-commerce sales accounted for 77.3% of total net sales in Q1 2025, down from 82.3% in Q1 2024, while wholesale sales increased to 22.7% from 17.7%[130]. - The gross profit margin improved slightly to 66.5% in Q1 2025 from 66.2% in Q1 2024, reflecting ongoing cost-saving initiatives[129]. Operating Expenses and Cost Management - Operating expenses decreased by approximately $1.2 million or 26% year-over-year, driven by reductions in staff-related expenses, marketing, and professional services[135]. - The company anticipates some increases in marketing expenses in future quarters to positively impact revenue growth[135]. Strategic Initiatives - The company launched a new line of hemp-derived ready-to-drink beverages under the Herbal Oasis brand, targeting the fastest-growing category in the hemp industry[123]. - The company is exploring international expansion, gaining market share in Central and South America, and expanding its e-commerce business in the UK[127]. - The company is evaluating potential acquisitions to lower customer acquisition costs and enhance profitability, although no pending acquisitions are currently in progress[128]. Financial Position and Compliance - As of December 31, 2024, the company had cash and cash equivalents of approximately $2.0 million and a working capital deficit of $2.8 million[137]. - As of September 30, 2024, the company reported stockholders' equity of $1,963,417, which is below the required $2 million for continued listing on NYSE American[141]. - The company remains subject to a compliance plan accepted by NYSE American on August 20, 2024, to regain compliance by December 5, 2025[141]. - If the company fails to comply with listing standards by the deadline, it may face delisting procedures[141]. - The company has no undisclosed off-balance sheet arrangements that could materially affect its financial condition[156]. Management and Reporting - Management emphasizes the importance of non-GAAP measures like Adjusted EBITDA for evaluating core operating results[147]. - The company aims to use operating cash flows to fund day-to-day operations and stabilize its cash position[144]. - The company is seeking shareholder approval to convert $5.7 million of outstanding Series A Preferred Stock and accrued dividends into shares of Common Stock to improve stockholder equity[142].