Cv Sciences Inc

Good day and welcome to the CV Sciences Inc. third quarter 2023 conference call. All participants are in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one On your touch-tone phone, to withdraw your question, please press Start in 2. Please note this event is being recorded. I would now like to turn the conference over to CV Sciences. Please go ahead.

Thank you, and good morning, everyone. With us today with prepared remarks are CV Sciences Chief Executive Officer Joseph Dowling and George Grasser, Chief Financial Officer. After prepared remarks, we will take questions from the analyst community. I would like to remind you that during this call, management's prepared remarks may contain forward-looking statements. These forward-looking statements are subject to risk and uncertainties that may cause 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, forward-looking statements. Finally, please note that on today's call, management will refer to non-GAAP financial measures in which CV Sciences excludes certain expenses from its GAAP financial results. Please refer to CV Sciences' press release from earlier today for a full reconciliation of its non-GAAP performance measures to the 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 cbsciences.com. I'd like to now turn the call over to CB 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 third quarter ended September 30, 2023. We are very pleased with our Q3 results as we continue to move towards a profitable and positive cash flow operation. Significant financial highlights during Q3 included, we increased our revenue to 4.1 million for the third quarter 2023 which is both a sequential and year over year increase in a very competitive environment where many of our competitors are experiencing significant revenue declines. We achieved a gross margin of 45.1% in the third quarter, which is again, both a sequential and year over year increase. For the nine months ended, of 2023, for the first nine months of 2023, we generated cash flow from operations of 2.4 million, which included the collection of 2.5 million of governmental tax credits. Nevertheless, it is a huge improvement when compared to cash used in operations of 2.1 million for the first nine months of 2022. We continue to have a balanced mix of B2B and B2C revenue and maintained our number one position in the natural products retail channel. We are increasing our market share in the natural product retail channel while brand contraction and consolidation continue to weed out weaker brands. We are aggressively managing working capital to ensure timely conversion of our receivables and inventory to cash. 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. Yord will provide details on each of these areas during his remarks. Our Q3 financial highlight illustrates the tremendous progress that we have made to achieve profitability and positive cash flow. We have strengthened our operations and positioned the company to pursue and leverage both organic and M&A growth opportunities. Our asset-like business model is well-positioned to take advantage of an industry that is contracting and maturing, requiring greater professional capability and trustworthiness. Q3 was a continuation of the diligent work of our team as we continued to see 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 B2B and B2C distribution, our flagship plus CBD brands, and the quality of our employees. On the revenue side, Our short-term goal continues to be to get the company back to a $5 million plus per quarter revenue run rate and much higher. During Q3, we continue to make progress in overcoming the supply chain issues we experienced during 2022. Brand contraction in all B2B sales channels is continuing as retailers are working through old inventory and removing slow-moving brands. As I mentioned, we are the number one selling brand in the natural product retail channel, and we continue to see market gains for CV Sciences and our flagship brand, Plus CBD. Customers are loyal to brands they trust, and we continue to see movement to our Plus CBD brand, which continues to be at the top of the list in the important natural product retail channels. Our B2C sales channel continues to improve. Our B2C infrastructure is scalable and can support nearly unlimited traffic and activity. On a daily basis, our team works to optimize our merchandising and marketing efforts, to optimize our ROI, and to ensure that we are achieving our return on ad spend targets. We are seeing results in all critical B2C KPIs, including visitors, despite much lower digital marketing spend. 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 contracts and evolves. We believe our B2B and B2C channels work closely together as our customers often learn about or even try our products from a B2B retailer and then over time transition to a B2C customer. The strength of our combined B2B and B2C distribution is a key asset and strategic consideration in our M&A strategy, which I will discuss in a few minutes. Product development will continue to be important for our growth strategy. We know that consumers are looking for high quality and trusted brands like ours plus CBD products, that can address specific needs states. We continue to address 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. Earlier this year, we launched our innovative reserve line to extremely favorable customer reviews and demands. We will continue to innovate and launch new products that are responsive to our customers and their specific needs, 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, we remain active with the US Hemp Roundtable and other advocacy groups to provide Congress and the FDA with data and the information needed to advance sensible legislation for the hemp industry. As discussed during our Q2 2023 earnings call, a recent subcommittee hearing of the House Oversight Committee included strong testimony regarding CBD safety, along with regulatory recommendations from industry experts to advocate for FDA and Congress to regulate CBD as a dietary supplement and food and beverage additive. We strongly agree with this recommendation and believe that current regulations governing dietary supplements are the starting point to establish a regulatory framework for the CBD industry. The absence of federal regulation continues to be a challenge. This void has led many states to enact regulations that are extremely challenging and costly for companies to comply with. This has led to confusion for both retailers and consumers. Inaction by FDA and Congress is frustrating, but we will continue our active involvement at both the federal and state level and will remain persistent in pushing Congress and FDA 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. Before I turn the call over to Yorg to discuss our financials, I want to briefly discuss our M&A strategy to help grow the company and increase shareholder value. Our company has numerous strengths and assets that can be leveraged much further. This includes our B2B and B2C distribution, the strength of our flagship brand plus CBD, our scalable infrastructure in systems and process, and most important, the talent and expertise of our employees. We are transitioning to become a global health and wellness company that will not only participate in the CBD category, but also leverage our strengths to pursue non-CBD nutraceuticals and other plant-based food products. Over the last several quarters, we have discussed our participation in select M&A opportunities. As part of this process, we have evaluated numerous opportunities that would allow us to leverage our strengths and assets that I just described. We are being extremely selective, making sure that anything we do must be a good strategic fit with favorable economics to our shareholders. With that context, I am pleased to announce that we have executed a non-binding letter of intent to acquire a plant-based food company in Europe. Closing of this important strategic acquisition is expected to occur before the end of the year. 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 cost efficiency, and are positioned to leverage our company's assets and strengths, both organically and through our M&A strategy. We are moving toward profitability and cash flow positive in the near term. 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.