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CV Sciences, Inc. Reports Second Quarter 2016 Financial Results

Aug 12, 2016
OTC Disclosure & News Service

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CV Sciences, Inc. Reports Second Quarter 2016 Financial Results

Continues Strong Performance From Consumer Products Division With Reported Sales of $2.5 Million for Q2 2016; Company Initiates Preclinical Drug Development Program to Address $5.3 Billion Market Opportunity in Cessation of Smokeless Tobacco

LAS VEGAS, NV--(Marketwired - August 12, 2016) - CV Sciences, Inc. (OTCBB: CVSI) (the "Company", "CV Sciences", "our" or "we") announced today its financial results for the second quarter and six months ended June 30, 2016.

Second Quarter 2016 - Business Highlights

Drug Development Program. Following the CanX Acquisition in December 2015, CV Sciences commenced its preclinical drug development program during the second quarter of 2016. The Company's drug development efforts include pursuing synthetic-based Cannabidiol ("CBD") drug candidates in areas that have potential to provide significant improvements in therapeutic patient treatments with sizable addressable markets.
Natural Products Sales Channel Expands. The Company expanded its education program and marketing efforts in partnership with broker relationships and physician educators to increase this sales channel, addressing the $35 billion U.S. Natural Products industry. As of June 30, 2016, the Company continued its expansion in the Natural Products sales channel with placement into 705 stores.
Company Rebranding Continues. In June 2016, CV Sciences announced that Financial Industry Regulatory Authority ("FINRA") had approved a change in the trading symbol for the Company's common stock to "CVSI." The Company's common stock formerly traded under the symbol "CANV."
"During the second quarter, we continued to generate strong performance from our consumer products division, as the distribution of our branded consumer products increased to 705 retail locations as of June 30, 2016, compared to the 120 retail locations a year ago," said Michael Mona, Jr., chairman and CEO of CV Sciences. "We have seen a strong market acceptance and an increase in demand for our consumer products with sales of $2.5 million during the three months ended June 30, 2016, up from sales of $2.4 million for the same period last year. Given our established position as a market leader in CBD consumer products, we have pivoted our corporate strategy to include the development and commercialization of innovative medicines. During the second quarter of 2016, we initiated our preclinical drug development program following the acquisition of CanX, Inc. ("CanX Acquisition") in December 2015. The remainder of 2016 will be focused on laying the groundwork for our development of novel therapeutics, utilizing synthetic CBD as the active pharmaceutical ingredient aimed at significant improvements in patient treatment for unmet medical needs. We have assembled a strong and experienced team to advance our clinical efforts and look forward to providing updates to our investors on the progress made in our drug development program. We remain focused on delivering innovative solutions to health care issues while creating value for our shareholders."

Operating Results for the Three Months Ended June 30, 2016

The Company's net loss for the three months ended June 30, 2016 was $2,226,902 or ($0.04) per share (basic and diluted), compared to net loss of $2,003,068 or ($0.06) per share (basic and diluted) for the three months ended June 30, 2015. There were significant non-cash transactions that caused the year-over-year difference which are explained in the Non-GAAP Financial Measures below. Revenues for the second quarter of 2016 increased as a result of the company's expansion in sales and distribution channels for its CBD consumer product category.

Selling, general and administrative ("SG&A") expenses for the three months ended June 30, 2016 was $3,385,726 compared to $2,850,053 for the same period in 2015. Stock-based compensation, which is a non-cash expense, was $670,682 and $857,846 for the three months ended June 30, 2016 and 2015, respectively. SG&A expenses also include $263,040 and $254,818 of depreciation and amortization expense for the three months ended June 30, 2016 and 2015, respectively. After adjusting for non-cash stock-based compensation and depreciation and amortization for the three months ended June 30, 2016 and 2015, SG&A costs increased by $714,615 in the second quarter of 2016 compared to the second quarter of 2015. This increase resulted from $122,809 of expense related to the Company's specialty pharmaceutical segment, which began operations during the second quarter of 2016 and increased headcount, legal, commissions, marketing and employee benefits expenses.

Research and development ("R&D") expense for the three months ended June 30, 2016 and 2015 were $341,547 and $433,544, respectively. The decrease in the second quarter of 2016 compared to 2015 relates primarily to the Company's transitioning R&D activities into production of inventory products. R&D expenses during the three months ended June 30, 2016 and 2015 includes stock-based compensation, a non-cash expense, of $0 and $8,846, respectively.

http://www.otcmarkets.com/stock/CVSI/news/CV-Sciences--Inc--Reports-Second-Quarter-2016-Financial-Results?id=138057&b=y