Business Wire | Aug 12, 2021 04:10PM EDT

cbdMD Reports Third Quarter Fiscal 2021 Results

Aug. 12, 2021

CHARLOTTE, N.C.--(BUSINESS WIRE)--Aug. 12, 2021--cbdMD, Inc. (NYSE American: YCBD, YCBDpA), one of the nation's leading and most highly trusted and recognized cannabidiol (CBD) brands, today announced its financial results and its business highlights for its third quarter and nine months ended June 30, 2021.

Financial highlights for the Quarter Ended June 30, 2021:

* Net sales of $10.6 million for the third quarter of fiscal 2021 remained steady year-over-year resulting in record trailing twelve-month net sales of over $46.4 million. * Gross profit margin for the third quarter of fiscal 2021 remained strong at approximately 68%, up from 65% in the prior year's third quarter. * E-commerce direct-to-consumer net sales were $7.8 million, a decrease of 4.9% from the prior year's third fiscal quarter. * Wholesale (including brick and mortar retail customers) net sales were $2.7 million, an increase of 13.7% from the prior year's third fiscal quarter. * Paw CBD (our award-winning CBD pet brand) had net sales of $1.5 million, an increase of 20.6% from the prior year's third fiscal quarter. * Quarterly operating expenses for the third quarter of fiscal 2021 were $13.9 million, an increase of 40.6% as compared to the third quarter of fiscal 2020 at $8.2 million. * Loss from operations increased to $6.7 million for the third quarter of fiscal 2021 compared to $1.4 million from the prior year's third fiscal quarter. * Non-GAAP adjusted operating loss increased to $5.4 million, compared to $187,000 from the prior year's fiscal quarter, and for the nine months ending June 30, 2021, our non-GAAP adjusted operating loss decreased by 15.2% to $8.5 million compared to $10.1 million for the prior year's nine month period. * Net income attributable to common shareholders for the third quarter of fiscal 2021 was approximately $977,000, or $0.02 per share, as compared to net loss of approximately $9.1 million, or $(0.18) per share from the prior year's third fiscal quarter. Our net income attributable to common shareholders was principally attributable to a decrease of approximately $6.9 million in the non-cash contingent liability which is associated with earnout shares which may be issued under the terms of the December 2018 acquisition of Cure Based Development (which owned the cbdMD brand). * As of June 30, 2021, we had working capital of approximately $23.2 million and cash on hand of approximately $18.9 million as compared to working capital of approximately $16.0 million and cash on hand of approximately $14.8 million at September 30, 2020. * Due to production delays from vendors on new product launches, we are now are revising our net sales guidance for the first quarter of fiscal 2022 ending December 31, 2021 from range of $15.5 million to $16.25 million to range of $14.9 million to $15.5 million, or 20-25% YOY sales growth for the December, 2021 quarter.

Business highlights since the start of the third quarter of fiscal 2021 include

* Expanded upon our award-winning sleep products, adding higher CBD strength tinctures and soft gels with additional levels of CBN. * Launched cbdMD Therapeutics subsidiary to advance cannabinoid science and clinical studies and launched an initial animal health study in collaboration with Colorado State University's Veterinary Program to study impact of our proprietary CBD on osteoarthritis. * Renewed our NSF certification; underwent the US Hemp Authority audit, receiving our seal of approval on May 10, 2021; underwent the National Animal Supplement Council (NASC) audit, receiving their prestigious Quality Seal of approval early August 2021. * Signed an exclusive sponsorship agreement as the Official CBD Partner of the NOBULL CrossFit Games. * Signed a sponsorship agreement with Master Champion and 9 Time PGA Tour Winner, Patrick Reed, who is now on Team cbdMD. * Extended our partnership with Bellator MMA. * Closed on the public offering of 8.0% Series A Cumulative Convertible Preferred Stock for total gross proceeds of $16.5 Million. * Acquired directcbdonline.com, adding a leading CBD marketplace, an online seller of CBD brands and products, providing access to their customer intelligence and database. * Announced the addition of new role of Chief Revenue Officer.

"We continue to build upon our success and develop our science and infrastructure, which we believe will drive shareholder value and separate our brands from our competition. We believe that our proven ability to innovate our marketing as well as deliver award winning products to our consumers will achieve significant and lasting market brand recognition and consumer acceptance for our cbdMD, Paw CBD and cbdMD Botanicals brands," said Martin Sumichrast, Chairman and Co-CEO of cbdMD, Inc.

cbdMD, Inc. will host a conference call at 4:15 p.m., Eastern time, on Thursday, August 12, 2021, to discuss the company's third quarter fiscal 2021 financial results and business progress.

CONFERENCE CALL DETAILS



Title: cbdMD Second Quarter 2021 Earnings Call

Event Date: Thursday, August 12, 2021 - 4:15 PM Eastern Time

Event Link: Webcast URL https://www.webcaster4.com/Webcast/Page/2206/41216

Webcast Replay Expiration: Thursday, August 12, 2022



Toll Free: 888-506-0062Participant Numbers: International: 973-528-0011

Entry code (not required): 233626

Toll Free: 877-481-4010Replay Number: International: 919-882-2331 Replay Passcode: 41216

About cbdMD, Inc.

cbdMD, Inc. is one of the leading and most highly trusted and most recognized cannabidiol (CBD) brands with a comprehensive line of U.S. produced, THC-free1 CBD products. Our cbdMD brand currently includes over 130 SKUs of high-grade, premium CBD products including CBD tinctures, CBD gummies, CBD topicals, CBD capsules, CBD bath bombs, CBD bath salts, CBD sleep aids and CBD drink mixes. Our Paw CBD brand of pet products includes over 45 SKUs of veterinarian-formulated products including tinctures, chews, topicals products in varying strengths, and our CBD Botanicals brand of beauty and skincare products features 15 SKUs, including facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care. To learn more about cbdMD and their comprehensive line of U.S. grown, THC-free1 CBD oil products, please visit www.cbdmd.com, follow cbdMD on Instagram and Facebook, or visit one of the 6,000 retail outlets that carry cbdMD products.

1 THC-free is defined as below the level of detection using validated scientific analytical methods.

Forward-Looking Statements

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements can be identified by the use of words such as ''should,'' ''may,'' ''intends,'' ''anticipates,'' ''believes,'' ''estimates,'' ''projects,'' ''forecasts,'' ''expects,'' ''plans,'' and ''proposes.'' These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading "Risk Factors" in cbdMD, Inc.'s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 as filed with the Securities and Exchange Commission (the "SEC") on December 22, 2020, Item 1A. Risk Factors, contained in our Quarterly Report on Form 10-Q for the period ended June 30, 2021 as filed with the SEC on August 12, 2021 and our other filings with the SEC. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of cbdMD, Inc. and are difficult to predict. cbdMD, Inc. does not undertake any duty to update any forward-looking statements except as may be required by law. The information which appears on our websites and our social media platforms, including, but not limited to, Instagram and Facebook, is not part of this press release.

Non-GAAP Financial Measures

This press release includes a financial measure that excludes the impact of certain items and therefore has not been calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). cbdMD, Inc. has included adjusted loss from operations because management uses this measure to assess operating performance in order to highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The adjusted operating loss has not been prepared in accordance with GAAP. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, net loss from operations as an indicator of our operating performance. Further, this non-GAAP financial measure, as presented by cbdMD, Inc., may not be comparable to similarly titled measures reported by other companies. cbdMD, Inc. has attached to this press release a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure.

cbdMD, INC.CONDENSED CONSOLIDATED BALANCE SHEETSJune 30, 2021 AND SEPTEMBER 30, 2020 (Unaudited) June 30, September 30, 2021 2020

Assets Current assets:Cash and cash equivalents $ 18,984,012 $ 14,824,644

Accounts receivable 1,467,598 911,482

Accounts receivable - discontinued operations 18,467 447,134

Marketable securities 13,412 26,472

Investment other securities 1,000,000 250,000

Inventory 4,738,418 4,603,360

Inventory prepaid 673,588 288,178

Prepaid software - 174,308

Prepaid sponsorship 1,628,418 1,203,300

Prepaid expenses and other current assets 1,459,300 983,374

Total current assets 29,983,213 23,712,252



Other assets:

Property and equipment, net 2,775,203 3,183,487

Operating lease assets 5,929,300 6,851,357

Deposits for facilities 529,583 790,708

Intangible assets, net 21,635,000 21,635,000

Goodwill 54,669,997 54,669,997

Total other assets 85,539,083 87,130,549



Total assets $ 115,522,296 $ 110,842,801

CONDENSED CONSOLIDATED BALANCE SHEETSJUNE 30, 2021 AND SEPTEMBER 30, 2020(continued)(Unaudited)June 30,September 30,2021

2020

Liabilities and shareholders' equityCurrent liabilities:Accounts payable$

3,144,380

$

2,850,421

Deferred revenue755

-

Accrued expenses2,362,024

2,769,920

Operating leases - current portion1,184,839

1,159,098

Paycheck Protection Program loan, current portion-

854,000

Note payable58,488

55,639

Total current liabilities6,750,486

7,689,078

Long term liabilities:Long term liabilities124,226

264,367

Paycheck Protection Program loan-

602,100

Operating leases - long term portion5,137,552

6,010,208

Contingent liability7,751,104

16,200,000

Deferred tax liability130,000

895,000

Total long term liabilities13,142,882

23,971,675

Total liabilities19,893,368

31,660,753

cbdMD, Inc. shareholders' equity:Preferred stock, authorized 50,000,000 shares, $0.001 par value, 2,800,000 and 500,000 shares issued and outstanding, respectively2,800

500

Common stock, authorized 150,000,000 shares, $0.001 par value, 56,973,815 and 52,130,870 shares issued and outstanding, respectively56,974

52,131

Additional paid in capital158,198,042

126,517,784

Accumulated deficit(62,628,889

)

(47,388,367

)

Total cbdMD, Inc. shareholders' equity95,628,927

79,182,048

Total liabilities and shareholders' equity$

115,522,295

$

110,842,801

CONDENSED CONSOLIDATED BALANCE SHEETSJUNE 30, 2021 AND SEPTEMBER 30, 2020(continued) (Unaudited) June 30, September 30, 2021 2020

Liabilities and shareholders' equity Current liabilities:Accounts payable $ 3,144,380 $ 2,850,421

Deferred revenue 755 -

Accrued expenses 2,362,024 2,769,920

Operating leases - current portion 1,184,839 1,159,098

Paycheck Protection Program loan, current - 854,000 portionNote payable 58,488 55,639

Total current liabilities 6,750,486 7,689,078



Long term liabilities:

Long term liabilities 124,226 264,367

Paycheck Protection Program loan - 602,100

Operating leases - long term portion 5,137,552 6,010,208

Contingent liability 7,751,104 16,200,000

Deferred tax liability 130,000 895,000

Total long term liabilities 13,142,882 23,971,675



Total liabilities 19,893,368 31,660,753



cbdMD, Inc. shareholders' equity:

Preferred stock, authorized 50,000,000shares, $0.001 par value, 2,800,000 and 2,800 500 500,000 shares issued and outstanding,respectivelyCommon stock, authorized 150,000,000 shares, 56,974 52,131 $0.001 par value, 56,973,815 and 52,130,870shares issued and outstanding, respectivelyAdditional paid in capital 158,198,042 126,517,784

Accumulated deficit (62,628,889 ) (47,388,367 )

Total cbdMD, Inc. shareholders' equity 95,628,927 79,182,048





Total liabilities and shareholders' equity $ 115,522,295 $ 110,842,801

cbdMD, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021 and 2020Three MonthsThree MonthsNine MonthsNine MonthsEndedEndedEndedEndedJune 30,June 30,June 30,June 30,2021

2020

2021

2020

Gross Sales$

11,352,585

$

10,809,387

$

36,941,917

$

30,925,678

Allowances(792,062

)

(172,842

)

(2,254,481

)

(741,861

)

Total Net Sales10,560,523

10,636,545

34,687,436

30,183,817

Cost of sales3,370,952

3,748,024

10,444,353

10,180,637

Gross Profit7,189,571

6,888,521

24,243,083

20,003,180

Operating expenses13,865,191

8,226,029

36,846,371

33,053,962

(Loss) from operations(6,675,620

)

(1,337,508

)

(12,603,288

)

(13,050,782

)

Realized and Unrealized gain (loss) on marketable and other securities, including impairments(18,623

)

(30,849

)

526,940

(906,011

)

Gain (loss) on extinguishment of debt1,466,113

-

1,466,113

-

(Increase) decrease of contingent liability6,871,000

(7,580,000

)

(10,500,000

)

30,580,000

Interest (expense) income(2,582

)

3,436

(23,573

)

46,311

Income (loss) before provision for income taxes1,640,288

(8,944,921

)

(21,133,808

)

16,669,518

Benefit for income taxes(103,000

)

-

765,000

2,240,300

Net (Loss) Income from continuing operations1,537,288

(8,944,921

)

(20,368,808

)

18,909,818

Net (Loss) from discontinued operations, net of tax (Note 14)-

(7,781

)

-

(48,983

)

Net (Loss) Income1,537,288

(8,952,702

)

(20,368,808

)

18,860,835

Preferred dividends560,281

100,050

1,220,610

266,800

Net (Loss) Income attributable to cbdMD, Inc. common shareholders$

977,007

$

(9,052,752

)

$

(21,589,418

)

$

18,594,035

Net (Loss) Income per share:Basic earnings per share0.02

(0.18

)

(0.43

)

0.45

Diluted earnings per share0.02

-

(0.43

)

0.44

Weighted average number of shares Basic:56,676,326

51,335,648

52,793,872

41,411,261

Weighted average number of shares Diluted:61,431,643

-

52,793,872

42,534,519

cbdMD, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021 and 2020 Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020

Gross Sales $ 11,352,585 $ 10,809,387 $ 36,941,917 $ 30,925,678

Allowances (792,062 ) (172,842 ) (2,254,481 ) (741,861 )

Total Net 10,560,523 10,636,545 34,687,436 30,183,817 SalesCost of sales 3,370,952 3,748,024 10,444,353 10,180,637

Gross Profit 7,189,571 6,888,521 24,243,083 20,003,180

Operating 13,865,191 8,226,029 36,846,371 33,053,962 expenses(Loss) from (6,675,620 ) (1,337,508 ) (12,603,288 ) (13,050,782 )operationsRealized andUnrealizedgain (loss) onmarketable and (18,623 ) (30,849 ) 526,940 (906,011 )othersecurities,includingimpairmentsGain (loss) on 1,466,113 - 1,466,113 - extinguishmentof debt(Increase)decrease of 6,871,000 (7,580,000 ) (10,500,000 ) 30,580,000 contingentliabilityInterest (2,582 ) 3,436 (23,573 ) 46,311 (expense)incomeIncome (loss)before 1,640,288 (8,944,921 ) (21,133,808 ) 16,669,518 provision forincome taxes Benefit for (103,000 ) - 765,000 2,240,300 income taxesNet (Loss)Income from 1,537,288 (8,944,921 ) (20,368,808 ) 18,909,818 continuingoperationsNet (Loss)fromdiscontinued - (7,781 ) - (48,983 )operations,net of tax(Note 14)Net (Loss) 1,537,288 (8,952,702 ) (20,368,808 ) 18,860,835 IncomePreferred 560,281 100,050 1,220,610 266,800 dividends Net (Loss)Incomeattributable $ 977,007 $ (9,052,752 ) $ (21,589,418 ) $ 18,594,035 to cbdMD, Inc.commonshareholders Net (Loss)Income pershare:Basic earnings 0.02 (0.18 ) (0.43 ) 0.45 per shareDiluted 0.02 - (0.43 ) 0.44 earnings pershareWeightedaverage number 56,676,326 51,335,648 52,793,872 41,411,261 of sharesBasic:Weightedaverage number 61,431,643 - 52,793,872 42,534,519 of sharesDiluted:cbdMD, INC.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021 AND 2020(Unaudited)Three MonthsThree MonthsNine MonthsNine MonthsEndedEndedEndedEndedJune 30,June 30,June 30,June 30,2021

2020

2021

2020

Net (Loss) Income$

1,537,288

$

(8,952,702

)

$

(20,368,808

)

$

18,860,835

Comprehensive (Loss) Income1,537,288

(8,952,702

)

(20,368,808

)

18,860,835

Preferred dividends(560,281

)

(100,050

)

(1,220,610

)

(266,800

)

Comprehensive (Loss) Income attributable to cbdMD, inc. common shareholders$

977,007

$

(9,052,752

)

$

(21,589,418

)

$

18,594,035

cbdMD, INC.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021 AND 2020(Unaudited) Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020

Net (Loss) $ 1,537,288 $ (8,952,702 ) $ (20,368,808 ) $ 18,860,835 IncomeComprehensive 1,537,288 (8,952,702 ) (20,368,808 ) 18,860,835 (Loss) Income Preferred (560,281 ) (100,050 ) (1,220,610 ) (266,800 )dividendsComprehensive(Loss) Incomeattributable to $ 977,007 $ (9,052,752 ) $ (21,589,418 ) $ 18,594,035 cbdMD, inc.commonshareholders cbdMD, INC.CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE NINE MONTHS ENDED JUNE 30, 2021 AND 2020(unaudited)Nine MonthsNine MonthsEndedEndedJune 30,June 30,2021

2020

Cash flows from operating activities:Net (Loss) Income$

(20,368,808

)

$

18,860,835

Adjustments to reconcile net (income) loss to netcash used by operating activities:Stock based compensation807,523

1,391,271

Restricted stock expense1,137,583

138,001

Marketing stock amortization660,232

-

Issuance of stock / warrants for service98,605

84,450

Inventory and materials impairment-

233,372

Impairment on discontinued operations asset-

45,783

Depreciation and amortization719,856

499,394

Other than temporary impairment other securities and other accounts receivable-

760,000

Increase/(Decrease) in contingent liability10,500,000

(30,580,000

)

Realized and unrealized loss of Marketable and other securities(526,939

)

146,011

Merchant reserve settlement-

132,657

Termination benefit495,568

-

Extinguishment of Paycheck Protection Program Loan(1,466,113

)

-

Non-cash lease expense922,057

878,986

Changes in operating assets and liabilities:Accounts receivable(556,116

)

710,629

Deposits261,125

(147,166

)

Merchant reserve-

386,912

Inventory(135,058

)

(2,329,112

)

Prepaid inventory(385,410

)

621,573

Prepaid expenses and other current assets(141,393

)

1,007,374

Accounts payable and accrued expenses(603,216

)

(480,424

)

Operating lease liability(846,914

)

(766,289

)

Note payable-

42,968

Deferred revenue / customer deposits4,478

(7,339

)

Collection on discontinued operations accounts receivable428,667

333,333

Deferred tax liability(765,000

)

(2,240,300

)

Cash used by operating activities(9,759,273

)

(10,277,081

)

Cash flows from investing activities:Purchase of other investment securities(210,000

)

-

Purchase of property and equipment(311,572

)

(1,851,746

)

Cash provided (used) by investing activities(521,572

)

(1,851,746

)

Cash flows from financing activities:Proceeds from issuance of common stock-

16,771,756

Proceeds from issuance of preferred stock15,798,115

4,421,928

Paycheck Protection Program Loan-

1,456,100

Note payable(137,292

)

-

Preferred dividend distribution(1,220,610

)

(266,800

)

Deferred issuance costs-

62,197

Cash provided by financing activities14,440,213

22,445,181

Net increase (decrease) in cash4,159,368

10,316,354

Cash and cash equivalents, beginning of period14,824,644

4,689,966

Cash and cash equivalents, end of period$

18,984,012

$

15,006,320

Supplemental Disclosures of Cash Flow Information:Nine MonthsNine MonthsEndedEndedJune 30,June 30,2021

2020

Cash Payments for:Interest expense$

23,573

$

26,126

Non-cash financial activities:Issuance of Contingent earnout shares:$

12,600,000

$

-

Warrants issued to representative$

254,950

$

524,113

cbdMD, INC.CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE NINE MONTHS ENDED JUNE 30, 2021 AND 2020(unaudited) Nine Months Nine Months Ended Ended June 30, June 30, 2021 2020

Cash flows from operating activities:Net (Loss) Income $ (20,368,808 ) $ 18,860,835

Adjustments to reconcile net (income) loss tonet cash used by operating activities:Stock based compensation 807,523 1,391,271

Restricted stock expense 1,137,583 138,001

Marketing stock amortization 660,232 -

Issuance of stock / warrants for service 98,605 84,450

Inventory and materials impairment - 233,372

Impairment on discontinued operations asset - 45,783

Depreciation and amortization 719,856 499,394

Other than temporary impairment other - 760,000 securities and other accounts receivableIncrease/(Decrease) in contingent liability 10,500,000 (30,580,000 )

Realized and unrealized loss of Marketable (526,939 ) 146,011 and other securitiesMerchant reserve settlement - 132,657

Termination benefit 495,568 -

Extinguishment of Paycheck Protection Program (1,466,113 ) - LoanNon-cash lease expense 922,057 878,986

Changes in operating assets and liabilities:Accounts receivable (556,116 ) 710,629

Deposits 261,125 (147,166 )

Merchant reserve - 386,912

Inventory (135,058 ) (2,329,112 )

Prepaid inventory (385,410 ) 621,573

Prepaid expenses and other current assets (141,393 ) 1,007,374

Accounts payable and accrued expenses (603,216 ) (480,424 )

Operating lease liability (846,914 ) (766,289 )

Note payable - 42,968

Deferred revenue / customer deposits 4,478 (7,339 )

Collection on discontinued operations 428,667 333,333 accounts receivableDeferred tax liability (765,000 ) (2,240,300 )

Cash used by operating activities (9,759,273 ) (10,277,081 )

Cash flows from investing activities:Purchase of other investment securities (210,000 ) -

Purchase of property and equipment (311,572 ) (1,851,746 )

Cash provided (used) by investing activities (521,572 ) (1,851,746 )

Cash flows from financing activities:Proceeds from issuance of common stock - 16,771,756

Proceeds from issuance of preferred stock 15,798,115 4,421,928

Paycheck Protection Program Loan - 1,456,100

Note payable (137,292 ) -

Preferred dividend distribution (1,220,610 ) (266,800 )

Deferred issuance costs - 62,197

Cash provided by financing activities 14,440,213 22,445,181

Net increase (decrease) in cash 4,159,368 10,316,354

Cash and cash equivalents, beginning of 14,824,644 4,689,966 periodCash and cash equivalents, end of period $ 18,984,012 $ 15,006,320

Supplemental Disclosures of Cash FlowInformation: Nine Months Nine Months Ended Ended June 30, June 30, 2021 2020

Cash Payments for:Interest expense $ 23,573 $ 26,126

Non-cash financial activities:Issuance of Contingent earnout shares: $ 12,600,000 $ -

Warrants issued to representative $ 254,950 $ 524,113

cbdMD, Inc.SUPPLEMENTAL FINANCIAL INFORMATIONRECONCILIATION OF NON-GAAP ADJUSTED INCOME (LOSS) FROM OPERATIONSThree MonthsThree MonthsNine MonthsNine MonthsEndedEndedEndedEndedJune 30,June 30,June 30,June 30,2021

2020

2021

2020

(Unaudited)GAAP (loss) from operations$

(6,675,620

)

$

(1,337,508

)

$

(12,603,288

)

(13,050,782

)

Adjustments:Depreciation246,533

211,937

719,856

499,394

Employee and director stock compensation (1)959,319

388,185

2,049,326

1,447,861

Other non-cash stock compensation for services (2)28,650

-

97,721

97,721

Inventory adjustment (3)-

316,922

-

483,315

One-time abnormal inventory adjustment (4)50,000

233,373

50,000

233,373

Accrual for severance-

-

703,022

-

Accrual / expenses for discretionary bonus150,000

-

450,000

222,500

Non-GAAP adjusted (loss) from operations$

(5,391,118

)

$

(187,091

)

$

(8,533,363

)

$

(10,066,619

)

(1) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.

(2) Represents non-cash expense related to options, warrants, restricted stock expenses that have been amortized during the period.

(3) Represents an adjustment after performing a physical inventory account.

(4) Represents an operating expense related to inventory loss related to regulatory changes impacting labels and packaging

View source version on businesswire.com: https://www.businesswire.com/news/home/20210812005794/en/

CONTACT: PR: 5W Public Relations cbdMD@5wpr.com (212) 999-5585

CONTACT: Investors: cbdMD, Inc. John Weston Director of Investor Relations John.Weston@cbdMD.com (704) 249-9515