What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-12-19 compared with 2024-12-18 · 268 added, 352 removed, 789 unchanged (44% of the section changed)

23 unchanged sentences

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during our last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, but for the additional review procedures renumerated above.

There have been no changes in our internal control over financial reporting during our last quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION.

On December 15, 2025, the Company entered into a Securities Purchase Agreement, as amneded (the “ELOC Agreement”) with C/M Capital Master Fund, LP, an accredited investor (the “ELOC Purchaser”).

Pursuant to the ELOC Agreement, the Company agreed to sell, and the ELOC Purchaser agreed to purchase, up to $10 million (the “Available Amount”) of the Company’s common stock (the “Purchase Shares”), subject to a sale limit of 19.99% of the outstanding shares of the Company’s common stock in accordance with the rules of the NYSE American.

The transactions contemplated by the ELOC Agreement are subject to the Company registering the ELOC Purchaser’s resale of the Purchase Shares on a registration statement to be filed with the SEC.

Concurrent with the execution of the ELOC Agreement, the Company entered into a registration rights agreement with the ELOC Purchaser.

Pursuant to the Registration Rights Agreement, the Company agreed to file a registration statement on Form S- 1 with the SEC covering the resale of the shares of common stock sold under the ELOC, on or before the 30th calendar day following the date of the Registration Rights Agreement and to use its commercially reasonable efforts to cause such registration statement to be declared effective by the SEC at the earliest practicable date, subject to limited exceptions described therein.

The registration rights granted under the Registration Rights Agreement are subject to certain conditions and limitations and are subject to customary indemnification and contribution provisions.

In connection with entering into the ELOC Agreement, the Company agreed to immediately issue to the ELOC Purchaser, 8,000,000 shares of common stock as commitment shares and, thereafter an amount of shares equal to 0.5% of the Available Amount, which shall be issued in a pro rated fashion simultaneously with the delivery of any and all Purchase Shares purchased under the ELOC Agreement.

The Company does not have a right to commence any sales of common stock to the ELOC Purchaser under the ELOC Agreement until the time when all of the conditions to the Company’s right to commence sales of Purchase Shares to the ELOC Purchaser set forth in the ELOC Agreement have been satisfied, including that a registration statement covering the resale of the Purchase Shares is declared effective by the SEC and the final form of prospectus contained therein is filed with the SEC (the “Commencement Date”).

At any time from and after the Commencement Date, on any business day on which the previous business day’s closing sale price of common stock was equal to or greater than $0.50 (the “Purchase Date”), the Company may direct the ELOC Purchaser to purchase a specified number of shares of common stock (a “Fixed Purchase”) not to exceed on any single business day the lesser of (i) $500,000 of shares of common stock or (ii) $10,000,000 in the aggregate of Fixed Purchases (as defined in the ELOC Agreement), at a purchase price equal to the lesser of 95% of (i) the lowest sale price of the common stock on the trading day immediately prior to such applicable Purchase Date or (ii) the daily volume weighted average price of the common stock for the five trading days immediately preceding the applicable Purchase Date for such Fixed Purchase.

In addition, at any time from and after the Commencement Date, on any business day on which the previous business day’s closing sale price of the common stock is equal to or greater than $0.50 and such business day is also the Purchase Date for a Fixed Purchase of an amount of shares of common stock not less than the applicable Fixed Purchase Share Limit (as defined in the ELOC Agreement) (the “VWAP Purchase Date”), the Company may also direct the ELOC Purchaser to purchase an additional number of shares of common stock (a “VWAP Purchase”) at a purchase price equal to the lesser of 95% of (i) the closing price of a share of common stock on the trading day immediately prior to such applicable Purchase Date and (ii) the lowest sale price on the VWAP Purchase date.

If the Company makes certain issuances of its securities within a specified period of time after a Purchase Date and such securities are issued at prices (the “New Issuance Price”) less than the prices to be paid by the ELOC Purchaser in such Fixed Purchase or VWAP Purchase, the purchase price for such applicable Fixed Purchase or VWAP Purchase would be reduced to the New Issuance Price, subject to the terms and conditions set forth in the ELOC Agreement.

Under the ELOC Agreement, in no event may the aggregate amount of Purchase Shares submitted in any single or combination of VWAP Purchase notices on a particular date require a payment from the ELOC Purchaser to us that exceeds $10,000,000, unless such limitation is waived by the ELOC Purchaser.

Series C Preferred

Effective December 18, 2025, the Company entered into Securities Purchase Agreements dated December 18, 2025 ( “Series C Purchase Agreements”) with two institutional investors whereby the investors were issued an aggregate of 1,000,000 shares of Series C Convertible Preferred Stock (“Series C Preferred Stock”) for aggregate gross proceeds of $2.25 million.

The Company received net proceeds of $2.21 million which shall be used for working capital purposes.

In addition, pursuant to the Purchase Agreements, the Company entered into a Registration Rights Agreement with each of the Investors pursuant to which the shares of common stock issuable upon conversion of the Series C Preferred Stock to the Investors are entitled to registration under the Securities Act.

Pursuant to the Registration Rights Agreement, the Company is required to file a registration statement to register the shares underlying the Series C Preferred Stock within 30 days following the closing date.

On December 18, 2025, the Company filed a Certificate of Amendment to the Certificate of Incorporation (the “Certificate of Designation”) designating 1,000,000 shares of the Company’s authorized preferred stock as Series C Convertible Preferred Stock, par value $0.001 per share.

Except for differences in the stated value, floor price and conversion price, the Series C Preferred Stock has terms and conditions that are substantially similar to those of the Company’s Series B Convertible Preferred Stock.

Each share of the Series C Preferred Stock is convertible into common stock at a conversion price of $2.25, subject to anti-dilution adjustments and Alternate Conversion rights (as defined in the Certificate of Designation).

The Series C Preferred Stock accrues dividends at a rate of 10% per annum which are payable quarterly in shares of common stock, subject to the satisfaction of all Equity Conditions (as defined in the Certificate of Designation), or in cash.

If the Company fails to satisfy an Equity Condition, dividends shall be paid in cash.

However, if North Carolina law prohibits the payment of dividends in cash, then the then Stated Value (as defined in the Certificate of Designation) shall be increased by the dividends as reasonably determined by the Company and the holders of the Series C Preferred Stock.

With respect to dividends, distributions, liquidation, dissolution and winding up of the Company, the Series C Preferred Stock ranks pari passu with the Series B Convertible Preferred Stock and is senior to all other shares of the Company’s capital stock unless otherwise consented to by the holders of the Series C Preferred Stock.

The holders of Series C Preferred Stock have no voting power and no right to vote, except as required by the North Carolina Business Corporations Act or with respect to matters affecting the preferences, rights, privileges or powers relating to the Series C Preferred Stock.

In addition, the Series C Preferred Stock is subject to a beneficial ownership limitation which prohibits any holder from beneficially owning more than 4.99% of the shares of the Company’s common stock outstanding immediately following such conversion.

The Certificate of Designation is filed as an exhibit to this annual report.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

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EXHIBIT INDEX

Incorporated by

Incorporated by Reference

Exhibit Description

Underwriting Agreement, dated as of April 30, 2023, between cbdMD, Inc.

and Maxim Group LLC

Filing or Furnished Herewith

Merger Agreement dated December 3, 2018 by and among Level Brands, Inc., AcqCo, LLC, cbdMD LLC and Cure Based Development, LLC

1 unchanged sentence

Articles of Merger dated December 20, 2018 as filed with the Secretary of State of North Carolina merging AcqCo, LLC with and into Cure Based Development, LLC

Articles of Merger dated December 20, 2018 as filed with the Secretary of State of Nevada merging Cure Based Development, LLC with an into cbdMD LLC

Articles of Merger dated December 20, 2018 as filed with the Secretary of State of North Carolina merging Cure Based Development, LLC with an into cbdMD LLC

Articles of Merger dated December 20, 2018 as filed with the Secretary of State of Nevada merging Cure Based Development, LLC with and into cbdMD LLC

Articles of Merger dated December 20, 2018 as filed with the Secretary of State of North Carolina merging Cure Based Development, LLC with and into cbdMD LLC

1 to Agreement and Plan of Merger dated March 31, 2021

Articles of Incorporation

3 unchanged sentences

Articles of Amendment to the Articles of Incorporation - filed December 5, 2016

Articles of Amendment to Articles of Incorporation

Articles of Amendment to Articles of Incorporation including the Certificate of Designations, Rights and Preferences of the 8.0% Series A Cumulative Convertible Preferred Stock

Articles of Amendment of Articles of Incorporation, as amended, of cbdMD, Inc.

effective April 24, 2023

Articles of Amendment Automatic Conversion of Series A Preferred Stock effective May 6, 2025

Articles of Amendment to the Articles of Incorporation 8 to 1 reverse split effective May 6, 2025

Certificate of Designation of Series B Convertible Preferred Stock filed September 29, 2025

Certificate of Designation of Series C Convertible Preferred Stock filed December 19, 2025

Bylaws, as amended

Articles of Amendment to Articles of Incorporation dated April 22, 2019

Articles of Amendment to the Articles of Incorporation including the Certificate of Designations, Rights and Preferences of the 8% Series A Cumulative Convertible Preferred Stock filed October 11, 2019

Form of common stock certificate of the registrant

2015 Equity Compensation Plan+

1 unchanged sentence

2021 Equity Compensation Plan*

Form of Representative’s Warrant dated May 15, 2019

Form of Representative’s Warrant dated October 16, 2019

Form of Representative’s Warrant dated January 9, 2020

Form of Representative’ s Warrant dated December 11, 2020

1 unchanged sentence

Form of Representative’ s Warrant dated May 3, 2023

Form of Senior Secured Convertible Promissory Note dated January 30, 2024

Convertible Promissory Note dated January 30, 2024

2025 Equity Compensation Plan+

Form of Indemnification Agreement

Office Lease dated July 11, 2019

Westinghouse Boulevard Lease dated August 27, 2019

Amended and Restated Executive Employment Agreement dated April 19, 2021 by and between cbdMD, Inc.

and Martin A.

Amended and Restated Executive Employment Agreement dated April 19, 2021 by and between CBD Industries LLC and R.

Scott Coffman+

Warehouse Lease dated August 27, 2019

Asset Purchase Agreement by and among Twenty Two Capital, LLC, cbdMD, Inc., John J.

3 unchanged sentences

Ronan Kennedy* +

Amendment 1 to the Amended and Restated Executive Employment Agreement by and between cbd Industries, LLC and R.

Scott Coffman Restated Agreement effective January 11, 2022+

Equipment Purchase Agreement effective April 7, 2022 by and between cbd Industries, LLC and Old Belts Extracts LLC

Separation Agreement by and between Martin A.

Sumichrast and cbdMD, Inc., and its subsidiaries effective June 11, 2022+

Membership Interest Transfer Agreement dated June 22, 2022

5 unchanged sentences

and Keystone Capital Partners, LLC

Securities Purchase Agreement, dated as of January 30, 2024, by and between cbdMD, Inc.

and the Investors*

Security Agreement, dated as of January 30, 2024, by and between cbdMD, Inc.

7 unchanged sentences

Amendment to Extend Westinghouse Boulevard Lease dated November 26, 2024

Form of Preferred Stock Purchase Agreement between cbdMD, Inc.

and the Selling Shareholders *

Form of Registration Rights Agreement between cbdMD, Inc.

and the Selling Shareholders

Executive Employment Agreement dated November 28, 2025 between cbdMD, Inc.

Ronan Kennedy*+

Securities Purchase Agreement by and between cbdMD, Inc.

and C/M Capital Master Fund, LP, dated December 15, 2025, as amended

Registration Rights Agreement by and between cbdMD, Inc.

and C/M Capital Master Fund, LP, dated December 15, 2025

Form of Series C Preferred Stock Securities Purchase Agreement dated December 19, 2025

Form of Registration Rights Agreement date December 19, 2025

Code of Business Conduct and Ethics

Insider Trading Policy

Subsidiaries of the Registrant

List of Subsidiaries

Consent of Cherry Bekaert LLP

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Certain exhibits and schedules have been omitted in accordance with Item 601(a)(5) of Regulation S-K.

The registrant agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon its request.

The registrant agrees to furnish supplementary a copy of any omitted exhibit or schedule to the Commission upon its request.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Sibyl Swift, PhD

/s/ Kevin Roe

December 19, 2025

/s/ Jeffery Porter

December 19, 2025

Jeffery Porter

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

5 unchanged sentences

and subsidiaries (the “Company”) as of September 30, 2025 and 2024, and the related statements of operations, comprehensive loss, stockholders’ (deficit) equity, and cash flows for each of the years in the two-year period ended September 30, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended

September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company ’ s Ability to Continue as a Going Concern

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Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated to the audit committee and that:

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

As disclosed in Note 12 to the financial statements, the Company has entered into convertible note agreements in which management evaluated required accounting considerations including, significant estimates, and judgements around certain assumptions associated with the convertible notes.

The transactions were deemed complex by management as they required valuation of the convertible notes and conversion feature in the debt instrument.

These notes were initially measured at fair value and have been subsequently remeasured to fair value each reporting period.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures with respect to management’s assessment of certain fair value measurements included the following, among others:

We obtained a listing of all convertible notes elected to be carried at fair value and management’s accounting analysis supporting these transactions.

We evaluated the conclusions reached to ensure these were recorded in accordance with the relevant accounting guidance.

We identified and evaluated the considerations related to the determination of the fair value of the convertible notes and the conversion features that included valuation models and assumptions utilized by management.

We reviewed the fair value models used, significant assumptions, and underlying data used in the models and evaluated whether the estimates and assumptions were consistent with audit evidence obtained.

We evaluated the disclosures surrounding fair value measurements to ensure they are disclosed in accordance with relevant accounting guidance.

We determined that there were no critical audit matters.

/s/ Cherry Bekaert LLP

11 unchanged sentences

$ 2,261,242 $ 2,452,553

Accounts receivable

Accounts receivable, net

1,040,887 983,910

Inventory, net

2,732,127 2,365,187

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62,708 62,708

Intangible assets

Intangible assets, net

2,124,502 2,889,580

16 unchanged sentences

Accrued dividends

4,671,000 667,000

Deferred Revenue

6 unchanged sentences

Long term liabilities:

Long term liabilities

Operating leases - long term portion

Contingent liability

Total long term liabilities

19 unchanged sentences

( 210 ) ( 440,152 )

( 440,152 ) ( 898,495 )

Total Net Sales

5 unchanged sentences

14,130,845 15,310,951

Impairment of goodwill and other intangible assets

Loss from operations

) ( 3,315,410 )

Realized and unrealized loss on marketable and other securities, including impairments

- ( 700,000 )

Decrease of contingent liability

74,580 185,638

Increase in fair value of convertible debt

87,380 ( 429,789 )

Interest (expense) income

Interest income (expense)

34,308 ( 29,507 )

8 unchanged sentences

Net Loss per share:

Basic and Diluted loss per share

( 1.79 ) ( 13.32 )

Basic and Diluted earnings per share ( 1.09 ) ( 14.29 )

Weighted average number of shares Basic and Diluted:

6 unchanged sentences

( 2,040,902 ) ( 3,700,126 )

Other Comprehensive income (loss)

$ 7,189 $ ( 7,189 )

Preferred dividends

9 unchanged sentences

Stock based compensation

5,015 233,666

Restricted stock expense

14,121 11,885

Write off of prepaid assets due to termination of contractual obligation

Issuance of stock for services

Inventory and materials impairment

3 unchanged sentences

361,063 452,326

Impairment of goodwill and other intangible assets

Credit losses 382,588 54,322

Increase/(Decrease) in contingent liability

(Decrease) increase in fair value of convertible debt

( 87,380 ) 429,789

Increase in fair value of convertible debt

Other-than-temporary impairment on other investments

Gain on termination of operating lease

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( 732,919 ) 766,472

76,000 105,898

766,472 27,443

Prepaid inventory

8 unchanged sentences

3,099 318,008

Collection on discontinued operations accounts receivable

Cash used by operating activities

1 unchanged sentence

Cash flows from investing activities:

Proceeds from sale of other investment securities

Purchase of intangible assets

2 unchanged sentences

( 184,172 ) ( 190,015 )

Cash (used) provided by investing activities

Cash used by investing activities

( 184,172 ) ( 290,015 )

1 unchanged sentence

Proceeds from issuance of common stock

50,001 2,478,325

1,247,499 ( 132,599 )

Preferred dividend distribution

- ( 3,668,500 )

Cash provided (used) by financing activities

Proceeds from issuance of preferred stock

Cash provided by financing activities

1,445,236 1,297,500

Net increase (decrease) in cash

Net (decrease) increase in cash

( 191,311 ) 654,693

8 unchanged sentences

Issuance of shares for conversion of debt and accrued interest

$ 1,079,639 $ 515,601

Change in lease asset related to extinguishment of HQ lease and new warehouse lease

$ ( 1,723,544 ) $ -

Issuance of shares for intangible asset

Conversion of accrued preferred dividends to preferred stock

$ 7,008,151 $ -

Preferred dividends accrued but not paid

$ 2,334,501 $ 4,004,001

See Notes to Consolidated Financial Statements

7 unchanged sentences

3,860 4 - - - 8,956 - 8,960

Issuance of options for share based compensation

- - - - - 1,772 - 1,772

Issuance of restricted stock for share based compensation

- - - - - 5,163 - 5,163

Preferred dividend declared, not paid

- - - - - - ( 1,000,501 ) ( 1,000,501 )

- - - - - - ( 996,501 ) ( 996,501 )

Balance, December 31, 2023

2,961,056 2,961 5,000,000 5,000 - 183,389,556 ( 176,360,774 ) 7,036,743

Issuance of Common stock

19,930 20 - - - 15,763 - 15,783

Issuance of options for share based compensation

- - - - - 1,080 - 1,080

Issuance of restricted stock for share based compensation

- - - - - 303 - 303

Change in far value of debt related to credit risk

- - - - ( 6,000 ) - - ( 6,000 )

Issuance of Common stock - Keystone

64,218 64 - - - 49,936 - 50,000

Preferred dividend declared, not paid

- - - - - - ( 1,000,500 ) ( 1,000,500 )

Net Income (loss)

- - - - - - ( 3,010,562 ) ( 3,010,562 )

Balance, March 31, 2024

3,045,204 3,045 5,000,000 5,000 ( 6,000 ) 183,456,639 ( 180,371,836 ) 3,086,847

Issuance of options for share based compensation, net

- - - - - 5,376 - 5.376

Issuance of restricted stock for share based compensation, net

- - - - - 7,167 - 7.167

Change in far value of debt related to credit risk

Change in fair value of debt related to credit risk

- - - - 7,189 - - 7,189

1 unchanged sentence

267,597 268 - - - 1,076,470 - 1,076,738

Preferred dividend declared, not paid

- - - - - - ( 1,000,500 ) ( 1,000,500 )

- - - - - - 459,737 459,737

Balance, June 30, 2024

3,759,433 3,759 5,000,000 5,000 ( 1,200 ) 183,933,162 ( 180,912,600 ) 3,028,121

Issuance of Common stock

4,000 4 - - - ( 4 ) - -

Issuance of options for share based compensation

- - - - - 1,080 - 1.080

Issuance of restricted stock for share based compensation

- - - - - 3,727

Change in far value of debt related to credit risk

Issuance of Common Stock, GSS Agreement

21,875 22 - - - 82,228 - 82,250

1 unchanged sentence

6,250 6 - - - 4,400 - 4,406

Issuance of Common Stock, Convertible Notes

Conversion of preferred stock and accrued dividends to common stock 8,125,000 8,125 ( 5,000,000 ) ( 5,000 ) ( 3,125 ) 7,008,151 7,008,151

Shares issued for fractional shares in reverse stock split

89 - - - - - - -

Preferred stock issuance -

1,700,000 1,700 1,443,536 1,445,236

Preferred dividend declared, not paid

2 unchanged sentences

Balance, Balance at September 30, 2025 8,917,054 8,917 1,700,000 1,700 - 186,650,640 ( 179,435,150 ) 7,226,107

3,939,057 $ 3,939 5,000,000 $ 5,000 $ ( 7,189 ) $ 184,029,565 $ ( 182,067,898 ) $ 1,963,417

See Notes to Condensed Consolidated Financial Statements

6 unchanged sentences

Issuance of Common stock

Issuance of options for share based compensation

Issuance of restricted stock for share based compensation

Preferred dividend

Net Income (loss)

Balance, December 31, 2022

3,051 3 - - - 15,780 - 15,783

Issuance of Common stock

Issuance of options for share based compensation

- - - - - 9,308 - 9,308

Issuance of restricted stock for share based compensation

Issuance of Common stock - A360

Issuance of Common stock - DCO

- - - - - 11,886 - 11,886

Change in fair value of debt related to credit risk - - - - ( 7,189 ) - - ( 7,189 )

Issuance of Common stock - Keystone 8,027 8 - - - 49,992 - 50,000

Roundup fractional shares resulting from reverse split

Issuance of Common Stock, Convertible Notes 101,857 102 - - - 515,568 - 515,670

Issuance of Common Stock, Majik Settlement 9,376 9 - - - 40,792 - 40,801

Preferred dividend

Net Income (loss)

Balance, March 31, 2023

- - - - - - ( 4,004,001 ) ( 4,004,001 )

Issuance of Common stock

Issuance of options for share based compensation, net

Issuance of restricted stock for share based compensation, net

Issuance of Common stock - A360

Issuance of Common stock - Maxim

Fractional share true-up

Preferred dividend

Net Income (loss)

Balance, June 30, 2023

- - - - - - ( 3,700,126 ) ( 3,700,126 )

Issuance of Common stock

Issuance of options for share based compensation

Issuance of restricted stock for share based compensation

Issuance of Common stock - Keystone

Maxim transaction expenses

Preferred dividend

Net Income (loss)

Balance, Balance at September 30, 2023

Balance at September 30, 2024

492,383 492 5,000,000 5,000 ( 7,189 ) 184,033,012 ( 182,067,898 ) 1,963,417

9 unchanged sentences

Our fiscal year end is established as September 30.

There have been no material changes in the Company's significant accounting policies from those previously disclosed in the 2023 10 -K.

The accompanying unaudited interim condensed consolidated financial statements of cbdMD have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the 2024 10 -K.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of consolidated financial position and the consolidated results of operations for the interim periods presented have been reflected herein.

Reverse Stock Split

On April 12, 2023, the board effected a reverse stock split at a ratio of one -for- forty -five, effective as of April 24, 2023.

The board of directors effected a reverse stock split at a ratio of one -for-eight, effective as of May 6, 2025.

Unless otherwise indicated, all share numbers in this filing, including shares of common stock and all securities convertible into, or exercisable for, shares of common stock, give effect to the reverse stock split.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries CBDI, Paw CBD, Proline Global, and Therapeutics.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries CBDI, Paw CBD, Proline Global, Oasis, and Therapeutics.

All material intercompany transactions and balances have been eliminated in consolidation.

11 unchanged sentences

As of September 30, 2025 and September 30, 2024, we had an allowance for credit losses of $ 599,521 and $ 346,197 , respectively.

September 30,

Credit Loss allowance - beginning of period

$ 346,197 $ 42,180

Credit loss provision 635,912 358,339

Write offs ( 382,588 ) ( 54,322 )

Recoveries - -

Credit loss allowance - end of period $ 599,521 $ 346,197

Merchant Receivable

3 unchanged sentences

Fees and reserves can change periodically with notice from the processors.

At September 30, 2024, the receivable from payment processors included $ 621,678 for the waiting period amount and is recorded as accounts receivable in the accompanying consolidated balance sheet.

At September 30, 2025 and 2024, the receivable from payment processors included $ 786,449 and $ 621,678 , respectively, for the waiting period amount and is recorded as accounts receivable in the accompanying consolidated balance sheet.

Inventory is stated at the lower of cost or net realizable value with cost being determined on a weighted average basis.

26 unchanged sentences

Any changes in fair value for marketable securities during a given period will be recorded as an unrealized gain or loss in the consolidated statement of operations.

For investments other securities without a readily determinable fair value, the Company may elect to estimate its fair value at cost less impairment plus or minus changes resulting from observable price changes.

The Company has elected the fair value method and will make individual determinations on and instrument by instrument basis.

For investments other securities without a readily determinable fair value, the Company has elected to estimate fair value at cost less impairment plus or minus changes from observable price changes.

Intangible Assets

The Company's intangible assets consist of trademarks and other intellectual property, all of which were previously accounted for in accordance with Accounting Standards Codification (ASC) Topic 350, Intangibles – Goodwill and Other .

The Company employed the non-amortization approach to account for purchased intangible assets having indefinite lives.

Under the non-amortization approach, intangible assets having indefinite lives were not amortized into the results of operations, but instead were reviewed annually or more frequently if events or changes in circumstances indicate that the assets might be impaired, to assess whether their fair value exceeds their carrying value.

We previously performed an annual impairment analysis each fiscal year on the indefinite-lived intangible assets following the steps laid out in ASC 350 - 30 - 35 - 18.

Our annual impairment analysis included a qualitative assessment to determine if it was necessary to perform the quantitative impairment test.

In performing a qualitative assessment, we reviewed events and circumstances that could affect the significant inputs used to determine if the fair value was less than the carrying value of the intangible assets.

If a quantitative analysis was necessary, we would analyze various aspects including revenues from the business, associated with the intangible assets.

In addition, intangible assets would be tested on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred.

The Company analyzed a variety of factors on its business to determine if a circumstance could trigger an impairment loss, and, at the time and based on the information then known, had determined that is it was more likely than not that an impairment loss had occurred.

See Note 5 more further information on the impairment testing procedures performed at December 31, 2022 and the Company’s decision to change from indefinite to definite lived status for its trademarks.

The Company now accounts for its trademarks in accordance with Accounting Standards Codification (ASC) Topic 360, Property, Plant and Equipment.

The Company began amortizing its trademarks over 20 years beginning January 1, 2023 and will perform impairment tests as prescribed by ASC 360, which states that impairment testing should be completed whenever events or changes in circumstances indicate that the asset group's carrying value may not be recoverable.

The Company test for impairment in accordance with ASC Topic 360, Property, Plant and Equipment ("ASC 360" ), which states that impairment testing should be completed whenever events or changes in circumstances indicate that the asset group's carrying value may not be recoverable.

If there are indications that the asset group's carrying value may not be recoverable, there are two further steps involved in long-lived asset impairment testing.

1 unchanged sentence

Step II of the impairment test, as per ASC 360, if necessary, involves quantifying the fair value of the asset group.

As further outlined in Note 5, during July of fiscal 2023, the Company determined that based on regulatory uncertainty and ongoing Company performance it was prudent to change the amortization of the “cbdMD” and “directCBDonline” trademarks to 5 years and “hempMD” trademark to 10 years.

This became a triggering event for an impairment test under ASC360 which resulted in an impairment of the intangibles in July 2023.

As of the end of the fourth quarter and fiscal 2023, a significant decline in market capitalization of both classes of equity as a result of the proxy vote triggered a subsequent impairment test, resulting in additional impairment during the fourth quarter of 2023.

Contingent Liability

A significant component of the purchase price consideration for the Company’s acquisition of Cure Based Development includes a fixed number of future shares to be issued as well as a variable number of future shares to be issued based upon the post-acquisition entity reaching certain specified future revenue targets, as further described in Note 6.

The Company made a determination of the fair value of the contingent liabilities as part of the valuation of the assets acquired and liabilities assumed in the business combination.

Revenue Recognition

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Revenue Recognition

The Company records revenue from the sale of its products when risk of loss and title to the product are transferred to the customer, which is upon shipping (and is typically FOB shipping) which is when our performance obligation is met.

The Company records revenue from the sale of its products when risk of loss and title to the product are transferred to the customer, which is upon shipping under standard sales terms, which is when our performance obligation is met.

Net sales are comprised of gross revenues less product returns, trade discounts and customer allowances, which include costs associated with off-invoice mark-downs and other price reductions, as well as trade promotions.

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The Company incurred $ 4.4 million and $ 4.2 million in advertising and marketing and promotional costs included in operating expenses during the years ended September 30, 2025 and 2024 respectively.

The Company believes driving its advertising aids in brand awareness and is critical to maintain brand recognition.

The Company believes driving its advertising aids brand awareness and is critical to maintain brand recognition and acquiring customers.

We are constantly evaluating advertising methods and costs and working to drive down our cost of customer acquisition.

The Company is a North Carolina corporation that is treated as a corporation for federal and state income tax purposes.

As of October 1, 2019, CBDI and Paw CBD were wholly owned subsidiaries and are disregarded entities for tax purposes and their entire share of taxable income or loss is included in the tax return of the Company and as of March 15, 2021, Therapeutics is also a wholly owned subsidiary and is a disregarded entity for tax purposes and its entire share of taxable income or loss is included in the tax return of the Company.

All wholly owned subsidiaries are disregarded entities for tax purposes and their entire share of taxable income or loss is included in the tax return of the Company.

The Company accounts for income taxes pursuant to the provisions of the Accounting for Income Taxes topic of the Financial Accounting Standards Board ("FASB") ASC 740 which requires, among other things, an asset and liability approach to calculating deferred income taxes.

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The Company from time to time may have amounts on deposit in excess of the insured limits.

The Company had a $ 1,893,606 uninsured balance at September 30, 2024 and a $ 1,163,360 uninsured balance at September 30, 2023 .

The Company had an approximate $ 1.5 million uninsured balance at September 30, 2025 and an approximate $ 1.9 million uninsured balance at September 30, 2024.

Concentration of credit risk with respect to receivables is principally limited to trade receivables with corporate customers that meet specific credit policies.

Management considers these customer receivables to represent normal business risk.

The Company did not have any customers that represented a significant amount of our sales for the year ended September 30, 2024 .

The Company did not have any customers that represented a significant amount of our sales for the years ended September 30, 2025 and 2024.

Stock-Based Compensation

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The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

The Company experienced a loss of $ 3.7 million for the fiscal year ended September 30, 2024 , resulting in a working capital deficit of $ 1.1 million at September 30, 2024.

The Company experienced a loss from operations of $ 2.1 million for the fiscal year ended September 30, 2025, and has net working capital of $ 3.1 million at September 30, 2025.

While the Company is taking strong action, believes in the viability of its strategy and path to profitability, and in its ability to raise additional funds, there can be no assurances to that effect.

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Convertible Notes

Effective February 1, 2024 ( the “Effective Date”), the Company entered into a Securities Purchase Agreement dated January 30, 2024 ( the “Purchase Agreement”) with five institutional investors (the “Investors”) whereby the Investors advanced the Company an aggregate of $ 1,250,000 gross proceeds and the Company issued each Investor an 8 % Senior Secured Original Issue 20 % Discount Convertible Promissory Note, in the aggregate principal amount of $ 1,541,666 (the “Notes”).

The Company is using the proceeds from the issuance of the Notes for working capital and general corporate purposes.

Effective February 1, 2024, the Company entered into a Securities Purchase Agreement dated January 30, 2024 with five institutional investors whereby the Investors advanced the Company an aggregate of $ 1,250,000 gross proceeds and the Company issued each Investor an 8 % Senior Secured Original Issue 20 % Discount Convertible Promissory Note, in the aggregate principal amount of $ 1,541,666 .

The Company used the proceeds from the issuance of the notes for working capital and general corporate purposes.

The Company elected the fair value option under ASC 825 Fair Value Measurements for the notes.

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The changes in fair value related to instrument-specific credit risk is recorded through other comprehensive income (loss).

These notes were fully converted during fiscal year 2025.

See Note 12 for more information related to the notes.

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Common equivalent shares are excluded from the computation of net loss per share if their effect is anti-dilutive.

On February 16, 2023, we held an annual meeting of stockholders.

At the annual meeting, our stockholders approved an amendment to our articles of incorporation, as amended, to effect a reverse stock split of our issued and outstanding shares of common stock by a ratio of between one -for- twenty to one -for-fifty, inclusive, with the exact ratio to be set at the discretion of our board of directors, at any time after approval of the amendment and prior to February 16, 2024.

On April 12, 2023, the board effected a reverse stock split at a ratio of one -for- forty -five, effective as of April 24, 2023 ( the "Reverse Stock Split").

On April 10, 2025, we held an annual meeting of stockholders.

At the annual meeting, our stockholders approved an amendment to our articles of incorporation, as amended, to effect a reverse stock split of our issued and outstanding shares of common stock by a ratio of between one -for- three to one -for- ten , inclusive, with the exact ratio to be set at the discretion of our board of directors, at any time after approval of the amendment and prior to the one year anniversary of the meeting.

On May 6, 2025, the board effected a reverse stock split at a ratio of one -for- eight , effective as of May 7, 2025 ( the "Reverse Stock Split").

Unless otherwise indicated, all share numbers in this report, including shares of common stock and all securities convertible into, or exercisable for, shares of common stock, give effect to the Reverse Stock Split.

New Accounting Standards

The Company adopted ASU 2016 - 13 Financial Instruments – Credit Losses (Topic 326 ):

Measurement of Credit Losses on Financial Instruments (ASC 326 ) effective October 1, 2023.

This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.

CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet credit exposures such as unfunded commitments to extend credit.

Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses.

The adoption of this standard had no material impact on the consolidated financial statements.

In November 2023, the FASB issued guidance that updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance on an annual and interim basis.

The Company adopted this guidance for its annual period ending September 30, 2025.

While the adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements, the new guidance resulted in increased disclosures on reportable segments in Note 16 of the Notes to the Consolidated Financial Statements.

In November 2024, the FASB issued guidance that requires disaggregation of specific expense categories in disclosures within the footnotes to the financial statements on an annual and interim basis.

The Company is required to adopt this guidance for its annual period ending September 30, 2028 and all interim periods thereafter on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of this guidance on its disclosures.

In December 2023, the FASB issued guidance that enhances the transparency of income tax disclosures by expanding annual disclosure requirements related to the rate reconciliation and income taxes paid.

The Company is required to adopt this guidance for its annual period ending September 30, 2026, which will result in increased disclosures in the Notes to its Consolidated Financial Statements.

NOTE 2 – MARKETABLE SECURITIES AND INVESTMENT OTHER SECURITIES

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As such we believe it was prudent to reassess the carrying value of this non-liquid security.

The Company performed an additional valuation analysis as of September 30, 2024 and determined that no further impairment was needed based on factors such as Steady State's financial performance and re-alignment of the business.

For the year ended September 30, 2024 and September 30, 2023 the Company recorded $ 0 and an unrealized loss of $ 700,000 , respectively of realized and unrealized loss on marketable and other securities, including impairments.

The Company performed an additional valuation analysis as of September 30, 2025 and September 30, 2024 and determined that no further impairment was needed based on factors such as Steady State's financial performance and re-alignment of the business.

For the year ended September 30, 2025 and September 30, 2024 the Company recorded $ 0 realized and unrealized loss on marketable and other securities, including impairments.

The table below summarizes the assets and liabilities related to marketable and other securities valued at fair value as of September 30, 2025 :

Markets for Significant Other Significant

Significant Other

Identical Assets

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$ - $ - $ ( 90,362 )

Change in value of equities

Change in value of contingent liability

Additional Investment

Fair value of convertible notes

Balance at September 30, 2024

- - 1,171,308

Change in value of contingent liability

Fair value of convertible notes - - ( 1,171,308 )

Balance at September 30, 2025

$ - $ - $ 1,171,308

NOTE 3 – INVENTORY

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Inventory Reserve

- ( 126,742 )

Inventory prepaid

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Abnormal amounts of idle facility expense, freight, handling costs, scrap, and wasted material (spoilage) are expensed in the period they are incurred and no material expenses related to these items occurred in the year ended September 30, 2025.

The Company wrote down inventory of $ 921,314 during the fourth quarter of fiscal year ended September 30, 2024 primarily related to obsolete and expired stock keeping units (“SKU”s).

The Company wrote down inventory of $ 365,979 and $ 921,314 during the fourth quarters of fiscal years ended September 30, 2025 and 2024, respectively, primarily related to obsolete and expired stock keeping units (“SKU”s).

We work hard to minimize inventory write-downs and slow moving and aging SKUs and work, as we work to streamline our offerings to higher velocity products and eliminate slow-moving and aging SKUs.

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$ 277,377 $ 454,268

Depreciation expense related to property and equipment was $ 452,326 and $ 404,280 for the year ended September 30, 2024 and 2023 , respectively.

During the third quarter of fiscal year 2023, the Company sold substantially all the assets of its manufacturing facility and as a result the gross investment and accumulated depreciation was removed from the balance sheet, reducing net PP&E

Depreciation expense related to property and equipment was $ 361,063 and $ 452,326 for the years ended September 30, 2025 and 2024, respectively.

NOTE 5 – INTANGIBLE ASSETS

Intangible Assets

As of July 1, 2023 the Company determined that based on market forces and the Company’s outlook it was prudent to adjust the useful lives of cbdMD’s and DCO intangibles to 5 year useful lives and hempMD’s trademark to 10 year amortization to better reflect the outlook of the brands.

This re-evaluation of the tradenames became a triggering event for a valuation test under ASC 360.

As a result of a multi-step approach under ASC 360 we determined that the “cbdMD,” “DirectCBDOnline” tradenames and the technology relieve asset was impaired by $6,027,000, and as a result, the amortization was adjusted to account for any changes in the value and estimated useful life of each asset.

Amortization expense for the year ended September 30, 2024 was $ 697,510 and was recorded on the consolidated statements of operations.

At September 30, 2023, the Company prepared a tradename impairment analysis in accordance with ASC 360 and has determined that based on market sentiment and the sharp decline in combined market capitalization of the common stock and Series A Preferred as a result of the ongoing proxy vote, a triggering event occurred.

The Company prepared an impairment analysis and as a result of a multi-step approach under ASC 360 we determined that the “cbdMD” DirectCBDOnline” tradenames and technology relieve were further impaired by $ 7,192,000 in fiscal year 2023, resulting in a total impairment charge of $ 13,219,000 for the fiscal year ended September 30, 2023.

At September 30, 2024, the Company prepared a tradename impairment analysis in accordance with ASC 360 and has determined that no impairment existed.

Amortization expense for the years ended September 30, 2025 and 2024 was $ 765,078 and $ 697,510 , respectively and was recorded on the consolidated statements of operations.

At September 30, 2025 and 2024, the Company prepared a tradename impairment analysis in accordance with ASC 360 and has determined that no impairment existed.

In 2019, Company’s subsidiary, CBD Industries, LLC, initiated a trademark cancellation proceeding against Majik Medicine, LLC (“Majik”) regarding Majik’s “CBD MD” trademark.

In a Settlement, Purchase, and Release Agreement that occurred in August of 2024, the Company acquired the trademark, resolving all related legal claims.

The agreement included a $ 100,000 initial payment, four additional annual payments of $ 50,000 , the issuance of 75,000 shares of common stock (the “Initial Shares”), and 50,000 more shares on the one -year anniversary.

The agreement included a $ 100,000 initial payment, four additional annual payments of $ 50,000 , the issuance of 9,375 shares of common stock, and 6,250 additional shares on the one -year anniversary.

Failure to make the additional payments would reassign the trademark to Majik.

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This acquisition strengthens the Company’s IP portfolio, avoids litigation costs, and expedites trademark issuance.

Majik also appointed board member William Raines III as a proxy for the Initial Shares for 12 months.

The Company used the Black Scholes method to determine the fair value of the remaining shares to be paid on the one -year anniversary.

At September 30, 2024, the Company prepared a tradename impairment analysis in accordance with ASC 360 and has determined that no impairment existed.

The Company issued the 6,250 additional shares of common stock in the fourth quarter of fiscal 2025 pursuant to the settlement agreement with Majik Medicine.

Intangible assets as of September 30, 2025 and 2024 consisted of the following:

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Tradename related to CBD MD limited mark

368,000 368,000

Tradename related to DirectCBDOnline.com

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NOTE 6 – CONTINGENT LIABILITY

Pursuant to a merger agreement entered into in 2018, the Company had a contractual obligation to issue 338,889 shares of its common stock, after approval by its shareholders, to the members of Cure Based Development, issued in two tranches 144,445 shares and 194,945 shares, both of which were subject to leak out provisions, and the unrestricted voting rights to 194,445 tranche of shares which vested over a five year period and were subject to a voting proxy agreement.

The contractual obligations and earn out provision were accounted for as a contingent liability and fair value was determined using Level 3 inputs, as estimating the fair value of these contingent liabilities require the use of significant and subjective inputs that may and are likely to change over the duration of the liabilities with related changes in internal and external market factors.

The agreement also provided that an additional 338,889 Earnout Shares would be issued as part of the consideration, upon the satisfaction of certain aggregate net revenue criteria by cbdMD within 60 months following the closing date of the merger

Aggregate Net Revenues

Shares Issued/ Each $ of Aggregate Net Revenue Ratio

$ 1 - $ 20,000,000

$ 20,000,001 - $ 60,000,000

$ 60,000,001 - $ 140,000,000

$ 140,000,001 - $ 300,000,000

The Company determined the final Earnout shares to be issued were 19,818 and were issued on January 11, 2024.

The Company previously as a contractual obligation to issue certain shares which was fully settles by the issuance of final Earnout shares of 19,818 and were issued on January 11, 2024.

There is no further Earnout obligation.

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NOTE 8 – SHAREHOLDERS ’ EQUITY

Preferred Stock – The Company is authorized to issue 50,000,000 shares of preferred stock, par value $ 0.001 per share.

In October 2019, the Company designated 5,000,000 of these shares as 8.0 % Series A Cumulative Convertible Preferred Stock.

Our 8.0% Series A Cumulative Convertible Preferred Stock ranks senior to our common stock for liquidation or dividend provisions and holders are entitled to receive cumulative cash dividends at an annual rate of 8.0% payable monthly in arrears for the prior month.

The Company reviewed ASC 480 – Distinguishing Liabilities from Equity in order to determine the appropriate accounting treatment for the preferred stock and determined that the preferred stock should be treated as equity.

There were 5,000,000 shares of 8.0 % Series A Cumulative Convertible Preferred Stock issued and outstanding at September 30, 2024 and September 30, 2023 .

The total amount of dividends declared were $ 4,004,001 and $ 4,002,005 for the years ended September 30, 2024 and September 30, 2023.

The Company suspended payment of the dividend in August of 2023 and as such recorded an accrual of $ 667,000 for the dividends declared but not paid as of September 30, 2023.

As of September 30, 2024, the Accrued liability for the dividends declared but not paid totaled $ 4,669,000 and continues to grow at approximately $ 1 million per quarter.

Preferred Stock Conversion and Reverse Stock Split

In October 2019, the Company designated 5,000,000 of its 50,000,000 authorized shares of preferred stock as 8.0% Series A Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”).

Series A Preferred Stock ranked senior to common stock for liquidation or dividend and holders were entitled to receive cumulative cash dividends at an annual rate of 8.0% payable monthly in arrears for the prior month.

There were 5,000,000 shares of Series A Preferred Stock issued and outstanding at September 30, 2024.

Among other matters, during the Company's annual meeting held on April 10, 2025, the shareholders of the Company approved:

an amendment the Certificate of Designation of the Company’s Series A Preferred Stock to include an automatic conversion provision whereby each outstanding share of Series A Preferred Stock, together with accrued and unpaid dividends, would automatically convert into thirteen shares of Common Stock, at an effective date determined by of the Board of Directors (the ”Automatic Preferred Conversion”);

an amendment to the Company’s Articles of Incorporation to authorize the Board of Directors to effect a reverse stock split of the then outstanding shares of Common stock at a specific ratio, ranging from one -for- three to one -for- ten , to be determined by the Board of Directors at a date and time to be determined by the Board of Directors.

The Board of Directors elected to effectuate the Automatic Preferred Conversion on May 6, 2025 at 4:01 p.m.

Eastern Time (the “Mandatory Exchange Date”).

On the Mandatory Exchange Date, all Series A Preferred Stock, together with accrued and unpaid dividends, was converted into 65,000,000 shares (pre-split) of Common Stock, dividends on converted shares ceased to accrue, and the Series A Preferred Stock ceased trading.

The Board of Directors elected to implement a one -for- eight ( 1:8 ) reverse stock split of the Company’s common stock (the “Reverse Stock Split”) on May 6, 2025, effective at 4:02 p.m.

Eastern Time, immediately following and therefore inclusive of shares of common stock issued in connection with the Automatic Preferred Conversion.

Following the Reverse Stock Split holders of fractional shares received, in lieu of a fractional share, the number of shares rounded up to the next whole number (“Round Up Shares”).

89 Round Up Shares were issued as a result of the Reverse Stock Split.

Common Stock – The Company is authorized to issue 150,000,000 shares of common stock, par value $ 0.001 per share.

There were 8,917,054 and 492,383 shares of common stock issued and outstanding at September 30, 2025 and 2024, respectively.

On March 2, 2023 Company entered into a purchase agreement (the "ELOC") with Keystone Capital Partners, LLC (“Keystone”), pursuant to which Keystone committed to purchase up to 281,934 of shares of our common stock.

Upon the execution of the ELOC, The Company issued 2,616 shares of common stock as "Commitment Shares" to Keystone as consideration for its commitment to purchase shares of our common stock under the ELOC.

An additional 6,104 Commitment Shares were issued 180 days after the date of the ELOC.

The 281,934 shares of the Company's common stock were registered for resale and may be issued under the ELOC or sold by us to Keystone at our discretion from time to time over a 12 month period commencing April 1, 2023.

The purchase price for the shares that the Company sold to Keystone under the ELOC fluctuated based on the price of the Company's common stock.

Keystone purchased an aggregate of 180,955 shares ( 64,218 of which were purchased during the year ended September 30, 2024) under the ELOC, which expired in the first half of fiscal 2024.

Preferred stock transactions:

The Company had no preferred stock transactions in the year ended September 30, 2024 and 2023 .

On September 29, 2025, the Company filed a Certificate of Amendment to the Certificate of Incorporation (the “Certificate of Designation”) designating 1,700,000 shares of the Company’s authorized preferred stock as Series B Convertible Preferred Stock, par value $ 0.001 per share.

Each share of the Series B Preferred Stock is convertible into common stock at a conversion price of $ 1.00 , subject to anti-dilution adjustments and Alternative Conversion rights (as defined in the Certificate of Designation).

The Series B Preferred Stock accrues dividends at a rate of 10 % per annum which are payable quarterly in shares of common stock, subject to the satisfaction of all Equity Conditions (as defined in the Certificate of Designation), or in cash.

If the Company fails to satisfy an Equity Condition, dividends shall be paid in cash.

With respect to liquidation, dissolution and winding up of the Company, the Series B Preferred Stock ranks senior to all shares of the Company’s capital stock unless otherwise consented to by the holders of the Series B Preferred Stock.

The holders of Series B Preferred Stock have no voting power and no right to vote, except as required by the North Carolina Business Corporations Act or with respect to matters affecting the preferences, rights, privileges or powers relating to the Series B Preferred Stock.

In addition, the Series B Preferred Stock is subject to a beneficial ownership limitation which prohibits any holder from beneficially owning more than 4.99 % of the shares of the Company’s common stock outstanding immediately following such conversion.

Common stock transactions:

In the year ended September 30, 2025 :

During the year the Company (i) issued 1,875 shares of restricted stock under the Company's 2015 equity incentive plan to a new employee;

(ii) issued 267,597 shares of common stock for conversions of notes payable;

and (iii) issued 21,875 shares of common stock to a consultant for advisory services, issued

In April 2025 the Company issued 9,432 shares of restricted stock awards to the Company’s board of directors.

The shares vest quarterly on June 30, 2025, September 30, 2025, December 31, 2025, and March 31, 2026.

The stock awards were valued at the fair market price of $ 8,964 and will amortize over the individual vesting periods.

In May 2025, the company issued 8.125 million shares of common stock pursuant to the conversion of the Series A Perfered Stock.

In August 2025, the Company issued 6,250 shares of common stock pursuant to the settlement agreement with Majik Medicine.

In the year ended September 30, 2024:

In September 2024, the Company issued 12,578 shares of common stock pursuant to the partial conversion of certain principal and interest related to the Notes.

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In April 2024, the Company issued an aggregate of 89,279 shares of common stock pursuant to the partial conversion of certain principal and interest related to the Notes.

In March 2024, the company issued 16,000 of restricted stock awards to the Company’s board of directors.

In March 2024, the Company issued 2,000 restricted stock awards to the Company’s board of directors.

The shares vest quarterly on June 30, 2024, September 30, 2024, December 31, 2024, and March 31, 2025.

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In January 2024, the Company issued 2,478 shares as part of the final Earnout.

In the year ended September 30, 2023:

In September of 2023, the company issued 102,616 shares under the Purchase Agreement to Keystone.

In July of 2023 the Company issued 2,616 shares to Keystone pertaining to the commitment shares under the ELOC.

On May 3, 2023, the Company completed an underwritten public offering of 1,350,000 shares of its common stock at a public offering price of $ 2.10 per share.

Gross proceeds from the offering before deducting underwriting discounts and commissions and offering expenses were approximately $ 2.8 million.

Under the terms of an underwriting agreement, the Company granted the underwriter an option, exercisable for 45 days, to purchase up to an additional 202,500 shares of common stock.

The net proceeds to the Company from the offering were approximately $ 2.5 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, and does not take into account the exercise by the underwriter of its option to purchase additional shares of common stock.

The Company also issued the underwriter a warrant to purchase up to 40,500 shares of its common stock exercisable at $ 2.52 per share.

On April 24, 2023 the Company issued a total of 39,533 shares of common stock to account for rounding up of fractional shares related to the Reverse Stock Split.

In March 2, 2023, the Company entered into the ELOC with Keystone, pursuant to which Keystone has committed to purchase up to 281,934 of shares of our common stock.

Additional Commitment Shares ( 6,104 ) will be issued over 180 days from March 2, 2023.

The 281,934 shares of the Company's common stock were registered for resale and may be issued under the ELOC or sold by us to Keystone at our discretion from time to time over a 12 -month period commencing April 1, 2023, subject to a 75 day blackout period commencing April 30, 2023.

The purchase price for the shares that the Company may sell to Keystone under the ELOC will fluctuate based on the price of the Company's common stock.

Depending on market liquidity at the time, sales of such shares may cause the trading price of our common stock to fall.

In April 2023, the Company issued 8,889 shares to Keystone under the ELOC entered into in March of 2023.

On February 1, 2023, the Company entered into an Agreement for Advertising Placement with a360 Media, LLC ( “a360” ) in which a360 will provide professional media support and advertising placement in exchange for up to 134,681 shares of the Company’s common stock valued at $ 14.85 per share.

A360 will receive the shares by providing the Company with a credit in the amount of $ 2,000,000 to be used for media support and advertising placement to the Company, of which $ 514,904 remains unutilized as of September 30,2023.

The shares are 70 % fully vested;

15 % of the Shares shall vest upon each advertising placement accrue pro-rata as percentage of the total advertising placement;

and 15 % of the shares shall vest provided there are no restrictions in product categories that the Company is able to market with a360 while the Company utilizes the advertising placement.

Any shares which do not vest within the term of the agreement shall be forfeited.

The Advertising Placement must be used by the Company prior to December 30, 2023, unless otherwise agreed in writing by both parties.

In January of 2023, the Company issued 2,223 shares of common stock to Twenty Two Capital as the final obligation under the 2021 acquisition agreement upon the expiration of the indemnification period.

Stock option transactions:

No options were issued during fiscal 2025.

In the year ended September 30, 2024:

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The Company has recorded a total prepaid expense of approximately $ 4,300 and intends to amortize the expense over the 12 -month board term.

In the year ended September 30, 2023:

In February of 2023, the Company granted its board of directors an aggregate of 2,667 common stock options.

The options vested immediately, have a strike price of $ 12.60 and a five -year term.

The Company has recorded a total prepaid expense of $ 21,120 and intends to amortize the expense over the 12 -month board term.

In January 2023, the Company issued 2,334 options to a group of employees.

The stock options awards vested at issuance, had a strike price of $ 10.53 , five -year term and a fair market value upon issuance of $ 15,225 .

In December 2022, the Company issued 2,223 options to an employee.

1,667 options vest equally at each anniversary for the next 3 years, have a strike price of $ 11.25 and a five year term.

The total expense of these options is $ 13,150 and will be amortized over the term of the vesting periods.

556 options vest based on meeting certain direct to consumer revenue requirements by the end of December 2024.

The Company has recorded an expense for these options of $ 11,974 for the twelve months ended September 30, 2024 .

The expected volatility rate was estimated based on comparison to the volatility of a blend of the Company's own stock and a peer group of companies in similar industries.

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Weighted average exercise price

$ 0.54 10.35 - 12.60

Risk free interest rate

4 % 3.93 % - 4.71 %

107 % 106.48 % - 106.51 %

Expected term (in years)

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Warrant transactions:

The Company had no warrant transactions during the twelve months ended September 30, 2024.

The Company had no warrant transactions during the twelve months ended September 30, 2025 and 2024.

NOTE 9 -STOCK-BASED COMPENSATION

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The Company accounts for stock-based compensation using the provisions of ASC 718.

ASC 718 codification requires companies to recognize the fair value of stock-based compensation expense in the financial statements based on the grant date fair value of the options.

ASC 718, Stock Compensation, requires companies to recognize the fair value of stock-based compensation expense in the financial statements based on the grant date fair value of the options.

All options are approved by the Compensation, Corporate Governance and Nominating Committee of the Board of Directors.

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( 14 ) 82.80 - -

( 21,124 ) 88.12

Outstanding at September 30, 2025

5,517 991.71 3.14 -

( 5,730 ) 117.35

Outstanding at September 30, 2024

44,035 123.58 3.14 -

Exercisable at September 30, 2025

5,517 $ 991.71 3.14 $ -

As of September 30, 2024 , there was approximately $ 7,858 of total unrecognized compensation cost related to non-vested stock options which vest over a period of approximately 2.3 years.

As of September 30, 2025, there was no unrecognized compensation cost related to non-vested stock options which all are fully vested.

Restricted Stock Award transactions:

The Company issued 16,000 of restricted stock awards to the Company’s board of directors.

In April 2025 the Company issued 9,432 shares of restricted stock awards to the Company’s board of directors.

The shares vest quarterly on June 30, 2025, September 30, 2025, December 31, 2025, and March 31, 2026.

The stock awards were valued at the fair market price of $4,296 upon issuance and will amortize over the individual vesting periods.

In the twelve months ended September 30, 2023:

In February of 2023, the Company issued 448 restricted stock awards to the Company’s board of directors.

The shares vest quarterly one fourth on June 30, 2023, one fourth, on September 30, 2023, one fourth on December 31, 2023, and one fourth on March 31, 2024.

The stock awards were valued at the fair market price of $ 5,660 upon issuance and will amortize over the individual vesting periods.

In January 2023, the Company issued 3,889 shares to a group of employees.

The shares vested upon issuance, having a fair market value upon issuance of $ 40,950 .

In December 2022, the Company issued 1,112 shares of restricted common stock to an employee.

556 shares vested upon issuance and the Company recorded a total expense of $ 6,250 .

556 shares vest based on meeting certain direct to consumer revenue performance hurdles prior to December 2024.

The stock awards were valued at the fair market price of $ 8,964 and will amortize over the individual vesting periods.

The Company issued 2,000 of restricted stock awards to the Company’s board of directors during the fiscal year ended September 30, 2024.

The shares vested quarterly on June 30, 2024, September 30, 2024, December 31, 2024, and March 31, 2025.

The stock awards were valued at the fair market price of $ 4,296 upon issuance and were amortized over the individual vesting periods.

NOTE 10 – WARRANTS

7 unchanged sentences

( 267 ) 1,024.38 - -

( 3,395 ) 242.55

Outstanding at September 30, 2025

5,901 208.75 4.07 -

( 1,352 ) 337.50

Outstanding at September 30, 2024

48,957 337.50 4.07 -

Exercisable at September 30, 2025

4 unchanged sentences

Exercisable at $1346.40 per share

1,079 176.06 October 2024

Exercisable at $56.25 per share

822 56.25 January 2025

Exercisable at $168.30 per share

429 1,346.40 December 2025

5 unchanged sentences

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Commencing August 2019, the Company’s executive offices were located at 8845 Red Oak Blvd, Charlotte, NC (the “Red Oak Facilities”) which we sub-leased under a sublease agreement dated July 11, 2019 which expires December 2026 ( the “Red Oak Sublease”).

We received a default notice from HSKL, Inc., the sub landlord, in September 2023.

Effective March 20, 2024 we entered into a License Agreement, dated as of March 14, 2024, by and between cbdMD, Inc.

and HSKL (the “License Agreement”) and Lease Forbearance Agreement, dated as of March 14, 2024, by and between cbdMD, Inc.

and HSKL (the “Forbearance Agreement”).

Under the License Agreement we have granted HSKL a license to possess and use a portion of the Red Oak Facilities until the earlier of (i) the termination of the Forbearance Agreement and (ii) July 31, 2024 ( the “Termination Date”).

The termination of the License Agreement will result in termination of the Red Oak Sublease.

Pursuant to the Forbearance Agreement HSKL has agreed to forbear from proceeding to exercise its remedies against us under the Red Oak Sublease, and the declaration of default related to past due rent in consideration of the following payments to HSKL:

$ 80,000 upon the execution of the Forbearance Agreement, followed by four monthly payments of $ 40,000 .

HSKL’s forbearance shall extend to the Termination Date and HSKL shall dismiss (without prejudice) a Complaint in Summary Ejectment filed in Mecklenburg County, North Carolina on February 27, 2024.

In the event of our breach of any of the conditions of the Forbearance Agreement, HSKL’s obligation to forbear shall cease, and HSKL may immediately exercise any and all of its rights or remedies at law, in equity or under the Red Oak Sublease.

The Company made all payments required under the Forbearance Agreement and License Agreement and ultimately made a final settlement payment to completely exit all liability associated with the Red Oak Sublease.

From time to time, the Company is involved in legal proceedings and subject to various claims that arise in the ordinary course of business.

Although the results of litigation and claims cannot be predicted with certainty, the Company is not currently a party to any legal proceedings the outcome of which, the Company believes, if determined adversely, would individually or in the aggregate have a material adverse effect on the Company’s Consolidated Financial Statements.

During 2025, the Company continued to expand distribution of our hemp-derived beverage products.

We have entered into agreements with various distributors providing for the distribution of certain of our hemp-derived beverage products, subject to certain terms and conditions, which may vary depending on the form of the agreement.

Such agreements remain in effect for their then-current term as long as our products are being distributed but are subject to specified termination rights held by each party.

Additionally, we are entitled to terminate certain distribution agreements at any time without cause upon payment of a termination fee, which may be material depending on the agreement, depending on the sell through of the product set.

NOTE 12 – NOTE PAYABLE

The Company intends to use the proceeds from the issuance of the Notes for working capital and general corporate purposes.

Each Note bears interest of 8 % per annum and matures on July 30, 2025.

The Note is convertible into shares of common stock at any time following the date of issuance at the Investor’s option at an initial conversion price of $ 0.684 per share (the “Conversion Price”), subject to certain adjustments.

If 30 calendar days, 60 calendar days, 90 calendar days, 120 calendar days, or 180 calendar days after the effective date of the Registration Statement (as defined below) (the “Adjustment Dates”), the Conversion Price then in effect is higher than the Market Conversion Price then in effect on the Adjustment Date, the Conversion Price shall automatically decrease to the Market Conversion Price (as defined under the Note).

The Conversion Price is subject to a $ 0.30 floor price.

As of the filing date of this report, and after the final 180 -day adjustment, the effective Conversion Price is $ 0.5066 .

Furthermore, at any time after the issuance of the Note, the Company may, after written notice to the Investor, prepay any portion or all outstanding Principal Amount by paying an amount equal to 125% of the Principal Amount then being prepaid (representing a 25 % prepayment premium payable to the Investor which shall not constitute a principal repayment);

provided that a Registration Statement registering all of the Conversion Shares issuable under the Note shall have been declared effective.

If the Company elects to prepay the Note, the Investor shall have the right, upon written notice to the Company within five trading days of the Investor’s receipt of a Prepayment Notice, to convert into common stock, up to 100% of the Prepayment Amount at the Conversion Price, upon the terms provided in the Note.

Upon the occurrence of any Event of Default (as defined in the Note), the Interest rate shall automatically be increased to the lesser of 22 % per annum or the highest amount permitted by law.

In the event that such Event of Default is subsequently cured (and no other Event of Default then exists), the adjustment shall cease to be effective as of the day immediately following the date of such cure;

provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default.

In addition, upon the occurrence of Event of Default, which has not been cured within any applicable cure period, the Company shall be obligated to pay to the Investor the Mandatory Default Amount, which Mandatory Default Amount shall be payable to the Investor on the date the Event of Default giving rise thereto occurs.

In the event the Note shall be converted following the occurrence of an Event of Default, the Investor shall have the option to convert the Mandatory Default Amount, upon the terms provided in the Note.

The Notes are secured by a first priority security interest as evidenced by and to the extent set forth in a Security Agreement, by and between the Company and the Investors.

The Company elected the fair value option under ASC 825 Fair Value Measurements for the Notes.

The Notes were initially recognized at a fair value of $ 2,702,000 on the balance sheet as of March 31,2024.

All subsequent changes in fair value, excluding the impact of the change in fair value related to instrument-specific credit risk are recorded in non-operating income.

The changes in fair value related to instrument-specific credit risk is recorded through other comprehensive income (loss).

The overall change in fair value of the Notes during the year ended September 30, 2024 was a decrease of $ 1,357,096 .

The overall change in principal value related to the conversion of Notes to commons stock during the year ended September 30,2024 was a decrease of $ 508,757 .

As of September 30, 2024, total fair value of the Notes is $ 1,171,308 , of which $ 1,032,909 represents the total principal outstanding.

Effective February 1, 2024, the Company entered into a Securities Purchase Agreement dated January 30, 2024, with five institutional investors whereby the Investors advanced the Company an aggregate of $ 1,250,000 gross proceeds and the Company issued each Investor an 8 % Senior Secured Original Issue 20 % Discount Convertible Promissory Note, in the aggregate principal amount of $ 1,541,666 .

Each note bore interest of 8 % per annum and was to mature on July 30, 2025.

Further, the notes were convertible, at the option of the holder, into shares of common stock at conversion price which was adjusted for certain down-round provisions, as defined.

At issuance, the Company elected the fair value option to account for the notes.

The notes were initially recognized at a fair value of $ 2,702,000 .

Excluding the impact of the change in fair value related to instrument-specific credit risk, which was recorded in other comprehensive income, subsequent changes in fair value were recorded in earnings at each reporting period.

recorded in non-operating income.

During the nine months ending June 30, 2025, the Company issued an aggregate of 267,597 shares of common stock upon the partial conversion of the remaining balance outstanding on the notes.

NOTE 13 – LEASES

The Company has lease agreements for its corporate, warehouse and laboratory offices with lease periods expiring between 2024 and 2025.

ASC 842 requires the recognition of leasing arrangements on the consolidated balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased assets.

The Company has a lease agreement for its warehouse with the lease period expiring September 2026.

ASC 842, Leases, requires the recognition of leasing arrangements on the consolidated balance sheet as right-of-use assets and liabilities pertaining to the rights and obligations created by the leased asset.

The Company determines whether an arrangement is a lease at inception and classify it as finance or operating.

All of the Company’s leases are classified as operating leases.

The Company’s leases do not contain any residual value guarantees.

The Company’s lease do not contain any residual value guarantees.

Right-of-use lease assets and corresponding lease liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term.

4 unchanged sentences

Components of operating lease costs are summarized as follows:

September 30,

Year Ended Year Ended

September 30, September 30,

Total Operating Lease Costs

$ 663,570 $ 1,328,4970

Supplemental cash flow information related to operating leases is summarized as follows:

September 30,

September September 30,

Cash paid for amounts included in the measurement of operating lease liabilities

As of September 30, 2024 , our operating leases had a weighted average remaining lease term of 2.99 years and a weighted average discount rate of 4.66 %.

$ 589,264 $ 1,421,610

As of September 30, 2025, our operating leases had a weighted average remaining lease term of 1 year and a weighted average discount rate of 4.66 %.

Future minimum aggregate lease payments under operating leases as of September 30, 2025 are summarized as follows:

4 unchanged sentences

NOTE 14 – LOSS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the following periods:

The following table sets forth the computation of basic and diluted loss per share for the following periods:

September 30,

16 unchanged sentences

( 1.09 ) ( 14.29 )

At the year ended September 30, 2024 , 100,993 potential shares underlying options, unvested RSUs and warrants as well as 185,223 shares issuable upon conversion of our Series A Preferred stock which are excluded from the shares used to calculate diluted loss per share as their inclusion would reduce net loss per share.

At the year ended September 30, 2025, 100,993 potential shares underlying options, unvested RSUs and warrants as well as 1.7 million shares issuable upon conversion of our Series B Preferred stock which are excluded from the shares used to calculate diluted loss per share as their inclusion would reduce net loss per share.

NOTE 15 – INCOME TAXES

14 unchanged sentences

Change in value of convertible debt ( 1.0

Expiration of tax carryovers ( 28.9 ) -

Change in valuation allowance

11 unchanged sentences

Allowance for doubtful accounts

134,000 77,000

Stock compensation

4 unchanged sentences

113,000 101,000

57,000 45,000

Inventory reserve 11,000 -

46,000 57,000

Capitalized expenses

1 unchanged sentence

Charitable contributions

13,000 39,000

Total deferred tax assets

25 unchanged sentences

At September 30, 2025 and 2024 , there are no unrecognized tax benefits, and there are no significant accruals for interest related to unrecognized tax benefits or tax penalties.

The Company has had a valuation allowance against the net deferred tax assets, with the exception of the deferred tax liabilities that result from indefinite-life intangibles ("naked credits").

During the year ended September 30, 2021, the Company generated enough indefinite life deferred tax assets from post-merger NOLs to reduce the naked credits to zero during the year and continue to record a valuation allowance on remaining deferred tax assets.

NOTE 16 - SEGMENT INFORMATION

The Company operates as a single reportable segment.

Our chief operating decision maker (CODM) is the Chief Executive Officer, who reviews financial information on a consolidated basis for purposes of assessing performance and allocating resources.

Accordingly, all of the Company's operations are considered a single operating segment under the criteria of ASC 280, Segment Reporting .

Because we have a single reportable segment, the segment information presented herein is consistent with the consolidated financial statements.

The required segment information for revenue, profit or loss, assets, and specified expenses (such as depreciation and amortization) can be found on the face of the Consolidated Income Statement and Consolidated Balance Sheet.

NOTE 17 – SUBSEQUENT EVENTS

During the first quarter of fiscal 2025, the Company issued an aggregate of 1,421,067 shares of common stock pursuant to the partial conversion of certain principal and interest related to the Notes.

As of the filing date of this report, the Notes have a principal balance of approximately $ 364,000 .

Effective November 26, 2024, cbdMD, Inc.

entered into a Second Amendment to Lease (the “Amendment”) to extend the Warehouse Lease entered into on August 27, 2019 ( the “Lease”) for approximately 80,000 square feet of space located at 2101 Westinghouse Boulevard, Suite A, Charlotte, North Carolina 28273, which facility also serves as the Company’s executive offices.

The Amendment extends the term of the Lease for a period of nineteen months beginning on March 1, 2025 with a new expiration date of September 30, 2026.

The Company has no further rights to extend or renew the terms of the Lease.

The Amendment provides for the monthly base rent of $ 65,000 , with an annual base rent of $ 9.75 per square feet from March 1, 2025 through February 28, 2026, and $ 67,600 with an annual base rent of $ 10.14 per square feet from March 1, 2026 through September 30, 2026.

The Company shall also continue to pay Additional Rent and all other amounts (other than “Monthly Base Rent”) in accordance with the terms of the Lease, except the “Controllable CAM Charges provision in Section 3 of Exhibit C to the Lease shall be deemed deleted from the Lease.

Furthermore, as set forth under the Amendment the landlord has approved certain subleases entered into by and between the Company and sub tenants for portions of the facility.

During November 2024, the Company engaged a consultant and issued 175,000 shares of restricted common stock for advisory services.

5371 - Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026

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, but would be limited by the Act.

Further clarification on the definition of THC will be due within 90 days of the Act’s effectiveness.

Executive Employment

On November 28, 2025, the Company entered into an Executive Employment Agreement with T.

Ronan Kennedy, the Company’s Chief Executive Officer and Chief Financial Officer.

The term of the Agreement commenced on November 28, 2025 and expires three years thereafter and may be extended for additional one -year periods unless terminated.

The Company will pay Mr.

Kennedy a base salary of $ 340,000 .

The Company also granted Mr.

Kennedy a restricted stock award for 445,000 shares of the Company’s common stock pursuant to the Company’s 2025 Equity Compensation Plan (the “2025 Plan”).

The vesting and issuance of the shares is subject to shareholder approval.

Equity Compensation Plan

On November 28, 2025, the board of directors of the Company approved the 2025 Plan, as the Company’s 2015 Equity Compensation Plan has expired and there is a nominal number of shares available under the Company’s 2021 Equity Compensation Plan.

The Company’s board of directors will recommend that the 2025 Plan be approved by its shareholders at the Company’s upcoming 2026 annual meeting.

The purpose of the 2025 Plan is to enable the Company to offer to its employees, officers, directors and consultants whose past, present and/or potential contributions to the Company and its subsidiaries have been, are or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company.

The 2025 Plan reserves 891,316 shares of our common stock for issuance pursuant to the terms of the plan upon the grant of plan options, restricted stock awards, or other stock-based awards granted under the 2025 Plan.

The 2025 Plan also contains an “evergreen formula” pursuant to which the number of shares of common stock available for issuance under the 2025 Plan will automatically increase on October 1 of each calendar year during the term of the 2025 Plan, beginning with calendar year 2026, (i) by an amount equal to 2 % of the total number of shares of common stock outstanding on September 30 of the such calendar year, up to a maximum of 300,000 shares or (ii) to no more than 10 % of the then number of issued and outstanding shares of the Company’s common stock as of the date of such increase.

On December 15, 2025, the Company entered into a Securities Purchase Agreement (the “ELOC Agreement”) with C/M Capital Master Fund, LP, an accredited investor (the “ELOC Purchaser”).

Pursuant to the ELOC Agreement, the Company agreed to sell, and the ELOC Purchaser agreed to purchase, up to $ 10 million (the “Available Amount”) of the Company’s common stock (the “Purchase Shares”), subject to a sale limit of 19.99 % of the outstanding shares of the Company’s common stock in accordance with the rules of the NYSE American.

The transactions contemplated by the ELOC Agreement are subject to the Company registering the ELOC Purchaser’s resale of the Purchase Shares on a registration statement to be filed with the SEC.

Concurrent with the execution of the ELOC Agreement, the Company entered into a registration rights agreement with the ELOC Purchaser.

The registration rights granted under the Registration Rights Agreement are subject to certain conditions and limitations and are subject to customary indemnification and contribution provisions.

In connection with entering into the ELOC Agreement, the Company agreed to immediately issue to the ELOC Purchaser, 40,000 shares of common stock as commitment shares and, thereafter an amount of shares equal to 0.5 % of the Available Amount, which shall be issued in a pro rated fashion simultaneously with the delivery of any and all Purchase Shares purchased under the ELOC Agreement.

At any time from and after the Commencement Date, on any business day on which the previous business day’s closing sale price of common stock was equal to or greater than $ 0.50 (the “Purchase Date”), the Company may direct the ELOC Purchaser to purchase a specified number of shares of common stock (a “Fixed Purchase”) not to exceed on any single business day the lesser of (i) $ 500,000 of shares of common stock or (ii) $ 10,000,000 in the aggregate of Fixed Purchases (as defined in the ELOC Agreement), at a purchase price equal to the lesser of 95 % of (i) the lowest sale price of the common stock on the trading day immediately prior to such applicable Purchase Date or (ii) the daily volume weighted average price of the common stock for the five trading days immediately preceding the applicable Purchase Date for such Fixed Purchase.

In addition, at any time from and after the Commencement Date, on any business day on which the previous business day’s closing sale price of the common stock is equal to or greater than $ 0.50 and such business day is also the Purchase Date for a Fixed Purchase of an amount of shares of common stock not less than the applicable Fixed Purchase Share Limit (as defined in the ELOC Agreement) (the “VWAP Purchase Date”), the Company may also direct the ELOC Purchaser to purchase an additional number of shares of common stock (a “VWAP Purchase”) at a purchase price equal to the lesser of 95 % of (i) the closing price of a share of common stock on the trading day immediately prior to such applicable Purchase Date and (ii) the lowest sale price on the VWAP Purchase date.

Under the ELOC Agreement, in no event may the aggregate amount of Purchase Shares submitted in any single or combination of VWAP Purchase notices on a particular date require a payment from the ELOC Purchaser to us that exceeds $ 10,000,000 , unless such limitation is waived by the ELOC Purchaser.

Series C Preferred

The Company received net proceeds of $ 2,100,000 which shall be used for working capital purposes.

Each share of the Series C Preferred Stock is convertible into common stock at a conversion price of $ 2.25 , subject to anti-dilution adjustments and Alternate Conversion rights (as defined in the Certificate of Designation).

If the Company fails to satisfy an Equity Condition, dividends shall be paid in cash.

In addition, the Series C Preferred Stock is subject to a beneficial ownership limitation which prohibits any holder from beneficially owning more than 4.99 % of the shares of the Company’s common stock outstanding immediately following such conversion.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures