cbdMD, Inc. (YCBD) Earnings Call Transcript & Summary

Greetings. Welcome to the cbdMD Inc. 2021 Annual Meeting of Shareholders. [Operator Instructions] Please note, this call is being recorded. I would now like to turn the conference over to your host, Martin A. Sumichrast, Chairman of the Board and Co-Chief Executive Officer of cbdMD. Marty, please go ahead.

Will the meeting please come to order? I am Marty Sumichrast, Chairman of the Board and Co-CEO of cbdMD. Along with my fellow directors and executive officers of cbdMD, I would like to welcome you to our 2021 Annual Meeting of Shareholders. We appreciate your attendance, your interest and most importantly, your support of cbdMD. This Annual Meeting of Shareholders is held pursuant to the bylaws of cbdMD and notice of Annual Meeting of Shareholders. You are participating in the meeting virtually. We are pleased to again hold our annual shareholder meeting virtually as we aim to increase access and participation. On the left-hand side of the registration page for the virtual annual meeting, you will see links to the notice of Annual Meeting of Shareholders and the proxy statement for 2021 annual meeting as previously filed with the SEC on January 25, 2021, an agenda and the meeting conduct standards and procedures. Registered shareholders may submit questions at any time during this meeting in the space provided on the left-hand side once you have completed the registration page and entered the meeting. During the formal portion of the annual meeting, questions from shareholders should pertain to the proposals being considered at that particular time. If you are a registered shareholder of cbdMD and would like to view the list of shareholders on the record date for this meeting, please submit your request after you've entered the meeting. We will take care of the formal business of the annual meeting first, then we will adjourn the formal portion of the annual meeting, but we'll stay online in order to answer any additional questions you have been posted. After dealing with a few procedural matters, we will take up the items to be acted upon. If technical disruption occurs that prevents us from continuing the meeting and the polls have been open, but the meeting is not adjourned, the polls will be closed immediately. Votes received prior to the timeline the polls are closed will be counted. The meeting will not be reconvened. The results will be announced publicly. I will be -- act as Chairman of the meeting, and Brian Pearlman will serve as secretary of the meeting and take minutes. I would like to introduce the directors and officers from cbdMD, who are in attendance today. Joining me is Scott Coffman, Co-CEO and member of cbdMD's Board; Billy Raines and Peter Ghiloni, members of the Board; and Ronan Kennedy, cbdMD's CFO and COO. In addition the Board of Directors has previously appointed Ronan Kennedy to serve as an inspector of the election for this meeting. I request that he file his oath of office with the secretary of the meeting for inclusion in the minutes of this meeting. Will the secretary please report on the proof of mailing of the notice of the Annual Meeting of Shareholders?

I have an affidavit of mailing from Issuer Direct Proxy Services, certifying as to the giving of notice of this meeting and the sending to shareholders of record as of January 22, 2021, the notice of Internet availability of proxy materials, which Issuer Direct Proxy Services commenced distributing to shareholders on January 26, 2021.

The notice of the meeting and the affidavit of mailing will be filed with the minutes of the meeting. The secretary has a list of holders of record of common stock of cbdMD at the close of business on January 22, 2021, and the record date for this annual meeting. This list of shareholders has been open for examination to the company's executive officers for any purpose relevant to this meeting during ordinary business hours beginning 2 days after giving notice of the 2021 Annual Meeting of Shareholders. This list is available for inspection during this meeting by any registered shareholder. If you wish to inspect this list, please post a request in the question portion of the registration page. The secretary will please file a copy of the list of shareholders with the records of cbdMD for this Annual Meeting of Shareholders. Ronan, will you please present your report of attendance at this meeting so we can determine whether a quorum is present?

Mr. Chairman, on January 22, 2021, the record date for this annual meeting, there were outstanding and entitled to vote a total of 52,287,113 shares of common stock. There were at least 33 1/3% of such shares of common stock represented by proxy thus constituting a quorum for this Annual Meeting of Shareholders.

Thank you, Ronan. On the basis of the report of the secretary and the inspector of election, I find that proper notice has been given and that the quorum is present. Accordingly, this Annual Meeting of Shareholders has been properly convened. It is currently 1:00 p.m. on March 12, 2021, and the polls for voting on all matters are open. All cbdMD common shareholders entitled to vote at this meeting have the ability to do so online. If you are a shareholder entitled to vote and have not yet voted or if you want to change your previously cast vote, please do so via the Vote My Shares links on the registration page. Please remember that if you've already voted by proxy, it is not necessary to vote again. After voting has been completed on all matters on the agenda, we will close the polls, and the inspector of election will provide his preliminary report. We'll move on now to a review of the proposals as set forth in the notice of annual meeting and accompanying proxy statement. The first proposal to come before the meeting is the election of directors. At this meeting, we'll be electing 7 directors for a term expiring at the 2022 Annual Meeting of Shareholders. The nominees are Marty Sumichrast, Scott Coffman, Bakari Sellers, William F. Raines III, Peter Ghiloni; Scott G. Stephen and Sim Farar. Information concerning their principal occupations, skills and qualifications and other matters which may be of interest are contained in the proxy statement for the 2021 annual meeting as previously filed with the SEC, a link to which is on the registration page. No other nominations were received prior to the deadline established by our 2020 proxy statement. Therefore, no additional nominations may be made at this meeting. And I declare the nominations to be closed. Are there any other comments on this first proposal? Seeing none, we will move on to the second proposal. The next matter to come before the meeting is a ratification of the appointment of Cherry Bekaert LLP as the company's independent registered public accounting firm. The Board of Directors recommends the ratification of the appointment of Cherry Bekaert LLP to serve a cbdMD's independent registered public accounting firm and to audit its financial statements for the fiscal year ending September 30, 2021. Are there any questions or comments on this proposal? Seeing none, I'll move to the next proposal. The next matter to come before the meeting is a resolution for the approval of cbdMD's 2021 Equity Compensation Plan. As set forth in the proxy statement for this Annual Meeting of Shareholders, the 2021 Equity Compensation Plan became effective on January 8, 2021, by date of its adoption by our Board of Directors. While grants some of the 2021 Equity Compensation Plan may be made to our employees prior to such time as the plan is approved by our shareholders, any such grant, if made, will not vest or become exercisable and no grants will be made to our executive officers and/or members of our Board of Directors until such time as the 2021 Equity Compensation Plan is approved by our shareholders and an additional listing application covering the shares of our common stock reserve for issuance under the plan has been approved by NYSE regulation. Are there any questions or comments on this proposal? Seeing none, I will move on to the next proposal. Proposal for our shareholders to approve an advisory resolution on the fiscal 2021 compensation of named executives, all as described in our proxy statement. This proposal is advisory. Although nonbinding, the vote will provide information to our Compensation, Governance, Corporate Governance and Nominating Committee and our Board of Directors regarding investor sentiment about our executive compensation philosophies, policies and practices which are Compensation, Corporate Governance and Nominating Committee and our Board of Directors will be able to consider when making future executive compensation decisions. Are there any questions or comments to this proposal? Seeing none, there being no more proposals to be considered at this Annual Meeting of Shareholders, we will move on. The polls are about to close. So if you've not yet voted, please do so. [Voting]

Since everyone has had the opportunity to vote, the polls are now closed. The inspector of election has delivered his preliminary report, and he will now announce the preliminary results.

Mr. Chairman, based on the inspector of election's preliminary report, each of the nominees for director received more than 87% of the votes cast in favor of his election and has been elected as Director of cbdMD to hold office until the 2022 Annual Meeting of Shareholders or until his successor has been duly elected and qualified. The ratification of the appointment of Cherry Bekaert LLP as cbdMD's independent registered public accounting firm, received more than 99% of the votes in favor of the appointment has been ratified. The 2021 Equity Compensation Plan has been approved by more than 92% of the votes in favor of the proposal and the resolution on a nonbinding advisory basis for the compensation of our named executive officers for fiscal 2021 received more than 97% of the votes cast in favor of the proposal and has been approved.

We will file the final report of the inspector of election with the records of the meeting. We expect to report the results of the voting on Form 8-K to be filed with the SEC within 4 business days of this meeting. A link to this Form 8-K will also be posted on cbdMD's corporate website under the Investor tab. That concludes the business for the meeting. The meeting is now adjourned. On behalf of my co-CEO, Scott Coffman, and all the other executive officers, members of our Board of Directors and all of our employees, I would like to thank all of you for your continued interest and support you've shown in cbdMD. We will provide a business update as part of our earnings call for fiscal quarter ended March 31, 2021, which we will hold in mid-May. We will announce the specific date and time as we get closer to that date. I now invite you to ask any questions you may have regarding cbdMD and its business. Please follow the instructions provided on the left-hand side of the screen to submit questions.

[Operator Instructions] Would you like to take questions from the lines?

No, I think we can close the meeting.

Thank you. This concludes today's call, and you may disconnect at this time. Thank you for your attendance.