8-K: cbdMD Receives NYSE American Extension to Regain Listing Compliance

cbdMD has been granted an extension until December 5, 2025, by the NYSE American to regain compliance with listing standards after reporting a stockholders deficit.

Summary

• cbdMD received notice from the NYSE American that its plan to regain compliance with continued listing standards has been accepted.
• The company has been granted a plan period through December 5, 2025, to meet the requirements.
• This follows a previous notice on June 5, 2024, stating that cbdMD was not in compliance with Section 1003(a)(ii) of the NYSE American Company Guide.
• This section requires a listed company to have stockholders equity of $4 million or more if it has reported losses in three of the last four fiscal years.
• As of March 31, 2024, cbdMD reported a stockholders deficit of $3.1 million and has had losses in three of the last four fiscal years.
• During the plan period, the company will be subject to quarterly reviews to assess progress.
• Failure to regain compliance by the deadline or make sufficient progress may result in delisting proceedings.
• The company's common and preferred stock will continue to be listed during the extension period.
• The company's business, operations, and reporting requirements with the SEC are not affected by this notification.

Sentiment

Score: 4

Explanation: The document highlights significant financial challenges and the risk of delisting, but also shows a path forward with the compliance plan acceptance. The sentiment is cautiously optimistic but with considerable uncertainty.

Positives

• The acceptance of the compliance plan provides cbdMD with an opportunity to address its financial issues.
• The extension allows the company to remain listed on the NYSE American while it works to regain compliance.
• Management is encouraged by the progress of the business in the third and fourth fiscal quarters.
• The plan acceptance allows the company to re-engage with Series A preferred shareholders to address the accrued dividend.

Negatives

• cbdMD is currently not in compliance with NYSE American listing standards due to a stockholders deficit of $3.1 million.
• The company has reported losses in three of the last four fiscal years.
• There is no guarantee that the company will be able to regain compliance by the deadline.
• Failure to meet the requirements could lead to delisting from the NYSE American.

Risks

• There is a risk that cbdMD may not make sufficient progress to satisfy the NYSE American.
• The company may not be able to regain compliance with the listing standards by December 5, 2025.
• Developments and events occurring after the plan's acceptance could negatively impact the company's ability to regain compliance.
• The company could fail to comply with other NYSE American continued listing standards.

Future Outlook

The company is working to regain compliance with NYSE American listing standards by December 5, 2025, but there is no guarantee of success. The company will be subject to quarterly reviews during the plan period.

Management Comments

• We appreciate the NYSE Americans of our plan acceptance and are encouraged with the progress of our business in the third and fourth fiscal quarters.
• The acceptance of the plan is the next critical step to addressing our ongoing capital structure challenges and lets us re-engage our Series A preferred shareholders to help create a solution involving the accrued dividend, says T. Ronan Kennedy the Company's CEO.

Industry Context

The CBD industry is facing increasing regulatory scrutiny and competition, which may be contributing to cbdMD's financial challenges. The company's ability to regain compliance will be crucial for its long-term viability in the market.

Comparison to Industry Standards

• Many companies in the cannabis and CBD sector have faced challenges with profitability and maintaining listing compliance, particularly smaller companies.
• Companies like Charlotte's Web and CV Sciences have also faced similar challenges in the past, highlighting the competitive and regulatory pressures in the industry.
• The requirement to maintain a minimum stockholders' equity is a common hurdle for companies in this sector, especially those that have not yet achieved consistent profitability.
• The plan period granted to cbdMD is similar to extensions granted to other companies facing similar issues, but the outcome will depend on the company's ability to improve its financial performance.

Stakeholder Impact

• Shareholders face the risk of delisting if the company fails to regain compliance.
• Employees may be concerned about the company's financial stability and future prospects.
• Customers may be impacted if the company's operations are disrupted by financial difficulties.
• Suppliers and creditors may be concerned about the company's ability to meet its obligations.

Next Steps

• cbdMD will be subject to quarterly reviews by the NYSE American to assess progress on its compliance plan.
• The company will work to improve its financial position to meet the listing requirements by December 5, 2025.
• The company will re-engage with Series A preferred shareholders to address the accrued dividend.

Key Dates

Keywords

NYSE American, listing compliance, stockholders equity, delisting, compliance plan, cbdMD, financial performance, preferred stock, common stock