|
(Exact Name of Registrant as Specified in its Charter)
|
|
|
|
State or Other Jurisdiction of
Incorporation or Organization
|
I.R.S. Employer
Identification No.
|
|
|
|
|
Address of Principal Executive Offices
|
Zip Code
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
|
|
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
☒
|
Smaller reporting company
|
|
Emerging growth company
|
|
Page
|
|||
No
|
|||
Form 10-K/A
Amendment No. 1
|
|||
1 | |||
4 | |||
8 | |||
9 | |||
9 | |||
11 | |||
11 | |||
14 |
Name
|
Age
|
Positions
|
||
T. Ronan Kennedy
|
45
|
Chief Financial Officer and Interim Chief Executive Officer
|
||
Scott G. Stephen
|
58
|
Chairman of the Board of Directors
|
||
Bakari Sellers
|
39
|
Director
|
||
William F. Raines, III
|
64
|
Director
|
||
Dr. Sibyl Swift
|
43
|
Director
|
Audit Committee
|
Responsibilities
|
|
Members:
|
The Audit Committee assists the board in fulfilling its oversight responsibility relating to:
|
|
● William F. Raines, III (Chairman)
|
● the integrity of our financial statements;
|
|
● Bakari Sellers
|
● our compliance with legal and regulatory requirements; and
|
|
● Scott G. Stephen
|
● the qualifications and independence of our independent registered public accountants.
|
|
Meetings in fiscal 2023: 11
|
The Audit Committee has the ultimate authority to select, evaluate and, where appropriate, replace the independent auditor, approve all audit engagement fees and terms, and engage outside advisors, including its own counsel, as it deems necessary to carry out its duties. The Audit Committee is also responsible for performing other related responsibilities set forth in its charter. Mr. Raines, the chairman of the Audit Committee is considered a “financial expert” under applicable SEC and NYSE American rules.
|
|
Compensation, Corporate Governance and Nominating Committee
|
In April 2020 following our 2020 annual meeting of shareholders, our board of directors approved the consolidation of two previously constituted board committees, the Compensation Committee and the Nominating and Corporate Governance Committee, into one consolidated committee titled the Compensation, Corporate Governance and Nominating Committee.
|
|
Members:
|
Responsibilities
|
|
● Bakari Sellers (Chairman)
● William F. Raines, III
● Scott Stephen
Meetings in fiscal 2023: 5
|
The Compensation, Corporate Governance and Nominating Committee is charged with ensuring that our compensation programs are competitive, designed to attract and retain highly qualified directors, officers and employees, encourage high performance, promote accountability and assure that employee interests are aligned with the interests of our shareholders. The committee is also tasked with assessing the performance of the board and to make recommendations to the board from time to time, or whenever it shall be called upon to do so, regarding nominees for the board and to ensure our compliance with appropriate corporate governance policies and procedures. The Compensation, Corporate Governance and Nominating Committee also administers our equity compensation plans.
|
Use of Outside Advisors
|
||
All compensation decisions are made with consideration of the committee’s guiding principles to provide competitive compensation for the purpose of attracting and retaining talented executives and of motivating our executives to achieve improved cbdMD executive performance, which ultimately benefits our shareholders. The committee has the sole authority to retain and terminate any advisors, including independent counsel, compensation consultants and other advisors to assist as needed, and has sole authority to approve the advisors’ fees, which will be paid by us, and the other terms and conditions of their engagement. The committee considers input and recommendations from management, including our President and Chief Financial Officer (who are not present during any committee deliberations with respect to compensation) in connection with its review of our compensation programs and its annual review of the performance of the other executive officers. During fiscal 2020 and 2021 the committee engaged the services of an independent compensation consultant, Willis Towers Watson, to provide it with an executive pay review. The committee takes into consideration the recommendations of the outside compensation consultant and our executive officers but retains absolute discretion as to whether to adopt such recommendations in whole or in part, as it deems appropriate.
|
●
|
all individuals serving as our principal executive officer or acting in a similar capacity during fiscal 2023;
|
●
|
our two most highly compensated named executive officers at September 30, 2023 whose annual compensation exceeded $100,000; and
|
●
|
up to two additional individuals for whom disclosure would have been made in this table but for the fact that the individual was not serving as a named executive officer of our company at September 30, 2023.
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock
Awards
($) (1)
|
Options
Awards
($) (1)
|
Non equity
incentive
plan
compensation
($)
|
Non-qualified
deferred
compensation
earnings ($)
|
All other
compensation
($)
|
Total ($)
|
||||||||||||||||||||||||
Ronan Kennedy, Interim CEO and CFO
|
2023
|
275,000 | - | - | - | - | - | - | 275,000 | ||||||||||||||||||||||||
CFO and COO
|
2022
|
275,962 | 100,000 | 49,000 | 132,750 | - | - | - | 557,712 | ||||||||||||||||||||||||
Kevin MacDermott, President (2)
|
2023
|
109,615 | - | - | - | - | - | - | 109,615 | ||||||||||||||||||||||||
2022
|
109,901 | - | 90,000 | 291,600 | - | - | - | 491,501 |
(1)
|
Represents the grant date value of the options and awards granted during the years presented, determined in accordance with FASB ASC Topic 718. The assumptions made in the valuations of the awards are included in Note 9 of the notes to our consolidated financial statements appearing in our 2023 10-K.
|
(2)
|
Mr. MacDermott commenced serving as our President on May 16, 2022 and resigned on February 26, 2023.
|
Term:
|
One year, with the option of extending for additional one-year terms by mutual consent of the parties upon 60 day’s prior notice by us.
|
|
Annual base salary:
|
$275,000, an increase of $25,000 from his initial annual base salary.
|
|
Restricted stock awards and stock options:
|
As additional compensation on the effective date of the agreement we granted him (i) a restricted stock award of an aggregate of 556 shares of our common stock vesting subject to continued employment on January 1, 2022, and (ii) five year stock options to purchase 1,667 shares of our common stock at an exercise price of $88.20 per share, vesting subject to continued employment on October 1, 2022.
|
Under Mr. Kennedy’s employment agreement dated October 1, 2021 we granted Mr. Kennedy: (i) a restricted stock award of 1,112 shares of our common stock, and (ii) 10 year stock options to purchase 7,778 shares of our common stock, vesting subject to continued employment as follows: (A) 2,223 shares at an exercise price of $157.50 per share which have vested; (B) an additional 2,778 shares at an exercise price of $225.00 per share which have vested; and (B) an additional 2,778 shares at an exercise price of $292.50 per share, which have also vested.
|
||
Performance bonus:
|
Mr. Kennedy is eligible for a performance bonus payable in a combination of cash and awards of common stock, to be based upon his relative achievement of annual performance goals to be established by our board of directors upon recommendation of the Compensation, Corporate Governance and Nominating Committee.
|
|
Discretionary bonus:
|
The Compensation, Corporate Governance and Nominating Committee will review his performance on an annual basis, and in connection with such annual review, Mr. Kennedy may be entitled to receive an annual discretionary bonus in such amount as may be determined by our board of directors, upon the recommendation of the committee, in its sole discretion.
|
|
Other benefits:
|
Mr. Kennedy is entitled to participate in all benefit programs we offer our employees, reimbursement for business expenses and four weeks of paid vacation.
|
|
Claw back provision:
|
Any incentive-based compensation, or any other compensation, paid to Mr. Kennedy pursuant to the terms of the Kennedy Employment Agreement, or otherwise, is subject to recovery under any law, government regulation or stock exchange listing requirement, and will be subject to such deductions and claw back as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement, or any policy adopted by cbdMD pursuant to any such law, government regulation or stock exchange listing requirement.
|
|
Termination:
|
The Kennedy Employment Agreement will terminate upon his death or as follows:
|
|
Disability
|
If we should terminate the Kennedy Employment Agreement as a result of his disability (as defined in the agreement) he is entitled to his base salary for a period of three months following the date of termination.
|
|
By cbdMD for cause or by Mr. Kennedy without cause:
|
We may terminate the Kennedy Employment Agreement without notice for “cause” (as defined in the Kennedy Employment Agreement) following a 30 day cure period. If we should terminate the Kennedy Employment Agreement for cause, he is not entitled to any compensation or severance benefits. Mr. Kennedy may also terminate the agreement without cause. In such event, he is not entitled to any compensation or severance benefits.
|
|
By cbdMD other than for cause and not in connection with a change of control:
|
We may terminate the Kennedy Employment Agreement upon 30 days’ notice to Mr. Kennedy. In such event, he is entitled to receive his base salary and executive benefits through the remaining period of the then current term of the agreement, and all granted but unvested options or restricted shares shall become fully vested on the date of termination and may be exercised by him for a period of 12 months following the date of termination.
|
Constructive termination:
|
Constructive termination of the Kennedy Employment Agreement shall occur if we materially breach the agreement, a successor company to us fails to assume the obligations under the agreement, or a material change in Mr. Kennedy’s duties and responsibilities occurs, all subject to waiver by him. In such event, subject to a 30-day cure period, he is entitled to the same compensation as if we had terminated the agreement without cause.
|
Change of control:
|
If the Kennedy Employment Agreement is terminated not for cause within two years of a change of control of cbdMD (as defined in the agreement), or in the 90 days prior to a change of control, we are obligated to pay Mr. Kennedy an amount equal to the greater of (i) 1.5 multiplied by his then base salary, or (ii) the base salary remaining to be paid during the then current term of the agreement, payable in a lump-sum payment on the termination date.
|
|
Non-compete, confidentially and indemnification:
|
The Kennedy Employment Agreement contains customary non-compete, for a period of one year following the date of termination, confidentiality and indemnification provisions.
|
Plan category
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
Weighted average
exercise price of
outstanding options,
warrants and rights ($)
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column)
|
|||||||||
Plans approved by our shareholders
|
||||||||||||
2015 Plan
|
29,087 | 170.77 | 9,738 | |||||||||
2021 Plan
|
12,678 | 84.00 | 81,846 | |||||||||
Plans not approved by shareholders
|
- | - | - |
Name
|
Number of securities underlying unexercised options (#) exercisable
|
Number of securities underlying unexercised options (#) unexercisable
|
Equity
incentive plan awards:
Number of
securities
underlying unexercised
unearned
options
|
Option
exercise
price
($)
|
Option
expiration
date
|
Number of
shares of
unit of stock
that have
not vested
(#)
|
Market
value of
shares or
units of
stock that
have not
vested ($)
|
Equity
incentive plan awards:
Number of
unearned
shares, units
or other rights
that have not
vested
|
Equity
incentive plan awards:
Market of
payout value
of unearned
shares, units or
other rights
that have not
vested
|
||||||||||||||||||||||||
T. Ronan Kennedy
|
2,223 | - | - | 157.50 |
10/1/2025
|
- | - | - | - | ||||||||||||||||||||||||
2,778 | - | - | 225.00 |
10/1/2025
|
- | - | - | - | |||||||||||||||||||||||||
2,778 | - | - | 292.50 |
10/1/2025
|
- | - | - | - | |||||||||||||||||||||||||
Kevin MacDermott(1)
|
- | - | - | - |
-
|
- | - | - | - |
(1)
|
Resigned effective February 26, 2023.
|
Annual retainer
|
$ | 35,000 | ||
Stock award, 112 shares of common stock, vesting quarterly on June 30, 2023, September 30, 2023, December 31, 2023 and March 31, 2024
|
||||
Common stock option grant, 667 shares, five year term, strike price fair market value on the Grant Date, vesting immediately
|
||||
Additional committee chairperson annual compensation:
|
||||
Chairman of the Board of Directors
|
$ | 22,500 | ||
Audit Committee
|
$ | 17,000 | ||
Compensation, Corporate Governance and Nominating Committee
|
$ | 7,000 | ||
Additional committee membership annual compensation (excluding committee chairperson):
|
||||
Audit Committee
|
$ | 8,500 | ||
Compensation, Corporate Governance and Nominating Committee
|
$ | 4,000 | ||
No additional compensation for meeting attendance
|
Name
|
Fees
earned or
paid in
cash ($)
|
Stock
Awards
($)
(1)
|
Options
Awards ($)
(1)
|
Non equity
incentive
plan
compensation ($)
|
Non-qualified deferred compensation earnings ($)
|
All other compensation ($)
|
Total ($)
|
|||||||||||||||||||||
William F. Raines, III
|
$ | 61,250 | $ | 1,415 | $ | 5,280 | - | - | - | $ | 67,945 | |||||||||||||||||
Bakari Sellers
|
$ | 54,125 | $ | 1,415 | $ | 5,280 | - | - | - | $ | 60,820 | |||||||||||||||||
Dr. Sibyl Swift(2)
|
$ | - | $ | 1,415 | $ | 5,280 | - | - | - | $ | 6,695 | |||||||||||||||||
Scott G. Stephen
|
$ | 50,375 | $ | 1,415 | $ | 5,280 | - | - | - | $ | 57,070 |
(1)
|
Represents the grant date value of the options and awards granted during the years presented, determined in accordance with FASB ASC Topic 718. The assumptions made in the valuations of the awards are included in Note 9 of the notes to our consolidated financial statements appearing in our 2023 10-K.
|
(2)
|
Only includes compensation specific to board role and excludes compensation as VP of Scientific and Regulatory Affairs.
|
❖
|
each person who is known by us to be the beneficial owner of more than 5% of our outstanding common stock;
|
❖
|
each director and nominee;
|
❖
|
each named executive officer; and
|
❖
|
all named executive officers and directors as a group.
|
Name of Beneficial Owner
|
No. of
Shares
Beneficially
Owned
|
% of
Class
|
||||||
Directors and Officers
|
||||||||
T. Ronan Kennedy (1)
|
16,164
|
*
|
||||||
William F. Raines, III (2)
|
3,228
|
*
|
||||||
Bakari Sellers (3)
|
3,410
|
*
|
||||||
Scott G. Stephen (4)
|
4,110
|
*
|
||||||
Dr. Sibyl Swift (5)
|
1,952
|
*
|
||||||
All names executive officers and directors as a group (five persons)
|
28,864
|
|
* | |||||
5% Shareholders
|
||||||||
R. Scott Coffman (6)
|
387,695
|
|
12.7% |
|
*
|
Less than 1%
|
(1)
|
The number of shares of our common stock beneficially owned by Mr. Kennedy includes (a) 86 shares of common stock issuable upon conversion of 2,300 shares of our Series A Preferred and (b) 9,532 shares of common stock underlying stock options with exercise prices ranging from $88.65 to $292.5 per share.
|
(2)
|
The number of shares of common stock beneficially owned by Mr. Raines includes (a) 337 shares held by him directly; (b) 2,891 shares of common stock underlying vested stock options with exercise prices ranging from $12.60 to $243.45 per share and (c) 2,058 shares held of record by Board Investor Group II, LLC that Mr. Raines controls voting. Mr. Raines disclaims beneficial ownership of all securities held by Board Investors Group II, LLC except to the extent of his pecuniary interest therein. See footnote 6 in our consolidated 2023 financial statements. Excludes 84 shares of common stock underlying unvested restricted stock awards.
|
(3)
|
The number of shares of our common stock beneficially owned by Mr. Sellers includes 3,047 shares of our common stock underlying vested stock options with exercise prices ranging from $12.60 to $243.45 per share. Excludes 28 shares of common stock underlying unvested restricted stock awards.
|
(4)
|
The number of shares of our common stock beneficially owned by Mr. Stephen includes 2,891 shares of common stock underlying vested stock options with exercise prices ranging from $12.60 to $243.45 per share. Excludes 28 shares of common stock underlying unvested restricted stock awards.
|
(5)
|
The number of shares of our common stock beneficially owned by Dr. Swift includes 284 shares of common stock as well as 667 common stock options with exercise prices ranging from $12.60 to $45.00. Excludes 28 shares of common stock underlying unvested restricted stock awards.
|
(6)
|
The number of outstanding shares of our common stock beneficially owned by Mr. Coffman includes: (a) 81,867 shares held of record by Edge of Business, LLC (“Edge of Business”); and (b) 305,828 shares held of record by the Coffman Family Office, LLC (“Coffman Family Office”). Except as set forth herein, Mr. Coffman has voting and dispositive control over securities owned of record by Edge of Business. Coffman Management, LLC (“Coffman Management”) is the Manager of Coffman Family Office and Mr. Coffman is the Manager of Coffman Management. Mr. Coffman disclaims beneficial ownership of the securities held of record by each of these entities except to the extent of his pecuniary interest therein.
|
Fiscal 2023
|
Fiscal 2022
|
|||||||
Audit Fees
|
240,000 | 321,955 | ||||||
Audit Related Fees
|
89,069 | 7,600 | ||||||
Tax Fees
|
26,000 | 31,000 | ||||||
All other Fees
|
- | - | ||||||
Total
|
355,069 | 360,555 |
●
|
reviewed and discussed with management and Cherry Bekaert LLP, our independent registered public accounting firm, our audited consolidated financial statements as of September 30, 2023 and the fiscal year then ended;
|
●
|
discussed with Cherry Bekaert LLP the matters required to be discussed by Statement on Auditing Standards No. 61, “Communication with Audit Committees,” as amended, with respect to its review of the findings of the independent registered public accounting firm during its examination of our financial statements; and
|
●
|
received from Cherry Bekaert LLP written affirmation of its independence as required by the Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees.” In addition, the Audit Committee discussed with Cherry Bekaert LLP, its independence and determined that the provision of non-audit services was compatible with maintaining auditor independence.
|
Audit Committee of the board of directors of cbdMD, Inc.
|
|
/s/ William F. Raines, III, Chairman
|
|
/s/ Bakari Sellers
|
|
/s/ Scott G. Stephen
|
(a)
|
(1) Financial statements.
|
Incorporated by
Reference
|
Filed or
Furnished
Herewith
|
|||||||||
No.
|
Exhibit Description
|
Form
|
Date Filed
|
Number
|
||||||
8-K
|
5/3/23
|
1.1
|
||||||||
8-K
|
12/4/18
|
2.1
|
||||||||
10-Q
|
2/14/19
|
2.2
|
||||||||
10-Q
|
2/14/19
|
2.3
|
||||||||
10-Q
|
2/14/19
|
2.4
|
||||||||
10-Q
|
2/14/19
|
2.5
|
||||||||
1-A
|
9/18/17
|
2.1
|
||||||||
1-A
|
9/18/17
|
2.2
|
||||||||
1-A
|
9/18/17
|
2.3
|
||||||||
1-A
|
9/18/17
|
2.4
|
||||||||
1-A
|
9/18/17
|
2.5
|
||||||||
1-A
|
9/18/17
|
2.6
|
||||||||
8-K
|
4/29/19
|
3.7
|
||||||||
8-A
|
10/11/19
|
3.1(f)
|
||||||||
1-A
|
9/18/17
|
3.7
|
||||||||
1-A
|
9/18/17
|
3.8
|
||||||||
1-A
|
9/18/17
|
3.9
|
||||||||
8-K
|
1/14/21
|
10.1
|
||||||||
S-1
|
9/26/18
|
4.10
|
||||||||
8-K
|
5/14/19
|
4.1
|
||||||||
8-K
|
10/16/19
|
4.1
|
||||||||
8-K
|
1/10/20
|
4.1
|
||||||||
8-K
|
12/9/20
|
4.1
|
||||||||
8-K
|
6/30/21
|
4.1
|
||||||||
8-K
|
5/3/23
|
4.1
|
||||||||
1-A
|
9/18/17
|
6.21
|
||||||||
10-Q
|
8/14/19
|
10.1
|
||||||||
10-Q
|
2/13/20
|
10.1
|
||||||||
8-K
|
2/28/20
|
10.1
|
||||||||
10-Q
|
8/21/20
|
10.1
|
||||||||
8-K
|
4/21/21
|
10.1
|
||||||||
8-K
|
4/21/21
|
10.2
|
||||||||
8-K
|
7/27/21
|
10.1
|
||||||||
8-K
|
7/27/21
|
10.2
|
8-K
|
12/3/21
|
10.1
|
||||||||
8-K
|
10/5/21
|
10.1
|
||||||||
8-K
|
1/18/22
|
10.1
|
||||||||
10-Q
|
5/13/22
|
10.21
|
||||||||
8-K
|
6/13/22
|
10.1
|
||||||||
10-Q
|
8/11/22
|
10.22
|
||||||||
S-1
|
3/13/23
|
10.17
|
||||||||
S-1
|
3/13/23
|
10.20
|
||||||||
8-K
|
3/2/23
|
10.1
|
||||||||
8-K
|
3/2/23
|
10.2
|
||||||||
1-A
|
9/18/17
|
15.1
|
||||||||
Filed^
|
||||||||||
10-K
|
12/17/21
|
21.1
|
||||||||
Filed^
|
||||||||||
Filed^
|
||||||||||
Filed
|
||||||||||
Filed
|
||||||||||
Filed
|
||||||||||
Filed^
|
||||||||||
101 INS
|
Inline XBRL Instance Document
|
Filed^
|
||||||||
101 SCH
|
Inline XBRL Taxonomy Extension Schema
|
Filed^
|
||||||||
101 CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase
|
Filed^
|
||||||||
101 LAB
|
Inline XBRL Taxonomy Extension Label Linkbase
|
Filed^
|
||||||||
101 PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
Filed^
|
||||||||
101 DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase
|
|||||||||
104
|
Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)
|
+ Indicates management contract or compensatory plan.
^ Previously filed with our 2023 Form 10-K, originally filed with the SEC on December 22, 2023, which is being amended hereby.
|
Date: January 26, 2024
|
cbdMD, Inc.
|
||
By:
|
/s/ T. Ronan Kennedy
|
||
T. Ronan Kennedy
|
|||
Interim Chief Executive Officer (Principal Executive Officer)
|
|||
Date: January 26, 2024
|
cbdMD, Inc.
|
||
By:
|
/s/ T. Ronan Kennedy
|
||
T. Ronan Kennedy
|
|||
Chief Financial Officer (Principal Accounting and Financial Officer)
|