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

Greetings. And welcome to the cbdMD Inc. 2023 Annual Meeting of Shareholders. [Operator Instructions] I will now turn the conference over to your host, Mr. Scott Stephen, Chairman of the Board of Directors. You may begin.

It is now 1 p.m. Eastern Time on February 16, 2023. Will the meeting please come to order? I am Scott Stephen, Chairman of the Board of Directors of cbdMD. Along with my fellow directors and executive officers of cbdMD, I would like to welcome you to our 2023 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 the Notice of Annual Meeting of Shareholders. You are participating in the meeting virtually. We are pleased to, again, hold our Annual Shareholders 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'll see links to the Notice of Annual Meeting of Shareholders and the proxy statement for the 2023 Annual Meeting as previously filed with the SEC on January 4, 2023, as supplemented on January 13, 2023, 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 will stay online in order to answer any additional questions that may have been posted. After dealing with a few procedural matters, we'll take up the items to be acted upon. If a technical disruption occurs that prevents us from continuing the meeting and the polls have been opened but the meeting is not adjourned, the polls will be closed immediately. Votes received prior to the time the polls were closed will be counted. The meeting will not be reconvened, and the results will be announced publicly. I will act as Chairman of the meeting, and Brian Pearlman will serve as Secretary of the meeting and take the minutes. I would like to introduce the directors and executive officers of cbdMD who are in attendance today. Joining me are Scott Coffman, Bakari Sellers, Billy Rains, Peter Ghiloni and Dr. Sibyl Swift, members of the Board. And Kevin MacDermott, cbdMD's President; and Ronan Kennedy, cbdMD's CFO and COO. In addition, the Board of Directors has previously appointed Ronan Kennedy to serve as the 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 December 28, 2022, the notice of Internet availability of proxy material, which Issuer Direct Proxy Services commenced distributing to shareholders on or about January 4, 2023.

The notice of the meeting and the affidavit of mailing will be filed with the minutes of this meeting. The Secretary has a list of the holders of record of common stock at cbdMD at the close of business on December 28, 2022, the record date of this annual meeting. The list of shareholders has been open for examination at the company's executive officers for any purpose relevant to this meeting during ordinary business hours beginning 2 days after the giving of notice of the 2023 Annual Meeting of Shareholders. This list is available for inspection during this meeting by any registered shareholders. If you wish to inspect the list, please post a request in the questions 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 that we can determine whether a quorum is present?

Mr. Chairman, on December 28, 2022, the recording date for this annual meeting, they were outstanding and entitled to vote a total of 60,682,262 shares of common stock. There are at least 49% 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 a quorum is present. Accordingly, this Annual Meeting of Shareholders has been properly convened. 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 voted, or if you want to change your previously cast vote, please do so via the Vote My Shares link on the registration page. Please remember that if you have 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 reports. We'll move now to a review of the proposal 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 the directors. At the meeting, we will be electing 4 directors for the term expiring at the 2024 Annual Meeting of Shareholders. The nominees are Bakari Sellers; William F. Raines, III; Scott G. Stephen; and Dr. Sibyl Swift. Information concerning their principal occupation, skills and qualifications and other matters which may be of interest, are contained in the proxy statement for the 2023 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 in our 2023 proxy statement. Therefore, no additional nominees will be made to this meeting, and I declare the nominations to be closed. Are there any questions or comments on the first proposal? Seeing none, we'll move on to the second proposal. The next matter to come before the meeting is the ratification of the appointment of Cherry Bekaert LLP as the company's independent registered public accounting firm. The Board of Directors recommend the ratification of the appointment of Cherry Bekaert LLP to serve as cbdMD's independent registered public accounting firm and to audit its financial statements for the fiscal year ending September 30, 2023. Are there any questions or comments on the second proposal? Seeing none, we'll move on to the third proposal. The next matter to come before the meeting is the approval of an amendment to our Articles of Incorporation as amended at the discretion of the Board to effect a reverse stock split of our issued and outstanding shares of common stock at a specific ratio ranging from 1:20 to 1:50 at any time prior to the 1-year anniversary date of the annual meeting, with the exact ratio to be determined by the Board. The Board of Directors recommends the approval of the amendment to our articles of incorporation as amended to effect a reverse stock split ranging from 1:20 to 1:50 with the exact ratio to be determined by the Board. Are there any questions or comments on the third proposal? Seeing none and there being no more proposals to be considered at the Annual Meeting of Shareholders, we'll move on. The polls are about to close. So if you have not yet voted, please do so. [Voting]

Since everyone has had the opportunity to vote, the polls are now closed. The inspector of the 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 88% of the votes cast in favor of his or her election and has been elected as a Director of cbdMD to hold until office until the 2024 Annual Meeting of Shareholders or until his or her 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 96% of the votes in favor, and the appointment has been ratified. The approval of the amendment to our articles of incorporation as amended at the discretion of the Board to effect a reverse stock split of our issued and outstanding shares of common stock at a specific ratio ranging from 1:20 to 1:50 at any time prior to the 1-year anniversary date of the annual meeting with the exact ratio to be determined by the Board received more than 85% of the votes in favor, and the appointment has been ratified.

We will file the final report of the Inspector of Election with the records of this meeting. We expect to report the results of the voting on a 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 Investors tab. That concludes the business for the meeting. The meeting is now adjourned. On behalf of Kevin MacDermott, our President; Ronan Kennedy, our CFO and COO; members of the Board of Directors and our employees, I would like to thank all of you for the continued interest and support you have shown in cbdMD. We will provide a business update as part of the earnings call for the fiscal quarter ending March 31, 2023, which we will hold 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.

With no questions, I'd like to thank everyone for attending today's meeting and look forward to our quarterly update in May. Thank you.

Thank you, everyone. This does conclude today's call. You may disconnect at this time, and have a wonderful day. We thank you for your participation.