Thank you, and good afternoon, everyone. With us today with prepared remarks are CV Sciences' Chief Executive Officer, Joseph Dowling; and Joerg Grasser, Chief Financial Officer.

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 risks 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, could, estimate, intend, expect, believe, potential, will, should, 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 measure.

This afternoon, May 8, the company issued a press release announcing its financial results. Participants on this call, who may not have 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.cvsciences.com. Following the prepared remarks, we will open up for Q&A from the analyst community.

I would like to now turn the call over to CV Sciences’ Chief Executive Officer, Mr. Joseph Dowling.

Joe?

Thank you, Scott. Good morning, everyone, and thank you for joining our call.

Before I begin, I would like to address several inquiries we had regarding today’s early morning call time since it is a departure from our historical practice of hosting earnings call post market close. The vendors that provide conference call services currently have unprecedented high demand.

Our vendor for the first time in their 20-year history exhausted their capacity requiring us to move to an early Friday time, which is not our preference, but COVID-19 circumstances which caused the capacity constraint are beyond our control. We appreciate you joining us on this early morning call, especially those participants in Western time zones.

Next, I sincerely hope that you and your loved ones are healthy and safe as we work through these challenging times together. At CV Sciences, our focus starts with ensuring the safety of our employees, working to protect the health and well being of the communities where we operate, and providing the highest quality and safest products to our customers and partners, while we adapt to a remote work environment.

The first quarter provided many extraordinary challenges, resulting from the COVID-19 pandemic. Our team at CV Sciences has quickly adapted to these changing business dynamics.

All functional areas of the company have performed exceptionally well, resulting in uninterrupted service to our customers. We continue to adapt and monitor the COVID-19 impact on our business and operations.

Our staff is fully executing our business objectives and we are following all federal, state and local requirements and recommended precautions with the safety and health of our employees being the highest priority. With that, I will move to our quarterly update.

We are pleased to report first quarter revenue above our guidance range with revenue of 8.3 million compared to our guidance range of 6 million to 8 million for the quarter. We are pleased with our ability to deliver on expectations amid a very challenging environment.

To address the changing industry environment, we right-sized our operations during the quarter to reflect near-term business trends. During the first quarter, in connection with our enterprise-wide cost reduction efforts, we reduced our staff by approximately 20%, reduced salaries across our leadership team and implemented other cost savings initiatives across all company operations.

As a result of these cost savings initiatives, we estimate an annual cash savings of more than 10 million across the organization. These adjustments to our cost structure are responsive to the industry trends where we continue to see sales of CBD products impacted by the uncertain regulatory environment.

That being said, we continue to maintain a high level of confidence in the long-term industry outlook. Our advocacy for the development of an FDA regulatory landscape continues, as does our work with the FDA.

Once established, this regulatory framework will serve us very well as one of the most respected companies in the CBD product category. Our distribution across primary retail channels, including both natural product retail and food, drug and mass retail, remains robust and further improved during the first quarter.

Our retail store count has not been materially impacted by COVID-19 and we continue to expand distribution across all sales channels. We are focused in expanding our product offering and vertical channels during 2020 as well as enhancing market efforts to drive the PlusCBD brand.

We ended the first quarter with over 5,700 stores carrying our branded PlusCBD products. We also continue to see good demand within our e-commerce platform, outperforming our other channels of distribution.

We remain focused on driving our e-commerce efforts. Let me now provide an update on our three primary sales channels; the natural product retail channel, the FDM channel and the direct-to-consumer e-commerce channel.

The natural product retail channel remains our largest channel in terms of sales. The current environment remains one of heavy competition, as new entrants have driven incremental shelf space with aggressive promotion and continue to aggressively promote today.

The ongoing stress of increased competition as well as the impact of COVID-19-related store closures in specific markets has created short-term pressure in this sales channel. As a result, sales in the natural products channel accounted for the majority of our year-over-year sales decline.

We do not believe the current competitive environment is sustainable and that in the near future, fewer brands will remain on shelf. We continue to believe that our leadership position in this channel is well established and positions us well for the future as we introduce new products and brands.

We are very pleased with our business development activities in the FDM sales channel. We were able to expand our product offering in one of our largest FDM accounts where we added four additional SKUs in 870 stores, and we are working on adding six additional SKUs with another large FDM partner for placement in more than 1,500 stores.

In addition, we are working on additional FDM partnerships which are at various stages of decision-making and approval for shelf placement. As noted in the past, this channel remains underdeveloped given the limitation of products sold through the FDM channel as generally only topical products are offered.

However, we remain very well positioned for additional product distribution once retailers expand offerings beyond topical products. The barrier to entry for the FDM channel is high, as larger chains work more exclusively with a small number of trusted suppliers of which we are one of the leading partners.

We continue to believe that FDA regulations remain a major catalyst for expansion of the FDM opportunity. Our third primary channel is the direct-to-consumer or e-commerce sales channel.

The DTC channel continues to be a significant area of focus and investment, and is a critical component of our overall strategy. We have made significant investments to expand our e-commerce presence and operational capability over the last several quarters.

While sales declined year-over-year during the first quarter, our expanded presence in the e-commerce channel is providing a beneficial impact to our overall sales mix and blended gross margin. We increased e-commerce to 24% of total sales during the first quarter, up from 15% in the first quarter of 2019.

During the quarter, we launched our updated and enhanced e-commerce site which is designed to support further growth, and we have recently expanded our marketing efforts to support our brand in our e-commerce channel. In addition, we established a dedicated cross-functional team consisting of sales, marketing and IT personnel focused exclusively on this sales channel.

As indicated in our first quarter guidance, the near-term pressures affecting our sales in the CBD category overall continue. We have adapted and are aggressively managing our business to reflect these near-term challenges.

We have taken significant costs out of our business across all functional areas and remain focused on driving improved profitability, despite the near-term pressures. We will continue to closely monitor costs with a focus on minimizing the near-term impact on our profit and cash flow profile.

As discussed last quarter, we temporarily slowed down our drug development efforts, awaiting allowance of our patent application. I am very pleased to announce that in early April, we received a notice of patent allowance from the U.S.

Patent and Trademark Office for our proprietary combination of CBD and nicotine, a first of its kind treatment for smokeless tobacco use and addiction. The patent not only validates our development program but also provides significant value to our drug development efforts to potentially commercialize a novel CBD pharmaceutical drug addressing the significant unmet medical need, a market that is estimated at greater than 2 billion.

The intellectual property protection could provide opportunities to monetize our development efforts, including with financial and/or strategic partners. Before I turn it over to Joerg, I want to stress that while near-term pressures in the sector continue, we remain confident about the continued development of the CBD industry.

We remain eager to see sensible, quality-focused regulations that will ensure long-term confidence in the market with a focus on high-quality efficacious products. As this occurs, quality will rise to the top and a more normalized and sustainable competitive environment will exist.

We remain bullish on the long-term future of CV Sciences. Now, let me turn to Joerg to run through our financials.

Thank you, Joe, and good early morning, everyone. During the first quarter of 2020, we generated 8.3 million of revenue compared to 14.9 million in the first quarter of 2019.

Revenue decreased 45% year-over-year, reflecting increased competition in the natural product channel, challenges of the regulatory environment and the impact of COVID-19. The first quarter decline was almost entirely in the natural product retail channel.

We also saw a modest decline in our e-commerce activities, partially offset by increased sales in the food, drug and mass channel. Despite some macroeconomic challenges, we continue to increase our retail distribution during the first quarter.

We entered the first quarter with PlusCBD products sold in 5,799 retail stores, up from 5,567 stores at year-end and up from 3,308 retail stores at the end of the first quarter of 2019. Of our total retail stores, 2,471 are with FDM retailers.

Gross margin for the first quarter of 2020 was 48.5% compared to 70.8% in the first quarter of 2019. So declining gross margin reflected increased production costs, volume deleverage of our manufacturing overhead costs and reduced pricing.

For the first quarter of 2020, we generated an adjusted EBITDA loss of 3.9 million compared to 1.7 million adjusted EBITDA in the prior year period. The lower EBITDA is the result of lower gross profit, partially offset by reduced SG&A expenses.

On a GAAP basis, we reported a first quarter 2020 net loss of 5.3 million or $0.05 per share compared to net loss of 9.4 million or $0.10 per fully diluted share in the same quarter of fiscal 2019. Adjusted net loss for the first quarter of 2020 was 3.9 million or $0.04.

This compares to adjusted net income in the prior year period of 1.5 million or $0.01 per fully diluted share. We are very carefully managing our cash position and ended the first quarter of 2020 with 7.6 million of total cash compared to 9.6 million at the end of fiscal 2019.

Cash used in operations during the first quarter 2020 was approximately 1.7 million and we spent approximately 1.2 million on our drug development efforts. We also invested 0.5 million in capital expenditures.

Inventory at the end of the first quarter amounted to 9 million compared to 10 million at the end of fiscal 2019. Inventory decreased due to our sale of finished goods.

Please note that last month we filed a Form S-3 Shelf Registration Statement with the SEC. At present time, the company has no specific plans to issue securities under the Registration Statement.

However, filing for Shelf Registration is a reflection of standard corporate governance to provide the company with flexibility to access the public capital markets in order to respond to future financing and business opportunities. Let me conclude by reiterating Joe’s confidence in our long-term business outlook and opportunity.

We remain confident in our long-term opportunity and are working diligently to continue to reduce costs in the near-term. As Joe mentioned, we are looking at our spending across the organization with the goal of lowering costs during a period where we experienced pressure on our sales.

We have the benefit of a very attractive business model with minimal needs for capital investment. This allows us to be flexible with our spending to manage our cash position.

While we do anticipate some modest negative operating cash flow in the near term, we believe our flexible business model and debt free balance sheet allow us to manage effectively through this difficult period. Now, I will turn the call back over to Joe to discuss ongoing business development and our plans for the remainder of 2020.

Thank you, Joerg. Our focus on being the market leading brand in every sales channel continues, and we are executing the strategies to achieve this goal.

As we manage the current business environment, we will continue to focus on expanding distribution, broadening our product offering, expanding our channel exposure and aggressively controlling costs. We have built an industry leading reputation for quality and regulatory leadership that we will further leverage as the regulatory environment develops.

We continue to have additional near-term opportunities to expand distribution and have a pipeline of new products slated for launch this year, including new vertical categories and new brands targeted to specific sales channels. We also remain committed to expanding our international opportunity, beginning with Europe.

Our marketing efforts have also been enhanced with a rollout of a refreshed and updated PlusCBD brand, including modernized packaging that speaks to our science-based product innovation while staying true to our core brand DNA, which we believe will further allow us to appeal to our current customer base and broaden our brand to more customers across all of our distribution channels. We have also refreshed our advertising and social media campaigns with the intent of grabbing the attention of consumers in an increasingly crowded market.

Results of this campaign are already being seen in the positive impact on our e-commerce efforts as well as good results across our entire business. I spoke earlier in this call about the U.S.

PTO patent allowance for our drug development program. We have been notified by the U.S.

PTO that this patent will issue on May 19, 2020. In light of this patent issuance, we have decided to form a new wholly-owned C-Corporation to which we will transfer the assets and operations of our drug program.

We are doing this for several reasons, including providing the company with greater flexibility to fund and/or partner our drug development efforts and to separate a distinct operating segment from our consumer products operations. Also, as Joerg mentioned earlier, we filed an S-3 Registration Statement on April 21, 2020 with the Securities and Exchange Commission which became effective on April 30, 2020.

This allows the company to raise up to $100 million in proceeds. We are currently not in the market to raise new capital, but this step provides us with flexibility to move in that direction.

As Joerg stated, filing the S-3 reflects standard corporate governance and provides the company with future financing capability. Before I conclude, let me provide an update on our efforts for a NASDAQ uplisting.

We remain committed to achieving an uplisting for CV Sciences. Our annual shareholders meeting is scheduled for May 21, 2020.

The shareholder proxy includes a proposal for a reverse stock split. The primary purpose for affecting the reverse stock split is to increase the per share trading price of our common stock to potentially permit the listing of the company's common stock on the NASDAQ.

We believe there are numerous potential benefits to a NASDAQ listing, including, one, making our common stock a more attractive investment to institutional investors; two, broaden the pool of investors that may be interested in investing in the company by attracting new investors who would prefer not to invest in shares that trade at lower share prices. And three, better enable us to raise funds to support planned operations.

We currently do not intend to affect the reverse stock split unless it is in connection with achieving a listing on a major exchange, or is otherwise intended to be in the interest of shareholders. To close, let me reiterate that we have and are aggressively responding to the near-term industry challenges, are controlling costs and accelerating new product brand and channel development.

Our confidence in the long-term industry outlook remains robust and we are equally as confident in our brand and business positioning. It is a challenging time to be running a business, but our community including our employees, our partners and our customers have never been more committed and are working collectively to advance our shared work in both our consumer products and drug development efforts.

We are working tirelessly and looking for more and more ways to achieve our objective of adding value to all stakeholders of CV Sciences. With that, I would like to turn the call over to the operator for questions from the analysts.

Operator?

Good morning, guys. Could you give us a little bit of a roadmap on new products or anything you’re thinking about, Joe?

And I understand if you don’t want to say too much, but just kind of curious what you’re thinking about there?

Thanks and good morning, Mike. We did mention several times during prepared remarks that we are working very aggressively on new product development.

We have not yet disclosed exactly what that consists of. That could also consist of new brands as well for specific channels.

And so while I don't think we have anything specific to say today, I think over the next couple of months, we would expect to have more to say on that.

Got it, okay. So it a pretty short – it's a shorter timeframe, a couple of months is what you’re thinking.

Yes.

Got it. And then, could you talk a little bit about your stepped-up kind of marketing plan for e-commerce, kind of that social, just what are you doing there specifically?

Yes. So it’s a major focus and a big part of our strategy.

Many of our investments in e-comm we believe are starting to pay dividends, and we see very encouraging signs. The search engine optimization, SEO, is a primary driver for online CBD sales due to restrictions on CBD for traditional e-comm marketing tactics, such as paid social ads on Facebook or Instagram and Google ads, all of which ban CBD display ads.

So it was a key for us to successfully transition our old site, and we talked a lot about doing that over the last several quarters, to a new state-of-the-art platform which required many months of auditing, scrubbing and staging of the new site to ensure minimal loss or damage to years of our historical SEO efforts. So, during Q1, we transitioned to Salesforce Demandware platform and we made substantial upgrades and optimizations to provide our site visitors a more fluid and dynamic shopping experience.

We have implemented dynamic promotions and coupon coding as well as productive email campaigns and journeys which have yielded increased click-through rates, open rates and conversion rates. Also during April – it wasn’t during Q1, but during April, we increased our email engagements by 88% on e-comm.

So steady investments in SEO, programmatic advertising, strong and engaging Web site content, revamped Instagram account, subscription service, which will be rolled out soon, and a revamped CV Sciences Web site, all of these things, Mike, are strategies where we continue to invest and implement as we had into Q2. So it's not any one thing.

It is a whole bunch of coordinated efforts that go into creating scale for an e-commerce platform, all of which I mention there.

Got it. Then maybe lastly, the 10 million annual cost cuts you have made, did you see much benefit in Q1?

Not really. I think we'll start to see the benefit in a big way in Q2 and for the rest of the year.

Okay. Thank you.

Good morning and thank you for the questions. Can you guys provide a little bit of color as far as sales on the FDM in natural channel side of things?

In the cannabis industry, we saw a big stockpiling in March ahead of it, but any color of continued sales in those channels under the COVID environment currently going forward here?

We didn't see a whole lot of COVID impact in Q1, Scott. It started maybe in very late – we did not have a lot of color or visibility when we provided guidance.

We had no clue what the COVID-19 impact was going to be like. I think it's fair to say that the COVID-19 impact will – we will see an impact in Q2.

We expect Q2 to be a challenging quarter and that there will be impact from COVID-19 certainly in the natural product retail channel. It's hard to say at this point whether it will impact FDM as much, we just don't know.

And we think that e-comm, as I just mentioned with the investments that we’re making and implementing, will continue to improve.

Okay, fair enough. Focusing on the natural channel from that standpoint, you said that there is going to rationalization there.

It still seems that we haven’t seen too much rationalization of the products there and it’s still a challenging environment from – and you mentioned pricing coming down. Kind of step us through when you expect potentially more rationalization to happen in that natural channel for a premier spot for you guys?

Well, we’re seeing brand rationalization, SKU rationalization already. I don't think it's as broad as we’d like or as quick as we'd like.

It's hard to say what the timing for fewer brands on shelf will be, but I think that trend has already begun, Scott. When will we be down to a dozen brands or a smaller number of serious competitors, it's very hard to say.

Okay. And then last question from me just to kind of focus on the FDM channel a little bit, the expansion there.

It sounds like you added doors. And can you touch base on the type of SKUs that are being added into the FDM channels?

And these are geographies within existing clients that are being added for you.

Yes. So, as I mentioned, we’re at various stages of discussion with several FDM retailers and that would have the impact of adding stores.

With our existing FDM partners, we are actively working to add SKUs and increase our product offering on shelf. And I mentioned in the prepared remarks that we recently added four SKUs in 870 stores with one of our other larger FDM retailers, all of those are topical products.

We’re actively working with one of our other larger FDM retailers to add six additional SKUs on shelf and that will be in approximately 1,500 stores. And all of those six SKUs are topical products as well.

So it's still limited to topical products primarily for most of our FDM partners until the FDA I believe puts regulatory environment in place, I think that's the situation that we’ll be facing.

Okay, I appreciate it. Real quick, so discussions are ongoing or have you seen little bit of delays because of COVID-19 on the FDM channel?

And I’ll jump back in the queue.

No, discussions continue. And so it’s – the discussions that were mostly by telephone anyhow, so it’s still very easy to continue that type of interaction with our FDM partners.

Okay. Thanks.

Good morning. Two questions and this is in the spirit of trying to understand your brand strength and if you can give some color about cadence in the quarter, especially March, given COVID.

One is that, I’m surprised that e-commerce sales have been down 24% quarter-on-quarter given that we’ve seen e-commerce go up for other companies during COVID. And I understand you’ve revamped the Web site, so it should be better in coming quarters.

But a drop of 24% speaks of no repeat purchases at least and it makes me wonder about the brand strength. So if you can comment on that.

And related to that, I hear the comments about upcoming rationalization of SKUs in the natural channel where you say you are the leader but that’s a very fragmented channel, right? So I wonder what type of metrics can you give us to have a sense that you really standout there.

When I go to those stores and I visit, I see a plethora of brands and it’s not immediately obvious to me that you have a leading brand there. And again, all this in the context of COVID.

And thank you for doing the call so early from your side in California. Thanks.

Thank you, Pablo, and good morning. On the e-commerce question, we made a conscious decision to make sure that our platform had the right scale and the right tools in place before we started to really significantly ramp up potential SEO spend, programmatic spend and other marketing spend to boost sales in that category or in that sales channel.

So we really made a conscious decision to make sure that we have the right platform in place with the right tools, with the right people so that we can support it. So, we look at the first quarter sales for the e-comm channel as sort of the very beginning and are confident that the investments that we’ve made and the assets that we have in place are going to position us to really leverage, not only the PlusCBD brand but other plans that we have in the future for additional verticals that we have planned.

And I talked a little bit about product development. We think there’s going to be significant opportunities for e-comm with things that we have coming up.

In terms of the second question on how much our brand is distinctive maybe or does it stand out on shelf, given as you mentioned the plethora of brands that are out there, we, as I mentioned in the prepared remarks, are in the middle of a brand refresh. And I think over the next couple of months, you will start to see our new packaging, our new labels which we think really is a significant sort of evolution of our PlusCBD brand.

And so far it’s been very well received. So we believe that will be responsive to your question or concern about sticking out or not standing out in the plethora of brands.

So we’re confident that we're moving our brand in the right direction.

Thanks. And just a quick follow up.

And again, what are we learning about the CBD category during COVID, right? I’m surprised that we didn’t see – obviously we didn’t see this spike in terms of people pantry loading like in cannabis.

What does that say about the category? Is it more of an indulgence?

I thought it will be more resilient, but the numbers would not prove that. And then in general, U.S.

people are flocking to supermarkets, grocery stores but I think you mentioned that in the natural channel, traffic is down. Just some context there in terms of what we are learning about the category and about the resilience of the category in this type of crisis.

Thanks.

It’s a good question, Pablo. I think it’s too soon.

I that if you just look at consumer spending and the last month and a half, the pantry stuffing that has occurred and how some of the retailers have done, I think it's way too soon for us to make assessments on the CBD category. I think this is a period of time that isn’t possible to extrapolate into the future.

I think over the next quarter, we should probably have some sense and some better visibility to be able to respond to that question. But right now, it’s just too soon.

We just don't have enough data.

Thank you. And one last one for Joerg.

When you gave guidance for the quarter in mid-March 6 million to 8 million and then you – I think the answer that you gave at the time was that it was a broad range because [indiscernible] what happened in orders for the second half of March [indiscernible]. Can Joerg give some color in terms of what happened?

Was there like promotions or offers that were brought forward from the second quarter? Just some context there would help.

Thanks.

Yes, Pablo, good morning. This is Joerg.

Yes, when we gave guidance in Q1 in regards to our expected range, this was like you said based on our run rate. And we had – actually our March was a pretty good month and there were in the second half of the month of March higher than expected revenue coming in.

We didn’t do any specific or significant discounted activities. It was at the very early stage of COVID.

We didn’t know exactly what it is going to happen at the retail stores and we saw a lessened increase in the monthly sales.

Again, and just to be clear and I don’t want to put words in your mouth, but should I interpret from the prepared remarks that sales will be down sequentially in the June quarter?

So April sales were down sequentially on a monthly – compared to the monthly average of Q1 results. And we expect Q2 to be a challenging quarter.

As you asked, the COVID-19 impact of shopping patterns and consumer spending is evolving and it’s impossible for us to forecast at this point and provide guidance either for Q2 or the full year. But we do know that Q2 will be a challenging quarter.

However, we think there are several positive notes that we’ve mentioned and talked about, including the launch of several new products that we expect to begin in early Q3 that we think will have the potential for a strong second half of 2020.

Got it. Thank you.

Hi. Good morning, guys.

Thanks very much for taking the questions. So, Joe, the FDA clearly has a lot on their plate right now.

So I would just love to get your thoughts on maybe the company’s internal expectations on – and I understand it’s broad, but on a very broad timeframe on when we can maybe expect to receive more clarity and more color in terms of guidelines on adjustables, in particular within the FDM channel? Thanks.

Thanks, Gerald, and good morning. The last public FDA communication was the March 2020 mandatory report to Congress and I think everyone on this call probably read this report where the FDA confirmed it was continuing to evaluate a regulatory pathway for hemp-derived CBD as a dietary supplement.

And I think if you read into that report, they also expressed concerns about the food and beverage categories. And so that's really what we have so far from the FDA.

They also have 180-day report to Congress requirement. But at the same time, FDA continues to publicly state that there's a lack of publicly available safety data and that's the primary reason that the agency is making slow progress on its commitment to develop a regulatory pathway for this category.

But in the past few months, we think a couple really good things have happened. Other respected international regulatory bodies, including the Australian Therapeutic Goods Administration, the TGA, and the UK’s Food Standards Agency, the FSA, they both reviewed the same publicly available evidence and both concluded that hemp-derived CBD products that provide up to, I think it's 70 milligrams of CBD daily have a strong safety profile, the very issue the FDA is concerned about and can be safely regulated as non-prescription products.

And so we think this is really good news, because we know the FDA, the TGA and the FSA, they all communicate regularly. And we also know that they make great efforts to harmonize their regulations between the countries.

So that we think is really good news and sort of a playbook in some ways for the FDA. I think it’s going to be difficult for them to go in a different direction, either that the UK is going or that Australia is going.

So we see that as a very positive movement.

Got it. That’s helpful color.

Thank you. My next question is just on your supply chain.

I get that operations, they seem like they haven't been impacted thus far. But just in light of the current situation, can you speak to any potential disruptions within your supply chain that we should be mindful of on a go-forward basis?

Thanks.

We have not seen any supply chain disruptions. And as I mentioned in my remarks, our ability to function up and down the supply chain all the way to manufacturing, packaging, fulfillment is uninterrupted.

We don't see any significant ingredient shortfalls or problems either, whether it's CBD as an ingredient or any of the other excipients that we might use in our manufacturing process. So to date, Gerald, we just haven't seen any significant disruptions or interruptions or ingredient shortages.

Great. That’s great to hear.

Last one from me and I’ll hop back in the queue. Just on the overall cost cuts, SG&A, I know based on your prepared remarks and your answers to some of the questions, it’s certainly coming down over the next three quarters.

But maybe just a cadence on the SG&A in terms of the cuts and maybe this is for Joerg. But should we think about the cuts as more back half weighted?

Just trying to get a sense of when we’ll see this start to flow through on the P&L from a quarterly perspective. Thank you.

Gerald, this is Joerg. So like Joe indicated, the majority of the cuts haven’t taken place in Q1 yet.

There was a minimal impact to the bottom line for Q1 and some maturity will come through in Q2 and then some of the cuts in really Q3 and Q4. And the cuts, which Joe indicated, some magnitude really across the organization impacting cost of goods sold, R&D and SG&A assets.

Thanks very much for the color.

Hi, Joe. Thanks for doing the call early, although I don’t think it’s that early.

Thank you, Alan. Good morning.

How are you?

I’m good. I just had a few questions.

And first of all, I saw you guys did a PPP loan and I’m just wondering – I see a lot of people deciding not to go forward with that. Can you just address why you did that?

And if you expect to pay it back or are you looking for forgiveness? How do you expect that to play out?

Well, let me say that we are very grateful that we received a PPP loan from the SBA under the CARES Act. The current economic uncertainty made this loan necessary to support our ongoing operation taking into account the business activity and really more than anything our ability to access other sources of liquidity.

And all of the received funds will go to the intended use; to keep employees and pay their payroll during this pandemic. So we were very thoughtful and careful in applying and receiving the loan.

Got it. And then my next question is, obviously the natural stores channel has been a challenge to you and everybody else.

And my own view is that this pandemic is probably going to reduce physical store visits for a while and move towards e-commerce. I’m glad to see you guys moving in that direction.

Is that the way you’re seeing things as well that you have a chance maybe to be doing [ph] better online than in the natural stores?

Well, we think we can do real well online and that has the huge focus of the company and a big part of our strategy. But we also think that the natural product retail channel can rebound from the impact of COVID-19.

I think that the stores that can make their way through this pandemic can be stronger on the other side, because there may be reduced competition. So I think it's too early to say, Allan, whether the independent health food store or natural product retailers are going to see continued lower foot traffic or not.

I think it – my guess is that it could return to some level of normalization at some point.

Okay. My next question is on M&A and obviously [indiscernible], but there was also not very widely reported at all, but a potential bid by a Canadian LLP from one of your competitors.

I’m just wondering, are you having any of these discussions yourself or are you able to disclose if this is something that your company has been approached about?

If we had been approached, we wouldn’t be talking about it. But right now, we have no plans for any kind of a transaction like you’re describing.

Okay. And my last question is, you guys tried previously to get the reverse split approved and it didn’t – unfortunately the shareholders didn’t approve it.

So a two-part question. Number one, is it a done deal that you can go to the NASDAQ or are we still waiting for some sort of final response if you do get the shareholder approval, because that would be a hold at the price.

And then two, what are you doing differently this time to get shareholders to vote in favor of this?

So, regarding NASDAQ, we are in dialogue with them and we are, as we have mentioned a few times, we believe we meet all of the requirements for a listing on NASDAQ with one exception, which is the share price which then leads to the proposal for our annual meeting to be voted on for the reverse stock split. And your question about what are we doing differently this time, we did retain a proxy solicitation firm this time.

Last time, we did not. And so we think that will help and we’re very active in that process as we speak.

And in my prepared remarks, Allan, you may have heard me say that we think there's all kinds of benefits obviously to an uplist for the company and for the stock, but that our intention is not to necessarily use the reverse split except for a listing. So anyhow, that’s – we think we’re moving in the right direction.

We think it’s very beneficial to shareholders if we’re able to achieve listing on NASDAQ. And we think that getting the approval from shareholders to affect the reverse stock split is in their best interest to really be able to check the box of having a share price that’s above the threshold required by NASDAQ.

Hi, guys. Just wanted to touch base on the patent CBD plus nicotine.

Are you currently talking to any strategic partners or financial partners or how do you kind of see that progressing in the next couple of quarters?

We’re not talking about whether or not we are or are not talking with any potential partners whether they’re strategic or financial on our drug program, Mike. But what we can say is having the patent allowed and I as I mentioned in my remarks, it will issue on May 19.

We think that that validates and gives us really an asset where it might have had some uncertainty prior to that. And so that is just happening in real time as we see it.

So it gives us flexibility and one of the things that we are doing and I mentioned this on my remarks too is that we are separating out the assets and the operations of the drug development program and we’re putting it into its own wholly-owned C-Corp. And we’re doing that because that will provide us with a lot of flexibility with a readymade vehicle to potentially bring on financial and/or strategic partners to accelerate the development.

So the patent itself is a real help in allowing us to make those kind of decisions.

Got it. Okay.

I would like to thank all of you for joining us today, especially this early morning time. We remain confident with our long-term growth opportunity here at CV Sciences and we’ll continue to focus on building the business to capitalize on all of our opportunities.

Thank you very much and have a great day.