cbdMD (YCBD) risk factors, FY2024 10-K

RISKS RELATED TO OUR OVERALL BUSINESS

1. 01We have a history of losses from operations and there are no assurances we will report profitable operations in future periods or continue as a going concern
2. 02In the event our revenues do not increase, we will need to raise additional capital to fund our operations in furtherance of our business plan
3. 03Our current capitalization limits our ability to make strategic or accretive acquisitions or attract new investors
4. 04In the event the holders of our Notes do not convert the Notes, our ability to repay our Notes upon their maturity in July 2025 is uncertain, and we will face additional risks if we are unable to repay the Notes
5. 05Our recent negative growth rates may continue
6. 06Our business depends on maintaining and strengthening our brand and generating and maintaining ongoing demand for our products, and a significant reduction in such demand could harm our results of operations
7. 07If we fail to attract new customers in a cost-effective manner, our business may be harmed
8. 08Our growth depends, in part, on expanding into additional consumer markets, and we may not be successful in doing so
9. 09Our plans for international expansion may not be successful
10. 10Fluctuations in the cost and availability of raw materials, equipment, labor, and transportation could cause manufacturing delays or increase our costs
11. 11We rely on third-parties for raw materials and to manufacture and compound our products. We have no control over these third parties and if these relationships are disrupted our results of operations in future periods will be adversely impacted
12. 12Failures in our third-party verification and testing protocols may have an adverse impact on our brands which could suppress sales
13. 13Failures to comply with applicable laws, including hemp laws, by our third-party suppliers could create disruptions in the supply chain and adversely impact our ability to manufacture products effectively
14. 14Consumers of the Company’s products may face adverse consequences should they test positive for THC which could negatively impact the Company’s reputation, lead to litigation, or other potentially negative impacts to the Company
15. 15We could be harmed by data loss or other security breaches
16. 16We face risks related to system interruption and lack of redundancy
17. 17Our future success depends on the continuing efforts of our management and key employees, and on our ability to attract and retain highly skilled personnel and senior management
18. 18If our other intangible assets, or fixed assets become impaired, we may be required to record a charge to our earnings

RISKS RELATED TO THE REGULATORY ENVIRONMENT FOR CBD

1. 19Lack of clarity and changes to Federal or state laws pertaining to industrial hemp could slow the use of industrial hemp which would materially impact our revenues in future periods
2. 20Final designation of hemp derived cannabinoids as impermissible adulterants, FDAs refusal to accept hemp derived cannabinoids as New Dietary Ingredients (NDI) or FDAs interpretation of IND Preclusion could negatively impact the Company’s operations
3. 21Failure or inability to secure required state or federal regulatory approvals and permits could negatively impact the Company’s ability to conduct business
4. 22Costs associated with compliance with numerous laws and regulations could impact our financial results. In addition, we could become subject to increased litigation risks associated with the CBD industry and the overall Dietary Supplement Industry
5. 23Uncertainty caused by potential changes to legal regulations could impact the use of the Company’s products
6. 24The FTC may seek to pursue enforcement actions against companies selling hemp derived cannabinoids, including the Company
7. 25Risks associated with international regulations

RISKS RELATED TO OWNERSHIP OF OUR SECURITIES

1. 26We are subject to the continued listing standards of the NYSE American and our failure to satisfy these criteria may result in de-listing of our securities
2. 27The Company has received notification from the NYSE American LLC that the Company is no longer in compliance with NYSE American’s continued listing standards and in the event we do not ultimately regain compliance, our securities could ultimately be delisted from the NYSE American
3. 28The Series A Convertible Preferred Stock ranks junior to all of our indebtedness and other liabilities and is effectively junior to all indebtedness and other liabilities of our subsidiaries
4. 29We are currently unable to pay dividends on the Series A Convertible Preferred Stock
5. 30The Series A Convertible Preferred Stock represents perpetual equity interests in us, and investors should not expect us to redeem or convert the Series A Convertible Preferred Stock on the date the Series A Convertible Preferred Stock becomes redeemable or convertible by us or on any particular date afterwards
6. 31Change of Control redemption obligations of the Series A Convertible Preferred Stock may make it more difficult for a party to acquire us or discourage a party from acquiring us
7. 32A holder of Series A Convertible Preferred Stock has extremely limited voting rights
8. 33The liquidation preference of the shares of our Series A Convertible Preferred Stock would reduce the amount available to our common shareholders in the event of our liquidation or winding up
9. 34The issuance of shares upon the conversions of our outstanding Notes may cause immediate and substantial dilution to our existing shareholders