cbdMD(US:YCBD)2026-02-17 21:06Financial Performance - Total net sales for the three months ended December 31, 2025, were $5.02 million, a decrease of 1.9% from $5.11 million in the same period of 2024[129]. - Gross profit as a percentage of net sales decreased to 59.8% in Q1 2026 from 66.5% in Q1 2025, reflecting a decline of 6.7%[129]. - Operating loss from operations was $286,288 for the three months ended December 31, 2025, compared to a loss of $86,272 in the prior year, indicating an increase in loss of $200,016[129]. - Net loss attributable to common shareholders was $324,602 for Q1 2026, a significant improvement from a loss of $985,406 in Q1 2025, representing a reduction of $660,804[129]. - Adjusted EBITDA for the three months ended December 31, 2025, was $(35,914), a significant decrease from $214,817 in the same period of 2024[150]. Sales Channels - E-commerce sales accounted for 71.8% of total net sales in Q1 2026, down from 77.3% in Q1 2025, while wholesale sales increased to 28.2% from 22.7%[130]. Expenses and Cash Flow - Operating expenses decreased by approximately $0.2 million or 5.7% to $3.29 million in Q1 2026 compared to $3.49 million in Q1 2025[134]. - The company aims to use operating cash flows to fund day-to-day operations and is focused on improving profitability and strengthening its balance sheet[144]. Funding and Capital Structure - The company raised additional cash through Series C Preferred Stock and structured an equity line of credit (ELOC) to strengthen its balance sheet[125]. - On September 29, 2025, the company issued 1,700,000 shares of Series B Convertible Preferred Stock for gross proceeds of $1.7 million, with a conversion price of $1.00 per share[139]. - On December 18, 2025, the company issued 1,000,000 shares of Series C Convertible Preferred Stock for gross proceeds of $2.25 million, with an initial conversion price of $2.25 per share, adjusted to $1.13 per share upon registration[141]. - The Series B and Series C Preferred Stocks rank pari passu with each other and are senior to all other shares of the company's capital stock[143]. Compliance and Regulatory Matters - The company received notifications from the NYSE American regarding non-compliance with continued listing standards, but subsequently resolved deficiencies and maintained compliance for two fiscal quarters[138]. - The company is actively monitoring legislative changes that could impact its business, particularly the THC content limitations set to take effect in November 2026[124]. Strategic Initiatives - The company anticipates that the acquisition of Bluebird Botanicals will contribute over $0.5 million in revenue per quarter once fully integrated[131]. - The company continues to pursue international expansion and has gained market share in Central and South America through sanitary registration approvals[128]. Financial Position - As of December 31, 2025, the company had cash and cash equivalents of approximately $3.4 million and working capital of $5.4 million, with an accumulated deficit of approximately $179.8 million[135]. - The company's ability to continue as a going concern is dependent on improving profitability and cash flow, raising additional funds, and addressing substantial doubt regarding its financial viability[137]. - The company has no commitments for material capital expenditures and no undisclosed off-balance sheet arrangements[136][155].