Good morning. Welcome to Level Brands Fiscal Year 2018 Earnings Call and Update. This morning the company issued a press release that provide an overview of its fiscal year 2018 results as filed this annual report on Form-10-K. Today’s conference is being recorded and will be available at levelbrands.com. All participants on this call will be in a listen-only mode, the call will be followed by a question-and-answer session. At this time, I would like to turn the conference over to Mark Elliott, Chief Financial Officer and Chief Operating Officer. Mark?

Thank you, Sherry. Thank you all for joining the Level Brands' fiscal year 2018 earnings conference call. On the call today, I also have our Chairman and Chief Executive Officer, Martin Sumichrast. Following the Safe Harbor statement Martin will provide an overview of our results and significant accomplishments for the fiscal year. I will then provide a summary of the fiscal year financial results and then we’ll open the call up for questions. We'd like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Level Brands caution that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated, indicating the risks described in the company’s filings with the SEC. Any forward-looking statements made on this conference call speak only as of today’s date, Thursday, November 13, 2018, and Level Brands does not intend to update any of these forward-looking statements to reflect events or circumstances that would occurred after today’s date. With that said, I’d like to turn the call over to Chairman and CEO, Martin Sumichrast. Marty?

Thanks Mark, I appreciated. Sherry, thank you, and thank you to all of those listening in of the call this morning, especially our friends out in the West Coast who get up extra early. As many of you know, last week we announced our intension to complete a transformative acquisition of the CBD brand, CBD MD. Once this acquisition closes, this new business unit will significantly add to our overall consolidated business, as well as add the new exciting team to the Level Brands family. Because of this transaction and the scale of it, many of you would ask that I discussed CBD MD, regardless of the fact that we haven't officially closed the merger. And there are some considerations to closing, including the signature of the 2018 Farm Bill, which show yesterday passed the house, the day before passed the Senate, its waiting President Trump's signature. I will do so in the question-and-answer session. And with that being said, we’re pleased to report total sales up 88% for our fiscal year ended September 30th. Mark is going to go into greater detail on the financial results momentarily. I would like to take a moment to provide a quick overview of our business model to listeners that maybe less familiar with our story and our business model. Through September 30th, Level Brands operated through branded business units, focused on opportunities in licensing, brand management and entertainment and products. While we operate and report performance of our business at the segment level, licensing agreements can and do span multiple business units. Overall cash, debt and financing are managed centrally. To-date, our key competitive advantage in our licensing business has been our relationship with Kathy Ireland, who is been proven significant success in the licensing space, having built Kathy Ireland worldwide into…

Thank you, Marty. Overall, our total net sales for fiscal year ended September was $8.4 million, which was up 88% from $5.4 million the prior year. Sales were primarily split between our licensing and our brand management entertainment segments, accounting for 62% and 33% of total net sales respectively. Our products division posted minimal sales as we’ve been undergoing a major strategic shift in that unit over the past few quarters. Assuming the closed acquisition of CBD MD brand, we will report revenues from CBD MD in the in the product division going forward. Our gross profit as a percentage of net sales came in at 68% for the year. Our major operating expenses include wages, advertising, travel, rent, professional service fees and expenses related to distribution and trade shows. Our overall operating expenses were approximately $5.6 million. These expenses include non-cash expenses in aggregate of over $1.9 million, items that include things like stock compensation, tangible asset impairments, depreciation. Specifically, expenses related to being publicly traded such as Investor Relations, transferred agent, additional legal and accounting fees and other support services, we're also largely new in our 2018 periods and added to that $5.6 million operating expense number. Our income from operations increased 149% and moved from a loss of $239,000 to income of $117,000. Our interest expense was almost nothing, down from $0.5 million in the prior year. The change was a result of no new borrowings in fiscal '18 and the conversion of prior loans to equity in June 2017. Our net income improved 104% to income $63,000 compared to a loss of $1.3 million. And accounting for non-controlling interest, our net loss improved 76% to $412,000 compared to a net loss of $1.7 million in the prior year. We had cash on hand of $4.3 million and working capital of $10.8 million at the year-end compared to cash on hand of $284,000 and working capital of $2.1 million at September 30, 2017. And our current assets at September 30th increased 228% from September 30, 2017. We continue to operate with no debt and subsequent to the fiscal year, we did complete a secondary offering where we issued 1.9 million shares and received gross proceeds of $6.9 million. This allows us to continue to maintain a strong balance sheet and execute on our overall strategy. With that, I’d like to now turn the call back to Marty.

Thanks Mark. So everybody, we’re pleased with the accomplishments in 2018, and I think we’re positioned moving ahead. Our primary focus is to increase our offerings, both by expanding our base of licensing offerings, as well as strategic product offerings specifically in the health and wellness arena. We’re very excited obviously about our positioning in the growing CBD market, which provides a great example of how we’re growing our capability in both licensing and product offerings. The process that involves innovating and identifying market trends tracking buying a demand trend and ultimately identifying the right manufacture fulfillment, bringing products to market and adding to the growth of our revenue streams. And we look forward to sharing this success in the future. So, with that I’d like to open it up for Q&A. Sherry, if you’d like to take here that for us. We're glad to answer some questions. Thank you.

At this time we'll be conducting a question-and-answer session [Operator Instructions]. Our first question is from Mike Solomon with Maxim Group. Please proceed with your questions.

Congratulations on a great year. Obviously, this is a transformative acquisition in the space that seems to be growing very quickly. Can you go through the acquisition and the potential ramp that we might see, and your rationale behind the earnout for CBD MD?

When we met the team over CBD MD and saw what they have accomplished in really a short period of time, taking the business starting to generate revenues really earlier this year and where they've gotten in just three quarters. We were really impressed by what they were able to do and what their plan is moving forward. Obviously, we believe in the CBD space. We believe CBD MD is an incredible brand. We love the name, the team there of 50 plus people and where they're going. And we restructured the deal as an all equity deal. The second half of the payment for the company is solely on earn out basis. And it reached $300 million in gross sales in the first five years, that’s an average of $60 million a year. We think that makes the acquisition very attractive. And so we're excited about working with them to try and attain these growth rates. And we will be reporting on that hopefully soon, as we get President Trump sign the Farm Bill and get this thing closed and get going. But it's really an exciting acquisition. I would tell all the listeners if they like to go to the CBD MD Web site and look at it, look at the products and order some and try them. They are great products and I actually use them for my shoulder and it really works. And so we’re very excited about the opportunity and other opportunities that we’re seeing in the space. So hopefully that answers your question, Mike.

Our next question is from Rajkumar, Private Investor. Please proceed with your question.

I would like to known what are the shares outstanding currently, and then what the size of both is? And then subsequently if the merger goes through, what those numbers will be?

Right now, we have approximately 10 million shares outstanding. I think the insiders closely held is somewhere in 30% range of that. So it depends on how you determine sloped. But I think the way I would look at it would probably be 70% of that 10 million is in the float and the rest is held by insiders. As far as the transaction is concerned at closing, we’re going to be issuing 15 million, approximately 15 million shares, so that will go up to 25 million. And that will be owned by the sellers of CBD MD, or cure based development, which is their holding company. And then the earn-out adds another 15 million shares over the next five years if those revenue targets are hit, so it would increased to 40 million shares. All those shares are subject to -- obviously the backend is subject to revenue milestones and the initial shares are subject to lock ups and leak outs, which you know you in the documents and see how we structured that. So hopefully that answers your question.

Our next question is from [Eric Badder with SCC Research]. Please proceed.

Could you talk a little bit about how potentially you see the synergies with that with the Kathy Ireland business? Obviously, you have a CBD product for that already. How can you leverage those two together?

Right now, our Cathy Island health and wellness sublicense we have as an exclusive with Isodiol. And that’s a 10 year agreement. It pays us $750,000 every quarter in shares of Isodiol. And I know that Isodiol is looking the same as everybody with the passage of the anticipated passage of the Farm Bill to actively go out and promote the Isodiol brand with the Kathy Ireland Health and Wellness license. So there is not really, with that exclusivity over there, the opportunity to cross market, obviously, isn’t there. But going into 2019, we’re talking to Isodiol about how do possibly work through those things and we’ll see if we can do that. But right now, obviously, Kathy and Health and Wellness brand is over with Isodiol CBD as its own. CBD MD will be its own wholly own subsidiary. And we think that the market obviously is big enough out there to build really both product lines out.

And when you look at this acquisition is an operating company, you’ve done licensing deals before. What should we be thinking about the split there between licensing and operating revenue, going forward and potential other further acquisitions?

It’s obviously hard to predict what the licensing the existing business is going to be able to do on a going forward basis. What we can say is that we haven’t given any revenue guidance regarding CBD and these businesses. With that being said, obviously, the earn-out of the backend is $300 million over a five year period. So that’s a considerable revenue ramp. So I don’t think the licensing side of the business would keep parity with that growth. So we’re not exactly -- I can’t give you a number as to what the percentages would be. But I’m fairly confident to say that if we close the CBD MD deal and if the company is able to ramp based on those earn out numbers, a big chunk of the revenue would be in that subsidiary. Now, if we go and look at possible other acquisitions or bolt-ons or things like that that could change that as well. But really I can’t give you a definitive I can just tell you what we know as of today.

And finally you did the offering. You have this nice cash. The acquisition is not going to take away from that at least in near-term. What do you look at the use for the incremental cash that you added and obviously you going to pick up some cash I guess this year some of the license agreements kicking in. What should we think about the uses for cash here?

Well, I think we always talk about what we believe that if we can close the CBD MD deal and that will be the passage of the final signature from the present Trump on the Farm Bill. The CBD market is really set, consumer product side really set to explore. And everything I don’t know about everybody on the phone, but just people I talk to there is so many different opportunities in the CBD market I’m hearing from different folks and what’s happening. So I think we want to try to put fuel in the CBD-MD rocket really and help grow that business. So, we’re going to deploying capital into that business to help grow that business. At the signing of the definitive agreements, we actually advance $2 million in the CBD MD to help them really put more fire power behind the growth of that business. And I think you’re going to see that in the coming quarters as we do that. So, that’s going to be obviously primary focus of deployment of capital and the running the rest of the businesses. But I think we’re in a really good cash position right now, we have no debt. And so we’re really in a good spot right now.

[Operator Instructions] Our next question is from Steve Emerson with Emerson Investment Group. Please proceed with your question.

Congratulations on great results and a great future. Do you have any thoughts as to how much bigger the CBD or perhaps retail sales are once the Farm Bill passes? In other words, we're addressing what percent of U.S. retail sales, or some idea how much are addressable market may go up with the passage?

I think the market, if you look at the various studies that are out there, we quoted Brightfield Group, we have see another one as pretty wide ranging from what people think of the size of the CBD market. I always say the CBD market has three lanes; the one lane you can grow at the process, the isolate; the second lane is consumer branded products; and the third lane is the farmer side of it. We’re living in that middle lane in the consumer branded product side. And I think that that's got a very, very large multi-multibillion-dollar market just in the United States, according to what we see in the research and the people that we're talking to. So that’s the lane that we’re going to live in with CBD MD, that's the lane that at least the Kathy Ireland health and wellness brand royalty licensing deal we have with Isodiol lives in. I can't really address necessarily how much of a percentage we’re going to have in that area. But to your point, I look at what CBD MD done as far as their growth rate and I think that with the passage of final ratification of the Farm Bill and just so many things open up, the question really is what do you think would be there growth rate if the Farm Bill had passed earlier. And I can’t answer it, but I can say that I think everybody at CBD MD is super excited about where this can lead. And there is going to be competition, but I think that's good. I think it’s a big enough market. I think having a first mover status is really important. And I think CBD MD certainly falls close to that category. There is others that have been out little bit longer, but it is a new market. And I think we're in the first pitch of the first inning and it’s exciting. So I know I can't give you specifics, Steve, because I don't know it. But I think we are in a rising tide environment at CBD and I think we've got some really, really well positioned ways to participate and I’m excited about it.

Ladies and gentlemen, we’ve reached the end of our question and answer session. I would like to hand the conference back over to management for closing remarks.

Listen everybody, thank you so much for taking the time. Thank you for supporting Level Brands. We really look forward to 2019 and everybody have a wonderful rest of your day and a great holiday season to each and every one of you. Thank you all very much.

Thank you. This concludes today’s conference. You may disconnect your lines at this time, and thank you for your participation.