Business Context and Reporting Period
Company: cbdMD, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: June 22, 2022
Reporting Period: Event date June 22, 2022
cbdMD, Inc. is an emerging growth company incorporated in North Carolina. The company's common stock (YCBD) and 8.0% Series A Cumulative Convertible Preferred Stock (YCBD PR A) are registered on the NYSE American.
Key Financial Metrics
This filing reports a specific transaction rather than periodic financial performance. Consequently, the filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity metrics for the reporting period.
Transaction Value: $1,000,000 (Purchase price for the sale of Membership Interests).
Material Changes
The primary material change reported is the entry into a Membership Interest Transfer Agreement effective June 22, 2022.
- Asset Sale: cbdMD, Inc. agreed to sell its entire ownership interest in Adara Sponsor, LLC ("Adara") to Blystone & Donaldson, LLC, and Mr. Thomas Finke.
- Consideration: The total purchase price is $1,000,000, which equals the Company's original purchase price for the Membership Interests.
- Condition Precedent: The completion of the agreement is conditioned on Adara Acquisition Corp. completing an initial business combination with Alliance Entertainment, Inc. on or before February 8, 2023.
Guidance, Outlook, and Risks
Management Commentary: The filing indicates that the full text of the Membership Interest Transfer Agreement will be filed with the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2022, or via an amendment to this Current Report.
Risks and Contingencies: The transaction is contingent upon a third-party event (the business combination between Adara Acquisition Corp. and Alliance Entertainment, Inc.). If this combination is not completed by February 8, 2023, the sale of the Membership Interests may not close.
Investor Verification Checklist
- Verify the status of the business combination between Adara Acquisition Corp. and Alliance Entertainment, Inc. to determine if the sale of Adara Sponsor, LLC will close.
- Review the upcoming Form 10-Q for the quarter ended June 30, 2022, for the full text of the Membership Interest Transfer Agreement.
- Confirm whether the $1,000,000 transaction price results in any gain or loss recognition for cbdMD, Inc. upon closing.