Charlotte's Web (CWBHF) investor relations material

Executive summary

• Q1 2026 revenue was $11.2 million, down 9% year-over-year, mainly due to retail channel restructuring and a shift to a margin-accretive distributor model.

• Net loss widened to $13.1 million ($0.08/share), compared to $6.2 million ($0.04/share) in Q1 2025, driven by a significant non-cash loss on financial instruments.

• Announced a proposed transaction with BAT to convert a C$75.3 million ($54M) debenture and invest an additional $10 million in equity, eliminating ~$65 million in debt and reducing annual interest costs by $3 million, pending shareholder and TSX approval.

• CMS activated the BEI program, enabling eligible hemp-derived CBD products to be covered for select Medicare/Medicaid beneficiaries.

• Focused on advancing medical and healthcare-practitioner channels, expanding product portfolio, and launching a practitioner portal.

Financial highlights

• Total assets at March 31, 2026 were $70.7 million, down from $75.3 million at year-end 2025.

• Cash and cash equivalents were $5.2 million at quarter-end, down from $8.0 million at December 31, 2025 and $19.4 million a year ago.

• SG&A expenses declined 17.7% year-over-year to $9.5 million, reflecting cost optimization and exit from the MLB agreement.

• Net cash used in operating activities was $2.8 million, nearly flat year-over-year.

• Convertible debenture principal was $63.8 million, with a net carrying amount of $51.5 million.

Outlook and guidance

• Management expects gross margin to trend toward 50% as in-house production efficiencies scale and transitional costs normalize.

• SG&A is expected to remain around $10 million per quarter, reflecting a leaner cost base and continued cost containment.

• Liquidity is expected to strengthen significantly upon completion of the BAT transaction, with sufficient cash to fund operations for the next 12 months.

• Long-term liquidity will depend on revenue growth, expense management, and successful completion of the BAT transaction.

• Early phase of BEI program is implementation-led, with adoption visibility expected in the second half of 2026.