cbdMD, Inc.
For the period ended Jun 30, 2025. Filed Aug 14, 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.
Jun 30, 2025 · Filed Aug 14, 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 2025-03-31; filed 2025-05-15.
0001437749-25-017178
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001437749-25-026930
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 55 previous paragraphs and 57 current paragraphs.
40 unchanged; 13 reworded; 4 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 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 (4)
Current report
During this fiscal year, we have faced a notable uptick in both state and federal regulatory activity that, if enacted, would limit consumer choice and significantly impact market access. Legislative actions in states like Georgia and Florida introduced new labeling requirements, which led to delays in product availability and required us to allocate additional resources toward packaging updates to remain compliant. At the federal and state levels, proposals such as HB 1 in Texas, HB 328 in North Carolina, and changes to the definition of hemp in the federal appropriations bill sought to fundamentally alter the definition of sellable hemp-derived products. If passed, these measures could have materially affected both our future revenue and the broader industry's viability.
Current report
While many of these proposals were ultimately defeated or delayed, the trend is clear: there is a growing and coordinated effort to restrict the hemp and cannabinoid wellness category. In response, management has had to dedicate increased time and capital this quarter to regulatory engagement—including updating packaging, mobilizing grassroots customer advocacy, lobbying efforts across multiple state capitals, and working closely with national trade organizations. We expect this regulatory pressure to persist, requiring continued strategic investment to protect market access and consumer choice. Increased regulation may also negatively affect our smaller competitors and potential reduce competition.
Current report
To support market momentum, we expanded our sales team mid-third quarter, initiated discussions with major retail chains, and ramped up in-person brand activation efforts. By the end of the third quarter, we have secured distribution for Oasis across Alabama, Georgia, North Carolina, parts of South Carolina, and the Florida Panhandle. Sell-through has continued to accelerate in the fourth quarter. Most recently, we signed new distribution agreements in Tennessee, Minnesota, with other distributors in the pipleeine, and we anticipate revenue from these market launches to begin contributing in the remainder of the fourth quarter.
Current report
We had total net sales of $4.6 million and $5.2 million for the three months ended June 30, 2025 and 2024, respectively, resulting in a decrease in net sales of $0.6 million or 12% quarter over quarter. This decrease is primarily due to declining performance of our direct-to-consumer business as well as regulatory uncertainty which impacted many of our wholesale accounts during recent months. For the nine months ended June 30, 2025, revenues were down 3%, which is driven by the decrease in revenue in the third quarter, which offset the previously reported 1% increase year over year through March 31, 2025. Our team continues to focus on all areas of driving revenue improvement, and during the third quarter made significant changes to our marketing team and strategy to combat recent trends; although through June 30, 2025 we did not see the benefits of these changes. We are seeing signs of success from our marketing changes and strategy commencing in July and through the fourth quarter, as we have secured distribution agreements for Oasis in multiple states. Despite the pervasive, industry wide challenges which we too are facing, we remain optimistic about our market positioning in fiscal 2025.
Removed paragraphs (2)
Previous report
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 report
Adjusted EBITDA for the three and six months ended March 31, 2025 and March 31, 2024 is as follows:
Reworded paragraphs (13)
Previous 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.
Current wording
The following discussion of our financial condition and results of operations for the three and nine months ended June 30, 2025 and the three and nine months ended June 30, 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 (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.
Current wording
We own and operate the nationally recognized CBD (cannabidiol) brands cbdMD, Paw CBD and functional mushroom brand ATRx Labs, and Herbal Oasis, our line of THC beverages, 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 powerful natural plant education, awareness and accessibility of high quality and effective products to all. We source hemp-derived cannabinoids, 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.
Previous wording
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 wording
Herbal Oasis (“Oasis”) is a premium hemp-derived THC-infused social seltzer that blends cannabinoids and nootropic mushrooms to deliver a fast-acting, functional beverage made for presence and connection.
Previous wording
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 wording
While we aimed to maintain our revenue levels during the third 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, and our plan to regain compliance with NYSE American continued listing standards and preserve 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 executive management focus from core business operations.
Previous wording
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 wording
In parallel, we identified and addressed weaknesses within our marketing team, which led to the implementation of leadership changes late in the second quarter to strengthen customer acquisition efforts and restore profitability momentum. During the third quarter we rebuilt our marketing team and agency base. During the third quarter we reconstructed our marketing and creative systems and processes along with our customer acquisition funnels and performed significant channel testing. This resulted in a growing new customer base in July and key metrics of our direct to consumer business trending in the right direction. Our conservative cash management in the second quarter 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.
Previous wording
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 wording
In the first fiscal quarter, cbdMD entered the rapidly expanding hemp-derived beverage market with the launch of Oasis, our ready-to-drink THC-infused seltzer. According to Euromonitor International, sales of hemp-derived THC beverages more than doubled in 2024 and are projected to grow to $4.1 billion by 2028—making this one of the fastest-growing segments in the hemp industry. Early consumer response to Oasis has been highly encouraging. In April 2025, the brand earned multiple medals at the prestigious LA Spirits Awards, a strong indicator of product acceptance and brand potential.
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 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.
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 38.5% and 34.2% for three months ended June 30, 2025 and 2024, respectively. This slight increase in cost of sales is mostly attributed to year over year increase in our warehouse lease cost and lower overhead absorption tied to revenue. Ongoing state-level regulatory action have the potential to increase our product costs through new labeling and packaging requirements in particular jurisdictions.
Previous wording
The following tables provide information on our operating expenses for the three and six months ended March 31, 2025 and 2024:
Current wording
The following tables provide information on our operating expenses for the three and nine months ended June 30, 2025 and 2024:
Previous 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.
Current wording
Our overall operating expenses were flat for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Payroll and other operating expense savings were offset by an increase in marketing expenses. For the nine months ended June 30, 2025 operating expenses decreased $1.9 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 $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.
Current wording
We had cash and cash equivalents on hand of approximately $1.1 million, working capital of $2.0 million and an accumulated deficit of approximately $179.1 million at June 30,2025. At September 30, 2024 we had cash and cash equivalents of $2.4 million, working capital of negative $2.2 million and an accumulated deficit of approximately $182.1 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 $2.4 million as of September 30, 2024.
Previous 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.
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 we were 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 and the elimination of accrued dividends, which was effective on May 6, 2025.
Previous wording
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 wording
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 unpaid dividends as of June 30, 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.
Previous wording
(2) Represents expenses incurred in relation to M&A and financing activities during the three and six months ended March 31, 2024.
Current wording
(2) Represents expenses incurred in relation to M&A and financing activities during the three and nine months ended June 30, 2024.