ycbd20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended March 31, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from __________________ to _______________

Commission file number 001-38299

cbdMD, INC.

(Exact Name of Registrant as Specified in its Charter)

North Carolina		47-3414576
State or Other Jurisdiction of Incorporation or Organization		I.R.S. Employer Identification No.

2101 Westinghouse Blvd., Suite A, Charlotte, NC		28273
Address of Principal Executive Offices		Zip Code

704-445-3060

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
common	YCBD	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.

See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

8,908,406 shares of common stock are issued and outstanding as of May 15, 2025.

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TABLE OF CONTENTS

		Page No

PART I-FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements.	5

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	26

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk.	34

ITEM 4.	Controls and Procedures.	34

PART II - OTHER INFORMATION

ITEM 1.	Legal Proceedings.	35

ITEM 1A.	Risk Factors.	35

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	35

ITEM 3.	Defaults Upon Senior Securities.	35

ITEM 4.	Mine Safety Disclosures.	35

ITEM 5.	Other Information.	36

ITEM 6.	Exhibits.	36

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OTHER PERTINENT INFORMATION

Unless the context otherwise indicates, when used in this report, the terms the “Company,” “cbdMD, “we,” “us, “our” and similar terms refer to cbdMD, Inc., a North Carolina corporation formerly known as Level Brands, Inc., and our subsidiaries CBD Industries LLC, a North Carolina limited liability company formerly known as cbdMD LLC, which we refer to as “CBDI”, Paw CBD, Inc., a North Carolina corporation which we refer to as “Paw CBD”, Proline Global, LLC, a North Carolina limited liability company which we refer to as "Proline", and cbdMD Therapeutics LLC, a North Carolina limited liability company which we refer to as “Therapeutics”. In addition, “fiscal 2024” refers to the year ended September 30, 2024, “fiscal 2025” refers to the fiscal year ending September 30, 2025, “first quarter of 2024” refers to the three months ended December 31, 2023 and “first quarter of 2025” refers to the three months ended December 31, 2024, "second quarter of 2024" refers to the three months ended March 31, 2024, and "second quarter of 2025" refers to the three months ended March 31, 2025.

We maintain a corporate website at www.cbdmd.com. The information contained on our corporate website and our various social media platforms is not part of this report.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about:

●

material risks associated with our overall business, including:

	●	our history of losses, potential liquidity concerns, need to raise additional capital and our ability to continue as a going concern;
	●	our current capitalization limits our ability to make strategic or accretive acquisitions or attract new investors;
	●	our reliance to market to key digital channels;
	●	our ability to acquire new customers at a profitable rate;
	●	our ability to bring new and compelling dietary ingredients to market;
	●	our reliance on third party raw material suppliers and manufacturers;
	●	Potential impact of tariffs; and
	●	our reliance on third party compliance with our supplier verification program and testing protocols.

●

material risks associated with regulatory environment for dietary ingredients, including but not limited to CBD, including:

	●	federal laws as well as FDA, FTC or DEA interpretation of existing regulation;
	●	state and local laws pertaining to regulated dietary ingredients (such as industrial hemp), beverages and their derivatives;
	●	costs to us for compliance with laws and the risks of increased litigation; and
	●	possible changes in the use of dietary ingredients such as CBD.

●

material risks associated with the ownership of our securities, including;

●

the risks for failing to regain compliance with the continued listing standards of the NYSE American pursuant to our Plan for continued listing of our Common Stock.

Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety, including the risks described in Part II, Item 1A. Risk Factors appearing later in this report, Part I, Item 1A. - Risk Factors appearing in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 as filed with the Securities and Exchange Commission (the “SEC”) on December 18, 2024 (the “2024 10-K”), as well as our other filings with the SEC. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

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PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

cbdMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2025 AND SEPTEMBER 30, 2024

(Unaudited)

	(Unaudited)
	*March 31,*		*September 30,*
	*2025*		*2024*
Assets

Current assets:
Cash and cash equivalents	$	1,765,234	$	2,452,553
Accounts receivable, net		1,052,069		983,910
Inventory, net		2,662,705		2,365,187
Inventory prepaid		221,629		159,006
Prepaid sponsorship		11,478		21,754
Prepaid expenses and other current assets		479,312		406,674
Total current assets		6,192,427		6,389,084

Other assets:
Property and equipment, net		432,792		454,268
Operating lease assets		1,042,746		85,817
Deposits for facilities		62,708		62,708
Intangible assets, net		2,507,046		2,889,580
Investment in other securities, noncurrent		700,000		700,000
Total other assets		4,745,292		4,192,373

Total assets	$	10,937,719	$	10,581,457

See Notes to Condensed Consolidated Financial Statements

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cbdMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2025 AND SEPTEMBER 30, 2024

(continued)

	(Unaudited)
	*March 31,*			*September 30,*
	*2025*			*2024*
Liabilities and shareholders' equity

Current liabilities:
Accounts payable	$	1,287,789		$	1,541,108
Accrued expenses		609,674			632,674
Accrued dividends		6,672,000			4,671,000
Deferred revenue		557,353			503,254
Operating leases – current portion		744,961			98,696
Convertible notes, at fair value		-			1,171,308
Total current liabilities		9,871,777			8,618,040

Long term liabilities:
Operating leases - long term portion		400,144			-
Total long term liabilities		400,144			-

Total liabilities		10,271,921			8,618,040

Commitments and Contingencies (Note 11)

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, 783,355 and 492,383 shares issued and outstanding, respectively		783			492
Additional paid in capital		185,194,577			184,033,012
Other comprehensive income		-			(7,189	)
Accumulated deficit		(184,534,562	)		(182,067,898	)
Total cbdMD, Inc. shareholders' equity		665,798			1,963,417

Total liabilities and shareholders' equity	$	10,937,719		$	10,581,457

See Notes to Condensed Consolidated Financial Statements

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cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

	*Three Months Ended March 31,*						*Six Months Ended March 31,*
	*2025*			*2024*			*2025*			*2024*

Gross Sales	$	4,749,426		$	4,816,444		$	9,862,902		$	10,192,075
Allowances		-			(439,926	)		-			(440,152	)
Total Net Sales		4,749,426			4,376,518			9,862,902			9,751,923
Cost of sales		1,790,062			1,795,790			3,502,929			3,613,698
Gross Profit		2,959,364			2,580,728			6,359,973			6,138,225

Operating expenses		3,445,180			4,131,719			6,932,061			8,755,053
Loss from operations		(485,816	)		(1,550,991	)		(572,088	)		(2,616,828	)
Decrease of contingent liability		-			4,828			-			74,580
Decrease (increase) in fair value of convertible debt		(2,583	)		(1,446,000	)		87,380			(1,446,000	)
Interest expense (income)		7,642			(18,399	)		19,046			(18,817	)
Loss before provision for income taxes		(480,757	)		(3,010,562	)		(465,662	)		(4,007,065	)

Net Loss		(480,757	)		(3,010,562	)		(465,662	)		(4,007,065	)
Preferred dividends		1,000,500			1,000,500			2,001,001			2,001,000

Net Loss attributable to cbdMD, Inc. common shareholders	$	(1,481,257	)	$	(4,011,062	)	$	(2,466,663	)	$	(6,008,065	)

Net Loss per share:
Basic and Diluted loss per share		(1.90	)		(10.84	)		(3.67	)		(16.23	)
Weighted average number of shares Basic and Diluted:		778,410			370,132			672,558			370,125

See Notes to Condensed Consolidated Financial Statements

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cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

(Unaudited)

	*Three Months Ended March 31,*						*Six Months Ended March 31,*
	*2025*			*2024*			*2025*			*2024*

Net Loss	$	(480,757	)	$	(3,010,562	)	$	(465,662	)	$	(4,007,065	)
Comprehensive Loss		(480,757	)		(3,010,562	)		(465,662	)		(4,007,065	)

Preferred dividends		(1,000,500	)		(1,000,500	)		(2,001,001	)		(2,001,000	)
Comprehensive Loss attributable to cbdMD, Inc. common shareholders	$	(1,481,257	)	$	(4,011,062	)	$	(2,466,663	)	$	(6,008,065	)

See Notes to Condensed Consolidated Financial Statements

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cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE Six MONTHS ENDED March 31, 2025 and 2024

(Unaudited)

	Six Months Ended
	March 31,
	2025			2024
Cash flows from operating activities:
Net Loss	$	(465,662	)	$	(4,007,065	)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock based compensation		-			2,852
Restricted stock expense		2,868			992
Issuance of stock for services		82,250			-
Amortization		382,534			345,684
Depreciation		201,369			228,615
Increase (decrease) in contingent liability		-			(74,580	)
Increase (decrease) in fair value of convertible debt		(87,380	)		1,446,000
Amortization of operating lease asset		330,969			584,574
Changes in operating assets and liabilities:
Accounts receivable		(67,408	)		301,132
Deposits		-			6,505
Inventory		(297,518	)		878,967
Prepaid inventory		(62,623	)		(95,119	)
Prepaid expenses and other current assets		(62,361	)		(164,404	)
Accounts payable and accrued expenses		(277,135	)		449,287
Operating lease liability		(241,489	)		(628,891	)
Deferred revenue / customer deposits		54,160			(84,497	)
Cash flows from operating activities		(507,426	)		(809,948	)
Cash flows from investing activities:
Purchase of property and equipment		(179,893	)		(180,015	)
Cash flows from investing activities		(179,893	)		(180,015	)
Cash flows from financing activities:
Proceeds from issuance of common stock		-			50,000
Note payable		-			1,247,499
Cash flows from financing activities		-			1,297,499
Net increase (decrease) in cash		(687,319	)		307,536
Cash and cash equivalents, beginning of period		2,452,553			1,797,860
Cash and cash equivalents, end of period	$	1,765,234		$	2,105,396

Supplemental Disclosures of Cash Flow Information:

	*2025*			*2024*

Cash Payments for:
Interest expense	$	19,046		$	18,817

Non-cash financial/investing activities:
Issuance of shares for conversion of debt and accrued interest	$	1,079,639		$	-
Issuance of shares for service	$	82,250		$	-
Change in lease asset related to extinguishment of HQ lease and new warehouse lease	$	(1,723,544	)	$	-
Preferred dividends accrued but not paid	$	2,001,001		$	2,001,000

See Notes to Condensed Consolidated Financial Statements

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cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE six months ended March 31, 2025

(Unaudited)

									*Other*			*Additional*
	*Common Stock*				*Preferred Stock*				*Comprehensive*			*Paid in*			*Accumulated*
	*Shares*		*Amount*		*Shares*		*Amount*		*Income*			*Capital*			*Deficit*			*Total*
Balance, September 30, 2024		492,383	$	492		5,000,000	$	5,000	$	(7,189	)	$	184,033,012		$	(182,067,898	)	$	1,963,417
Issuance of Common stock		1,000		1		-		-		-			(1	)		-			-
Issuance of restricted stock for share based compensation		-		-		-		-		-			2,007			-			2,007
Change in fair value of debt related to credit risk		-		-		-		-		(588	)		-			-			(588	)
Issuance of Common Stock, Convertible Notes		177,633		178		-		-		-			719,733			-			719,911
Issuance of Common Stock, GSS Agreement		21,875		22		-		-		-			82,228			-			82,250
Preferred dividend declared, not paid		-		-		-		-		-			-			(1,000,501	)		(1,000,501	)
Net Loss		-		-		-		-		-			-			15,095			15,095
Balance, December 31, 2024		692,891	$	693		5,000,000	$	5,000	$	(7,777	)	$	184,836,980		$	(183,053,305	)	$	1,781,591
Issuance of Common stock		500		1		-		-		-			(1	)		-			-
Issuance of restricted stock for share based compensation		-		-		-		-		-			861			-			861
Change in fair value of debt related to credit risk		-		-		-		-		7,777			-			-			7,777
Issuance of Common Stock, Convertible Notes		89,964		89		-		-		-			356,737			-			356,826
Preferred dividend declared, not paid		-		-		-		-		-			-			(1,000,500	)		(1,000,500	)
Net Loss		-		-		-		-		-			-			(480,757	)		(480,757	)
Balance, March 31, 2025		783,355	$	783		5,000,000	$	5,000	$	-		$	185,194,577		$	(184,534,562	)	$	665,798

See Notes to Condensed Consolidated Financial Statements

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cbdMD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE six months ended March 31, 2024

(Unaudited)

									Other			Additional
	Common Stock				Preferred Stock				Comprehensive			Paid in		Accumulated
	Shares		Amount		Shares		Amount		Income			Capital		Deficit			Total
Balance, September 30, 2023		370,072	$	370		5,000,000	$	5,000	$	-		$	183,389,686	$	(174,363,772	)	$	9,031,284
Issuance of Common Stock		60		-		-		-		-			-		-			-
Issuance of options for share based compensation		-		-		-		-		-			1,772		-			1,772
Issuance of restricted stock for share based compensation		-		-		-		-		-			689		-			689
Preferred dividend		-		-		-		-		-			-		(1,000,501	)		(1,000,501	)
Net Loss		-		-		-		-		-			-		(996,501	)		(996,501	)
Balance, December 31, 2023		370,132	$	370		5,000,000	$	5,000	$	-		$	183,392,147	$	(176,360,774	)	$	7,036,743
Issuance of Common Stock		2,491		2		-		-		-			15,781		-			15,783
Issuance of options for share based compensation		-		-		-		-		-			1,080		-			1,080
Issuance of restricted stock for share based compensation		-		-		-		-		-			303		-			303
Change in fair value of debt related to credit risk		-		-		-		-		(6,000	)		-		-			(6,000	)
Issuance of Common stock - Keystone		8,027		8		-		-		-			49,992		-			50,000
Preferred dividend		-		-		-		-		-			-		(1,000,500	)		(1,000,500	)
Net Loss		-		-		-		-		-			-		(3,010,562	)		(3,010,562	)
Balance, March 31, 2024		380,650	$	380		5,000,000	$	5,000	$	(6,000	)	$	183,459,303	$	(180,371,836	)	$	3,086,847

See Notes to Condensed Consolidated Financial Statements

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cbdMD, INC.

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

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 offices located in Charlotte, North Carolina. Our fiscal year end is established as September 30.

There have been no material changes in the Company's significant accounting policies from those previously disclosed in the Annual Report as of and for the fiscal year ended September 30, 2024 as filed on Form 10-K (the "2024 10-K").

The accompanying unaudited interim condensed consolidated financial statements of cbdMD have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the 2024 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of consolidated financial position and the consolidated results of operations for the interim periods presented have been reflected herein.

Principles of Consolidation

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

Reverse Stock Split

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

Use of Estimates

The Company’s condensed consolidated financial statements have been prepared in accordance with US GAAP and requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significant estimates made in the accompanying condensed consolidated financial statements include, but are not limited to, allowances for credit losses, inventory valuation reserves, expected sales returns and allowances, certain assumptions related to the valuation of investments other securities, acquired intangibles and long-lived assets and the recoverability of intangible and long-lived assets and income taxes, including deferred tax valuation allowances and reserves for estimated tax liabilities is a material estimate. Actual results could differ from these estimates. The Company continues to monitor macroeconomic conditions to remain flexible and to optimize and evolve its business as appropriate.

Cash and Cash Equivalents

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

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Accounts Receivable

Accounts receivable are stated at cost less an allowance for credit losses, if applicable. Credit is extended to customers after an evaluation of the customer’s financial condition, and generally collateral is not required as a condition of credit extension. Management’s determination of the allowance for credit losses is based on an evaluation of the receivables, past experience, current economic conditions, and other risks inherent in the receivables portfolio. The balance for allowance for credit losses was $416,844 and $346,197 on March 31, 2025 and September 30, 2024, respectively.

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


	March 31, 2025			September 30, 2024

Credit loss allowance - beginning of period	$	346,197		$	42,180
Credit loss provision		388,693			358,339
Write offs		(318,046	)		(54,322	)
Recoveries		-			-
Credit loss allowance - end of period	$	416,844		$	346,197

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 2.5% and 4.0% 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, 2025 and September 30, 2024, the receivable from payment processors included approximately $694,515 and $621,678 respectively, for the waiting period amount and is recorded as accounts receivable in the accompanying condensed consolidated balance sheet.

Inventory

Inventory is stated at the lower of cost or net realizable value with cost being determined on a weighted average basis. The cost of inventory includes product cost, freight-in, and production fill and labor (portions of which we outsource 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. The reserve for inventory was $82,036 and $0 for March 31, 2025 and September 31, 2024, respectively.

Property and Equipment

Property and equipment items are stated at cost less accumulated depreciation. Expenditures for routine maintenance and repairs are charged to operations as incurred. Depreciation is charged to expense over the estimated useful lives of the assets using the straight-line method. Generally, the useful lives 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.

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

The Company elected the fair value option under ASC 825 Fair Value Measurements for its Convertible notes. The convertible notes were initially recognized at fair value on the balance sheet. All subsequent changes in fair value, excluding the impact of the change in fair value related to instrument-specific credit risk are recorded in non-operating income. The changes in fair value related to instrument-specific credit risk is recorded through other comprehensive loss. See Note 11 for more information related to the convertible notes.

Intangible Assets

The Company accounts for its trademarks in accordance with Accounting Standards Codification (ASC) Topic 360, Property, Plant and Equipment and are amortized over 5-10 years. The Company performs impairment tests as prescribed by ASC 360, which states that impairment testing should be completed whenever events or changes in circumstances indicate that the asset group's carrying value may not be recoverable.

Revenue Recognition

Under ASC 606, Revenue from Contracts with Customers, the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Performance Obligations

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

Other than account receivable, the Company has no material contract assets nor contract liabilities at March 31, 2025.

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

	*Three Months Ended March 31,*
	*2025*		*% of total*			*2024*		*% of total*

E-commerce sales	$	3,634,793		76.5	%	$	3,625,719		82.8	%
Wholesale sales		1,114,633		23.5	%		750,799		17.2	%
Total Net Sales	$	4,749,426		100.0	%	$	4,376,518		100.0	%

	*Six Months Ended March 31,*
	*2025*		*% of total*			*2024*		*% of total*

E-commerce sales	$	7,587,523		76.9	%	$	8,049,724		82.5	%
Wholesale sales		2,275,379		23.1	%		1,702,199		17.5	%
Total Net Sales	$	9,862,902		100.0	%	$	9,751,923		100.0	%

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Cost of Sales

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

Income Taxes

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

The Company accounts for income taxes pursuant to the provisions of the Accounting for Income Taxes topic of ASC 740 which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The Company uses the inside basis approach to determine deferred tax assets and liabilities associated with its investment in a consolidated pass-through entity. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

Concentrations

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

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

Concentration of credit risk with respect to receivables is principally limited to trade receivables with corporate customers that meet specific credit policies. Management considers these customer receivables to represent normal business risk. The Company did not have any customers that represented a significant amount of our sales for the three and six months ended March 31, 2025.

Stock-Based Compensation

The Company accounts for its stock compensation under the ASC 718-10-30, Compensation - Stock Compensation using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.

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

Earnings (Loss) Per Share

The Company uses ASC 260-10, Earnings Per Share for calculating the basic and diluted loss per share. The Company computes basic loss per share by dividing net loss and net loss attributable to common shareholders, after deducting preferred stock dividends, by the weighted average number of common shares outstanding. Common equivalent shares are excluded from the computation of net loss per share if their effect is anti-dilutive.

Liquidity and Going Concern Considerations

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

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While the Company believes in the viability of its strategy and path to profitability, and in its ability to raise additional funds, there can be no assurances of these actions. The Company’s working capital position may not be sufficient to support the Company’s daily operations for the twelve months subsequent to the issuance of these annual financial statements. The Company’s ability to continue as a going concern is dependent upon its ability to improve profitability and the ability to acquire additional funding. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the annual financial statements are issued. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.

Convertible Notes

Effective February 1, 2024, the Company entered into a Securities Purchase Agreement dated January 30, 2024 with five institutional investors (the “Investors”) whereby the Investors advanced the Company an aggregate of $1,250,000 gross proceeds and the Company issued each Investor an 8% Senior Secured Original Issue 20% Discount Convertible Promissory Note, in the aggregate principal amount of $1,541,666 (the “Notes”). The Company is using the proceeds from the issuance of the Notes for working capital and general corporate purposes. The table below represents the change in fair value of the convertible notes as of March 31, 2025. As of the end of January 2025 the Notes were satisfied in full and no longer an obligation of the Company.

	In Active
	Markets for		Significant Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Balance at September 30, 2024		-		-		1,171,308
Conversion of convertible notes						(719,324	)
Change in fair value of convertible notes		-		-		(89,963	)
Balance December 31, 2024	$	-	$	-	$	362,021
Conversion of convertible notes						(364,604	)
Change in fair value of convertible notes		-		-		2,583
Balance at March 31, 2025	$	-	$	-	$	-

New Accounting Standards

On December 14, 2023 the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This standard went into effect for fiscal years beginning after December 31, 2024 and will go into effect for the company beginning with it's fiscal year ending September 30, 2025. The Company is currently evaluating the impacts of this standard on the consolidated financial statements.

The Company adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures Measurement. This standard went into effect for fiscal years beginning after December 13, 2023. This standard enhances segment reporting under Topic 280 by expanding the breadth and frequency of segment disclosures. The Company is currently evaluating the impacts of this standard on the consolidated financial statements.

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

On April 7, 2022, CBD Industries, LLC entered into an asset sale agreement to sell substantially all its manufacturing assets to a subsidiary of Steady State, LLC ("Steady State"). The equipment sale is initially valued at approximately $1.8 million for accounting purposes, the sale price consisting of products to be provided to the Company under the manufacturing and supply agreement and $1.4 million of which the Company invested into Steady State in the form of an equity investment consistent with the terms of Steady State's completed series C financing. In September of 2023, the Company impaired this investment by $700,000. The Company has classified this investment as Level 3 for fair value measurement purposes as there are no observable inputs and has included it in non-current assets on the accompanying condensed consolidated balance sheets as the Company plans to hold this investment.

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

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NOTE 3 - INVENTORY

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

	*March 31,*			*September 30,*
	*2025*			*2024*
Finished Goods	$	1,698,003		$	1,534,718
Inventory Components		1,046,738			830,469
Inventory Reserve		(82,036	)		-
Inventory prepaid		221,629			159,006
Total Inventory	$	2,884,334		$	2,524,193

Abnormal amounts of idle facility expense, freight, handling costs, scrap and wasted material (spoilage) are expensed in the period they are incurred and no material expenses related to these items occurred in the three or six months ended March 31, 2025.

NOTE 4 – PROPERTY AND EQUIPMENT

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

	*March 31,*			*September 30,*
	*2025*			*2024*
Computers, furniture and equipment	$	1,758,805		$	1,587,411
Manufacturing equipment		284,275			284,275
Leasehold improvements		495,581			487,081
		2,538,661			2,358,767
Less accumulated depreciation		(2,105,869	)		(1,904,499	)
Property and equipment, net	$	432,792		$	454,268

Depreciation expense related to property and equipment was $94,629 and $117,750 for the three months ended March 31, 2025 and 2024, respectively, and was $201,369 and $228,615 for the six months ended March 31, 2025 and 2024, respectively.

NOTE 5 – INTANGIBLE ASSETS

Intangible Assets

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

	*March 31,*			*September 30,*
	*2025*			*2024*
Trademark related to cbdMD	$	21,585,000		$	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 CBD MD limited mark		368,000			368,000
Tradename related to DirectCBDOnline.com		749,567			749,567
Impairment of intangible assets		(17,504,000	)		(17,504,000	)
Amortization of definite lived intangible assets		(3,409,365	)		(3,026,831	)
Total	$	2,507,046		$	2,889,580

Amortization expense related to definite lived intangible assets was $191,267 and $172,842 for the three months ended March 31, 2024 and 2025, respectively, and was $382,534 and $345,684 for the six months ended March 31, 2025 and 2024, respectively.

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NOTE 6 – RELATED PARTY TRANSACTIONS

None.

NOTE 7 – 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 in order to determine the appropriate accounting treatment for the preferred stock and determined that the preferred stock should be treated as equity. There were 5,000,000 shares of 8.0% Series A Cumulative Convertible Preferred Stock issued and outstanding at March 31, 2025 and September 30, 2024.

The total amount of preferred dividends declared and accrued were $1,000,500 and $2,001,001 for both the three and six months ended March 31, 2025, respectively, and the total amount of preferred dividends declared and accrued were $1,000,501 and $2,001,000 for the three and six months ended March 31, 2024. Subsequent to quarter end all preferred stock including all declared and accrued dividends was converted to common stock as further described in Note 15.

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

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

Preferred stock transactions:

The Company had no preferred stock transactions in the three and six months ended March 31, 2025 and 2024.

Common stock transactions:

In the six months ended March 31, 2025:

In March 2025, the Company issued 1,875 shares of restricted stock under the Company's 2015 equity incentive plan to a new employee that vest in 12 months.

During January of 2025, the Company issued 89,964 shares of common stock for conversions of the Notes.

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

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

In the six months ended March 31, 2024:

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

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

Stock option transactions:

There were no stock options granted in the three and six months ended March 31, 2025 and 2024.

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NOTE 8 – STOCK BASED COMPENSATION

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

The following table summarizes stock option activity for the six months ended March 31, 2025:

	*Number of shares*			*Weighted-average exercise price*		*Weighted-average remaining contractual term (in years)*		*Aggregate intrinsic value (in thousands)*
Outstanding at September 30, 2024		5,531		$	989.72		3.14	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		(14	)		82.80		-		-
Outstanding at March 31, 2025		5,517			992.03		2.64		-

Exercisable at March 31, 2025		5,517		$	992.03		2.64	$	-

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

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NOTE 9 - WARRANTS

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

	*Number of shares*			*Weighted-average exercise price*		*Weighted-average remaining contractual term (in years)*		*Aggregate intrinsic value (in thousands)*
Outstanding at September 30, 2024		6,168		$	233.99		3.42	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited		(267	)		1,024.38		-		-
Outstanding at March 31, 2025		5,901			208.75		0.35		-

Exercisable at March 31, 2025		5,901		$	208.75		-	$	-

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

	*Number of shares*		*Weighted-average exercise price*		*Expiration*
Exercisable at $1,346.40 per share		429	$	1,346.40	December 2025
Exercisable at $1,350.00 per share		409		1,350.00	June 2026
Exercisable at $20.16 per share		5,063		20.16	April 2028
		5,901	$	208.75

NOTE 10 – COMMITMENTS AND CONTINGENCIES

None.

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NOTE 11 – NOTE PAYABLE

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

Each Note bears interest of 8% per annum and matures on July 30, 2025. The Note is convertible into shares of common stock at any time following the date of issuance at the Investor’s option at an initial conversion price of $5.472 per share (the “Conversion Price”), subject to certain adjustments. If 30 calendar days, 60 calendar days, 90 calendar days, 120 calendar days, or 180 calendar days after the effective date of a registration statement registering the shares of common stock issuable upon conversion of the Notes (the “Adjustment Dates”), the Conversion Price then in effect is higher than the Market Conversion Price then in effect on the Adjustment Date, the Conversion Price shall automatically decrease to the Market Conversion Price (as defined under the Note). The Conversion Price is subject to a $2.40 floor price.

The Company elected the fair value option under ASC 825 Fair Value Measurements for the Notes. The Notes were initially recognized at a fair value of $2,702,000 on the balance sheet as of March 31, 2023. All subsequent changes in fair value, excluding the impact of the change in fair value related to instrument-specific credit risk are recorded in non-operating income. The changes in fair value related to instrument-specific credit risk is recorded through other comprehensive loss.

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

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NOTE 12 – LEASES

The Company has lease agreements for its warehouse and executive office the lease periods expiring in September 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. The Company’s lease is classified as an operating lease. The Company’s leases does 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 it's lease based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the lease commencement date to determine the present value of future lease payments. The Company’s lease terms may include options to extend or terminate the lease.

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

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

Components of operating lease costs are summarized as follows:

	*Three Months*		*Six Months*
	*Ended*		*Ended*
	*March 31,*		*March 31,*
	*2025*		*2025*
Total Operating Lease Costs	$	180,974	$	330,969

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

	*Three Months*		*Six Months*
	*Ended*		*Ended*
	*March 31,*		*March 31,*
	*2025*		*2025*
Cash paid for amounts included in the measurement of operating lease liabilities	$	132,624	$	199,264

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

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

For the year ended December 31,
2025	$	390,000
2026		798,200
Total future lease payments		1,188,200
Less interest		(43,096	)
Total lease liabilities	$	1,145,104

NOTE 13 – LOSS PER SHARE

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

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NOTE 14 – INCOME TAXES

The Company has a valuation allowance against the net deferred tax assets, with the exception of the deferred tax liabilities that result from indefinite-life intangibles (“naked credits”). The Company has determined that using the general methodology for calculating income taxes during an interim period for the quarters ending December 31, 2019, March 31, 2020, and June 30, 2020, provided for a wide range of potential annual effective rates. At September 30, 2023 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, 2025, the Company determined the same circumstances to be true and therefore recorded a net deferred tax asset of zero.

NOTE 15 – SUBSEQUENT EVENTS

Following shareholder approval at the Company's annual meeting held on April 10, 2025 for an amendment to the Company’s Series A Preferred Stock designation to amend the Company’s articles of incorporation to provide for the automatic conversion of all of the Company’s issued and outstanding shares of Series A Preferred Stock ("Preferred Stock") at a ratio of one share of Preferred Stock to 13 shares of Common stock, the Board of Directors elected to effectuate the automatic conversion (the ”Automatic Preferred Conversion”), which provides for the conversion of each share of Preferred Stock into thirteen shares of Common Stock, inclusive of all accumulated and unpaid dividends on May 6, 2025 at 4:01 p.m. Eastern Time (the “Mandatory Exchange Date”). Dividends on converted shares ceased to accrue on the Mandatory Exchange Date and the Preferred Stock ceased trading on the Mandatory Exchange Date. Shareholders who held Preferred Stock electronically in book-entry form did not need to take action (the Conversion was automatic) to receive shares of Common Stock on the Mandatory Exchange Date. Following the Mandatory Exchange Date there are no shares of Preferred Stock issued or outstanding.

In addition, following shareholder approval at the Company's annual meeting held on April 10, 2025 for the amendment to the Company's articles of incorporation to implement a reverse stock split, the Company announced one April 17, 2025 that its Board of Directors approved a ratio of one-for-eight reverse stock split of the Company's issued and outstanding shares of Common Stock. The Company's shareholders previously approved the reverse stock split at the Company's annual meeting and granted the board the authority to determine a final reverse split ratio. The reverse stock split was effective at 4:02 p.m. Eastern Time on May 6, 2025 immediately following the Automatic Preferred Conversion, following the filing and effectiveness of an amendment to the Company's articles of incorporation, as amended, with the Common Stock trading on a post-split basis when the market opened on the May 7, 2025. The Company's Common Stock continues to trade on the NYSE American under the existing trading symbol “YCBD” with a new CUSIP number 12482W 408.

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

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operations for the three and six months ended March 31, 2025 and the three and six months ended March 31, 2024 should be read in conjunction with the unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties such as our plans, objectives, expectations and intentions.

Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements because of several factors, including those set forth under the Part I, Item 1A, Risk Factors and Business sections in our 2024 10-K, this report, and our other filings with the Securities and Exchange Commission. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this report.

Our Company

General

We own and operate the nationally recognized CBD (cannabidiol) brands cbdMD, Paw CBD and functional mushroom brand ATRx Labs. We believe that we are an industry leader producing and distributing hemp derived solutions including broad spectrum CBD products and full spectrum CBD products. Our mission is to enhance our customer’s overall quality of life while bringing cannabinoid and mushroom education, awareness and accessibility of high quality and effective products to all. We source cannabinoids, including CBD, which are extracted from non-GMO hemp grown on farms in the United States. Our innovative broad spectrum formula utilizes one of the purest hemp extracts, containing CBD, CBG and CBN, while eliminating the presence of tetrahydrocannabinol (THC). Non-THC is defined as below the level of detection using validated scientific analytical methods. Our full spectrum and Delta 9 products contain a variety of cannabinoids and terpenes in addition to CBD while maintaining small amounts of THC that fall below the level of detection and are within the limits set in the 2018 Farm Act. In addition to our core brands, we also operate (1) cbdMD Therapeutics to capture the Company’s ongoing investments in science related to its existing and future products, including research and development activities for therapeutic applications and (2) Proline Global which houses some of our newer brands.

Our cbdMD brand of products includes an array of high-grade, premium every day and functional CBD products, including tinctures; gummies; topicals; capsules; and sleep, focus and calming aids. In addition, we have clinical based claims and industry leading strength and concentrations to drive product efficacy.

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Our Paw CBD brand of products includes veterinarian-formulated products including tinctures, chews, topicals products in varying strengths and formulas. Paw CBD products have undergone the National Animal Safety Council’s rigorous audit and meet their Quality Seal standard.

Our ATRx brand was developed using the power of functional mushrooms to provide consumers a complementary natural ingredient solution for immunity, focus, digestive health, and cognitive and mood benefits.

Herbal Oasis (“Oasis”) is a premium THC-infused social seltzer that blends cannabinoids and nootropic mushrooms to deliver a fast-acting, functional beverage made for presence and connection.

cbdMD, Paw CBD, Oasis, and ATRx products are distributed through our e-commerce websites, third party e-commerce sites, select distributors and marketing partners as well as a variety of brick-and-mortar retailers.

Recent Developments

Management continues to be very focused on our goal of delivering positive earnings through a combination of optimizing our product portfolio, right-sizing our cost structure and investing in marketing that will provide positive return on customer acquisition. During fiscal 2024 we made sweeping changes that have had a very positive impact to the business. The first quarter of fiscal 2025 was the first quarter in the Company’s history as a public company that revenues increased from a prior sequential quarter, the Company achieved Non GAAP Net Income (before the preferred dividend accrual) and the Company achieved positive EBITDA on a Non GAAP basis.

While we aimed to maintain our revenue levels during the second fiscal quarter, we experienced a decline driven by several identifiable factors. Our top priority for the quarter was securing shareholder approval to amend our articles of incorporation and convert the Series A Preferred stock. This strategic move was essential to improving stockholders’ equity, regaining compliance with NYSE American continued listing standards, and preserving our Common Stock listing on the NYSE American. We were successful in obtaining shareholder approval to convert our Series A Preferred Stock; however, the process required significant management attention and temporarily diverted focus from core business operations.

In parallel, we identified and addressed weaknesses within our marketing team, which led to the implementation of leadership changes late in the quarter to strengthen customer acquisition efforts and restore profitability momentum. Additionally, our conservative cash management led to inventory levels dropping below optimal thresholds. Coupled with delays in product testing, this resulted in intermittent stock shortages across several SKUs. To correct this, we have since increased inventory investments to ensure better product availability and to support revenue recovery moving forward.

In the first fiscal quarter, cbdMD entered into the booming beverage market, of which Euromonitor International estimates sales of hemp-derived THC beverages more than doubled in 2024 and are projected to balloon to $4.1 billion by 2028, with the launch of our hemp-derived, ready-to-drink Oasis line — a category we believe is the fastest-growing segment in the hemp industry today. Momentum continued in the second quarter as Oasis secured distribution through leading alcohol distributors across Alabama, Florida, Georgia, and North Carolina. Consumer response has been positive, and in April 2025, Oasis captured multiple medals at the prestigious 2025 LA Spirits Awards, signaling strong acceptance.

We remain focused on growing the Company in a smart, profitable manner along with appropriate cost controls.

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Growth Strategies

We continued to pursue many strategies to grow our revenues and expand the scope of our business in fiscal 2025 and beyond:

●

Product Innovation: Our goal is to provide our customers superior functional based products with greater efficacy claims and absorption. We constantly assess and evaluate our product portfolio, and devote resources to ongoing research and development processes with the goal of improving our product offerings. During the first quarter of fiscal 2025, we launched reformulations on several sleep products to enhance their effectiveness and improve taste. In addition, we launched ready-to-drink beverage product under our new Oasis brand. We have a pipeline of cannabinoid and non-cannabinoid products and formulation upgrades that are in the queue for ongoing innovation and product portfolio improvement.

●

Expand our revenue channels: We continued to pursue relationships with traditional retail accounts and distributors and believe our top brand awareness and effective marketing position us as a preferred CBD partner for key traditional retail accounts as this channel has continued to normalize. During the first quarter of fiscal 2024 we launched several SKUs into Sprouts retail footprint. In April 2024, we added Door Dash as a customer. We expanded our ATRx Labs product in GNC during 2024. In 2025, we began developing relationships with beer and alcohol distributors for our Oasis beverage line and have added several large beer distributors to support our brand.

●

International Expansion: We continue to explore sales in markets outside of the United States. We generally partner with local wholesalers and local legal counsel who can help navigate the laws and regulatory requirements within their jurisdiction. We continue to pursue key wholesale accounts in a number of international markets and are gaining market share in Central and South America through our sanitary registration approvals. We are also continuing to expand our E-commerce business to consumers in the United Kingdom (UK) which was expanded onto Amazon’s platform during fiscal year 2023 and are continuing to grow this channel quarterly.

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Cultivate Additional Brands: We continue to operate and attempt to grow the Paw CBD business. During fiscal 2024 we launched our nootropic mushroom line under the ATRx brand. During the first quarter of fiscal 2025 we launched a new line of hemp derived and nootropic beverages under the Oasis brand. We believe there are ongoing opportunities with these brands to focus on education, cross-selling and customer retention.

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Acquisitions: We evaluate acquisitions (M&A) where we believe (i) there is an accretive customer base that can lower our cost of customer acquisitions through either a complementary direct to consumer base or wholesale channels, or (ii) the target has a profitable business or easily attainable cost synergies that can quickly help contribute and accelerate profitability of our Company. While the Company continues to evaluate M&A opportunities, as of the date of this report we currently do not have any pending or potential acquisitions. Eliminating the Series A Preferred Stock (including the cumulative dividends and other rights and preferences of the Series A Preferred Stock) has increased the volume of opportunities we are receiving from third parties.

Results of operations

The following tables provide certain selected consolidated financial information for the periods presented:

	Three Months Ended March 31,
	2025			2024			Change
Total net sales	$	4,749,426		$	4,376,518		$	372,908
Cost of sales		1,790,062			1,795,790			(5,728	)
Gross profit as a percentage of net sales		62.3	%		59.0	%		3.3	%
Operating expenses		3,445,180			4,131,719			(686,539	)
Operating loss from operations		(485,816	)		(1,550,991	)		1,065,175
Decrease on contingent liability		-			4,828			(4,828	)
Net loss before taxes		(480,757	)		(3,010,562	)		2,529,805
Net loss attributable to cbdMD Inc. common shareholders	$	(1,481,257	)	$	(4,011,062	)	$	2,529,805

	Six Months Ended March 31,
	2025			2024			Change
Total net sales	$	9,862,902		$	9,751,923		$	110,979
Cost of sales		3,502,929			3,613,698			(110,769	)
Gross profit as a percentage of net sales		64.5	%		62.9	%		1.5	%
Operating expenses		6,932,061			8,755,053			(1,822,992	)
Operating loss from operations		(572,088	)		(2,616,828	)		2,044,740
Decrease on contingent liability		-			74,580			(74,580	)
Net loss before taxes		(465,662	)		(4,007,065	)		3,541,403
Net loss attributable to cbdMD Inc. common shareholders	$	(2,466,663	)	$	(6,008,065	)	$	3,541,402

We record product sales primarily through two main delivery channels, direct to consumers via our E-commerce sales and direct to wholesalers utilizing our internal sales team. The following table provides information on the contribution of net sales by type of sale to our total net sales.

	Three Months Ended March 31,
	2025		% of total			2024		% of total
E-commerce sales	$	3,634,793		76.5	%	$	3,625,719		82.8	%
Wholesale sales		1,114,633		23.5	%	$	750,799		17.2	%
Total Net Sales	$	4,749,426				$	4,376,518

	Six Months Ended March 31, 2025
	2025		% of total			2024		% of total
E-commerce sales	$	7,587,523		76.9	%	$	8,049,724		82.5	%
Wholesale sales	$	2,275,379		23.1	%		1,702,199		17.5	%
Total Net Sales	$	9,862,902				$	9,751,923

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Net Sales

We had total net sales of $4.7 million and $4.4 million for the three months ended March 31, 2025 and 2024, respectively, resulting in an increase in net sales of $0.3 million or 9% quarter over quarter. This increase is partially attributable to a year over year $0.36 million increase in wholesale sales as a result of an allowance provided in 2024 to a large customer. Sequentially, revenue declined by 7%. For the six months ended March 31, 2025, revenues were up over 1%. Our team continues to focus on all areas of driving revenue improvement. Despite the overall category facing challenges, we remain optimistic about our market positioning in fiscal 2025.

Cost of sales

Our cost of sales includes costs associated with distribution, fill and labor expense, components, manufacturing overhead, third party providers, and freight for our product sales. Our cost of sales as a percentage of net sales was 37.7% and 41.0% for three months ended March 31, 2025 and 2024, respectively. This slight decrease in cost of sales is mostly attributed to the credit provided to one of our customers during 2024 and offset by an increase in warehouse rent and rent related costs that began impacting the Company at the end of November 2024.

Operating expenses

Our principal operating expenses include staff related expenses, advertising (which includes expenses related to industry distribution and trade shows), sponsorships, affiliate commissions, merchant fees, technology, travel, rent, professional service fees, and business insurance expenses.

Consolidated Operating Expenses

The following tables provide information on our operating expenses for the three and six months ended March 31, 2025 and 2024:

	Three Months Ended March 31,
	2025		2024		Change
Staff related expense	$	1,247,439	$	1,384,558	$	(137,119	)
Accounting/legal expense/professional outside services		287,002		427,630		(140,628	)
Marketing/Advertising		1,124,246		979,625		144,621
Merchant fees		135,499		167,228		(31,729	)
R&D and regulatory		6,323		2,097		4,226
Rent and utilities		224,264		407,895		(183,631	)
Non-cash stock compensation		1,934		11,944		(10,010	)
Intangibles Amortization		191,267		172,842		18,425
Depreciation		94,629		117,750		(23,121	)
All other expenses		132,577		460,150		(327,573	)
Totals	$	3,445,180	$	4,131,719	$	(686,539	)

	Six Months Ended March 31,
	2025		2024		Change
Staff related expense	$	2,489,318	$	2,771,424	$	(282,106	)
Accounting/legal expense/professional outside services		632,413		880,854		(248,441	)
Marketing/Advertising		2,125,487		2,372,620		(247,133	)
Merchant fees		284,138		343,103		(58,965	)
R&D and regulatory		9,269		6,726		2,543
Rent and utilities		363,509		803,206		(439,697	)
Non-cash stock compensation		5,016		28,486		(23,470	)
Intangibles Amortization		382,534		345,684		36,850
Depreciation		201,369		228,615		(27,246	)
All other expenses		439,008		974,335		(535,327	)
Totals	$	6,932,061	$	8,755,053	$	(1,822,992	)

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Our overall operating expenses decreased by approximately $0.7 million or 17% for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. For the six months ended March 31, 2025 operating expenses decreased $1.8 million. The year over year decrease was primarily driven by management's continued ongoing efforts to reduce our cost structure including rental related decreases as our HQ office was eliminated as well as reduction in professional, accounting and legal expenses. Our team continues to pursue cost saving initiatives, however after significant progress in 2023 and 2024, larger saving opportunities are harder to identify and implement. We are closely watching marketing expenses and working to improve spend efficiency with the goal of positively impacting (increasing) revenues.

Liquidity and Capital Resources

We had cash and cash equivalents on hand of approximately $1.8 million and a working capital deficit of $3.7 million. Our working capital is reduced by approximately $6.7 million of accrued dividend payments as of March 31, 2025. At September 30, 2024 we had cash and cash equivalents of $2.4 million and working capital of negative $1.1 million. As of September 30, 2024, our working capital was reduced by approximately $4.7 million for accrued dividends payments. Excluding the accrued dividend payments, we had adjusted working capital of $3.3 million as of March 31, 2025 and $2.4 million as of September 30, 2024.

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We do not have any commitments for material capital expenditures. We no longer have a commitment for cumulative dividends at an annual rate of 8% payable monthly in arrears to our preferred shareholders. As of August 2023, we suspended paying the dividend in cash and are accruing this dividend on a monthly basis. On April 10, 2025, shareholders approved the conversion of each share of Series A Preferred Stock into 13 shares of Common Stock, which was effective on May 6, 2025.

While the Company is taking strong action and believes that it can execute its strategy and path to profitability, and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s working capital position may not be sufficient to support the Company’s daily operations for the twelve months subsequent to the filing of this quarterly report. The Company’s ability to continue as a going concern is dependent upon its ability to improve profitability and cash flow and the ability to acquire additional funding. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that these financial statements are issued. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.

On December 31, 2024, we received notification (the “Notice”) from the NYSE American that the Company is no longer in compliance with an additional NYSE American continued listing standard. Specifically, the letter states that the Company is not in compliance with the continued listing standard set forth in Section 1003(a)(i) of the NYSE American Company Guide (the “Company Guide”). Section 1003(a)(i) requires a listed company to have stockholders’ equity of $2.0 million or more if the listed company has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years then ended. The Company reported stockholders equity of $1.9 million as of September 30, 2024, and losses from continuing operations and/or net losses in four of its five most recent fiscal years then ended. The Notice further provided that the Company remains subject to the conditions set forth in the NYSE American’s initial non compliance notification dated June 5, 2024 and its compliance plan that was accepted by the NYSE American on August 20, 2024 for noncompliance under Section 1003(a)(ii) of the Company Guide due to stockholders’ equity under $4.0 million which addressed how the Company intends to regain compliance with the continued listing standards by December 5, 2025 (the “Plan”). If the Company is not in compliance with the continued listing standards by December 5, 2025 or if the Company does not make progress consistent with the Plan during the Plan period, the Company will be subject to delisting procedures as set forth in the Company Guide.

As previously disclosed, following the period covered by this report, all outstanding shares of Series A Preferred Stock were converted to Common Stock on May 6, 2025 and all accrued dividends were eliminated. As part of this conversion, $6.7 million of accrued and future dividends as of March 31, 2025 were converted to equity upon the Series A Preferred conversion which we believe will bring us into compliance with the NYSE American’s continued listing standards within the Plan period, assuming we maintain the continued listing standards for two quarters.

While the Notice has no immediate impact on the listing of the Company’s shares of common stock which will continue to be listed and traded on the NYSE American during this period, subject to the Company’s compliance with the other listing requirements of the NYSE American, if the Common Stock ultimately were to be delisted for any reason, it could negatively impact the Company by (i) reducing the liquidity and market price of the Company’s Common Stock; (ii) reducing the number of investors willing to hold or acquire the Common Stock, which could negatively impact the Company’s ability to raise equity financing; and (iii) limiting the Company’s ability to use a registration statement to offer and sell freely tradable securities, thereby preventing the Company from accessing the public capital markets.

Our goal from a liquidity perspective is to use operating cash flows to fund day to day operations. We comply with NYSE American continued listing standards. We remain focused on improving the Company’s operating performance and continue to focus on profitability, and growing the Company in order to strengthen its balance sheet.

Adjusted EBITDA

To supplement the Company's unaudited interim consolidated financial statements presented in accordance with US GAAP, the Company uses certain non-GAAP measures of financial performance. Non-GAAP financial measures are not prepared in accordance with, or as an alternative to US GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company's performance that either excludes or includes amounts, or is subject to adjustment that have such an effect, that are not normally excluded or included in the most directly comparable financial measure that is calculated and presented in accordance with US GAAP. Adjusted EBITDA as presented below is a non-GAAP measure.

cbdMD defines Adjusted EBITDA as Earnings Before Interest, Taxes, Depreciation and Amortization excluding stock based compensation and mergers and acquisitions and financing transaction expenses.

Our management uses and relies on Adjusted EBITDA, which is a non-GAAP financial measure. We believe that management, analysts and shareholders benefit from referring to the following non-GAAP financial measure to evaluate and assess our core operating results from period-to-period after removing the impact of items that affect comparability. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the excluded items described below.

We have included a reconciliation of our non-GAAP financial measure to the most comparable financial measures calculated in accordance with GAAP. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between cbdMD and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable rules of the Securities and Exchange Commission.

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Adjusted EBITDA for the three and six months ended March 31, 2025 and March 31, 2024 is as follows:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2025			2024			2025			2024
(Unaudited)

GAAP (loss) from operations	$	(485,816	)	$	(1,550,991	)	$	(572,088	)	$	(2,616,828	)
Adjustments:
Depreciation & Amortization		285,896			290,592			583,903			574,299
Employee and director stock compensation (1)		1,934			11,944			5,016			28,486
Mergers and Acquisitions and financing transaction expense (2)		-			58,239			-			125,838
Non-cash expense incurred as a credit (3)		-			439,926			-			439,926
Non-cash accelerated amortization of expense related to terminated IT contracts		-			72,101			-			72,101
Non-GAAP adjusted EBITDA	$	(197,986	)	$	(678,189	)	$	16,831		$	(1,376,178	)

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

(2) Represents expenses incurred in relation to M&A and financing activities during the three and six months ended March 31, 2024.

(3) Represents non-cash expense incurred as a credit provided to GNC to replace expired product.

Critical accounting policies

The preparation of financial statements and related disclosures in conformity with US GAAP and our discussion and analysis of our financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Note 1, “Organization and Summary of Significant Accounting Policies,” of the Notes to our consolidated financial statements appearing elsewhere in this report describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

Please see Part II, Item 7 – Critical Accounting Policies appearing in our 2024 10-K for the critical accounting policies we believe involve the more significant judgments and estimates used in the preparation of our consolidated financial statements and are the most critical to aid you in fully understanding and evaluating our reported financial results. Management considers these policies critical because they are both important to the portrayal of our financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.

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Recent accounting pronouncements

Please see Note 1 – Organization and Summary of Significant Accounting Policies appearing in the condensed consolidated financial statements included in this report for information on accounting pronouncements.

Off balance sheet arrangements

As of the date of this report, we have no undisclosed off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable for a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluation as of the end of the period covered by this report, our principal executive officer and principal accounting officer has concluded that our disclosure controls and procedures were effective to ensure that the information relating to our company, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our principal executive officer and principal accounting officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Accordingly, in addition to the disclosure below, we incorporate by reference the risk factors disclosed in Part I, Item 1A of our 2024 10-K. See also “Liquidity and Capital Resources” above.

Tariffs on imported packaging materials could increase our costs and negatively affect our business, results of operations, and financial condition.

While our raw materials and products are produced in the U.S., we rely on certain packaging materials for our products that are sourced from U.S. and foreign suppliers. In March and April 2025, the Trump Administration announced a series of additional special tariffs, some of which have been temporarily paused. The additional special tariffs already in effect as of the date of this report are tariffs of 10% on most products from all countries worldwide. Although we believe we have alternative U.S. sources for our packaging materials, as a result of the increases in the U.S. tariffs, we may experience higher costs that we may not be able to pass on to consumers, which could result in the loss of customers, harm to our operating performance, and a negative impact on our profit margins. Additionally, the imposition of tariffs could disrupt our supply chain, result in delays or shortages of packaging materials, or require us to seek alternative suppliers at potentially higher costs. The increase or continued imposition of tariffs, potential trade restrictions between countries as a result of tariffs, and similar constraints could result in a material adverse effect on our business, operations, and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Except for those unregistered securities previously disclosed in reports filed with the SEC, we have not sold any securities without registration under the Securities Act during the period covered by this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable to our Company’s operations.

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ITEM 5. OTHER INFORMATION.

The Auditor Firm ID for our external auditors, Cherry Bekaert LLP, is 677.

ITEM 6. EXHIBITS.

		Incorporated by Reference			Filed or Furnished
No.	Exhibit Description	Form	Date Filed	Number	Herewith
2.1	Merger Agreement dated December 3, 2018 by and among Level Brands, Inc., AcqCo, LLC, cbdMD LLC and Cure Based Development, LLC	8-K	12/3/18	2.1

2.2	Articles of Merger dated December 20, 2018 as filed with the Secretary of State of Nevada merging AcqCo, LLC with and into Cure Based Development, LLC	10-Q	2/14/19	2.2

2.3	Articles of Merger dated December 20, 2018 as filed with the Secretary of State of North Carolina merging AcqCo, LLC with and into Cure Based Development, LLC	10-Q	2/14/19	2.3

2.4	Articles of Merger dated December 20, 2018 as filed with the Secretary of State of Nevada merging Cure Based Development, LLC with an into cbdMD LLC	10-Q	2/14/19	2.4

2.5	Articles of Merger dated December 20, 2018 as filed with the Secretary of State of North Carolina merging Cure Based Development, LLC with an into cbdMD LLC	10-Q	2/14/19	2.5

2.6	Addendum No. 1 to Agreement and Plan of Merger dated March 31, 2021	8-K	4/1/21	10.1

3.1	Articles of Incorporation	1-A	9/18/17	2.1

3.2	Articles of Amendment to the Articles of Incorporation – filed April 22, 2015	1-A	9/18/17	2.2

3.3	Articles of Amendment to the Articles of Incorporation – filed June 22, 2015	1-A	9/18/17	2.3

3.4	Articles of Amendment to the Articles of Incorporation – filed November 17, 2016	1-A	9/18/17	2.4

3.5	Articles of Amendment to the Articles of Incorporation – filed December 5, 2016	1-A	9/18/17	2.5

3.6	Articles of Amendment to Articles of Incorporation	8-K	4/29/19	3.7

3.7	Articles of Amendment to the Articles of Incorporation including the Certificate of Designations, Rights and Preferences of the 8.0% Series A Cumulative Convertible Preferred Stock	8-A	10/11/19	3.1(f)

3.8	Articles of Amendment of Articles of Incorporation, as amended, of cbdMD, Inc. effective April 24, 2023 - reverse stock split	8-K	4/27/23	3.1

3.9	Articles of Amendment Automatic Conversion of Preferred Stock effective May 6, 2025	8-K	5/7/25	3.1

3.10	Articles of Amendment to the Articles of Incorporation 8 to 1 reverse split effective May 6, 2025	8-K	5/7/25	3.2

3.11	Bylaws, As amended	1-A	9/18/17	2.6

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31.1	Certification of Principal Executive Officer and Principal Financial Officer (Section 302)	Filed

32.1	Certification of Principal Executive Officer and Principal Financial Officer (Section 906)	Furnished*

101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	Filed
101.SCH	Inline XBRL Taxonomy Extension Schema Document	Filed
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	Filed
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	Filed
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed
104	Cover Page Interactive Data File (embedded within the Inline XBRL Document and include in Exhibit 101)	Filed

+ Exhibits and/or schedules have been omitted. The Company hereby agrees to furnish to the staff of the Securities and Exchange Commission upon request any omitted information.

* This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our stockholders who make a written request to our Corporate Secretary at cbdMD, Inc. 2101 Westinghouse Blvd, Suite A, Charlotte, NC 28273.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf signed on the registrant’s behalf by a duly authorized officer of the registrant and by the principal financial or chief accounting officer of the registrant.

	cbdMD, INC.



May 15, 2025	By:	/s/ T. Ronan Kennedy
		T. Ronan Kennedy, Chief Executive Officer and principal executive officer


May 15, 2025	By:	/s/ T. Ronan Kennedy
		T. Ronan Kennedy, Chief Financial Officer and principal financial officer

May 15, 2025		/s/ Brad Whitford
		Brad Whitford, Chief Accounting Officer