Charlotte's Web Holdings, Inc. Material Event Summary

This guide explains the recent agreement between Charlotte’s Web and British American Tobacco (BAT) in plain English.

1. What happened?

Charlotte’s Web is deepening its partnership with British American Tobacco (BAT). They secured a $10 million investment by selling new shares. They also converted a $56.8 million loan—plus interest—into shares. This moves BAT from a lender to a major owner of the company.

2. When did it happen?

The companies signed the agreements on March 30, 2026. They expect to finalize the deal and issue the new shares around May 28, 2026, pending shareholder and regulatory approval.

3. Why did it happen?

Charlotte’s Web partnered with BAT in 2022 through a $56.8 million loan. Since then, the company has struggled with a crowded CBD market, unclear regulations, and consistent losses. Recently, the company lacked the cash to fund research and marketing. By turning that debt into shares and adding $10 million in cash, the company clears its debt payments and gains enough money to operate through 2027.

4. Why does this matter?

This deal changes how the company is owned and run. Once finished, BAT will own about 40.8% of the company.

• The Cash: The $10 million helps fund new product innovation and expands retail distribution.
• The Control: BAT’s influence is now official. They can block the company from taking on new debt or selling assets. They also gain the right to appoint two board members, giving them a say in major strategic decisions.

5. Who is affected?

• Investors: This deal issues many new shares. This "dilution" means your individual ownership percentage shrinks, which lowers the potential profit per share. However, it also removes the immediate risk of bankruptcy.
• Customers: The deal keeps the supply chain running. You should see fewer product shortages for hemp extracts and topicals.
• Employees: Removing the threat of bankruptcy provides job stability. The team can now focus on growth instead of worrying about paying off loans.

6. What happens next?

The company is preparing a document for shareholders to vote on these new shares. If you own stock by the record date, you will receive this document around April 6, 2026. It will explain the share price and board appointments. You will vote on these items at a special meeting. You can track these filings on the SEC website.

7. What should investors know?

The company still needs to prove it can become profitable. While the cash prevents a crisis, it limits the potential gains for retail investors by giving BAT so much control.

Key things to watch before you decide:

• The Conversion Price: Check the upcoming documents for the "conversion price." If the debt converts at a price much lower than the current market value, it effectively transfers value from existing shareholders to BAT.
• Management’s Plan: Watch the next earnings call to see how management plans to turn a profit now that the debt burden is gone.
• Strategic Direction: Pay attention to the two new board members appointed by BAT; their backgrounds will signal whether the company plans to pivot its product strategy or focus on aggressive cost-cutting.

Disclaimer: I am an AI, not a financial advisor. This summary is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.