cbdMD(YCBD) - 2025 Q3 - Quarterly Report

Report Overview Filing Information This document is a Form 10-Q quarterly report filed by cbdMD, INC. for the period ended June 30, 2025. The company is a non-accelerated filer and a smaller reporting company, with 8,912,959 shares of common stock outstanding as of August 13, 2025 - The registrant is cbdMD, INC., a North Carolina corporation, filing a Quarterly Report on Form 10-Q for the period ended June 30, 2025[2] Filer Type and Common Stock Outstanding | Indicator | Value | | :--- | :--- | | Filer Type | Non-accelerated Filer, Smaller reporting company | | Common Stock Outstanding (as of Aug 13, 2025) | 8,912,959 shares | Other Pertinent Information This section defines key terms used throughout the report, including the Company's various subsidiaries (CBDI, Paw CBD, Proline, Therapeutics) and specific fiscal period references. It also states that information on the corporate website and social media is not part of this report - The terms 'Company,' 'cbdMD,' 'we,' 'us,' 'our' refer to cbdMD, Inc. and its subsidiaries: CBD Industries LLC (CBDI), Paw CBD, Inc. (Paw CBD), Proline Global, LLC (Proline), and cbdMD Therapeutics LLC (Therapeutics)[13] - Fiscal year definitions are provided, with 'fiscal 2025' referring to the year ending September 30, 2025, and specific quarterly periods defined[13] Cautionary Statement Regarding Forward-Looking Information The report contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially. Readers are cautioned against undue reliance and advised to review risk factors in this report and the 2024 10-K - The report includes forward-looking statements concerning future events and financial performance, which involve known and unknown risks and uncertainties[16] - Key risks include a history of losses, potential liquidity concerns, need for additional capital, reliance on digital channels, ability to acquire profitable customers, reliance on third-party suppliers, regulatory environment for dietary ingredients (like CBD), and risks related to NYSE American listing standards[18] - The Company undertakes no obligation to publicly release revisions to forward-looking statements, except as required by federal securities laws[17] PART I - FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for cbdMD, Inc., including balance sheets, statements of operations, comprehensive loss, cash flows, and shareholders' equity, along with detailed notes explaining significant accounting policies and specific financial line items Condensed Consolidated Balance Sheets The balance sheets show a decrease in total assets from $10.58 million at September 30, 2024, to $9.90 million at June 30, 2025, primarily driven by a reduction in cash and cash equivalents and intangible assets. Total liabilities significantly decreased from $8.62 million to $3.78 million, largely due to the conversion of accrued dividends and convertible notes Condensed Consolidated Balance Sheet Metrics | Metric | June 30, 2025 | September 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $1,059,559 | $2,452,553 | $(1,392,994) | | Total current assets | $5,597,002 | $6,389,084 | $(792,082) | | Total assets | $9,895,256 | $10,581,457 | $(686,201) | | Total current liabilities | $3,583,518 | $8,618,040 | $(5,034,522) | | Total liabilities | $3,784,753 | $8,618,040 | $(4,833,287) | | Total shareholders' equity | $6,110,503 | $1,963,417 | $4,147,086 | - Accrued dividends decreased from $4.7 million to $0, and convertible notes decreased from $1.2 million to $0, contributing to the significant reduction in current liabilities[23] Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, the company reported a net loss of $(0.9) million compared to a net income of $0.5 million in the prior year, primarily due to decreased net sales and an operating loss. For the nine months, net loss attributable to common shareholders improved to $(3.7) million from $(6.5) million year-over-year Condensed Consolidated Statements of Operations Metrics | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Net Sales | $4,606,796 | $5,173,878 | $14,469,698 | $14,925,801 | | Gross Profit | $2,831,087 | $3,403,514 | $9,191,060 | $9,541,740 | | Loss from operations | $(904,686) | $(382,028) | $(1,476,774) | $(2,998,855) | | Net Loss (income) | $(895,272) | $459,737 | $(1,360,934) | $(3,547,327) | | Net Loss attributable to cbdMD, Inc. common shareholders | $(1,228,772) | $(540,763) | $(3,695,435) | $(6,548,828) | | Basic and Diluted earnings per share | $(0.21) | $(8.93) | $(1.56) | $(16.39) | - Preferred dividends for the nine months ended June 30, 2025, were $2,334,501, down from $3,001,501 in the prior year[25] Condensed Consolidated Statements of Comprehensive Loss The comprehensive loss attributable to common shareholders for the three months ended June 30, 2025, was $(1.2) million, compared to $(0.5) million in the prior year. For the nine months, it improved to $(3.7) million from $(6.6) million in 2024 Condensed Consolidated Statements of Comprehensive Loss Metrics | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (Loss) income | $(895,272) | $459,737 | $(1,360,934) | $(3,547,327) | | Comprehensive (Loss) income | $(895,272) | $459,737 | $(1,360,934) | $(3,547,327) | | Comprehensive Loss attributable to cbdMD, Inc. common shareholders | $(1,228,772) | $(535,963) | $(3,688,246) | $(6,550,028) | Condensed Consolidated Statement of Cash Flows For the nine months ended June 30, 2025, cash used in operating activities increased to $(1.2) million from $(0.5) million in the prior year. Investing activities used $(0.2) million, while financing activities generated no cash in 2025 compared to $1.3 million in 2024, resulting in a net decrease in cash of $(1.4) million Condensed Consolidated Statement of Cash Flows Metrics | Cash Flow Activity | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Loss | $(1,360,934) | $(3,547,327) | | Cash used by operating activities | $(1,211,626) | $(520,169) | | Cash flows from investing activities | $(181,368) | $(180,015) | | Cash flows from financing activities | $- | $1,297,499 | | Net (decrease) increase in cash | $(1,392,994) | $597,315 | | Cash and cash equivalents, end of period | $1,059,559 | $2,395,175 | - Non-cash activities included the issuance of shares for conversion of debt and accrued interest ($1,079,639) and conversion of accrued preferred dividends to preferred stock ($6,672,652) in 2025[29] Condensed Consolidated Statements of Shareholders' Equity Shareholders' equity significantly increased from $2.0 million at September 30, 2024, to $6.1 million at June 30, 2025, primarily driven by the automatic conversion of all Preferred Stock and accrued dividends into common stock on May 6, 2025, and a one-for-eight reverse stock split Condensed Consolidated Statements of Shareholders' Equity Metrics | Metric | September 30, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Common Stock Shares | 492,383 | 8,908,444 | | Preferred Stock Shares | 5,000,000 | 0 | | Total Shareholders' Equity | $1,963,417 | $6,110,503 | - On May 6, 2025, all Preferred Stock and accrued unpaid dividends were converted into 65,000,000 shares (pre-split) of Common Stock, and a one-for-eight reverse stock split was effected immediately thereafter[40][81][82] - During the nine months ended June 30, 2025, the Company issued 267,597 shares of common stock for conversions of notes payable and 21,875 shares to a consultant for advisory services[83] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations of the company's accounting policies, significant estimates, and specific financial statement line items, including changes in accounts receivable, inventory, property and equipment, intangible assets, and the impact of the reverse stock split and preferred stock conversion NOTE 1 – Organization and Summary of Significant Accounting Policies This note outlines the company's formation, name changes, fiscal year, and key accounting policies, detailing the impact of the one-for-eight reverse stock split, significant estimates, fair value accounting, revenue recognition, and going concern considerations due to accumulated deficits - 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[40] Selected Balance Sheet Allowances and Reserves | Metric | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Credit loss allowance - end of period | $517,749 | $346,197 | | Inventory Reserve | $131,195 | $0 | - The Company experienced a loss of $1.361 million for the nine months ended June 30, 2025, and an accumulated deficit of approximately $179.1 million, raising substantial doubt about its ability to continue as a going concern[66][67] Net Sales by Channel | Sales Channel | 3 Months Ended June 30, 2025 (% of total) | 3 Months Ended June 30, 2024 (% of total) | 9 Months Ended June 30, 2025 (% of total) | 9 Months Ended June 30, 2024 (% of total) | | :--- | :--- | :--- | :--- | :--- | | E-commerce sales | $3,579,635 (77.7%) | $3,937,930 (76.1%) | $11,167,158 (77.2%) | $11,987,654 (80.3%) | | Wholesale sales | $1,027,161 (22.3%) | $1,235,948 (23.9%) | $3,302,540 (22.8%) | $2,938,147 (19.7%) | | Total Net Sales | $4,606,796 (100.0%) | $5,173,878 (100.0%) | $14,469,698 (100.0%) | $14,925,801 (100.0%) | NOTE 2 – Marketable Securities and Investment Other Securities The Company values marketable securities at fair value and may elect to estimate fair value for other securities at cost less impairment. An investment in Steady State, LLC, initially valued at $1.4 million, was impaired by $0.7 million in September 2023 and is classified as a Level 3 non-current asset - The Company's investment in Steady State, LLC, initially $1.4 million, was impaired by $0.7 million in September 2023 and is classified as a Level 3 fair value measurement[74] NOTE 3 - Inventory Inventory is valued at the lower of cost or net realizable value, with cost determined on a weighted average basis. The total inventory increased to $3.2 million at June 30, 2025, from $2.5 million at September 30, 2024, and a reserve for inventory of $0.1 million was recorded at June 30, 2025 Inventory Composition | Inventory Category | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Finished Goods | $1,838,339 | $1,534,718 | | Inventory Components | $1,091,538 | $830,469 | | Inventory Reserve | $(131,195) | $- | | Inventory prepaid | $380,039 | $159,006 | | Total Inventory | $3,178,721 | $2,524,193 | NOTE 4 – Property and Equipment Net property and equipment decreased to $0.3 million at June 30, 2025, from $0.5 million at September 30, 2024. Depreciation expense for the nine months ended June 30, 2025, was $0.3 million, a decrease from $0.4 million in the prior year Property and Equipment, Net | Category | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Computers, furniture and equipment | $1,758,805 | $1,587,411 | | Manufacturing equipment | $285,750 | $284,275 | | Leasehold improvements | $495,581 | $487,081 | | Less accumulated depreciation | $(2,194,775) | $(1,904,499) | | Property and equipment, net | $345,361 | $454,268 | - Depreciation expense for the nine months ended June 30, 2025, was $290,275, down from $395,098 in the same period of 2024[77] NOTE 5 – Intangible Assets Total intangible assets decreased to $2.3 million at June 30, 2025, from $2.9 million at September 30, 2024, primarily due to amortization. Amortization expense for definite-lived intangible assets was $0.6 million for the nine months ended June 30, 2025 Intangible Assets Composition | Category | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Trademark related to cbdMD | $21,585,000 | $21,585,000 | | Impairment of intangible assets | $(17,504,000) | $(17,504,000) | | Amortization of definite lived intangible assets | $(3,600,632) | $(3,026,831) | | Total Intangible Assets | $2,315,779 | $2,889,580 | - Amortization expense for definite lived intangible assets was $573,801 for the nine months ended June 30, 2025, an increase from $518,526 in the prior year[78] NOTE 6 – Related Party Transactions There were no related party transactions reported for the period - No related party transactions were reported[79] NOTE 7 – Shareholders' Equity Shareholders approved an automatic conversion of Preferred Stock and a reverse stock split. On May 6, 2025, all Preferred Stock and accrued dividends converted into common stock, and a one-for-eight reverse stock split was implemented, resulting in 8,125,000 shares of common stock from the conversion - Shareholders approved an amendment to the Certificate of Designation for automatic conversion of Preferred Stock into thirteen shares of Common Stock per share, including accrued dividends[81][85] - A one-for-eight reverse stock split was implemented on May 6, 2025, immediately following the Preferred Stock conversion[82][85] - During the nine months ended June 30, 2025, the Company issued 267,597 shares of common stock for convertible notes and 21,875 shares to a consultant[83] NOTE 8 – Stock Based Compensation As of June 30, 2025, there were 5,517 stock options outstanding with a weighted average exercise price of $991.71 and a remaining contractual term of 2.39 years. All outstanding stock options were vested, resulting in no remaining unrecognized stock compensation costs Stock Option Details | Metric | June 30, 2025 | | :--- | :--- | | Outstanding shares | 5,517 | | Weighted average exercise price | $991.71 | | Weighted average remaining contractual term (years) | 2.39 | | Exercisable shares | 5,517 | - As of June 30, 2025, there were no remaining unrecognized stock compensation costs as all stock options were vested[86] NOTE 9 - Warrants As of June 30, 2025, there were 5,901 warrants outstanding with a weighted average exercise price of $208.75 and a remaining contractual term of 2.54 years. These include warrants exercisable at $1,346.40 (expiring Dec 2025), $1,350.00 (expiring June 2026), and $20.16 (expiring April 2028) Warrant Details | Metric | June 30, 2025 | | :--- | :--- | | Outstanding shares | 5,901 | | Weighted average exercise price | $208.75 | | Weighted average remaining contractual term (years) | 2.54 | | Exercisable shares | 5,901 | Warrant Exercise Prices and Expiration Dates | Exercise Price | Number of Shares | Expiration | | :--- | :--- | :--- | | $1,346.40 | 429 | December 2025 | | $1,350.00 | 409 | June 2026 | | $20.16 | 5,063 | April 2028 | NOTE 10 – Commitments and Contingencies The Company is not currently involved in any material pending or threatened litigation or other legal proceedings - The Company is not currently the subject of any material pending or threatened litigation or other legal proceedings[89] NOTE 11 – Note Payable The 8% Senior Secured Original Issue 20% Discount Convertible Promissory Notes, with an aggregate principal amount of $1.5 million, were fully converted and satisfied between April 2024 and January 2025. As of June 30, 2025, the balance of convertible notes was $0 - The Company issued 8% Senior Secured Original Issue 20% Discount Convertible Promissory Notes with an aggregate principal amount of $1,541,666 on February 1, 2024[90] - From April 2024 through January 2025, these Notes were fully converted and satisfied, resulting in a balance of $0 at June 30, 2025[68][69] - During the nine months ending June 30, 2025, 267,597 shares of common stock were issued upon partial conversion of the remaining balance[92] NOTE 12 – Leases The Company has operating lease agreements for its warehouse and executive office, expiring in September 2026. As of June 30, 2025, the weighted average remaining lease term was 1.25 years with a weighted average discount rate of 4.66%. Total future lease payments amount to $1.0 million - The Company's operating lease for its warehouse and executive office expires in September 2026[94] Lease Agreement Details | Metric | Value | | :--- | :--- | | Weighted average remaining lease term | 1.25 years | | Weighted average discount rate | 4.66% | | Total future lease payments | $993,200 | | Total lease liabilities | $962,738 | - Total operating lease costs for the nine months ended June 30, 2025, were $482,596[97] NOTE 13 – Loss Per Share At June 30, 2025, 7,392 potential shares underlying options, unvested RSUs, and warrants were excluded from diluted loss per share calculation as their inclusion would be anti-dilutive - 7,392 potential shares from options, unvested RSUs, and warrants were excluded from diluted loss per share calculation at June 30, 2025, due to their anti-dilutive effect[101] NOTE 14 – Income Taxes The Company maintains a full valuation allowance against its net deferred tax assets, resulting in a net deferred tax asset of zero at June 30, 2025, as management believes it is more likely than not that the net deferred asset will not be realized - The Company has a full valuation allowance against its net deferred tax assets, resulting in a net deferred tax asset of zero at June 30, 2025[103] NOTE 15 – Subsequent Events On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing significant changes to tax law. The Company is currently evaluating the impact of this act on its future financial statements - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, bringing significant changes to tax law[104] - The Company is evaluating the impact of the OBBBA on its financial position, results of operations, and cash flows for future periods[104] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results for the three and nine months ended June 30, 2025 and 2024, highlighting recent developments, growth strategies, and key financial performance metrics Our Company cbdMD, Inc. operates nationally recognized CBD brands (cbdMD, Paw CBD), functional mushroom brand (ATRx Labs), and hemp-derived THC beverages (Herbal Oasis). The company focuses on optimizing its product portfolio, right-sizing costs, and investing in marketing for positive customer acquisition returns. Recent challenges include a revenue decline in Q3 2025 due to management focus on preferred stock conversion, marketing team weaknesses, and inventory shortages, alongside increased state and federal regulatory activity - cbdMD, Inc. owns and operates CBD brands (cbdMD, Paw CBD), functional mushroom brand (ATRx Labs), and hemp-derived THC beverage brand (Herbal Oasis)[108][113] - The company experienced a revenue decline in Q3 2025 due to management's focus on securing shareholder approval for preferred stock conversion, weaknesses in the marketing team, and intermittent stock shortages[116][117] - Increased state and federal regulatory activity, including new labeling requirements and proposals to alter the definition of hemp-derived products, has required significant management attention and capital[118][119] - cbdMD launched Oasis, a hemp-derived THC-infused seltzer, into the rapidly expanding beverage market, securing distribution in multiple states and anticipating revenue contributions in Q4[120][121] Growth Strategies The Company's growth strategies include product innovation (e.g., reformulated sleep products, Oasis beverage line), expanding revenue channels (e-commerce, traditional retail, beer/alcohol distributors), international expansion (Central and South America), cultivating additional brands (Paw CBD, ATRx, Oasis), and evaluating accretive acquisitions to lower customer acquisition costs or accelerate profitability - Product innovation focuses on superior functional products with greater efficacy, including reformulated sleep products and the new Oasis beverage brand[123] - Expansion of revenue channels includes traditional retail accounts (Sprouts, GNC), third-party e-commerce (Door Dash), and new relationships with beer and alcohol distributors for the Oasis line[123] - International expansion is pursued through local wholesalers and legal counsel, gaining market share in Central and South America[123] - The Company evaluates acquisitions that offer accretive customer bases or profitable businesses with attainable cost synergies, with increased opportunities noted since the elimination of Series A Preferred Stock[124] Results of operations Net sales decreased by 12% for the three months ended June 30, 2025, to $4.6 million, primarily due to declining direct-to-consumer performance and regulatory uncertainty impacting wholesale. Cost of sales increased to 38.5% of net sales, while operating expenses remained flat quarter-over-quarter but decreased by $1.9 million for the nine months due to cost structure reductions Results of Operations (3 Months Ended June 30) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Total net sales | $4,606,796 | $5,173,878 | $(567,082) | | Cost of sales | $1,775,709 | $1,770,364 | $5,345 | | Gross profit as a percentage of net sales | 61.5% | 65.8% | -4.3% | | Operating expenses | $3,735,773 | $3,785,542 | $(49,769) | | Operating loss from operations | $(904,686) | $(382,028) | $(522,658) | | Net loss attributable to cbdMD Inc. common shareholders | $(1,228,772) | $(540,763) | $(687,964) | Results of Operations (9 Months Ended June 30) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Total net sales | $14,469,698 | $14,925,801 | $(456,103) | | Cost of sales | $5,278,638 | $5,384,061 | $(105,423) | | Gross profit as a percentage of net sales | 63.5% | 63.9% | -0.4% | | Operating expenses | $10,667,834 | $12,540,595 | $(1,872,761) | | Operating loss from operations | $(1,476,774) | $(2,998,855) | $1,522,081 | | Net loss before taxes | $(1,360,934) | $(3,547,327) | $2,186,393 | | Net loss attributable to cbdMD Inc. common shareholders | $(3,695,435) | $(6,548,828) | $2,853,393 | - The decrease in net sales for the three months ended June 30, 2025, was primarily due to declining direct-to-consumer business and regulatory uncertainty impacting wholesale accounts[127] - Operating expenses for the nine months ended June 30, 2025, decreased by $1.9 million, driven by reductions in rental costs (due to HQ office elimination) and professional, accounting, and legal expenses[131] Liquidity and Capital Resources As of June 30, 2025, the Company had $1.1 million in cash and cash equivalents, $2.0 million in working capital, and an accumulated deficit of $179.1 million. The conversion of Series A Preferred Stock and elimination of accrued dividends on May 6, 2025, is expected to bring the Company into compliance with NYSE American listing standards, addressing previous non-compliance notifications Liquidity and Capital Resources Summary | Metric | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1.1 million | $2.4 million | | Working capital | $2.0 million | $(2.2) million | | Accumulated deficit | $(179.1) million | $(182.1) million | - The conversion of Series A Preferred Stock and elimination of $6.7 million in accrued dividends on May 6, 2025, is expected to improve stockholders' equity and bring the Company into compliance with NYSE American continued listing standards[134][137] - The Company's ability to continue as a going concern is dependent on improving profitability, cash flow, and securing additional funding, as current working capital may not be sufficient for the next twelve months[135] Adjusted EBITDA Adjusted EBITDA, a non-GAAP measure, is defined as Earnings Before Interest, Taxes, Depreciation and Amortization, excluding stock-based compensation and M&A/financing transaction expenses. For the nine months ended June 30, 2025, Adjusted EBITDA was $(0.6) million, an improvement from $(1.5) million in the prior year - Adjusted EBITDA is a non-GAAP financial measure used by management to evaluate core operating results, excluding stock-based compensation and M&A/financing transaction expenses[141][142] Adjusted EBITDA Reconciliation | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP (loss) from operations | $(904,641) | $(382,028) | $(1,476,774) | $(2,998,855) | | Depreciation & Amortization | $280,172 | $287,754 | $864,076 | $862,053 | | Employee and director stock compensation | $825 | $9,321 | $5,841 | $16,835 | | Non-GAAP adjusted EBITDA | $(623,644) | $(84,953) | $(606,857) | $(1,549,701) | Critical accounting policies The preparation of financial statements requires management to make significant judgments, assumptions, and estimates, particularly concerning allowances for credit losses, inventory valuation, fair value measurements, and the recoverability of long-lived assets and income taxes - Management's critical accounting policies involve significant judgments and estimates related to allowances for credit losses, inventory valuation reserves, fair value of investments and intangibles, and income taxes[41][147][148] Recent accounting pronouncements The Company is evaluating the impact of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures), effective for fiscal years beginning after December 31, 2024, and December 15, 2026, respectively. ASU 2023-07 (Segment Reporting) was adopted for fiscal years beginning after December 13, 2023 - The Company is evaluating the impacts of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) on its consolidated financial statements[70][71] - ASU 2023-07 (Segment Reporting) was adopted for fiscal years beginning after December 13, 2023, enhancing segment disclosures[72] Off balance sheet arrangements 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 - The Company has no undisclosed off-balance sheet arrangements that have a material effect on its financial condition, revenues, or liquidity[151] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable for a smaller reporting company - This item is not applicable for a smaller reporting company[152] ITEM 4. Controls and Procedures Management concluded that the Company's disclosure controls and procedures were effective as of the end of the reporting period. There were no material changes in internal control over financial reporting during the most recent fiscal quarter - The principal executive officer and principal accounting officer concluded that the Company's disclosure controls and procedures were effective as of the end of the reporting period[153] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[154] PART II - OTHER INFORMATION ITEM 1. Legal Proceedings There are no legal proceedings to report - No legal proceedings are reported[156] ITEM 1A. Risk Factors The Company incorporates by reference the risk factors disclosed in its 2024 10-K and the Form 10-Q for the quarter ended March 31, 2025, in addition to the 'Liquidity and Capital Resources' discussion in this report - Risk factors from the 2024 10-K and the Form 10-Q for the quarter ended March 31, 2025, are incorporated by reference[157] - The 'Liquidity and Capital Resources' section in this report also contains relevant risk disclosures[157] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company has not sold any unregistered securities during the period covered by this report, except for those previously disclosed - No unregistered sales of equity securities occurred during the reporting period, other than those previously disclosed[158] ITEM 3. Defaults Upon Senior Securities There are no defaults upon senior securities to report - No defaults upon senior securities are reported[159] ITEM 4. Mine Safety Disclosures This item is not applicable to the Company's operations - This item is not applicable to the Company's operations[160] ITEM 5. Other Information The Auditor Firm ID for Cherry Bekaert LLP is 677. No officers or directors adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - The Auditor Firm ID for Cherry Bekaert LLP is 677[161] - No officers or directors adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[161] ITEM 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including merger agreements, articles of incorporation amendments (such as those related to the preferred stock conversion and reverse stock split), bylaws, and certifications - Exhibits include merger agreements, articles of incorporation amendments (e.g., for preferred stock conversion and reverse stock split), and certifications[162][163] - Copies of the report and exhibits are available to stockholders upon written request[164]