CV Sciences, Inc. (CVSI) Earnings Call Transcript & Summary

Greetings. Welcome to the 2022 Annual Meeting of Stockholders of CV Sciences Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Joseph Dowling, Chief Executive Officer of CV Sciences. You may begin.

Good morning. I am Joseph Dowling, Chief Executive Officer of CV Sciences, Inc. I am happy to welcome you to the CV Sciences 2022 Annual Meeting of Stockholders. Before I call the meeting to order, I'd like to introduce the members of the Board of Directors who are with us today. The members of the Board are Beth Altman, Terri Funk Graham, Dr. Paul Blake, Dr. Joseph Maroon and me, Joseph Dowling. Joerg Grasser, our CFO, will act as Secretary of the meeting and as Inspector of Elections. The meeting will now officially come to order. We will proceed with the formal business of the meeting as set forth in your notice of annual meeting and proxy statement. Will the Secretary please report at this time with respect to the mailing of the notice of the meeting and the stockholders' list?

I have at this meeting a complete list of stockholders of record of the company's common stock on March 31, 2022, the record date for this meeting fixed by the Board for determining the shareholders entitled to vote at this meeting. I also have an affidavit certifying that the notices of Internet availability of proxy materials for the annual meeting were deposited in the United States Mail to all stockholders of record or by designated company authorization through traditional bank and broker searching referred to as beneficial owners and all material requested by broker intermediaries were counted and set for distribution including spoilage on or about April 15, 2022.

Thank you. At this time, I am appointing Mr. Grasser to act as Inspector of Election at this meeting. Mr. Grasser has taken and subscribed the customary oath of office to execute his duties with strict impartiality. We will file this oath with the records of the meeting. His function is to decide upon the qualifications of voters present at this meeting, accept their votes and when balloting on all matters is completed to tally the final votes. Will the Secretary please report at this time with respect to the existence of a quorum?

I have been informed that proxies have been received for 67,812,975 of the 122,040,186 shares of common stock outstanding on the record date. Holders of common stock are entitled to 1 vote per share of common stock on all matters presented for approval at the meeting and for purposes of determining whether a quorum has been met. In addition, proxies have been received for 700 of the 700 shares of Series A convertible preferred stock outstanding on the record date. Owners of preferred stock are entitled to 170,000 votes per share of preferred stock on certain of the matters presented for approval at the meeting and for purposes of determining whether a quorum has been met for an aggregate of 119 million votes. In total, proxies have been received for 186,812,975 of the total votes of 241,040,186, which represents approximately 77.5% of the total number of votes. This constitutes a quorum for the meeting today, and we may now carry out the official business of the meeting.

On the basis of Mr. Grasser's report, the meeting is duly convened. We will now proceed with the formal business of this meeting. As stated in the notice, there are 6 proposals to be considered by the stockholders at this meeting, of which 5 of the 6 proposals are stated in the notice, and the final 6 proposal is to consider and act upon such other business as may properly be brought before this meeting or any adjournments or postponements thereof. No additional business or proposal has been proposed. The first item of business is the election of 2 directors to serve until the next Annual Meeting of Stockholders or until their successors are duly elected and qualified subject to prior death, resignation or removal. The nominees for directors are Dr. Joseph Maroon and Joseph Dowling. I declare the nominations for directors closed. The second item of business is the approval to amend the company's Certificate of Incorporation as amended to increase the number of shares of capital stock authorized for issuance thereunder from 200 million shares to 800 million shares and the number of shares of common stock authorized for issuance thereunder from 190 million shares to 790 million shares. The third item of business is the approval to amend the company's Certificate of Incorporation as amended to effect at the discretion of our Board of Directors a reverse stock split of all of our issued and outstanding shares of common stock at a ratio of not less than 1-for-10 and not greater than 1-for-400 such ratio to be determined by our Board of Directors at any time before May 30, 2025 without further approval or authorization of our stockholders. The fourth item of business is the ratification of the selection by the company's Board of Directors of Haskell & White LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2022. The fifth item of business is to approve on a nonbinding advisory basis, the executive officer compensation program for the company's named executive officers Mr. Joseph Dowling and Mr. Joerg Grasser. The Secretary will now describe the voting procedures.

Voting is by proxy and electronic submission at the virtual meeting. You do not need to vote virtually at this meeting, if you have already sent in your signed proxy. Each share of common stock is entitled to 1 vote on all items presented to our stockholders for approval at this meeting. Each share of preferred stock is entitled to 170,000 votes on the second and third items. Amendments to our Certificate of Incorporation to affect the increase in authorized shares and the reverse stock split authorization and is not entitled to vote on the other matters present to our stockholders for approval at this meeting. The time is now 10:09 a.m. Pacific Time and the polls are now closed for voting.

May we have the preliminary results of the voting?

The report of the Inspector of Election covering the proposals presented at this meeting is as follows: Dr. Joseph Maroon and Joseph Dowling have both been elected as directors of the company by the stockholders. Proposal #2 has passed. The company is now authorized to amend its Certificate of Incorporation as amended to increase the number of authorized shares of common stock from 190 million to 790 million shares and to correspondingly increase the number of authorized shares of all classes of our capital stock to 800 million shares. As a result, we intend to file an amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a foregoing amendment as soon as reasonably practical. Proposal #3 has passed. The company's Board now has the authority to effect a reverse stock split of all of our issued and outstanding shares of common stock at a ratio of not less than 1-for-10 and not greater than 1-for-400, such ratio to be determined by our Board at any time before May 30, 2025, without further approval or authorization of our stockholders. The appointment of Haskell & White LLP as independent auditors for the fiscal year ending December 31, 2022, has been ratified. The company's executive officer compensation program presented for stockholder approval on a nonbinding advisory basis has been approved.

A full tally of the votes received will be published in our current report on Form 8-K, which will be filed with the Securities and Exchange Commission on or before June 1, 2022. Before we adjourn, I would like to take a moment to extend our deepest thanks and sincere gratitude to our outgoing Board members, Terri Funk Graham, Beth Altman and Dr. Paul Blake, all of whom are leaving our Board as of today. The commitment to CV Sciences of Terri, Beth and Paul has been truly commendable, and we will miss you all greatly as Board members. Being a Board member requires a commitment of time and energy that is physically and emotionally demanding, especially during the challenging last 2.5 years. To each of you, thank you for your strength, wisdom and intellect, which has been invaluable to us. Good luck in your future endeavors, and I know our friendship will continue. We will now move to adjourn the meeting. If you have any questions, please contact us at [email protected], and we are happy to schedule a follow-up meeting with you. This concludes the formal portion of the meeting, and the meeting is adjourned. Thank you.

This concludes today's meeting, and you may disconnect at this time. Thank you for your attendance.