Business Context and Reporting Period
Company: cbdMD, Inc. (NYSE American: YCBD)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal Year ended September 30, 2025
Business Overview: cbdMD is a consumer wellness company focused on hemp-derived cannabinoids (CBD, Delta-9 THC), functional mushrooms (ATRx), and beverages (Herbal Oasis). The company operates through direct-to-consumer e-commerce and wholesale channels. It is a smaller reporting company and non-accelerated filer.
Key Financial Metrics
| Metric | Fiscal 2025 | Fiscal 2024 | Change |
|---|---|---|---|
| Total Net Sales | $19.19 million | $19.48 million | (1.5%) |
| Gross Profit | $11.97 million | $12.00 million | (0.2%) |
| Gross Margin | 62.4% | 61.6% | +0.8% |
| Operating Loss | $(2.16) million | $(3.32) million | Improvement of $1.16M |
| Net Loss | $(2.04) million | $(3.70) million | Improvement of $1.66M |
| Cash and Equivalents (End of Period) | $2.26 million | $2.45 million | $(0.19) million |
| Working Capital | $3.1 million | $(1.1) million deficit | Significant Improvement |
| Operating Cash Flow | $(1.45) million | $(0.35) million | Worsened |
Revenue Mix (Fiscal 2025): E-commerce accounted for 76.7% ($14.71M) and Wholesale for 23.3% ($4.48M).
Debt: The company repaid its convertible notes in full during the second quarter of fiscal 2025. As of September 30, 2025, there were no outstanding convertible notes.
Material Changes vs. Prior Period
- Loss Reduction: GAAP operating loss decreased by 35% (from $3.32M to $2.16M) due to disciplined cost control, including a $0.5M reduction in payroll and $0.6M reduction in rent expenses following the elimination of former executive offices.
- Capital Structure Simplification: In May 2025, the company executed a 1-for-8 reverse stock split and converted all Series A Preferred Stock and accrued dividends into common stock. This action restored compliance with NYSE American listing standards.
- Revenue Stabilization: While full-year revenue declined slightly, the fourth quarter of fiscal 2025 showed a 4% year-over-year increase, driven by growth in wholesale channels and the new Oasis beverage brand.
- Inventory Management: Inventory write-downs decreased significantly from $0.92M in fiscal 2024 to $0.37M in fiscal 2025.
Outlook, Risks, and Contingencies
Management Commentary and Guidance
Management expects trends from late 2025 to continue into fiscal 2026, citing momentum in direct-to-consumer and wholesale channels. The company identified approximately $200,000 in corporate overhead savings to be implemented in early 2026. The Oasis beverage brand continues to expand distribution but remains a P&L drag due to scaling investments.
Material Risks
- Going Concern: The company has a history of losses and an accumulated deficit of approximately $179 million. The auditor has raised substantial doubt about the company's ability to continue as a going concern within twelve months without additional funding or improved profitability.
- Regulatory Threat: H.R. 5371, signed into law in November 2025, limits THC content in hemp-derived consumables to 0.4mg per container effective November 12, 2026. This poses a significant threat to approximately 40-45% of the company's revenue derived from full-spectrum SKUs.
- Liquidity: Working capital is currently positive ($3.1M), but the company may need to raise additional capital to fund operations if revenue growth does not offset operating expenses.
Subsequent Events (Post-Sept 30, 2025)
- ELOC Agreement: Entered into a $10 million equity line of credit with C/M Capital Master Fund, LP (Dec 15, 2025).
- Series C Preferred: Issued 1 million shares of Series C Convertible Preferred Stock for $2.25 million gross proceeds (Dec 18, 2025).
Investor Verification Checklist
- Regulatory Impact: Verify the final implementation details of H.R. 5371 and the potential impact on the 40-45% of revenue from full-spectrum THC products.
- Liquidity Runway: Assess the sufficiency of the $2.26M cash balance and recent $2.25M Series C proceeds against the $1.45M operating cash burn rate.
- Listing Compliance: Confirm continued compliance with NYSE American standards following the Series A conversion and reverse split.
- Oasis Brand Economics: Monitor the timeline for the Oasis beverage brand to reach profitability and reduce its current drag on earnings.
- Debt Obligations: Review the terms of the new Series C Preferred Stock (10% dividend rate) and the ELOC agreement for potential dilution or cash flow impacts.