What changed in this filing

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Item 1. Financial Statements

2025-08-13 compared with 2025-05-14 · 199 added, 140 removed, 463 unchanged (42% of the section changed)

17 unchanged sentences

Investment in unconsolidated entity 9,600 10,800

SBH purchase option and other derivative assets 970 1,075

Intangible assets, net 962 1,049

SBH purchase option and other derivative assets 500 1,075

Other long-term assets 416 632

14 unchanged sentences

License and media rights payable

Derivative and other long-term liabilities 1,236 1,327

Derivatives and other long-term liabilities

Total liabilities

4 unchanged sentences

unlimited shares authorized;

158,009,541 and 158,009,541 shares issued and outstanding as of March 31, 2025 and December 31, 2024

158,617,767 and 158,009,541 shares issued and outstanding as of June 30, 2025 and December 31, 2024

Additional paid-in capital

9 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended March 31, (unaudited)

Three Months Ended June 30, (unaudited)

Six Months Ended June 30, (unaudited)

2025 2024 2025 2024

Revenue $ 12,806 $ 12,289 $ 25,068 $ 24,413

7 unchanged sentences

Other income (expense), net

( 675 ) ( 6 ) ( 1,413 ) 605

Loss before provision for income taxes

( 6,290 ) ( 11,011 ) ( 12,502 ) ( 20,629 )

Income tax expense

Income tax benefit (expense)

2 ( 46 ) 2 ( 62 )

$ ( 6,288 ) $ ( 11,057 ) $ ( 12,500 ) $ ( 20,691 )

Per common share amounts (Note 10)

Net loss per common share, basic and diluted

Net loss per common share, basic

$ ( 0.04 ) $ ( 0.07 ) $ ( 0.08 ) $ ( 0.13 )

Net loss per common share, diluted

$ ( 0.04 ) $ ( 0.07 ) $ ( 0.08 ) $ ( 0.13 )

See Notes to Unaudited Condensed Consolidated Financial Statements

9 unchanged sentences

Share-based compensation — — 187 — 187

Net loss — ( 6,212 ) ( 6,212 )

— ( 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

— — — ( 6,288 ) ( 6,288 )

Balance—June 30, 2025

158,617,767 $ 1 $ 328,997 $ ( 314,069 ) $ 14,929

Balance—December 31, 2023

2 unchanged sentences

Share-based compensation — 842 — 842

Net loss — ( 9,634 ) ( 9,634 )

— ( 9,634 ) ( 9,634 )

Balance—March 31, 2024

157,227,855 $ 1 $ 328,024 $ ( 281,357 ) $ 46,668

Common shares issued upon vesting of restricted share units, net of withholding 267,187 — ( 20 ) — ( 20 )

Share-based compensation — — 237 — 237

— — — ( 11,057 ) ( 11,057 )

Balance—June 30, 2024

157,495,042 $ 1 $ 328,241 $ ( 292,414 ) $ 35,828

See Notes to Unaudited Condensed Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Three Months Ended March 31, (unaudited)

Six Months Ended June 30, (unaudited)

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization

(Gain)/loss on foreign currency transaction

2,522 ( 1,430 )

Gain on disposal of assets

( 2,326 ) ( 28 )

Change in fair value of financial instruments

Convertible debenture and other accrued interest 868 1,015

Convertible debenture accrued interest 1,471 1,931

Changes in right-of-use assets 950 908

Share-based compensation

Inventory provision

Other 746 266

Changes in operating assets and liabilities:

Accounts receivable, net

( 760 ) ( 154 )

Inventories, net

( 311 ) ( 1,025 )

Prepaid expenses and other current assets

License and media rights

Accounts payable, accrued and other liabilities

( 202 ) ( 286 )

Operating lease obligations

( 1,220 ) ( 1,121 )

Accounts payable, accrued and other liabilities

License and media rights

Other operating assets and liabilities, net

( 171 ) ( 192 )

Net cash used in operating activities

8 unchanged sentences

Net cash used in financing activities

( 25 ) ( 118 )

Net decrease in cash and cash equivalents

6 unchanged sentences

Non-cash purchase of property and equipment and intangible assets

$ ( 83 ) $ ( 374 )

See Notes to Unaudited Condensed Consolidated Financial Statements

6 unchanged sentences

together with its subsidiaries (collectively "Charlotte's Web" or the "Company") is a public company incorporated pursuant to the laws of the Province of British Columbia and a Certified B Corp.

The Company's common shares are publicly listed on the Toronto Stock Exchange ("TSX") under the symbol "CWEB" and quoted on the OTCQX under the symbol "CWBHF." The Company's corporate headquarters is located in Louisville, Colorado in the United States of America.

The Company's common shares are publicly listed on the Toronto Stock Exchange ("TSX") under the symbol "CWEB" and quoted on the OTCQB under the symbol "CWBHF." The Company's corporate headquarters is located in Louisville, Colorado in the United States of America.

The majority of the Company's business is conducted in the United States of America.

5 unchanged sentences

The Company does not currently have any plans to expand into such high-THC products in the near future.

The Company's current product categories include full spectrum hemp extract oil tinctures (liquid product), gummies, capsules, and soft-gels, CBD topical creams and lotions, broad-spectrum botanical CBD gummies, functional mushrooms gummies, and pet products.

The Company's products are distributed through its e-commerce website, third-party e-commerce websites, select distributors, health practitioners, and a variety of brick-and-mortar and specialty retailers.

The Company's current product categories include full-spectrum hemp extract oil tinctures (liquid product), gummies, capsules, soft-gels, CBD topical creams and lotions, broad-spectrum botanical CBD gummies, functional mushroom gummies, and pet products.

The Company grows its proprietary hemp domestically in the United States on farms leased in northeastern Colorado and sources high-quality hemp through contract farming operations in Arizona, Colorado, Kentucky, New Mexico, and Canada.

10 unchanged sentences

GAAP as found in the Accounting Standards Codification ("ASC") and Accounting Standards Updates ("ASU") of the Financial Accounting Standards Board ("FASB").

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company's financial position as of March 31, 2025 and its results of operations for the three months ended March 31, 2025 and 2024, cash flows for the three months ended March 31, 2025 and 2024, and stockholders’ equity for the three months ended March 31, 2025 and 2024.

Operating results for the three months ended March 31, 2025, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2025.

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company's financial position as of June 30, 2025 and its results of operations for the three and six months ended June 30, 2025 and 2024, cash flows for the six months ended June 30, 2025 and 2024, and stockholders' equity for the three and six months ended June 30, 2025 and 2024.

Operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2025.

The unaudited interim condensed consolidated financial statements presented herein do not contain the required disclosures under U.S.

1 unchanged sentence

Certain amounts presented in prior periods have been reclassified to conform with the current period presentation.

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

( In thousands, except share, per share, per unit, and number of years)

related notes as of and for the year ended December 31, 2024, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 19, 2025.

statements and related notes as of and for the year ended December 31, 2024 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 19, 2025.

Inventories are stated at the lower of cost or net realizable value.

9 unchanged sentences

The following table sets forth the disaggregation of the Company's revenue:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

2025 2024 2025 2024

Product revenue

$ 12,731 $ 12,215 $ 24,918 $ 24,028

Service revenue 75 74 150 385

3 unchanged sentences

Recently Adopted Accounting Pronouncements

In November 2023 the Financial Accounting Standards Board ("FASB") issued ASU 2023-07—Segment Reporting .

In November 2023, the FASB issued ASU 2023-07—Segment Reporting .

The guidance was issued to provide financial statement users with more disaggregated expense information about a public entity’s reportable segments.

2 unchanged sentences

Recently Issued Accounting Pronouncements Not Yet Adopted

Other than described below, no new accounting pronouncements issued by the FASB had or may have a material impact on the Company’s consolidated financial statements.

Other than described below, no new accounting pronouncements issued by the FASB may have a material impact on the Company's consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20):

14 unchanged sentences

The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions.

For public business entities, the new requirements is effective for annual periods beginning after December 15, 2024.

For public business entities, the new requirements are effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact, if any, that the updated standard will have on the Company's consolidated financial statements and related disclosures.

FAIR VALUE MEASUREMENT

The following table sets forth the Company's financial instruments that were measured at fair value on a recurring basis at March 31, 2025 and December 31, 2024, by level within the fair value hierarchy:

March 31, 2025

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024, by level within the fair value hierarchy:

June 30, 2025

Level 1 Level 2 Level 3 Total

17 unchanged sentences

Debt conversion option $ — $ 786 $ — 786

There were no transfers between levels of the fair value hierarchy and there were no changes in the fair value methodologies during the three months ended March 31, 2025, and the year ended December 31, 2024.

There were no transfers between levels of the fair value hierarchy and there were no changes in the fair value methodologies during the three and six month periods ended June 30, 2025 and the year ended December 31, 2024.

Investment in Unconsolidated Entity

7 unchanged sentences

( In thousands, except share, per share, per unit, and number of years)

As of March 31, 2025, BAT holds an equity interest in DeFloria in the form of 2,000,000 or 100 % preferred units ( 200,000 preferred units as of March 31, 2024) following its $ 10 million initial investment and has the right to participate in future equity issuances to maintain its pro rata equity position.

As of June 30, 2025, BAT holds an equity interest in DeFloria in the form of approximately 2,000,000 or 100 % preferred units ( 200,000 preferred units as of June 30, 2024) following its $ 10 million initial investment and has the right to participate in future equity issuances to maintain its pro rata equity position.

In 2024, BAT and AJNA invested an additional $ 5 million and $ 2 million, respectively, into DeFloria in exchange for a convertible debenture.

The Company and AJNA each hold 4,000,000 or approximately 50 % ( 400,000 common shares as of March 31, 2024), respectively, of DeFloria's voting common units following a 1-10 stock split when DeFloria converted from a Limited Liability Company to a Corporation.

The Company and AJNA each hold 4,000,000 or approximately 50 % ( 400,000 common shares as of June 30, 2024), respectively, of DeFloria's voting common units following a 1-10 stock split when DeFloria converted from a Limited Liability Company to a Corporation.

The Company's contribution to DeFloria is a license permitting the use of certain proprietary hemp intellectual property, including clinical and consumer data.

5 unchanged sentences

All changes from the remeasurement of the warrant will be recorded as a change in fair value of financial instruments in the condensed consolidated statements of operations.

The Company determined the fair value of the AJNA warrants to be de minimis and as such no value was recorded as of March 31, 2025 and December 31, 2024, respectively.

As of June 30, 2025, the AJNA warrants have expired and as such have no value.

The Company determined that it has a variable interest in the investment in DeFloria;

6 unchanged sentences

The investment has been remeasured at fair value at each reporting date, with changes recognized in condensed consolidated statements of operations as changes in fair value of financial instruments for the period.

For the three months ended March 31, 2025 and March 31, 2024, a loss of $ 100 and $ 800 , respectively, related to the investment in DeFloria was recognized as a change in fair value of financial instruments in the condensed consolidated statements of operations.

As of March 31, 2025 and December 31, 2024, the DeFloria investment represents an investment of $ 10,700 and $ 10,800 within the condensed consolidated balance sheets.

For the three months ended June 30, 2025 and June 30, 2024, a loss of $ 1,100 and a gain of $ 1,000 , respectively, related to the investment in DeFloria was recognized as a change in fair value of financial instruments in the condensed consolidated statements of operations.

Additionally, for the six months ended June 30, 2025 and June 30, 2024, a loss of $ 1,200 and a gain of $ 200 , respectively, related to the investment in DeFloria was recognized as a change in fair value of financial instruments in the condensed consolidated statements of operations.

As of June 30, 2025 and December 31, 2024, the DeFloria investment represents an investment of $ 9,600 and $ 10,800 , respectively, within the condensed consolidated balance sheets.

The use of assumptions for the fair value determination includes a high degree of subjectivity and judgment using unobservable inputs (level 3 on the fair value hierarchy), which results in estimation uncertainty.

2 unchanged sentences

The OPM is appropriate when the range of potential future outcomes is difficult to predict with any certainty.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

( In thousands, except share, per share, per unit, and number of years)

The following additional assumptions are used in the model:

March 31, December 31,

June 30, December 31,

Expected term (years)

3 unchanged sentences

Discount for lack of marketability 31.0 % 31.0 %

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, per unit, and number of years)

Convertible Debt Derivatives

13 unchanged sentences

The debt interest rate conversion feature, if triggered, reduces the stated interest rate of the debenture to 1.5 % upon federal regulation of CBD in the United States.

For the three months ended March 31, 2025 and March 31, 2024, a loss of $ 53 and $ 54 , respectively, related to the debt interest rate conversion feature was recognized as a change in fair value of financial instruments in the condensed consolidated statement of operations.

As of March 31, 2025 and December 31, 2024, the debt interest rate conversion feature represents a financial asset of $ 970 and $ 1,023 , respectively, within SBH purchase option and other derivative assets in the condensed consolidated balance sheets.

For the three months ended June 30, 2025 and June 30, 2024, a loss of $ 525 and $ 101 , respectively, related to the debt interest rate conversion feature was recognized as a change in fair value of financial instruments in the condensed consolidated statements of operations.

Additionally, for the six months ended June 30, 2025 and June 30, 2024, a loss of $ 578 and $ 154 , respectively, related to the debt interest rate conversion feature was recognized as a change in fair value of financial instruments in the condensed consolidated statements of operations.

As of June 30, 2025 and December 31, 2024, the debt interest rate conversion feature represents a financial asset of $ 500 and $ 1,023 , respectively, within SBH purchase option and other derivative assets in the condensed consolidated balance sheets.

To determine the value of the debt interest rate conversion feature, the Company utilizes a probability weighted income approach.

This method calculates the present value of the reduced interest accrued on the debenture assuming the feature is triggered at a certain time, after accounting for the probability of federal regulation of CBD.

This method calculates the present value of the reduced interest accrued on the debenture assuming the feature is triggered at a certain time,

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

( In thousands, except share, per share, per unit, and number of years)

after accounting for the probability of federal regulation of CBD.

This approach is useful when ultimate valuation is based on an unverifiable outcome, such as an event outside of the Company's influence.

The following additional assumptions are used in the model:

March 31, December 31,

June 30, December 31,

Stated interest rate 5.0 % 5.0 %

11 unchanged sentences

Treasury Securities with a maturity equivalent to the expected maturity of the debenture.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, per unit, and number of years)

For the three months ended March 31, 2025 and March 31, 2024, a gain of $ 78 and a loss of $ 56 , respectively, related to the debt conversion option was recognized as a change in fair value of financial instruments in the condensed consolidated statements of operations.

As of March 31, 2025 and December 31, 2024, the debt conversion option represents a financial liability of $ 709 and $ 786 , respectively, within derivative and other long-term liabilities in the condensed consolidated balance sheets.

The following table provides the assumptions regarding Level 2 fair value measurements inputs at their measurement dates:

March 31, December 31,

For the three months ended June 30, 2025 and June 30, 2024, a gain of $ 83 and $ 276 , respectively, related to the debt conversion option was recognized as a change in fair value of financial instruments in the condensed consolidated statements of operations.

For the six months ended June 30, 2025 and June 30, 2024, a gain of $ 162 and $ 220 , respectively, related to the debt conversion option was recognized as a change in fair value of financial instruments in the statements of operations.

As of June 30, 2025 and December 31, 2024, the debt conversion option represents a financial liability of $ 664 and $ 786 , respectively, within derivative and other long-term liabilities in the condensed consolidated balance sheets.

The following table provides the assumption regarding Level 2 fair value measurements inputs at their measurement dates:

June 30, December 31,

Expected volatility

9 unchanged sentences

The SBH Purchase Option was purchased for total consideration of $ 8,000 and has a term of five years (extendable for an additional two years upon payment of additional consideration).

The SBH Purchase Option provides the Company the option to acquire all or substantially all the shares of Stanley Brothers USA, at a purchase price to be determined at the time of exercise of the SBH Purchase Option.

The SBH Purchase Option provides the Company the option to acquire all or substantially all the shares of Stanley Brothers USA, at a purchase price to be determined at the time of exercise of

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

( In thousands, except share, per share, per unit, and number of years)

the SBH Purchase Option.

The Company is not obligated to exercise the SBH Purchase Option.

5 unchanged sentences

Changes in assumptions that reasonably could have been different at the reporting date may result in a higher or lower determination of fair value.

For the three months ended March 31, 2025, the Company determined that there is a highly unlikely probability that the Company will exercise the SBH Purchase Option.

For the six months ended June 30, 2025, the Company determined that there is a highly unlikely probability that the Company will exercise the SBH Purchase Option.

As such the company recognized a loss of $ 52 within change in fair value of financial instruments in the condensed consolidated statements of operations, and the SBH Purchase Option represents a financial asset of nil within SBH purchase option and other derivative assets in the condensed consolidated balance sheets.

For the three months ended March 31, 2024, the Company recognized a loss of $ 951 related to the SBH Purchase Option within change in fair value of financial instruments in the condensed consolidated statements of operations.

For the three and six months ended June 30, 2024, the company recognized a loss of $ 34 and $ 985 , respectively, related to the SBH Purchase Option within change in fair value of financial instruments in the condensed consolidated statements of operations.

As of December 31, 2024, the SBH Purchase Option represents a financial asset of $ 52 within SBH purchase option and other derivative assets in the condensed consolidated balance sheets.

1 unchanged sentence

Primary assumptions utilized include financial projections of Stanley Brothers USA and the probability and timing of exercise.

As of March 31, 2025, the value of the SBH Purchase Option was nil as the exercising of the option is considered unlikely.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, per unit, and number of years)

As of June 30, 2025, the value of the SBH Purchase Option was nil as the exercising of the option is considered highly unlikely.

The following additional assumptions are used in the fair value model of the SBH Purchase Option as of December 31, 2024:

4 unchanged sentences

Inventories consist of the following:

June 30, December 31,

Harvested hemp and seeds

6 unchanged sentences

( 966 ) ( 1,576 )

Total inventory

$ 19,398 $ 18,907

LICENSE AND MEDIA RIGHTS

MLB Promotion Rights Agreement

On October 11, 2022, the Company entered into a Promotional Rights Agreement (the "MLB Promotional Rights Agreement") with MLB Advanced Media L.P., on its own behalf and on behalf of Major League Baseball Properties, Inc., the Office of the Commissioner of Baseball, The MLB Network, LLC and the Major League Baseball Clubs (collectively, the "MLB"), pursuant to which the Company entered into a strategic partnership with MLB to promote the Company's new NSF-Certified for Sport® product line.

On May 13, 2025, the Company and MLB entered into a letter agreement ("PRA Letter Agreement") terminating the MLB Promotional Rights Agreement as of May 13, 2025 and waives the Company's obligation to pay the current and remaining aggregate rights fee of $ 18 million for the remainder of the term of the MLB Promotional Rights Agreement.

As consideration under the MLB promotional rights agreement, the Company has paid a combination of cash over the license period, along with upfront non-cash consideration in the form of equity, as well as contingent consideration in the form of contingent payments based on revenue.

As of March 31, 2025 and December 31, 2024, the carrying value of the licensed properties was $ 10,717 and $ 11,691 , respectively, recorded as a license and media rights asset within the condensed consolidated balance sheets.

As of March 31, 2025 and December 31, 2024, the carrying value of the media rights was $ 3,000 , respectively, recorded as a prepaid asset and a license and media rights asset within the condensed consolidated balance sheets.

For the three months ended March 31, 2025 and March 31, 2024, the Company paid the MLB $ 0 and $ 2,500 , respectively, as part of the committed cash payments, and recognized $ 974 , respectively, in amortization expense related to the license and media right assets.

Licensed properties are amortized straight line and media rights are amortized as incurred.

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

( In thousands, except share, per share, per unit, and number of years)

The PRA Letter Agreement terminates the MLB Promotional Rights Agreement and waives the Company's obligation to pay the current and remaining aggregate rights fee of $ 18 million for the remainder of the term.

Maturities of the MLB license and media rights payable as of March 31, 2025 are as follows:

2025 (9 months remaining) $ 5,500

Total payments

Imputed interest

Total license and media rights payable

Current license liabilities

Total non-current license and media rights payable

As of March 31, 2025, expected amortization of licensed properties are as follows:

2025 (9 months remaining) $ 2,923

Total future amortization

LICENSE AND MEDIA RIGHTS

MLB Promotion Rights Agreement

On May 13, 2025, the Company and MLB entered into a letter agreement ("PRA Letter Agreement") terminating the MLB Promotional Rights Agreement and waives the Company's obligation to pay the remaining aggregate rights fee of $ 18 million for the remainder of the term of the MLB Promotional Rights Agreement.

As consideration under the MLB promotional rights agreement, the Company was committed to pay a combination of cash over the license period, along with upfront non-cash consideration in the form of equity, as well as contingent consideration in the form of contingent payments based on revenue.

The PRA Letter Agreement terminates the MLB Promotional Rights Agreement.

As a result of the termination, the license and media rights assets as well as the current and non-current payable previously recorded on the condensed consolidated balance sheets were written off.

This write-off resulted in the recognition of a gain of $ 2,326 which is included in Other income (expense), net within the condensed consolidated statements of operations.

The gain reflects the net impact of the derecognition of related obligation exceeding the carrying value of the associated assets.

As of June 30, 2025 and December 31, 2024, the carrying value of the licensed properties was $ 0 and $ 11,691 , respectively, recorded as a license and media rights asset within the condensed consolidated balance sheets.

As of June 30, 2025 and December 31, 2024, the carrying value of the media rights was $ 0 and $ 3,000 recorded as a prepaid asset and a license and media rights asset within the condensed consolidated balance sheets.

For the three months ended June 30, 2025 and June 30, 2024, the Company paid MLB $ 0 , respectively, as part of the committed cash payments, and recognized $ 0 and $ 1,025 , respectively, in amortization expense related to the license and media right assets.

For the six months ended June 30, 2025 and June 30, 2024, the Company paid MLB $ 0 and $ 2,500 , respectively, as part of the committed cash payments, and recognized $ 0 and $ 1,999 , respectively, in amortization expense related to the license and media right assets.

Licensed properties were amortized straight line and media rights were amortized as incurred.

Convertible Debenture

6 unchanged sentences

The maturity date for the debenture is November 14, 2029.

The following is a summary of the Company's convertible debenture as of March 31, 2025 :

As of March 31, 2025

The following is a summary of the Company's convertible debenture as of June 30, 2025 :

As of June 30, 2025

Principal Amount Unamortized Debt Discount and Costs Net Carrying Amount

1 unchanged sentence

Convertible debenture due November 2029 $ 62,962 $ ( 14,346 ) $ 48,616

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

( In thousands, except share, per share, per unit, and number of years)

The following is a summary of the Company's convertible debenture as of December 31, 2024 :

3 unchanged sentences

Convertible debenture due November 2029 $ 58,172 $ ( 14,541 ) $ 43,631

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, per unit, and number of years)

The debenture was C$ 75.3 million per the subscription agreement and translated to USD on the transaction date.

For the three months ended March 31, 2025 and March 31, 2024 , the Company recognized a foreign currency gain of $ 62 and $ 925 , respectively, related to the net carrying value of the debenture within the condensed consolidated statements of operations .

For the three months ended June 30, 2025 and June 30, 2024, the Company recognized a foreign currency loss of $ 2,600 and a gain of $ 430 , respectively, related to the net carrying value of the debenture within the condensed consolidated statement of operations .

Additionally, f or the six months ended June 30, 2025 and June 30, 2024 , the Company recognized a foreign currency loss of $ 2,538 and a gain of $ 1,355 , respectively, related to the net carrying value of the debenture within the condensed consolidated statement of operations .

Interest is accrued annually and payable on the maturity date or date of earlier conversion.

On conversion, accrued interest will either be converted into common shares equal to the amount of accrued interest or will be paid in cash if agreed with the Lender.

As of March 31, 2025 and December 31, 2024 , the principal amount of the debenture includes $ 6,800 and $ 6,078 , respectively, of accrued interest expense.

The following is a summary of the interest expense and amortization expense, recorded within the condensed consolidated statements of operations, of the Company's convertible debenture for the three months ended March 31, 2025 and 2024 :

Three Months Ended March 31,

As of June 30, 2025 and June 30, 2024 , the principal amount of the debenture includes $ 7,549 and $ 4,636 , respectively, of accrued interest expense.

The following is a summary of the interest expense and amortization expense, recorded within the statement of operation, of the Company's convertible debenture for the three and six months ended June 30, 2025 and June 30, 2024 :

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Interest expense $ 749 $ 721 $ 1,471 $ 1,454

5 unchanged sentences

From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.

Although the ultimate aggregate amount of monetary liability or financial impact with respect to these matters is subject to many uncertainties and is therefore not predictable with assurance, management believes that as of March 31, 2025 there is no litigation pending that could have, individually and in the aggregate, a material adverse effect on the Company’s financial position, results of operations or cash flows.

Although the ultimate aggregate amount of monetary liability or financial impact with respect to these matters is subject to many uncertainties and is therefore not predictable with assurance, management believes that as of June 30, 2025 there is no litigation pending that could have, individually and in the aggregate, a material adverse effect on the Company’s financial position, results of operations or cash flows.

The Company has lease arrangements related to office space, warehouse and production space, and land to facilitate agricultural operations.

1 unchanged sentence

Generally, the lease agreements do not include options to terminate the lease.

Maturities of operating lease liabilities as of March 31, 2025 are as follows:

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

( In thousands, except share, per share, per unit, and number of years)

Maturities of operating lease liabilities as of June 30, 2025 are as follows:

Operating Leases

5 unchanged sentences

Total non-current lease liabilities

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, per unit, and number of years)

SHAREHOLDERS’ EQUITY

As of March 31, 2025 and December 31, 2024, the Company's share capital consists of one class of issued and outstanding shares:

As of June 30, 2025 and December 31, 2024, the Company’s share capital consists of one class of issued and outstanding shares:

common shares.

2 unchanged sentences

Common Shares

As of March 31, 2025 and December 31, 2024, the Company was authorized to issue an unlimited number of common shares, which have no par value.

As of June 30, 2025 and December 31, 2024, the Company was authorized to issue an unlimited number of common shares, which have no par value.

LOSS PER SHARE

3 unchanged sentences

The following table sets forth the computation of basic and dilutive net loss per share attributable to common shareholders:

Three Months Ended March 31,

Net loss $ ( 6,212 ) $ ( 9,634 )

Three Months Ended June 30,

Six Months Ended June 30,

2025 2024 2025 2024

$ ( 6,288 ) $ ( 11,057 ) $ ( 12,500 ) $ ( 20,691 )

Weighted-average number of common shares - basic 158,611,084 157,227,855 158,313,655 156,632,263

3 unchanged sentences

Loss per common share – basic and diluted

As of March 31, 2025 and March 31, 2024, potentially dilutive securities include stock options, restricted share units, common share warrants, and convertible debenture conversion.

When the Company recognizes a net loss from continuing operations, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of diluted net loss per share.

$ ( 0.04 ) $ ( 0.07 ) $ ( 0.08 ) $ ( 0.13 )

As of June 30, 2025 and June 30, 2024, potentially dilutive securities include stock options, restricted share units, common share warrants, and convertible debenture conversion.

When the Company recognizes a net loss from continuing operations, all potentially dilutive shares

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

( In thousands, except share, per share, per unit, and number of years)

are anti-dilutive and are consequently excluded from the calculation of diluted net loss per share.

The potentially dilutive awards outstanding for each period are presented in the table below:

Three and Six Months Ended June 30,

Outstanding options 3,238,084 4,523,486

4 unchanged sentences

If the convertible debenture in diluted EPS is anti-dilutive, or if the conversion value of the debenture does not exceed their conversion price for a reporting period, then the shares underlying the notes will not be reflected in the Company’s calculation of diluted EPS.

For the three months ended March 31, 2025, the price of the Company's shares did not exceed the conversion price and therefore there was no impact to potential common share diluted EPS during those periods.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, per unit, and number of years)

For the three and six months ended June 30, 2025 and June 30, 2024, the price of the Company’s Shares did not exceed the conversion price and therefore there was no impact to potential common share diluted EPS during those periods.

SHARE-BASED COMPENSATION

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Upon the exercise of any stock options, the Company issues shares to the award holder from the pool of authorized but unissued common shares.

There were no options granted for the three months ended March 31, 2025 and March 31, 2024.

Detail of the number of stock options outstanding for the three months ended March 31, 2025 under the Company's 2015 legacy option plan and the Company's amended 2018 long term incentive plan (collectively, the "Plans") is as follows:

There were no options granted for the six months ended June 30, 2025.

Detail of the number of stock options outstanding for the six months ended June 30, 2025 under the Company's 2015 legacy option plan and the Company's amended 2018 long term incentive plan (collectively, the "Plans") is as follows:

Number of Options

5 unchanged sentences

( 274,995 ) 0.65

Outstanding as of March 31, 2025

Outstanding as of June 30, 2025

3,238,084 $ 0.90 6.90 $ —

Exercisable/vested as of March 31, 2025

Exercisable/vested as of June 30, 2025

3,238,084 $ 0.90 6.90 $ —

There were no options granted or exercised during the three months ended March 31, 2025 and March 31, 2024, respectively.

There were no options exercised during the six months ended June 30, 2025 and 2024, respectively.

Restricted share units

The Company has issued time-based restricted share units to certain employees as permitted under the amended 2018 long term incentive plan ("the 2018 Plan").

The restricted share units granted vest in accordance with the board-approved agreement, typically over equal installments up to four years .

Upon vesting, one common share of the Company is issued for each restricted share unit awarded.

The fair value of each restricted share unit granted is equal to the market price of the Company's shares at the date of the grant.

There were no shares vested during the three months ended March 31, 2025.

The fair value of shares vested during the three months ended March 31, 2024 was $ 869 .

The Company has issued time-based restricted share units to certain employees as permitted under the Company's amended 2018 long term incentive plan (the "2018 Plan").

The restricted share units granted vest in accordance with the board-approved agreement, typically over

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

( In thousands, except share, per share, per unit, and number of years)

equal installments up to four years .

Upon vesting, one share of the Company’s common shares is issued for each restricted share unit awarded.

The fair value of each restricted share unit granted is equal to the market price of the Company’s shares at the date of the grant.

There were no shares vested during the three months ended June 30, 2025.

The fair value of shares vested during the six months ended June 30, 2025 and 2024 was $ 106 and $ 946 , respectively.

Details of the number of restricted share units outstanding under the 2018 Plan is as follows:

Number of Shares

Grant Date Fair Value

Average Grant Date Fair Value

Outstanding as of December 31, 2024

1 unchanged sentence

2,366,433 $ 0.09

( 291,165 ) $ 0.16

( 608,226 ) $ 0.17

Shares withheld upon vesting

Outstanding as of March 31, 2025

( 283,178 ) $ 0.17

Outstanding as of June 30, 2025

5,668,941 $ 0.19

Share-based Compensation Expense

Share-based compensation expense for all equity arrangements for the three months ended March 31, 2025 and March 31, 2024 was $ 187 and $ 842 , respectively, included in selling, general and administrative expense in the condensed consolidated statements of operations.

As of March 31, 2025, $ 1,121 of total unrecognized share-based compensation expense related to unvested options granted to employees is expected to be recognized over a weighted-average period of 1.33 years.

The Company reported income tax expense of $ 0 and $ 16 for the three months ended March 31, 2025 and 2024, respectively.

The Company's effective tax rate in the three months ended March 31, 2025 and 2024 was 0.0 % and ( 0.2 )% , respectively.

Share-based compensation expense for all equity arrangements for the three months ended June 30, 2025 and 2024 was $ 180 and $ 237 , respectively, included in selling, general and administrative expense in the condensed consolidated statements of operations.

Share-based compensation expense for all equity arrangements for the six months ended June 30, 2025 and 2024 was $ 367 and $ 1,079 , respectively, included in selling, general and administrative expense in the condensed consolidated statements of operations.

As of June 30, 2025, $ 971 of total unrecognized share-based compensation expense related to unvested options granted to employees is expected to be recognized over a weighted-average period of 2.15 years.

The Company reported income tax benefit (expense) of $ 2 and $( 46 ) for the three months ended June 30, 2025 and 2024, respectively.

Additionally, income tax benefit (expense) for the six months ended June 30, 2025 and 2024 was of $ 2 and $( 62 ), respectively.

The Company's effective tax rate for the three and six months ended June 30, 2025 was 0 % .

The Company's effective tax rate for the three and six months ended June 30, 2024 was 0.2 %.

The Company’s effective tax rates differ from the U.S.

federal statutory rate of 21.0% for the three months end March 31, 2025 and 2024 , respectively, primarily due to the valuation allowance.

The effective tax rate for the three months ended March 31, 2025 is consistent with the three months ended March 31, 2024, as the Company has been in a full valuation allowance for both periods.

federal statutory rate of 21% for the three and six months ending June 30, 2025 and June 30, 2024 , respectively, primarily due to the valuation allowance and the establishment of a naked credit related to the Company's investment in DeFloria.

OPERATING SEGMENT

5 unchanged sentences

The CODM assesses performance for this segment and decides how to allocate resources based on pre-tax net income/(loss) that is reported on the consolidated statement of operations.

The measure of segment assets is reported on the consolidated balance sheets as total assets.

For the three months ended March 31, 2025 and 2024, the segment's revenues and pre-tax net loss were $ 12,262 and $ 12,124 ;

The measure of segment assets is reported on the consolidated balance sheets as total

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

( In thousands, except share, per share, per unit, and number of years)

For the three months ended June 30, 2025 and 2024, the segment's revenues and pre-tax net loss were $ 12,806 and $ 12,289 ;

and $ 6,290 and $ 11,011 , respectively.

There are no differences between segment revenues, pre-tax net income/(loss) and the Company's consolidated revenues and pre-tax net income/(loss).

Additionally, for the six months ended June 30, 2025 and 2024, the segment's revenues and pre-tax net loss were $ 25,068 and $ 24,413 ;

and $ 12,502 and $ 20,629 , respectively.

There are no differences between segment revenues, pre-tax net loss and the Company's consolidated revenues and pre-tax net loss.

General Information

3 unchanged sentences

The Company's revenue is primarily derived from the production and sale of hemp-based CBD wellness products.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, per unit, and number of years)

Chief Operating Decision Maker (CODM):

The Company's Chief Executive Officer, the Chief Financial Officer, the Chief Operations Officer, and the Chief People Officer.

The Company's Chief Executive Officer, Chief Financial Officer, Chief Operations Officer, Chief Revenue Officer and Chief People Officer.

Measure of Segment Profit or Loss and Total Assets:

2 unchanged sentences

Significant Segment Expenses

The following significant expenses are regularly reviewed by the CODM for the three months ended March 31, 2025 and 2024:

The following significant expenses are regularly reviewed by the CODM for the three months ended June 30, 2025 and 2024 :

Cost of goods sold $ 6,816 and $ 9,707 , respectively;

2 unchanged sentences

and Depreciation and Amortization $ 512 and $ 2,489 , respectively.

The CODM reviewed the following for the six months ended June 30, 2025 and 2024 :

Cost of goods sold $ 12,848 and $ 14,920 , respectively;

Selling, general, and administrative expenses $ 21,640 and $ 30,007 respectively;

Change in fair value of financial instruments $ 1,669 and $ 720 , respectively;

and Depreciation and Amortization $ 2,961 and $ 4,982 , respectively.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

( In thousands, except share, per share, per unit, and number of years)

Reconciliation to Consolidated Financial Statements

As the Company operates as a single reportable segment, the amounts presented above align directly with the consolidated totals in the financial statements.

For the Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Product Revenue

4 unchanged sentences

6,816 9,707 12,848 14,920

$ 5,990 $ 2,582 $ 12,220 $ 9,493

Gross profit %

5 unchanged sentences

Other income (expense), net

( 675 ) ( 6 ) ( 1,413 ) 605

Loss before provision for income taxes

10 unchanged sentences

The note has been fully reserved for as of December 31, 2024 .

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share, per share, per unit, and number of years)

On March 2, 2021, the Company entered into the SBH Purchase Option with Stanley Brothers USA as discussed above ( Note 3 "Fair Value Measurement").

1 unchanged sentence

Certain members of the Stanley Brothers , who are or were employees of the Company at the time, are the majority shareholders of Stanley Brothers USA.

Effective January 5, 2023, the Company entered into a Brand License and Option Agreement with JMS Brands LLC, an entity owned by one of the Stanley Brothers.

Pursuant to the Brand License and Option Agreement, the Company licensed certain intellectual property from JMS Brands LLC, for an annual license fee of $ 500 .

As of January 5, 2024 , the Brand License and Option Agreement has expired.

On April 6, 2023, the Company jointly formed an entity, DeFloria, with AJNA and BAT.

1 unchanged sentence

AJNA is partially owned and was co-founded by a member of the Stanley Brothers.

BAT holds an equity interest in the entity in the form of 2,000,000 preferred units following its $ 10 million investment and has the right to participate in future equity issuances to maintain its pro rata equity position.

BAT holds an equity interest in the entity in the form of approximately 2,000,000 preferred units following its initial $ 10 million investment and has the right to participate in future equity issuances to maintain its pro rata equity position.

The Company and AJNA each hold 4,000,000 of the entity's voting common units (Note 3).

1 unchanged sentence

The principal and interest of the note receivable will be paid in 36 monthly installments.

As of March 31, 2025 and December 31, 2024 , the remaining note receivable of $ 51 and $ 71 , respectively, is presented in other assets in the condensed consolidated balance sheets.

Additionally on February 12, 2024, the Company and DeFloria entered into a separate master services agreement pursuant to which the Company will be compensated for the provision of certain services to DeFloria.

For the three months ended March 31, 2025 and March 31, 2024, the Company recognized $ 75 and $ 311 in revenue and cost of goods sold, respectively, related to the service agreement with DeFloria.

Additionally, the Company has an accounts receivable balance due from DeFloria of $ 342 and $ 648 as of March 31, 2025 and December 31, 2024, respectively.

As of June 30, 2025 and

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

( In thousands, except share, per share, per unit, and number of years)

December 31, 2024 , the remaining note receivable of $ 37 and $ 71 , respectively, is presented in other assets in the condensed consolidated balance sheets.

On April 6, 2023, the Company and DeFloria entered into a supply agreement in which the Company shall supply raw material that will be used in the development of the new drug.

The price charged by the Company is at cost of goods sold level.

For the three and six months ended June 30, 2025, the Company recognized $ 641 in revenue and cost of goods sold, respectively, related to the supply agreement with DeFloria.

Similarly, on February 12, 2024, the Company and DeFloria entered into a separate master services agreement pursuant to which the Company will be compensated for the provision of certain services to DeFloria.

For the three and six months ended June 30, 2025, the Company recognized $ 75 and $ 150 in revenue and cost of goods sold, respectively, related to the service agreement with DeFloria.

Additionally, the Company has an accounts receivable balance due from DeFloria of $ 1,059 and $ 648 as of June 30, 2025 and December 31, 2024, respectively.

On June 21, 2024, the Company entered into a consulting agreement with Jared Stanley, former executive of the Company, and current member of the Board of Directors.

In consideration for Mr.

Stanley's services, he receives a bi-weekly fee of $ 6 .

SUBSEQUENT EVENTS

The Company and MLB entered into the PRA Letter Agreement terminating the MLB Promotional Rights Agreement as of May 13, 2025 and waives the Company's obligation to pay the remaining aggregate rights fee of $ 18 million for the current and remainder of the term of the MLB Promotional Rights Agreement.

Stanley's services, he will receive a bi-weekly fee of $ 6 .

On July 15, 2025, the Company entered into a promissory note, as lender, where the Company loaned $ 750 to DeFloria.

The note and accrued interest is due and payable by DeFloria upon the later of December 31, 2026, or the date the Company shall issue and sell units of a newly-authorized series of preferred units in a bona fide financing transaction to one or more investors for aggregate cash proceeds to DeFloria or any other convertible debt of DeFloria of not less than $ 10 million.

Upon any event of default by DeFloria under the note, which includes DeFloria’s failure to pay amounts within 3 business days of when due and breaches of DeFloria’s obligations pursuant to the note, the Company will be entitled to exercise its rights under the note.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements