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Charlotte's Web Holdings, Inc. (CWBHF), through its wholly owned subsidiary Charlotte’s Web, Inc., entered into a new Convertible Promissory Note with DeFloria, Inc., a joint venture among Charlotte’s Web, AJNA BioSciences and a British American Tobacco subsidiary. The Note has an aggregate principal of $1,582,500, rolling up a prior note of $750,000 plus $82,500 of accrued interest. It is unsecured and governed by Delaware law.
The Note bears interest at 8.0% plus the Bank of England Base Rate, initially 11.25% per annum, resetting quarterly and capped at 14%. Prepayment is not allowed without consent of Majority Holders. Maturity occurs 90 days after demand by Majority Holders (only after a 24‑month anniversary trigger) or upon default. The Note automatically converts in a DeFloria qualified financing of at least $10,000,000 into preferred stock at the lower of an 80% discount to the financing price or a $146,000,000 Valuation Cap formula, and may also convert at CW’s option in other financings. On maturity, Majority Holders can require conversion into a new senior preferred series. A deemed liquidation event triggers accelerated repayment of principal, accrued interest, plus a 20% premium, unless CW elects conversion into senior preferred stock.
Charlotte’s Web Holdings, Inc. reported lower revenue but a much stronger balance sheet for the quarter ended June 30, 2026. Revenue was $10.9 million, down 15.2% year over year, with product revenue of $10.8 million as the company shifted retail sales toward a margin-focused distributor model. Gross margin improved slightly to 47.5%, helped by better product and channel mix despite higher depreciation.
The company recorded an operating loss of $4.4 million and a net loss of $4.1 million for the quarter, and a six‑month net loss of $17.2 million versus $12.5 million a year earlier. A key event was the May 28, 2026 conversion of a C$75.3 million convertible debenture and accrued interest into 95.3 million common shares plus a $10 million private placement from BAT, eliminating the debenture and related derivatives, adding $65.0 million to additional paid‑in capital, and producing a $4.2 million loss on extinguishment.
Following this transaction, total liabilities fell to $20.3 million from $77.3 million at year‑end 2025, and shareholders’ equity moved from a $(2.0) million deficit to $56.1 million. Cash and cash equivalents increased to $14.0 million, aided by the private placement and reduced operating cash burn, and management states it expects existing liquidity to fund operations for at least the next 12 months.
Charlotte’s Web Holdings reported second-quarter 2026 revenue of $10.9 million, down 15.2% from a year earlier, as it continued shifting away from lower-margin retail channels. Gross margin improved to 47.5%, and SG&A declined 5.4%, producing an operating loss of $4.4 million and a net loss of $4.1 million, versus $6.3 million a year ago. Adjusted EBITDA was a loss of $3.0 million, improving from a $3.6 million loss.
A recapitalization with British American Tobacco converted a large debenture into equity and added $10 million of new capital, cutting total liabilities by $57.0 million to $20.3 million and restoring shareholders’ equity to $56.1 million. Cash rose to $14.0 million, and net cash used in operations for the first half fell about 45% to $3.7 million. The company highlights advancing U.S. hemp policy debates, new healthcare pilot initiatives, and DeFloria’s planned Phase 2 trial, while noting regulatory risks, including new California restrictions affecting roughly 10% of revenue.
Charlotte's Web Holdings, Inc. chief executive officer William J. Morachnick reported equity compensation-related transactions involving common shares and restricted stock units. He exercised derivative awards to acquire 294,661 common shares and the company withheld 71,750 shares to cover tax obligations, a non-market disposition.
After these transactions, he directly held 3,517,612 common shares. His restricted stock unit holdings were 883,986 units, each representing a right to receive one common share. The RSU agreement provides for vesting in equal quarterly installments over 1 year beginning on July 1, 2026, from a grant made on April 1, 2026.
Charlotte's Web Holdings, Inc. director Matthew Evan McCarthy exercised restricted stock units into common shares. On July 1, 2026, 75,000 restricted stock units converted into 75,000 common shares at a stated price of $0.00 per share. Following this equity award vesting and conversion, he now directly holds 150,000 common shares of the company, and the reported restricted stock unit position was reduced to zero.
Charlotte's Web Holdings director Angela May McElwee exercised 85,000 Restricted Stock Units into Common Shares on July 1, 2026. This was a derivative exercise, not an open-market buy or sell. Following the conversion, she directly holds 170,000 Common Shares. Each RSU represented a contingent right to receive one common share, vesting in a single installment on July 1, 2026.
Charlotte's Web Holdings, Inc. director Maureen K. Usifer exercised restricted stock units into 75,000 Common Shares. The Form 4 shows a derivative exercise on July 1, 2026, converting 75,000 restricted stock units into 75,000 Common Shares at a stated price of $0.00 per share, with no sale reported.
Following the transaction, Usifer directly holds 150,000 Common Shares. The derivative line shows 75,000 restricted stock units exercised into an equal number of Common Shares, leaving no remaining units from that grant. Footnotes explain that each unit represented a contingent right to receive one Common Share and that the units vested in a single installment on July 1, 2026.
Charlotte's Web Holdings, Inc. Chief Executive Officer William J. Morachnick reported routine equity compensation activity involving restricted stock units and related tax withholding. He exercised derivative rights to acquire 375,000 common shares at a conversion price of $0.0000 per share.
To cover tax obligations, 91,313 common shares were disposed of at $0.3100 per share as a tax-withholding disposition, rather than an open-market sale. Following these transactions, he directly holds 3,294,701 common shares. The restricted stock units vest in equal quarterly installments beginning on 12/31/2023 under an agreement granted on 10/12/2023.
Charlotte’s Web Holdings, Inc. reports that co‑founder Jared Stanley resigned from its Board of Directors effective June 3, 2026. He will continue to support the company in an advisory capacity, and his decision is stated as not stemming from any disagreement over operations, policies, or financial reporting.
Stanley is dedicating his efforts to leading DeFloria, Inc., a clinical‑stage botanical pharmaceutical company co‑founded by Charlotte’s Web that is developing AJA001, an FDA Phase 2 investigational botanical drug for irritability associated with autism spectrum disorder. Charlotte’s Web is a co‑founder and shareholder of DeFloria and remains involved through this affiliation. Following his resignation, the Board consists of six directors.
Charlotte’s Web Holdings has deepened its strategic relationship with British American Tobacco’s subsidiary BT DE Investments (BAT). BAT invested US$10 million (C$13,873,000) to buy 14,662,765 new common shares at C$0.94 per share and simultaneously converted its existing convertible debenture into equity.
The debenture’s conversion terms were amended, cutting the conversion price from C$2.00 to C$0.94 and setting interest conversion at the same price. BAT converted all principal and accrued interest into 95,281,277 common shares. After the share purchase and conversion, BAT holds 109,944,042 shares, or about 40.6% of the 270,549,931 shares outstanding as of May 28, 2026.
An amended and restated investor rights agreement gives BAT board nomination rights aligned with ownership (with at least two nominees while it holds 10% or more), demand and piggyback registration rights, pre‑emptive and top‑up rights, transfer restrictions, a standstill capping ownership below 49% until May 28, 2028, and consent rights over certain major corporate actions and additional indebtedness above US$10 million.