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5	5	= Overview =
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7		-CV Sciences was incorporated under the name Foreclosure Solutions, Inc. in the State of Texas on December 9, 2010. On July 25, 2013, the Company’s predecessor, CannaVest Corp., a Texas corporation (“CannaVest Texas”), merged with the Company, a wholly-owned Delaware subsidiary of CannaVest Texas, to effectuate a change in the Company’s state of incorporation from Texas to Delaware. On January 4, 2016, the Company filed a Certificate of Amendment of Certificate of Incorporation with the Secretary of State of the State of Delaware, reflecting its corporate name change to “CV Sciences, Inc.”, effective on January 5, 2016. In addition, on January 4, 2016, the Company amended its Bylaws to reflect its corporate name change to “CV Sciences, Inc.” The Company previously operated under the corporate name of CannaVest Corp. On June 8, 2016, the Company changed its trading symbol from CANV to CVSI, and continues to be traded on the OTC: QB.
	7	+CV Sciences (CVSI) was incorporated under the name Foreclosure Solutions, Inc. in the State of Texas on December 9, 2010. On July 25, 2013, the Company’s predecessor, CannaVest Corp., a Texas corporation (“CannaVest Texas”), merged with the Company, a wholly-owned Delaware subsidiary of CannaVest Texas, to effectuate a change in the Company’s state of incorporation from Texas to Delaware. On January 4, 2016, the Company filed a Certificate of Amendment of Certificate of Incorporation with the Secretary of State of the State of Delaware, reflecting its corporate name change to “CV Sciences, Inc.”, effective on January 5, 2016. In addition, on January 4, 2016, the Company amended its Bylaws to reflect its corporate name change to “CV Sciences, Inc.” The Company previously operated under the corporate name of CannaVest Corp. On June 8, 2016, the Company changed its trading symbol from CANV to CVSI, and continues to be traded on the OTC: QB.
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9	9	The change in corporate name was undertaken in connection with the acquisition of CanX Inc., a Florida corporation (“CanX”). As more fully set forth in its Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2016 (the “CanX 8-K”), on December 30, 2015, the company entered into an Agreement and Plan of Reorganization (the “Purchase Agreement”) with CANNAVEST Merger Sub, Inc., a Florida corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), CANNAVEST Acquisition LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “LLC”), CanX and the Starwood Trust, as the Shareholders’ Representative (the “CanX Acquisition”). Pursuant to the Purchase Agreement, Merger Sub merged with and into CanX with CanX surviving such merger. Immediately following effectiveness of the merger, CanX merged with and into the LLC with the LLC surviving such merger. Upon consummation of these transactions, CanX ceased to exist and all property, rights, privileges, powers and franchises of CanX vested in the LLC, and all debts, liabilities and duties of CanX became the debts, liabilities and duties of the LLC. In consideration for the acquisition of CanX and its wholly-owned subsidiary, Cannabine, LLC, a Florida limited liability company, the Company paid and issued to the former shareholders of CanX at closing an aggregate sum of $250,000 in cash and 5,000,000 shares of the Company’s common stock. Pursuant to the Purchase Agreement, subject to the Company achieving certain post-closing milestones, the Company was previously required to pay and issue certain additional contingent consideration to the former shareholders of CanX, as more particularly set forth in the CanX 8-K. As further discussed in the Current Report on Form 8-K filed with the SEC on March 22, 2017 (the March 2017 8-K), on March 16, 2017, the parties to the Purchase Agreement entered into an amendment to the Purchase Agreement pursuant to which the Company agreed to issue the additional contingent consideration without the Company having achieved the remaining post-closing milestones and agreed to certain revisions to the buy-out option of the Company for the royalty payments otherwise due to the former shareholders of CanX, as further discussed in the CanX 8-K.
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25	25	The company expect to realize revenue to fund a portion of its working capital needs through the sale of finished products and raw materials to third parties. However, in order to fund its drug development efforts, the company will need to raise additional capital either through the issuance of equity and/or the issuance of debt.
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27		-**Current Operations**
	27	+= Current Operations =
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29		-==== Specialty Pharmaceuticals ====
	29	+== Specialty Pharmaceuticals ==
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31	31	The company currently contract with qualified parties and contract research organizations for its preclinical research and IND preparation and development. Commercialization of future specialty pharmaceutical products in the United States and other territories may rely on licensing and co-promotion agreements with strategic partners. If the company choose to build a commercial infrastructure to support marketing in the United States, such commercial infrastructure could include a sales organization, internal sales support, an internal marketing group and distribution support.
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33		-==== Consumer Products ====
	33	+== Consumer Products ==
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35	35	The company utilize internal resources to manufacture, market, and sell products containing hemp-derived CBD primarily under its PlusCBD™ brand. Hemp-derived CBD is one of at least 80 cannabinoids found in hemp, and is non-psychoactive. The company's U.S. based operations oversee its raw material supply chain, raw material processing, product development and manufacturing, and sales and marketing. The company will continue to scale-up its processing capability to accommodate new products in its pipeline.
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37		-**Description of its Subsidiaries**
	37	+== Description of Subsidiaries ==
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39	39	The Company owns 100% of the issued and outstanding membership interests of two subsidiaries: Plus CBD, LLC (formerly, “Global Hemp Source, LLC”) (“Plus CBD”), and the LLC. The Company also owned a 70% interest in CannaVest Europe, GmbH. On May 2, 2016, the Company filed Articles of Dissolution for its wholly-owned subsidiaries US Hemp Oil, LLC and CannaVest Laboratories, LLC (formerly, “PhytoSPHERE Systems, LLC”) with the Secretary of State of Nevada, effective as of April 29, 2016. On January 20, 2017, the Company filed for dissolution of CannaVest Europe, GmbH, an entity that prior to dissolution, the Company had a 70% interest in, with the District Court, Dusseldorf Germany, effective December 31, 2016. None of US Hemp Oil, CannaVest Laboratories and CannaVest Europe GmbH had any assets or liabilities at the time of their dissolution.
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57	57	The company's target customers for its consumer product segment are first and foremost end consumers via internet sales, direct-to-consumer health and wellness stores, collectives, cooperatives, affiliate sales and master distributors. Secondarily, CV Sciences is targeting manufacturers of products that can readily replace their raw base materials for its base materials, making the products more environmentally friendly and sustainable. In the future, the company intend to target national and regional broker networks and major distribution companies who have preexisting relationships with major retail chain stores. In addition, CV Sciences is directly pursuing distribution opportunities with national retailers. As the company continue to develop its business, these markets may change, be re-prioritized or eliminated as management responds to consumer and regulatory developments.
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59		-**Competition**
	59	+== Competition ==
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61	61	There are several companies developing cannabinoid therapeutics for a range of medical indications. The cannabinoid therapeutic area currently includes formulated extracts of the Cannabis plant and synthetic formulations. These formulations include CBD and THC, or a combination of CBD/THC as the active pharmaceutical ingredient. Certain companies such as GW Pharmaceuticals, PLC have focused on plant-based CBD formulations; while other companies such as Zynerba Pharmaceuticals Inc. and Insys Therapeutics Inc. have focused on synthetic CBD formulations.
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63	63	The CBD-based consumer product industry is highly fragmented with numerous companies, many of which are under-capitalized. The company routinely evaluate internal and external opportunities to optimize value for shareholders through new product development or by asset acquisitions or sales. There are also large, well-funded companies that currently do not offer hemp-based consumer products but may do so in the future.
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65		-**Intellectual Property**
	65	+= Intellectual Property =
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67	67	CV Sciences has filed trademark applications on its brands, logos and marks including, but not limited to CV Sciences and Plus CBD. On January 30, 2016, the company received a Notice of Allowance from the U.S. Patent and Trademark Office for its utility patent application number 14/791,184, Novel Process for Generating Hemp Oil with a High CBD Content. This patent covers its solvent-free and highly repeatable process for producing hemp oil with higher concentrations of CBD and expires in 2033.
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71	71	The company review its intellectual property portfolio on a periodic basis and the company will continue to broaden its portfolio in a fiscally prudent manner. The company intend to file for patent protection on its pharmaceutical products based on proprietary formulations, processes and technology.
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73		-**Research and Development**
	73	+= Research and Development =
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75	75	The company opened a laboratory facility in San Diego, California in September 2013 to advance its CBD consumer products business. Research and development costs are charged to expense as incurred and include, but are not limited to, employee salaries and benefits, cost of inventory used in product development, consulting service fees, the cost of renting and maintaining its laboratory facility and depreciation of laboratory equipment. The company's lab specializes in process development and product testing. The company incurred research and development expenses of $1,159,009 and $1,320,003, for the years ended December 31, 2016 and 2015, respectively.
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77		-**Source and Availability of Raw Materials**
	77	+= Source and Availability of Raw Materials =
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79	79	The Company sources its raw materials from well-established and well-recognized hemp growers in Europe. CV Sciences has arrangements with some of these growers to have exclusive rights to their supply. The Company has two supply arrangements in place with European farmers to supply raw material in future years. CV Sciences has contractual rights for the growth and processing of hemp oil for delivery through October 2018 under both contracts. The company do not intend to purchase any inventory under these supply agreements from the 2017 crop and/or 2018 crop. As such, the company recorded an impairment expense during the year ended December 31, 2016, related to acquired goodwill and intangible assets from PhytoSPHERE (See Note 7 of the Company’s consolidated financial statements). In addition, during the year ended December 31, 2016, the company recorded a $3,562,459 impairment of certain raw material inventory (See Note 4 of the Company’s consolidated financial statements).
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81		-**Employees**
	81	+= Employees =
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83	83	As of March 23, 2017, the company had a total of 39 employees; 38 full-time employees and 1 part-time employee. CV Sciences has no collective bargaining agreements with its employees and none are represented by labor unions. Management believes the Company has good relationships with its employees.
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