What changed in this filing

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Item 1. Financial Statements

2026-08-13 compared with 2026-05-13 · 241 added, 150 removed, 365 unchanged (52% of the section changed)

15 unchanged sentences

Derivative and other long-term assets

LIABILITIES AND SHAREHOLDERS’ DEFICIT

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

3 unchanged sentences

Total current liabilities

Convertible debenture

Converted debenture

Lease obligations

2 unchanged sentences

Commitments and contingencies (Note 7)

Shareholders’ deficit:

Shareholders’ equity (deficit):

Common shares, nil par value;

unlimited shares authorized;

159,683,953 and 159,420,141 shares issued and outstanding as of March 31, 2026 and December 31, 2025

270,549,931 and 159,420,141 shares issued and outstanding as of June 30, 2026 and December 31, 2025

Additional paid-in capital

Accumulated deficit

Total shareholders’ deficit

Total liabilities and shareholders’ deficit

Total shareholders’ equity (deficit)

Total liabilities and shareholders’ equity (deficit)

See Notes to Unaudited Condensed Consolidated Financial Statements

2 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)

Cost of goods sold

2 unchanged sentences

Change in fair value of financial instruments

Loss from extinguishment of debt

Other income (expense), net

Loss before provision for income taxes

Income tax benefit

Income tax benefit (expense)

Per common share amounts (Note 10)

12 unchanged sentences

Balance— March 31, 2026

Common shares issued upon vesting of restricted share units, net of withholding

Exercise of common stock options

Share-based compensation

Conversion of convertible debenture into common stock

Issuance of common stock by private investment

Balance—June 30, 2026

Balance—December 31, 2024

2 unchanged sentences

Balance—March 31, 2025

Common shares issued upon vesting of restricted share units, net of withholding

Share-based compensation

Balance—June 30, 2025

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:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Loss on extinguishment of debt

Change in fair value of financial instruments

Depreciation and amortization

Convertible debenture and other accrued interest

Changes in right-of-use assets

Share-based compensation

Changes in right-of-use assets

(Gain)/loss on foreign currency transaction

Gain on disposal of assets

Changes in operating assets and liabilities:

2 unchanged sentences

Prepaid expenses and other current assets

Operating lease obligations

Accounts payable, accrued and other liabilities

Operating lease obligations

Other operating assets and liabilities, net

5 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of common stock

Other financing activities

Net cash used in financing activities

Net decrease in cash and cash equivalents

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents —beginning of period

Cash and cash equivalents —end of period

Non-cash activities:

Non-cash purchase of property and equipment and intangible assets

Supplemental disclosures of non-cash investing and financing activities

Conversion of debt to equity

Extinguishment of embedded derivatives liability upon debt conversion

Extinguishment of embedded derivatives asset upon debt conversion

See Notes to Unaudited Condensed Consolidated Financial Statements

28 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, 2026 and its results of operations for the three months ended March 31, 2026 and 2025, cash flows for the three months ended March 31, 2026 and 2025, and stockholders’ equity (deficit) for the three months ended March 31, 2026 and 2025.

Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026.

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, 2026 and its results of operations for the three and six months ended June 30, 2026 and 2025, cash flows for the six months ended June 30, 2026 and 2025, and stockholders' equity (deficit) for the three and six months ended June 30, 2026 and 2025.

Operating results for the three and six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026.

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

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

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

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

interim condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended December 31, 2025, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 31, 2026.

consolidated financial statements and related notes as of and for the year ended December 31, 2025 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 31, 2026.

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 eCommerce website, as well as distributors, and health practitioners.

The majority of the Company's revenue is derived from sales of branded products to consumers via the Company's direct-to-consumer eCommerce website, as well as distributors, and healthcare practitioners.

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

2 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,

Product revenue

6 unchanged sentences

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.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

I n December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements.

12 unchanged sentences

Disaggregation of Income Statement Expenses.

The guidance requires disaggregated disclosure of income statement expenses for public business entities.

The new guidance requires disaggregated disclosure of income statement expenses for public business entities.

ASU 2024-03 is effective for the Company beginning December 31, 2026.

1 unchanged sentence

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, 2026 and December 31, 2025, by level within the fair value hierarchy:

March 31, 2026

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, by level within the fair value hierarchy:

June 30, 2026

Financial assets:

11 unchanged sentences

Debt conversion option

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, 2026, and the year ended December 31, 2025.

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, 2026 and the year ended December 31, 2025.

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 PLC ("BAT").

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

AJNA is a botanical drug development company.

2 unchanged sentences

(predecessor to Charlotte's Web, Inc).

As of March 31, 2026, BAT holds an equity interest in DeFloria in the form of approximately 2,000,000 or 100 % preferred units 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, 2026, BAT holds an equity interest in DeFloria in the form of approximately 2,000,000 or 100 % preferred units 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 %, respectively, of DeFloria's voting common units following a 1-10 stock

The Company and AJNA each hold 4,000,000 or approximately 50 % , 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.

Additionally, the Company has a

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

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

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.

Additionally, the Company has a supply agreement with DeFloria, under which the Company supplies the oils at cost used to produce and develop the new drug.

supply agreement with DeFloria, under which the Company supplies the oils at cost used to produce and develop the new drug.

AJNA's contribution to the entity is laboratory and regulatory services, clinical expertise, and the provision of clinical services.

2 unchanged sentences

Management determined the warrant should be accounted for in accordance with ASC 321, which requires the warrant to be measured at fair value at issuance and subsequently remeasured at fair value each reporting period.

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 April 2025, AJNA warrants have expired and as such have no value.

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

As of April 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, 2026 and March 31, 2025, a loss of $ 200 and $ 100 , 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, 2026 and December 31, 2025, the DeFloria investment represents an investment of $ 8,600 and $ 8,800 , respectively, within the condensed consolidated balance sheets.

For the three months ended June 30, 2026 and June 30, 2025, a loss of $ 300 and $ 1,100 , 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, 2026 and June 30, 2025, a loss of $ 500 and $ 1,200 , 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, 2026 and December 31, 2025, the DeFloria investment represents an investment of $ 8,300 and $ 8,800 , 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.

7 unchanged sentences

Discount for lack of marketability

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

2 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").

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.

The debenture will accrue interest at a stated annualized rate of 5 % until such time that there is federal regulation permitting the use of cannabidiol, a phytocannabinoid derived from the plant Cannabis sativa L.

BTI) (the "Lender" or "BT DE"), providing for the issuance of a $ 56.8

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

million (C$ 75.3 million) convertible debenture (the "Convertible Debenture").

The Convertible Debenture was 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.

The Convertible Debenture accrued interest at a stated annualized rate of 5 % until such time that there is federal regulation permitting the use of cannabidiol, a phytocannabinoid derived from the plant Cannabis sativa L.

as an ingredient in food products and dietary supplements in the United States.

1 unchanged sentence

Following federal regulation of CBD, the annualized rate of interest shall reduce to 1.5 %.

The maturity date for the debenture is November 14, 2029 (the "Maturity Date").

The maturity date for the debenture was November 14, 2029 (the "Maturity Date").

On May 28, 2026, the Company completed BT DE comprised of two components:

(i) amendment and conversion of BAT’s outstanding C$ 75.3 million convertible debenture, as well as, all accrued interest, into Charlotte’s Web's common shares at a conversion price of C$ 0.94 per share;

and (ii) a concurrent additional equity investment by BT DE (the "Investment") of $ 10 million (approximately C$ 13.9 million at the then applicable exchange rate) by way of a private placement at a price equal to the greater of (a) C$ 0.94 per share, and (b) a dollar amount equal to the maximum discount available pursuant to section 607 of the TSX Company Manual applied to the 5-day volume weighted average price of the Company’s common shares on the TSX prior to the closing date (collectively, the “Transaction”) provided that the maximum number of Common Shares to be issued to BAT under the Investment would not exceed 14,760,638 common shares of the Company.

On May 28, 2026, the Company and BT DE entered into an amendment and conversion notice for the Convertible Debenture (the "Amendment and Conversion Notice").

Pursuant to the Amendment and Conversion Notice:

(i) the conversion price of the Convertible Debenture was reduced from C$ 2.00 to C$ 0.94 per share;

(ii) the interest conversion price of the Convertible Debenture was amended to C$ 0.94 per share;

and (iii) the applicable threshold for purposes of the Conversion Cap (as defined in the Conversion Debenture) was increased from 19.9 % to 40.8 %.

At the closing and immediately following the effectiveness of the Amendment and Conversion Notice, BT DE converted the principal amount of, and all accrued but unpaid interest on, the Convertible Debenture into 95,281,277 common shares of the Company.

As of the closing of the Transaction and upon the conversion of the Convertible Debenture and the Investment, BT DE holds an aggregate of 109,944,042 common shares of the Company, representing approximately 40.6 % of the issued and outstanding Common Shares (calculated on a non-diluted basis) of the Company based on 270,549,931 Common Shares issued and outstanding as of May 28, 2026.

The Company initially determined that the debenture was a freestanding financial instrument which included embedded derivatives.

The embedded derivatives were bifurcated from the debenture and accounted for separately in accordance with the provisions of ASC 815, Derivatives and Hedging .

The Company reviewed the terms of the debenture and identified two material embedded features which required bifurcation under ASC 815:

1) the interest rate conversion feature based on changes in federal regulations, and 2) the debt conversion option to common shares.

The debt interest rate conversion feature was classified as a derivative asset and measured at fair value using a probability-weighted income approach.

The debt conversion option was classified as a derivative liability and measured at fair value using a Black-Scholes option pricing model.

When a conversion feature has been separated from a convertible debt instrument and accounted for as a derivative liability or asset, there is no equity conversion feature remaining in the debt for accounting purposes.

Therefore, while there is a legal conversion of the debt, the derivatives are subject to extinguishment accounting because they are being surrendered in exchange for common shares.

As such, the following two derivatives have been extinguished as May 28, 2026.

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, 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, 2026 and March 31, 2025, a loss of $ 6 and $ 53 , 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, 2026 and December 31, 2025, the debt interest rate conversion feature represents a financial asset of $ 202 and $ 211 , 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.

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.

Prior to the amendment and conversion of the Convertible Debenture, the debt interest rate conversion feature was 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 use of assumptions for the fair value determination included a high degree of subjectivity and judgment using unobservable inputs (level 3 on the fair value hierarchy), which results in estimation uncertainty.

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

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, 2026 and June 30, 2025, a gain of $ 10 and a loss of $ 525 , 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, 2026 and June 30, 2025, a gain of $ 4 and a loss of $ 578 , 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, 2026 and December 31, 2025, the debt interest rate conversion feature represents a financial asset of $ 0 and $ 211 , respectively, within Derivative and other long-term assets in the condensed consolidated balance sheets.

The following table provides a roll forward of the fair value of the debt interest rate feature in connection with the conversion of the convertible debenture:

Balance - December 31, 2025

Change in fair value during the period, recognized in change in fair value of financial instruments

Foreign currency exchange impact

Reclassification to equity in connection with extinguishment of debt

Balance - June 30, 2026

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

This method calculated the present value of the reduced interest accrued on the Convertible Debenture assuming the feature is triggered at a certain time, 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:

The following additional assumptions were used in the model:

Stated interest rate

4 unchanged sentences

Debt Conversion Option

Per the debenture, the Lender has the option, at any time before the Maturity Date at no additional consideration, for all or any part of the principal amount to be converted into fully paid and non-assessable common shares.

The Company assessed this conversion feature and determined that the debt conversion option is an embedded derivative that requires bifurcation and is classified as a financial liability within the condensed consolidated balance sheet.

The debt conversion option is initially measured at fair value and is revalued at each reporting period using the Black-Scholes option pricing model based on Level 2 observable inputs.

The assumptions used by the Company are the quoted price of the Company's common shares in an active market, risk-free interest rate, volatility and expected life, and assumes no dividends.

Volatility is based on the actual historical market activity of the Company's shares.

The expected life is based on the remaining contractual term of the debenture and the risk-free interest rate is based on the implied yield available on U.S.

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

Prior to the amendment and conversion of the Convertible Debenture, the Lender had the option, at any time before the Maturity Date at no additional consideration, for all or any part of the principal amount to be converted into fully paid and non-assessable common shares.

The Company determined that the debt conversion option was an embedded derivative that required bifurcation and was classified as a financial liability within the condensed consolidated balance sheet.

The debt conversion option was initially measured at fair value and revalued at each reporting period using the Black-Scholes option pricing model based on Level 2 observable inputs.

The assumptions used by the Company were the quoted price of the Company's common shares in an active market, risk-free interest rate, volatility and expected life, and assumed no dividends.

Volatility was based on the actual historical market activity of the Company's shares.

The expected life was based on the remaining contractual term of the Convertible Debenture and the risk-free interest rate was based on the implied yield available on U.S.

Treasury Securities with a maturity equivalent to the expected maturity of the Convertible Debenture.

For the three months ended June 30, 2026 and June 30, 2025, a gain of $ 5,848 and $ 83 , 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, 2026 and June 30, 2025, a loss of $ 2,814 and a gain of $ 162 , 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, 2026 and December 31, 2025, the debt conversion option represents a financial liability of $ 0 and $ 5,187 , respectively, within Derivative and other long-term liabilities in the condensed consolidated balance sheets.

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

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

For the three months ended March 31, 2026 and March 31, 2025, a loss of $ 8,662 and a gain of $ 78 , 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, 2026 and December 31, 2025, the debt conversion option represents a financial liability of $ 13,779 and $ 5,187 , 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:

The following table provides a roll forward of the fair value of the debt conversion option feature in connection with the conversion of the convertible debenture:

Balance - December 31, 2025

Change in fair value during the period, recognized in change in fair value of financial instruments

Foreign currency exchange impact

Reclassification to equity in connection with extinguishment of debt

Balance - June 30, 2026

The following table provides the assumptions regarding Level 2 fair value measurements inputs at their measurement dates prior to extinguishment upon conversion of the Convertible Debenture as of May 28, 2026:

Expected volatility

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The Company was not obligated to exercise the SBH Purchase Option or warrant and as such the unexercised option and warrant have expired.

For the three months ended March 31, 2025, the Company recognized a loss of $ 52 related to the SBH Purchase Option within change in fair value of financial instruments in the condensed consolidated statements of operations.

For the six months ended June 30, 2025, the Company recognized a loss of $ 52 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, 2025, the SBH Purchase Option represented a financial asset of $ 0 within Derivative assets and other long-term assets in the condensed consolidated balance sheets.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Inventories consist of the following:

3 unchanged sentences

inventory provision

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

LICENSE AND MEDIA RIGHTS

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As consideration under the MLB promotional rights agreement, the Company 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.

For the three months ended March 31, 2025, the Company recognized $ 974 in amortization expense related to the license and media right assets.

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

The PRA Letter Agreement terminated 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 for the six months ended June 30, 2025.

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

Convertible Debenture

On November 14, 2022, the Company entered into the Subscription Agreement with BT DE Investments, Inc., providing for the issuance of a $ 56.8 million ( C$ 75.3 million ) Convertible Debenture.

The debenture is denominated in Canadian Dollars ("CAD" or "C$").

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.

The debenture will accrue interest at a stated annualized rate of 5 % until such time that there is federal regulation permitting the use of CBD as an ingredient in food products and dietary supplements in the United States.

The Convertible Debenture was denominated in Canadian Dollars ("CAD" or "C$").

The Convertible Debenture was 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.

The Convertible Debenture accrued interest at a stated annualized rate of 5 % until such time that there was federal regulation permitting the use of CBD as an ingredient in food products and dietary supplements in the United States.

Following federal regulation of CBD, the stated annualized rate of interest shall reduce to 1.5 % .

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

On March 30, 2026, the Company announced that it has entered into an agreement to complete a transaction with BAT comprised of two components:

and (ii) a concurrent additional equity investment by BAT of $ 10 million (approximately C$ 13.6 million at current exchange rates) by way of a private placement at a price equal to the greater of (a) C$ 0.94 per share, and (b) a dollar amount equal to the maximum discount available pursuant to section 607 of the TSX Company Manual applied to the 5-day volume weighted average price of the Company’s common shares on the TSX prior to the closing date (collectively, the “Transaction”).

The Transaction will result in the issuance of approximately 110 million Charlotte's Web's common shares to BAT and represents a total equity commitment of approximately C$ 103 million (approximately $ 75 million).

Completion of the Transaction is subject to, among other conditions, TSX and shareholder approval.

The Company's shareholders will be asked to approve the Transaction at an annual general and special meeting of the shareholders to be held on or about May 28, 2026.

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

On May 28, 2026, the Company completed a transaction with BT DE comprised of two components:

(i) amendment and conversion of BAT’s outstanding C$ 75.3 million Convertible Debenture, as well as, all accrued interest, into Charlotte’s Web's common shares at a

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 March 31, 2026 :

As of March 31, 2026

Principal Amount

Unamortized Debt Discount and Costs

Net Carrying Amount

Convertible Debenture

Convertible debenture due November 2029

conversion price of C$ 0.94 per share;

and (ii) a concurrent additional equity investment by BT DE of $ 10 million (approximately C$ 13.9 million at the then applicable exchange rate) by way of a private placement at a price equal to C$ 0.94 per share, and (b) a dollar amount equal to the maximum discount available pursuant to section 607 of the TSX Company Manual applied to the 5-day volume weighted average price of the Company’s common shares on the TSX prior to the closing date provided that the maximum number of common shares of the Company to be issued to BT DE under the Investment would not exceed 14,760,638 common shares of the Company.

On May 28, 2026, the Company and BT DE entered into the Amendment and Conversion Notice.

Pursuant to the Amendment and Conversion Notice:

(i) the interest conversion price of the Convertible Debenture was reduced from C$ 2.00 to C$ 0.94 per share;

(ii) the interest conversion price of the Convertible Debenture was amended to C$ 0.94 per share;

and (iii) the applicable threshold for purposes of the Conversion Cap (as defined in the Convertible Debenture) was increased from 19.9 % to 40.8 %.

As of the closing of the Transaction and upon the conversion of the Convertible Debenture and the Investments, BT DE holds an aggregate of 109,944,042 common shares of the Company, representing approximately 40.6 % of the issued and outstanding Common Shares (calculated on a non-diluted basis) of the Company based on 270,549,931 Common Shares issued and outstanding as of May 28, 2026.

The retirement of the debt obligations was accounted for as an extinguishment of debt.

In accordance with applicable accounting standards, the Company recognized $ 65.0 million in additional paid-in capital in connection with the transaction, including $ 52.9 million attributable to the fair value of the conversion feature and $ 12.0 million related to unamortized debt discount.

As a result, the Company recognized a loss on extinguishment of debt of $ 4.2 million, which was recorded in Loss from extinguishment of debt on the Company’s condensed consolidated statements of operations.

Following this conversion, the outstanding balance of the Convertible Debenture and its associated accrued interest represents a zero balance in the Company's condensed consolidated balance sheets statement.

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

4 unchanged sentences

Convertible Debenture

Convertible debenture due November 2029

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, 2026 and March 31, 2025 , the Company recognized a foreign currency gain of $ 725 and $ 62 , respectively, related to the net carrying value of the debenture within the condensed consolidated statements 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, 2026 and December 31, 2025 , the principal amount of the debenture includes $ 9,850 and $ 9,057 , 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, 2026 and 2025 :

Three Months Ended March 31,

Convertible debenture

The Convertible Debenture, prior to extinguishment , was C$ 75.3 million per the subscription agreement and translated to USD on the transaction date.

For the three months ended June 30, 2026 and June 30, 2025, the Company recognized a foreign currency loss of $ 498 and $ 2,600 , respectively, related to the net carrying value of the Convertible Debenture within the condensed consolidated statement of operations.

Additionally, for the six months ended June 30, 2026 and June 30, 2025, the Company recognized a foreign currency gain of $ 227 and a loss $ 2,538 , respectively, related to the net carrying value of the Convertible Debenture within the condensed consolidated statement of operations.

As of June 30, 2026 and June 30, 2025 , the principal amount of the Convertible Debenture, prior to extinguishment, included $ 10,378 and $ 7,549 , respectively, of accrued interest expense.

The following is a summary of the interest expense and amortization expense, recorded

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

within the condensed consolidated statements of operations, of the Company's convertible debenture for the three and six months ended June 30, 2026 and June 30, 2025 :

Three Months Ended June 30,

Six Months Ended June 30,

Interest expense

4 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, 2026 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.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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, 2026 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, 2026 are as follows:

Maturities of operating lease liabilities as of June 30, 2026 are as follows:

Operating Leases

6 unchanged sentences

SHAREHOLDERS’ EQUITY

As of March 31, 2026 and December 31, 2025, the Company's share capital consists of one class of issued and outstanding shares:

As of June 30, 2026 and December 31, 2025, the Company’s share capital consists of one class of issued and outstanding shares:

common shares.

1 unchanged sentence

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

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Common Shares

As of March 31, 2026 and December 31, 2025, the Company was authorized to issue an unlimited number of common shares, which have no par value.

As of June 30, 2026 and December 31, 2025, the Company was authorized to issue an unlimited number of common shares, which have no par value.

LOSS PER SHARE

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Diluted loss per common share is computed by dividing the net loss by the weighted-average number of common shares together with the number of additional common shares that would have been outstanding if all potentially dilutive common shares had been issued, unless anti-dilutive.

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Weighted-average number of common shares - basic

2 unchanged sentences

Loss per common share – basic and diluted

As of March 31, 2026 and March 31, 2025, potentially dilutive securities include stock options, restricted share units, common share warrants, and convertible debenture conversion.

As of June 30, 2026 and June 30, 2025, potentially dilutive securities include stock options, restricted share units, and common share warrants.

As of June 30, 2025, potentially dilutive securities also included convertible debenture conversion rights.

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.

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

Three and Six Months Ended June 30,

Outstanding options

Outstanding restricted share units

The Company's 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.

The Company can settle the convertible debenture in shares.

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, 2026, 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.

On March 30, 2026, the Company announced that it has entered into an agreement to complete a transaction with BAT, refer to Note 6 for additional details.

The Transaction, if completed, will result in the issuance of approximately 110 million Charlotte's Web's common shares to BAT and represents a total equity commitment of approximately C$ 103 million (approximately $ 75 million).

For the three and six months ended June 30, 2025, the Company's Convertible Debenture was 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.

The price of the Company’s common shares did not exceed the conversion price and therefore there was no impact to potential common share diluted EPS during those periods.

On May 28, 2026, the Company entered into an agreement with BAT comprised of two components:

(i) amendment and conversion of BAT’s outstanding C$ 75.3 million C onvertible Debenture, as well as, all accrued interest, into Charlotte’s Web's common shares at a conversion price of C$ 0.94 per share;

and (ii) a concurrent additional equity investment by BAT of $ 10 million (approximately C$ 13.9 million at the then applicable exchange rates) by way of a private placement at a price equal to the greater of (a) C$ 0.94 per share, and (b) a dollar amount equal to the maximum discount available pursuant to section 607 of the TSX Company Manual applied to the 5-day volume weighted average price of the Company’s common shares on the TSX prior to the closing date (collectively, the “Transaction”) provided that the maximum number of Common Shares to be issued to BAT under the Investment would not exceed 14,760,638 Common Shares.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

At closing and immediately following the effectiveness of the Amendment and Conversion Notice, BAT converted the principal amount of, and all accrued but unpaid interest on, the Convertible Debenture into 95,281,277 Common Shares.

As of the Closing and upon the conversion of the Convertible Debenture and the purchase of the Purchased Shares, BAT holds an aggregate of 109,944,042 Common Shares, representing approximately 40.6 % of the issued and outstanding Common Shares (calculated on a non-diluted basis) of the Company based on 270,549,931 Common Shares issued and outstanding as of May 28, 2026.

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.

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 options granted for the three months ended March 31, 2026 and March 31, 2025.

Detail of the number of stock options outstanding for the three months ended March 31, 2026 under the Company's amended 2018 Long-Term Incentive Plan (the "2018 Plan") is as follows:

Detail of the number of stock options outstanding for the six months ended June 30, 2026 under the Company's 2015 legacy option plan and the Company's amended 2018 Long-Term Incentive Plan (the "2018 Plan") is as follows:

Number of Options

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Forfeited (and expired)

Outstanding as of March 31, 2026

Exercisable/vested as of March 31, 2026

There were no options granted or exercised during the three months ended March 31, 2026 and March 31, 2025, respectively.

Outstanding as of June 30, 2026

Exercisable/vested as of June 30, 2026

There were no options granted during the six months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, all outstanding options were fully vested and exercisable.

Restricted share units

The Company has issued time-based restricted share units to certain employees as permitted under the 2018 Plan.

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

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 that are 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 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.

The fair value of shares vested during the three months ended March 31, 2026 was $ 77 .

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

There were no shares vested during the three months ended June 30, 2026.

The fair value of shares vested during the six months ended June 30, 2026 and 2025 was $ 238 and $ 106 , respectively.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Number of Shares

Weighted-Average

Grant Date Fair Value

Average Grant Date Fair Value

Outstanding as of December 31, 2025

( 1,118,147 )

Shares withheld upon vesting

Outstanding as of March 31, 2026

Outstanding as of June 30, 2026

Share-based Compensation Expense

Share-based compensation expense for all equity arrangements for the three months ended March 31, 2026 and March 31, 2025 was $ 151 and $ 187 , respectively, included in selling, general and administrative expense in the condensed consolidated statements of operations.

As of March 31, 2026, $ 3,268 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 2.62 years.

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The Company reported income tax benefit of $ 3 and $ 0 for the three months ended March 31, 2026 and 2025, respectively.

The Company's effective tax rate in the three months ended March 31, 2026 and 2025 was 0.0 % .

Share-based compensation expense for all equity arrangements for the three months ended June 30, 2026 and 2025 was $ 506 and $ 180 , 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, 2026 and 2025 was $ 657 and $ 367 , respectively, included in selling, general and administrative expense in the condensed consolidated statements of operations.

As of June 30, 2026, $ 2,537 of total unrecognized share-based compensation expense related to unvested awards granted to employees is expected to be recognized over a weighted-average period of 2.45 years.

The Company reported income tax benefit (expense) of $( 35 ) and $ 2 for the three months ended June 30, 2026 and 2025, respectively.

Additionally, income tax benefit (expense) for the six months ended June 30, 2026 and 2025 was $( 32 ) and $ 2 , respectively.

The Company's effective tax rate for the three and six months ended June 30, 2026 was 0.9 % and 0.2 %, respectively .

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

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

federal statutory rate of 21.0% for the three months end March 31, 2026 and 2025 , respectively, primarily due to state tax payments.

federal statutory rate of 21% for the three and six months ending June 30, 2026 and June 30, 2025 , respectively, primarily due to state tax payments.

OPERATING SEGMENT

4 unchanged sentences

The majority of Company’s products have similar characteristics due to the same raw material ingredient (CBD and derivatives), similar nature of cultivation process, the type of customer and the regulatory nature of the industry.

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 condensed consolidated statement of operations.

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

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

For the three months ended March 31, 2026 and 2025, the segment's revenues and pre-tax net loss were $ 11,159 and $ 12,262 ;

For the three months ended June 30, 2026 and 2025, the segment's revenues and pre-tax loss were $ 10,855 and $ 12,806 ;

and $ 4,092 and $ 6,290 , 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, 2026 and 2025, the segment's revenues and pre-tax loss were $ 22,014 and $ 25,068 ;

and $ 17,207 and $ 12,502 , respectively.

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

CHARLOTTE’S WEB HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

General Information

6 unchanged sentences

Measure of Segment Profit or Loss and Total Assets:

The CODM evaluates performance and allocates resources based on pre-tax net income/(loss), as presented in the accompanying financial statements.

The CODM evaluates performance and allocates resources based on pre-tax income/(loss), as presented in the accompanying financial statements.

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

Significant Segment Expenses

The following significant expenses are regularly reviewed by the CODM for the three months ended March 31, 2026 and 2025:

The following significant expenses are regularly reviewed by the CODM for the three months ended June 30, 2026 and 2025:

Cost of goods sold $ 5,698 and $ 6,816 , respectively;

1 unchanged sentence

Change in fair value of financial instruments $ 5,557 and $ 1,543 , respectively;

Loss from extinguishment of debt $ 4,216 and $ — , respectively;

and Depreciation and Amortization $ 1,494 and $ 512 , respectively.

The CODM reviewed the following for the six months ended June 30, 2026 and 2025:

Cost of goods sold $ 11,653 and $ 12,848 , respectively;

Selling, general, and administrative expenses $ 19,043 and $ 21,640 respectively;

Change in fair value of financial instruments $ 3,311 and $ 1,669 , respectively;

Loss from extinguishment of debt $ 4,216 and $ — , respectively;

and Depreciation and Amortization $ 3,171 and $ 2,961 , respectively.

CHARLOTTE’S WEB HOLDINGS, INC.

3 unchanged sentences

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

Product Revenue

6 unchanged sentences

Change in fair value of financial instruments

Loss from extinguishment of debt

Other income (expense), net

8 unchanged sentences

According to the terms of the agreement, no additional interest will accrue through the payment date.

The note has been fully reserved for as of December 31, 2025 .

The note has been fully reserved for as of June 30, 2026 and December 31, 2025 .

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.

The Company is not obligated to exercise the SBH Purchase Option and as such the unexercised option expired as of March 31, 2026.

The Company was not obligated to exercise the SBH Purchase Option and as such the unexercised option expired as of February 26, 2026.

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

1 unchanged sentence

BAT holds an equity interest in the entity in the form of approximately 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.

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

Effective May 1, 2023, the Company entered into an 8 % interest bearing note receivable with DeFloria for the sale of lab equipment in the amount of $ 170 .

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

The Company and AJNA each hold 4,000,000 of the entity's voting

CHARLOTTE’S WEB HOLDINGS, INC.

1 unchanged sentence

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

March 31, 2026 and December 31, 2025 , the remaining note receivable of $ 8 and $ 19 , respectively, is presented in other assets in the condensed consolidated balance sheets.

common units (Note 3).

Effective May 1, 2023, the Company entered into an 8 % interest bearing note receivable with DeFloria for the sale of lab equipment in the amount of $ 170 .

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

As of June 30, 2026 and December 31, 2025 , the remaining note receivable of $ 0 and $ 19 , 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, 2026, the Company recognized $ 68 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 months ended March 31, 2026 and March 31, 2025, the Company recognized $ 75 and $ 75 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 $ 1,546 and $ 1,471 as of March 31, 2026 and December 31, 2025, respectively.

For the three and six months ended June 30, 2026, 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 $ 1,689 and $ 1,471 as of June 30, 2026 and December 31, 2025, respectively.

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

2 unchanged sentences

The funds were distributed monthly between July and November 2025.

The balance of the promissory note including accrued interest as of March 31, 2026 and December 31, 2025 is $ 805 and $ 784 , respectively.

The balance of the promissory note including accrued interest as of June 30, 2026 and December 31, 2025 is $ 827 and $ 784 , respectively.

On June 4, 2026, 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 .

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

The Management's Discussion and Analysis of Financial Condition and Results of Operations for Charlotte’s Web Holdings, Inc.

is also included in the Form 10-Q for the quarter ended June 30, 2026 filed on SEDAR+ on August 13, 2026 in its entirety.

This document (this “MD&A”) contains information under the heading “Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” which has been excerpted from Charlotte’s Web Holdings, Inc.’s (the “Company” or “our”) Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (the “Second Quarter Report”) filed concurrently with this MD&A on the date hereof on our profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov .

This MD&A should be read in conjunction with our Second Quarter Report including Item 1 containing the Company’s unaudited condensed consolidated financial statements and the related notes thereto as well as Item 1 “Business” and Item 1A “Risk Factors”.

This MD&A incorporates by reference herein the section entitled “Disclosure Regarding Forward-Looking Statements” and Item 1A “Risk Factors” from our Second Quarter Report.

Defined terms used herein but otherwise not defined have the meaning ascribed to them in the Annual Report on Form 10-K for the year ended December 31, 2025 and in Part II, Item 1A—Risk Factors” of this Form 10-Q.

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