cbdMD, Inc.

PART 1**–** FINANCIAL INFORMATION**

ITEM 1. FINANCIAL STATEMENTS.

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2025 AND SEPTEMBER 30, 2024

(Unaudited)

See Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2025 AND SEPTEMBER 30, 2024

(continued)

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND Six MONTHS ENDED March 31, 2025 and 2024

(Unaudited)

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE AND Six MONTHS ENDED March 31, 2025 and 2024

(Unaudited)

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE Six MONTHS ENDED March 31, 2025 and 2024

(Unaudited)

Supplemental Disclosures of Cash Flow Information:

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE six months ended March 31, 2025

(Unaudited)

cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE six months ended March 31, 2024

(Unaudited)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THEthree and six months ended March 31, 2025 and 2024 (unaudited)

NOTE1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

cbdMD, Inc. (“cbdMD”, “we”, “us”, “our”, or the “Company”) is a North Carolina corporation formed on* March 17, 2015as Level Beauty Group, Inc. In November 2016we changed the name of the Company to Level Brands, Inc. and on May 1, 2019we changed the name of our Company to cbdMD, Inc. We operate from offices located in Charlotte, North Carolina. Our fiscal year end is established as September 30.*

There have beenno material changes in the Company's significant accounting policies from those previously disclosed in the Annual Report as of and for the fiscal year ended* September 30, 2024* as filed on Form10-K (the "2024 10-K").

The accompanying unaudited interim condensed consolidated financial statements of cbdMD have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the2024 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of consolidated financial position and the consolidated results of operations for the interim periods presented have been reflected herein.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries CBDI, Paw CBD, Proline and Therapeutics. All material intercompany transactions and balances have been eliminated in consolidation.

Reverse Stock Split

On* April 17, 2025,the board effected a reverse stock split at a ratio ofone*-for-eight, effective as of* May 6, 2025**.* Unless otherwise indicated, all share numbers in this filing, including shares of common stock and all securities convertible into, or exercisable for, shares of common stock, give effect to the reverse stock split.

Use of Estimates

The Company’s condensed consolidated financial statements have been prepared in accordance with US GAAP and requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significant estimates made in the accompanying condensed consolidated financial statements include, but arenot limited to, allowances for credit losses, inventory valuation reserves, expected sales returns and allowances, certain assumptions related to the valuation of investments other securities, acquired intangibles and long-lived assets and the recoverability of intangible and long-lived assets and income taxes, including deferred tax valuation allowances and reserves for estimated tax liabilities is a material estimate. Actual results could differ from these estimates. The Company continues to monitor macroeconomic conditions to remain flexible and to optimize and evolve its business as appropriate.

Cash and Cash Equivalents

For financial statements purposes, the Company considers all highly liquid investments with a maturity of less thanthree months when purchased to be cash equivalents.

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Accounts Receivable

Accounts receivable are stated at cost less an allowance for credit losses, if applicable. Credit is extended to customers after an evaluation of the customer’s financial condition, and generally collateral isnot required as a condition of credit extension. Management’s determination of the allowance for credit losses is based on an evaluation of the receivables, past experience, current economic conditions, and other risks inherent in the receivables portfolio. The balance for allowance for credit losses was $416,844 and $346,197 on* March 31, 2025* and* September 30, 2024*, respectively.

The following table represents a summary of the allowance for credit losses for the periods ended* March 31, 2025and September 30, 2024:*

Merchant Receivable and Reserve

The Company primarily sells its products through the internet and has an arrangement to process customer payments withthird-party payment processors and negotiate the fee based on the market. The arrangement with the payment processors requires that the Company pay a fee between 2.5% and 4.0% of the transaction amounts processed. Pursuant to this agreement, there can be a waiting period between2 to5 days prior to reimbursement to the Company, as well as a calculated reserve which some payment processors hold back. Fees and reserves can change periodically with notice from the processors. At* March 31, 2025* and* September 30, 2024*, the receivable from payment processors included approximately $694,515 and $621,678 respectively, for the waiting period amount and is recorded as accounts receivable in the accompanying condensed consolidated balance sheet.

Inventory

Inventory is stated at the lower of cost or net realizable value with cost being determined on a weighted average basis. The cost of inventory includes product cost, freight-in, and production fill and labor (portions of which we outsource tothird party manufacturers). Write-offs of potentially slow moving or damaged inventory are recorded based on management’s analysis of inventory levels, forecasted future sales volume and pricing and through specific identification of obsolete or damaged products. We assess inventory quarterly for slow moving products and potential impairments and at a minimum perform a physical inventory count annually near fiscal year end. The reserve for inventory was $82,036 and $0 for* March 31, 2025and September**31,* 2024, respectively.

Property and Equipment

Property and equipment items are stated at cost less accumulated depreciation. Expenditures for routine maintenance and repairs are charged to operations as incurred. Depreciation is charged to expense over the estimated useful lives of the assets using the straight-line method. Generally, the useful lives arefive years for manufacturing equipment and automobiles andthree years for software, computer, and furniture and equipment. The useful life for leasehold improvements are over the term of the lease, or the remaining economic life of the asset, whichever is shorter. The cost and accumulated depreciation of property are eliminated from the accounts upon disposal, and any resulting gain or loss is included in the consolidated statements of operations for the applicable period. Long-lived assets held and used by the Company are reviewed for impairment whenever changes in circumstance indicate the carrying value of an asset* may**not* be recoverable.

Fair Value Accounting

The Company utilizes accounting standards for fair value, which include the definition of fair value, the framework for measuring fair value, and disclosures about fair value measurements. Fair value is a market-based measurement,not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels1 and2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level3 of the hierarchy).

Level1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level2 inputs are inputs other than quoted prices included in Level1 that are directly or indirectly observable for the asset or liability. Level2 inputs* mayinclude quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability. Level3* inputs are unobservable inputs for the asset or liability, which are based on an entity’s own assumptions, as there is little, if any, observable market activity. In instances where the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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When the Company records an investment in marketable securities the carrying value is assigned at fair value. Any changes in fair value for marketable securities during a given period will be recorded as an unrealized gain or loss in the consolidated statement of operations. For investment other securities without a readily determinable fair value, the Company* may*elect to estimate its fair value at cost less impairment plus or minus changes resulting from observable price changes.

The Company elected the fair value option under ASC825 Fair Value Measurements for its Convertible notes. The convertible notes were initially recognized at fair value on the balance sheet. All subsequent changes in fair value, excluding the impact of the change in fair value related to instrument-specific credit risk are recorded in non-operating income. The changes in fair value related to instrument-specific credit risk is recorded through other comprehensive loss. See Note11 for more information related to the convertible notes.

Intangible Assets

The Company accounts for its trademarks in accordance with Accounting Standards Codification (ASC) Topic360, Property, Plant and Equipment and are amortized over5-10 years. The Company performs impairment tests as prescribed by ASC360, which states that impairment testing should be completed whenever events or changes in circumstances indicate that the asset group's carrying value** may** not be recoverable.

Revenue Recognition

Under ASC606, Revenue from Contracts with Customers, the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following thefive-step model prescribed under ASC606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Performance Obligations

Contract liabilities represent unearned revenues and are presented as deferred revenue or customer deposits on the condensed consolidated balance sheets.

Other than account receivable, the Company hasno material contract assets nor contract liabilities at* March 31, 2025*.

The following tables represent a disaggregation of revenue by sales channel:

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Cost of Sales

The Company’s cost of sales includes costs associated with distribution, fill and labor expense, components, manufacturing overhead,third-party providers, and outbound freight for the Company’s products sales. For the Company’s product sales, cost of sales also includes the cost of refurbishing products returned by customers that will be offered for resale, if any, and the cost of inventory write-downs associated with adjustments of held inventories to their net realizable value. These expenses are reflected in the Company’s consolidated statements of operations when the product is sold and net sales revenues are recognized or, in the case of inventory write-downs, when circumstances indicate that the carrying value of inventories is in excess of their net realizable value.

Income Taxes

The Company is a North Carolina corporation that is treated as a corporation for federal and state income tax purposes. CBDI, Therapeutics, Proline Global, and Paw CBD are wholly owned subsidiaries and are disregarded entities for tax purposes and their entire share of taxable income or loss is included in the tax return of the Company.

The Company accounts for income taxes pursuant to the provisions of theAccounting for Income Taxes topic of ASC740 which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The Company uses the inside basis approach to determine deferred tax assets and liabilities associated with its investment in a consolidated pass-through entity. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely thannot that the net deferred asset willnot be realized.

Concentrations

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, and securities.

The Company places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation (“FDIC”) covers*$250,000* for substantially all depository accounts. The Company from time to time* may*have amounts on deposit in excess of the insured limits.

Concentration of credit risk with respect to receivables is principally limited to trade receivables with corporate customers that meet specific credit policies. Management considers these customer receivables to represent normal business risk. The Company didnot have any customers that represented a significant amount of our sales for thethree andsix months ended* March 31, 2025*.

Stock-Based Compensation

The Company accounts for its stock compensation under the ASC718-10-30, Compensation - Stock Compensation using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that** may** be settled by the issuance of those equity instruments.

The Company uses the Black-Scholes model for measuring the fair value of options and warrants. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods. The Company recognizes forfeitures when they occur.

Earnings (Loss) Per Share

The Company uses ASC260-10, Earnings Per Share for calculating the basic and diluted loss per share. The Company computes basic loss per share by dividing net loss and net loss attributable to common shareholders, after deducting preferred stock dividends, by the weighted average number of common shares outstanding. Common equivalent shares are excluded from the computation of net loss per share if their effect is anti-dilutive.

Liquidity and Going Concern Considerations

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company experienced a loss of $465,662 for thesix months ended* March 31, 2025*, resulting in a working capital deficit of $3.7 million at* March 31, 2025*,which includes $6.7 million in accrued dividends that have subsequently converted to equity, inclusive with the conversion of the Company's series A Preferred Stock.

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While the Company believes in the viability of its strategy and path to profitability, and in its ability to raise additional funds, there can beno assurances of these actions. The Company’s working capital position* may**not* be sufficient to support the Company’s daily operations for thetwelve months subsequent to the issuance of these annual financial statements. The Company’s ability to continue as a going concern is dependent upon its ability to improve profitability and the ability to acquire additional funding. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern withintwelve months after the date that the annual financial statements are issued. These financial statements donot include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that* mayresult in the Companynot* being able to continue as a going concern.

Convertible Notes

Effective* February 1, 2024,the Company entered into a Securities Purchase Agreement dated January 30, 2024withfive* institutional investors (the “Investors”) whereby the Investors advanced the Company an aggregate of $1,250,000 gross proceeds and the Company issued each Investor an 8% Senior Secured Original Issue 20% Discount Convertible Promissory Note, in the aggregate principal amount of $1,541,666 (the “Notes”). The Company is using the proceeds from the issuance of the Notes for working capital and general corporate purposes. The table below represents the change in fair value of the convertible notes as of* March 31, 2025*. As of the end of* January 2025the Notes were satisfied in full andno* longer an obligation of the Company.

New Accounting Standards

On* December 14, 2023the FASB issued ASU**2023-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures. This standard went into effect for fiscal years beginning after* December 31, 2024and will go into effect for the company beginning with it's fiscal year ending September 30, 2025.*The Company is currently evaluating the impacts of this standard on the consolidated financial statements.

The Company adopted ASU*2023*-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures Measurement. This standard went into effect for fiscal years beginning after* December 13, 2023.This standard enhances segment reporting under Topic280* by expanding the breadth and frequency of segment disclosures. The Company is currently evaluating the impacts of this standard on the consolidated financial statements.

NOTE2 – MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES

The Company has, from time to time, entered into contracts where a portion of the consideration provided by the counterparty in exchange for the Company’s services was common stock, options or warrants (an equity position). In these situations, upon invoicing the customer for the stock or other instruments, the Company recorded the receivable as accounts receivable other, and used the value of the stock or other instrument upon invoicing to determine the value. In determining fair value of marketable securities and investment other securities, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and consider counterparty credit risk in our assessment of fair value. The Company determines the fair value of marketable securities and investment other securities based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the fair value hierarchy distinguishes between observable and unobservable inputs.

On* April 7, 2022,CBD Industries, LLC entered into an asset sale agreement to sell substantially all its manufacturing assets to a subsidiary of Steady State, LLC ("Steady State"). The equipment sale is initially valued at approximately $1.8 million for accounting purposes, the sale price consisting of products to be provided to the Company under the manufacturing and supply agreement and $1.4 million of which the Company invested into Steady State in the form of an equity investment consistent with the terms of Steady State's completed series C financing. In Septemberof2023,* the Company impaired this investment by $700,000. The Company has classified this investment as Level3 for fair value measurement purposes as there areno observable inputs and has included it in non-current assets on the accompanying condensed consolidated balance sheets as the Company plans to hold this investment.

In valuing the investments, the Company used the value paid, which was the price offered to allthird-party investors.

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NOTE3 - INVENTORY

Inventory at* March 31, 2025* and* September 30, 2024* consists of the following:

Abnormal amounts of idle facility expense, freight, handling costs, scrap and wasted material (spoilage) are expensed in the period they are incurred andno material expenses related to these items occurred in thethree orsix months ended* March 31, 2025*.

NOTE4 – PROPERTY AND EQUIPMENT

Property and equipment at* March 31, 2025* and* September 30, 2024* consisted of the following:

Depreciation expense related to property and equipment was $94,629 and $117,750 for thethree months ended* March 31, 2025and2024*, respectively, and was $201,369 and $228,615 for thesix months ended* March 31, 2025and2024*, respectively.

NOTE5 – INTANGIBLE ASSETS

Intangible Assets

Intangible assets as of* March 31, 2025* and* September 30, 2024* consisted of the following:

Amortization expense related to definite lived intangible assets was $191,267 and $172,842 for thethree months ended* March 31, 2024and2025,* respectively, and was $382,534 and $345,684 for thesix months ended* March 31, 2025and2024,* respectively.

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NOTE6 – RELATED PARTY TRANSACTIONS

None.

NOTE7 – SHAREHOLDERS’** EQUITY**

Preferred Stock – The Company is authorized to issue 50,000,000 shares of preferred stock, par value $0.001 per share. In* October 2019,the Company designated 5,000,000 of these shares as 8.0% Series A Cumulative Convertible Preferred Stock. Our8.0%* Series A Cumulative Convertible Preferred Stock ranks senior to our common stock for liquidation or dividend provisions and holders are entitled to receive cumulative cash dividends at an annual rate of8.0% payable monthly in arrears for the prior month. The Company reviewed ASC480 –Distinguishing Liabilities from Equity in order to determine the appropriate accounting treatment for the preferred stock and determined that the preferred stock should be treated as equity. There were 5,000,000 shares of 8.0% Series A Cumulative Convertible Preferred Stock issued and outstanding at* March 31, 2025* and* September 30, 2024*.

The total amount of preferred dividends declared and accrued were$1,000,500 and $2,001,001 for both thethree andsix months ended* March 31, 2025*, respectively, and the total amount of preferred dividends declared and accrued were $1,000,501 and $2,001,000 for thethree andsix months ended* March 31, 2024*. Subsequent to quarter end all preferred stock including all declared and accrued dividends was converted to common stock as further described in Note15.

Common Stock – The Company is authorized to issue 150,000,000 shares of common stock, par value $0.001 per share. There were 783,355 and 492,383 shares of common stock issued and outstanding at* March 31, 2025* and* September 30, 2024*, respectively.

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Stock Options - The Company currently has awards outstanding with service conditions and graded-vesting features. We recognize compensation cost on a straight-line basis over the requisite service period.

Preferred stock transactions:

The Company hadno preferred stock transactions in thethree andsix months ended* March 31, 2025* and2024.

Common stock transactions:

In thesix months ended* March 31, 2025*:

In* March 2025,the Company issued 1,875 shares of restricted stock under the Company's2015* equity incentive plan to a new employee that vest in 12 months.

During* Januaryof2025,* the Company issued 89,964 shares of common stock for conversions of the Notes.

During thefirst quarter of 2025 the Company issued 177,634 shares of common stock for conversion of the Notes.

In* November 2024,*the Company issued 21,875 shares of common stock to a consultant for advisory services.

In thesix months ended* March 31, 2024:*

In* January 2024**,*the Company issued 8,028 shares under its ELOC.

In* January 2024**,*the Company issued 2,478 shares as part of the final earnout related to a prior transaction.

Stock option transactions:

There wereno stock options granted in thethree andsix months ended* March 31, 2025and2024.*

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NOTE8 – STOCK BASED COMPENSATION

The fair value of each time-based award is estimated on the date of grant using the Black-Scholes option valuation model. Our weighted-average assumptions are used in the Black-Scholes valuation model for equity awards and are calculated based on time-based vesting provisions granted during the year.

The following table summarizes stock option activity for thesix months ended* March 31, 2025*:

As of* March 31, 2025*, there was approximately $2,161 of total unrecognized compensation cost related to non-vested stock options which vest over a period of approximately 0.5 years.

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NOTE9 - WARRANTS

Transactions involving the Company equity-classified warrants for thesix months ended* March 31, 2025* are summarized as follows:

The following table summarizes outstanding common stock purchase warrants as of* March 31, 2025*:

NOTE10 – **** COMMITMENTS AND CONTINGENCIES

None.

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NOTE11 – NOTE PAYABLE

Effective* February 1, 2024,the Company entered into a Securities Purchase Agreement dated January 30, 2024withfive* institutional investors (the “Investors”) whereby the Investors advanced the Company an aggregate of $1,250,000 gross proceeds and the Company issued each Investor an 8% Senior Secured Original Issue 20% Discount Convertible Promissory Note, in the aggregate principal amount of $1,541,666 (the “Notes”). The Company intends to use the proceeds from the issuance of the Notes for working capital and general corporate purposes.

Each Note bears interest of 8% per annum and matures on* July 30, 2025.The Note is convertible into shares of common stock at any time following the date of issuance at the Investor’s option at an initial conversion price of $5.472 per share (the “Conversion Price”), subject to certain adjustments. If30* calendar days,60 calendar days,90 calendar days,120 calendar days, or180 calendar days after the effective date of a registration statement registering the shares of common stock issuable upon conversion of the Notes (the “Adjustment Dates”), the Conversion Price then in effect is higher than the Market Conversion Price then in effect on the Adjustment Date, the Conversion Price shall automatically decrease to the Market Conversion Price (as defined under the Note). The Conversion Price is subject to a $2.40 floor price.

The Company elected the fair value option under ASC825 Fair Value Measurements for the Notes. The Notes were initially recognized at a fair value of $2,702,000 on the balance sheet as of* March 31, 2023.*All subsequent changes in fair value, excluding the impact of the change in fair value related to instrument-specific credit risk are recorded in non-operating income. The changes in fair value related to instrument-specific credit risk is recorded through other comprehensive loss.

During* January 2025,*the Company issued an aggregate of 89,964 shares of common stock upon the conversion of the Notes to satisfy the remaining balance of principal and accrued interest on the Notes.

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NOTE12 – LEASES

The Company has lease agreements for its warehouse and executive office the lease periods expiring in* September 2026.ASC842* requires the recognition of leasing arrangements on the consolidated balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased assets. The Company determines whether an arrangement is a lease at inception and classify it as finance or operating. The Company’s lease is classified as an operating lease. The Company’s leases doesnot contain any residual value guarantees.

Right-of-use lease assets and corresponding lease liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term. Since the interest rate implicit in our lease arrangements isnot readily determinable, the Company determined an incremental borrowing rate for it's lease based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the lease commencement date to determine the present value of future lease payments. The Company’s lease terms* may*include options to extend or terminate the lease.

In addition to the monthly base amounts in the lease agreement, the Company is required to pay real estate taxes, insurance and common area maintenance expenses during the lease term.

Lease costs on operating leases are recognized on a straight-line basis over the lease term and included as a selling, general and administrative expense in the condensed consolidated statements of operations.

Components of operating lease costs are summarized as follows:

Supplemental cash flow information related to operating leases is summarized as follows:

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As of* March 31, 2025*, our operating lease had a weighted average remaining lease term of 1.5 years and a weighted average discount rate of 4.66%.

Future minimum aggregate lease payments under operating leases as of* March 31, 2025* are summarized as follows:

NOTE13 – LOSS PER SHARE

At* March 31, 2025*,7,659 potential shares underlying options, unvested RSUs and warrants as well as 23,153 potential shares underlying shares of Series A Cumulative Convertible Preferred Stock were excluded from the shares used to calculate diluted loss per share as their inclusion would be anti-dilutive. At* March 31, 2024*,11,551 potential shares underlying options, unvested RSUs and warrants as well as 23,153 shares of Series A Cumulative Convertible Preferred Stock, as well as total of 35,450 available shares and remaining commitment shares under the Keystone agreement were excluded from the shares used to calculate diluted loss per share as their inclusion would reduce net loss per share.

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NOTE14 – INCOME TAXES

The Company has a valuation allowance against the net deferred tax assets, with the exception of the deferred tax liabilities that result from indefinite-life intangibles (“naked credits”). The Company has determined that using the general methodology for calculating income taxes during an interim period for the quarters ending* December 31, 2019,** March 31, 2020,and June 30, 2020,provided for a wide range of potential annual effective rates. At September 30, 2023the Company recorded a net deferred tax asset ofzero* as the cumulative net deferred tax asset had a full valuation on it and there wasnot enough positive evidence that would warrant recognizing the benefit of the net deferred tax asset. In addition, the net indefinite lived deferred tax items were a deferred tax asset so there wasnot any recognition of a deferred tax liability related to indefinite lived deferred tax liabilities. At* March 31, 2025*, the Company determined the same circumstances to be true and therefore recorded a net deferred tax asset of zero.

NOTE15 – SUBSEQUENT EVENTS

Following shareholder approval at the Company's annual meeting held on* April 10, 2025for an amendment to the Company’s Series A Preferred Stock designation to amend the Company’s articles of incorporation to provide for the automatic conversion of all of the Company’s issued and outstanding shares of Series A Preferred Stock ("Preferred Stock") at a ratio ofone* share of Preferred Stock to 13 shares of Common stock, the Board of Directors elected to effectuate the automatic conversion (the ”Automatic Preferred Conversion”), which provides for the conversion of each share of Preferred Stock intothirteen shares of Common Stock, inclusive of all accumulated and unpaid dividends on* May 6, 2025at4:01* p.m. Eastern Time (the “Mandatory Exchange Date”). Dividends on converted shares ceased to accrue on the Mandatory Exchange Date and the Preferred Stock ceased trading on the Mandatory Exchange Date. Shareholders who held Preferred Stock electronically in book-entry form didnot need to take action (the Conversion was automatic) to receive shares of Common Stock on the Mandatory Exchange Date. Following the Mandatory Exchange Date there areno shares of Preferred Stock issued or outstanding.

In addition, following shareholder approval at the Company's annual meeting held on* April 10, 2025for the amendment to the Company's articles of incorporation to implement a reverse stock split, the Company announcedone** April 17, 2025that its Board of Directors approved a ratio ofone*-for-eight reverse stock split of the Company's issued and outstanding shares of Common Stock. The Company's shareholders previously approved the reverse stock split at the Company's annual meeting and granted the board the authority to determine a final reverse split ratio. The reverse stock split was effective at4:02 p.m. Eastern Time on* May 6, 2025immediately following the Automatic Preferred Conversion, following the filing and effectiveness of an amendment to the Company's articles of incorporation, as amended, with the Common Stock trading on a post-split basis when the market opened on the May 7, 2025.The Company's Common Stock continues to trade on the NYSE American under the existing trading symbol “YCBD” with a new CUSIP number12482W* 408.

Approximately 51 roundup shares were issued as part of the reverse split.

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