cbdMD, Inc.
For the period ended Mar 31, 2025. Filed May 15, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
YCBD$0.42+7.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-13.
0001437749-25-003752
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001437749-25-017178
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 54 previous paragraphs and 55 current paragraphs.
32 unchanged; 17 reworded; 6 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
Herbal Oasis (“Oasis”) is a premium THC-infused social seltzer that blends cannabinoids and nootropic mushrooms to deliver a fast-acting, functional beverage made for presence and connection.
Current report
While we aimed to maintain our revenue levels during the second fiscal quarter, we experienced a decline driven by several identifiable factors. Our top priority for the quarter was securing shareholder approval to amend our articles of incorporation and convert the Series A Preferred stock. This strategic move was essential to improving stockholders’ equity, regaining compliance with NYSE American continued listing standards, and preserving our Common Stock listing on the NYSE American. We were successful in obtaining shareholder approval to convert our Series A Preferred Stock; however, the process required significant management attention and temporarily diverted focus from core business operations.
Current report
In parallel, we identified and addressed weaknesses within our marketing team, which led to the implementation of leadership changes late in the quarter to strengthen customer acquisition efforts and restore profitability momentum. Additionally, our conservative cash management led to inventory levels dropping below optimal thresholds. Coupled with delays in product testing, this resulted in intermittent stock shortages across several SKUs. To correct this, we have since increased inventory investments to ensure better product availability and to support revenue recovery moving forward.
Current report
In the first fiscal quarter, cbdMD entered into the booming beverage market, of which Euromonitor International estimates sales of hemp-derived THC beverages more than doubled in 2024 and are projected to balloon to $4.1 billion by 2028, with the launch of our hemp-derived, ready-to-drink Oasis line — a category we believe is the fastest-growing segment in the hemp industry today. Momentum continued in the second quarter as Oasis secured distribution through leading alcohol distributors across Alabama, Florida, Georgia, and North Carolina. Consumer response has been positive, and in April 2025, Oasis captured multiple medals at the prestigious 2025 LA Spirits Awards, signaling strong acceptance.
Current report
As previously disclosed, following the period covered by this report, all outstanding shares of Series A Preferred Stock were converted to Common Stock on May 6, 2025 and all accrued dividends were eliminated. As part of this conversion, $6.7 million of accrued and future dividends as of March 31, 2025 were converted to equity upon the Series A Preferred conversion which we believe will bring us into compliance with the NYSE American’s continued listing standards within the Plan period, assuming we maintain the continued listing standards for two quarters.
Current report
(3) Represents non-cash expense incurred as a credit provided to GNC to replace expired product.
Removed paragraphs (5)
Previous report
During the first fiscal quarter cbdMD took a bigger step into the beverage category and launched our line of hemp derived, ready-to-drink beverages under the Herbal Oasis (“Oasis”) line. We see this as currently the fastest growing category in the hemp industry.
Previous report
Corporate overhead and allocation of management fees to our segments
Previous report
Included in our consolidated operating expenses are expenses associated with our corporate overhead which are not allocated to the operating business unit, including (i) staff related expenses; (ii) accounting and legal expenses; (iii) professional outside services; (iv) travel and entertainment expenses; (v) rent; (vi) business insurance; and (vii) non-cash stock compensation expense.
Previous report
As previously disclosed, the Company is committed to undertaking a transaction or transactions in the future to achieve compliance with the NYSE American’s requirements, including but not limited to seeking shareholder approval to convert its outstanding Series A Preferred Stock and accrued dividends, a liability totaling $5.7 million on December 31, 2024, into shares of Common Stock. Under certain Series A Preferred Stock conversion proposals, the accrued dividend would move to equity and increase the Company’s stockholder equity. However, there can be no assurance that the Company will be able to achieve compliance with the NYSE American’s continued listing standards within the required timeframe.
Previous report
(1) Represents depreciation of property, plant and equipment and amortization of the Company's intangible assets.
Reworded paragraphs (17)
Previous wording
The following discussion of our financial condition and results of operations for the three months ended December 31, 2024 and the three months ended December 31, 2023 should be read in conjunction with the unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties such as our plans, objectives, expectations and intentions.
Current wording
The following discussion of our financial condition and results of operations for the three and six months ended March 31, 2025 and the three and six months ended March 31, 2024 should be read in conjunction with the unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties such as our plans, objectives, expectations and intentions.
Previous wording
We own and operate the nationally recognized CBD (cannabidiol) brands cbdMD, Paw CBD and functional mushroom brand ATRx Labs. We believe that we are an industry leader producing and distributing hemp derived solutions including broad spectrum CBD products and full spectrum CBD products. Our mission is to enhance our customer’s overall quality of life while bringing cannabinoid and mushroom education, awareness and accessibility of high quality and effective products to all. We source cannabinoids, including CBD, which are extracted from non-GMO hemp grown on farms in the United States. Our innovative broad spectrum formula utilizes one of the purest hemp extracts, containing CBD, CBG and CBN, while eliminating the presence of tetrahydrocannabinol (THC). Non-THC is defined as below the level of detection using validated scientific analytical methods. Our full spectrum and Delta 9 products contain a variety of cannabinoids and terpenes in addition to CBD while maintaining small amounts of THC that fall below the level of detection and are within the limits set in the 2018 Farm Act. In addition to our core brands, we also operate cbdMD Therapeutics, LLC to capture the Company’s ongoing investments in science related to its existing and future products, including research and development activities for therapeutic applications and Proline Global that houses some of our newer brands.
Current wording
We own and operate the nationally recognized CBD (cannabidiol) brands cbdMD, Paw CBD and functional mushroom brand ATRx Labs. We believe that we are an industry leader producing and distributing hemp derived solutions including broad spectrum CBD products and full spectrum CBD products. Our mission is to enhance our customer’s overall quality of life while bringing cannabinoid and mushroom education, awareness and accessibility of high quality and effective products to all. We source cannabinoids, including CBD, which are extracted from non-GMO hemp grown on farms in the United States. Our innovative broad spectrum formula utilizes one of the purest hemp extracts, containing CBD, CBG and CBN, while eliminating the presence of tetrahydrocannabinol (THC). Non-THC is defined as below the level of detection using validated scientific analytical methods. Our full spectrum and Delta 9 products contain a variety of cannabinoids and terpenes in addition to CBD while maintaining small amounts of THC that fall below the level of detection and are within the limits set in the 2018 Farm Act. In addition to our core brands, we also operate (1) cbdMD Therapeutics to capture the Company’s ongoing investments in science related to its existing and future products, including research and development activities for therapeutic applications and (2) Proline Global which houses some of our newer brands.
Previous wording
Our ATRx brand was developed using the power of functional mushrooms to provide consumers a complementary natural ingredient solution for immunity, focus, digestive health, cognitive and mood benefits.
Current wording
Our ATRx brand was developed using the power of functional mushrooms to provide consumers a complementary natural ingredient solution for immunity, focus, digestive health, and cognitive and mood benefits.
Previous wording
cbdMD, Paw CBD and ATRx products are distributed through our e-commerce websites, third party e-commerce sites, select distributors and marketing partners as well as a variety of brick-and-mortar retailers.
Current wording
cbdMD, Paw CBD, Oasis, and ATRx products are distributed through our e-commerce websites, third party e-commerce sites, select distributors and marketing partners as well as a variety of brick-and-mortar retailers.
Previous wording
Management continues to be very focused on our goal of delivering positive earnings through a combination of optimizing our product portfolio, right-sizing our cost structure and investing in marketing that will provide positive return on customer acquisition. During fiscal 2024 we continue to make sweeping changes that have had a very positive impact to the business. The first quarter of fiscal 2025 is the first quarter in Company’s history as a public company that revenues increased from a prior sequential quarter, the Company achieved Net Income (before the preferred dividend accrual) and the Company achieved positive EBITDA on a Non GAAP basis.
Current wording
Management continues to be very focused on our goal of delivering positive earnings through a combination of optimizing our product portfolio, right-sizing our cost structure and investing in marketing that will provide positive return on customer acquisition. During fiscal 2024 we made sweeping changes that have had a very positive impact to the business. The first quarter of fiscal 2025 was the first quarter in the Company’s history as a public company that revenues increased from a prior sequential quarter, the Company achieved Non GAAP Net Income (before the preferred dividend accrual) and the Company achieved positive EBITDA on a Non GAAP basis.
Previous wording
We had total net sales of $5.1 million and $5.4 million for the three months ended December 31, 2024 and 2023, respectively, resulting in a decrease in net sales of $0.3 million or 4.9% quarter over quarter. This decrease is partially attributable to a decrease of $0.5 million in e-commerce sales year over year while wholesale sales increased by $0.2 million. The decrease was primarily due to a reduction in marketing spend and ongoing market changes. However, wholesale sales have recently seen a positive impact related to changes in our team and product portfolio year over year. Sequentially, revenue grew by 12%. Our team continues to focus on all areas of driving revenue improvement. Despite the overall category facing challenges, we remain optimistic about our market positioning in fiscal 2025.
Current wording
We had total net sales of $4.7 million and $4.4 million for the three months ended March 31, 2025 and 2024, respectively, resulting in an increase in net sales of $0.3 million or 9% quarter over quarter. This increase is partially attributable to a year over year $0.36 million increase in wholesale sales as a result of an allowance provided in 2024 to a large customer. Sequentially, revenue declined by 7%. For the six months ended March 31, 2025, revenues were up over 1%. Our team continues to focus on all areas of driving revenue improvement. Despite the overall category facing challenges, we remain optimistic about our market positioning in fiscal 2025.
Previous wording
Our cost of sales includes costs associated with distribution, fill and labor expense, components, manufacturing overhead, third party providers, and freight for our product sales. Our cost of sales as a percentage of net sales was 33.5% and 33.8% for three months ended December 31, 2024 and 2023, respectively. This slight decrease in cost of sales is mostly attributed to ongoing cost saving initiatives.
Current wording
Our cost of sales includes costs associated with distribution, fill and labor expense, components, manufacturing overhead, third party providers, and freight for our product sales. Our cost of sales as a percentage of net sales was 37.7% and 41.0% for three months ended March 31, 2025 and 2024, respectively. This slight decrease in cost of sales is mostly attributed to the credit provided to one of our customers during 2024 and offset by an increase in warehouse rent and rent related costs that began impacting the Company at the end of November 2024.
Previous wording
The following tables provide information on our operating expenses for the three months ended December 31, 2024 and 2023:
Current wording
The following tables provide information on our operating expenses for the three and six months ended March 31, 2025 and 2024:
Previous wording
Our overall operating expenses decreased by approximately $1.2 million or 26% for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. The year over year decrease was primarily driven by management's continued ongoing efforts to reduce our cost structure including decreases in staff related expenses, marketing expenses, and professional, accounting and legal expenses. Our team continues to pursue cost saving initiatives, however after significant progress in 2023 and 2024, larger saving opportunities are harder to identify and implement. We are closely watching marketing expenses and anticipate seeing some increases in future quarters with the goal of positively impacting (increasing) revenues.
Current wording
Our overall operating expenses decreased by approximately $0.7 million or 17% for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. For the six months ended March 31, 2025 operating expenses decreased $1.8 million. The year over year decrease was primarily driven by management's continued ongoing efforts to reduce our cost structure including rental related decreases as our HQ office was eliminated as well as reduction in professional, accounting and legal expenses. Our team continues to pursue cost saving initiatives, however after significant progress in 2023 and 2024, larger saving opportunities are harder to identify and implement. We are closely watching marketing expenses and working to improve spend efficiency with the goal of positively impacting (increasing) revenues.
Previous wording
We had cash and cash equivalents on hand of approximately $2.0 million and a working capital deficit of $2.8 million. Our working capital is reduced by approximately $5.7 million of accrued dividend payments as of December 31, 2024. At September 30, 2024 we had cash and cash equivalents of $2.4 million and working capital of negative $1.1 million. Our working capital was reduced by approximately $4.7 million for accrued dividends payments as of September 30, 2024. Excluding the accrued dividend payments, we had adjusted working capital of $2.8 million as of December 31, 2024 and $2.4 million as of September 30, 2024. See non GAAP Adjusted EBITDA disclosure below.
Current wording
We had cash and cash equivalents on hand of approximately $1.8 million and a working capital deficit of $3.7 million. Our working capital is reduced by approximately $6.7 million of accrued dividend payments as of March 31, 2025. At September 30, 2024 we had cash and cash equivalents of $2.4 million and working capital of negative $1.1 million. As of September 30, 2024, our working capital was reduced by approximately $4.7 million for accrued dividends payments. Excluding the accrued dividend payments, we had adjusted working capital of $3.3 million as of March 31, 2025 and $2.4 million as of September 30, 2024.
Previous wording
We do not have any commitments for material capital expenditures. We have a commitment for cumulative dividends at an annual rate of 8% payable monthly in arrears for the prior month to our preferred shareholders. As of August 2023, we suspended paying the dividend in cash and are accruing this dividend on a monthly basis.
Current wording
We do not have any commitments for material capital expenditures. We no longer have a commitment for cumulative dividends at an annual rate of 8% payable monthly in arrears to our preferred shareholders. As of August 2023, we suspended paying the dividend in cash and are accruing this dividend on a monthly basis. On April 10, 2025, shareholders approved the conversion of each share of Series A Preferred Stock into 13 shares of Common Stock, which was effective on May 6, 2025.
Previous wording
On December 31, 2024, we received notification (the “Notice”) from the NYSE American NYSE American that the Company is no longer in compliance with an additional NYSE American continued listing standard. Specifically, the letter states that the Company is not in compliance with the continued listing standard set forth in Section 1003(a)(i) of the NYSE American Company Guide (the “Company Guide”). Section 1003(a)(i) requires a listed company to have stockholders’ equity of $2 million or more if the listed company has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years then ended. The Company reported stockholders equity of $1,963,417 as of September 30, 2024, and losses from continuing operations and/or net losses in four of its five most recent fiscal years then ended. The Notice further provided that the Company remains subject to the conditions set forth in the NYSE American’s initial non compliance notification dated June 5, 2024 and its compliance plan that was accepted by the NYSE American on August 20, 2024 for noncompliance under Section 1003(a)(ii) of the Company Guide due to stockholders’ equity under $4 million which addressed how the Company intends to regain compliance with the continued listing standards by December 5, 2025 (the “Plan”). If the Company is not in compliance with the continued listing standards by December 5, 2025 or if the Company does not make progress consistent with the Plan during the Plan period, the Company will be subject to delisting procedures as set forth in the Company Guide.
Current wording
On December 31, 2024, we received notification (the “Notice”) from the NYSE American that the Company is no longer in compliance with an additional NYSE American continued listing standard. Specifically, the letter states that the Company is not in compliance with the continued listing standard set forth in Section 1003(a)(i) of the NYSE American Company Guide (the “Company Guide”). Section 1003(a)(i) requires a listed company to have stockholders’ equity of $2.0 million or more if the listed company has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years then ended. The Company reported stockholders equity of $1.9 million as of September 30, 2024, and losses from continuing operations and/or net losses in four of its five most recent fiscal years then ended. The Notice further provided that the Company remains subject to the conditions set forth in the NYSE American’s initial non compliance notification dated June 5, 2024 and its compliance plan that was accepted by the NYSE American on August 20, 2024 for noncompliance under Section 1003(a)(ii) of the Company Guide due to stockholders’ equity under $4.0 million which addressed how the Company intends to regain compliance with the continued listing standards by December 5, 2025 (the “Plan”). If the Company is not in compliance with the continued listing standards by December 5, 2025 or if the Company does not make progress consistent with the Plan during the Plan period, the Company will be subject to delisting procedures as set forth in the Company Guide.
Previous wording
While the Notice has no immediate impact on the listing of the Company’s shares of common stock or Series A Preferred Stock, which will continue to be listed and traded on the NYSE American during this period, subject to the Company’s compliance with the other listing requirements of the NYSE American, if the Common Stock and Series A Preferred Stock ultimately were to be delisted for any reason, it could negatively impact the Company by (i) reducing the liquidity and market price of the Company’s Common Stock and Series A Preferred Stock; (ii) reducing the number of investors willing to hold or acquire the Common Stock and Series A Preferred Stock, which could negatively impact the Company’s ability to raise equity financing; and (iii) limiting the Company’s ability to use a registration statement to offer and sell freely tradable securities, thereby preventing the Company from accessing the public capital markets.
Current wording
While the Notice has no immediate impact on the listing of the Company’s shares of common stock which will continue to be listed and traded on the NYSE American during this period, subject to the Company’s compliance with the other listing requirements of the NYSE American, if the Common Stock ultimately were to be delisted for any reason, it could negatively impact the Company by (i) reducing the liquidity and market price of the Company’s Common Stock; (ii) reducing the number of investors willing to hold or acquire the Common Stock, which could negatively impact the Company’s ability to raise equity financing; and (iii) limiting the Company’s ability to use a registration statement to offer and sell freely tradable securities, thereby preventing the Company from accessing the public capital markets.
Previous wording
Our goal from a liquidity perspective is to use operating cash flows to fund day to day operations. We continue to improve the Company’s operating performance, we have been able to stabilize our cash position over the last few quarters, and we believe we are getting closer to long-term sustainable cash flow production. The conversion of the Notes provides the Company additional cash for working purposes during fiscal 2025. Management continues to focus on profitability growing the Company in order to strengthen its balance sheet.
Current wording
Our goal from a liquidity perspective is to use operating cash flows to fund day to day operations. We comply with NYSE American continued listing standards. We remain focused on improving the Company’s operating performance and continue to focus on profitability, and growing the Company in order to strengthen its balance sheet.
Previous wording
Adjusted EBITDA for the three months ended December 31, 2024 and December 31, 2023 is as follows:
Current wording
Adjusted EBITDA for the three and six months ended March 31, 2025 and March 31, 2024 is as follows:
Previous wording
(3) Represents expenses incurred in relation to M&A and financing activities during the quarter ended December 31, 2023.
Current wording
(2) Represents expenses incurred in relation to M&A and financing activities during the three and six months ended March 31, 2024.
Previous wording
Please see Note 1 – Organization and Summary of Significant Accounting Policies appearing in the consolidated financial statements included in this report for information on accounting pronouncements.
Current wording
Please see Note 1 – Organization and Summary of Significant Accounting Policies appearing in the condensed consolidated financial statements included in this report for information on accounting pronouncements.