Cv Sciences Inc

Greetings and welcome to the Civil Sciences, Inc. first quarter 2023 conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the floor over to CB Sciences.

Thank you, and good morning, everyone. With us today with prepared remarks are CB Sciences Chief Executive Officer Joseph Dowling and your GRASR Chief Financial Officer. After the prepared remarks, we will take questions from the analyst community. I would like to remind you that on today's call, management's prepared remarks may contain forward-looking statements. These forward-looking statements are subject to risk and uncertainties that may cause the actual results to differ materially from those anticipated by CV Sciences at this time. When used in this call, the words anticipate, should, could, estimate, intend, expect, believe, potential, will, project, and similar expressions as they relate to CV Sciences are as such a forward-looking statement. Please note that on today's call, management will refer to non-GAAP financial measures, in which CB Sciences excludes certain expenses from its GAAP financial results. Please refer to CB Sciences' press release from earlier today for a full reconciliation of its non-GAAP performance measures, most comparable GAAP financial measures. This morning, the company issued a press release announcing its financial results. Participants on this call who may not have already done so, may wish to look at the press release as the company provides a summary of the results on this call. The press release may be found at www.cbsciences.com. I would like to now turn the call over to CV Sciences' Chief Executive Officer, Mr. Joseph Dowling. Joe?

Good morning, everyone. Thank you for joining our call. This morning, we issued a press release reporting results for our first quarter ended March 31, 2023. We are pleased with our continued progress as we move closer to profitability and generating free cash flow on a sustained basis. Significant financial highlights during Q1 included, we achieved for the second consecutive quarter, sequential revenue growth of 4.1 million. Our gross margin increased sequentially to 43% and also increased when compared to Q1 2022. We generated cash flow from operations of 1 million. We maintained our number one position in the natural products retail channel and continue to increase our market share. And we are carefully managing our working capital through diligent collection of our receivables, conversion of our inventory to cash, and scrutiny of all vendor relationships, all of which contributed to a sequential increase in our cash balance at the end of Q1. We also achieved numerous operational objectives during Q1, including we launched several new products, including our PlusCBD Reserve Collection Extra Gummies, our reserve collection soft gels, and our PlusCBD Daily Balance, a new line of THC-free gummies and soft gels. And our cost efficiency efforts continue to result in a lower overall company cost structure with efficiency gains and cash savings in several areas, including SG&A. Also, during Q1, we reversed an accrued payroll tax associated with an RSU issuance to our founder due to the statute of limitations expiration. This transaction significantly strengthens our balance sheet, which is now essentially debt free. Yorg will provide details on each of these areas during his remarks. Our Q1 results give us great optimism that we will remain a competitive force in our industry in spite of the continuing challenges we have faced since early 2020, including brand saturation and inaction by FDA and Congress to provide a sensible regulatory environment for our industry. Our asset-like business model is well positioned to take advantage of an industry that is maturing becoming more professional and trustworthy. Q1 was a good example of how we are now starting to realize the positive financial impact of several years of hard work in properly scaling the company, putting us in a position to leverage the strength of our assets, including our Plus CBD brand and our distribution. On the revenue side, our immediate goal is to get the company back to a 5 million plus per quarter revenue run rate and higher. This revenue goal is in near term sight. During Q1, we made great progress in overcoming the supply chain issues we experienced during 2022. We see more brand contraction in B2B as retailers are working through old inventory and continue to remove slow moving brands. As I already mentioned, we are the number one selling brand in the natural product retail channel, and we continue to see market share concentration of the top three brands in the 50% range. Customers are sticking with or moving to brands that they know and trust, and we continue to be at the top of the list in the natural channel. Our B2C sales channel continues to improve. Our B2C infrastructure is built for scale and can support nearly unlimited traffic and activity. Our merchandising and marketing investment to optimize our B2C ROI is refined on a daily basis to ensure that we are achieving our return on ad spend targets. We are seeing results in all critical B2C KPIs, including new visitors, increased subscription orders and revenue, and AOV. Brand contraction, increased education, and consumer trust will all help grow the B2C channel. And we are prepared to grow the channel and take market share as the category evolves. Our B2B and B2C channels work synergistically as our customers often learn about or even try our products from a B2B retailer and then over time, transition to a B2C customer. Company and brand awareness is also a focus area for our team. During Q1, we saw continued improvement in our social media public relations efforts. Our impressions, engagements, and engagement rate are all improving. We are regularly covered by relevant national media outlets to highlight our high-quality products, and to feature our position as a thought leader in the CBD and wellness category. Our share of voice is increasing. During Q1, CV Sciences and PlusCBD were featured in more than 30% of total media coverage. Only one other CBD company has a higher share of voice than we do. Product development will continue to be important for our growth strategy. As we mentioned at year end, 36% of our fiscal year 2022 revenue was from new products launched since May 2021. Of course, consumers are looking for high-quality brands like our PlusCBD products, but they increasingly want multi-active ingredient products that carry a structure function claim that can be trusted. We are addressing this trend and plan to launch new products similar to our wellness line, including our sleep, calm, and relief products and our over-the-counter topical line. We also recently launched our innovative reserve line to extremely favorable customer reviews and demand. We will continue to innovate and launch new products that are responsive to our customers and their specific needs states, including for anxiety, pain, and sleep disorders. We believe that strong science supports our product claims and will win the trust and loyalty of our existing and new customers. On regulatory matters, patience will be required. There is progress at the state level, and we remain optimistic regarding further progress. Inaction by FDA and Congress is frustrating, but we will continue to be actively involved at the federal level in pushing Congress to make progress. We all know that a sensible regulatory framework will significantly benefit our industry and consumers and will create an environment where quality companies and products can be trusted to grow the category responsibly. At year end, we commented on our drug development program in treatment of smokeless tobacco use and addiction, where we announced that the company received its formal certificate of grant from the Japan Patent Office for its patent application 721-6697 for our drug development asset. CV Sciences has also filed corresponding patent applications that provide similar patent protection in key commercial markets with patents already granted in the United States, Canada, Australia, and six European Union countries. We continue to believe that this drug development program has significant value, and even though we have positive element of this program internally, we continue to seek collaboration partners on this program. The challenges in our industry continue. but we are well positioned with an efficient business model and operating structure. We continue to streamline operations, increase our cost efficiency, and realign the company for growth and profitability. We have made great progress in structuring a very lean, cost-efficient organization that is now repositioned to leverage our company's assets and strengths, which includes our employees, the quality of our products, the trust in our brand, and the strength of our distribution. We will be able to achieve profitability and cash flow positive at a much lower revenue number than many of our competitors because of the tough decisions that we have made over the last several years. Let me pause now, and I will turn the call over to York.