Cover
Cover - shares | 6 Months Ended | |
Mar. 31, 2022 | May 13, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | cbdMD, INC. | |
Entity Central Index Key | 0001644903 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2022 | |
Entity Ex Transition Period | false | |
Entity Common Stock Shares Outstanding | 59,357,213 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-38299 | |
Entity Incorporation State Country Code | NC | |
Entity Tax Identification Number | 47-3414576 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 8845 Red Oak Blvd | |
Entity Address City Or Town | Charlotte | |
Entity Address Postal Zip Code | 28217 | |
City Area Code | 704 | |
Local Phone Number | 445-3060 | |
Trading Symbol | YCBD | |
Security Exchange Name | NYSEAMER | |
Security 12b Title | 8% Series A Cumulative Convertible Preferred Stock | |
Entity Address State Or Province | NC |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2022 | Sep. 30, 2021 |
Current Assets: | ||
Cash And Cash Equivalents | $ 13,336,850 | $ 26,411,424 |
Accounts Receivable | 2,045,602 | 1,113,372 |
Accounts Receivable - Discontinued Operations | 1,375 | 10,967 |
Marketable Securities | 0 | 33,351 |
Investment Other Securities | 1,000,000 | 1,000,000 |
Inventory | 4,713,041 | 5,021,867 |
Inventory Prepaid | 519,128 | 551,519 |
Prepaid Sponsorship | 1,474,350 | 1,212,682 |
Prepaid Expenses And Other Current Assets | 1,236,744 | 1,147,178 |
Total Current Assets | 24,327,090 | 36,502,360 |
Other Assets: | ||
Property And Equipment, Net | 2,334,619 | 2,561,574 |
Operating Lease Assets | 5,025,669 | 5,614,960 |
Deposits For Facilities | 138,708 | 529,583 |
Intangible Assets | 18,389,258 | 23,003,929 |
Goodwill | 42,772,685 | 56,670,970 |
Total Other Assets | 68,660,939 | 88,381,016 |
Total Assets | 92,988,029 | 124,883,376 |
Current Liabilities: | ||
Accounts Payable | 2,746,837 | 2,978,914 |
Accrued Expenses | 1,840,797 | 2,727,612 |
Operating Leases - Current Portion | 1,136,018 | 1,151,150 |
Note Payable | 61,483 | 59,470 |
Total Current Liabilities | 5,785,135 | 6,917,146 |
Long Term Liabilities: | ||
Long Term Liabilities | 77,732 | 108,985 |
Operating Leases - Long Term Portion | 4,278,733 | 4,859,058 |
Contingent Liability | 2,823,000 | 9,856,000 |
Total Long Term Liabilities | 7,179,465 | 14,824,043 |
Total Liabilities | 12,964,600 | 21,741,189 |
Cbdmd, Inc. Shareholders' Equity: | ||
Preferred Stock, Authorized 50,000,000 Shares, $0.001 Par Value, 5,000,000 And 5,000,000 Shares Issued And Outstanding, Respectively | 5,000 | 5,000 |
Common Stock, Authorized 150,000,000 Shares, $0.001 Par Value, 59,352,213 And 57,783,340 Shares Issued And Outstanding, Respectively | 59,352 | 57,783 |
Additional Paid In Capital | 179,116,064 | 176,417,269 |
Accumulated Deficit | (99,156,987) | (73,337,865) |
Total Cbdmd, Inc. Shareholders' Equity | 80,023,429 | 103,142,187 |
Total Liabilities And Shareholders' Equity | $ 92,988,029 | $ 124,883,376 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2022 | Sep. 30, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Issued | 5,000,000 | 5,000,000 |
Preferred Stock, Outstanding | 5,000,000 | 5,000,000 |
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Authorized | 150,000,000 | 150,000,000 |
Common Stock, Issued | 59,352,213 | 57,783,340 |
Common Stock, Outstanding | 59,322,213 | 57,783,340 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||
Gross Sales | $ 9,948,858 | $ 12,457,386 | $ 19,805,625 | $ 25,520,568 |
Allowances | (319,972) | (658,775) | (854,917) | (1,393,654) |
Total Net Sales | 9,628,886 | 11,798,611 | 18,950,708 | 24,126,914 |
Cost Of Sales | 3,186,564 | 3,643,127 | 7,514,874 | 7,073,402 |
Gross Profit | 6,442,322 | 8,155,484 | 11,435,834 | 17,053,512 |
Operating Expenses | 11,452,700 | 12,323,207 | 23,407,984 | 22,981,180 |
Impairment Of Goodwill And Other Intangible Assets | 0 | 0 | 18,183,285 | 0 |
Loss From Operations | (5,010,378) | (4,167,723) | (30,155,435) | (5,927,668) |
Realized And Unrealized Gain (loss) On Marketable And Other Securities, Including Impairments | 0 | 2,852 | (33,352) | 545,562 |
Decrease (increase) Of Contingent Liability | 353,000 | (8,871,000) | 6,303,000 | (17,371,000) |
Other Income | 2,249 | 0 | 72,987 | 0 |
Interest Expense | (2,086) | (10,603) | (5,320) | (20,990) |
Loss Before Provision For Income Taxes | (4,657,215) | (13,046,474) | (23,818,120) | (22,774,096) |
Benefit For Income Taxes | 0 | 536,000 | 0 | 868,000 |
Net Loss | (4,657,215) | (12,510,474) | (23,818,120) | (21,906,096) |
Preferred Dividends | 1,000,500 | 560,280 | 2,001,002 | 660,330 |
Net Loss Attributable To Cbdmd, Inc. Common Shareholders | $ (5,657,715) | $ (13,070,754) | $ (25,819,122) | $ (22,566,426) |
Net Loss Per Share: | ||||
Basic Earnings Per Share | $ (0.10) | $ (0.24) | $ (0.44) | $ (0.43) |
Diluted Earnings Per Share | $ (0.10) | $ (0.24) | $ (0.44) | $ (0.43) |
Weighted Average Number Of Shares Basic: | 58,966,979 | 53,471,607 | 59,073,963 | 52,793,872 |
Weighted Average Number Of Shares Diluted: | 58,966,979 | 53,471,607 | 59,073,963 | 52,793,872 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) | ||||
Net Loss | $ (4,657,215) | $ (12,510,474) | $ (23,818,120) | $ (21,906,096) |
Comprehensive Loss | (4,657,215) | (12,510,474) | (23,818,120) | (21,906,096) |
Preferred Dividends | (1,000,500) | (560,280) | (2,001,002) | (660,330) |
Comprehensive Loss Attributable To Cbdmd, Inc. Common Shareholders | $ (5,657,715) | $ (13,070,754) | $ (25,819,122) | $ (22,566,426) |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash Flows From Operating Activities: | ||
Net Loss | $ (23,818,120) | $ (21,906,096) |
Adjustments To Reconcile Net (income) Loss To Net Cash Used By Operating Activities: | ||
Stock Based Compensation | 797,096 | 451,527 |
Restricted Stock Expense | 837,267 | 547,140 |
Marketing Stock Amortization | 339,520 | 0 |
Issuance Of Stock / Warrants For Service | 0 | 155,695 |
Inventory And Materials Impairment | 878,142 | 0 |
Intangibles Amortization | 329,671 | 0 |
Depreciation | 600,750 | 473,324 |
Impairment Of Goodwill And Other Intangible Assets | 18,183,285 | 0 |
Increase/(decrease) In Contingent Liability | (6,303,000) | 17,371,000 |
Realized And Unrealized Loss Of Marketable And Other Securities | 33,350 | (5,562) |
Termination Benefit | 0 | 352,279 |
Amortization Of Operating Lease Asset | 589,291 | 611,298 |
Changes In Operating Assets And Liabilities: | ||
Accounts Receivable | (932,230) | (936,983) |
Deposits | 390,875 | 1,125 |
Inventory | (569,316) | 271,815 |
Prepaid Inventory | 32,391 | (190,451) |
Prepaid Expenses And Other Current Assets | 354,752 | 44,408 |
Accounts Payable And Accrued Expenses | (1,129,614) | (1,366,373) |
Operating Lease Liability | (595,457) | (540,664) |
Deferred Revenue / Customer Deposits | 10,723 | (41,418) |
Collection On Discontinued Operations Accounts Receivable | 9,592 | 424,917 |
Deferred Tax Liability | 0 | (868,000) |
Cash Used By Operating Activities | (10,670,537) | (5,151,019) |
Cash Flows From Investing Activities: | ||
Proceeds From Sale Of Other Investment Securities | 0 | (750,000) |
Purchase Of Property And Equipment | (373,795) | (226,542) |
Cash Provided (used) By Investing Activities | (373,795) | (976,542) |
Cash Flows From Financing Activities: | ||
Proceeds From Issuance Of Preferred Stock | 0 | 15,798,115 |
Note Payable | (29,240) | (123,268) |
Preferred Dividend Distribution | (2,001,002) | (660,330) |
Cash Provided By Financing Activities | (2,030,242) | 15,014,517 |
Net Increase (decrease) In Cash | (13,074,574) | 8,886,956 |
Cash And Cash Equivalents, Beginning Of Period | 26,411,424 | 14,824,644 |
Cash And Cash Equivalents, End Of Period | 13,336,850 | 23,711,600 |
Cash Payments For: | ||
Interest Expense | 4,173 | 7,117 |
Non-cash Financial/investing Activities: | ||
Issuance Of Contingent Earnout Shares: | 730,000 | 11,271,000 |
Warrants Issued To Representative | $ 0 | $ 254,950 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY - USD ($) | Total | Common Stock | Preferred Stock | Additional Paid-In Capital | Other comprehensive Income (loss) | Accumulated Deficit |
Balance, Shares at Sep. 30, 2020 | 52,130,870 | 500,000 | ||||
Balance, Amount at Sep. 30, 2020 | $ 79,182,048 | $ 52,131 | $ 500 | $ 126,517,784 | $ 0 | $ (47,388,367) |
Issuance Of Preferred Stock, Shares | 2,300,000 | |||||
Issuance Of Preferred Stock, Amount | 15,795,815 | 0 | $ 2,300 | 15,795,815 | 0 | 0 |
Issuance Of Options For Share Based Compensation | 219,875 | 0 | 0 | 219,875 | 0 | 0 |
Issuance Of Restricted Stock For Share Based Compensation | 15,279 | 0 | 0 | 15,279 | 0 | 0 |
Preferred Dividend | (100,050) | 0 | 0 | 0 | 0 | (100,050) |
Net Loss | (9,395,621) | $ 0 | $ 0 | 0 | 0 | (9,395,621) |
Balance, Shares at Dec. 31, 2020 | 52,130,870 | 2,800,000 | ||||
Balance, Amount at Dec. 31, 2020 | 85,719,646 | $ 52,131 | $ 2,800 | 142,548,753 | 0 | (56,884,038) |
Balance, Shares at Sep. 30, 2020 | 52,130,870 | 500,000 | ||||
Balance, Amount at Sep. 30, 2020 | 79,182,048 | $ 52,131 | $ 500 | 126,517,784 | 0 | (47,388,367) |
Net Loss | (21,906,096) | |||||
Balance, Shares at Mar. 31, 2021 | 56,337,787 | 2,800,000 | ||||
Balance, Amount at Mar. 31, 2021 | 85,884,569 | $ 56,338 | $ 2,800 | 155,780,222 | (69,954,791) | |
Balance, Shares at Dec. 31, 2020 | 52,130,870 | 2,800,000 | ||||
Balance, Amount at Dec. 31, 2020 | 85,719,646 | $ 52,131 | $ 2,800 | 142,548,753 | 0 | (56,884,038) |
Issuance Of Preferred Stock, Shares | 3,711,964 | |||||
Issuance Of Preferred Stock, Amount | 15,795,815 | $ 3,712 | 0 | 11,422,488 | 0 | 0 |
Preferred Dividend | (560,279) | 0 | 0 | 0 | 0 | (560,279) |
Net Loss | (12,510,474) | $ 0 | 0 | 0 | (12,510,474) | |
Exercise Of Options For Share Based Compensation, Shares | 147,953 | |||||
Exercise Of Options For Share Based Compensation, Amount | 627,648 | $ 148 | 0 | 627,500 | 0 | 0 |
Issuance Of Restricted Stock For Share Based Compensation, Shares | 347,000 | |||||
Issuance Of Restricted Stock For Share Based Compensation, Amount | 1,181,828 | $ 347 | $ 0 | 1,181,481 | 0 | 0 |
Balance, Shares at Mar. 31, 2021 | 56,337,787 | 2,800,000 | ||||
Balance, Amount at Mar. 31, 2021 | 85,884,569 | $ 56,338 | $ 2,800 | 155,780,222 | (69,954,791) | |
Balance, Shares at Sep. 30, 2021 | 57,783,340 | 5,000,000 | ||||
Balance, Amount at Sep. 30, 2021 | 103,142,187 | $ 57,783 | $ 5,000 | 176,417,269 | 0 | (73,337,865) |
Issuance Of Options For Share Based Compensation | 505,466 | 0 | 505,466 | 0 | 0 | |
Issuance Of Restricted Stock For Share Based Compensation | 508,754 | 0 | 508,754 | 0 | 0 | |
Preferred Dividend | (1,000,502) | 0 | 0 | 0 | 0 | (1,000,502) |
Net Loss | (19,160,904) | $ 0 | $ 0 | 0 | 0 | (19,160,904) |
Issuance Of Common Stock, Shares | 494,630 | |||||
Issuance Of Common Stock, Amount | 405,000 | $ 495 | 404,505 | 0 | 0 | |
Balance, Shares at Dec. 31, 2021 | 58,277,970 | 5,000,000 | ||||
Balance, Amount at Dec. 31, 2021 | 84,400,000 | $ 58,278 | $ 5,000 | 177,835,993 | 0 | (93,499,271) |
Balance, Shares at Sep. 30, 2021 | 57,783,340 | 5,000,000 | ||||
Balance, Amount at Sep. 30, 2021 | 103,142,187 | $ 57,783 | $ 5,000 | 176,417,269 | 0 | (73,337,865) |
Net Loss | $ (23,818,120) | |||||
Balance, Shares at Mar. 31, 2022 | 466,713 | 59,352,213 | 5,000,000 | |||
Balance, Amount at Mar. 31, 2022 | $ 80,023,429 | $ 59,352 | $ 5,000 | 179,116,064 | 0 | (99,156,986) |
Balance, Shares at Dec. 31, 2021 | 58,277,970 | 5,000,000 | ||||
Balance, Amount at Dec. 31, 2021 | 84,400,000 | $ 58,278 | $ 5,000 | 177,835,993 | 0 | (93,499,271) |
Issuance Of Options For Share Based Compensation | 291,630 | 0 | 291,630 | 0 | 0 | |
Issuance Of Restricted Stock For Share Based Compensation | 328,515 | 0 | 328,515 | 0 | 0 | |
Preferred Dividend | (1,000,500) | 0 | 0 | 0 | 0 | (1,000,500) |
Net Loss | (4,657,215) | $ 0 | $ 0 | 0 | 0 | (4,657,215) |
Issuance Of Common Stock, Shares | 1,074,243 | |||||
Issuance Of Common Stock, Amount | $ 661,000 | $ 1,074 | 659,926 | 0 | 0 | |
Balance, Shares at Mar. 31, 2022 | 466,713 | 59,352,213 | 5,000,000 | |||
Balance, Amount at Mar. 31, 2022 | $ 80,023,429 | $ 59,352 | $ 5,000 | $ 179,116,064 | $ 0 | $ (99,156,986) |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Mar. 31, 2022 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Note 1 - Organization And Summary Of Significant Accounting Policies | NOTE 1 – 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, 2015 as Level Beauty Group, Inc. In November 2016 we changed the name of the Company to Level Brands, Inc. and on May 1, 2019 we changed the name of our Company to cbdMD, Inc. We operate from our offices located in Charlotte, North Carolina. Our fiscal year end is established as September 30. On December 20, 2018 (the “Closing Date”), the Company, and its newly organized wholly owned subsidiaries AcqCo, LLC and cbdMD LLC (“CBDI”), completed a two-step merger (the “Mergers”) with Cure Based Development, LLC, a Nevada limited liability company (“Cure Based Development”). Upon completion of the Mergers, CBDI survived and operates the prior business of Cure Based Development. As consideration for the Mergers in April of 2019, the Company issued 15,250,000 shares of our common stock to the members of Cure Based Development, of which unrestricted voting rights to 8,750,000 of the shares vest over a five-year period and are subject to a voting proxy agreement, as well as to issue another 15,250,000 shares of our common stock (the “Earnout Shares”) in the future upon certain earnout goals (the “Earnout Rights”) being achieved within five years from the closing of the Mergers. The Company owns and operates the nationally recognized CBD (cannabidiol) brands cbdMD, Paw CBD and cbdMD Botanicals. The Company sources cannabinoids, including CBD, which are extracted from non-GMO hemp grown on farms in the United States. CBD is a natural substance produced from the hemp plant. The products manufactured by and for the Company comply with the 2018 Farm Bill - our full spectrum products contain trace amounts of THC under the 0.3% by dry weight limit in the 2018 Farm Act while our broad spectrum products are non-psychoactive as they do not contain detectable levels of tetrahydrocannabinol (THC). In the third quarter of fiscal 2019 cbdMD launched its new CBD pet brand, Paw CBD. Following the initial positive response to the brand from retailers and consumers, cbdMD, Inc. organized Paw CBD, Inc. (“Paw CBD”) as a separate wholly owned subsidiary on October 22, 2019, to take advantage of its early mover status in the CBD animal health industry. On March 15, 2021 cbdMD formed a new wholly owned subsidiary, cbdMD Therapeutics, LLC (“Therapeutics”) for the purposes of isolating and quantifying the Company’s ongoing investments in science related to its existing and future products, including research and development activities for therapeutic applications. In July 2021, the Company acquired the assets of Twenty Two Capital, LLC (“Twenty Two”) d/b/a directcbdonline.com (“DCO”). This business operates a CBD marketplace through directcbdonline.com. In addition to the revenue contribution from the business the Company believes this acquisition will provide additional insight on consumer data and industry trends. 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 the 2021 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. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for fiscal 2021 as reported in the 2021 10-K have been omitted. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries CBDI, Paw CBD and Therapeutics. All material intercompany transactions and balances have been eliminated in consolidation. 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 are not limited to, allowances for doubtful accounts, 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, contingent liability and, hence consideration for the Mergers is a material estimate. Actual results could differ from these estimates. While the Company has been relatively successful in navigating the impact of COVID-19, it had previously been affected by temporary manufacturing closures, changes in product distribution and employment and compensation adjustments. There are also ongoing related risks to the Company’s business depending on any resurgence of the pandemic. 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 than three months when purchased to be cash equivalents. Accounts Receivable and Accounts Receivable Other Merchant Receivable and Reserve 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 to third 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. Customer Deposits Customer deposits consist of payments received in advance of revenue recognition. Revenue is recognized as revenue recognition criteria are met. 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 are five years for manufacturing equipment and automobiles and three 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 Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are directly or indirectly observable for the asset or liability. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability. Level 3 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. 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. Goodwill Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Identifiable intangible assets acquired in business combinations are recorded based on their fair values at the date of acquisition. Goodwill is not subject to amortization but must be evaluated for impairment annually. The Company tests for goodwill impairment annually or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. In performing a goodwill test, the Company performs a qualitative evaluation and if necessary, a quantitative evaluation. Factors considered in the qualitative test include specific operating results as well as new events and circumstances. For the quantitative test, the Company assesses goodwill for impairment by comparing the carrying value of the business to the respective fair value. The Company determines the fair value of the business using a combination of income- based and market-based approaches and incorporates assumptions it believes market participants would utilize. The income-based approach utilizes discounted cash flows while the market-based approach utilizes market multiples. These approaches are dependent upon internally developed forecasts that are based upon annual budgets and longer-range strategic plans. The Company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective acquired business and in the internally developed forecasts. The Company has analyzed a variety of factors on its business to determine if a circumstance could trigger an impairment loss. See Note 5 for further information on the impairment testing procedures performed. Intangible Assets The Company’s intangible assets consist of trademarks and other intellectual property, all of which are accounted for in accordance with Accounting Standards Codification (ASC) Topic 350, Intangibles – Goodwill and Other Contingent Liability A significant component of the purchase price consideration for the Company’s acquisition of Cure Based Development includes a fixed number of future shares to be issued as well as a variable number of future shares to be issued based upon the post-acquisition entity reaching certain specified future revenue targets, as further described in Note 6. The Company made a determination of the fair value of the contingent liabilities as part of the valuation of the assets acquired and liabilities assumed in the business combination. Paycheck Protection Program Loan Revenue Recognition Under ASC 606, Revenue from Contracts with Customers, Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. The Company meets that obligation when it has shipped products which have been ordered to the customer. The Company has reviewed its various revenue streams for its other contracts under the five-step approach. At March 31, 2022, the Company has no future performance obligations. Allocation of Transaction Price In the Company’s current business model, it does not have contracts with customers which have multiple elements as revenue is driven purely by online product sales or purchase order-based product sales. Revenue Recognition The Company records revenue from the sale of its products when its customer obtains control, which is upon shipping (and is typically FOB shipping) which is when our performance obligation is met. Net sales are comprised of gross revenues less product returns, trade discounts and customer allowances, which include costs associated with off-invoice mark-downs and other price reductions, as well as trade promotions. These incentive costs are recognized at the later of the date on which the Company recognizes the related revenue or the date on which the Company offers the incentive. The Company currently offers a 60-day, money back guarantee. Regarding sales for services provided, the Company records revenue when the customer has accepted services and the Company has a right to payment. Based on the contracted services, revenue is recognized when the Company invoices customers for completed services at agreed upon rates or revenue is recognized over a fixed period of time during which the service is performed. Disaggregated Revenue The Company’s product revenue is generated primarily through two sales channels, E-commerce sales (formerly referred to as consumer sales) and wholesale sales. The Company believes that these categories appropriately reflect how the nature, amount, timing and uncertainty of revenue and cash flows are impacted by economic factors. A description of the Company’s principal revenue generating activities are as follows: - E-commerce sales - consumer products sold through the Company’s online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment; and - Wholesale sales - products sold to the Company’s wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the customer, in accordance with the terms of the applicable agreement. Payment terms vary and can typically be 30 days from the date control over the product is transferred to the customer. Contract liabilities represent unearned revenues and are presented as deferred revenue or customer deposits on the condensed consolidated balance sheets. The Company has no material contract assets nor contract liabilities at March 31, 2022. The following tables represent a disaggregation of revenue by sales channel: Three Months Three Months Ended March Ended March 31,2022 % of total 31,2021 % of total Wholesale sales $ 3,048,332 31.7 % $ 3,436,176 29.1 % E-commerce sales 6,580,554 68.3 % 8,362,435 70.9 % Total Net Sales $ 9,628,886 100.0 % $ 11,798,611 100.0 % Six Months Six Months Ended March Ended March 31,2022 % of total 31,2021 % of total Wholesale sales $ 5,254,067 27.7 % $ 6,063,356 25.1 % E-commerce sales 13,696,641 72.3 % 18,063,558 74.9 % Total Net Sales $ 18,950,708 100.0 % $ 24,126,914 100.0 % 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, and includes labor for its service 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. As of October 1, 2019, CBDI and Paw CBD were 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 and as of March 15, 2021, Therapeutics is also a wholly owned subsidiary and is a disregarded entity for tax purposes and its 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 the Accounting for Income Taxes 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. The Company had a $12,621,509 uninsured balance at March 31, 2022 and a $23,508,953 uninsured balance at September 30, 2021. 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 did not have any customers that represented a significant amount of our sales for the three and six months ended March 31, 2022. Stock-Based Compensation The Company accounts for its stock compensation under the ASC 718-10-30, Compensation - Stock Compensation 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 ASC 260-10, Earnings Per Share for calculating the basic and diluted income (loss) per share. The Company computes basic income (loss) per share by dividing net income (loss) and net income (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. New Accounting Standards In December 2019, the FASB issued ASU 2019-12, Income Taxes, Simplifying the Accounting for Income Taxes (Topic 740). The ASU eliminates certain exceptions to the guidance in Accounting Standards Codification (ASC or Codification) 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The guidance also clarifies that single-member limited liability companies and similar disregarded entities that are not subject to income tax are not required to recognize an allocation of consolidated income tax expense in their separate financial statements, but they could elect to do so. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this standard had no material impact on the Company's consolidated financial statements and disclosures. |
MARKETABLE SECURITIES AND INVES
MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES | 6 Months Ended |
Mar. 31, 2022 | |
MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES | |
Note 2 - Marketable Securities And Investment Other Securities | NOTE 2 – 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 customer 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. If there is insufficient data to support the valuation of the security directly, the Company will value it, and the underlying revenue, on the estimated fair value of the services provided. 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 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 following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: · Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. · Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. · Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. Where an accounts receivable other is settled with the receipt of the common stock or other instrument, the common stock or other instrument was classified as an asset on the consolidated balance sheet as either an investment marketable security (when the customer is a public entity) or as an investment other security (when the customer is a privately held entity). For the three months ended March 31, 2022 and 2021, the Company recorded $0 and $2,852, respectively, and for the six months ended March 31, 2022 and 2021 the Company recorded $(33,350) and $545,562 respectively, of realized and unrealized gain (loss) on marketable and other securities, including impairments. The realized loss in the first quarter of fiscal 2022 was a result of marking the Company’s holdings of 1,042,193 shares of Isodiol International, Inc (“Isodiol”) down to zero after Isodiol was delisted from the TSX during December 2021. The gain in the prior year was driven by the sale of our investment in Formula Four Beverages, Inc. that was previously written to zero based on prior information related to the company’s performance and COVID-19 impacts. In September 2020, the Company purchased a membership interest in Adara Sponsor LLC for $250,000, which along with proceeds from other investors was utilized as an investment in Adara Acquisition Corporation (“Adara”), a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination (a “SPAC”). On January 13, 2021, the Company executed second tranche subscriptions agreements and funded the remaining $750,000 commitment into Adara Sponsor, LLC. On February 9, 2021, the public shares of Adara began trading on the NYSE. Commencing March 24, 2021, holders of the 11,500,000 units sold in the Adara’s initial public offering could elect to separately trade shares of the Adara Class A common stock and warrants included in the units. The shares of Class A common stock and warrants that were separated now trade on NYSE American LLC under the symbols “ADRA” and “ADRA WS”, respectively. On March 31, 2022, the Company’s implied, indirect ownership in Adara represented 4.4% (633,988 shares) and 10.1% (1 million) of the warrants. As of March 31, 2022, ADRA stock closed at $9.88 while ADRA WS closed at $0.32. Adara’s focus of targets to pursue for the business combination are expected to be in the consumer products industry including business in the health and wellness, ecommerce, discretionary spending, information technology sectors and related channels of distribution. While Adara is currently a listed company, the Company’s investment is in Adara Sponsor, LLC and consequently the Company has classified this investment as Level 3 for fair value measurement purposes as there are no observable inputs. In valuing the investment, the Company used the value paid, which was the price offered to all third-party investors. The Company assessed the common stock and determined there was not an impairment for the period ended March 31, 2022.The table below summarized the assets valued at fair value as of March 31, 2022: In Active Markets for Significant Other Significant Identical Assets Observable Unobservable Total Fair Value and Liabilities Inputs Inputs at March 31, (Level 1) (Level 2) (Level 3) 2022 Investment other securities $ - $ - $ 1,000,000 $ 1,000,000 (Level 1) (Level 2) (Level 3) 2021 Balance at September 30, 2021 33,351 - 1,000,000 1,033,351 Change in value of equities (33,351 ) - (33,351 ) Additional Investment - - Balance at December 31, 2021 $ - $ - $ 1,000,000 $ 1,000,000 Change in value of equities - - - Additional Investment - - Balance at March 31, 2022 $ - $ - $ 1,000,000 $ 1,000,000 |
INVENTORY
INVENTORY | 6 Months Ended |
Mar. 31, 2022 | |
INVENTORY | |
Note 3 - Inventory | NOTE 3 - INVENTORY Inventory at March 31, 2022 and September 30, 2021 consists of the following: March 31, September 30, 2022 2021 Finished Goods $ 3,309,847 $ 3,362,897 Inventory Components 1,509,798 1,729,176 Inventory Reserve (106,604 ) (70,206 ) Inventory prepaid 519,128 551,519 Total Inventory $ 5,232,169 $ 5,573,386 Abnormal amounts of idle facility expense, freight, handling costs, scrap and wasted material (spoilage) are expensed in the period they are in incurred and no material expenses related to these items occurred in the three months ended March 31, 2022. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
Note 4 - Property And Equipment | NOTE 4 – PROPERTY AND EQUIPMENT Major classes of property and equipment at March 31, 2022 and September 30, 2021 consist of the following: March 31, September 30, 2022 2021 Computers, furniture and equipment $ 678,421 $ 549,910 Manufacturing equipment 3,079,499 2,968,838 Leasehold improvements 1,016,273 870,621 Automobiles 35,979 35,979 4,810,173 4,425,348 Less accumulated depreciation (2,475,553 ) (1,863,774 ) Property and equipment, net $ 2,334,619 $ 2,561,574 Depreciation expense related to property and equipment was $323,294 and $240,517 for the three months ended March 31, 2022 and 2021, respectively and was $611,780 and $473,323 for the six months ended March 31, 2022 and 2021, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Mar. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
Note 5 - Goodwill And Intangible Assets | NOTE 5 – GOODWILL AND INTANGIBLE ASSETS Goodwill The Company had goodwill at December 31, 2021 of $56,670,970. The Company performs a Step 0 goodwill impairment analysis annually following the steps laid out in ASC 350-20-35-3C. Our annual impairment analysis includes a qualitative assessment to determine if it is necessary to perform the quantitative impairment test. In performing a qualitative assessment, we review events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of goodwill. From time to time the Company also evaluates goodwill impairment on a quarterly basis if any triggering events have occurred that would require such analysis. For the three months ended December 31, 2021, the Company performed a Step 0 goodwill impairment analysis on consolidated goodwill and determined that a triggering event had occurred to necessitate performing the quantitative impairment test. After performing the quantitative impairment test in accordance with ASC 350-20-35-3C, the Company determined that goodwill was impaired by $13,898,285. The Company has recorded this impairment to reduce total goodwill on its condensed consolidated balance sheets and has recorded the corresponding impairment expense on its condensed consolidated statement of operations as of December 31, 2021. The Company performed the same analysis as of March 31, 2022 and determined that no additional impairment has occurred. Intangible Assets In July 2021, the Company completed the acquisition of DCO and acquired certain assets, including the trade name, domains and certain other intellectual property. The tradename will be used in marketing and branding of the website. The Company believes the trade name has a 10 year life. In addition to the trade name, DCO has a technology platform used to market to its customer and the Company believes it has a 4 year life. On December 20, 2018, the Company completed the Mergers with Cure Based Development and acquired certain assets, including the trademark “cbdMD” and its variants and certain other intellectual property. The trademark is the cornerstone of this subsidiary and is key as the Company creates and distributes products and continue to build this brand. The Company believed the trademark did not have limits on the time it would contribute to the generation of cash flows and therefore identified these as indefinite lived intangible assets. In September 2019, the Company purchased the rights to the trademark name HempMD for $50,000. This trademark will be used in the marketing and branding of certain products to be released under this brand name. At the time of acquisition, the Company believes the trademark does not have limits on the time it will contribute to the generation of cash flows and therefore has identified these as indefinite-lived intangible assets. As of December 31, 2021, the Company has re-assessed the “cbdMD” and “HempMD” trademarks and have determined that the trademarks should be classified as definite lived intangible assets with useful lives of 20 years versus indefinite lived intangible assets. The Company used a variety of factors in determining the reclassifications and have made the reclassifications following guidance prescribed by ASC 350-30-35-17, which states that when a reporting entity subsequently determines that in indefinite-lived intangible asset has a finite useful life, the reporting entity should test the asset for impairment as an indefinite lived asset prior to commencing amortization. As of December 31, 2021, the Company has prepared a tradename impairment analysis in accordance with ASC 350 and has determined that the “cbdMD” trademark was impaired by $4,285,000. The Company has recorded this impairment charge as a reduction in the carrying value of the intangible assets on its condensed consolidated balance sheets with the corresponding impairment expense recorded on its condensed consolidated statements of operations. The Company began amortizing the trademarks over their useful lives of 20 years as of January 2022. Intangible assets as of March 31, 2022 and September 30, 2021 consisted of the following: March 31, September 30, 2022 2021 Trademark related to cbdMD $ 17,300,000 $ 21,585,000 Trademark for HempMD 50,000 50,000 Technology Relief from Royalty related to DirectCBDOnline.com 667,844 667,844 Tradename related to DirectCBDOnline.com 749,567 749,567 Amortization of definite lived intangible assets: (378,153 ) (48,482 ) Total $ 18,389,258 $ 23,003,929 |
CONTINGENT CONSIDERATION
CONTINGENT CONSIDERATION | 6 Months Ended |
Mar. 31, 2022 | |
CONTINGENT CONSIDERATION | |
Note 6 - Contingent Consideration | NOTE 6 – CONTINGENT CONSIDERATION As consideration for the Mergers, described in Note 1, the Company had a contractual obligation to issue 15,250,000 shares of its common stock, after approval by its shareholders, to the members of Cure Based Development, issued in two tranches 6,500,000 shares and 8,750,000 shares, both of which are subject to leak out provisions, and the unrestricted voting rights to 8,750,000 tranche of shares will also vest over a five year period and are subject to a voting proxy agreement. The Merger Agreement also provides that an additional 15,250,000 Earnout Shares can be issued upon the satisfaction of certain aggregate net revenue criteria by cbdMD within 60 months following the Closing Date. The contractual obligations and earn out provision are accounted for as a contingent liability and fair value is determined using Level 3 inputs, as estimating the fair value of these contingent liabilities require the use of significant and subjective inputs that may and are likely to change over the duration of the liabilities with related changes in internal and external market factors. The initial two tranches totaling 15,250,000 shares were valued using a market approach method and included the use of the following inputs: share price upon contractual obligation, discount for lack of marketability to address leak out restrictions, and probability of shareholder disapproval. In addition, the 8,750,000 shares in the second tranche also included an input for a discount for lack of voting rights during the vest periods. The Merger Agreement also provides that an additional 15,250,000 Earnout Shares would be issued as part of the consideration for the Mergers, upon the satisfaction of certain aggregate net revenue criteria by cbdMD within 60 months following the Closing Date as follows, as measured at four intervals (each a “marking period”): the completion of 12, 24, 42, and 59 calendar months from the Closing Date, and based upon the ratios set forth below: Aggregate Net Revenues Shares Issued/ Each $ of Aggregate Net Revenue Ratio $1 - $20,000,000 .190625 $20,000,001 - $60,000,000 .0953125 $60,000,001 - $140,000,000 .04765625 $140,000,001 - $300,000,000 .23828125 For clarification purposes, the Aggregate Net Revenues during a Marking Period shall be multiplied by the applicable Shares Issued/Each $ of Aggregate Net Revenue Ratio, minus, the number of shares issued as a result of Aggregate Net Revenues during the prior marking periods. The issuance of the initial 15,250,000 shares and the 15,250,000 Earnout Shares were approved by the Company’s shareholders in April 2019. The initial shares were issued upon shareholder approval on April 19, 2019 and had a carrying value of $ 53,215,163. Additionally, as the 15,250,000 initial shares were issued, the value of the shares in the amount of $53,215,163 was reclassified from the contingent liability to additional paid in capital on the consolidated balance sheet. In addition, the first marking period for the Earnout Shares was December 31, 2019 and based on measurement criteria, 5,127,792 Earnout Shares were issued on February 27, 2020 and had a value of $4,620,000 which was reclassified from the contingent liability to additional paid in capital on the consolidated balance sheet. The second marking period for the Earnout Shares was December 31, 2020 and based on measurement criteria, 3,348,520 Earnout Shares were issued on March 8, 2021 and had a value of $11,271,000 which was reclassified from the contingent liability to additional paid in capital on the consolidated balance sheet. The first quarter of the third marking period ended on March 31, 2021 and based on the measurement criteria an additional 562,278 Earnout Shares had been earned and issued in May of 2021. These shares deceased in value by $522,104 during the quarter through the time of issuance and had a value of $1,329,000 which was reclassified from the contingent liability to additional paid in capital on the consolidated balance sheet. The second quarter of the third marking period ended on June 30, 2021 and based on the measurement criteria an additional 503,275 Earnout Shares had been earned and issued in August of 2021. These shares decreased in value by $222,442 during the quarter through the time of issuance and had a value of $920,000, which was reclassified from the contingent liability to additional paid in capital on the consolidated balance sheet. The third quarter of the third marketing period ended on September 30, 2021 and based on the measurement criteria an additional 466,713 Earnout Shares were earned and issued in December 2021. These shares decreased in value by $366,841 during the quarter through the time of issuance and had a value of $405,000, which was reclassified from the contingent liability to additional paid in capital on the consolidated balance sheet. The fourth quarter of the third marketing period ended on December 31, 2021 and based on the measurement criteria an additional 444,243 Earnout Shares were earned and issued in March 2022. These shares increased in value by $41,914 during the quarter through the time of issuance and had a value of $325,000, which was reclassified from the contingent liability to additional paid in capital on the consolidated balance sheet The third marking period was originally an 18 month period commencing on January 1, 2021 and ending on June 30, 2022 (the “Third Marking Period End Date”), after which time the determination of the issuance of any remaining Earnout Shares would be made pursuant to the terms of the Merger Agreement. On March 31, 2021 the Company entered into Addendum No. 1 to the Merger Agreement (“Addendum No. 1”) with the holders of the remaining Earnout Rights which amended the measurement periods within the third marking period to change the determination of the aggregate net revenues within the third marking period to a quarterly basis for each of the six fiscal quarters within the third marking period, beginning with the quarter ended March 31, 2021, instead of following Third Marking Period End Date. This change in the measurement date, however, has no effect on the number of remaining Earnout Shares issuable under the Earnout Rights and no effect on the earnout targets; Addendum No. 1 simply changes the physical issuance date(s) of the remaining Earnout Shares, if in fact, such shares are earned pursuant to the terms of the Merger Agreement. Addendum No. 1 did not change any of the terms of the fourth marking period (as that term is defined in the Merger Agreement). This change did not impact the fair value of the contingent liability. The value of the contingent liability was $2,810,000 and $9,440,000 at March 31, 2022 and September 30, 2021, respectively. In November of 2021 the Company entered into a contractual obligation to issue up to 120,000 RSUs to an employee. During the twelve month period ending December 31, 2022, the employee shall receive RSUs that are dependent upon a minimum $3 million and up to $8 million of net sales generated by the employee through accounts established and opened by the employee. The shares will be subject to meeting the minimum $3 million of net sales as well as to calculations including volume-weighted average stock price minimum and maximum. As of December 31, 2021 the estimated revenue target to be met by the employee through December 31, 2022 was below the minimum threshold for earning RSUs, and therefore, the Company recorded a zero liability related to this contingent liability at December 31, 2021. During the three months ended March 31, 2022, the employee resigned their position with the company. As such, this contractual obligation was terminated. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Mar. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
Note 7 - Related Party Transactions | NOTE 7 – RELATED PARTY TRANSACTIONS The Company, as noted in Note 2, and a number of its affiliates have invested into Adara through Adara Sponsor. Martin Sumichrast, the Company’s co-CEO, is also CEO of Adara. |
SHAREHOLDERS EQUITY
SHAREHOLDERS EQUITY | 6 Months Ended |
Mar. 31, 2022 | |
SHAREHOLDERS EQUITY | |
Note 8 - Shareholders' Equity | NOTE 8 – 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. Our 8.0% 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 of 8.0% payable monthly in arrears for the prior month. The Company reviewed ASC 480 – Distinguishing Liabilities from Equity The total amount of preferred dividends declared and paid were $1,000,500 and $560,280, respectively, for the three months ended March 31, 2022 and 2021. The total amount of dividends declared and paid were $2,001,002 and $660,330 for the six months ended March 31, 2022 and March 31, 2021, respectively. Common Stock – The Company is authorized to issue 150,000,000 shares of common stock, par value $0.001 per share. There were 59,352,213 and 57,783,340 shares of common stock issued and outstanding at March 31, 2022 and September 30, 2021, respectively Preferred stock transactions: The Company had no preferred stock transactions in the three and six months ended March 31, 2022. In the six months ended March 31, 2021: On December 8, 2020, the Company completed a follow-on firm commitment underwritten public offering of 2,300,000 shares of its 8.0% Series A Cumulative Convertible Preferred Stock for aggregate gross proceeds of $17.25 million. The Company received approximately $15.8 million in net proceeds after deducting underwriting discounts and commissions. The Company also issued to the representative of the underwriters warrants to purchase in aggregate 150,502 shares of common stock with an exercise price of $3.74. The warrants were valued at $254,950 and expire on December 8, 2025. Common stock transactions: In the six months ended March 31, 2022: In March 2022 the Company issued 444,243 shares of restricted common stock in connection with the Earnout Shares as referenced in Note 6. On December 28, 2021 the Company issued 466,713 shares of restricted common stock in connection with the Earnout Shares as referenced in Note 6. In October 2021, the Company issued 25,000 shares of restricted common stock to an executive officer of the Company, subject to a January 1, 2022 vest. In the six months ended March 31, 2021: In March of 2021, the Company issued 180,000 shares of restricted common stock to a professional athlete to completely satisfy a $800,000 obligation due between July and December of 2021. The Company recorded a total prepaid expense of $649,800 in conjunction with the issuances of shares and intends to amortize this over the term of the athlete’s agreement. In March of 2021, the Company issued 27,000 of restricted stock awards to the Company’s board of directors. Two thousand of the shares vested at the time of the grant, while the balance vest one fourth on June 30, 2021, one fourth, on September 30, 2021, one fourth on December 31, 2021, and one fourth on March 31, 2022. The stock awards were valued at the fair market price of $118,800 upon issuance and will amortize over the individual vesting periods. In March 2021, the Company issued 3,348,520 shares of common stock in connection with the Earnout Shares as referenced in Note 6. In February 2021 as partial compensation pursuant to the terms of a Personal Services Agreement for the endorsement of the Company’s products, the Company issued 40,000 common shares. The Company recorded a total prepaid expense of $155,200 in conjunction with the issuance of shares. In January of 2021 the Company issued 167,500 of restricted stock awards to an aggregate of 15 employees. A majority vested immediately with the balance vesting by April 6, 2021. The stock awards were valued at the fair market price of $494,125 upon issuance and amortized over the individual vesting periods. In October of 2020 the Company issued 50,000 of restricted stock awards to an executive officer, subject to a multi-year vesting schedule with a minimum one year before the first tranche vests as noted below in Note 9. Stock option transactions: In the six months ended March 31, 2022: In March of 2022, the Company granted its board of directors an aggregate of 120,000 common stock options. The options vested immediately, have a strike price of $0.818 and a five-year term. The Company has recorded a total prepaid expense of $57,000 and intends to amortize the expense over the 12-month board term. In January of 2022, the Company granted an aggregate of 130,000 common stock options to a group of 9 employees. These options vest upon grant and the Company has recorded an expense for these options of $79,500 for the three months ended March 31, 2022 In October 2021, the Company granted an aggregate of 75,000 common stock options to an executive officer. These options vest on October 1, 2022. The Company has recorded an expense for these options of $23,025 and $46,050 for the three and six months ended March 31, 2022. In the six months ended March 31, 2021: In March 2021, the Company granted its board of directors an aggregate of 150,000 common stock options. The options vested immediately, have a strike price of $4.40 and a five-year term. The Company has recorded a total prepaid expense of $395,850 and intends to amortize the expense over the 12-month board term. In January 2021, the Company granted an aggregate of 80,000 common stock options to three employees. The options vest in three equal tranches, the first on April 15, 2021, the second on April 15, 2022 and the third on April 14, 2023 and have an exercise price of $3.10 per share and a term of 10 years. The Company has recorded an expense of $66,967 for the three months ended March 31, 2021 for these options. In October 2020, the Company granted an aggregate of 350,000 common stock options to an executive officer. The options vest in three equal tranches, the first on October 1, 2021, the second on October 1, 2022 and the third on October 1, 2023, and have an exercise price of $3,50, $5.00, and $6.50 per share and a term of 5 years. The Company has recorded an expense for these options of $31,054 for both the three months ended December 31, 2021 and 2020, respectively. The expected volatility rate was estimated based on a weighted average mix of the volatilities of the Company and a peer group of companies in similar industries. The expected term used was the full term of the contract for the issuances. The risk-free interest rate for periods within the contractual life of the option is based on U.S. Treasury securities. The pre-vesting forfeiture rate of zero is based upon the experience of the Company. As required under ASC 718, the Company will adjust the estimated forfeiture rate to its actual experience. Management will continue to assess the assumptions and methodologies used to calculate estimated fair value of share-based compensation. Circumstances may change and additional data may become available over time, which could result in changes to these assumptions and methodologies, and thereby materially impact our fair value determination. The following table summarizes the inputs used for the Black-Scholes pricing model on the options issued in the three months ended March 31, 2022 and 2021: March 31, March 31, 2022 2021 Weighted average exercise price $0.82 - $0.975 $ 4.65 Risk free interest rate 1.56% - 1.66% 0.16% - 0.85% Volatility 100.23% - 100.30 100.72% - 1005.43% Expected term 2.5 - 5 years 2.5 - 6.2 years Divident yield None None Warrant Transactions: The Company has no warrant transactions during the three and six month ended March 31, 2022. In the six months ended March 31, 2021: In December 2020 in relation to the follow-on firm commitment underwritten public offering of the 8.0% Series A Cumulative Convertible Preferred Stock, the Company issued to the representative of the underwriters warrants to purchase in aggregate 150,502 shares of common stock with an exercise price of $3.74. The warrants expire on December 8, 2025. The following table summarizes the inputs used for the Black-Scholes pricing model on the warrants issued in the three months ended March 31, 2022 and 2021: March 31, March 31, 2022 2021 Weighted average exercise price $ - $ 3.74 Risk free interest rate - 0.39 % Volatility - 103.42 % Expected term - 2.75 years Divident yield - None |
STOCKBASED COMPENSATION
STOCKBASED COMPENSATION | 6 Months Ended |
Mar. 31, 2022 | |
STOCKBASED COMPENSATION | |
Note 9 - Stock-based Compensation | NOTE 9 – STOCK BASED COMPENSATION Equity Compensation Plan – On June 2, 2015, the Board of Directors of the Company approved the 2015 Equity Compensation Plan (“2015 Plan”). The 2015 Plan initially made 1,175,000 common stock shares, either unissued or reacquired by the Company, available for awards of options, restricted stocks, other stock grants, or any combination thereof. The number of shares of common stock available for issuance under the 2015 Plan shall automatically increase on the first trading day of October each calendar year during the term of the 2015 Plan, beginning with calendar year 2016, by an amount equal to one percent (1%) of the total number of shares of common stock outstanding on the last trading day in September of the immediately preceding fiscal year, but in no event shall any such annual increase exceed 100,000 shares of common stock. On April 19, 2019, shareholders approved an amendment to the 2015 Plan and increased the number of shares available for issuance under the 2015 Plan to 2,000,000 and retained the annual evergreen increase provision of the plan. On January 8, 2021, the Company’s Board of Directors approved the 2021 Equity Compensation Plan (the “2021 Plan”) and it was subsequently approved by its shareholders at its annual meeting held on March 12, 2021. The purpose of the 2021 Plan is to advance the interests of the Company by providing an incentive to attract, retain and motivate highly qualified and competent persons who are important to it and upon whose efforts and judgment the success of the Company is largely dependent. The 2021 Plan made 5,000,000 common shares, either unissued or reacquired by the Company, available for awards of options, restricted stocks, other stock grants, or any combination thereof. The 2021 Plan also contains an “evergreen formula” pursuant to which the number of shares of common stock available for issuance under the 2021 Plan will automatically increase on October 1 of each calendar year during the term of the 2021 Plan, beginning with calendar year 2022, by an amount equal to 1.0% of the total number of shares of common stock outstanding on September 30 of such calendar year, up to a maximum of 250,000 shares. The Company accounts for stock-based compensation using the provisions of ASC 718. ASC 718 codification requires companies to recognize the fair value of stock-based compensation expense in the financial statements based on the grant date fair value of the options. All options are approved by the Compensation, Corporate Governance and Nominating Committee of the Board of Directors. Restricted stock awards that vest in accordance with service conditions are amortized over their applicable vesting period using the straight-line method. The fair value of the Company’s stock option awards or modifications is estimated at the date of grant using the Black-Scholes option pricing model. Eligible recipients include employees, officers, directors and consultants who are deemed to have rendered or to be able to render significant services to the Company or its subsidiaries and who are deemed to have contributed or to have the potential to contribute to the success of the Company. Options granted generally have a five-to-ten-year term and have vesting terms that cover one to three years from the date of grant. Certain of the stock options granted under the plan have been granted pursuant to various stock option agreements. Each stock option agreement contains specific terms. 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. 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 used in the Black-Scholes valuation model for equity awards with time-based vesting provisions granted during the year. The following table summarizes stock option activity under both plans for the six months ended March 31, 2022: Weighted-average remaining Aggregate Weighted-average contractual term intrinsic value Number of shares exercise price (in years) (in thousands) Outstanding at September 30, 2021 2,702,500 $ 4.42 5.13 $ - Granted 325,000 1.15 - Exercised - - Forfeited (170,000 ) 4.52 Outstanding at March 31, 2022 2,857,500 3.96 4.79 - Exercisable at March 31, 2022 1,996,668 $ 4.16 4.44 $ - As of March 31, 2022, there was approximately $897,788 of total unrecognized compensation cost related to non-vested stock options which vest over a period of approximately 2.8 years. Restricted Stock Award transactions: In the six months ended March 31, 2022: In March of 2022, the Company issued 20,000 of restricted stock awards to the Company’s board of directors. The shares vest quarterly one fourth on June 30, 2022, one fourth, on September 30, 2022, one fourth on December 31, 2022, and one fourth on March 31, 2023. The stock awards were valued at the fair market price of $16,360 upon issuance and will amortize over the individual vesting periods. In January 2022, the Company issued 30,000 shares of restricted stock awards to six employees. The stock awards were valued at the fair market price of $29,250 and vested at the grant date. In January of 2022, the Company issued 320,000 shares to a professional athlete in conjunction with an amendment to the athlete’s sponsorship agreement as referenced in Note 11. The stock grant was valuated at the fair market price of $336,000 upon issuance and will be amortized over the remaining term of the agreement. In November 2021, the Company issued 120,000 shares of restricted stock awards to an employee, subject to certain revenue performances metrics through December 2022, as referenced in Note 6. These shares were forfeited during January 2022. In October 2021 the Company issued 5,000 shares of restricted stock awards to an employee, which vested immediately upon issuance. In October 2021 the Company issued 25,000 shares of restricted stock awards to an executive officer, subject to a four-month vesting schedule. In the six months ended March 31, 2021: In March of 2021, the Company issued 27,000 of restricted stock awards to the Company’s board of directors. Two thousand of the shares vested at the time of the grant, while the balance vest one fourth on June 30, 2021, one fourth, on September 30, 2021, one fourth on December 31, 2021, and one fourth on March 31, 2022. The stock awards were valued at the fair market price of $118,800 upon issuance and will amortize over the individual vesting periods. In January of 2021 the Company issued 167,500 of restricted stock awards to an aggregate of 15 employees. A majority vested immediately with the balance vesting by April 6, 2021. The stock awards were valued at the fair market price of $494,125 upon issuance and amortized over the individual vesting periods. In October 2020, the Company issued 50,000 of restricted stock awards to an executive officer. The restricted stock vests in three equal tranches, the first of which vests on October 1, 2021, on the second on October 1, 2022 and the third on October 1, 2023 and were valued at fair market value upon issuance at $100,000 which will be amortized over the vesting period. The Company recognized $328,515 and $531,605 of restricted stock compensation expense for the three months ended March 31, 2022 and 2021, respectively. |
WARRANTS
WARRANTS | 6 Months Ended |
Mar. 31, 2022 | |
WARRANTS | |
Note 10 - Warrants | NOTE 10 - WARRANTS Transactions involving the Company equity-classified warrants for the six months ended March 31, 2022 and 2021 are summarized as follows: Weighted-average remaining Aggregate Weighted-average contractual term intrinsic value Number of shares exercise price (in years) (in thousands) Outstanding at September 30, 2021 660,417 $ 4.60 3.05 $ - Granted - - - Exercised - - Forfeited - - Outstanding at March 31, 2022 660,417 4.60 2.55 - Exercisable at March 31, 2022 660,417 $ 4.60 - $ - The following table summarizes outstanding common stock purchase warrants as of March 31, 2022: Weighted-average Number of shares exercise price Expiration Exercisable at $4.00 per share 70,500 4.00 September 2022 Exercisable at $7.50 per share 100,000 7.50 October 2022 Exercisable at $4.375 per share 51,429 4.375 September 2023 Exercisable at $7.50 per share 60,000 7.50 May 2024 Exercisable at $3.9125 per share 47,822 3.9125 October 2024 Exercisable at $1.25 per share 36,682 1.25 January 2025 Exercisable at $3.74 per share 150,502 3.74 December 2025 Exercisable at $3.75 per share 143,482 3.75 June 2026 660,417 $ 4.60 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
Note 11 - Commitments And Contingencies | NOTE 11 COMMITMENTS AND CONTINGENCIES In May 2019, the Company entered into an endorsement agreement with a professional athlete. The term of the agreement is through December 31, 2022 and is tied to performance of the athlete in so many professional events annually, and also includes promotion of the Company via social media, wearing of logo during competition, requirements to provide production days for advertising creation and attendance of meet and greets. The potential payments, if all services are provided, in aggregate is $4,900,000 and is paid based on the services above for the period ending: December 2019 - $400,000, December 2020 - $800,000, December 2021 - $1,800,000, and December 2022 - $1,900,000. In light of the impact of COVID-19 on events, the Company and professional athlete mutually agreed to suspend payments from March 2020 through June 2020. Effective July 1, 2020, the parties entered into a new endorsement agreement amending certain of the contract terms which superseded the original agreement. Under the current endorsement agreement potential payments to the professional athlete are as follows from July 2020 to December 2022 – up to $2,867,000 to be paid in common stock in three issuances, based on a Volume Weighed Average Price (“VWAP”) calculation, of which the last two issuances can be paid in cash at the Company’s option - $1,400,000 paid in July 2020, $800,000 paid between July 2021 and December 2021, and $667,000 paid between July 2022 and December 2022. The Company will make monthly cash payments as follows from: July 2020 to December 2020 - $40,000, from January 2021 to June 2021 - $50,000, from July 2021 to December 2021 - $75,000, from January 2022 to June 2022 - $85,000, and from July 2022 to December 2022 - $100,000. In March 2021, the parties entered into an additional amendment to the endorsement agreement whereby the Company issued the professional athlete 180,000 common shares to completely satisfy the $800,000 payment options between July 2021 and December 2021. The Company has recorded expense of $422,309 and $253,700 for the three months ended December 31, 2021 and 2020, respectively. In January of 2022, the parties entered into an additional amendment to the endorsement agreement, whereby the Company has foregone certain rights to logo wearing during events while retaining other performance of the athlete through December 2024. In exchange for change in obligations and term, the parties re-amortized the balance owed during 2022 through 2024, including issuing 320,000 of the Company’s common stock as part of the total compensation. In April 2022, effective February 2022, the Company entered into an endorsement agreement with a professional athlete. The term of the agreement is through February 2025 and is tied to performance of the athlete in so many professional events annually, and also includes promotion of the Company via social media, wearing of logo during competition, requirement to provide production days for advertising creation and attendance at meet and greets. The potential base payments, if all services are provided is $1,500,000 over the term of the agreement, in addition to some incentives for sales directly influenced by the athlete. |
NOTE PAYABLE
NOTE PAYABLE | 6 Months Ended |
Mar. 31, 2022 | |
NOTE PAYABLE | |
Note 12 - Note Payable | NOTE 12 – NOTE PAYABLE In July 2019, the Company entered into a loan arrangement in the amount of $249,100 for a line of equipment, of which $70,357 is a long term note payable at March 31, 2022. Payments are for 60 months and have a financing rate of 7.01 %, which requires a monthly payment of $4,905. In January 2020, the Company entered into a loan arrangement for $35,660 for equipment, of which $7,373 is a long term note payable at March 31, 2022. Payments are for 48 months and have a financing rate of 6.2%, which requires a monthly payment of $841. |
PAYCHECK PROTECTION PROGRAM LOA
PAYCHECK PROTECTION PROGRAM LOAN | 6 Months Ended |
Mar. 31, 2022 | |
PAYCHECK PROTECTION PROGRAM LOAN | |
Note 13 - Paycheck Protection Program Loan | NOTE 13 – PAYCHECK PROTECTION PROGRAM LOAN In April 2020, the Company applied for an unsecured loan pursuant to the PPP administered by and authorized by the CARES Act. Section 1106 of the Act provides for forgiveness of up to the full principal amount of qualifying loans guaranteed under the Paycheck Protection Program. On April 27, 2020, the Company received the loan from Truist Bank (the “Lender”) in the principal amount of $1,456,100. The SBA Loan is evidenced by a promissory note issued by the Company to the Lender. During May of 2021, the Company received notice from the SBA the loan principal and any accrued interest was completely forgiven. |
LEASES
LEASES | 6 Months Ended |
Mar. 31, 2022 | |
LEASES | |
Note 14 - Leases | NOTE 14 – LEASES The Company has lease agreements for its corporate, warehouse and laboratory offices with lease periods expiring between 2021 and 2026. ASC 842 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. All of the Company’s leases are classified as operating leases. The Company’s leases do not 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 is not readily determinable, the Company determined an incremental borrowing rate for each 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 agreements, the Company is required to pay real estate taxes, insurance and common area maintenance expenses during the lease terms. 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: Three Months Six Months Ended Ended March 31, March 31, 2022 2022 Total Operating Lease Costs $ 386,783 $ 773,564 Supplemental cash flow information related to operating leases is summarized as follows: Three Months Six Months Ended Ended March 31, March 31, 2022 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 392,029 $ 782,256 As of March 31, 2022, our operating leases had a weighted average remaining lease term of 4.38 years and a weighted average discount rate of 4.66%. For the year ended September 30, 2022 $ 676,463 2023 1,380,204 2024 1,421,610 2025 1,159,949 Thereafter 1,372,862 Total future lease payments 6,011,088 Less interest (596,337 ) Total lease liabilities $ 5,414,751 Future minimum aggregate lease payments under operating leases as of March 31, 2022 are summarized as follows: |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Mar. 31, 2022 | |
Net Loss Per Share: | |
Note 15 - Earnings Per Share | NOTE 15 – EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the following periods: Three Months Ended Six Months Ended March 31, March 31, March 31, March 31, 2022 2021 2022 2021 Basic: Net loss continuing operations $ (4,657,215 ) $ (12,510,474 ) $ (23,818,120 ) $ (21,906,096 ) Preferred dividends paid 1,000,500 560,280 2,001,002 660,330 Net loss continuing operations adjusted for preferred dividend (5,657,715 ) (13,070,754 ) (25,819,122 ) (22,566,426 ) Net loss attributable to cbdMD Inc. common shareholders (5,657,715 ) (13,070,754 ) (25,819,122 ) (22,566,426 ) Diluted: Net loss (5,657,715 ) (13,070,754 ) (25,819,122 ) (22,566,426 ) Shares used in computing basic earnings per share 58,966,979 53,471,607 59,073,963 52,793,872 Earnings per share Basic: Continued operations (0.10 ) (0.24 ) (0.44 ) (0.43 ) Discontinued operations - - - - Basic earnings per share (0.10 ) (0.24 ) (0.44 ) (0.43 ) Earnings per share Dliuted: - - Continued operations (0.10 ) (0.24 ) (0.44 ) (0.43 ) Discontinued operations - - - - Diluted earnings per share (0.10 ) (0.24 ) (0.44 ) (0.43 ) At March 31, 2022, 4,071,250 potential shares underlying options, unvested RSUs and warrants as well as 8,335,000 convertible preferred shares were excluded from the shares used to calculate diluted loss per share as their inclusion would reduce net loss per share. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Mar. 31, 2022 | |
INCOME TAXES | |
Note 16 - Income Taxes | NOTE 16 – INCOME TAXES On November 17, 2017, the Company completed an IPO of its common stock. The Company conducted a Section 382 analysis and determined an ownership change occurred upon the IPO. On October 2, 2018, the Company completed a follow-on firm commitment underwritten public offering of its common stock. On May 16, 2019, the Company completed an additional follow-on firm commitment underwritten public offering of its common stock. On October 16, 2019, the Company completed a follow-on firm commitment underwritten public offering of its 8.0% Series A Cumulative Convertible Preferred Stock. On January 14, 2020, the Company completed a follow-on firm commitment underwritten public offering of its common stock. Management has determined that an ownership change has occurred under Internal Revenue Code (IRC) Section 382 resulting in limitations on the utilization of Company’s federal and state NOL carryovers. On December 20, 2018, the Company completed a two-step merger with Cure Based Development (see Note 1). As a result of the Mergers the Company established as part of the purchase price allocation a net deferred tax liability related to the book-tax basis of certain assets and liabilities of approximately $4.6 million. The Company has had 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. Therefore, the Company had calculated the tax provision on a discrete basis under ASC 740-270-30- 36(b) for the quarters ending December 31, 2019, March 31, 2020, and June 30, 2020. At September 30, 2021 the Company recorded a net deferred tax asset of zero as the cumulative net deferred tax asset had a full valuation on it and there was not 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 was not any recognition of a deferred tax liability related to indefinite lived deferred tax liabilities. At March 31, 2022, the Company determined the same circumstances to be true and therefore recorded a net deferred tax asset of zero. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Mar. 31, 2022 | |
SUBSEQUENT EVENTS | |
Note 17 - Subsequent Events | NOTE 17 – SUBSEQUENT EVENTS In April of 2022, the Company issued 200,000 options to a consultant as part of an advisory agreement under the Company’s Employee Plan. 50,000 vested upon the grant, 50,000 vest six months from the grant date and 100,000 options vest upon renewal of a consulting agreement in March of 2023. The Company recorded a total expense of $131,300 and will amortize the options over the vesting periods. In April of 2022, the Company issued 100,000 options to an employee that vest upon the Company achieving certain revenue performance goals for direct-to-consumer revenue for the 3 months ending December 2022. In May of 2022, the Company issued 5,000 restricted stock grants to an employee. The Company recorded a total expense of $3,350 associated with the grant. As part of ongoing cost optimization initiatives of the Company, on April 7, 2022 Company entered into an equipment purchase agreement to sell substantially all of its manufacturing equipment to a subsidiary of Steady State, LLC (“Steady State”) and simultaneously entered into a manufacturing and supply agreement with the Steady State whereby Steady State will manufacture certain products for the Company. Steady State (and its subsidiaries) is an existing qualified supplier of the Company. 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 shall invest into Steady State in the form of an equity investment consistent with the terms of Steady State’s recently completed financing. As part of the sale, the Company satisfied a remaining balance on one of its equipment leases. |
ORGANIZATION AND SUMMARY OF S_2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Mar. 31, 2022 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles Of Consolidation | The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries CBDI, Paw CBD and Therapeutics. All material intercompany transactions and balances have been eliminated in consolidation. 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 are not limited to, allowances for doubtful accounts, 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, contingent liability and, hence consideration for the Mergers is a material estimate. Actual results could differ from these estimates. While the Company has been relatively successful in navigating the impact of COVID-19, it had previously been affected by temporary manufacturing closures, changes in product distribution and employment and compensation adjustments. There are also ongoing related risks to the Company’s business depending on any resurgence of the pandemic. 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 than three months when purchased to be cash equivalents. |
Accounts Receivable And Accounts Receivable Other | Accounts receivable are stated at cost less an allowance for doubtful accounts, if applicable. Credit is extended to customers after an evaluation of the customer’s financial condition, and generally collateral is not required as a condition of credit extension. Management’s determination of the allowance for doubtful accounts is based on an evaluation of the receivables, past experience, current economic conditions, and other risks inherent in the receivables portfolio. As of March 31, 2022 and September 30, 2021, we had an allowance for doubtful accounts of $19,215 and $3,633, respectively. |
Merchant Receivable And Reserve | The Company primarily sells its products through the internet and has an arrangement to process customer payments with third-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 2.6% and 5.0% of the transaction amounts processed. Pursuant to this agreement, there can be a waiting period between 2 to 5 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, 2022, the receivable from payment processors included approximately $264,305 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 to third 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. |
Customer Deposits | Customer deposits consist of payments received in advance of revenue recognition. Revenue is recognized as revenue recognition criteria are met. |
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 are five years for manufacturing equipment and automobiles and three 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 Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are directly or indirectly observable for the asset or liability. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability. Level 3 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. 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. |
Goodwill | Goodwill represents the excess of cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Identifiable intangible assets acquired in business combinations are recorded based on their fair values at the date of acquisition. Goodwill is not subject to amortization but must be evaluated for impairment annually. The Company tests for goodwill impairment annually or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. In performing a goodwill test, the Company performs a qualitative evaluation and if necessary, a quantitative evaluation. Factors considered in the qualitative test include specific operating results as well as new events and circumstances. For the quantitative test, the Company assesses goodwill for impairment by comparing the carrying value of the business to the respective fair value. The Company determines the fair value of the business using a combination of income- based and market-based approaches and incorporates assumptions it believes market participants would utilize. The income-based approach utilizes discounted cash flows while the market-based approach utilizes market multiples. These approaches are dependent upon internally developed forecasts that are based upon annual budgets and longer-range strategic plans. The Company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective acquired business and in the internally developed forecasts. The Company has analyzed a variety of factors on its business to determine if a circumstance could trigger an impairment loss. See Note 5 for further information on the impairment testing procedures performed. |
Intangible Assets | The Company’s intangible assets consist of trademarks and other intellectual property, all of which are accounted for in accordance with Accounting Standards Codification (ASC) Topic 350, Intangibles – Goodwill and Other |
Contingent Liability | A significant component of the purchase price consideration for the Company’s acquisition of Cure Based Development includes a fixed number of future shares to be issued as well as a variable number of future shares to be issued based upon the post-acquisition entity reaching certain specified future revenue targets, as further described in Note 6. The Company made a determination of the fair value of the contingent liabilities as part of the valuation of the assets acquired and liabilities assumed in the business combination. |
Paycheck Protection Program Loan | On April 27, 2020, we received a loan in the principal amount of $1,456,100 (the “SBA Loan”) in consideration of a Promissory Note, under the Paycheck Protection Program (“PPP”), which was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). The Company used the SBA Loan for qualifying expenses and on May 17, 2021 it received notice from the SBA that the loan had been forgiven. The Company subsequently booked $1,466,113 gain for unpaid principal and accrued interest. |
Revenue Recognition | Under ASC 606, Revenue from Contracts with Customers, Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. The Company meets that obligation when it has shipped products which have been ordered to the customer. The Company has reviewed its various revenue streams for its other contracts under the five-step approach. At March 31, 2022, the Company has no future performance obligations. Allocation of Transaction Price In the Company’s current business model, it does not have contracts with customers which have multiple elements as revenue is driven purely by online product sales or purchase order-based product sales. Revenue Recognition The Company records revenue from the sale of its products when its customer obtains control, which is upon shipping (and is typically FOB shipping) which is when our performance obligation is met. Net sales are comprised of gross revenues less product returns, trade discounts and customer allowances, which include costs associated with off-invoice mark-downs and other price reductions, as well as trade promotions. These incentive costs are recognized at the later of the date on which the Company recognizes the related revenue or the date on which the Company offers the incentive. The Company currently offers a 60-day, money back guarantee. Regarding sales for services provided, the Company records revenue when the customer has accepted services and the Company has a right to payment. Based on the contracted services, revenue is recognized when the Company invoices customers for completed services at agreed upon rates or revenue is recognized over a fixed period of time during which the service is performed. Disaggregated Revenue The Company’s product revenue is generated primarily through two sales channels, E-commerce sales (formerly referred to as consumer sales) and wholesale sales. The Company believes that these categories appropriately reflect how the nature, amount, timing and uncertainty of revenue and cash flows are impacted by economic factors. A description of the Company’s principal revenue generating activities are as follows: - E-commerce sales - consumer products sold through the Company’s online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment; and - Wholesale sales - products sold to the Company’s wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the customer, in accordance with the terms of the applicable agreement. Payment terms vary and can typically be 30 days from the date control over the product is transferred to the customer. Contract liabilities represent unearned revenues and are presented as deferred revenue or customer deposits on the condensed consolidated balance sheets. The Company has no material contract assets nor contract liabilities at March 31, 2022. The following tables represent a disaggregation of revenue by sales channel: Three Months Three Months Ended March Ended March 31,2022 % of total 31,2021 % of total Wholesale sales $ 3,048,332 31.7 % $ 3,436,176 29.1 % E-commerce sales 6,580,554 68.3 % 8,362,435 70.9 % Total Net Sales $ 9,628,886 100.0 % $ 11,798,611 100.0 % Six Months Six Months Ended March Ended March 31,2022 % of total 31,2021 % of total Wholesale sales $ 5,254,067 27.7 % $ 6,063,356 25.1 % E-commerce sales 13,696,641 72.3 % 18,063,558 74.9 % Total Net Sales $ 18,950,708 100.0 % $ 24,126,914 100.0 % |
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, and includes labor for its service 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. As of October 1, 2019, CBDI and Paw CBD were 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 and as of March 15, 2021, Therapeutics is also a wholly owned subsidiary and is a disregarded entity for tax purposes and its 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 the Accounting for Income Taxes |
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. The Company had a $12,621,509 uninsured balance at March 31, 2022 and a $23,508,953 uninsured balance at September 30, 2021. 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 did not have any customers that represented a significant amount of our sales for the three and six months ended March 31, 2022. |
Stock-based Compensation | The Company accounts for its stock compensation under the ASC 718-10-30, Compensation - Stock Compensation 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 ASC 260-10, Earnings Per Share for calculating the basic and diluted income (loss) per share. The Company computes basic income (loss) per share by dividing net income (loss) and net income (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. |
New Accounting Standards | In December 2019, the FASB issued ASU 2019-12, Income Taxes, Simplifying the Accounting for Income Taxes (Topic 740). The ASU eliminates certain exceptions to the guidance in Accounting Standards Codification (ASC or Codification) 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The guidance also clarifies that single-member limited liability companies and similar disregarded entities that are not subject to income tax are not required to recognize an allocation of consolidated income tax expense in their separate financial statements, but they could elect to do so. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this standard had no material impact on the Company's consolidated financial statements and disclosures. |
ORGANIZATION AND SUMMARY OF S_3
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Disaggregation Of Revenue | Three Months Three Months Ended March Ended March 31,2022 % of total 31,2021 % of total Wholesale sales $ 3,048,332 31.7 % $ 3,436,176 29.1 % E-commerce sales 6,580,554 68.3 % 8,362,435 70.9 % Total Net Sales $ 9,628,886 100.0 % $ 11,798,611 100.0 % Six Months Six Months Ended March Ended March 31,2022 % of total 31,2021 % of total Wholesale sales $ 5,254,067 27.7 % $ 6,063,356 25.1 % E-commerce sales 13,696,641 72.3 % 18,063,558 74.9 % Total Net Sales $ 18,950,708 100.0 % $ 24,126,914 100.0 % |
MARKETABLE SECURITIES AND INV_2
MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES | |
Assets Valued At Fair Value | In Active Markets for Significant Other Significant Identical Assets Observable Unobservable Total Fair Value and Liabilities Inputs Inputs at March 31, (Level 1) (Level 2) (Level 3) 2022 Investment other securities $ - $ - $ 1,000,000 $ 1,000,000 (Level 1) (Level 2) (Level 3) 2021 Balance at September 30, 2021 33,351 - 1,000,000 1,033,351 Change in value of equities (33,351 ) - (33,351 ) Additional Investment - - Balance at December 31, 2021 $ - $ - $ 1,000,000 $ 1,000,000 Change in value of equities - - - Additional Investment - - Balance at March 31, 2022 $ - $ - $ 1,000,000 $ 1,000,000 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
INVENTORY | |
Inventory | March 31, September 30, 2022 2021 Finished Goods $ 3,309,847 $ 3,362,897 Inventory Components 1,509,798 1,729,176 Inventory Reserve (106,604 ) (70,206 ) Inventory prepaid 519,128 551,519 Total Inventory $ 5,232,169 $ 5,573,386 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
Major Classes Of Property And Equipment | March 31, September 30, 2022 2021 Computers, furniture and equipment $ 678,421 $ 549,910 Manufacturing equipment 3,079,499 2,968,838 Leasehold improvements 1,016,273 870,621 Automobiles 35,979 35,979 4,810,173 4,425,348 Less accumulated depreciation (2,475,553 ) (1,863,774 ) Property and equipment, net $ 2,334,619 $ 2,561,574 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
Intangible Assets | March 31, September 30, 2022 2021 Trademark related to cbdMD $ 17,300,000 $ 21,585,000 Trademark for HempMD 50,000 50,000 Technology Relief from Royalty related to DirectCBDOnline.com 667,844 667,844 Tradename related to DirectCBDOnline.com 749,567 749,567 Amortization of definite lived intangible assets: (378,153 ) (48,482 ) Total $ 18,389,258 $ 23,003,929 |
CONTINGENT CONSIDERATION (Table
CONTINGENT CONSIDERATION (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
Contingent Liability | Aggregate Net Revenues Shares Issued/ Each $ of Aggregate Net Revenue Ratio $1 - $20,000,000 .190625 $20,000,001 - $60,000,000 .0953125 $60,000,001 - $140,000,000 .04765625 $140,000,001 - $300,000,000 .23828125 |
SHAREHOLDERS EQUITY (Tables)
SHAREHOLDERS EQUITY (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
Cbdmd, Inc. Shareholders' Equity: | |
Fair Value Assumptions | March 31, March 31, 2022 2021 Weighted average exercise price $0.82 - $0.975 $ 4.65 Risk free interest rate 1.56% - 1.66% 0.16% - 0.85% Volatility 100.23% - 100.30 100.72% - 1005.43% Expected term 2.5 - 5 years 2.5 - 6.2 years Divident yield None None March 31, March 31, 2022 2021 Weighted average exercise price $ - $ 3.74 Risk free interest rate - 0.39 % Volatility - 103.42 % Expected term - 2.75 years Divident yield - None |
STOCKBASED COMPENSATION (Tables
STOCKBASED COMPENSATION (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
STOCKBASED COMPENSATION | |
Stock Option Activity | Weighted-average remaining Aggregate Weighted-average contractual term intrinsic value Number of shares exercise price (in years) (in thousands) Outstanding at September 30, 2021 2,702,500 $ 4.42 5.13 $ - Granted 325,000 1.15 - Exercised - - Forfeited (170,000 ) 4.52 Outstanding at March 31, 2022 2,857,500 3.96 4.79 - Exercisable at March 31, 2022 1,996,668 $ 4.16 4.44 $ - |
WARRANTS (Tables)
WARRANTS (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
WARRANTS | |
Summary Of Warants | Weighted-average remaining Aggregate Weighted-average contractual term intrinsic value Number of shares exercise price (in years) (in thousands) Outstanding at September 30, 2021 660,417 $ 4.60 3.05 $ - Granted - - - Exercised - - Forfeited - - Outstanding at March 31, 2022 660,417 4.60 2.55 - Exercisable at March 31, 2022 660,417 $ 4.60 - $ - |
Outstanding Common Stock Purchase Warrants | Weighted-average Number of shares exercise price Expiration Exercisable at $4.00 per share 70,500 4.00 September 2022 Exercisable at $7.50 per share 100,000 7.50 October 2022 Exercisable at $4.375 per share 51,429 4.375 September 2023 Exercisable at $7.50 per share 60,000 7.50 May 2024 Exercisable at $3.9125 per share 47,822 3.9125 October 2024 Exercisable at $1.25 per share 36,682 1.25 January 2025 Exercisable at $3.74 per share 150,502 3.74 December 2025 Exercisable at $3.75 per share 143,482 3.75 June 2026 660,417 $ 4.60 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
LEASES | |
Components Of Operating Lease Costs | Three Months Six Months Ended Ended March 31, March 31, 2022 2022 Total Operating Lease Costs $ 386,783 $ 773,564 |
Supplemental Cash Flow Information Related To Operating Leases | Three Months Six Months Ended Ended March 31, March 31, 2022 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 392,029 $ 782,256 |
Future Minimum Aggregate Lease Payments Under Operating Leases | For the year ended September 30, 2022 $ 676,463 2023 1,380,204 2024 1,421,610 2025 1,159,949 Thereafter 1,372,862 Total future lease payments 6,011,088 Less interest (596,337 ) Total lease liabilities $ 5,414,751 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Mar. 31, 2022 | |
Net Loss Per Share: | |
Computation Of Basic And Diluted Earnings Per Share | Three Months Ended Six Months Ended March 31, March 31, March 31, March 31, 2022 2021 2022 2021 Basic: Net loss continuing operations $ (4,657,215 ) $ (12,510,474 ) $ (23,818,120 ) $ (21,906,096 ) Preferred dividends paid 1,000,500 560,280 2,001,002 660,330 Net loss continuing operations adjusted for preferred dividend (5,657,715 ) (13,070,754 ) (25,819,122 ) (22,566,426 ) Net loss attributable to cbdMD Inc. common shareholders (5,657,715 ) (13,070,754 ) (25,819,122 ) (22,566,426 ) Diluted: Net loss (5,657,715 ) (13,070,754 ) (25,819,122 ) (22,566,426 ) Shares used in computing basic earnings per share 58,966,979 53,471,607 59,073,963 52,793,872 Earnings per share Basic: Continued operations (0.10 ) (0.24 ) (0.44 ) (0.43 ) Discontinued operations - - - - Basic earnings per share (0.10 ) (0.24 ) (0.44 ) (0.43 ) Earnings per share Dliuted: - - Continued operations (0.10 ) (0.24 ) (0.44 ) (0.43 ) Discontinued operations - - - - Diluted earnings per share (0.10 ) (0.24 ) (0.44 ) (0.43 ) |
ORGANIZATION AND SUMMARY OF S_4
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Total net sales | $ 9,628,886 | $ 11,798,611 | $ 18,950,708 | $ 24,126,914 |
Percentage of revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Wholesale Sales | ||||
Total net sales | $ 3,048,332 | $ 3,436,176 | $ 5,254,067 | $ 6,063,356 |
Percentage of revenue | 31.70% | 29.10% | 27.70% | 25.10% |
E-commerce Sales | ||||
Total net sales | $ 6,580,554 | $ 8,362,435 | $ 13,696,641 | $ 18,063,558 |
Percentage of revenue | 68.30% | 70.90% | 72.30% | 74.90% |
ORGANIZATION AND SUMMARY OF S_5
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Mar. 08, 2021 | Jan. 08, 2021 | Jul. 31, 2021 | Feb. 27, 2020 | Apr. 19, 2019 | Dec. 31, 2018 | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Mar. 30, 2022 | Jul. 22, 2021 | May 31, 2021 | Jul. 31, 2020 |
Allowance for doubtful accounts | $ 19,215 | $ 19,215 | $ 3,633 | ||||||||||||||||
Earnout shares amount | $ 11,271,000 | $ 416,000 | $ 4,620,000 | 405,000 | |||||||||||||||
Earnout shares issued | 3,348,520 | 5,127,792 | 503,275 | 562,278 | |||||||||||||||
Deceased in share value | 522,104 | $ 222,442 | 522,104 | ||||||||||||||||
PPP loan | 0 | $ 1,456,100 | |||||||||||||||||
Description of form bill | spectrum products contain trace amounts of THC under the 0.3% by dry weight limit in the 2018 Farm | ||||||||||||||||||
Gain (loss) on extinguishment of debt | 1,466,113 | $ 0 | |||||||||||||||||
FDIC amount | 250,000 | ||||||||||||||||||
Cash, Uninsured Amount | 12,621,509 | 12,621,509 | $ 23,508,953 | ||||||||||||||||
Receivable from payment processors | 264,305 | ||||||||||||||||||
Increase Decrease in value of shares | $ 3,100,012 | 3,517,558 | |||||||||||||||||
Common stock shares issuable | 5,000,000 | 2,000,000 | |||||||||||||||||
Net Loss | $ (4,657,215) | $ (19,160,904) | $ (12,510,474) | $ (9,395,621) | $ (23,818,120) | $ (21,906,096) | |||||||||||||
Common stock shares issued | 59,352,213 | 59,352,213 | 57,783,340 | 52,130,870 | 320,000 | 300,000 | 1,400,000 | ||||||||||||
Minimum [Member] | |||||||||||||||||||
Merchant processing fee | 2.60% | ||||||||||||||||||
Maximum [Member] | |||||||||||||||||||
Merchant processing fee | 5.00% | ||||||||||||||||||
Automobiles [Member] | |||||||||||||||||||
Estimated useful life | three years | ||||||||||||||||||
Manufacturing equipment [Member] | |||||||||||||||||||
Estimated useful life | five years | ||||||||||||||||||
Cure Based Development [Member] | First marking period [Member] | |||||||||||||||||||
Earnout shares issued | 3,348,520 | 466,713 | 466,713 | ||||||||||||||||
Common stock shares issuable | 15,250,000 | ||||||||||||||||||
Common stock shares issued | 15,250,000 | ||||||||||||||||||
Unrestricted voting right shares | 8,750,000 | ||||||||||||||||||
Earnout shares issuable | 15,250,000 | ||||||||||||||||||
Cure Based Development [Member] | Second marking period [Member] | |||||||||||||||||||
Common stock shares issued | 5,127,792 | ||||||||||||||||||
Fair value of shares issued | $ 11,271,000 |
MARKETABLE SECURITIES AND INV_3
MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Investmenr other securities, beginning | $ 1,000,000 | $ 1,033,351 |
Investment other securities | 1,000,000 | |
Change in value of equities | 0 | (33,351) |
Additional Investment | 0 | 0 |
Investment other securities, ending | 1,000,000 | 1,000,000 |
Level 1 | ||
Investmenr other securities, beginning | 0 | 33,351 |
Investment other securities | 0 | |
Additional Investment | 0 | 0 |
Investment other securities, ending | 0 | 0 |
Change in value of equities | 0 | (33,351) |
Level 2 | ||
Investmenr other securities, beginning | 0 | 0 |
Investment other securities | 0 | |
Investment other securities, ending | 0 | 0 |
Level 3 | ||
Investmenr other securities, beginning | 1,000,000 | 1,000,000 |
Investment other securities | 1,000,000 | |
Investment other securities, ending | 1,000,000 | 1,000,000 |
Change in value of equities | $ 0 | $ 0 |
MARKETABLE SECURITIES AND INV_4
MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES (Details Narrative) - USD ($) | Jan. 13, 2021 | Mar. 24, 2021 | Sep. 30, 2020 | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 |
Realized and Unrealized loss on marketable and other securities, including impairments | $ 0 | $ 2,852 | $ (33,350) | $ 545,562 | |||
Total acquisition shares | 1,042,193 | ||||||
Adara Sponser LLC [Member] | |||||||
Payment for membership interest | $ 250,000 | ||||||
Initial public offering shares | 11,500,000 | ||||||
Indirect ownership description | the Company’s implied, indirect ownership in Adara represented 4.4% (633,988 shares) and 10.1% (1 million) of the warrants | ||||||
Closing price description | ADRA stock closed at $9.88 while ADRA WS closed at $0.32 | ||||||
Subscription amount | $ 750,000 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Mar. 31, 2022 | Sep. 30, 2021 |
INVENTORY | ||
Finished goods | $ 3,309,847 | $ 3,362,897 |
Inventory components | 1,509,798 | 1,729,176 |
Inventory reserve | (106,604) | (70,206) |
Inventory prepaid | 519,128 | 551,519 |
Total | $ 5,232,169 | $ 5,573,386 |
INVENTORY (Details Narrative)
INVENTORY (Details Narrative) | 6 Months Ended |
Mar. 31, 2022USD ($) | |
INVENTORY | |
Inventory wrote-down | $ 0 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Mar. 31, 2022 | Sep. 30, 2021 |
Gross property and equipment | $ 4,810,173 | $ 4,425,348 |
Less accumulated depreciation | (2,475,553) | (1,863,774) |
Net property and equipment | 2,334,619 | 2,561,574 |
Automobiles [Member] | ||
Gross property and equipment | 35,979 | 35,979 |
Manufacturing equipment [Member] | ||
Gross property and equipment | 3,079,499 | 2,968,838 |
Computers, Furniture and Equipment | ||
Gross property and equipment | 678,421 | 549,910 |
Leasehold Improvements | ||
Gross property and equipment | $ 1,016,273 | $ 870,621 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
PROPERTY AND EQUIPMENT | ||||
Depreciation expense | $ 323,294 | $ 240,517 | $ 611,780 | $ 473,323 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) | Mar. 31, 2022 | Sep. 30, 2021 | Sep. 30, 2019 |
Amortization of definite lived intangible assets: | $ (378,153) | $ (48,482) | |
Intangible assets | 18,389,258 | 23,003,929 | |
Trademark Related to cbdMD | |||
Intangible assets | 17,300,000 | 21,585,000 | |
Trademark Related to HempMD | |||
Intangible assets | 50,000 | 50,000 | $ 50,000 |
Technology Relief from Royalty related to DirectCBDOnline.com [Member] | |||
Intangible assets | 667,844 | 667,844 | |
Tradename related to DirectCBDOnline.com [Member] | |||
Intangible assets | $ 749,567 | $ 749,567 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Mar. 31, 2022 | Sep. 30, 2021 | Sep. 30, 2019 | |
Useful lives of trademark | 10 years | |||
Intangible assets | $ 18,389,258 | $ 23,003,929 | ||
Trademark Related to cbdMD | ||||
Useful lives of trademark | 20 years | |||
Impairment of goodwill | $ 13,898,285 | |||
Intangible assets | $ 17,300,000 | 21,585,000 | ||
Trademark Related to HempMD | ||||
Useful lives of trademark | 20 years | |||
Impairment of goodwill | $ 4,285,000 | |||
Intangible assets | $ 50,000 | $ 50,000 | $ 50,000 |
CONTINGENT CONSIDERATION (Detai
CONTINGENT CONSIDERATION (Details Narrative) - USD ($) | Mar. 08, 2021 | Jan. 31, 2022 | Nov. 30, 2021 | Jul. 31, 2021 | Jul. 22, 2021 | May 31, 2021 | Feb. 27, 2020 | Mar. 31, 2022 | Jun. 30, 2021 | Sep. 30, 2021 |
RSUs issued | 320,000 | 120,000 | 5,000 | |||||||
Net sales | $ 3,000,000 | |||||||||
Sale of shares | 8,000,000 | |||||||||
Additional earnout shares | 444,243,000,000 | |||||||||
Shares increased in value | $ 41,914,000,000 | |||||||||
Contingent liability to additional paid in capital | $ 325,000,000,000 | |||||||||
Common stock shares issued for service, shares | 200,000 | |||||||||
Decrease in additional shares | 366,841 | |||||||||
Additional shares | 466,713 | |||||||||
Deceased in share value | $ 522,104 | $ 222,442 | $ 522,104 | |||||||
Decrease (increase) of contingent liability | $ 73,561 | |||||||||
Initial shares issued, value | $ 522,104 | $ 405,000 | $ 53,215,163 | |||||||
Initial shares issued, shares | 15,250,000 | |||||||||
Earnout shares issued | 3,348,520 | 562,278 | 5,127,792 | 503,275 | ||||||
Decrease in value of the contingent liability | 255,000 | |||||||||
Earnout shares amount | $ 11,271,000 | 416,000 | $ 4,620,000 | 405,000 | ||||||
Contingent liability | 488,561 | 2,810,000 | $ 920,000 | $ 9,440,000 | ||||||
Increases Second market value | $ 161,000 | $ 222,442 | ||||||||
Devlopment issuance of two tranches | 15,250,000 | |||||||||
Additional shares | 15,250,000 | |||||||||
Issuance two tranches shares | 6,500,000 | |||||||||
Second Tranche | ||||||||||
Contingent liability | 2,120,000 | $ 13,000 | ||||||||
Voting right shares | 8,750,000 | |||||||||
April 2019 | Shareholders | ||||||||||
Earnout shares issued | 15,250,000 | |||||||||
Contingent liability | $ 148,000 | $ 1,329,000 | ||||||||
Earnout shares issuable | 15,250,000 | |||||||||
Carrying value | $ 53,215,163 | |||||||||
Merger Agreement | ||||||||||
Earnout shares issued | 15,250,000 | |||||||||
Voting Proxy Agreement | Tranche | ||||||||||
Unrestricted voting right shares | 8,750,000 |
SHAREHOLDERS EQUITY (Details)
SHAREHOLDERS EQUITY (Details) - $ / shares | 6 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Endorsement Agreement | ||
Exercise price | $ 0 | $ 3.74 |
Risk free interest rate | 0.00% | 0.39% |
Expected term | 2 years 6 months | |
Dividend yield | 0.00% | 0.00% |
Volatility | 0.00% | 103.42% |
Options | ||
Exercise price | $ 0.975 | $ 4.65 |
Volatility | 100.30% | 1005.43% |
Risk free interest rate | 1.66% | 0.85% |
Expected term | 5 years | 6 years 2 months 12 days |
Dividend yield | 0.00% | 0.00% |
Options | Minimum [Member] | ||
Exercise price | $ 0.82 | |
Volatility | 100.23% | 100.72% |
Risk free interest rate | 1.56% | 0.16% |
Expected term | 2 years 6 months | 2 years 9 months |
SHAREHOLDERS EQUITY (Details Na
SHAREHOLDERS EQUITY (Details Narrative) - USD ($) | Dec. 08, 2020 | Jan. 31, 2022 | Mar. 31, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Jan. 31, 2020 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Sep. 30, 2021 | Mar. 30, 2022 | Jul. 22, 2021 | Apr. 09, 2021 | Feb. 28, 2021 | Sep. 30, 2020 | Jul. 31, 2020 | Oct. 29, 2019 | Oct. 16, 2019 |
Restricted common stock, amount | $ 29,250 | $ 118,800 | $ 494,125 | ||||||||||||||||
Restricted common stock | 27,000 | ||||||||||||||||||
Common stock authorized | 150,000,000 | 150,000,000 | 150,000,000 | ||||||||||||||||
Common stock par value | $ 0.001 | $ 0.001 | |||||||||||||||||
Common stock shares issued | 59,352,213 | 59,352,213 | 57,783,340 | 320,000 | 300,000 | 52,130,870 | 1,400,000 | ||||||||||||
Common stock outstanding | 59,322,213 | 59,322,213 | 57,783,340 | ||||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||
Preferred stock, outstanding | 5,000,000 | 5,000,000 | 5,000,000 | ||||||||||||||||
Preferred stock, issued | 5,000,000 | 5,000,000 | 5,000,000 | ||||||||||||||||
Preferred stock authorized | 50,000,000 | 50,000,000 | 50,000,000 | 5,000,000 | |||||||||||||||
Prepaid expense | $ 57,000 | $ 57,000 | |||||||||||||||||
Proceeds from issuance of convertible preferred stock | $ 0 | $ 15,798,115 | |||||||||||||||||
Warrants And Options [Member] | |||||||||||||||||||
Prepaid expense | $ 155,200 | ||||||||||||||||||
Restricted stock awards shares | 3,348,520 | 562,278 | 562,278 | 3,348,520 | 466,713 | 25,000 | 40,000 | ||||||||||||
Market price | $ 494,125 | $ 494,125 | |||||||||||||||||
In March 2021 [Member] | |||||||||||||||||||
Prepaid expense | $ 395,850 | $ 649,800 | $ 649,800 | $ 395,850 | |||||||||||||||
Exercise price per share | $ 4.40 | $ 4.40 | |||||||||||||||||
Aggregate shares of common stock | 150,000 | ||||||||||||||||||
Restricted stock awards shares | 180,000 | 180,000 | |||||||||||||||||
Option term | five-year term | ||||||||||||||||||
Obligation due | $ 800,000 | ||||||||||||||||||
In january 2021 [Member] | |||||||||||||||||||
Exercise price per share | $ 3.10 | $ 3.10 | |||||||||||||||||
Aggregate shares of common stock | 80,000 | ||||||||||||||||||
Stock options expense | $ 66,967 | ||||||||||||||||||
Restricted stock awards shares | 167,500 | 167,500 | |||||||||||||||||
In April 2021 [Member] | |||||||||||||||||||
Aggregate shares of common stock | 75,000 | ||||||||||||||||||
Stock options expense | $ 23,025 | 46,050 | $ 79,500 | ||||||||||||||||
Series A Cumulative Convertible Preferred Stock | In October 2019 [Member] | |||||||||||||||||||
Exercise price per share | $ 3.74 | $ 0.818 | $ 3.74 | $ 3.74 | |||||||||||||||
Aggregate shares of common stock | 150,502 | 350,000 | 130,000 | ||||||||||||||||
Expiration date | Dec. 8, 2025 | ||||||||||||||||||
Stock options expense | $ 31,054 | $ 31,054 | |||||||||||||||||
Proceeds from issuance of convertible preferred stock | $ 17,250,000 | ||||||||||||||||||
Convertible preferred stock issued and outstanding | 50,000 | ||||||||||||||||||
Dividend declared and paid | 2,001,002 | $ 660,330 | |||||||||||||||||
Dividend paid | $ 1,000,500 | $ 560,280 | |||||||||||||||||
Underwriting commisions, shares | 2,300,000 | ||||||||||||||||||
Receivable amount | $ 15,800,000 | ||||||||||||||||||
Aggregate shares of common stock amount | $ 254,950 | ||||||||||||||||||
Term of years | 10 years | ||||||||||||||||||
Term of exercise price description | exercise price of $3,50, $5.00, and $6.50 per share and a term of 5 years |
STOCKBASED COMPENSATION (Detail
STOCKBASED COMPENSATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Sep. 30, 2021 | Mar. 31, 2022 | |
Number of options outstanding, ending | 660,417 | |
Weighted average exercise price outstanding, ending | $ 4.60 | |
Options | ||
Number of options outstanding, beginning | 2,702,500 | |
Number of options granted | 325,000 | |
Number of options exercised | 0 | |
Number of options forfeited | (170,000) | |
Number of options outstanding, ending | 2,702,500 | 2,857,500 |
Number of options exerciseable | 1,996,668 | |
Weighted average exercise price outstanding, beginning | $ 4.42 | |
Weighted average exercise price granted | 1.15 | |
Weighted average exercise price exercised | 0 | |
Weighted average exercise price forfeited | 4.52 | |
Weighted average exercise price outstanding, ending | $ 4.42 | 3.96 |
Weighted average exercise price exerciseable | $ 4.16 | |
Weighted average remaining contractual terms outstanding (in years) | 5 years 1 month 17 days | 4 years 9 months 14 days |
Weighted average remaining contractual terms exerciseable (in years) | 4 years 5 months 8 days | |
Aggregate intrinsic value, outstanding beginning | $ 0 | |
Aggregate intrinsic value, Granted | 0 | |
Aggregate intrinsic value outstanding | 0 | |
Aggregate intrinsic value exerciseable | $ 0 |
STOCKBASED COMPENSATION (Deta_2
STOCKBASED COMPENSATION (Details Narrative) - USD ($) | Jan. 08, 2021 | Jan. 31, 2022 | Nov. 30, 2021 | Oct. 31, 2021 | Mar. 31, 2021 | Jan. 31, 2021 | Oct. 31, 2020 | Apr. 19, 2019 | Jun. 02, 2015 | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 |
Increase in shares of common stock | 100,000 | ||||||||||||
Recognized stock based compensation expense | $ 328,515 | $ 531,605 | |||||||||||
Unrecognized compensation | $ 897,788 | ||||||||||||
Description of non vested option | non-vested stock options which vest over a period of approximately 2.8 years | ||||||||||||
Options issued | 1,175,000 | ||||||||||||
Shares issuance for available | 5,000,000 | 2,000,000 | |||||||||||
Restricted common stock, shares | 30,000 | 120,000 | 5,000 | 167,500 | |||||||||
Total number of shares issued and outstanding | 250,000 | ||||||||||||
Restricted common stock, amount | $ 29,250 | $ 118,800 | $ 494,125 | ||||||||||
Professional Athlete | |||||||||||||
Restricted common stock, shares | 320,000 | ||||||||||||
Restricted common stock, amount | $ 336,000 | ||||||||||||
Board of Directors | |||||||||||||
Restricted common stock, shares | 20,000 | 27,000 | |||||||||||
Restricted common stock, amount | $ 16,360 | $ 118,800 | |||||||||||
Executive Officers [Member] | |||||||||||||
Restricted common stock, shares | 25,000 | 50,000 | |||||||||||
Restricted common stock, amount | $ 100,000 |
WARRANTS (Details)
WARRANTS (Details) | 6 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
Number of options outstanding, ending | shares | 660,417 |
Weighted average exercise price outstanding, ending | $ / shares | $ 4.60 |
Endorsement Agreement | |
Number of options outstanding, beginning | shares | 660,417 |
Number of options granted | shares | 0 |
Number of Options exercised | shares | 0 |
Number of options forfeited | shares | 0 |
Number of options outstanding, ending | shares | 660,417 |
Number of options exerciseable | shares | 660,417 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 4.60 |
Weighted average exercise price granted | $ / shares | 0 |
Weighted average exercise price exercised | $ / shares | 0 |
Weighted average exercise price forfeited | $ / shares | 0 |
Weighted average exercise price outstanding, ending | $ / shares | 4.60 |
Weighted average exercise price exerciseable | $ / shares | $ 4.60 |
Weighted average remaining contractual terms outstanding (in years) | 3 years 18 days |
Weighted average remaining contractual terms exerciseable (in years) | 2 years 6 months 18 days |
Aggregate intrinsic value, Granted | $ | $ 0 |
Aggregate intrinsic value, outstanding beginning | $ | 0 |
Aggregate intrinsic value outstanding | $ | 0 |
Aggregate intrinsic value exerciseable | $ | $ 0 |
WARRANTS (Details 1)
WARRANTS (Details 1) | 6 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Number of options outstanding, beginning | shares | 660,417 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 4.60 |
Warrant One [Member] | |
Number of options outstanding, beginning | shares | 70,500 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 4 |
Expiration | September 2022 |
Warrant Two [Member] | |
Number of options outstanding, beginning | shares | 100,000 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 7.50 |
Expiration | October 2022 |
Warrant Three [Member] | |
Number of options outstanding, beginning | shares | 51,429 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 4.375 |
Expiration | September 2023 |
Warrant Four[ Member] | |
Number of options outstanding, beginning | shares | 60,000 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 7.50 |
Expiration | May 2024 |
Warrant Five[Member] | |
Number of options outstanding, beginning | shares | 47,822 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 3.9125 |
Expiration | October 2024 |
Warrant Six [Member] | |
Number of options outstanding, beginning | shares | 36,682 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 1.25 |
Expiration | January 2025 |
Warrant Seven [Member] | |
Number of options outstanding, beginning | shares | 150,502 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 3.74 |
Expiration | December 2025 |
Warrants Eight [Member] | |
Number of options outstanding, beginning | shares | 143,482 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 3.75 |
Expiration | June 2026 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 30 Months Ended | ||||||||||||||
Apr. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2022 | Mar. 31, 2022 | Mar. 30, 2022 | Sep. 30, 2021 | Jul. 22, 2021 | Sep. 30, 2020 | Jul. 31, 2020 | |
Potential payments paid services | $ 667,000 | $ 800,000 | $ 4,900,000 | $ 2,867,000 | |||||||||||||||
Cash payment monthly | $ 100,000 | $ 85,000 | $ 75,000 | $ 50,000 | $ 40,000 | ||||||||||||||
Recorded expense | $ 422,309 | $ 253,700 | |||||||||||||||||
Common stock issued | 59,352,213 | 320,000 | 57,783,340 | 300,000 | 52,130,870 | 1,400,000 | |||||||||||||
Endorsement Agreement | |||||||||||||||||||
Potential payments paid services | $ 1,500,000 | $ 1,900,000 | $ 1,800,000 | $ 800,000 | |||||||||||||||
Endorsement Agreement | Between July 2021 December 2021 [Member] | Professional Athlete | |||||||||||||||||||
Potential payments paid services | $ 800,000 | $ 800,000 | $ 400,000 | ||||||||||||||||
Common stock issued | 180,000 |
NOTE PAYABLE (Details Narrative
NOTE PAYABLE (Details Narrative) | 6 Months Ended |
Mar. 31, 2022USD ($) | |
Monthly payment period | 60 years |
Monthly payment | $ 4,905 |
Loan Amount | 249,100 |
Long term note payable | $ 70,357 |
Financing rate | 7.01% |
In january 2020 [Member] | |
Monthly payment period | 48 years |
Monthly payment | $ 841 |
Long term note payable | $ 7,373 |
Financing rate | 6.20% |
Equipment | $ 35,660 |
PAYCHECK PROTECTION PROGRAM L_2
PAYCHECK PROTECTION PROGRAM LOAN (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Apr. 27, 2020 | Mar. 31, 2022 | Sep. 30, 2020 | |
Principle amount | $ 0 | $ 1,456,100 | |
Lendor [Member] | |||
Principle amount | $ 1,456,100 |
LEASES (Details)
LEASES (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2022 | Mar. 31, 2022 | |
LEASES | ||
Operating lease costs | $ 386,783 | $ 773,564 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2022 | Mar. 31, 2022 | |
LEASES | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 392,029 | $ 782,256 |
LEASES (Details 2)
LEASES (Details 2) - Non Operating Leases | Sep. 30, 2021USD ($) |
2022 | $ 676,463 |
2023 | 1,380,204 |
2024 | 1,421,610 |
2025 | 1,159,949 |
Thereafter | 1,372,862 |
Total future lease payments | 6,011,088 |
Less interest | (596,337) |
Total lease liabilities | $ 5,414,751 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 6 Months Ended |
Mar. 31, 2022 | |
LEASES | |
Weighted average remaining lease term, operating leases | 4 years 4 months 17 days |
Weighted average discount rate, operating leases | 4.66% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Net Loss Per Share: | ||||
Net loss continuing operations | $ (4,657,215) | $ (12,510,474) | $ (23,818,120) | $ (21,906,096) |
Preferred dividends paid | 1,000,500 | 560,280 | 2,001,002 | 660,330 |
Net loss continuing operations adjusted for preferred dividend | (5,657,715) | (13,070,754) | (25,819,122) | (22,566,426) |
Net loss attributable to cbdMD, Inc. common shareholders | (5,657,715) | (13,070,754) | (25,819,122) | (22,566,426) |
Net loss | $ (5,657,715) | $ (13,070,754) | $ (25,819,122) | $ (22,566,426) |
Shares used in computing basic earnings per shares | 58,966,979 | 53,471,607 | 59,073,963 | 52,793,872 |
Continued operations | $ (0.10) | $ (0.24) | $ (0.44) | $ (0.43) |
Discontinued operations | 0 | 0 | 0 | 0 |
Basic earnings per share | (0.10) | (0.24) | (0.44) | (0.43) |
Continuing operations | (0.10) | (0.24) | (0.44) | (0.43) |
Discontinued operations | 0 | 0 | 0 | 0 |
Diluted earnings per share | $ (0.10) | $ (0.24) | $ (0.44) | $ (0.43) |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) | 6 Months Ended |
Mar. 31, 2022shares | |
Options, RSUs and Warrants | |
Potential shares excluded from the shares used to calculate diluted loss per share | 4,071,250 |
Convertible Preferred Share [Member] | |
Potential shares excluded from the shares used to calculate diluted loss per share | 8,335,000 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Millions | 1 Months Ended | |
Oct. 16, 2019 | Dec. 20, 2018 | |
INCOME TAXES | ||
Underwritten public offering | 8.00% | |
Net deferred tax, asset/deferred tax liability | $ 4.6 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | |||||
Mar. 31, 2023 | Dec. 31, 2022 | May 31, 2022 | Apr. 30, 2022 | Jan. 31, 2022 | Nov. 30, 2021 | Mar. 31, 2022 | |
RSUs issued | 320,000 | 120,000 | 5,000 | ||||
Subsequent Event [Member] | |||||||
Equipment sold value | $ 1,800,000 | ||||||
Invest amount | $ 1,400,000 | ||||||
Subsequent Event [Member] | Advisory Agreement [Member] | |||||||
Options issued during period | 200,000 | ||||||
Total expense | $ 131,300 | ||||||
Vested option | 50,000 | 50,000 | |||||
Option vested on renewal | 100,000 | ||||||
Subsequent Event [Member] | Employee [Member] | |||||||
RSUs issued | 5,000 | ||||||
Options issued during period | 100,000 | ||||||
Total expense | $ 3,350 |