The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: Yes, good day, Ronan and team. I hope you can hear me okay.
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: I'm well, and you, Ronan?
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: So you all made, obviously, a lot of progress on a lot of fronts, so I hope you don't mind if I ask a few questions. To what extent was the $2.9 million
in fiscal fourth quarter SG&A expense, the new baseline that we should think about for future quarters? Or do you think there's further progress
that you can make in fiscal first quarter 2025 and beyond?
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: Okay, very helpful. You've given guidance, obviously, for the first quarter 2025 revenues to approach $5 million. You booked about $4.5 million. If
I'm doing math, probably the fiscal fourth quarter, and you generated about $170,000 of operating cash flow in fiscal 4Q and about $80,000 of free
cash flow.
So do you expect that you'll be free cash flow positive again here in the fiscal first quarter, given the approximately 10% sequentially higher revenue
outlook that you've offered? Or are there more one-time items or higher marketing investments that might impact that?
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: Right. I mean, $0.36 million of principal is left, and given your liquidity profile, looks pretty good. Is there any meaningful accrued interest, or was
that baked into the $0.36 million in the press release?
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: Okay. Last question, if you'll permit me. You issued a very intriguing press release on November 4, obviously, around the new Herbal Oasis Social
Tonics, which are and hemp-derived seltzers, as the press release explained. And you gave a little commentary on that in today's press release and
on the call. But I wonder, could you provide us some quantification of the incremental annual revenue opportunity that you're targeting for the
new product in fiscal '25 and beyond, as well as on the go-to-market model and prospective margin structure of that product?
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: Right, okay. But no sort of target for total revenue in 2025? It's just too hard to say. Maybe you will address that in a future quarter?
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: Okay. Thank you very much.
Question: Thomas McGovern - Maxim Group LLC - Analyst
: Hey, guys. Thanks for taking my question. So first question would be on marketing. You guys talked a lot about it on the last call and mentioned
at the beginning of this call that you're still looking to find that right revenue or right spend mix on marketing and maybe kind of doing an overhaul
of the marketing strategy to focus on the functionality of your product. So I just want to get an update, maybe a little bit more detail on where you
are with revising your marketing and customer retention strategies.
Question: Thomas McGovern - Maxim Group LLC - Analyst
: Understood. I appreciate that color. My second question is on just kind of the mix of revenues. So e-commerce continues to be the majority of your
net revenue. I think you said it was around 82% this quarter, fairly consistent with where it's been in the past. I'm just curious. As you guys are kind
of developing this ATRx brand, which I know has probably easier access to retail space as compared to some of your CBD or THC products -- and
you guys did just launch this Oasis line of THC seltzers and just mentioned that you could be looking at maybe a slightly higher mix in the wholesale
category.
Just curious, as we look at 2025, do you expect e-commerce to kind of still maintain that low 80% range on net revenue, or do you think that revenue
mix will change as some of these other brands start to develop, maybe see a little bit more sales in retail and wholesale?
Question: Thomas McGovern - Maxim Group LLC - Analyst
: Got you. And kind of just to follow up on that, we spoke in the past about how there's kind of been some ups and downs with the retail landscape
for CBD. I'm just curious. As it stands now, how do you see that outlook in 2025? Do you expect there to be any kind of inflection point potentially
where you could start to see retail shelves opening back up to CBD products? Or do you think that the statement's been made by some of these
big box stores that for the time being, until something changes on a federal level or this stuff becomes regulated by the FDA, that it's still going to
be tough to expand or even in some cases maintain shelf space for your CBD products?
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DECEMBER 18, 2024 / 9:20PM, YCBD.A - Q4 2024 cbdMD Inc Earnings Call
Question: Thomas McGovern - Maxim Group LLC - Analyst
: Got you. Okay, final question from me. In the past election cycle, there was a lot of conversation going on about the legalization of recreational
marijuana. Less so focused on CBD, but I'm curious if you have any high-level commentary on the incoming president and then if you think his
cabinet or the switch will potentially facilitate improvements in the market. Do you see it as it's kind of a neutral transition or potentially negative?
Just curious if you have any high-level commentary on that, and if there's been any developments on that FDA front in terms of regulating CBD as
separate from the current supplement regulations. Thanks.
Question: Thomas McGovern - Maxim Group LLC - Analyst
: Understood. Again, I appreciate you guys taking the time to answer all the questions.
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: Just one quick housekeeping follow up. How many shares have you now issued cumulatively from the conversion of the notes? How many new
shares? Maybe it's what, about [900,000] principal, maybe $8 million total if there's accrued unpaid interest. But how many shares were issued in
total? Thanks.
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: 1.6 million and 2 million new shares from the conversion to date?
Question: Adam Waldo - Lismore Partners, LLC - Analyst
: Okay, thank you very much.
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