cbdMD Issues Unregistered Equity Securities on Feb 1

TL;DR

**cbdMD just sold new shares, likely diluting existing stock.**

AI Summary

On February 1, 2024, cbdMD, Inc. entered into a material definitive agreement involving the unregistered sale of equity securities. This filing indicates that the company issued new shares, potentially diluting existing shareholders' ownership. For investors, this matters because an increase in the number of outstanding shares can reduce the value of each individual share, impacting their investment.

Why It Matters

The issuance of unregistered equity securities can dilute existing shareholder value and may signal a need for capital outside of traditional registered offerings.

Risk Assessment

Risk Level: medium — The issuance of unregistered equity securities can lead to dilution for current shareholders and may indicate financial strain or a strategic shift in capital raising.

Analyst Insight

A smart investor would investigate the terms of the unregistered equity sale to understand the extent of dilution and the purpose of the capital raise, as this could impact future share price.

Key Players & Entities

• cbdMD, Inc. (company) — registrant
• February 1, 2024 (date) — date of earliest event reported

FAQ

Key Financial Figures

• $1,250,000 — rs advanced the Company an aggregate of $1,250,000 gross proceeds and the Company issued e
• $1,541,666 — e, in the aggregate principal amount of $1,541,666 (the "Notes"). The Company intends to u
• $0.684 — ption at an initial conversion price of $0.684 per share (the "Conversion Price"), sub
• $0.30 — ). The Conversion Price is subject to a $0.30 floor price. Furthermore, at any time

Filing Documents

• ycbd20240201_8k.htm (8-K) — 39KB
• ex_621911.htm (EX-4.1) — 167KB
• ex_621910.htm (EX-10.1) — 258KB
• ex_621912.htm (EX-10.2) — 141KB
• ex_621913.htm (EX-10.3) — 142KB
• 0001437749-24-002975.txt ( ) — 1053KB
• ycbd-20240201.xsd (EX-101.SCH) — 4KB
• ycbd-20240201_def.xml (EX-101.DEF) — 13KB
• ycbd-20240201_lab.xml (EX-101.LAB) — 17KB
• ycbd-20240201_pre.xml (EX-101.PRE) — 13KB
• ycbd20240201_8k_htm.xml (XML) — 5KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. Effective February 1, 2024 (the "Closing Date"), cbdMD, Inc. (the "Company") entered into a Securities Purchase Agreement dated January 30, 2024 (the "Purchase Agreement") with five institutional investors (the "Investors") whereby the Investors advanced the Company an aggregate of $1,250,000 gross proceeds and the Company issued each Investor an Senior Secured Original Issue Discount Convertible Promissory Note, in the aggregate principal amount of $1,541,666 (the "Notes"). The Company intends to use the proceeds from the issuance of the Notes for working capital and general corporate purposes. Each Note bears interest of 8% per annum and matures on July 30, 2025. The Note is convertible into shares of common stock at any time following the date of issuance at the Investor's option at an initial conversion price of $0.684 per share (the "Conversion Price"), subject to certain adjustments. If 30 calendar days, 60 calendar days, 90 calendar days, 120 calendar days, or 180 calendar days after the effective date of the Registration Statement (as defined below) (the "Adjustment Dates"), the Conversion Price then in effect is higher than the Market Conversion Price then in effect on the Adjustment Date, the Conversion Price shall automatically decrease to the Market Conversion Price (as defined under the Note). The Conversion Price is subject to a $0.30 floor price. Furthermore, at any time after the issuance of the Note, the Company may, after written notice to the Investor, prepay any portion or all outstanding Principal Amount by paying an amount equal to 125% of the Principal Amount then being prepaid (representing a 25% prepayment premium payable to the Investor which shall not constitute a principal repayment); provided that a Registration Statement registering all of the Conversion Shares issuable under the Note shall have been declared effective. If the Company elects to prepay the Note, the Investor shall

02 Unregistered Sales of Equity Securities

Item 3.02 Unregistered Sales of Equity Securities. The information contained above under Item 1.01, to the extent applicable, is hereby incorporated by reference herein. Based in part upon the representations of the Investors in the Purchase Agreement, the sale of the Notes were made in reliance on the exemption afforded by Section 4(a)(2) of the Securities Act and corresponding provisions of state securities or "blue sky" laws. None of the securities have been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the Commission or an applicable exemption from the registration requirements. Neither this Current Report on Form 8-K nor any exhibit attached hereto is an offer to sell or the solicitation of an offer to buy shares of common stock or other securities of the Company.

01 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits. (d) Exhibits. Exhibit Number Exhibit 4.1 Convertible Promissory Note dated January 30, 2024 10.1 Securities Purchase Agreement, dated as of January 30, 2024, by and between cbdMD, Inc. and the Investors* 10.2 Security Agreement, dated as of January 30, 2024, by and between cbdMD, Inc. and the Investor* 10.3 Registration Rights Agreement, dated January 30, 2024, by and between cbdMD, Inc. and the Investor 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) *Certain exhibits and schedules have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon its request. 2

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. cbdMD, Inc. Date: February 2, 2024 By: /s/ T. Ronan Kennedy Name: T. Ronan Kennedy Title: Chief Financial Officer 3

View Full Filing

View this 8-K filing on SEC EDGAR