NYSE: YCBD

Our products are sold through a diversified distribution network that includes direct-to-consumer e-commerce platforms, online marketplaces, wholesale distribution to national and regional retailers, specialty health and pet channels, and emerging international markets. This multi-channel strategy allows us to reach a broad and diverse consumer base, reduce reliance on any single distribution partner, and quickly introduce new products which reflect scientific findings, consumer trends, and regulatory dynamics.

Recent Developments

Management’s efforts to drive shareholder value during 2025 were focused in 2 areas: (i) deliver positive earnings through a combination of optimizing our product portfolio, rationalizing our cost structure, and growing revenue; and, (ii) simplifying our capital structure.

During fiscal 2025 we made progress on strengthening the business. We were able to essentially maintain our revenue base and we continued to reduce our GAAP operating loss from a $3.3 million loss during fiscal 2024 to $2.1 million during fiscal 2025. We accomplished this while still focusing on disciplined cost control, rebuilding our marketing team and launching into the exciting hemp derived THC beverage category with our brand Oasis.

During fiscal 2025 we were successful in cleaning up our capital structure and at our annual meeting in April 2025 we secured sufficient votes to convert our Series A Convertible Preferred and outstanding accrued preferred dividends into approximately 91% of the Company’s outstanding common stock. This vote was critical to regaining compliance with NYSE American continued listing standards and maintaining our American listing as well as make the Company more attractive for merger and acquisition activity. We are now back in compliance with the NYSE American’s continued listing standards and our non-compliance status has been removed.

During the fiscal fourth quarter of 2025 the Company continued to make progress on building momentum with sequential and fourth quarter fiscal 2025 increases in revenue. We continue to make progress with our Oasis brand, which continues to grow quarterly as we added distributors and improved our sell-through at retailers. We are now available throughout the Southeast in Texas, Alabama, Georgia, Florida, North Carolina, Tennessee and several other states outside the Southeast. To date, Oasis has been a P&L earnings drag on the Company as we invest in a scaling, high-growth category. We made changes during the first fiscal quarter 2026 to reduce certain Oasis brand overhead expenses, add sales staff and are starting to see some benefits of scale as revenues continue to grow.

cbdMD believes trends from late 2025 are continuing in the first quarter of 2026. We are seeing momentum in our direct-to-consumer business, wholesale is trending up and we added additional Oasis distribution during the quarter. In addition, we have identified nearly $200,000 in corporate overhead savings that will be implemented during early 2026 with insurance renewals and professional fees leading the way.

During calendar 2025, we have faced a notable uptick in both state and federal regulatory activity. While most of the state level action to restrict the hemp category occurred, the industry built sufficient support to limit many restrictions on our industry. Unfortunately federal action in November 2025 poses a significant threat to the industry and our revenue bases, with approximately 40-45% of the Company's revenue derived from full spectrum SKUs that may be impacted.

Growth Strategies

We continued to pursue many strategies to grow our revenues and expand the scope of our business in fiscal 2025 and beyond:

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Product Innovation: Our goal is to provide our customers superior functional based products with greater efficacy claims and absorption. We constantly assess and evaluate our product portfolio, and devote resources to ongoing research and development processes with the goal of improving our product offerings. During the first quarter of fiscal 2025, we launched reformulations on several sleep products to enhance their effectiveness and improve taste. In addition, we launched ready-to-drink beverage product under our new Oasis brand. We have a pipeline of cannabinoid and non-cannabinoid products and formulation upgrades that are in the queue for ongoing innovation and product portfolio improvement.

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Expand our revenue channels: We continued to pursue relationships with traditional retail accounts and distributors and believe our top brand awareness and effective marketing position us as a preferred CBD partner for key traditional retail accounts as this channel has continued to normalize. During the first quarter of fiscal 2024 we launched several SKUs into Sprouts retail footprint. In April 2024, we added Door Dash as a customer. We expanded our ATRx Labs product in GNC during 2024. In 2025, we began developing relationships with beer and alcohol distributors for our Oasis beverage line and have added several large beer distributors to support our brand. Oasis can now be found in Total Wine, Winn-Dixie, Piggly Wiggly and a growing number of national and regional grocery and c-store chains.

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International Expansion: We continue to explore sales in markets outside of the United States. We generally partner with local wholesalers and local legal counsel who can help navigate the laws and regulatory requirements within their jurisdiction. We continue to pursue key wholesale accounts in a number of international markets and are gaining market share in Central and South America through our sanitary registration approvals.

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Cultivate Additional Brands: We continue to operate and attempt to grow the Paw CBD business. During fiscal 2024 we launched our nootropic mushroom line under the ATRx brand. During the first quarter of fiscal 2025 we launched a new line of hemp derived and nootropic beverages under the Oasis brand. We believe there are ongoing opportunities with these brands to focus on education, cross-selling and customer retention

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Acquisitions: We evaluate acquisitions where we believe there is an accretive customer base that can lower our cost of customer acquisitions through either a complementary direct to consumer base or wholesale channels, or the target has a profitable business or easily attainable cost synergies that can quickly help contribute and accelerate revenue and profitability of our Company.

Marketing

cbdMD and its brands are primarily direct to consumer brands and our focus is to grow our base of customers by profitably acquiring new customers while minimizing churn. We employ a multi-channel media approach that allows us to market our brand and products through various distribution efforts, including professional partnerships, social media engagement, podcasts, digital and television advertising, affiliate marketing, search engine optimization, and influencer endorsements. In addition, we work with our retail partners on various marketing efforts to focus on shelf velocity.

During fiscal years 2025 and 2024 we spent approximately $4.4 million and $4.2 million, respectively, on brand development, sponsorships and marketing.

Moving forward, we remain committed to thoughtful, data-driven investments to expand our well-established brand. We are placing greater emphasis on consumer, retailer, and regulatory education to build awareness of our superior science, safety, and clinical efficacy. By refining our messaging and outreach, we aim to attract more consumers, engage more retailers, and foster broader regulatory acceptance, always working in the best interests of the company.

Sales

We distribute our products both through our online sales channel as well as through a number of wholesalers and retailers that resell our products both in brick and mortar locations as well as via their online websites. Sales of our products primarily come from online sales at our websites www.cbdmd.com, www.pawcbd.com, www.atrxlabs.com, www.herbaloasis.com,and www.directcbdonline.com and through our inside sales department. For our core cbdMD brand, we employ an inside sales team that concentrates on B2B niche specialty retailers as well as wholesale distributors, including international distributors, who we believe can help expand the reach of cbdMD products and brand recognition at physical retail locations. For our Oasis brand, we employ as second team focused on building relationships with beverage distributors and mass retailers that sell ready to drink ("RTD") beverages.

During fiscal year 2025, our e-commerce business experienced continued growth, with year over year increases in new e-commerce customers. For fiscal 2025 and fiscal 2024, approximately 77% and 80% of sales were e-commerce, respectively. Our wholesale continues to expand with the additional growth of international distributors and the addition of the Oasis distribution network.

Product Development and Manufacturing

cbdMD’s manufacturing, supply chain, and quality systems are designed to support rigorous standards of quality, safety, consistency, and regulatory compliance across all stages of product development. We utilize a hybrid manufacturing model that integrates internal specification design and oversight with both in-house manufacturing and use of experienced third-party contract manufacturers, allowing us to maintain flexibility in production, align with evolving regulatory expectations, and efficiently scale as demand fluctuates. All hemp-derived cannabinoids used in our products are sourced from U.S.-grown hemp cultivated under federal and state hemp programs. Our suppliers are evaluated for Good Manufacturing Practice ("GMP") compliance, traceability, contaminant controls, and cannabinoid profile consistency, and all raw materials undergo comprehensive testing for potency, residual solvents, pesticides, microbials, mycotoxins, and heavy metals.

Our contract manufacturing partners operate under GMP-aligned procedures that include strict documentation practices, validated processes, and batch-level traceability. Critical manufacturing relationships are governed by master manufacturing agreements and, where applicable, a quality assurance agreement that defines, among other things, specifications, testing obligations, deviation handling, and corrective action measures. These partners perform blending, homogenization, encapsulation, filling, packaging, and stability testing for a wide array of formats including oils, gummies, capsules, soft-gels, topicals, and pet chews. Finished goods are subjected to multiple levels of testing by ISO-17025 accredited laboratories to confirm cannabinoid content, purity, and compliance with the 0.3% Delta-9 THC limit imposed by the 2018 Farm Bill.

Warehousing and fulfillment operations are conducted in our 80,000-square-foot GMP-aligned facility, which manages incoming components, packaging, finished goods storage, and order fulfillment. We maintain environmental controls, FEFO-based inventory rotation, product-level traceability, and documented recall protocols. Our warehouse processes are designed to support a high volume of direct-to-consumer shipments as well as large retail distribution orders while maintaining product integrity and compliance.

Research and development activities play a central role in our competitive strategy. Through cbdMD Therapeutics, our scientific and clinical research arm, we have conducted controlled human and companion-animal clinical trials, biomarker and biometric studies, and toxicology evaluations to better understand the safety and efficacy of our formulations. Completed randomized, double-blind, placebo-controlled human studies have indicated improvements in pain, inflammation, mood, and general well-being, while our veterinary trials have shown mobility and gait improvements in dogs with osteoarthritis. A biometric sleep study conducted with WHOOP confirmed measurable improvements in sleep performance within seven days of product use. We use this data to refine formulations, substantiate claims, inform our patent pending, and generate regulatory dossiers for international approvals. Published peer-reviewed findings enhance credibility among consumers, retailers, and regulatory authorities. To date, our published study results have been cited multiple times in reputable peer-reviewed journals.

Our innovation pipeline includes proprietary formulations designed for sleep, stress, pain, inflammation reduction, recovery, mood, and mobility, as well as novel ingredient combinations that integrate cannabinoids with other clinically supported functional compounds. We continually evaluate new delivery systems—including improved edible formats, beverages, and bioavailability-enhancing technologies—to expand consumer access to safe and effective cannabinoid products, and our expanding portfolio of other functional ingredients.

Intellectual property protection remains an important component of our strategy. We maintain an extensive trademark portfolio covering cbdMD®, Paw CBD®, ATRX®, and related brands in the United States and internationally. We also rely on trade secrets and proprietary processes involving formulation techniques, cannabinoid ratios, clinical methodologies, and data analytics. Our pending U.S. patent application seeks to protect certain cannabinoid-based formulations developed through our clinical research program. To safeguard confidential information, we employ confidentiality agreements, controlled access systems, and internal data governance protocols.

Together, our manufacturing, quality, research, and intellectual property programs form the foundation of cbdMD’s ability to produce safe, compliant, scientifically credible, and commercially differentiated cannabinoid and other wellness products.

Intellectual property

We hold a portfolio of U.S. trademark applications which are held for current and future product offerings and extended branding capability. The portfolio, includes but is not limited to, the trademarks set forth below:

Mark

US Serial No.

US Registration No.

Filing date

Description of Mark Usage

DIRECT CBD ONLINE

88424644

6324509

5/10/2019

Service mark

DIRECT CBD ONLINE

88424628

6399287

5/10/2019

Service mark

CBD MD

86914580

5173264

2/21/2016

Standard word mark

cbdMD

88451429

5/29/2019

Stylized word mark (logo in color)

cbdMD

88451502

5/29/2019

Standard word mark

Paw CBD

88697605

10/19/2019

Standard word mark

CBDMD

88944504

6/2/2020

Standard word mark

hempMD

88109782

6/29/2021

Standard word mark

ATRX

98209919

10/04/2023

Standard word mark

We currently have filed multiple foreign trademark applications for CBDMD and Paw CBD and have secured marks in the following countries: Chile, Costa Rica, Argentina, Peru, Ecuador, European Union, United Kingdom, Czech Republic, New Zealand, Columbia, Australia, and Switzerland. We continue to prosecute the CBDMD and PAWCBD trademarks in the following countries: Brazil, Canada, China, Spain, Mexico, Norway, and South Africa. Additionally, a growing number of our products hold sanitary registrations in certain Central and South American countries.

The Company’s U.S. Patent Application No.: 17/359,193 is currently under examination. In Q4 of fiscal year 2024 the Company filed a response to an office action making several amendments to its claims based on data from the Company’s clinical studies. This patent, if granted, is expected to provide protection in several key areas, including novel formulations for the treatment of mood and sleep disorders.

In addition to our trademarks and our patent filing, we rely on a combination of trade secret laws and restrictions on disclosure to protect our intellectual property rights. Our success depends on the protection of the proprietary aspects of our product development, formulation and knowhow, as well as our ability to operate without infringing on the proprietary rights of others. We also enter into proprietary information and confidentiality agreements with our employees, consultants and commercial partners and control access to, and distribution of, our formulas and other proprietary information.

In addition to www.cbdmd.com, www.pawcbdmd.com, www.atrxlabs.com, and www.directcbdonline.com, we own multiple domain names that we may or may not operate in the future. However, as with phone numbers, we do not have and cannot acquire any property rights in an Internet address. The regulation of domain names in the United States and in other countries is subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registers or modify the requirements for holding domain names. As a result, we might not be able to maintain our domain names or obtain comparable domain names, which could harm our business.

Competition

The dietary supplement market is highly competitive, with new products and new brands entering frequently. The Company is attempting to distinguish itself by focusing on hemp derived cannabinoids and seeking to identify new, emerging ingredients with functional efficacy for key consumer need states such as sleep, mood, focus and energy. Specifically, the hemp derived cannabinoid market has remained fragmented with over 2,000 brands in the category and no clear dominant brand in the US. Our competitors of hemp derived cannabinoid products include a combination of public and private companies who operate as combination of e-commerce and wholesale brands as well as brick and mortar retail operations. In addition to cbdMD’s hemp derived CBD and Delta 9 products, there are several other synthetic compounds including, but not limited to delta-8; delta 10 and HHC, that do not have long market history or safety data which have taken market share over the last 2 years. The launch of ATRx and Oasis, the Company’s functional mushroom line and beverage line, respectively, also faces significant competitive pressure as functional mushrooms have emerged as a fast growing segment of the overall dietary supplement market and beverages have emerged as the fastest growing segment of the overall CBD market. By focusing on specific functional formulas to address consumer need states, the Company believes it can differentiate itself in the market. While the pending changes in Federal law discussed below may negatively affect our industry, we do believe it will reduce competition, as smaller competitors, poorly capitalized competitors and competitors that can not comply with Federal law changes may cease operating.

Government Regulations

Government regulation of hemp-derived cannabinoids remains dynamic, multi-layered, and complex. Our operations are influenced by federal law, state legislation, and international regulatory frameworks, each of which shapes the permissible scope of manufacturing, marketing, labeling, distribution, and sale of our products. We devote significant resources to monitoring regulatory developments and adjusting our operations accordingly.

At the federal level, the 2018 Farm Bill established the modern legal framework for hemp, removing hemp and hemp-derived cannabinoids from the Controlled Substances Act so long as the material contains no more than 0.3% Delta-9 THC on a dry-weight basis. Although this statute legalized the cultivation and interstate transport of hemp, it left the regulation of ingestible and topical cannabinoids to the U.S. Food and Drug Administration ("FDA"). As a result, the FDA continues to assert that CBD cannot be lawfully marketed as a dietary supplement or added to human food under existing statutory authorities due to CBD’s prior investigation as an approved drug. The FDA has repeatedly highlighted concerns involving product safety, labeling accuracy, and potential risks to vulnerable populations. Enforcement has included warning letters for unapproved drug claims, mislabeling, inadequate testing, and non-compliant animal products. The agency has also emphasized cGMP expectations, contaminant testing, adverse event reporting, and the need for well-controlled studies to establish safety for long-term use.

On November 12, 2025, President Trump signed into law H.R. 5371, the “Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026” (the “Act”), which makes continuing appropriations and extensions for fiscal year 2026, and which also limits any THC content to 0.4mg per container for hemp-derived consumable products nationally on November 12, 2026. It is unknown to the Company whether or not the sections of the Act that impact the hemp industry will ultimately go into effect on November 12, 2026, or if those sections will be replaced, impacted or amended by subsequent acts of Congress. cbdMD was founded using THC-free broad spectrum, however a significant amount of our revenues are from products that contain low-dose hemp-derived THC that complies with the original Farm Bill and the Act in all likelihood will have a harmful impact on the industry and Company if further legislation is not enacted to mitigate the current language. During December 2025, Senator Wyden introduced the Cannabinoid Safety and Regulation Act (“CSRA”) which has received strong support from industry and a number of legislators, and would mitigate damaging impact for the Act, should this be ultimately signed into law. As of the date of this filing there are no assurances the CSRA will be enacted.

The Federal Trade Commission ("FTC") regulates advertising and marketing practices and continues to take enforcement actions against companies that make unsubstantiated health claims, misleading endorsements, or unsupported performance representations. All claims made by cbdMD—whether digital, print, social media, or influencer-based—must be supported by competent and reliable scientific evidence. Our investment in clinical trials, peer-reviewed publications, and biometric data (e.g., the WHOOP sleep study) strengthens our ability to meet substantiation standards.

The U.S. Department of Agriculture ("USDA") regulates hemp cultivation and approves state and tribal hemp programs. While it does not regulate finished products, all hemp used in cbdMD products must originate from producers operating under USDA-approved or state-approved hemp plans. These requirements ensure that our raw materials originate from legal sources subject to THC compliance, standardized sampling protocols, and production oversight.

The Drug Enforcement Administration ("DEA") retains jurisdiction over controlled substances and continues to regulate cannabis containing more than 0.3% Delta-9 THC. DEA has also expressed concerns about synthetic and semi-synthetic cannabinoids, including isomers produced from chemical conversion processes. These compounds may be considered controlled substances under the Federal Analogue Act, and products containing them may trigger enforcement actions. While cbdMD does not rely on synthetic cannabinoids, evolving DEA views continue to influence market dynamics and state-level legislative activity.

At the state level, the regulatory environment for hemp-derived products is highly fragmented. States have adopted different definitions of allowable cannabinoids, potency limits, serving sizes, packaging and labeling requirements, testing mandates, age restrictions, and sales channel limitations. Several states have enacted specific rules governing hemp-derived Delta-9 THC products, including potency caps and restrictions on intoxicating formulations. Others have banned certain forms of hemp-derived cannabinoids altogether, citing public health concerns. These divergent laws require ongoing reformulation, labeling adjustments, packaging updates, and market-specific strategies. Certain products may not be legal for sale in particular states, and our distribution decisions must account for these differences. We continue to monitor regulatory changes and adjust our operations, product formulations, and distribution pathways as needed.

Internationally, we navigate a similarly varied regulatory landscape. In the United Kingdom, the Food Standards Agency requires Novel Foods authorization for ingestible CBD products. The European Union applies similar Novel Foods rules, although specific requirements vary by member state. cbdMD has submitted a Novel Foods dossier to both the UK Food Standards Agency and the European Food Safety Authority which includes comprehensive safety, toxicology, stability, and manufacturing evidence. In Latin America, distribution often depends on obtaining sanitary registrations or import permits, each requiring product specifications, stability evidence, cannabinoid data, and documentation of manufacturing practices. cbdMD has obtained sanitary registrations or is in the process of securing registrations in countries including Brazil and Costa Rica. Other global markets maintain strict prohibitions or complex regulatory pathways for cannabinoid products, requiring careful evaluation before entry.

Advertising, labeling, and marketing regulations overlap across multiple agencies. All labeling must accurately represent cannabinoid content and include required disclosures, QR codes, batch information, and warnings. Claims must avoid disease-related statements and must be substantiated under both FDA and FTC standards. Pet products face further scrutiny under FDA’s Center for Veterinary Medicine ("CVM"), which considers ingestible cannabinoid pet products unapproved animal drugs absent explicit authorization.

The interplay of these federal, state, and international frameworks creates a dynamic and often uncertain regulatory environment. We expect continued evolution in the laws governing hemp-derived cannabinoids, including potential congressional action, FDA rulemaking, state legislative amendments, and international shifts. Our strategic planning, product development, distribution, and compliance systems are structured to adapt to these changes while prioritizing safety, transparency, and regulatory conformity.

Human Capital

At December 1, 2025 we had approximately 42 full-time employees and employ additional contractors to support the organization’s efforts. There are no collective bargaining agreements covering any of our employees.

We believe that cbdMD’s success depends on our ability to attract, develop and retain key personnel. We believe that the skills, experience and industry knowledge of our key employees significantly benefit our operations and performance.

Employee levels and expertise are assessed and reviewed on a regular basis and management believes it has sufficient human capital to operate its business successfully.

Additional information

Information on the history of our company can be found in Note 1 to the notes to our consolidated financial statements appearing in this annual report on Form 10-K.

We file annual, quarterly and other reports, proxy statements and other information with the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers such as our company that file electronically with the SEC.

Our corporate website address is www.cbdmd.com. We make available free of charge, through the Investor section of our website, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information which appears on our corporate website is not part of this report.