What changed in this filing

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Item 1. Financial Statements

2025-11-12 compared with 2025-08-13 · 151 added, 127 removed, 535 unchanged (34% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30, December 31,

2025 (unaudited)

12 unchanged sentences

Investment in unconsolidated entity 9,300 10,800

Derivative assets

Intangible assets, net 906 1,049

SBH purchase option and other derivative assets 500 1,075

Other long-term assets 1,019 632

8 unchanged sentences

Total current liabilities

10,364 15,936

Convertible debenture

10 unchanged sentences

unlimited shares authorized;

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

159,136,454 and 158,009,541 shares issued and outstanding as of September 30, 2025 and December 31, 2024

Additional paid-in capital

9 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30, (unaudited)

Six Months Ended June 30, (unaudited)

Three Months Ended September 30, (unaudited)

Nine Months Ended September 30, (unaudited)

2025 2024 2025 2024

15 unchanged sentences

Per common share amounts (Note 10)

Net loss per common share, basic

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

Net loss per common share, diluted

Net loss per common share, basic and diluted

$ ( 0.04 ) $ ( 0.04 ) $ ( 0.12 ) $ ( 0.17 )

1 unchanged sentence

CHARLOTTE’S WEB HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands, except share amounts)

14 unchanged sentences

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

Common shares issued upon vesting of restricted share units, net of withholding 518,687 — ( 9 ) — ( 9 )

Share-based compensation — — 145 — 145

— — ( 5,818 ) ( 5,818 )

Balance—September 30, 2025

159,136,454 $ 1 $ 329,133 $ ( 319,887 ) $ 9,247

Balance—December 31, 2023

10 unchanged sentences

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

Common shares issued upon vesting of restricted share units, net of withholding 267,187 — ( 15 ) — ( 15 )

Share-based compensation — — 217 — 217

— — — ( 5,787 ) ( 5,787 )

Balance—September 30, 2024

157,762,229 $ 1 $ 328,443 $ ( 298,201 ) $ 30,243

See Notes to Unaudited Condensed Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Six Months Ended June 30, (unaudited)

Nine Months Ended September 30, (unaudited)

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization

(Gain)/loss on foreign currency transaction

(Gain)/Loss on disposal of assets

Change in fair value of financial instruments

2,869 ( 702 )

Gain on disposal of assets

Convertible debenture and other accrued interest

(Gain)/loss on foreign currency transaction

1,418 ( 870 )

Change in fair value of financial instruments

Convertible debenture accrued interest 1,471 1,931

Changes in right-of-use assets 1,348 1,373

Share-based compensation

Allowance for credit losses ( 107 ) 138

Inventory provision

2 unchanged sentences

Accounts receivable, net

( 760 ) ( 154 )

Inventories, net

1 unchanged sentence

Prepaid expenses and other current assets

( 389 ) 1,305

Accounts payable, accrued and other liabilities

41 unchanged sentences

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'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 retailers across multiple channels of business.

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.

The Company's products are distributed through its e-commerce website, third-party e-commerce websites, select distributors, and health practitioners.

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

The hemp grown in Canada is utilized exclusively in the Canadian markets or for research purposes and not in products sold within the United States.

9 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 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.

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 September 30, 2025 and its results of operations for the three and nine months ended September 30, 2025 and 2024, cash flows for the nine months ended September 30, 2025 and 2024, and stockholders' equity for the three and nine months ended September 30, 2025 and 2024.

Operating results for the three and nine months ended September 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

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

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

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

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.

annual audited consolidated financial 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.

4 unchanged sentences

Revenue Recognition

The majority of the Company's revenue is derived from sales of branded products to consumers via the Company's direct-to-consumer e-commerce website, as well as distributors, retail and wholesale business-to-business customers, and health practitioners.

The service revenue is due to the Company and DeFloria, Inc.

The service revenue is attributable to the Company and DeFloria Inc.

("DeFloria") entering into a Master Services Agreement ("Services Agreement") in which the Company is compensated for the provision of certain services to DeFloria.

1 unchanged sentence

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2025 2024 2025 2024

12 unchanged sentences

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 September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40).

This guidance modernizes and clarifies the accounting model for costs related to internal-use software, eliminating the historically used stage-based framework.

The new guidance supersedes ASC 350-50 on website development costs, folding relevant guidance into ASC 350-40.

ASU 2025-06 is effective for the Company beginning after December 15, 2027, and early adoption is permitted as of the beginning of an annual reporting period.

The Company is currently evaluating the effect of adopting this ASU.

In July 2025, the FASB issued ASU 2025-05—Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

The guidance relates to estimating credit losses under CECL (Current Expected Credit Losses) for current accounts receivable and current contract assets.

The guidance provides a practical expedient to assume that current conditions as of the balance sheet date will persist through the reasonable and supportable forecast period.

ASU 2025-05 is effective for the Company beginning after December 15, 2025.

The Company is currently evaluating the effect of adopting this ASU.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

8 unchanged sentences

The Company is currently evaluating the effect of adopting this ASU.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

In December 2023, the FASB issued a final standard on improvements to income tax disclosures, ASU 2023-09, Improvements to Income Tax Disclosures .

1 unchanged sentence

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 are effective for annual periods beginning after December 15, 2024.

ASU 2023-09 is effective for the Company beginning with its fiscal year ended December 31, 2025 and will be disclosed in the Financial Statements reported in our Annual Report on Form 10-K filed with the SEC for such period.

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 as of June 30, 2025 and December 31, 2024, by level within the fair value hierarchy:

June 30, 2025

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

September 30, 2025

Level 1 Level 2 Level 3 Total

1 unchanged sentence

Stanley Brothers USA Holdings purchase option

$ — $ — $ — $ —

Debt interest rate conversion feature — — 590 590

Total financial assets

$ — $ — $ 590 $ 590

Investment in unconsolidated entity:

6 unchanged sentences

Stanley Brothers USA Holdings purchase option

$ — $ — $ 52 $ 52

Debt interest rate conversion feature — — 1,023 $ 1,023

Total financial assets

$ — $ — $ 1,075 $ 1,075

Investment in unconsolidated entity:

2 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 and six month periods ended June 30, 2025 and the year ended 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)

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 nine month periods ended September 30, 2025 and the year ended December 31, 2024.

Investment in Unconsolidated Entity

On April 6, 2023, the Company jointly formed an entity, DeFloria, with AJNA BioSciences ("AJNA"), and a subsidiary of British American Tobacco ("BAT").

On April 6, 2023, the Company jointly formed an entity, DeFloria, with AJNA BioSciences PBC ("AJNA"), and a subsidiary of British American Tobacco PLC ("BAT").

AJNA is a botanical drug development company.

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

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

The seven Stanley brothers (the "Stanley Brothers") founded CWB Holdings, Inc.

(predecessor to Charlotte's Web, Inc).

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, 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.

As of September 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 September 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 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 and AJNA each hold 4,000,000 or approximately 50 % ( 400,000 common shares as of September 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.

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

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

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

5 unchanged sentences

Upon formation of the entity, the Company elected the fair value option because it allowed the investment to be valued based on current market conditions.

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

For the three months ended September 30, 2025 and September 30, 2024, a loss of $ 300 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.

Additionally, for the nine months ended September 30, 2025 and September 30, 2024, a loss of $ 1,500 and a gain of $ 400 , 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 September 30, 2025 and December 31, 2024, the DeFloria investment represents an investment of $ 9,300 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.

To determine the value of the investment, the Company utilizes an Option Pricing Model ("OPM").

The OPM considers the various terms of the stockholder agreements, including the level of seniority among the securities, dividend policy, conversion ratios, and cash allocations upon liquidation of the entity.

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

The OPM considers the various terms of the stockholder agreements, including the level of

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

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

seniority among the securities, dividend policy, conversion ratios, and cash allocations upon liquidation of the entity.

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

The following additional assumptions are used in the model:

June 30, December 31,

September 30, December 31,

Expected term (years)

7 unchanged sentences

BATS and NYSE:

BTI) (the "Lender"), providing for the issuance of a $ 56.8 million (C$ 75.3 million) convertible debenture (the "debenture").

BTI) (the "Lender"), providing for the issuance of $ 56.8 million (C$ 75.3 million) convertible debenture (the "debenture").

The debenture is convertible into 19.9 % ownership of the Company's common shares at a conversion price of C$ 2.00 per common share of the Company on the TSX.

5 unchanged sentences

Debt Interest Rate Conversion Feature

The debt interest rate conversion feature is classified as a financial asset and is 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.

The debt interest rate conversion feature is classified as a financial asset and is remeasured at fair value at each reporting date, with changes recognized in the condensed consolidated statements of operations as changes in fair value of financial instruments for the period.

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 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.

For the three months ended September 30, 2025 and September 30, 2024, a gain of $ 101 and $ 259 , 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 nine months ended September 30, 2025 and September 30, 2024, a loss of $ 477 and a gain $ 105 , 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 September 30, 2025 and December 31, 2024, the debt interest rate conversion feature represents a financial asset of $ 590 and $ 1,023 , respectively, within 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.

6 unchanged sentences

The following additional assumptions are used in the model:

June 30, December 31,

September 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.

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,

For the three months ended September 30, 2025 and September 30, 2024, a loss of $ 1,001 and a gain of $ 1,338 , 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 nine months ended September 30, 2025 and September 30, 2024, a loss of $ 839 and a gain of $ 1,558 , 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 September 30, 2025 and December 31, 2024, the debt conversion option represents a financial liability of $ 1,651 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:

September 30, December 31,

Expected volatility

21 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 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 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.

For the nine months ended September 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 Derivative assets in the condensed consolidated balance sheets.

For the three and nine months ended September 30, 2024 the Company recognized a loss of $ 375 and $ 1,360 , 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 Derivative assets in the condensed consolidated balance sheets.

The Monte Carlo valuation model considers multiple revenue and EBITDA outcomes for Stanley Brothers USA and other probabilities in assigning a fair value.

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

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

As of September 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,

September 30, December 31,

Harvested hemp and seeds

14 unchanged sentences

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 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.

On May 13, 2025, the Company and MLB entered into a letter agreement ("PRA Letter Agreement") terminating the MLB Promotional Rights Agreement and waiving 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.

3 unchanged sentences

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.

As of September 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 September 30, 2025 and December 31, 2024, the carrying value of the media rights was $ 0 and $ 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 September 30, 2025 and September 30, 2024, the Company paid MLB $ 0 and $ 2,500 , respectively, as part of the committed cash payments, and recognized $ 0 and $ 1,774 , respectively, in amortization expense related to the license and media right assets.

For the nine months ended September 30, 2025 and September 30, 2024, the Company paid MLB $ 0 and $ 5,000 , respectively, as part of the committed cash payments, and recognized $ 0 and $ 3,773 , 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.

7 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 June 30, 2025 :

As of June 30, 2025

Principal Amount Unamortized Debt Discount and Costs Net Carrying Amount

Convertible Debenture

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

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

(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 September 30, 2025 :

As of September 30, 2025

Principal Amount Unamortized Debt Discount and Costs Net Carrying Amount

Convertible Debenture

Convertible debenture due November 2029 $ 62,300 $ ( 13,481 ) $ 48,819

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

4 unchanged sentences

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

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 .

For the three months ended September 30, 2025 and September 30, 2024, the Company recognized a foreign currency gain of $ 1,100 and a loss of $ 533 , respectively, related to the net carrying value of the debenture within the condensed consolidated statement of operations.

Additionally, for the nine months ended September 30, 2025 and September 30, 2024, the Company recognized a foreign currency loss of $ 1,438 and a gain of $ 822 , 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 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,

As of September 30, 2025 and December 31, 2024, the principal amount of the debenture includes $ 8,301 and $ 6,078 , respectively, of accrued interest expense.

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

6 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 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.

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 September 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.

4 unchanged sentences

(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:

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

Operating Leases

6 unchanged sentences

SHAREHOLDERS’ EQUITY

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

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

common shares.

The Company is also authorized to issue preferred shares issuable in series.

To date, no shares of preferred shares have been issued or are outstanding.

To date, no preferred shares have been issued or are outstanding.

Common Shares

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.

As of September 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

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2025 2024 2025 2024

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$ ( 0.04 ) $ ( 0.04 ) $ ( 0.12 ) $ ( 0.17 )

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

As of September 30, 2025 and September 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

CHARLOTTE’S WEB HOLDINGS, INC.

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(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.

dilutive shares 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,

Three and Nine Months Ended September 30,

Outstanding options 3,189,744 3,742,095

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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 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.

For the three and nine months ended September 30, 2025 and September 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 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:

There were no options granted nor exercised for the nine months ended September 30, 2025 and 2024.

Detail of the number of stock options outstanding for the nine months ended September 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

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( 323,335 ) 0.60

Outstanding as of June 30, 2025

Outstanding as of September 30, 2025

3,189,744 $ 0.91 6.69 $ —

Exercisable/vested as of June 30, 2025

Exercisable/vested as of September 30, 2025

2,982,939 $ 0.95 5.83 $ —

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 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

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

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

CHARLOTTE’S WEB HOLDINGS, INC.

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(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.

The fair value of shares vested during the nine months ended September 30, 2025 and 2024 was $ 278 and $ 1,024 , respectively.

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

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( 374,491 ) $ 0.25

Outstanding as of June 30, 2025

Outstanding as of September 30, 2025

4,663,762 $ 0.19

Share-based Compensation Expense

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 %.

Share-based compensation expense for all equity arrangements for the three months ended September 30, 2025 and 2024 was $ 145 and $ 217 , 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 nine months ended September 30, 2025 and 2024 was $ 512 and $ 1,296 , respectively, included in selling, general and administrative expense in the condensed consolidated statements of operations.

As of September 30, 2025, $ 729 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 1.97 years.

The Company reported income tax benefit of $ 36 and $ 0 for the three months ended September 30, 2025 and 2024, respectively.

Additionally, income tax benefit (expense) for the nine months ended September 30, 2025 and 2024 was of $ 38 and $( 62 ), respectively.

The Company's effective tax rate as of September 30, 2025 and September 30, 2024 was ( 0.1 )% and 0.2 %, respectively.

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

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.

federal statutory rate of 21% for the nine months end September 30, 2025 and September 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

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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

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

For the three months ended September 30, 2025 and 2024, the segment's revenues and pre-tax net loss were $ 11,503 and $ 12,587 ;

CHARLOTTE’S WEB HOLDINGS, INC.

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(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 $ 5,854 and $ 5,787 , respectively.

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 ;

Additionally, for the nine months ended September 30, 2025 and 2024, the segment's revenues and pre-tax net loss were $ 36,571 and $ 37,000 ;

and $ 18,356 and $ 26,416 , respectively.

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Chief Operating Decision Maker (CODM):

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

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

Measure of Segment Profit or Loss and Total Assets:

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Significant Segment Expenses

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

The following significant expenses were reviewed by the CODM for the three months ended September 30, 2025 and 2024:

Cost of goods sold $ 7,026 and $ 5,914 , respectively;

Selling, general, and administrative expenses $ 9,731 and $ 12,693 , respectively;

Change in fair value of financial instruments $ 1,543 and $ 1,140 , respectively;

Change in fair value of financial instruments loss of $ 1,200 and a gain of $ 1,422 , respectively;

and Depreciation and Amortization $ 1,689 and $ 2,523 , respectively.

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

The CODM reviewed the following for the nine months ended September 30, 2025 and 2024 :

Cost of goods sold $ 19,874 and $ 20,834 , respectively;

Selling, general, and administrative expenses $ 31,371 and $ 42,700 respectively;

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

Change in fair value of financial instruments a loss of $ 2,869 and a gain of $ 702 , respectively;

and Depreciation and Amortization $ 4,650 and $ 7,505 , respectively.

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, 2025 Nine Months Ended

September 30, 2025

2025 2024 2025 2024

36 unchanged sentences

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

As of June 30, 2025 and

As of September 30, 2025 ,

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

(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.

and December 31, 2024, the remaining note receivable of $ 28 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.

For the nine months ended September 30, 2025 and September 30, 2024, the Company recognized $ 641 and $ — 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 will receive a bi-weekly fee of $ 6 .

For the three and nine months ended September 30, 2025, the Company recognized $ 75 and $ 225 in revenue and cost of goods sold, respectively, related to the service agreement with DeFloria.

For the three and nine months ended September 30, 2024, the Company recognized $ 74 and $ 459 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 $ 1,134 and $ 648 as of September 30, 2025 and December 31, 2024, respectively.

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

1 unchanged sentence

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.

The funds will be distributed monthly between July and November 2025, and the balance of the promissory note as of September 30, 2025 is $ 575 .

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 will receive a bi-weekly fee of $ 6 .

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