Executive Summary

Record quarterly sales of $12.349M, up 203% YoY and 53% QoQ, driven by organic expansion across retail, wholesale, and DTC channels, and supported by SPINS data showing PlusCBD as the #1 hemp CBD brand in natural products retail .
Gross margin expanded to 73.4% vs 69.7% YoY and 68.9% in Q1, reflecting mix shift to branded consumer products and lower raw material unit costs from prior inventory impairments .
Diluted EPS of $0.03 vs ($0.01) YoY and $0.01 in Q1; net income $3.186M (press release) vs $3.1859M (10-Q), a rounding difference; operating income swung to $3.297M from a ($0.860M) loss YoY .
Strategic catalysts: Farm Bill progress, NASDAQ uplisting application, SEC enforcement matter settled, and full repayment of remaining convertible debt, all improving regulatory/financing posture and investor relevance .

What Went Well and What Went Wrong

What Went Well

“Record key performance metrics that include triple-digit year-over-year revenue growth and double-digit sales growth on a sequential quarterly comparison” (Joseph Dowling) .
Gross profit doubled to $9.060M (+219% YoY), maintaining strong margins while scaling; adjusted EBITDA reached $3.806M (vs $(0.281)M YoY), demonstrating operating leverage .
Retail distribution expanded to 1,968 stores (+11% QoQ), with PlusCBD ranked #1 by SPINS in hemp CBD category and #2 across broader natural product categories, supporting brand leadership .

What Went Wrong

Specialty pharmaceutical segment remains pre-revenue; Q2 R&D spend rose to $0.366M, driving a segment operating loss of ($0.367)M as preclinical work advances for CVSI-007 .
Street estimates unavailable via S&P Global, limiting beat/miss analysis; management did not provide quantitative guidance ranges, only directional commentary for H2 strength .
Ongoing legal overhangs (e.g., Dun Agro claim; legacy shareholder litigation) persisted through Q2, though SEC enforcement was settled; potential costs/distractions remain .

Financial Results

Metric	Q2 2017	Q1 2018	Q2 2018
Revenue ($USD)	$4,081,832	$8,070,765	$12,348,695
Diluted EPS ($USD)	($0.01)	$0.01	$0.03
Gross Margin %	69.7%	68.9%	73.4%
Operating Income ($USD)	($859,674)	$667,606	$3,297,468
Net Income ($USD)	($992,188)	$619,334	$3,185,910

Note: Press release reported net income of $3,186,000; 10-Q shows $3,185,910 (rounding difference) .

Segment performance (Q2 2018):

Segment	Product Sales ($USD)	Gross Profit ($USD)	SG&A ($USD)	R&D ($USD)	Operating Income ($USD)
Consumer Products	$12,348,695	$9,060,076	($5,319,536)	($75,833)	$3,664,707
Specialty Pharmaceutical	$0	$0	($1,068)	($366,171)	($367,239)

Key KPIs:

KPI	Q2 2018	Prior Period
Retail Store Count	1,968 (as of 6/30/18)	1,772 (implied from +11% QoQ)
Adjusted EBITDA ($USD)	$3,806,056	$(280,939) (Q2 2017)
EBITDA ($USD)	$3,383,332	$(811,488) (Q2 2017)
Total Cash ($USD)	$7,231,176 (cash+restricted)	$3,887,528 (Q1 2018)
Unrestricted Cash ($USD)	$6,450,000	$3,106,218 (Q1 2018)
Cash from Operations (YTD)	$5,369,312 (six months)	$204,279 (six months 2017)

Non-GAAP reconciliation highlights: Adjusted EBITDA adds back stock-based compensation ($361,149 Q2), common stock for services ($61,575), excludes derivative gains (none in Q2), and royalty buy-out (none in 2018) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2018 / H2 2018	None	“Expect to deliver a strong second half” (no range)	Maintained qualitative only
Gross Margin	FY 2018	None	Continue strong margins; no numeric guidance	Maintained
Adjusted EBITDA	FY 2018	None	Profitability expected to continue; no range	Maintained
EPS	FY 2018	None	No quantitative guidance	Maintained
Store Count	FY 2018	None	Ongoing distribution expansion; no numeric target	Maintained
Drug Dev. Milestones (CVSI-007)	2019	N/A	Target IND filing in 2019; clinical start in 2019 per plan	New timeline reiterated
Capital Markets	2018	N/A	NASDAQ uplisting application filed	New initiative

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’17 and Q1’18)	Current Period (Q2’18)	Trend
Revenue trajectory	Q4’17 revenue $5.6M; Q1’18 $8.1M (company IR deck)	Q2’18 $12.3M (+53% QoQ; +203% YoY)	Acceleration QoQ (53%)
Gross margin	Q1’18 68.9%	Q2’18 73.4%	Expansion from Q1 and YoY
Distribution footprint	Continued additions; no numeric target	1,968 stores (+11% QoQ)	Scaling retail presence
Regulatory/legal	SEC matter pending (Q1)	SEC settled; CEO transition	Risk reduced
Farm Bill tailwind	Noted progress (Q1 policy context)	Strong bipartisan support; likely 2018 passage	Positive regulatory trajectory
R&D execution (CVSI-007)	Preclinical work advancing	IND targeted 2019; preclinical ongoing	Program advancing
Capital structure	Convertible debt outstanding (Q1; repaid in April)	Fully repaid convertible note; avoided dilution	Deleveraged
Brand leadership	Building PlusCBD awareness	SPINS #1 hemp CBD product; #2 across categories	Strengthening brand

Management Commentary

“CV Sciences delivered strong financial results for the second quarter of 2018... In every aspect, we set new performance records and laid the groundwork for future expansion” — Joseph Dowling (CEO) .
“We continue to make progress with our pre-clinical program... advance toward filing an Investigational New Drug application in 2019... filed our application for up-listing to the Nasdaq Capital Market” — Joseph Dowling .
Call highlights: “Our PlusCBD brand continues to be the number one selling hemp CBD product line... gross margin of 73%... fully repaid all remaining convertible debt totaling $660,000” — Joseph Dowling .

Q&A Highlights

Epidiolex approval viewed as industry validation; expected release of toxicology data to aid broader CBD research, potentially benefiting CVSI programs .
NASDAQ uplisting: application submitted; management engaged with the exchange, will disclose updates as available .
Capacity expansion: new facility and org scaling across sales, marketing, manufacturing to meet growth; positioning for a ~$1.6B hemp CBD market by 2021 .

Estimates Context

We attempted to retrieve S&P Global consensus for Revenue and EPS for Q2 2018, but data was unavailable due to API limits (consensus therefore not accessible). As a result, beat/miss analysis versus Street is not provided [GetEstimates error].
Company pre-announced Q2 revenue of $12.3M ahead of the print, which can be used as a proxy for internal expectations, but is not Street consensus .

Metric	Q2 2018 Actual	Q2 2018 Consensus
Revenue ($USD)	$12,348,695	N/A (S&P Global consensus unavailable)
Diluted EPS ($USD)	$0.03	N/A (S&P Global consensus unavailable)

Key Takeaways for Investors

Momentum continues: 53% QoQ revenue growth and margin expansion to 73.4% indicate durable scaling and operating leverage in the consumer products segment .
Brand leadership and distribution breadth (1,968 stores; SPINS #1) provide defensible competitive positioning and support further shelf gains .
Cleaned-up capital structure (convertible repaid) and SEC matter resolution reduce overhangs, potentially broadening investor base ahead of NASDAQ uplisting efforts .
Near-term trading catalyst: legislative progress on the Farm Bill and uplisting updates could drive sentiment; monitor regulatory headlines and exchange communications .
Medium-term thesis: consumer products growth funds specialty pharma; CVSI-007 IND target in 2019 opens optionality for value creation in smokeless tobacco cessation (a ~$4B market) .
Watch cost discipline: SG&A growth supports scaling but should trend below revenue growth to sustain EBITDA gains; current Adjusted EBITDA inflection supports this trajectory .
Track legal/commercial risks: while SEC matter is resolved, litigation and supplier disputes persist; monitor disclosures for potential financial impact .

Sources: Press releases and 8-K exhibits ; Q2 2018 10-Q and financial statements ; Q2 2018 earnings call transcript .

CV Sciences, Inc. (CVSI)·Q2 2018 Earnings Summary