cbdMD, Inc. Announces Shareholder Approval of Automatic Conversion of Series A Preferred Stock and Other Results from Annual Meeting

Rhea-AI Summary

cbdMD (NYSE: YCBD) announced shareholder approval for the automatic conversion of its Series A Preferred Stock into Common Stock at its April 10, 2025 annual meeting. The conversion will transform each preferred share into thirteen common shares, eliminating approximately $6.7 million in accrued dividend payments and $4 million in annual dividend obligations.

The company also secured shareholder approval for:

• Election of seven directors for the 2026 term
• Appointment of Cherry Bekaert LLP as independent auditor
• Authorization for a potential reverse stock split ranging from 1:3 to 1:10 within one year

CEO Ronan Kennedy stated this conversion will enhance their capital structure, enable reinvestment in growth initiatives, and support continued NYSE American listing requirements while removing barriers to strategic M&A activities.

Positive

• Elimination of $6.7M in accrued dividend payments
• Savings of $4M in annual dividend obligations
• Improved capital structure for potential M&A activities
• Strengthened balance sheet for NYSE American listing compliance

Negative

• Potential dilution from preferred stock conversion to common shares
• Possible reverse stock split indicating share price concerns

Insights

Financial Restructuring Analyst

cbdMD's shareholder approval for automatic preferred stock conversion represents a significant financial restructuring with substantial positive implications for the company's balance sheet. The elimination of $6.7 million in accrued dividend payments and $4 million in annual dividend obligations will dramatically improve cash flow flexibility for a company with a market cap of only $1.6 million.

This conversion effectively recapitalizes the business by shifting from a dividend-burdened preferred structure to an all-common equity base. While this will create dilution for existing common shareholders (at 13 common shares per preferred share), the trade-off appears highly favorable given the magnitude of the dividend obligations being eliminated relative to the company's size.

The approval of a potential reverse stock split (1:3 to 1:10 ratio) further signals management's focus on maintaining NYSE American listing requirements. The company's explicit mention of meeting "shareholders' equity requirements" suggests this restructuring addresses potential delisting concerns while simultaneously creating more strategic flexibility.

Most compelling is how this recapitalization transforms cbdMD's financial profile by removing fixed dividend obligations that were likely constraining growth investments and strategic options. The freed capital can now be deployed toward business development in its CBD, functional mushroom, and THC-infused product lines, potentially accelerating organic growth or enabling strategic acquisitions that were previously unfeasible under the dividend-burdened capital structure.

Charlotte, North Carolina--(Newsfile Corp. - April 10, 2025) - cbdMD, Inc. (NYSE American: YCBD) (NYSE American: YCBDpA) (the "Company" or "cbdMD") one of the nation's leading and most highly trusted and recognized CBD companies, and operator of the leading CBD brands cbdMD and Paw CBD, along with its functional mushroom brand ATRx Labs and emerging THC-infused seltzer brand Herbal Oasis announced today that at the Company's annual meeting of shareholders held on April 10, 2025, that its Common Stock holders and 8% Series A Cumulative Convertible Preferred Stock (the "Preferred Stock") holders approved the automatic conversion (the "Conversion") of shares of the Company's Preferred Stock into shares of the Company's Common Stock. The Company intends to set a mandatory exchange date for the Preferred Stock in the near future (the "Mandatory Exchange Date"). The automatic conversion will provide for the conversion of each share of Preferred Stock into thirteen shares of Common Stock, inclusive of all accumulated and unpaid dividends on the Mandatory Exchange Date. Dividends on converted shares will cease to accrue on the Mandatory Exchange Date and the Preferred Stock will cease trading on the Mandatory Exchange Date.

"We are excited to announce this conversion, which is expected to eliminate approximately $6.7 million in accrued dividend payments as of March 31, 2025 and $4 million in annual dividend obligations. This will allow us to reinvest this capital into our growth initiatives," said Ronan Kennedy, Chief Executive Officer and Chief Financial Officer of cbdMD. "Additionally, this conversion will enhance our capital structure and provide us with the flexibility needed to continue delivering value to our shareholders. We believe that this conversion removes a large impediment to more strategic activity along with M&A and will strengthen our balance sheet, meeting our shareholders' equity requirements for the continued listing of our Common Stock on the NYSE American."

At the annual meeting, the Company’s shareholders also: (1) elected seven directors for a term expiring at the 2026 annual meeting of shareholders, (2) the ratified the appointment of Cherry Bekaert LLP as the Company’s independent registered public accounting firm, and (3) approved an amendment to the Company’s articles of incorporation at the discretion of the board, to effect a reverse stock split of the Company’s common stock, at a specific ratio, ranging from one-for-three to one-for-ten, at any time prior to the one-year anniversary date of the annual meeting.

About cbdMD

cbdMD, Inc. (NYSE American: YCBD) (NYSE American: YCBDpA) is one of the leading and most highly trusted and most recognized cannabidiol (CBD) brands with a comprehensive line of U.S. produced, THC-free¹ CBD products, and an array of Farm Act compliant Delta 9 products. Our Paw CBD brand of pet products includes veterinarian-formulated products, our ATRx brand features functional mushroom products. In addition, we operate Herbal Oasis, a premium THC-infused social seltzer that blends cannabinoids and nootropic mushrooms to deliver a fast-acting, functional beverage made for presence and connection. With an alcohol-free formula and wellness-forward ingredients, Oasis invites a better way to drink-one rooted in clarity, balance, and joy. To learn more about cbdMD and our comprehensive line of U.S. grown, THC-free¹ CBD and Full Spectrum products as well as our other brands, please visit www.cbdmd.com, www.pawcbd.com, ATRxlabs.com, or Herbaloasis.com, follow cbdMD on Instagram and Facebook, or visit one of the thousands of retail outlets that carry cbdMD's products.

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

Forward-Looking Statements

This press release contains various forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 including statements regarding potential growth, opportunities from our new capital structure and improved balance sheet, creating value to our shareholders and satisfying our shareholders' equity requirements for continued listing on the NYSE American. These statements relate to anticipated future events, future results of operations or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "might," "will," "shall," "should," "could," "intends," "expects," "plans," "goals," "projects," "anticipates," "believes," "seeks," "estimates," "forecasts," "predicts," "possible," "potential," "target," or "continue" or the negative of these terms or other comparable terminology.

These forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are only predictions, are uncertain and involve substantial known and unknown risks, uncertainties and other factors which may cause our (or our industry's) actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all of the risks and uncertainties that could have an impact on the forward-looking statements, including without limitation, risks and uncertainties relating to our continued listing on the NYSE American, failure to develop and sell new products, market impact and dilutive effects on our stock price and other disclosures and other important risks and uncertainties referenced and discussed under the heading titled "Risk Factors" in the Company's filings with the Securities and Exchange Commission. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligations to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

Contacts:

Investors:
cbdMD, Inc.
Ronan Kennedy
Chief Executive Officer and Chief Financial Officer
IR@cbdmd.com
(704) 445-3064

SOURCE: cbdMD

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/248118

FAQ

What is the conversion ratio for cbdMD's (YCBD) Series A Preferred Stock to Common Stock?

Each share of Series A Preferred Stock will convert into thirteen shares of Common Stock, including all accumulated and unpaid dividends.

How much will cbdMD (YCBD) save annually from the preferred stock conversion?

The conversion will eliminate $4 million in annual dividend obligations and approximately $6.7 million in accrued dividend payments as of March 31, 2025.

What reverse stock split ratio was approved for cbdMD (YCBD)?

Shareholders approved a potential reverse stock split ranging from one-for-three to one-for-ten, to be implemented at the board's discretion within one year.

How will the preferred stock conversion affect cbdMD's (YCBD) NYSE American listing?

The conversion will strengthen the company's balance sheet and help meet shareholders' equity requirements for continued NYSE American listing.