CV Sciences, Inc. Reports First Quarter 2023 Financial Results
First Quarter 2023 and Recent Financial and Operating Highlights
- Generated revenue of
$4.1 million $4.4 million 7% from$3.9 million - Recognized gross margin of
43.0% for the first quarter 2023 compared to26.0% for the first quarter 2022 and a sequential improvement from40.4% for the fourth quarter 2022; - Cash balance of
$0.7 million $0.6 million - Generated cash flow from operations of
$1.0 million $0.4 million - Maintained 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;
- Launched PlusCBD™ Reserve Collection Extra Gummies and Reserve Collection 30ct softgels to support stress relief and relaxation;
- Launched PlusCBD™ Daily Balance, a new line of THC-free gummies and softgels;
- Received formal notice of patent issuance from Japan Patent Office for formulations containing CBD and nicotine for treating smokeless tobacco addiction;
- Received employee retention credit (ERC) under the CARES Act for a total of
$2.5 million - Reversed accrued payroll tax associated with RSU release to founder in 2019 due to the expiration of the statute of limitations;
- Received preliminary approval of proposed settlement of a shareholder derivative lawsuit; and
- Continued to evaluate strategic opportunities, including consideration of an inbound or outbound merger, sale, acquisition or other options for the Company.
"We are focused on building for the future with several key initiatives, including the: introduction of new exciting products; growing our existing sales channels; pursuing new sales channels including international opportunities; and continuing to operate our business cost efficiently," stated Joseph Dowling, Chief Executive Officer of CV Sciences. "Our first quarter gross margins exceeded our expectations and we are encouraged by improvements we have made to reduce operating expense. Our flagship PlusCBD™ brand continues to improve its number one position and gain market share in the natural product channel, and, with our portfolio of high-quality and proven products, we believe the Company is positioned for future growth. We have strengthened our balance sheet and continue to operate cost efficiently and plan to continue participating in the consolidation and brand contraction of the CBD market as we execute on our key strategic initiatives, and leverage core competitive advantages to drive long-term growth and shareholder value."
Operating Results - First Quarter 2023 Compared to First Quarter 2022
Sales for first quarter 2023 were
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=1613177&tp_key=052bb65fc2. Investors interested in participating in the live call can also dial (877) 407-0784 from the
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
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
CV SCIENCES, INC. | |||
STATEMENTS OF OPERATIONS (UNAUDITED) | |||
(in thousands, except per share data) | |||
Three months ended March 31, | |||
2023 | 2022 | ||
Product sales, net | $ 4,148 | $ 4,447 | |
Cost of goods sold | 2,366 | 3,291 | |
Gross profit | 1,782 | 1,156 | |
Operating expenses: | |||
Research and development | 35 | 121 | |
Selling, general and administrative | 2,156 | 2,550 | |
Benefit from reversal of accrued payroll tax | (6,171) | — | |
Total operating expenses | (3,980) | 2,671 | |
Operating income (loss) | 5,762 | (1,515) | |
Interest expense, net | 56 | 702 | |
Net income (loss) | $ 5,706 | $ (2,217) | |
Weighted average common shares outstanding, basic and diluted | 152,104 | 116,834 | |
Net income (loss) per common share, basic and diluted | $ 0.04 | $ (0.02) | |
CV SCIENCES, INC. | |||
BALANCE SHEETS (UNAUDITED) | |||
(in thousands, except per share data) | |||
March 31, 2023 | December 31, 2022 | ||
Assets | |||
Current assets: | |||
Cash | $ 714 | $ 611 | |
Accounts receivable, net | 657 | 766 | |
Inventory | 6,526 | 6,563 | |
Prepaid expenses and other | 2,103 | 3,190 | |
Total current assets | 10,000 | 11,130 | |
Property & equipment, net | 516 | 575 | |
Right of use assets | 249 | 275 | |
Intangibles, net | 251 | 251 | |
Other assets | 452 | 505 | |
Total assets | $ 11,468 | $ 12,736 | |
Liabilities and stockholders' equity (deficit) | |||
Current liabilities: | |||
Accounts payable | $ 2,441 | $ 2,284 | |
Accrued expenses | 3,241 | 9,690 | |
Operating lease liability - current | 120 | 117 | |
Debt, net | 451 | 1,223 | |
Total current liabilities | 6,253 | 13,314 | |
Operating lease liability - net of current portion | 157 | 188 | |
Deferred tax liability | 11 | 11 | |
Total liabilities | 6,421 | 13,513 | |
Commitments and contingencies | |||
Stockholders' equity (deficit) | |||
Preferred stock, par value | — | — | |
Common stock, par value | 15 | 15 | |
Additional paid-in capital | 87,015 | 86,897 | |
Accumulated deficit | (81,983) | (87,689) | |
Total stockholders' equity (deficit) | 5,047 | (777) | |
Total liabilities and stockholders' equity (deficit) | $ 11,468 | $ 12,736 | |
CV SCIENCES, INC. | |||
STATEMENTS OF CASH FLOWS (UNAUDITED) | |||
(in thousands) | |||
Three months ended March 31, | |||
2023 | 2022 | ||
OPERATING ACTIVITIES | |||
Net income (loss) | $ 5,706 | $ (2,217) | |
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities: | |||
Depreciation and amortization | 59 | 517 | |
Stock-based compensation | 118 | 516 | |
Employee retention credit benefit | — | (1,993) | |
Note discount and interest expense | 100 | 699 | |
Benefit from reversal of accrued payroll tax | (6,171) | — | |
Non-cash lease expense | 26 | — | |
Loss on sale of property and equipment | — | 99 | |
Other | 59 | 98 | |
Change in operating assets and liabilities: | |||
Accounts receivable, net | 102 | 1,096 | |
Inventory | 37 | 387 | |
Prepaid expenses and other | 1,087 | 690 | |
Accounts payable and accrued expenses | (148) | (271) | |
Net cash flows provided by (used in) operating activities | 975 | (379) | |
FINANCING ACTIVITIES | |||
Proceeds from issuance of preferred stock and common stock warrants, net of issuance costs | — | 605 | |
Proceeds from issuance of convertible notes, net of issuance costs | — | 970 | |
Repayment of note payable | (764) | — | |
Repayment of unsecured debt | (108) | (132) | |
Net cash flows provided by (used in) financing activities | (872) | 1,443 | |
Net increase in cash | 103 | 1,064 | |
Cash, beginning of period | 611 | 1,375 | |
Cash, end of period | $ 714 | $ 2,439 | |
Supplemental cash flow disclosures: | |||
Interest paid | $ 3 | $ 3 | |
Supplemental disclosure of non-cash transactions: | |||
Convertible note principal conversion into shares of common stock | $ — | $ (675) | |
Services paid with common stock | $ — | $ 384 | |
Issuance cost in accounts payable and accrued expenses | $ — | $ (68) | |
CV SCIENCES, INC.
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
We prepare our financial statements in accordance with generally accepted accounting principles for
Adjusted EBITDA is defined by us as EBITDA (net income (loss) plus depreciation and interest 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 three months ended March 31, 2023 and 2022 is detailed below (in thousands, except per share data):
Three months ended March 31, | |||
2023 | 2022 | ||
Net income (loss) - GAAP | $ 5,706 | $ (2,217) | |
Stock-based compensation (1) | 118 | 516 | |
Benefit from reversal of accrued payroll tax (2) | (6,171) | — | |
Employee retention credit benefit (3) | — | (1,993) | |
Note discount and interest expense (4) | 100 | 699 | |
Net loss - non-GAAP | $ (247) | $ (2,995) | |
Diluted EPS - GAAP | $ 0.04 | $ (0.02) | |
Stock-based compensation (1) | — | — | |
Benefit from reversal of accrued payroll tax (2) | (0.04) | — | |
Employee retention credit benefit (3) | — | (0.02) | |
Note discount and interest expense (4) | — | 0.01 | |
Diluted EPS - non-GAAP | $ — | $ (0.03) | |
Shares used to calculate diluted EPS - GAAP and non-GAAP | 152,104 | 116,834 | |
_____________ | ||
(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 expense reduction related to benefit for employee retention credit. | |
(4) | 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 three months ended March 31, 2023 and 2022 is detailed below (in thousands):
Three months ended March 31, | |||
2023 | 2022 | ||
Net income (loss) | $ 5,706 | $ (2,217) | |
Depreciation expense | 59 | 517 | |
Interest expense | 56 | 702 | |
EBITDA | 5,821 | (998) | |
Stock-based compensation (1) | 118 | 516 | |
Benefit from reversal of accrued payroll tax (2) | (6,171) | — | |
Employee retention credit benefit (3) | — | (1,993) | |
Adjusted EBITDA | $ (232) | $ (2,475) | |
______________ | ||
(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 expense reduction related to benefit for employee retention credit. | |
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SOURCE CV Sciences, Inc.
