Exhibit 99.1
cvsciences_logo.jpg 

CV Sciences, Inc. Reports Fiscal Year-End 2018 Financial Results
Record full year revenue
 
Las Vegas, Nevada – March 12, 2019 (GLOBE NEWSWIRE) – CV Sciences, Inc. (OTCQB:CVSI) ("CV Sciences" or the “Company”) announced today its financial results for the year ended December 31, 2018.

Fiscal 2018 Financial and Operating Highlights
Record revenue of $48.2 million for 2018, an increase of 133% over 2017;
Record net income of $10.0 million, or $0.09 per fully diluted share;
Record adjusted EBITDA of $14.0 million or 29.0% of net revenue for 2018, an increase of $12.4 million from $1.6 million for 2017;
Retail distribution increases to 2,238 stores as of December 31, 2018, a 45% increase over the prior year;
Generated $12.6 million of cash from operations, with cash balance increasing to $12.7 million at year end;
Passage of 2018 Farm Bill has accelerated business development activities and is opening new channels of distribution;
Significant enhancements to management team in finance, science and regulatory functions;
CV Sciences named one of the first U.S. Hemp Authority™ Certified Manufacturers and PlusCBD Oil™ softgels named “Top Pick” by ConsumerLab.com; and
Earned the industry’s first self-affirmed Generally Recognized as Safe (GRAS) status for the PlusCBD™ Gold Formula product line.

“We finished 2018 with strong sales momentum and enter 2019 well positioned to capitalize on the rapidly growing consumer awareness and broad based demand for hemp CBD products. We generated 133% revenue growth during 2018 and expanded the availability of the PlusCBD™ brand to over 2,200 stores nationwide,” stated Joseph Dowling, Chief Executive Officer of CV Sciences. “The December passage of the 2018 Farm Bill has further broadened consumer and retailer interest in the hemp CBD product category and we are seeing significant new interest from nearly all channels of distribution. We are positioning our company to capitalize on this incremental growth opportunity with enhancements to our leadership team and business systems, and are in the planning process for expanded production and fulfillment capabilities to support rising demand.”
Mr. Dowling added, “Our drug development program continues to make steady progress in advancing our proprietary lead drug candidate - CVSI-007 - which addresses the multibillion dollar smokeless tobacco use and addiction market. We continue to anticipate filing an Investigational New Drug application in 2019. Our unique focus on the CBD market, through both a rapidly growing and highly profitable consumer product division as well as a drug development division positions us to broadly participate in a market that analysts estimate could reach $16 billion in sales by 2025. We look forward to our continued growth, new product innovation and broadening retail distribution during 2019 and beyond.”

Operating Results - Full Year 2018 Compared to Full Year 2017
Sales for 2018 were $48.2 million, an increase of 133.3% from $20.7 million in 2017. The sales increase in 2018 compared with 2017 reflects an increase in distribution, customer awareness and demand for the Company’s branded PlusCBD™ products, as the Company continued to expand and maintain its core customer base. The Company launched new products and formulations, including gel, capsules and gummies, which helped drive overall sales growth. The Company's natural product retail channel included 2,238 stores nationwide at December 31, 2018, up from 1,548 stores as of December 31, 2017.

Operating income for 2018 increased to $10.2 million, or 21.2% of net revenue, compared to an operating loss of $4.9 million in the prior year. The increase in the operating margin primary reflects significant operating leverage on SG&A expenses given the strong sales growth and to a lesser extent, the increase in gross margin.

Net income for 2018 increased to $10.0 million, or $0.09 per fully diluted share, compared to a net loss of $4.9 million or ($0.06) per fully diluted share in the prior year.

Adjusted EBITDA for 2018 was $14.0 million or 29.0% of net revenue, compared to $1.6 million or 7.7% of net revenue, in the prior year.






Fourth Quarter 2018 - Sales
During the fourth quarter of 2018, sales increased 96.4% to $14.2 million compared to $7.2 million in the prior year period. Fourth quarter sales growth reflects the Company's continued organic expansion into all sales channels, including the natural product retail, wholesale and direct-to-consumer channels. The Company's natural product retail channel included 2,238 stores nationwide at December 31, 2018, up from 1,548 stores as of December 31, 2017 and 2,093 stores as of September 30, 2018. CV Sciences continues to develop new sales channels as consumer awareness and demand increases. The Company remains encouraged by the strength of its branded products as evidenced by SPINS® Scan data, which continues to position the Company as the #1 selling hemp CBD product line in the natural products retail channel.

Conference Call and Webcast
The Company will host a conference call and webcast to discuss these results today at 4:30 pm EST/1:30 pm PST. The webcast of the conference call will be available on the Investor Relations section of the Company's web site at https://ir.cvsciences.com/news-events and at http://public.viavid.com/index.php?id=133332. 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 two hours after the call concludes and will be available through Tuesday, March 19, 2019, by dialing (844) 512-2921 from the U.S. or (412) 317-6671 from international locations, and entering confirmation code 13688167.

About CV Sciences, Inc.
CV Sciences, Inc. (OTCQB:CVSI) operates two distinct business segments: a consumer product division focused on manufacturing, marketing and selling hemp-based CBD products to a range of market sectors; and a drug development division focused on developing and commercializing novel therapeutics utilizing CBD. The Company’s PlusCBD Oil is the top-selling brand of hemp-derived CBD on the market, according to SPINS, the leading provider of syndicated data and insights for the natural, organic and specialty products industry. CV Sciences, Inc. has primary offices and facilities in San Diego, California and Las Vegas, Nevada. 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.

Contact Information
Investor Contact:
ICR
Scott Van Winkle
617-956-6736
scott.vanwinkle@icrinc.com

Media Contact:
ICR
Cory Ziskind
646-277-1232
cory.ziskind@icrinc.com







CV SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
For the Years Ended
December 31,
 
2018
 
2017
Product sales, net
$
48,244

 
$
20,679

Cost of goods sold
14,366

 
6,190

Gross profit
33,878

 
14,489

 
 
 
 
Operating expenses:
 
 
 
Research and development
1,885

 
724

Selling, general and administrative
21,746

 
16,193

Royalty buy-out

 
2,432

 
23,631

 
19,349

 
 
 
 
Operating income (loss)
10,247

 
(4,860
)
 
 
 
 
Other expense:
 
 
 
Interest expense
153

 
507

Other

 
12

Total other expense
153

 
519

 
 
 
 
Income (loss) before income taxes
10,094

 
(5,379
)
Income tax benefit (expense)
(93
)
 
482

Net income (loss)
$
10,001

 
$
(4,897
)
 
 
 
 
Weighted average common shares outstanding
 
 
 
Basic
91,916

 
80,432

Diluted
114,470

 
80,432

 
 
 
 
Net income (loss) per common share
 
 
 
Basic
$
0.11

 
$
(0.06
)
Diluted
$
0.09

 
$
(0.06
)






CV SCIENCES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
 
As of December 31,
 
2018
 
2017
Assets
 

 
 

Current assets:
 

 
 

Cash
$
12,684

 
$
2,013

Restricted cash
251

 
779

Accounts receivable, net
3,340

 
1,507

Inventory
7,132

 
2,823

Prepaid expenses and other
2,059

 
813

Total current assets
25,466

 
7,935

 
 
 
 
Inventory
1,418

 
5,667

Property & equipment, net
2,844

 
2,084

Intangible assets, net
3,801

 
3,836

Goodwill
2,788

 
2,788

Other assets
585

 
400

Total assets
$
36,902

 
$
22,710

 
 
 
 
Liabilities and stockholders' equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
1,245

 
$
678

Accrued expenses
2,673

 
1,932

Notes payable
474

 
726

Total current liabilities
4,392

 
3,336

 
 
 
 
Notes payable

 
850

Deferred rent
1,329

 
1,068

Deferred income taxes
1,065

 
1,075

Total liabilities
6,786

 
6,329

 
 
 
 
Commitments and contingencies (Note 11)


 


 
 
 
 
Stockholders' equity
 
 
 
Preferred stock, par value $0.0001; 10,000 shares authorized; no shares issued and outstanding

 

Common stock, par value $0.0001; 190,000 shares authorized; 94,940 and 90,513 shares issued and outstanding as of December 31, 2018 and 2017, respectively
9

 
9

Additional paid-in capital
55,134

 
51,400

Accumulated deficit
(25,027
)
 
(35,028
)
Total stockholders' equity
30,116

 
16,381

 
 
 
 
Total liabilities and stockholders' equity
$
36,902

 
$
22,710







CV SCIENCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
 
For the Years Ended December 31,
 
2018
 
2017
OPERATING ACTIVITIES
 

 
 

Net income (loss)
$
10,001

 
$
(4,897
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
519

 
183

Amortization of debt issuance costs
51

 
221

Amortization of derivative liability debt discount

 
29

Stock-based compensation
2,925

 
3,419

Stock-based royalty buy-out

 
2,432

Common stock issued for professional services
295

 

Bad debt expense
49

 
483

Deferred tax liability
(10
)
 
(482
)
Change in accrued interest payable included in convertible note payable

 
189

Fair value of warrant expense incurred on extinguishment of note payable

 
137

Loss on sale of fixed assets

 
12

Gain on change in derivative liability

 
(249
)
Change in operating assets and liabilities:
 
 
 
Accounts receivable
(1,882
)
 
(1,241
)
Note receivable

 
(25
)
Inventory
(60
)
 
1,043

Prepaid expenses and other
(832
)
 
(400
)
Accounts payable and accrued expenses
1,308

 
1,780

Deferred rent
195

 
981

Net cash provided by operating activities
12,559

 
3,615

 
 
 
 
INVESTING ACTIVITIES
 
 
 
Purchase of equipment
(893
)
 
(454
)
Tenant improvements to leasehold real estate
(351
)
 
(1,546
)
Net cash used in investing activities
(1,244
)
 
(2,000
)
 
 
 
 
FINANCING ACTIVITIES
 
 
 
Borrowing from convertible debt, net of costs

 
750

Repayment of convertible debt in cash
(660
)
 
(472
)
Repayment of unsecured debt in cash
(850
)
 

Repayment of unsecured notes payable
(176
)
 
(159
)
Proceeds from exercise of stock options
514

 

Net cash provided by (used in) financing activities
(1,172
)
 
119

 
 
 
 
Net increase in cash and restricted cash
10,143

 
1,734

Cash and restricted cash, beginning of year
2,792

 
1,058

Cash and restricted cash, end of year
$
12,935

 
$
2,792

 
 
 
 






CV SCIENCES, INC.
NON-GAAP FINANCIAL MEASURES
(in thousands)
We use Adjusted EBITDA 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. Adjusted EBITDA is defined by us as EBITDA (net income (loss) plus depreciation expense, amortization expense, interest and income tax expense, 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 highlight 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 Annual Report, 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.
Adjusted EBITDA is not presented in accordance with, or as an alternative to, GAAP financial measures and may be different from non-GAAP measures used by other companies. We encourage investors to review the GAAP financial measures included in this Annual Report, including our consolidated financial statements, to aid in their analysis and understanding of our performance and in making comparisons.
A reconciliation from our net income (loss) to Adjusted EBITDA, a non-GAAP measure, for the years ended December 31, 2018 and 2017 is detailed below:
 
For the Years Ended December 31,
 
2018
 
2017
Net income (loss)
$
10,001

 
$
(4,897
)
Depreciation expense
484

 
147

Amortization expense
35

 
35

Interest expense
153

 
507

Income tax expense (benefit)
93

 
(482
)
EBITDA
10,766

 
(4,690
)
Stock-based compensation expense (1)
2,925

 
3,419

Common stock issued for professional services (2)
295

 

Royalty buy-out (3)

 
2,432

Loss on extinguishment of debt (4)

 
189

Gain on derivative liability (5)

 
(249
)
Bad debt expense (6)

 
483

Adjusted EBITDA
$
13,986

 
$
1,584

_________________
(1)
Represents stock-based compensation expense related to stock options and warrants awarded to employees, consultants and non-executive directors based on the grant date fair value using the Black-Scholes valuation model.
(2)
Represents common stock issued for professional services
(3)
Represents the share-based royalty buy-out associated with the CanX acquisition (see Note 9 of our consolidated financial statements).
(4)
Represents loss on extinguishment of debt associated with our long-term note payable with Wiltshire, LLC (Wiltshire) (see Note 7 of our consolidated financial statements).
(5)
Represents gain on change in derivative liability associated with our convertible notes with Iliad Research Trading, L.P. (Iliad) (see Note 7 of our consolidated financial statements).
(6)
Write-off of certain accounts receivable during 2017 that are not considered normal write offs.