CV Sciences, Inc. Reports Fiscal Year-End 2023 Financial Results
- None.
- None.
Fiscal 2023, Fourth Quarter 2023 and Recent Financial and Operating Highlights
- Generated revenue of
$16.0 million $16.2 million $3.8 million $4.1 million - Recognized gross margin of
44.3% for fiscal year 2023, a significant improvement from34.2% for 2022; Gross margin of45.8% for the fourth quarter 2023, a sequential improvement from45.1% for the third quarter 2023; - Cash balance of
$1.3 million $0.6 million - Generated cash flow from operations of
$2.3 million $1.9 million $2.5 million - Continued to reduce operating expenses, excluding the benefit from reversal of accrued payroll taxes, by
20% to$9.9 million $12.4 million - 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;
- Launched +PlusCBDTM Reserve Collection Extra Gummies and Reserve Collection 30ct softgels to support stress relief and relaxation (Q1 2023);
- Launched +PlusCBDTM Daily Balance, a new line of THC-free gummies and softgels (Q1 2023);
- Received formal notice of patent issuance from Japan Patent Office for formulations containing CBD and nicotine for treating smokeless tobacco addiction (Q1 2023);
- 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 (Q1 2023);
- Received preliminary approval of proposed settlement of shareholder derivative lawsuit (Q1 2023);
- Launched +PlusCBDTM Reserve Collection Extra Gummies to support healthy sleep, faster recovery, deeper relaxation and a brighter mood (Q2 2023);
- Launched +PlusCBDTM Reserve Sleep Gummies, specifically designed for better sleep (Q3 2023);
- Expanded +PlusCBDTM Pet product offering with the launch of pet chews for hip and joint health and calming care chews (Q1 2024);
- Acquired Cultured FoodsTM, a leading manufacturer and distributor of alternative plant-based vegan foods, providing the Company with manufacturing and distribution foothold in the EU that will allow for leverage of our key strengths and competencies (Q4 2023); 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 very pleased with our fiscal year 2023 results. In a challenging environment, our revenues stayed flat at
Operating Results - Full Year 2023 Compared to Full Year 2022
Sales for fiscal 2023 were
Fourth Quarter 2023 Results
During the fourth quarter of 2023, sales decreased
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=1655740&tp_key=ff6ae49b9f. 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 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
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. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) | ||||||||
Years Ended December 31, | ||||||||
2023 | 2022 | |||||||
Product sales, net | $ | 16,004 | $ | 16,205 | ||||
Cost of goods sold | 8,919 | 10,655 | ||||||
Gross profit | 7,085 | 5,550 | ||||||
Operating expenses: | ||||||||
Research and development | 151 | 307 | ||||||
Selling, general and administrative | 9,745 | 12,090 | ||||||
Benefit from reversal of accrued payroll taxes | (6,171) | — | ||||||
Total operating expenses | 3,725 | 12,397 | ||||||
Operating income (loss) | 3,360 | (6,847) | ||||||
Gain on debt extinguishment | — | (127) | ||||||
Other expense, net | 264 | 1,541 | ||||||
Income (loss) before income taxes | 3,096 | (8,261) | ||||||
Income tax benefit | (6) | (47) | ||||||
Net income (loss) | 3,102 | (8,214) | ||||||
Deemed dividend for beneficial conversion of Series A convertible preferred stock | — | 920 | ||||||
Net income (loss) attributable to common stockholders | $ | 3,102 | $ | (9,134) | ||||
Weighted average common shares outstanding | ||||||||
Basic | 153,954 | 138,034 | ||||||
Diluted | 153,955 | 138,034 | ||||||
Net income (loss) per share attributable to common stockholders | ||||||||
Basic | $ | 0.02 | $ | (0.07) | ||||
Diluted | $ | 0.02 | $ | (0.07) | ||||
CV SCIENCES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) | ||||||||
December 31, | December 31, | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 1,317 | $ | 611 | ||||
Accounts receivable, net | 431 | 766 | ||||||
Inventory | 5,655 | 6,563 | ||||||
Prepaid expenses and other | 535 | 3,190 | ||||||
Total current assets | 7,938 | 11,130 | ||||||
Property and equipment, net | 379 | 575 | ||||||
Right of use assets | 167 | 275 | ||||||
Intangibles, net | 78 | 251 | ||||||
Goodwill | 342 | — | ||||||
Other assets | 296 | 505 | ||||||
Total assets | $ | 9,200 | $ | 12,736 | ||||
Liabilities and stockholders' equity (deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,309 | $ | 2,284 | ||||
Accrued expenses | 3,422 | 9,690 | ||||||
Operating lease liability - current | 130 | 117 | ||||||
Debt, net of debt discounts | 254 | 1,223 | ||||||
Total current liabilities | 6,115 | 13,314 | ||||||
Operating lease liability - net of current portion | 58 | 188 | ||||||
Deferred tax liability | 19 | 11 | ||||||
Other liabilities | 105 | — | ||||||
Total liabilities | 6,297 | 13,513 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity (deficit) | ||||||||
Preferred stock, par value | — | — | ||||||
Common stock, par value | 16 | 15 | ||||||
Additional paid-in capital | 87,464 | 86,897 | ||||||
Accumulated deficit | (84,587) | (87,689) | ||||||
Accumulated other comprehensive income | 10 | — | ||||||
Total stockholders' equity (deficit) | 2,903 | (777) | ||||||
Total liabilities and stockholders' equity (deficit) | $ | 9,200 | $ | 12,736 | ||||
CV SCIENCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | ||||||||
Years Ended December 31, | ||||||||
2023 | 2022 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | 3,102 | $ | (8,214) | ||||
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 235 | 992 | ||||||
Stock-based compensation | 218 | 1,009 | ||||||
Employee retention credit benefit | — | (2,516) | ||||||
Note discount and interest expense | 112 | 1,563 | ||||||
Impairment of goodwill and intangible assets | 251 | 1,234 | ||||||
Benefit from reversal of accrued payroll tax | (6,171) | — | ||||||
Non-cash lease expense | 108 | 70 | ||||||
Loss on sale of property and equipment | — | 150 | ||||||
Gain on debt extinguishment | — | (127) | ||||||
Deferred taxes | (14) | (51) | ||||||
Other | 407 | 449 | ||||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable, net | 352 | 1,065 | ||||||
Inventory | 1,042 | 2,061 | ||||||
Prepaid expenses and other | 2,931 | 1,680 | ||||||
Accounts payable and accrued expenses | (320) | (1,250) | ||||||
Net cash flows provided by (used in) operating activities | 2,253 | (1,885) | ||||||
INVESTING ACTIVITIES | ||||||||
Acquisition of business, net of cash acquired | (156) | — | ||||||
Net cash flows used in investing activities | (156) | — | ||||||
FINANCING ACTIVITIES | ||||||||
Repayment of note payable | (1,117) | (953) | ||||||
Repayment of unsecured debt | (274) | (336) | ||||||
Proceeds from issuance of preferred stock and common stock warrants | — | 700 | ||||||
Issuance costs related to issuance of preferred stock and common stock warrants | — | (146) | ||||||
Proceeds from issuance of convertible notes | — | 1,000 | ||||||
Debt issuance costs related to convertible notes | — | (46) | ||||||
Proceeds from issuance of note payable | — | 2,000 | ||||||
Debt issuance costs related to note payable | — | (423) | ||||||
Repayment of convertible notes | — | (675) | ||||||
Net cash flows provided by (used in) financing activities | (1,391) | 1,121 | ||||||
Net change in cash | 706 | (764) | ||||||
Cash, beginning of period | 611 | 1,375 | ||||||
Cash, end of period | $ | 1,317 | $ | 611 | ||||
Supplemental cash flow disclosures: | ||||||||
Interest paid | $ | 7 | $ | 6 | ||||
Income taxes paid | $ | — | $ | 2 | ||||
Supplemental disclosure of non-cash transactions: | ||||||||
Purchase of insurance through issuance of note payable | $ | 259 | $ | 245 | ||||
Convertible note principal conversion into shares of common stock | $ | — | $ | (1,284) | ||||
Services paid with common stock | $ | — | $ | 385 | ||||
Fair value of assets acquired, excluding cash | $ | 275 | $ | — | ||||
Liabilities assumed | (77) | — | ||||||
Goodwill on acquisition | 336 | — | ||||||
Common stock consideration | (250) | — | ||||||
Holdback liability | (18) | — | ||||||
Contingent consideration | (88) | — | ||||||
Deferred tax liabilities | (22) | |||||||
Cash paid for acquisition | $ | 156 | $ | — | ||||
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, amortization, and interest expense, net), minus income tax benefit, 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 years ended December 31, 2023 and 2022 is detailed below (in thousands, except per share data):
Years ended | ||||||||
2023 | 2022 | |||||||
Net income (loss) attributable to common stockholders - GAAP | $ | 3,102 | $ | (9,134) | ||||
Stock-based compensation (1) | 218 | 1,009 | ||||||
Benefit from reversal of accrued payroll tax (2) | (6,171) | — | ||||||
Employee retention credit benefit (3) | — | (2,516) | ||||||
Note discount and interest expense (4) | 112 | 1,535 | ||||||
Gain on extinguishment of debt (5) | — | (127) | ||||||
Intangible asset impairment (6) | 251 | 1,234 | ||||||
Deemed dividend (7) | — | 920 | ||||||
Net loss - non-GAAP | $ | (2,488) | $ | (7,079) | ||||
Diluted EPS - GAAP | $ | 0.02 | $ | (0.07) | ||||
Stock-based compensation (1) | — | 0.01 | ||||||
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 | ||||||
Gain on extinguishment of debt (5) | — | — | ||||||
Intangible asset impairment (6) | — | 0.01 | ||||||
Deemed dividend (7) | — | 0.01 | ||||||
Diluted EPS - non-GAAP | $ | (0.02) | $ | (0.05) | ||||
Shares used to calculate diluted EPS - GAAP and non-GAAP | 153,955 | 138,034 | ||||||
(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. | ||||||||||
(5) | Represents gain on extinguishment of debt related to our convertible note. | ||||||||||
(6) | Represents intangible asset impairment charge. | ||||||||||
(7) | Represents deemed dividend associated with beneficial conversion charge of conversion of Series A preferred stock. | ||||||||||
A reconciliation from our net income (loss) to Adjusted EBITDA, a non-GAAP measure, for the years ended December 31, 2023 and 2022 is detailed below (in thousands):
Years ended | ||||||||
2023 | 2022 | |||||||
Net income (loss) | $ | 3,102 | $ | (8,214) | ||||
Depreciation and amortization expense | 235 | 992 | ||||||
Interest expense, net | 60 | 1,541 | ||||||
Income tax benefit | (6) | (47) | ||||||
EBITDA | 3,391 | (5,728) | ||||||
Stock-based compensation (1) | 218 | 1,009 | ||||||
Benefit from reversal of accrued payroll tax (2) | (6,171) | — | ||||||
Employee retention credit benefit (3) | — | (2,516) | ||||||
Gain on extinguishment of debt (4) | — | (127) | ||||||
Intangible asset impairment (5) | 251 | 1,234 | ||||||
Adjusted EBITDA | $ | (2,311) | $ | (6,128) | ||||
(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 gain on extinguishment of our convertible note during the year ended December 31, 2022. | |||||||||||
(5) | Represents intangible asset impairment charge. | |||||||||||
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SOURCE CV Sciences, Inc.
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