CV Sciences, Inc. Announces Proposed Settlement of Shareholder Litigation

Rhea-AI Summary

CV Sciences, Inc. (OTCQB:CVSI) announced preliminary approval of a proposed settlement for a derivative lawsuit in Nevada, alleging breach of fiduciary duty. This lawsuit stemmed from events linked to a class action dismissed in July 2019. A settlement in principle was agreed upon in January 2022, with the U.S. District Court granting preliminary approval on February 7, 2023. A final hearing is scheduled for May 15, 2023. If approved, this settlement will resolve all claims without admitting wrongdoing by the company. Additionally, the settlement includes certain corporate reforms to be implemented within 60 days post-approval.

Positive

• Preliminary approval received for proposed settlement of derivative lawsuit.
• Settlement aims to resolve claims without admission of wrongdoing.

Negative

• Derivative lawsuit indicates potential governance issues.
• Ongoing legal matters may distract from business operations.

SAN DIEGO, March 2, 2023 /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, announced today that CV Sciences has received preliminary approval a proposed settlement of a derivative lawsuit pending in Nevada. The lawsuit alleged breach of fiduciary duty and other claims premised on the same events that were the subject of a purported class action filed in the Southern District of New York on April 23, 2014. On July 2, 2019, the court entered a final order dismissing the class action complaint with prejudice. 

The parties agreed to a settlement in principal in January 2022. Plaintiff filed a motion for preliminary approval of proposed settlement on June 1, 2022. On February 7, 2023, the U.S. District Court, District of Nevada granted preliminary approval of the proposed settlement. On May 15, 2023, the U.S. District Court will hold a hearing to determine whether to grant final approval of the settlement agreement. The proposed settlement, if approved by the court, will resolve all claims asserted in the action without any admission, concession or finding of any fault, liability or wrongdoing by the Company or any defendant. CV Sciences and the individual defendants continue to deny any wrongdoing. The proposed settlement contemplates the implementation by the Company of certain corporate reforms within 60 days of final approval. The Company currently anticipates that plaintiff's counsel will file a motion seeking an award of attorney's fees.

Additional details regarding the proposed settlement are included in that Current Report on Form 8-K filed by CV Sciences with the Securities and Exchange Commission ("SEC") on March 2, 2023. The Stipulation and Agreement of Settlement and Notice of Proposed Settlement ("Notice") are available at https://ir.cvsciences.com/governance-docs. A copy of the Notice is attached.

Notice of Settlement

About CV Sciences, Inc.

CV Sciences, Inc. (OTCQB:CVSI) is a consumer wellness company specializing in hemp extracts and other proven, science-backed, natural ingredients and products, which 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 one of 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. CV Sciences follows all guidelines for Good Manufacturing Practices (GMP) and the Company's products are processed, produced, and tested throughout the manufacturing process to confirm strict compliance with company standards and specifications. 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. CV Sciences, Inc. has primary offices and facilities in San Diego, California. The Company also operates a drug development division 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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.

Contact Information

ir@cvsciences.com

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SOURCE CV Sciences, Inc.

FAQ

What is the proposed settlement regarding CV Sciences, Inc. (CVSI)?

CV Sciences announced preliminary approval for a proposed settlement of a derivative lawsuit in Nevada, aiming to resolve claims without admitting wrongdoing.

When is the final hearing for the CVSI settlement approval?

The final hearing for the proposed settlement approval is scheduled for May 15, 2023.

What allegations were made in the CVSI lawsuit?

The lawsuit alleged breach of fiduciary duty and other claims related to a class action complaint dismissed in July 2019.

What does the proposed settlement include for CV Sciences, Inc.?

The proposed settlement includes the implementation of certain corporate reforms within 60 days of final approval.