CV Sciences, Inc. Reports Fiscal Year-End 2022 Financial Results

SAN DIEGO, March 29, 2023

Fiscal 2022, Fourth Quarter 2022 and Recent Financial and Operating Highlights

• Generated revenue of $16.2 million for fiscal year 2022 compared to $20.0 million for 2021; Revenue of $3.9 million for the fourth quarter 2022 sequential increase of 3% from $3.8 million in the third quarter 2022;
• Recognized gross margin of 34.2% for fiscal year 2022 compared to 43.0% for 2021; Gross margin of 40.4% for the fourth quarter 2022 compared to 41.6% in the third quarter 2022;
• Cash balance of $0.6 million at year end compared to $1.4 million at the end of 2021;
• Reduced operating expenses by 54% to $12.4 million for fiscal year 2022 compared to $27.1 million for 2021;
• Generated cash flow from operations of $0.2 million in the fourth quarter of 2022 resulting in best quarterly operating cash results since the second quarter of 2019;
• Regained number one position as top-selling hemp extract brand in the natural product retail sales channel, according to SPINS, the leading provider of syndicated data and insights for the natural, organic and specialty products industry;
• Launched four unique Over-the-Counter (OTC) pain relief topical products (Q1 2022);
• Launched PlusCBD™ Relief softgels to wellness line of CBD products (Q1 2022);
• Claimed refundable employee retention credit (ERC) under the CARES Act for a total of $2.5 million (Q1 and Q3 2022).
• Completed move to more efficient and cost effective facility in San Diego (Q2 2022);
• Launched PlusCBD™ Reserve Collection 30ct softgels to support stress relief and relaxation (Q3 2022);
• Extinguished entire outstanding convertible debt (Q3 2022);
• Settled six shareholder derivative lawsuits (Q3 2022);
• Launched PlusCBD™ Daily Balance, a new line of THC-free gummies and softgels (Q1 2023);
• Received formal notice of patent issuance from Japan Patent Office for formulations containing CBD and nicotine for treating smokeless tobacco addiction (Q1 2023);
• Received preliminary approval of proposed settlement of shareholder derivative lawsuit (Q1 2023); and
• Continued to evaluate strategic opportunities, including consideration of inbound and outbound merger, sale, acquisition or other options for the Company.

"We are focused on building for the future with several key initiatives, including: introduction of new exciting products; growing our existing sales channels; pursuing new sales channels including international opportunities; and continue to operate our business cost efficiently," stated Joseph Dowling, Chief Executive Officer of CV Sciences. "Our fourth quarter positive operating cash results of $0.2 million exceeded our expectations and we are encouraged by improvements we have made to reduce operating expense. In addition, we received very positive consumer response from our most recent new product launches. Our product quality and innovation team helped broaden our business in 2022. We believe our recently launched Reserve Collection and Wellness Line of products are evidence of our strong pipeline, and demonstrate our ability to develop innovative products that address the need-states of our customers. Our flagship PlusCBD™ brand continues to improve its number one position and gain market share in the natural product channel, and, with our portfolio of high-quality and proven products, we believe the Company is positioned for future growth. We have strengthened our balance sheet and continue to operate cost efficiently and plan to continue participating in the consolidation and brand contraction of the CBD market by continuing to execute on our key strategic initiatives, and leveraging core competitive advantages to drive long-term growth and shareholder value."

Operating Results - Full Year 2022 Compared to Full Year 2021

Sales for fiscal 2022 were $16.2 million, a decrease of 19% from $20.0 million in 2021. The decline is primarily due to lower retail sales in our retail channel, mostly resulting from reduced sales to independent natural product retailers and FDM accounts. The total number of units sold during 2022 decreased by 22%, partially offset by increases in average sales price per unit in the second half of 2022. In addition, our revenue in 2022 was negatively impacted by supply chain challenges with certain contract manufacturers. The Company reduced its operating loss to $6.8 million in 2022, compared to an operating loss of $18.4 million in the prior year, mostly due to reductions of its selling, general and administrative expenses. The Company had negative adjusted EBITDA for fiscal 2022 of $6.1 million, compared to negative adjusted EBITDA of $10.0 million in 2021.

Fourth Quarter 2022 Results