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CV Sciences, Inc. Reports First Quarter 2024 Financial Results

SAN DIEGO, May 14, 2024 /PRNewswire/ -- CV Sciences, Inc. (OTCQB: CVSI) (the "Company", "CV Sciences", "our", "us" or "we"), a preeminent consumer wellness company specializing in hemp extracts and other proven science-backed, natural ingredients and products, today announced its financial results for the quarter ended March 31, 2024.

(PRNewsfoto/CV Sciences, Inc.)
(PRNewsfoto/CV Sciences, Inc.)

First Quarter 2024 and Recent Financial and Operating Highlights

  • Generated revenue of $4.0 million for first quarter 2024 compared to $4.1 million for the first quarter 2023 and a sequential improvement from $3.8 million for the fourth quarter 2023;

  • Recognized gross margin of 46.3% for first quarter 2024 compared to 43.0% for the first quarter 2023 and a sequential improvement from 45.8% for the fourth quarter 2023;

  • Cash balance of $0.7 million at quarter end compared to $1.3 million at the end of 2023;

  • Further established number one position as top-selling hemp extract brand in the natural product retail sales channel, according to SPINS, the leading provider of syndicated data and insights for the natural, organic and specialty products industry;

  • Expanded +PlusCBD™ Pet product offering with the launch of pet chews for hip and joint health and calming care chews;

  • Acquired Elevated Softgels, a leading manufacturer of encapsulated softgels and tinctures for the supplement and nutrition industry, based in Colorado; and

  • Continued to build an efficient and cost effective consumer products platform and continue to evaluate inbound and outbound merger, sale, acquisition or other options for the Company.

"We are pleased with our first quarter 2024 results. Our revenues increased sequentially to $4 million in the first quarter 2024 in a challenging environment. Our 46.3% gross margin in the first quarter 2024 is our best gross margin in the last 12 quarters," stated Joseph Dowling, Chief Executive Officer of CV Sciences. "Our first quarter 2024 progress demonstrates our continuous commitment to innovation and cost-efficient execution as we move closer to profitability and positive cash flow. We are thrilled that Elevated Softgels and its employees are joining CV Sciences as another milestone in our transition to a global health and wellness company. Our immediate plan is to increase the existing business of Elevated Softgels to further leverage its existing capacity. In addition, we intend to in-source production of certain of our key products."

Operating Results - First Quarter 2024 Compared to First Quarter 2023

Sales for first quarter 2024 were $4.0 million, a decrease of 4% from $4.1 million in the first quarter 2023. The decline is primarily due to lower B2B sales of $0.2 million because of lower average order value. B2C sales increased by $0.1 million or 3% to $1.8 million in the first quarter 2024.  The total number of units sold during the first quarter 2024 decreased by 14.7%, partially offset by higher average sales prices per unit of 11.8%. The average sales price per unit improved due to product and channel mix. We generated an operating loss of $0.6 million in the first quarter 2024, compared to an operating income of $5.8 million in the first quarter 2023, mostly due to the reversal of accrued payroll tax of $6.2 million and improved gross margins. The Company had negative adjusted EBITDA of $0.5 million for the first quarter 2024 compared to $0.2 million in the first quarter of 2023.

Conference Call and Webcast

The Company will host a conference call and webcast to discuss these results today at 10:00 am EDT/7:00 am PDT. The webcast of the conference call will be available on the Investor Relations section of the Company's website at https://ir.cvsciences.com/news-events or directly at https://viavid.webcasts.com/starthere.jsp?ei=1668608&tp_key=842142989f. Investors interested in participating in the live call can also dial (877) 407-0784 from the U.S. or international callers can dial (201) 689-8560. A telephone replay will be available approximately three hours after the call concludes, and will be available through Thursday, May 21, 2024, by dialing (844) 512-2921 from the U.S. or (412) 317-6671 from international locations, and entering confirmation code 13746320.

About CV Sciences, Inc.

CV Sciences, Inc. (OTCQB:CVSI) is a consumer wellness company specializing in nutraceuticals and plant-based foods. The Company's hemp extracts and other proven, science-backed, natural ingredients and products are sold through a range of sales channels from B2B to B2C. The Company's +PlusCBD™ branded products are sold at select retail locations throughout the U.S. and are the top-selling brands of hemp extracts in the natural products market, according to SPINS, the leading provider of syndicated data and insights for the natural, organic and specialty products industry. With a commitment to science, +PlusCBD™ product benefits in healthy people are supported by human clinical research data, in addition to three published clinical case studies available on PubMed.gov. +PlusCBD™ was the first hemp extract supplement brand to invest in the scientific evidence necessary to receive self-affirmed Generally Recognized as Safe (GRAS) status. The Company's Cultured Foods™ brand provides a variety of 100% plant-based food products. Committed to crafting nutritious and flavorful alternatives, Cultured Foods™ caters to individuals seeking vegan, gluten-free, or flexitarian options for a wholesome and satisfying culinary experience. CV Sciences, Inc. has primary offices and facilities in San Diego, California, and Warsaw, Poland. The Company also operates a drug development program focused on developing and commercializing CBD-based novel therapeutics. Additional information is available from OTCMarkets.com or by visiting www.cvsciences.com.

Forward Looking Statements

This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-looking statements by definition involve risk and uncertainties. CV Sciences does not undertake any obligation to publicly update any forward-looking statements, except as required by applicable law. As a result, investors should not place undue reliance on such forward-looking statements.

Contact Information
ir@cvsciences.com

CV SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)




Three Months Ended

March 31,




2024



2023


Product sales, net


$

4,002



$

4,148


Cost of goods sold



2,149




2,366


Gross profit



1,853




1,782









Operating expenses:







Research and development



36




35


Selling, general and administrative



2,437




2,156


Benefit from reversal of accrued payroll taxes






(6,171)


Total operating expenses



2,473




(3,980)









Operating income (loss)



(620)




5,762









Other expense, net



2




56


Income (loss) before income taxes



(622)




5,706


Income tax expense



6





Net income (loss)


$

(628)



$

5,706









Weighted average common shares outstanding, basic and diluted



163,075




152,104


Net income (loss) per common share, basic and diluted


$

(0.00)



$

0.04


 

CV SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)




March 31,
2024



December 31,

2023


Assets







Current assets:







Cash


$

662



$

1,317


Accounts receivable, net



507




431


Inventory



5,756




5,655


Prepaid expenses and other



426




535


Total current assets



7,351




7,938









Property and equipment, net



319




379


Right of use assets



139




167


Intangibles, net



73




78


Goodwill



340




342


Other assets



244




296


Total assets


$

8,466



$

9,200









Liabilities and stockholders' equity (deficit)







Current liabilities:







Accounts payable


$

2,460



$

2,309


Accrued expenses



3,248




3,422


Operating lease liability - current



134




130


Debt



117




254


Total current liabilities



5,959




6,115









Operating lease liability - net of current portion



23




58


Deferred tax liability



19




19


Other liabilities



103




105


Total liabilities



6,104




6,297









Commitments and contingencies














Stockholders' equity (deficit)







Preferred stock, par value $0.0001; 10,000 shares authorized; 1 share issued as

of March 31, 2024 and December 31, 2023; no shares outstanding as of March

31, 2024 and December 31, 2023







Common stock, par value $0.0001; 790,000 shares authorized; 163,228 and

161,679 shares issued and outstanding as of March 31, 2024 and December

31, 2023, respectively



16




16


Additional paid-in capital



87,556




87,464


Accumulated deficit



(85,215)




(84,587)


Accumulated other comprehensive income



5




10


Total stockholders' equity (deficit)



2,362




2,903









Total liabilities and stockholders' equity (deficit)


$

8,466



$

9,200


 

CV SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)




Three Months Ended

March 31,




2024



2023


OPERATING ACTIVITIES







Net income (loss)


$

(628)



$

5,706


Adjustments to reconcile net income (loss) to net cash flows provided by (used

in) operating activities:







Depreciation and amortization



63




59


Stock-based compensation



30




118


Note discount and interest expense






100


Benefit from reversal of accrued payroll tax






(6,171)


Non-cash lease expense



28




26


Other



108




59


Change in operating assets and liabilities:







Accounts receivable, net



(70)




102


Inventory



(102)




37


Prepaid expenses and other



109




1,087


Accounts payable and accrued expenses



(56)




(148)


Net cash flows provided by (used in) operating activities



(518)




975









FINANCING ACTIVITIES







Repayment of note payable



(50)




(764)


Repayment of unsecured debt



(86)




(108)


Net cash flows provided by (used in) financing activities



(136)




(872)


Effect of exchange rate changes on cash



(1)





Net change in cash



(655)




103


Cash, beginning of period



1,317




611


Cash, end of period


$

662



$

714



Supplemental cash flow disclosures:







Interest paid


$

4



$

3


Income taxes paid


$

6



$


Supplemental disclosure of non-cash transactions:







Services paid with common stock


$

62



$


 

CV SCIENCES, INC.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)


We prepare our consolidated financial statements in accordance with generally accepted accounting principles for the United States (GAAP). The non-GAAP financial measures, such as net income (loss) per share and Adjusted EBITDA included in this press release are different from those otherwise presented under GAAP. We use non-GAAP measures internally to evaluate our performance and make financial and operational decisions that are presented in a manner that adjusts from their equivalent GAAP measures or that supplement the information provided by our GAAP measures. The non-GAAP financial measures exclude non-cash compensation expense for stock options. When evaluating the performance of our business and developing short and long-term plans, we do not consider share-based compensation charges. Although share-based compensation is necessary to attract and retain quality employees, our consideration of share-based compensation places its primary emphasis on overall shareholder dilution rather than the accounting charges associated with such grants. Because of the varying availability of valuation methodologies and subjective assumptions, we believe that the exclusion of share-based compensation allows for more accurate comparison of our financial results to previous periods. In addition, we believe it useful to investors to understand the specific impact of the application of the fair value method of accounting for share-based compensation on our operating results.


Adjusted EBITDA is defined by us as EBITDA (net income (loss) plus depreciation, amortization, interest, and income tax expense, further adjusted to exclude certain non-cash expenses and other adjustments as set forth below. We use Adjusted EBITDA because we believe it more clearly highlights trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures, since Adjusted EBITDA eliminates from our results specific financial items that have less bearing on our core operating performance.


We use Adjusted EBITDA in communicating certain aspects of our results and performance, including in this press release, and believe that Adjusted EBITDA, when viewed in conjunction with our GAAP results and the accompanying reconciliation, can provide investors with greater transparency and a greater understanding of factors affecting our financial condition and results of operations than GAAP measures alone. In addition, we believe the presentation of Adjusted EBITDA is useful to investors in making period-to-period comparison of results because the adjustments to GAAP are not reflective of our core business performance.


A reconciliation from our GAAP net income (loss) to non-GAAP net loss for the quarter ended March 31, 2024 and 2023 is detailed below (in thousands, except per share data):




Three Months Ended

March 31,




2024



2023


Net income (loss) - GAAP


$

(628)



$

5,706


Stock-based compensation (1)



30




118


Benefit from reversal of accrued payroll tax (2)






(6,171)


Note discount and interest expense (3)






100


Net loss - non-GAAP


$

(598)



$

(247)









Diluted EPS - GAAP


$

(0.00)



$

0.04


Stock-based compensation (1)







Benefit from reversal of accrued payroll tax (2)






(0.04)


Note discount and interest expense (3)







Diluted EPS - non-GAAP


$

(0.00)



$

(0.00)









Shares used to calculate diluted EPS - GAAP and non-GAAP



163,075




152,104


____________________

(1)   Represents stock-based compensation expense related to stock options awarded to employees and non-executive directors based on the grant

      date fair value using the Black-Scholes valuation model.

(2)   Represents benefit from reversal of accrued payroll tax associated with RSU release to founder in 2019.

(3)   Represents amortization of OID/debt issuance costs and interest expense for convertible notes payable and notes payable.

 

A reconciliation from our net income (loss) to Adjusted EBITDA, a non-GAAP measure, for the quarter ended March

31, 2024 and 2023 is detailed below (in thousands):




Three Months Ended

March 31,




2024



2023


Net income (loss)


$

(628)



$

5,706


Depreciation expense



59




59


Amortization expense



4





Interest expense



2




56


Income tax expense



6





EBITDA



(557)




5,821


Stock-based compensation (1)



30




118


Benefit from reversal of accrued payroll tax (2)






(6,171)


Adjusted EBITDA


$

(527)



$

(232)


____________________

(1)   Represents stock-based compensation expense related to stock options awarded to employees and non-executive directors based on the grant

      date fair value using the Black-Scholes valuation model.

(2)   Represents benefit from reversal of accrued payroll tax associated with RSU release to founder in 2019.

 

Cision
Cision

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SOURCE CV Sciences, Inc.