In a significant corporate real estate move, cbdMD (NYSE:YCBD), Inc., a North Carolina-based company specializing in perfumes, cosmetics, and other toilet preparations, has announced the extension of its warehouse lease. The lease pertains to approximately 80,000 square feet of space at 2101 Westinghouse Boulevard, Suite A, Charlotte, North Carolina, which also houses the company's executive offices.
Effective as of Monday, cbdMD entered into a Second Amendment to extend the original Lease dated August 27, 2019. This extension adds nineteen months to the lease term, commencing on March 1, 2025, and concluding on September 30, 2026. With no further rights to renew, the company has agreed to a monthly base rent of $65,000 for the first year, increasing to $67,600 for the remaining period.
The decision to remain at the current facility was made after management evaluated various options concerning the expiring lease. The extension is seen as a strategic move to avoid operational disruptions and the high costs associated with relocating. It also allows cbdMD more time to seek out potential facilities that align with their long-term goals.
In addition to the lease extension, cbdMD has negotiated sublease agreements, which will help defray some of the rental costs during the new lease period. The terms of the lease and the amendment are detailed in the company's SEC filing, which serves as the source of this information.
The company also disclosed the issuance of approximately 627,011 shares of common stock over the past three months as part of the partial conversion of its outstanding Senior Secured Convertible Notes. As of the day before the lease amendment, the company had around 4,469,444 shares of common stock issued and outstanding.
This move by cbdMD reflects a commitment to maintaining its operational base in Charlotte while strategically managing its financial obligations and planning for future growth. The information provided in this article is based on a press release statement from the company.
"In other recent news, North Carolina-based company cbdMD, Inc. has made significant strides in its intellectual property and financial agreements. The company acquired the "CBD MD" trademark from Majik Medicine, LLC, enhancing its intellectual property portfolio and removing procedural barriers at the U.S. Patent and Trademark Office Trademark Trial and Appeal Board. The acquisition is part of a broader agreement involving annual payments and the issuance of common stock to Majik, as well as a five-year consulting agreement.
In other financial news, cbdMD also amended its existing financial agreements with its institutional investors, incorporating the newly acquired trademark as a permitted lien. Additionally, the company has settled its lease obligations for its former executive offices, resulting in an approximate gain of $550,000.
In its Q3 results, cbdMD reported a 15% decrease in total net sales to $5.1 million, despite improvements in gross margins and operational efficiencies. However, it generated about $200,000 in cash during the quarter. These are some of the recent developments for cbdMD, Inc."
InvestingPro Insights
cbdMD's recent lease extension decision comes amid challenging financial circumstances, as revealed by InvestingPro data. The company's market capitalization stands at a modest $1.95 million, reflecting investor caution. This caution appears warranted, given that cbdMD's revenue for the last twelve months as of Q3 2024 was $20.64 million, with a concerning revenue decline of 21.55% over the same period.
InvestingPro Tips highlight that cbdMD is "quickly burning through cash" and "may have trouble making interest payments on debt." These factors likely influenced the company's decision to extend its current lease rather than relocate, as it allows them to conserve cash and avoid additional financial strain.
Despite these challenges, the company has seen a "significant return over the last week," with a 12.09% price increase. This short-term gain, however, should be viewed in the context of longer-term performance, as the stock price has "fallen significantly over the last five years."
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for cbdMD, providing a deeper understanding of the company's financial position and market performance.
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