Cv Sciences Inc

Greetings and welcome to the CVSciences first quarter 2021 conference call. At this time, all participants are on a listen-only mode and this conference is being recorded. Following the formal presentation, management will take questions from the analyst community. I would now like to turn the call over to CVSciences for an introduction. Please go ahead.

Thank you and good afternoon, everyone. With us today with prepared remarks are CVSciences Chief Executive Officer Joseph Dowling and Chief Financial Officer, Jorg Grasser. I would like to remind you that during this call, management's prepared remarks may contain forward-looking statements, and management may make additional forward-looking statements during the Q&A session. These forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from those anticipated by CD Sciences at this time. When used in this call, the words anticipate, could, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to CD Sciences are as such forward-looking statements. Finally, please note that on today's call, management will refer to non-GAAP financial measures in which CD Sciences excludes certain expenses from its GAAP financial results. Please refer to CD Sciences' press release from earlier today for a full reconciliation of its non-GAAP performance measures, to the most comparable GAAP financial measures. This afternoon, May 13th, the company issued a press release announcing its financial results. Participants on this call who have not already done so may wish to view the press release as the company provides a summary of the results on this call. The press release may be found at cvsciences.com. Following the prepared remarks, we will open up for questions from the analyst community. I would now like to turn the call over to CVSciences Chief Executive Officer, Mr. Joseph Dowling. Joe?

Thank you, Melissa. Good afternoon, and thank you for joining us for today's conference call. First quarter results are in line with our expectations. During Q1, we achieved our highest gross margin and EBITDA results since Q3 of 2019. Revenues were down slightly on a sequential basis due primarily to a shift in our strategic pricing. We constantly monitor product pricing by sales channel, balancing consumer access and profitability. One of our goals is to certainly grow revenue, and we will, but we also want to balance revenue growth with profitability, and we manage that carefully by sales channel investment and product offering mix. Going forward, we are optimistic about both revenue growth and profitability for several reasons. First, pandemic relief and recovery. As the economy reopens and B2B retail returns, we see a more normalized traditional retail channel emerging, including for FDM, natural products, and other B2B channels. We are starting to see this now in conversations with our retail partners, and we believe continued improvement throughout 2021 will occur as the economy opens further. Second, we believe the digital sales channel is just starting and there is significant room for growth with higher margins than traditional retail. Over the last year, investments to strengthen our digital capabilities across our platform have been made and are showing good results. We have seen positive trends in all of our KPIs, including site visitors, conversion, and average order value. We have stood up digital program initiatives, including a robust SEO, email, affiliate, social media, and auto-ship programs, all of which are showing excellent progress. We recognize that the pandemic has likely accelerated a permanent change in consumer shopping behavior, making our investment and shift to digital more critical. We will continue to invest in and evolve our digital platform to position CV Sciences for growth in this important sales channel that, as I mentioned, is just starting. And third, we are positioning our product offering to meet consumer needs in the sales channels we are pursuing. We have always been well positioned for the natural product retail channel, and we will continue to evolve our product offering for this important channel, including, just earlier this week, the launch of our PlusCBD Calm and Sleep Gummies that support healthy stress response and sleep cycles for people getting back to their normal routines, including reentry to the workplace. Another example of new product development for growth is in our ProCBD line, which are clinical strength CBD products introduced in January, which are available exclusively for the medical practitioner sales channel. We see significant opportunity in this channel for several reasons, including consumers' desire for science-based products using natural plant-based alternatives. Also, our ProCBD product line is the only high-strength line on the market supported by published investigations, randomized controlled clinical studies, and post-marketing safety review. A focus on science is critically important to this discerning channel. This channel has a much higher barrier to entry with products that must be backed by science and by companies with a track record that can be trusted. We are certainly that company and we believe the medical practitioner channel will become a significant component of our revenue mix in the future. As consumer demographics, need states, preferences, and shopping behaviors evolve, we will continuously manage our product offering to meet consumer demand. We are planning and expect to introduce in the second half of 2021 several new products targeted to the biggest market opportunities available, including for the digital, natural products, and medical practitioner sales channels. We believe all of these factors provide a foundation for growth going forward. We recognize that the last year has been difficult, but believe that normalization will continue in the first half of 2021, and during the second half of 2021, we will start to see benefit from the initiatives I just mentioned. The economy reopening, our digital investment, and our targeted and evolving product offering and mix. On the science front, last month we announced an ongoing partnership with Alchemist Labs, an established leader in botanical plant testing, to collaborate with the National Institute of Standards and Technology in efforts to help cannabis testing labs demonstrate and improve measurement capabilities and comparability. This continued science leadership further demonstrates why CV Sciences is the most trusted company in the CBD category. On the regulatory front, we continue to lead the discussion with members of Congress and partner with the FDA for a sensible regulatory framework. We are involved with and support current legislative efforts, including H.R. 841, which would provide a clear set of rules for industry to follow and for FDA to enforce. The impact of this legislation would also help accelerate brand contraction and help rid the industry of bad actors. Our nicotine cessation drug development program is advancing. We have completed our pharmacological toxicology studies and are currently focused on CMC activities or chemistry manufacturing and controls in support of our planned clinical studies, which we are planning for late 2021 or early 2022. As I have previously mentioned, in 2020, we received formal notice of patent issuance from the USPTO for the US market and approval notification from the Japanese Patent Office for the Japanese market. We are actively pursuing patent protection in other select worldwide countries and geographies that represent significant market opportunities. We continue to believe that this program represents significant hidden value for our company. As mentioned in prior calls, we expect to partner this program sometime in the future. Now, let me turn it over to Jorg to run through our financials.