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Charlotte’s Web (OTCQX: CWBHF) posts Q1 2026 results and outlines major BAT balance sheet deal

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Charlotte’s Web Holdings reported Q1 2026 results and highlighted a major balance sheet transaction with BAT. Revenue was $11.2 million, down 9% from $12.3 million a year earlier, as the company exited lower-margin retail accounts. Gross margin was 46.6% versus 50.8% in Q1 2025.

SG&A fell 17.7% to $9.5 million, helping Adjusted EBITDA improve to a loss of $1.7 million from a $2.8 million loss. Net loss widened to $13.1 million, or $(0.08) per share, mainly from an $8.9 million non-cash fair value charge on the BAT convertible debenture.

The proposed BAT transaction would convert about $54 million of debenture plus interest and add a $10 million equity investment, eliminating roughly $3 million of annual interest and leaving BAT with about 40% of common shares, subject to TSX and shareholder approval. Cash was $5.2 million at March 31, 2026. The company is preparing to participate in the new CMS Beneficiary Engagement Incentive pathway and advancing the DeFloria AJA001 Phase 2 program, expected to start mid‑2026, while also upgrading its U.S. listing to the OTCQX Best Market.

Positive

  • Proposed BAT transaction materially de-levers balance sheet: conversion of approximately $54 million of convertible debenture plus accrued interest and a concurrent $10 million equity investment would eliminate about $3 million of annual interest and remove a $51.5 million liability, significantly strengthening shareholders’ equity if approved.
  • Cost structure reset improving underlying profitability: SG&A declined 17.7% year over year to $9.5 million, contributing to a $1.1 million improvement in Adjusted EBITDA to a loss of $1.7 million despite lower revenue, indicating operating efficiency gains.

Negative

  • Ongoing losses and shareholder dilution risk: Q1 2026 net loss widened to $13.1 million, and completion of the BAT transaction would leave BAT holding about 40% of the company’s common shares, which represents significant dilution for existing shareholders.
  • Revenue decline and margin compression: net revenue fell 9.0% year over year to $11.2 million, while gross margin decreased from 50.8% to 46.6%, reflecting lower volume, insourcing ramp costs and higher promotions.

Insights

Balance sheet fix and cost cuts offset softer revenue and margins.

Charlotte’s Web posted Q1 2026 revenue of $11.2M, down 9% year over year, as it intentionally exited lower-margin retail accounts. Gross margin slipped to 46.6% due to insourcing ramp-up costs, legacy inventory and higher promotional spend.

Cost actions are visible: SG&A fell 17.7% to $9.5M, and Adjusted EBITDA loss improved to $1.7M from $2.8M. The larger net loss of $13.1M is driven mostly by an $8.9M non-cash fair value hit on the BAT debenture, not cash operations.

The proposed BAT deal would convert about $54M of debenture and add $10M in equity, removing roughly $3M in annual interest and a $51.5M liability. If approved at the May 28, 2026 meeting, this meaningfully de-levers the balance sheet while leaving BAT at ~40% ownership.

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Revenue $11.2M Three months ended March 31, 2026; down 9.0% year over year
Gross margin 46.6% Q1 2026 vs 50.8% in Q1 2025
Adjusted EBITDA -$1.7M Q1 2026, improved from -$2.8M in Q1 2025
Net loss -$13.1M Q1 2026, vs -$6.2M in Q1 2025, driven by non-cash fair value change
Non-cash fair value adjustment $8.9M Change in fair value of financial instruments in Q1 2026
Cash and cash equivalents $5.2M As of March 31, 2026
Convertible debenture balance $51.5M Carrying amount as of March 31, 2026, targeted in BAT transaction
Annual interest savings $3M Estimated reduction if BAT debenture conversion completes
Convertible debenture financial
"to amend and convert BAT’s outstanding convertible debenture of approximately $54 million, plus accrued interest"
A convertible debenture is a long-term loan a company issues that pays interest like a bond but can be turned into a set number of the company’s shares under pre-agreed terms. For investors it matters because it mixes safety and upside: you get regular interest and higher repayment priority like a lender, yet you also hold an option to become a shareholder if the stock rises, which can dilute existing owners and change risk and return profiles.
Adjusted EBITDA financial
"Adjusted EBITDA(1) improved to a loss of $1.7 million in Q1 2026, from a loss of $2.8 million in Q1 2025"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Beneficiary Engagement Incentive regulatory
"made available the Substance Access Beneficiary Engagement Incentive (“BEI”) to eligible participants in select CMS Innovation Center models"
A beneficiary engagement incentive is a reward or benefit offered to people covered by an insurance plan or health program to encourage actions like taking medications, attending preventive care, or using digital health tools. For investors, these incentives matter because higher participation can lower treatment costs, improve measurable outcomes and program performance, and affect a payer’s or provider’s revenue and risk profile—think of it as a loyalty program that also helps control expenses.
OTCQX Best Market market
"Charlotte’s Web qualified for trading on the OTCQX Best Market, an upgrade from the OTCQB Venture Market"
OTCQX Best Market is the top tier of an over‑the‑counter (OTC) trading platform where companies voluntarily meet higher disclosure and governance standards than typical OTC listings. For investors, it signals relatively better transparency and oversight—think of it as a premium section of a flea market where sellers show more paperwork—yet these stocks still carry more liquidity and regulatory risk than listings on major national exchanges.
Mark-to-market financial instruments financial
"Adjusted EBITDA also excludes other non-cash items such as changes in fair value of financial instruments (Mark-to-Market)"
Phase 2 clinical program medical
"The Phase 2 clinical program, designed to evaluate safety, tolerability, and early signals of therapeutic effectiveness"
Revenue $11.2M -9.0% YoY
Gross margin 46.6% -4.2 percentage points YoY
Net loss $13.1M vs $6.2M net loss prior year
Adjusted EBITDA -$1.7M improved from -$2.8M
Understanding 8-K Material Events →
FALSE000175015500017501552026-05-132026-05-13

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 2026
 
Charlotte’s Web Holdings, Inc.
(Exact name of registrant as specified in its charter)
 
 
British Columbia
000-56364
98-1508633
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
 
700 Tech Court
Louisville, Colorado
80027
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (720) 617-7303
 
Not applicable
(Former name or former address, if changed since last report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
 
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
N/AN/AN/A
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02    Results of Operations and Financial Condition.

On May 13, 2026, Charlotte’s Web Holdings, Inc. (the “Company”) issued an earnings release announcing its financial results for the three months ended March 31, 2026. A copy of the earnings release is furnished herewith as Exhibit 99.1 and incorporated in this Item 2.02 by reference.

Item 9.01.    Financial Statements and Exhibits.
(d) Exhibits

Exhibit
No.
Description
99.1
Press Release dated May 13, 2026
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)

The information in the press release attached as Exhibit 99.1 is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
CHARLOTTE’S WEB HOLDINGS, INC.
Date: May 13, 2026By:/s/ Erika Lind
Erika Lind
Chief Financial Officer  and Corporate Secretary



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Charlotte’s Web First Quarter 2026 Financial Results
Proposed Transaction Set to Transform Balance Sheet; BEI Healthcare Access Pathway Activated April 1st; Adjusted EBITDA(1) Continues to Improve

Louisville, Colo. May 13, 2026 – (TSX: CWEB, OTCQX: CWBHF), Charlotte’s Web Holdings, Inc. (“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 March 31, 2026. All amounts are expressed in U.S. dollars.

TRANSACTION AND SUBSEQUENT EVENTS UPDATE

Proposed Transaction and $10M Investment
During the first quarter of 2026, Charlotte’s Web announced a transaction with BT DE Investments Inc. (“BAT”), a subsidiary of British American Tobacco p.l.c. (LSE: BATS and NYSE: BTI), to amend and convert BAT’s outstanding convertible debenture of approximately $54 million, plus accrued interest, and complete a concurrent $10 million private placement.

Upon completion, the transaction would eliminate Charlotte’s Web’s largest outstanding balance sheet liability, remove approximately $3 million in annual interest costs, strengthen shareholders’ equity, and add $10 million in new capital to support the Company’s participation in the developing CMS healthcare-access opportunity and other medical channel opportunities. Following completion of the transaction, BAT would hold approximately 40% of the Company’s then-issued and outstanding common shares on a non-diluted basis, representing a total equity commitment of approximately $75 million.

Completion of the transaction is subject to TSX approval and is pending approval of Charlotte’s Web shareholders at the Annual General and Special Meeting of shareholders scheduled to be held on May 28, 2026.

“Charlotte’s Web exited the first quarter with the right elements in place to position us for future growth. With a significantly enhanced capital structure and balance sheet on the horizon, along with our first-class product-quality systems, and rapidly emerging healthcare-channel infrastructure, we are well prepared to pursue the fast evolving federally authorized CBD opportunities,” said Bill Morachnick, Chief Executive Officer. “Following the April 1 activation of the CMS Substance Access Beneficiary Engagement Incentive, we are moving from preparation to deployment while continuing support for federal regulatory clarity and advancing DeFloria through the FDA Botanical Drug Pathway.”

Centers for Medicare & Medicaid Services Pilot Program Activated
Subsequent to quarter-end, on April 1, 2026, the Centers for Medicare & Medicaid Services (“CMS”), through the Center for Medicare & Medicaid Innovation, made available the Substance Access Beneficiary Engagement Incentive (“BEI”) to eligible participants in select CMS Innovation Center models, including the ACO REACH Model and the Enhancing Oncology Model. The optional BEI allows approved model participants, subject to CMS requirements, safeguards, physician oversight, and implementation-plan review, to cover eligible hemp-derived products of up to $500 annually per eligible beneficiary. Qualifying products are purchased by participating organizations and furnished directly to eligible beneficiaries.



CMS provides that eligible hemp-derived CBD products include non-intoxicating full-spectrum products containing up to 3 milligrams of naturally occurring THC per serving. Complementing this CMS guidance, FDA Commissioner Martin A. Makary issued a limited enforcement-discretion letter for eligible orally administered hemp-derived CBD products furnished under specified healthcare-program conditions, providing important regulatory clarity for eligible ingestible CBD products furnished through the BEI.

Charlotte’s Web’s first-quarter activities focused on preparing for this emerging healthcare channel. Management expects the early phase of the BEI to be implementation-led, with visibility into participating-organization adoption and patient engagement expected to develop through the second half of the year.

The BEI program remains subject to ongoing legal and administrative scrutiny, and the Company is monitoring any risks, litigation and implications. However, the Company feels the underlying policy direction favors companies like Charlotte's Web that have robust compliance infrastructure, clinical data, and manufacturing controls.

DeFloria Phase 2 Clinical Program
DeFloria, Inc. continues to advance AJA001 Oral Solution, an investigational botanical drug candidate for irritability associated with autism spectrum disorder (“ASD”). DeFloria is a collaboration between Charlotte’s Web, AJNA BioSciences, and British American Tobacco. Charlotte’s Web owns approximately one-third of DeFloria and holds exclusive commercial manufacturing rights for AJA001 upon potential FDA approval.

The Phase 2 clinical program, designed to evaluate safety, tolerability, and early signals of therapeutic effectiveness in adolescents and adults with ASD, remains substantially advanced across key program elements including clinical site selection, protocol optimization, and manufacturing readiness. The Company expects Phase 2 trial initiation in mid-2026, subject to the completion of customary development activities, regulatory requirements, and alignment of required resources. While the pathway remains subject to clinical, regulatory, financing, and commercialization risks, management believes DeFloria represents a compelling long-term opportunity to extend Charlotte's Web's botanical science platform into FDA-regulated pharmaceutical development.

FIRST QUARTER 2026 BUSINESS REVIEW

Medical Channel Advancement
Charlotte’s Web advanced its medical and healthcare-practitioner channel during the quarter, supported by long-standing practitioner relationships, quality infrastructure, clinical safety data, and a science-led approach to hemp-derived CBD wellness. The Company has established relationships and patient-advocacy communities for more than a decade, including work with organizations such as Realm of Caring, the Arthritis Foundation, and the U.S. Pain Foundation. These relationships have supported education, responsible access, consumer safety, and evidence-informed dialogue around hemp-derived CBD. The Company expanded its Medical product portfolio, which was developed for the healthcare-practitioner channel and aligns with common wellness use cases, including sleep, stress support, physical comfort, and overall wellness. During the quarter, Charlotte’s Web launched the CBD Clinic medical portal, a practitioner-facing resource designed to provide greater visibility into the Company’s portfolio of products, expand access to clinical education, and offer information to support evidence-informed understanding of CBD. The April 1, 2026, activation of the BEI further expands the opportunity for compliant, quality-led producers such as Charlotte’s Web to access healthcare markets.



Manufacturing Internalization
The Company’s transition to in-house gummy production, operational in 2025, is now substantially complete, with the majority of its gummy manufacturing conducted at the Company’s Louisville, Colorado cGMP facility. Capital expenditures related to insourcing projects declined significantly year-over-year, reflecting the completion of major equipment investments. In-house manufacturing is expanding across multiple gummy and topical products and is expected to improve gross margin as production volumes scale and startup-phase inefficiencies are resolved.

OTCQX Best Market Qualification
Subsequent to quarter-end, Charlotte’s Web qualified for trading on the OTCQX Best Market, an upgrade from the OTCQB Venture Market. OTCQX is the highest marketplace tier of the OTC Markets and is designed for established, investor-focused companies that meet higher financial and governance standards. Management believes the upgrade enhances the Company’s visibility and accessibility for U.S. investors.


FIRST QUARTER FINANCIAL REVIEW

"Our Q1 2026 results reflect continued progress on the operational fundamentals of the business,” said Erika Lind, Chief Financial Officer. “Lower first-quarter revenue reflects our decision to exit select lower-margin retail relationships last September and reduce the cost structure required to support those accounts. While this reduces near-term revenue, it improves the quality of our product and channel mix, and is expected to support stronger gross margin, operating margin, and cash flow over time. We are focused on profitable revenue, disciplined resource allocation, and building a more scalable business. Our core online consumer channel demonstrated healthy engagement, while operational discipline further improved cash flow. Year-over-year SG&A declined 17.7%, and Adjusted EBITDA improved by $1.1 million. Q1 net loss of $13.1 million was driven primarily by an $8.9 million non-cash fair value adjustment on the BAT convertible debenture, which will cease to impact our bottom line after Q2 of this year, assuming completion of the transaction with BAT. Completion of the BAT transaction would eliminate the debenture and add $10 million to cash and working capital, meaningfully strengthening our balance sheet to support our healthcare opportunity and broader growth strategy.”

The following table sets forth selected financial information for the periods indicated:
Three Months Ended
March 31,
U.S. $ millions, except per share data20262025
Revenue$11.2$12.3
Cost of goods sold6.06.0
Gross profit5.26.2
Selling, general, and administrative expenses9.511.6
Operating loss     (4.3)(5.3)
Change in fair value of financial instruments    (8.9)(0.1)
Other income (expense), net    0.1(0.7)
Net loss before income taxes$(13.1)$(6.2)
EPS basic and diluted$(0.08)$(0.04)


Adjusted EBITDA (1)$(1.7)$(2.8)
Assets:
Cash and cash equivalents$5.2$19.4
Total assets$70.7$108.0
Liabilities:
Long-term liabilities$77.6$68.5
Total liabilities$93.8$87.0
Consolidated net revenue for the first quarter ended March 31, 2026, was $11.2 million, compared to $12.3 million in the first quarter of 2025. The year-over-year revenue decrease of 9.0% primarily reflected the retail channel restructuring initiated in September 2025, as previously disclosed. The Company's online consumer channel, targeted digital marketing efficiency, healthcare-practitioner channel development, and diversified botanical wellness portfolio are the core foundations for sustainable revenue growth.

Gross profit in Q1 2026 was $5.2 million, or 46.6% of revenue, compared to $6.2 million, or 50.8% of revenue, in Q1 2025. The year-over-year margin compression reflected several factors, including higher production costs as the Company continued scaling in-house manufacturing, the flow-through of previously outsourced inventory at legacy cost levels, modestly increased online promotional investment to support customer acquisition, and the impact of lower sales volume on fixed cost absorption. These factors were partially offset by a favorable product mix and the continued underlying benefits from manufacturing internalization. The legacy inventory cost effect is transitional and is expected to diminish as production normalizes under fully insourced economics. Management expects gross margin to trend toward the Company's target range of approximately 50% as insourced production efficiencies scale, transitional cost items normalize, and the benefits of channel restructuring are fully realized.

Total SG&A expenses were $9.5 million in Q1 2026, a year-over-year improvement of 17.7% from $11.6 million in Q1 2025. This reduction reflects the continued benefit of the Company’s comprehensive cost optimization program, including personnel cost realignment and reduced depreciation and amortization from exiting the MLB agreement ($0.7 million vs. $1.6 million in the prior year period), which has now reduced SG&A by approximately $33.6 million, or 44.5%, over the past two years. Charlotte’s Web believes it has substantially completed its operating cost reset, and expects quarterly SG&A to remain in a normalized range of approximately $10 million, reflecting a lean, appropriately scaled cost base to support growth as strategic catalysts materialize.

Net loss for Q1 2026 was $13.1 million, or $(0.08) per share, compared to a net loss of $6.2 million, or $(0.04) per share, in Q1 2025. The Q1 2026 net loss includes a non-cash charge of $8.9 million related to the change in fair value of financial instruments, primarily the mark-to-market adjustment on the BAT convertible debenture derivative liability. This non-cash item reflects accounting recognition of changes in the estimated fair value of the Company's outstanding convertible debenture conversion feature and associated derivatives, and is not indicative of cash performance or operating results. Upon closing of the BAT transaction, subject to customary closing conditions, TSX approval and shareholder approval at the May 28, 2026 Annual General and Special Meeting of the Shareholders, this derivative liability will be eliminated from the balance sheet. Excluding this non-cash item, along with depreciation, amortization, interest, and share-based compensation, Adjusted EBITDA(1) improved to a loss of $1.7 million in Q1 2026, from a loss of $2.8 million in Q1 2025, an improvement of approximately $1.1 million year-over-year.

Cash and cash equivalents as of March 31, 2026, were $5.2 million, compared to $8.0 million as of December 31, 2025, and $19.4 million as of March 31, 2025. Net cash used in operating activities in Q1 2026 was $2.8 million, essentially flat compared to $2.8 million in Q1 2025, reflecting continued operating cost discipline despite the


year-over-year revenue decline. Capital expenditures were minimal at $21 thousand as the Company’s in-house manufacturing insourcing project, which drove $0.5 million in capital expenditures in Q1 2025, has been substantially completed.

The BAT transaction, subject to customary closing conditions, and shareholder approval on May 28, 2026, is expected to provide $10 million in new equity capital and eliminate the Company's largest balance sheet liability, the convertible debenture carried at $51.5 million as of March 31, 2026. This transaction would significantly strengthen the Company's balance sheet, improve shareholders' equity, and remove approximately $3 million in annual interest costs, meaningfully improving the Company's cash flow profile on a go-forward basis.

Financial Position
Cash as of March 31, 2026, was $5.2 million, compared to $8.0 million at December 31, 2025. The quarterly decrease primarily reflects operating cash usage of $2.8 million, consistent with the prior year period despite lower topline revenue and gross margin. Benefiting from a declining operating expense base, anticipated gross margin improvements from scaled in-house production, and the proposed BAT transaction, which provides $10 million in new equity capital, management expects the Company’s liquidity position to strengthen meaningfully upon completion of the transaction. Management believes existing cash and cash equivalents will provide sufficient liquidity to fund operations and planned capital expenditures for the next 12 months.

Consolidated Financial Statements and Management’s Discussion and Analysis
The Company’s consolidated financial statements and accompanying notes for the three months ended March 31, 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 

Management will not host a quarterly analyst call this quarter. The Company hosts two earnings calls per year. The next quarterly analyst call will follow the release of the Company’s second quarter financial results in August, 2026. A recording of the Company’s most recent earnings webcast in March, 2026 (2025 year-end) is available on the Investor Relations section of the Company’s website at https:/investors.charlottesweb.com.

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.   


Additional Information and Where to Find It
In connection with the proposed transaction, Charlotte’s Web has filed with the SEC a definitive proxy statement on Schedule 14A and may file other documents with the SEC regarding the proposed transaction. This release is not a substitute for the proxy statement or any other document that Charlotte’s Web may file with the SEC. INVESTORS IN, AND SECURITY HOLDERS OF, CHARLOTTE’S WEB ARE URGED TO READ, THE DEFINITIVE PROXY STATEMENT AND DOCUMENTS INCORPORATED BY REFERENCE THEREIN AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT CHARLOTTE’S WEB AND THE PROPOSED TRANSACTION AND RELATED MATTERS. The definitive proxy statement and other relevant materials for the proposed transaction have been mailed or otherwise made available to stockholders of Charlotte’s Web as of April 6, 2026. Investors and security holders may obtain free copies of the proxy statement (when available) and other documents filed with the SEC by Charlotte’s Web through the website maintained by the SEC at www.sec.gov or by contacting Charlotte’s Web at 700 Tech Court, Louisville, CO 80027 or by telephone at (720) 484-8930.

Participants in the Solicitation
Charlotte’s Web and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction under the rules of the SEC. Information regarding the persons who may be deemed participants in the solicitation of proxies in connection with the proposed transaction will be set forth in the proxy statement when it is filed with the SEC. You can find more information about the Company’s directors and executive officers in its Annual Report for the year ended December 31, 2025 on Form 10-K filed with the SEC on March 31, 2026 and its Definitive Annual Meeting Proxy Statement filed with the SEC on April 29, 2025. You may obtain a free copy of these documents as indicated above.

No Offer or Solicitation
This press release shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed transaction. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

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: completion of the transaction with BAT, including obtaining the necessary TSX and shareholder approval of the transaction; benefits to the Company of completing the transaction with BAT; use of proceeds of the transaction; the Company's beliefs regarding product eligibility under CMS programs and the Company’s opportunities in connection therewith; the potential scope and impact of federal healthcare frameworks for hemp-derived products; potential impacts as a result of the HEMP Act; advancement of the
HEMP Act; advancement of the legislation and federal framework including under the HEMP Act; advancement of the Hemp Act; the Company's competitive positioning, and its ability to participate in federal healthcare programs; sales volume and gross margin expectations; anticipated timing for, and business impact of, in-house manufacturing of topical and gummy products; future expectations for SG&A expenses; regulatory developments and the impact of developments on both consumer action and the Company's opportunities and operations; activities relating to, and sponsorship of, legislation to advance regulatory framework; the impact of insourcing on operating margins, capital expenditures and R&D; anticipated future financial results the impact of certain activities on the Company's business and financial condition and anticipated trajectory; the timing and outcomes from DeFloria’s clinical trials, including 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; the Company’s activities relating to its medical channel advancement and the impacts thereof; trend of gross margin levels; inventory cost effects; expectations on SG&A ranges going forward; and management expectations around cash reserves providing sufficient liquidity to fund operations and planned expenditures.

The material factors and assumptions used to develop the forward-looking statements herein include, but are not limited to: receipt of TSX and shareholder approval for the transaction; successful completion of the transaction; expectations around cost reduction, run rate, revenue growth and expectations around cash flow improvement in 2026; regulatory regime changes; anticipated product development and sales; the success of sales and marketing activities; product development and production expectations; outcomes from R&D activities; the Company's ability to deal with adverse growing conditions in a timely and cost-effective manner; 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 on various product channels; anticipated development of new products; anticipated consumer trends and corresponding product innovation; ; the Company’s ability to increase online traffic and demographic exposure through new products and marketing and omni-channel expansion; and expectations around consumer product demand. In addition, the forward-looking statements are subject to risks and uncertainties pertaining to, among other things: 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; organizational changes, marketing plans and operational platform upgrades, and the impact of these initiatives on retail expansion, operational efficiencies, cash flow, revenue and e-commerce monetization; expectations relating to IT upgrades, marketing optimization and operational integrations; the impact of the Company’s product innovations on product development, expansion activities and the corresponding results thereof; competing products; share price volatility; loss of proprietary information; product acceptance; internet and system infrastructure functionality;


information technology security; available capital to fund operations and business plans; crop risk; economic and political considerations; failure to receive TSX and shareholder approval of the transaction; 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 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.

CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share and per share amounts)
March 31,
December 31,
2026 (unaudited)2025
ASSETS

Current assets:

Cash and cash equivalents$5,198 $8,035 
Accounts receivable, net1,410 811 
Inventories, net17,181 18,022 
Prepaid expenses and other current assets3,334 3,491 
Total current assets27,123 30,359 
Property and equipment, net21,630 22,679 
Operating lease right-of-use assets, net11,183 11,297 
Investment in unconsolidated entity8,600 8,800 
Intangible assets, net761 785 
Derivative and other long-term assets1,390 1,353 
Total assets$70,687 $75,273 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable$2,589 $2,186 
Accrued and other current liabilities4,021 5,053 
Lease obligations – current1,490 1,420 
Total current liabilities8,100 8,659 
Convertible debenture51,504 50,849 
Lease obligations11,922 12,186 
Derivative and other long-term liabilities14,202 5,618 
Total liabilities85,728 77,312 
Commitments and contingencies
Shareholders’ deficit
Common shares, nil par value; unlimited shares authorized; 159,683,953 and 159,420,141 shares issued and outstanding as of March 31, 2026 and December 31, 20251 1 
Additional paid-in capital329,380 329,270 
Accumulated deficit(344,422)(331,310)
Total shareholders’ deficit(15,041)(2,039)
Total liabilities and shareholders’ deficit$70,687 $75,273 
CHARLOTTE’S WEB HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except share and per share amounts)

Three Months Ended March 31, (unaudited)
20262025
Revenue$11,159 $12,262 
Cost of goods sold5,955 6,032 
Gross profit5,204 6,230 
Selling, general, and administrative expenses9,528 11,578 
Operating loss(4,324)(5,348)
Change in fair value of financial instruments(8,868)(126)
Other income (expense), net77 (738)
Loss before provision for income taxes$(13,115)$(6,212)
Income tax expense3 — 
Net loss$(13,112)$(6,212)
Per common share amounts
Net loss per common share, basic and diluted$(0.08)$(0.04)


CHARLOTTE’S WEB HOLDINGS, INC.

CONSOLIDATED STATEMENTS CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(in thousands of U.S. dollars, except share amounts)
Common SharesAdditional
Paid-in
Capital
Accumulated Deficit
Total
Shareholders’
Equity (Deficit)
SharesAmount
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 withholding263,812—(41)— (41)
Share-based compensation——151 — 151 
Net loss— (13,112)(13,112)
Balance—March 31, 2026159,683,953 $1 $329,380 $(344,422)$(15,041)
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, 2025158,009,541 $1 $328,842 $(307,781)$21,062 
CHARLOTTE’S WEB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
Three Months Ended March 31, (unaudited)
20262025
Cash flows from operating activities:
Net loss
$(13,112)$(6,212)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization1,678 2,449 
Change in fair value of financial instruments8,868 126 
Convertible debenture and other accrued interest793 868 
Changes in right-of-use assets114 473 
Share-based compensation151 187 
Other(788)126 
Changes in operating assets and liabilities:
Accounts receivable, net
(575)(394)
Inventories, net
856 19 
Prepaid expenses and other current assets
109 28 
Operating lease obligations
(194)(605)
Accounts payable, accrued and other liabilities(537)71 
Other operating assets and liabilities, net(142)96 
Net cash used in operating activities(2,779)(2,768)
Cash flows from investing activities:
Purchases of property and equipment and intangible assets(21)(521)
Proceeds from sale of assets4 28 
Net cash used in investing activities(17)(493)
Cash flows from financing activities:
Other financing activities(41)— 
Net cash used in financing activities(41)— 
Net decrease in cash and cash equivalents(2,837)(3,261)
Cash and cash equivalents —beginning of period8,035 22,618 
Cash and cash equivalents —end of period$5,198 $19,357 
 
Non-cash activities:
Non-cash purchase of property and equipment and intangible assets$— $(83)

(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, and impairment of assets. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP. The non-GAAP financial measures do not have a standardized meaning prescribed under U.S. GAAP and therefore may not be comparable to similar measures presented by other issuers. The primary purpose of using non-GAAP financial measures is to provide supplemental information we believe may be useful to investors and to enable them to evaluate our results the same way we do. We also present non-GAAP financial measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis and comparing our results with those of other companies by excluding items we do not believe are indicative of our core operating performance. Specifically, we use these non-GAAP measures as measures of operating performance; to prepare our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of our results with those of other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and in communications with our board of directors concerning our financial performance. Investors should be aware, however, that not all companies define these non-GAAP measures consistently.
(1)EBITDA and Adjusted EBITDA are non-GAAP financial measures with reconciliations provided in the tables below. Adjusted EBITDA for the three months ended March 31, 2026, and 2025 is as follows:   
Charlotte's Web Holdings, Inc.
Statement of Adjusted EBITDA
(In Thousands)
Three Months Ended March 31,
(unaudited)
U.S. $ Thousands20262025
Net loss$(13,112)$(6,212)
Depreciation of property and equipment and amortization of intangibles1,678 2,449 
Interest expense736 685 
Income tax expense (3)— 
EBITDA $(10,701)$(3,078)
Share-based compensation151 187 
Mark-to-market financial instruments8,868 126 
Adjusted EBITDA$(1,682)$(2,765)

Source: View Original Filing on SEC EDGAR

FAQ

How did Charlotte’s Web (CWBHF) perform financially in Q1 2026?

Charlotte’s Web reported Q1 2026 revenue of $11.2 million, down 9% year over year. Gross margin was 46.6%, and SG&A expenses fell 17.7% to $9.5 million. Net loss was $13.1 million, or $(0.08) per share, heavily impacted by an $8.9 million non-cash fair value charge.

What is the proposed BAT transaction mentioned by Charlotte’s Web?

The company agreed with BT DE Investments (BAT subsidiary) to amend and convert about $54 million of convertible debenture plus interest and complete a $10 million private placement. If approved, this would eliminate Charlotte’s Web’s largest liability, remove roughly $3 million in annual interest, and strengthen equity.

How did Charlotte’s Web’s Adjusted EBITDA change in Q1 2026?

Adjusted EBITDA improved in Q1 2026 to a loss of $1.7 million from a $2.8 million loss in Q1 2025. The $1.1 million year-over-year improvement came mainly from a 17.7% reduction in SG&A expenses and ongoing cost optimization, despite lower revenue and compressed gross margins.

What is Charlotte’s Web’s cash position and cash use in Q1 2026?

Cash and cash equivalents were $5.2 million as of March 31, 2026, compared with $8.0 million at December 31, 2025. Net cash used in operating activities was $2.8 million, effectively flat versus the prior-year quarter, reflecting tighter operating cost control amid lower revenue.

What opportunities does the CMS Beneficiary Engagement Incentive create for Charlotte’s Web?

The CMS Beneficiary Engagement Incentive allows eligible participants in certain models to cover up to $500 annually in hemp-derived products per beneficiary. Charlotte’s Web focuses on preparing products and infrastructure to serve this emerging healthcare channel, which may provide new medically-oriented demand for compliant, non-intoxicating CBD products.

What is the status of DeFloria’s AJA001 clinical program involving Charlotte’s Web?

Charlotte’s Web owns about one-third of DeFloria and holds exclusive commercial manufacturing rights for AJA001 if approved. The Phase 2 trial for irritability in autism spectrum disorder is substantially advanced in planning, with initiation expected in mid‑2026, subject to completing development tasks and regulatory requirements.

Why did Charlotte’s Web’s gross margin decline in Q1 2026?

Gross margin dropped to 46.6% from 50.8% year over year due to higher production costs while scaling in-house manufacturing, the flow-through of older outsourced inventory costs, slightly higher online promotions, and lower sales volume affecting fixed cost absorption, partially offset by favorable product mix benefits.

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