CV Sciences, Inc. Reports First Quarter 2024 Financial Results

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

$

—

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.