Charlotte's Web Reports Second Quarter 2026 Financial Results
Rhea-AI Summary
Charlotte's Web (OTCQX: CWBHF) reported second quarter 2026 revenue of $10.9 million, down 15.2% year over year, reflecting its 2025 decision to largely exit retail channels. Gross profit was $5.2 million, with gross margin expanding to 47.5% from 46.8% despite lower volume.
Operating loss was $4.4 million versus $4.1 million a year earlier, while net loss narrowed to $4.1 million from $6.3 million, aided by a favorable change in fair value of financial instruments. Adjusted EBITDA improved to -$3.0 million from -$3.6 million. SG&A declined 5.4% year over year, and second quarter operating cash use fell to $0.9 million from $2.8 million in the first quarter.
On May 28, 2026, British American Tobacco subsidiary BAT converted its C$75.3 million debenture into common shares at C$0.94 and invested an additional $10 million via private placement, eliminating Charlotte's Web's largest liability. Total liabilities dropped by $57.0 million (approximately 74%), shareholders' equity moved to $56.1 million from a $2.0 million deficit, and cash rose to $14.0 million. The Company also completed its transition to in-house gummy production and highlighted evolving U.S. hemp policy, California market restrictions (about 10% of revenue), and progress of the DeFloria clinical program.
Positive
- Total liabilities reduced by $57.0 million (~74%) after BAT debenture conversion
- Shareholders' equity improved to $56.1 million from a $2.0 million deficit
- Cash and equivalents increased to $14.0 million from $8.0 million at year-end 2025
- Gross margin expanded to 47.5% from 46.8% in Q2 2025
- SG&A expenses declined 5.4% year over year in Q2 2026
- Operating cash use fell to $0.9 million from $2.8 million in Q1 2026
- Net loss narrowed to $4.1 million from $6.3 million year over year
- Adjusted EBITDA loss improved to -$3.0 million from -$3.6 million
- Capital expenditures for first half 2026 dropped to $50 thousand from $652 thousand
Negative
- Q2 2026 revenue declined 15.2% year over year to $10.9 million
- First half 2026 revenue decreased 12.2% to $22.0 million from $25.1 million
- Operating loss widened to $4.4 million from $4.1 million in Q2 2025
- Non-cash loss of $4.2 million recorded from extinguishment of debt in Q2 2026
- California restrictions materially limit hemp-derived CBD sales in a market ~10% of revenue
- No revenue recognized yet from the BEI healthcare initiatives in the quarter
News Explained
Near-term product access, healthcare-program revenue, and DeFloria's next clinical phase remain dependent on unresolved external conditions.
The quarterly report records results for the period ended
The proposed extension would postpone the relevant federal restriction for those products, rather than establish the durable framework the company is seeking.
DeFloria's Phase 2 autism-related program remains substantially advanced in preparation, but trial initiation still requires securing the resources to fund it.
No revenue was recognized from the healthcare access incentive program in the quarter, which the company describes as being in early build-out.
AI-generated analysis. How Rhea-AI works. Not financial advice.
Federal Hemp Framework and Healthcare Strategy Advance; Debenture Conversion Eliminates Largest Liability, Restores Positive Shareholders' Equity; Gross Margin Expands to
Louisville, Colorado--(Newsfile Corp. - August 13, 2026) - Charlotte's Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) ("Charlotte's Web" or the "Company"), a botanical wellness innovation company and the market leader in cannabidiol (CBD) hemp extract wellness products, today announced results for the quarter ended June 30, 2026. All amounts are expressed in U.S. dollars unless otherwise indicated.
"The second quarter fundamentally changed Charlotte's Web's financial position. We completed the recapitalization, strengthened the balance sheet, and positioned the Company to pursue our healthcare strategy and federal regulatory priorities from a position of strength," said Bill Morachnick, Chief Executive Officer of Charlotte's Web. "Our near-term revenue reflects the channel decisions we made last September to largely exit the retail landscape, delivering the margin and cash flow improvements coming through the quarter. But the bigger Q2 story has been Federal hemp policy movements, which are continuing. The Administration, CMS and bipartisan members of Congress are aligning to protect non-intoxicating full-spectrum hemp products, drawing the same distinction we have argued for years: naturally occurring full-spectrum hemp is not the same thing as synthetic intoxicants, and policy should stop treating them alike. We intend to keep making that case, and to keep educating the public about what full-spectrum hemp actually is and is not. We also continue to advance DeFloria through the FDA Botanical Drug Pathway, extending our botanical science into regulated medicine."
POLICY UPDATE
The second quarter and period since have brought more federal hemp policy reform movement than has occurred since passage of the 2018 Farm Bill. At this point, Congress has introduced bipartisan hemp product legislation; the Trump Administration has formally asked Congress to revise or delay enactment of the impending federal hemp product ban; the Center for Medicare Services ("CMS") intervened publicly to defend access to full-spectrum CBD; and the Senate ultimately voted to postpone enactment of an impending federal hemp product ban that was set to take effect in November. While hemp product policy remains unsettled, taken together, these policy reform developments reflect a policy debate that is increasingly focused on distinguishing between naturally occurring, non-intoxicating full-spectrum hemp products, like Charlotte's Web products, vs. synthetic, intoxicating hemp cannabinoid products. The following outlines the developments most relevant to the Company:
Federal Hemp Legislation
On June 24, 2026, President Trump, through the Office of Management and Budget ("OMB") submitted an
In July 2026, Representatives Andy Barr (R-KY) and Angie Craig (D-MN) introduced a bipartisan bill, the Lawful Hemp Protection Act (H.R. 9830), which would establish a comprehensive federal regulatory framework for hemp-derived products, including preserving consumer access to non-intoxicating, full-spectrum hemp products. The bill strikes the hemp ban at Section 781 and amends the Federal Food, Drug, and Cosmetic Act to regulate hemp-derived cannabinoid dietary supplements. Additionally, the legislation proposes to adjust the federal hemp definition to a
On August 5, 2026, the Senate began negotiating the legislative vehicle for a Continuing Resolution ("CR") to fund the government past the September 30, 2026 deadline. The Senate CR package ultimately included a provision to extend enactment of Section 781 from November 12, 2026, to December 11, 2026, as it relates to naturally occurring hemp products. In response, Senator Ted Budd (R-NC) proposed an amendment to strip the hemp ban extension language.
On August 6, 2026, CMS Administrator Dr. Mehmet Oz wrote a letter to members of the U.S. Senate urging them to reject the Budd amendment, stating that CMS had "taken historic action to not only expand access to full-spectrum CBD, but do so in a way that ensures expanded access drives value for both patients and the Medicare program." Dr. Oz further highlighted the Administration's continued support for maintaining access to hemp-derived CBD products while policymakers evaluate longer-term regulatory solutions.
On August 8, 2026, the U.S. Senate rejected the Budd amendment 61-32 and passed the CR with language to postpone enactment of Section 781 to December 11, 2026, as it relates to naturally occurring hemp products. As Charlotte's Web products are formulated using naturally occurring, full-spectrum hemp extracts, the Company's product portfolio falls within the scope of products protected by the Senate CR.
The Senate CR extension, if passed by the House in September as a reconciled bill and signed into law by President Trump, provides Congress with additional time to advance comprehensive hemp legislation that could establish a durable federal regulatory framework for naturally derived hemp products. Charlotte's Web supports the extension as an important step toward a federal policy approach that preserves consumer access to lawful full-spectrum hemp products while addressing concerns associated with synthetic, intoxicating, and unregulated cannabinoid products.
Charlotte's Web is closely monitoring the legislative process; however, the Company cannot predict whether the proposed hemp extension will ultimately be enacted into law or, if enacted, what form any final substantive short- or long-term policy solution for hemp products will take, and the corresponding impact on the Company.
California Hemp Restrictions
July 1, 2026, California enacted SB 378 and AB 8, which, in conjunction with Governor Newsom's Emergency Regulations imposed in 2025, materially restrict the sale of hemp-derived CBD products in the state and effectively eliminate full-spectrum hemp products from the California market. Based on the Company's current channel mix, California represents approximately
NATIONAL HEALTHCARE STRATEGY
Value-Based Care Pilot Programs
In line with the Administration's efforts to integrate full-spectrum hemp products into the national healthcare system, Charlotte's Web is actively engaging Accountable Care Organizations (ACOs) to launch pilot programs evaluating the role of CBD within value-based care models. These initiatives are designed to generate measurable clinical and economic outcomes that demonstrate the potential of cannabinoid-based interventions to improve patient wellness while reducing overall healthcare costs. By aligning with care delivery models inspired by the principles of the Center for Medicare & Medicaid Innovation ("CMMI"), Charlotte's Web believes it is well positioned for a shift toward outcomes-based healthcare and future funding or shared-savings opportunities, subject to regulatory developments and program eligibility requirements.
CMMI has publicly stated that the Substance Access Beneficiary Engagement Incentive ("BEI") for eligible hemp products will comply with the federal THC limits described above. Eligibility of full-spectrum products under these programs therefore remains linked to the outcome of the federal legislative process.
DEFLORIA CLINICAL PROGRAM
DeFloria, Inc. is advancing AJA001 Oral Solution, an investigational full-spectrum botanical drug candidate. DeFloria is a collaboration between Charlotte's Web, AJNA BioSciences, and a subsidiary of British American Tobacco. Charlotte's Web owns approximately one-third of DeFloria and holds exclusive commercial manufacturing rights for AJA001 upon potential FDA approval. DeFloria's clinical work to date has centered on irritability associated with autism spectrum disorder ("ASD"), where the Phase 2 program remains substantially advanced across clinical site selection, protocol optimization and manufacturing readiness. Initiation of the Phase 2 trial remains subject to securing the resources required to fund it. Effective June 3, 2026, Charlotte's Web co-founder Jared Stanley stepped down from the Company's Board of Directors to dedicate his full attention to his role as Chief Executive Officer of DeFloria, including advancing and financing its clinical program.
Alongside the ASD program, DeFloria is evaluating multiple rare pediatric neurological indications for AJA001, each of which would be expected to be eligible for orphan drug designation. AJA001 is a complex, full-spectrum botanical drug product whose constituents act through multiple biological pathways. This pharmacology lends itself to evaluation in more than one indication, and DeFloria's active Investigational New Drug ("IND") filing provides a regulatory foundation from which those indications may be pursued. Advancement of AJA001 remains subject to clinical, regulatory, financing and commercialization progress.
For Charlotte's Web, this direction is a return to first principles. The Company was founded in service of children with severe, treatment-resistant neurological conditions and the families advocating for them. That origin continues to shape where Charlotte's Web believes a rigorously developed botanical drug can matter most. The Company expects DeFloria to provide further detail on its expanded development strategy as those programs advance.
OPERATIONS
The transition to in-house gummy production is substantially complete at the Company's cGMP facility in Louisville, Colorado. The major equipment investment is now behind the Company: capital expenditures were
SECOND QUARTER FINANCIAL REVIEW
"The balance sheet is in a fundamentally different position than it was ninety days ago," said Erika Lind, Chief Financial Officer. "We eliminated
Transaction completion and capital structure
On May 28, 2026, following approval by shareholders at the Annual General and Special Meeting, Charlotte's Web completed its transaction with BT DE Investments Inc. ("BAT"), a subsidiary of British American Tobacco p.l.c. (LSE: BATS) (NYSE: BTI). BAT's outstanding C
The transaction eliminated the Company's largest balance sheet liability and removed the associated annual interest cost. Balance sheet changes as of June 30, 2026, compared to December 31, 2025, include:
- The convertible debenture balance was reduced from
$50.8 million to zero - Total liabilities were reduced by
$57.0 million , or approximately74% - Total shareholders' equity increased to
$56.1 million from a shareholders' deficit of$2.0 million - Cash and cash equivalents increased to
$14.0 million from$8.0 million
The conversion also resulted in a non-cash loss from extinguishment of debt of
Second quarter financial review
The following table sets forth selected financial information for the periods indicated:
| Three Months Ended June 30, | ||||||
| U.S. $ millions, except per share data | 2026 | 2025 | ||||
| Revenue | $ | 10.9 | $ | 12.8 | ||
| Cost of goods sold | 5.7 | 6.8 | ||||
| Gross profit | 5.2 | 6.0 | ||||
| Selling, general, and administrative expenses | 9.5 | 10.1 | ||||
| Operating loss | (4.4 | ) | (4.1 | ) | ||
| Change in fair value of financial instruments | 5.6 | (1.5 | ) | |||
| Loss from extinguishment of debt | (4.2 | ) | - | |||
| Other (expense), net | (1.1 | ) | (0.7 | ) | ||
| Net loss | $ | (4.1 | ) | $ | (6.3 | ) |
| EPS basic and diluted | $ | (0.02 | ) | $ | (0.04 | ) |
| Adjusted EBITDA (1) | $ | (3.0 | ) | ( | ) | |
| Assets: | ||||||
| Cash and cash equivalents | $ | 14.0 | $ | 15.3 | ||
| Total assets | $ | 76.4 | $ | 88.0 | ||
| Liabilities: | ||||||
| Long-term liabilities | $ | 12.1 | $ | 62.7 | ||
| Total liabilities | $ | 20.3 | $ | 73.0 | ||
Consolidated net revenue for the second quarter ended June 30, 2026, was
Gross profit in the second quarter of 2026 was
Total SG&A expenses were
Net loss for the second quarter of 2026 was
Excluding the
Adjusted EBITDA1 for the second quarter of 2026 was a loss of
Financial Position
Cash and cash equivalents as of June 30, 2026, were
Consolidated Financial Statements and Management's Discussion and Analysis
The Company's consolidated financial statements and accompanying notes for the three and six months ended June 30, 2026, and 2025, and related management's discussion and analysis of financial condition and results of operations ("MD&A"), are reported in the Company's 10-Q filing on the Securities and Exchange Commission website at www.sec.gov and on SEDAR+ at www.sedarplus.ca and will be available on the Investor Relations section of the Company's website at https://investors.charlottesweb.com.
Analyst Conference Call
The Company intends to host a second quarter earnings review and corporate update call and webcast which will also include broader corporate updates. Details will be provided later this month in a separate shareholder conference call and webcast notice.
About Charlotte's Web Holdings, Inc.
Charlotte's Web Holdings, Inc., a Certified B Corporation headquartered in Louisville, Colorado, is a botanical wellness innovation company and a market leader in hemp extract wellness, offering Charlotte's Web whole-plant full-spectrum CBD extracts, as well as broad-spectrum CBD and cannabinoid isolates. The Company's hemp extracts have naturally occurring botanical compounds including cannabidiol ("CBD"), CBN, CBC, CBG, THC, terpenes, flavonoids, and other beneficial compounds. Charlotte's Web product categories include CBD oil tinctures (liquid products), CBD gummies (sleep, calming, exercise recovery, immunity), CBN gummies, hemp-derived THC microdose gummies, functional mushroom gummies, CBD capsules, CBD topical creams and lotions, as well as CBD pet products for dogs. Through its substantially vertically integrated business model, Charlotte's Web maintains stringent control over product quality and consistency with analytic testing from soil to shelf for quality assurance. Charlotte's Web products are distributed to retailers and healthcare practitioners throughout the U.S.A. and are available online through the Company's website at www.charlottesweb.com.
Shares of Charlotte's Web trade on the Toronto Stock Exchange (TSX) under the symbol "CWEB" and are quoted in U.S. Dollars in the United States on the OTCQX under the symbol "CWBHF". Subscribe to Charlotte's Web investor news.
(1) Non-GAAP Measures: The press release contains non-GAAP measures, including EBITDA and Adjusted EBITDA. Please refer to the section in the tables captioned "Non-GAAP Measures" below for additional information and a reconciliation to GAAP for all Non-GAAP metrics.
Forward-Looking Information
Certain information provided herein constitutes forward-looking statements or information (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking statements are typically identified by words such as "may", "will", "should", "could", "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements are not guarantees of future performance, and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties, and other factors which may cause actual results, levels of activity, and achievements to differ materially from those expressed or implied by such statements. The forward-looking statements contained in this press release are based on certain assumptions and analysis by management of the Company in light of its experience and perception of historical trends, current conditions, expected future development, and other factors that it believes are appropriate and reasonable.
Specifically, this press release contains forward-looking statements relating to, but not limited to: the enactment, timing, scope and effect of the continuing resolution referenced herein, of any amendment to Section 781, and of the Lawful Hemp Protection Act, and any other federal legislative or regulatory framework applicable to hemp-derived products, including the provisions scheduled to take effect November 12, 2026 and those that would be postponed to December 11, 2026; whether the Administration, House of Representatives and the Senate agree on common legislative language; the Company's beliefs regarding product eligibility under CMS programs, including the BEI, the ACO REACH Model, the Enhancing Oncology Model; the pace and extent of adoption by participating organizations; the status and outcome of discussions with participating organizations; the potential scope and impact of federal healthcare frameworks for hemp-derived products; the Company's competitive positioning and its ability to participate in federal healthcare programs; sales volume and gross margin expectations, including the target gross margin range; future expectations for SG&A expenses; anticipated benefits of the completed BAT transaction, including interest cost savings and balance sheet strength; the impact of retail channel restructuring and insourcing on operating margins and capital expenditures; the timing and outcomes from DeFloria's clinical trials, including Phase 2 trial initiation and the alignment of required resources, strategic value for the Company's shareholders and potential commercial opportunities for Charlotte's Web; the ability of AJA001 to address irritability associated with ASD; DeFloria's evaluation of additional indications for AJA001 and the composition of its development portfolio and the potential eligibility of any such indications for orphan drug designation and the availability of any associated development incentives or periods of marketing exclusivity; the expectation that DeFloria will provide further detail on its development strategy; expected improvement in the Company's cash flow profile; expectations on quarterly SG&A normalized amount; the Company's ability to reformulate products for California customers; and management expectations around cash reserves providing sufficient liquidity to fund operations and planned expenditures for the next 12 months.
The material factors and assumptions used to develop the forward-looking statements herein include, but are not limited to: expectations around cost reduction, run rate, and cash flow improvement in 2026; regulatory regime changes; expectations regarding regulatory and legislative updates and timing of same; anticipated product development and sales; the success of sales and marketing activities; product development and production expectations; outcomes from R&D activities; the availability of qualified and cost-effective human resources; compliance with contractual and regulatory obligations and requirements; availability of adequate liquidity and capital to support operations and business plans; continued product placement across channels; anticipated development of new products; anticipated consumer trends and corresponding product innovation; and expectations around consumer product demand. In addition, the forward-looking statements are subject to risks and uncertainties pertaining to, among other things: failure of Congress to enact the continuing resolution or any longer-term hemp framework, or enactment on terms less favorable than anticipated; the effect of the November 12, 2026 restrictions on product eligibility under CMS programs; supply and distribution chains; the market for the Company's products; revenue fluctuations; regulatory changes; loss of customers and retail partners; retention and availability of talent; competing products; share price volatility; product acceptance; available capital to fund operations and business plans; crop risk; economic and political considerations; and including but not limited to those risks and uncertainties discussed under the heading "Risk Factors" in the Company's most recently filed Annual Report on Form 10-K, and other risk factors contained in other filings with the Securities and Exchange Commission available on www.sec.gov and filings with Canadian securities regulatory authorities available on www.sedarplus.ca. The impact of any one risk, uncertainty, or factor on a particular forward-looking statement is not determinable with certainty, as these are interdependent, and the Company's future course of action depends on management's assessment of all information available at the relevant time. Any forward-looking statement in this press release is based only on information currently available to the Company and speaks only as of the date on which it is made. Except as required by applicable law, the Company assumes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. All forward-looking statements, whether written or oral, attributable to the Company or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements.
For further information, contact:
Erika Lind
Chief Financial Officer
Erika.Lind@CharlottesWeb.com
Cory Pala
Director of Investor Relations
(720) 484-8930
Cory.Pala@CharlottesWeb.com
CHARLOTTE’S WEB HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share and per share amounts)
| June 30, | December 31, | ||||||
| 2026 (unaudited) | 2025 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 13,988 | $ | 8,035 | |||
| Accounts receivable, net | 1,359 | 811 | |||||
| Inventories, net | 16,517 | 18,022 | |||||
| Prepaid expenses and other current assets | 2,738 | 3,491 | |||||
| Total current assets | 34,602 | 30,359 | |||||
| Property and equipment, net | 20,600 | 22,679 | |||||
| Operating lease right-of-use assets, net | 10,941 | 11,297 | |||||
| Investment in unconsolidated entity | 8,300 | 8,800 | |||||
| Intangible assets, net | 737 | 785 | |||||
| Derivative and other long-term assets | 1,209 | 1,353 | |||||
| Total assets | $ | 76,389 | $ | 75,273 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 1,984 | $ | 2,186 | |||
| Accrued and other current liabilities | 4,874 | 5,053 | |||||
| Lease obligations – current | 1,398 | 1,420 | |||||
| Total current liabilities | 8,256 | 8,659 | |||||
| Convertible debenture | — | 50,849 | |||||
| Lease obligations | 11,657 | 12,186 | |||||
| Derivative and other long-term liabilities | 412 | 5,618 | |||||
| Total liabilities | 20,325 | 77,312 | |||||
| Commitments and contingencies (Note 7) | |||||||
| Shareholders' equity (deficit): | |||||||
| Common shares, nil par value; unlimited shares authorized; 270,549,931 and 159,420,141 shares issued and outstanding at June 30, 2026 and December 31, 2025 | 1 | 1 | |||||
| Additional paid-in capital | 404,612 | 329,270 | |||||
| Accumulated deficit | (348,549 | ) | (331,310 | ) | |||
| Total shareholders' equity (deficit) | 56,064 | (2,039 | ) | ||||
| Total liabilities and shareholders' equity (deficit) | $ | 76,389 | $ | 75,273 | |||
CHARLOTTE’S WEB HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except share and per share amounts)
| Three Months Ended June 30, (unaudited) | Six Months Ended June 30, (unaudited) | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Revenue | $ | 10,855 | $ | 12,806 | $ | 22,014 | $ | 25,068 | |||||||
| Cost of goods sold | 5,698 | 6,816 | 11,653 | 12,848 | |||||||||||
| Gross profit | 5,157 | 5,990 | 10,361 | 12,220 | |||||||||||
| Selling, general and administrative expenses | 9,515 | 10,062 | 19,043 | 21,640 | |||||||||||
| Operating loss | (4,358 | ) | (4,072 | ) | (8,682 | ) | (9,420 | ) | |||||||
| Change in fair value of financial instruments | 5,557 | (1,543 | ) | (3,311 | ) | (1,669 | ) | ||||||||
| Loss from extinguishment of debt | (4,216 | ) | — | (4,216 | ) | — | |||||||||
| Other income (expense), net | (1,075 | ) | (675 | ) | (998 | ) | (1,413 | ) | |||||||
| Loss before provision for income taxes | (4,092 | ) | (6,290 | ) | (17,207 | ) | (12,502 | ) | |||||||
| Income tax benefit (expense) | (35 | ) | 2 | (32 | ) | 2 | |||||||||
| Net loss | $ | (4,127 | ) | $ | (6,288 | ) | $ | (17,239 | ) | $ | (12,500 | ) | |||
| Per common share amounts (Note 10) | |||||||||||||||
| Net loss per common share, basic and diluted | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.08 | ) | |||
CHARLOTTE’S WEB HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(in thousands of U.S. dollars, except share amounts)
| Common Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders' Equity (Deficit) | ||||||||||||||||
| Shares | Amount | ||||||||||||||||||
| Balance—December 31, 2025 | 159,420,141 | $ | 1 | $ | 329,270 | $ | (331,310 | ) | $ | (2,039 | ) | ||||||||
| Common shares issued upon vesting of restricted share units, net of withholding | 263,812 | — | (41 | ) | — | (41 | ) | ||||||||||||
| Share-based compensation | — | — | 151 | — | 151 | ||||||||||||||
| Net loss | — | (13,112 | ) | (13,112 | ) | ||||||||||||||
| Balance—March 31, 2026 | 159,683,953 | $ | 1 | $ | 329,380 | $ | (344,422 | ) | $ | (15,041 | ) | ||||||||
| Common shares issued upon vesting of restricted share units, net of withholding | 854,335 | — | (278 | ) | — | (278 | ) | ||||||||||||
| Exercise of common stock options | 67,601 | — | 22 | — | 22 | ||||||||||||||
| Share-based compensation | — | — | 506 | — | 506 | ||||||||||||||
| Conversion of convertible debenture into common stock | 95,281,277 | — | 64,982 | — | 64,982 | ||||||||||||||
| Issuance of common stock by private investment | 14,662,765 | — | 10,000 | — | 10,000 | ||||||||||||||
| Net loss | — | (4,127 | ) | (4,127 | ) | ||||||||||||||
| Balance—June 30, 2026 | 270,549,931 | $ | 1 | $ | 404,612 | $ | (348,549 | ) | $ | 56,064 | |||||||||
| Balance—December 31, 2024 | 158,009,541 | $ | 1 | $ | 328,655 | $ | (301,569 | ) | $ | 27,087 | |||||||||
| Common shares issued upon vesting of restricted share units, net of withholding | — | — | — | — | — | ||||||||||||||
| Share-based compensation | — | 187 | — | 187 | |||||||||||||||
| Net loss | — | (6,212 | ) | (6,212 | ) | ||||||||||||||
| Balance—March 31, 2025 | 158,009,541 | $ | 1 | $ | 328,842 | $ | (307,781 | ) | $ | 21,062 | |||||||||
| Common shares issued upon vesting of restricted share units, net of withholding | 608,226 | — | (25 | ) | — | (25 | ) | ||||||||||||
| Share-based compensation | — | — | 180 | — | 180 | ||||||||||||||
| Net loss | — | (6,288 | ) | (6,288 | ) | ||||||||||||||
| Balance—June 30, 2025 | 158,617,767 | $ | 1 | $ | 328,997 | $ | (314,069 | ) | $ | 14,929 | |||||||||
CHARLOTTE’S WEB HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
| Six Months Ended June 30,(unaudited) | |||||||
| 2026 | 2025 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (17,239 | ) | $ | (12,500 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Loss on extinguishment of debt | 4,216 | — | |||||
| Change in fair value of financial instruments | 3,311 | 1,669 | |||||
| Depreciation and amortization | 3,171 | 2,961 | |||||
| Convertible debenture and other accrued interest | 1,321 | 1,471 | |||||
| Share-based compensation | 657 | 367 | |||||
| Changes in right-of-use assets | 355 | 950 | |||||
| (Gain)/loss on foreign currency transaction | (190 | ) | 2,522 | ||||
| Gain on disposal of assets | — | (2,326 | ) | ||||
| Other | 53 | 742 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable, net | (570 | ) | (760 | ) | |||
| Inventories, net | 1,520 | (311 | ) | ||||
| Prepaid expenses and other current assets | 700 | 22 | |||||
| Accounts payable, accrued and other liabilities | (94 | ) | (202 | ) | |||
| Operating lease obligations | (552 | ) | (1,220 | ) | |||
| Other operating assets and liabilities, net | (364 | ) | (171 | ) | |||
| Net cash used in operating activities | (3,705 | ) | (6,786 | ) | |||
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment and intangible assets | (50 | ) | (652 | ) | |||
| Proceeds from sale of assets | 5 | 113 | |||||
| Net cash used in investing activities | (45 | ) | (539 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from issuance of common stock | 10,000 | - | |||||
| Other financing activities | (297 | ) | (25 | ) | |||
| Net cash provided by (used in) financing activities | 9,703 | (25 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 5,953 | (7,350 | ) | ||||
| Cash and cash equivalents —beginning of period | 8,035 | 22,618 | |||||
| Cash and cash equivalents —end of period | $ | 13,988 | $ | 15,268 | |||
| Supplemental disclosures of non-cash investing and financing activities | |||||||
| Conversion of debt to equity | $ | 52,942 | |||||
| Extinguishment of embedded derivatives liability upon debt conversion | 8,062 | ||||||
| Extinguishment of embedded derivatives asset upon debt conversion | 214 | ||||||
(1) Non-GAAP Measures -EBITDA and Adjusted EBITDA
Earnings before interest, taxes, depreciation, and amortization ("EBITDA") is not a recognized performance measure under U.S. GAAP. The term EBITDA consists of net income (loss) and excludes interest, taxes, depreciation, and amortization. Adjusted EBITDA also excludes other non-cash items such as changes in fair value of financial instruments (Mark-to-Market), Share-based compensation, impairment of assets and, for the quarter ended June 30, 2026, the
(1) EBITDA and Adjusted EBITDA are non-GAAP financial measures with reconciliations provided in the tables below. Adjusted EBITDA for the three months ended June 30, 2026, and 2025 is as follows:
| Charlotte's Web Holdings, Inc. | ||||||||||||||
| Statement of Adjusted EBITDA | ||||||||||||||
| (In Thousands) | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||
| U.S. $ Thousands | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Net loss | $ | (4,127 | ) | $ | (6,288 | ) | $ | (17,239 | ) | $ | (12,500 | ) | ||
| Depreciation of property and equipment and amortization of intangibles | 1,494 | 512 | 3,171 | 2,961 | ||||||||||
| Interest (income) expense | 470 | 450 | 1,206 | 1,135 | ||||||||||
| Income tax expense (benefit) | 35 | (2 | ) | 32 | (2 | ) | ||||||||
| EBITDA | (2,128 | ) | (5,328 | ) | (12,830 | ) | (8,406 | ) | ||||||
| Shared-based compensation | 506 | 180 | 657 | 367 | ||||||||||
| Loss on extinguishment of debt | 4,216 | - | 4,216 | - | ||||||||||
| Mark-to-market financial instruments | (5,557 | ) | 1,543 | 3,311 | 1,669 | |||||||||
| Inventory Provision | - | (17 | ) | - | (4 | ) | ||||||||
| Adjusted EBITDA | $ | (2,963 | ) | $ | (3,622 | ) | $ | (4,646 | ) | $ | (6,374 | ) | ||
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/309425