Martin A. Sumichrast - 17 May 2022 Form 4 Insider Report for cbdMD, Inc. (YCBD)

Footnote F1

Pursuant to the terms of the Agreement and Plan of Merger (the "Merger Agreement") dated December 3, 2018 by and between the Issuer, its wholly owned subsidiaries, and Cure Based Development, LLC which closed on December 20, 2018 (the "Closing Date"), CBD Holding, LLC ("CBDH"), then the sole member of Cure Based Development, LLC, was entitled to receive (the "Earnout Rights") up to 15,250,000 additional shares of the Issuer's common stock for no additional consideration (the "Earnout Shares") as part of the merger consideration, which such Earnout Shares were to be issued upon the satisfaction of certain aggregate net revenue criteria within 60 months following the Closing Date, as measured at four intervals from the Closing Date of 12 calendar months, 24 calendar months, 42 calendar months (the "Third Marking Period"), and 59 calendar months. The issuance of the Earnout Shares was approved by the Issuer's shareholders in April 2019. On February 26, 2020 in connection with its dissolution and liquidation and pursuant to the terms of a Distribution Agreement, CBDH distributed the Earnout Rights to its members, including the Sumichrast 2017 Family Trust ("Family Trust"), on a pro rata basis. On March 31, 2021 the Issuer entered into Addendum No. 1 to the Merger Agreement with the members of CBDH which amended the measurement periods within the Third Marking Period to change the determination of the aggregate net revenues within the Third Marking Period to a quarterly basis for each of the six fiscal quarters within the Third Marking Period, beginning with the quarter ended March 31, 2021, instead of following the Third Marking Period end date which was 18 months after the beginning of the Third Marking Period. On May 17, 2022 in accordance with the terms of the Merger Agreement, as amended, the Issuer determined that the net revenue criteria for the March 31, 2022 quarter of the Third Marketing Period had been achieved and the Issuer issued an aggregate of 458,877 shares of its common stock representing the March 31, 2022 Third Marking Period Earnout Shares which were earned under the terms of the Merger Agreement, as amended. Included in this issuance was the issuance of 41,299 Earnout Shares to the Family Trust.

Footnote F2

Includes 250,000 shares of common stock held directly by the Reporting Person and 1,644,553 shares of common stock that are held of record by the Family Trust. The Reporting Person has the sole power to dispose of the shares of common stock held of record by the Family Trust. The Reporting Person has the sole right to vote 1,250,803 shares of common stock held by the Family Trust and the balance of 393,750 shares are subject to the terms of a Voting Trust Agreement dated February 26, 2020 between the Issuer and the Family Trust pursuant to which until such time as the unrestricted voting rights to these shares have vested, the voting rights to such shares are held by the independent chairman of the Audit Committee of the Issuer's board of directors who will vote such shares on any matter brought before the Issuer's shareholders in accordance with the recommendation of its board of directors. The voting rights to the 393,750 shares vest in equal portions on each of June 20, 2022 and December 20, 2023. The Reporting Person disclaims beneficial ownership of the securities held of record by the Family Trust except to the extent of his pecuniary interest therein.