Business Context and Reporting Period
Company: cbdMD, Inc. (formerly Level Brands, Inc.)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three months ended December 31, 2025 (First Quarter of Fiscal 2026)
Business Overview: cbdMD operates nationally recognized CBD brands including cbdMD, Paw CBD, and Bluebird Botanicals (acquired January 2026), as well as functional mushroom brand ATRx Labs and THC beverage brand Herbal Oasis. The company sources hemp-derived cannabinoids and distributes products via e-commerce and wholesale channels.
Key Financial Metrics
| Metric | Q1 2026 (Ended Dec 31, 2025) | Q1 2025 (Ended Dec 31, 2024) |
|---|---|---|
| Total Net Sales | $5,016,904 | $5,113,476 |
| Gross Profit | $3,001,294 | $3,400,609 |
| Gross Margin | 59.8% | 66.5% |
| Operating Loss | $(286,288) | $(86,272) |
| Net Loss | $(283,131) | $15,095 (Income) |
| Net Loss Attributable to Common Shareholders | $(324,602) | $(985,406) |
| Cash and Cash Equivalents (End of Period) | $3,387,933 | $1,970,217 |
| Working Capital | $5,391,274 | Filing text does not provide a clear value |
| Accumulated Deficit | $(179,759,753) | $(183,053,304) |
Cash Flow Summary: Net cash used in operating activities was $(812,464). Net cash provided by financing activities was $2,103,957, primarily from the issuance of Series C Preferred Stock. Net cash used in investing activities was $(164,802) for property and equipment purchases.
Material Changes vs. Prior Period
- Revenue: Net sales decreased by 1.9% ($96,572) compared to the prior year quarter, driven by lower direct-to-consumer sales and holiday promotions, partially offset by growth in wholesale sales.
- Profitability: Gross margin declined from 66.5% to 59.8% due to increased warehouse lease costs, lower overhead absorption, regulatory packaging reworks, and a shift in revenue mix toward wholesale.
- Operating Expenses: Total operating expenses decreased by 5.7% ($199,299) due to savings in professional services and other expenses, despite increases in marketing spend and rent/utilities.
- Capital Structure: The company raised approximately $2.25 million in gross proceeds via Series C Preferred Stock issuance in December 2025. Additionally, 1,108,790 shares of Series B Preferred Stock were converted to common stock during the quarter.
Outlook, Risks, and Management Commentary
Management Commentary:
- Acquisition: In January 2026, the company acquired Bluebird Botanicals for 425,000 shares of restricted common stock plus an earnout of up to 525,000 shares. Management expects this to add over $0.5 million in quarterly revenue once integrated.
- Legislative Risk: The "Continuing Appropriations... Act" signed in November 2025 limits THC content to 0.4mg per container effective November 2026. Management warns this could materially adversely impact the business if not amended, as a meaningful portion of revenue comes from products containing low-dose THC.
- Liquidity: The company maintains an Equity Line of Credit (ELOC) with C/M Capital Master Fund, LP, allowing for up to $20 million in sales of common stock. Management notes that while they believe in their path to profitability, there is substantial doubt about their ability to continue as a going concern for the next 12 months without additional funding or improved profitability.
Risks and Contingencies:
- Going Concern: The company has an accumulated deficit of approximately $179.8 million and reported a net loss for the quarter. Continued losses raise substantial doubt about the ability to continue as a going concern.
- Regulatory Environment: Ongoing changes in federal and state laws regarding hemp-derived cannabinoids and THC limits pose significant operational risks.
- Listing Compliance: The company previously faced non-compliance with NYSE American listing standards regarding stockholders' equity but resolved deficiencies as of December 2025.
Key Facts for Investor Verification
- Going Concern Status: Verify the company's ability to secure additional capital or achieve profitability within 12 months to avoid insolvency risks.
- Legislative Impact: Monitor the status of the "Continuing Appropriations... Act" and potential amendments (e.g., CSRA or HEMP Act) that could alter THC limits and impact revenue streams.
- Preferred Stock Dilution: Review the terms of Series B and Series C Preferred Stock, including conversion prices (Series C adjusted to $1.13 in Feb 2026) and dividend accruals, to assess potential dilution to common shareholders.
- Bluebird Integration: Track the integration progress of the Bluebird Botanicals acquisition to validate the projected $0.5 million quarterly revenue contribution.
- ELOC Utilization: Monitor the utilization of the $20 million Equity Line of Credit and the associated registration statement effectiveness.