Good afternoon. Welcome to cbdMD Inc.'s September 30 Fourth Quarter and Fiscal 2022 Earnings Call and Update. This afternoon, the company issued a press release that provided an overview of its fourth quarter and fiscal year 2022 results, which follows the filing of its annual report on Form 10-K. Today's conference call is being recorded and will be available online along with our earnings press release covering our financial results and non-GAAP presentation, at cbdmd.com in accordance with cbdMD's retention policies. All participants on this call will be in a listen-only mode. The call will be followed by a question-and-answer session. At this time, I would now like to turn the conference over to Ronan Kennedy, the company's Chief Financial Officer and Chief Operating Officer. Ronan, please go ahead.

Thank you, Trice, and thank you all for joining the cbdMD's fiscal 2022 earnings call and update. On the call today, we also have Kevin MacDermott, our President and Dr. Sibyl Swift our Vice President of Scientific and Regulatory Affairs. We'd like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for purposes of Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. cbdMD cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated, including risks described in the company's annual report on Form 10-K for the quarter ending September 30, 2022, and our other filings with the SEC, all of which can be reviewed on the company's website at www.cbdmd.com or on the SEC website at sec.gov. Any forward looking statements made on this conference call speak only as of today's date Thursday, December 15, 2022 and cbdMD does not intend to update any of these forward-looking statements to reflect events or circumstances that would occur after today's date, except as may be required by Federal Securities Law. With that, I'd like to turn the call over to Kevin.

Thank you, Ronan. Happy Holidays everybody. 2022 was a reset year for cbdMD. We began the year taking aggressive action to rationalize our spend and focus on profitability. We've made a lot of great strides, but it remains a difficult environment for the CBD industry. We spent a lot of time studying the market and consumers and in addition to addressing our cost structure, spent most of the year designing our business to address the following challenges, product efficacy, affordability, and education. CBD is often misunderstood in its impact question. We took this to heart and we wanted to ensure that our brand and products are never questioned for their quality or efficacy. With that imperative in mind, we scrutinized our U.S. product portfolio and launched some of the highest concentration products in the market. This reset resulted in cutting our human product SKUs from over 150 to just over 40. Our emphasis was to be sure that if you take our products that you would feel their impact, so our lineup now features CBD's strengths that range from 1,500 milligrams to 7,500 milligrams. That means if you consume our products, you will feel the benefit of taking properly. We know this through consumer feedback and the results of our two-year long clinical studies. Everyday wellness products were not enough. We knew we could provide consumers more and further differentiate our product portfolio. In October, we completed development of our product design to address the pain management market, for cbdMD MAX. cbdMD MAX provides consumers a naturally derived alternative for pain with the unique combination of cbdMD's proprietary cannabinoid blend and Univestin, a clinically proven natural ingredient with a long legacy of safe human consumption. Pain impacts millions of Americans, we're excited about the product line extensions of channel opportunities…

Thank you, Kevin. On our last call, Kevin said that we have laid the foundation for cbdMD to deliver superior everyday wellness products that are formulated to specifically address the needs of our customers. We have discussed our Citizens Petition to FDA on several of our last call. We began the process in February through our Trade Association, the Natural Products Association, or NPA, and the FDA had until August 22 to respond. As we anticipated, the FDA did not provide a substantive response. And true to form, they stated they needed more time to consider our request. In light of the agency's current approach to regulating dietary ingredients, and my over half decade of experience working at the agency, we believe that now is the time to stand up as an industry and ensure that the agency does not block innovation in the dietary supplement space. While there has been little movement at the federal level towards regulatory clarity for hemp-derived cannabinoid products, states continue to introduce legislation to ensure that consumers have access to safe products that are effective. Maintaining compliance with multiple different state regulations is challenging, but is now a known cost to operate in the cannabinoid space. We are actively engaged with state agencies whenever possible, to present reasonable legislative solutions to ensure that our customers have access to products that support their wellbeing. We are also working with the NPA to directly collaborate with Congress persons and their staff on Capitol Hill to educate them on the challenges that current regulatory regime presents, but more importantly, on the opportunities that responsible legislation and their engagement with the agency would provide to reputable companies like cbdMD and our customers who deserve safe and effective botanically drives wellness solutions at affordable prices. Our novel foods applications…

On a GAAP basis, total net sales for the fourth quarter of fiscal 2022 were $7.9 million were 19% decrease from prior year's comparative quarter total. For our fiscal year ended September 30, 2022 audited in net sales totaled $35.4 million, a 20% decrease compared to $44.5 million in fiscal 2021. Our quarterly e-commerce direct-to-consumer business generated sales of $6.3 million in the fourth quarter of fiscal 2022. This was a 13% year-over-year quarterly decrease. For fiscal year-end 2022, e-commerce generated $26.4 million of net sales compared to $32.9 million for the comparative prior fiscal year or 19% decrease. E-commerce represented 79% of our total net sales for the fourth quarter, and 75% for the fiscal year-ended 2022. Our wholesale business generated $1.6 million of net sales for the fourth quarter of fiscal 2022, down 37% compared to $2.5 million for the comparative quarter in fiscal 2021. Kevin previously mentioned our sell-through strategy prior to our transition to our higher strains offering, this had a large impact -- larger impact on our wholesale business as we transitionally offering and had sold several products out of stock prior to the reset. For the fiscal year-ended September 30, 2022 and 2021, our wholesale business generated net sales of $8.9 million $11.6 million respectively. Product sales totaled $3.7 million for 2022. Our GAAP gross profit as a percentage of net sales came in at 64% for the fourth quarter of fiscal 2022, this compares to 58% for the comparative prior year period. For the fiscal year-ended September 30, 2022 and 2021, gross profit was 63% and 67% respectively, as a percent of total net sales. We expect to maintain gross profit margins in the mid-60s when factoring in the sales mix. Our operating expenses for the fourth quarter fiscal 2022 totaled $7.9 million,…

Thank you. That wraps up the today's discussion. And we'll just open it up for Q&A.

Thank you, Kevin. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Richard Molinsky [ph], a private investor. Please go ahead.

Hi, guys, how you doing? Congratulations. And I love the product -- I love the product as you know. You mentioned about this $1 million payment that you're going to receive in January, you were mentioning. Can you just explain that a little bit further to me if you don't mind? And I have one more question after that.

Sure. So we previously had invested $1 million in the Adara stack that's been sitting on our balance sheet. And our last -- all we -- as part of sort of the situation that happened, ended up signing new agreement to receive the capital back upon a closure of that transaction. So that transaction has been moving forward. They filed the sort of final proxy to prove the merger, so I think most parties are assuming that that is likely going to happen. At that time that we would get our capital back.

Okay. So with that capital, and a plan, which you've been on, which is to get to profitability. And I know, I've asked you this before. But my hope is that we don't have to go back to the equity markets, you could do some strategically or get to the profitability, $1 million dollars definitely going to help. But is there anything you could talk about? Will this be enough money do you think to see whether you are executing or there could be something else to talk about that would maybe help the finance structure?

Look, Richard, we're looking at a lot of different alternatives right now. So it can't be anything specific. But we got a lot of things in the works.

You got it. No problem. I know you do. And I appreciate that. And good luck to you.

Thanks, Richard.

[Operator Instructions] As there are no further questions from the phone lines, this concludes the Q&A session and today's conference call. You may disconnect your lines. Thank you for participating. And have a pleasant day.