Encouraging CBD regulatory progress in
Congress
Net revenue of $16.0M vs. $18.9M
YoY
Cash increased to $61.7M
LOUISVILLE, Colo., Aug. 10,
2023 /CNW/ - (TSX: CWEB) (OTCQX: CWBHF),
Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the
"Company"), the market leader in full spectrum hemp extract
wellness products, today reported financial results for the second
quarter ended June 30,
2023.
Regulatory Update
During the second quarter, the U.S. Food and Drug Administration
("FDA") committed to "work at speed" with Congress to resolve a
regulatory pathway for hemp-derived CBD. Recent progress has
been encouraging surrounding The Hemp Derived Consumer Protection
and Market Stabilization Act of 2023, (bill H.R. 1629) which aims
to regulate hemp extract products under the dietary supplement
regulatory framework. Charlotte's Web and industry peers have
compiled and shared safety and toxicology data with Congress to
address concerns raised by the FDA. On July
27th, the U.S. House Oversight and Accountability
Subcommittee on Health Care and Financial Services held a hearing
on the FDA's failure to regulate hemp-derived CBD products since
the passing of the 2018 Farm Bill. An RFI (Request for Information)
was made public immediately after the hearing by the Energy and
Commerce Committee, with a deadline of August 18th for the CBD industry
participants to engage and support the future regulatory landscape
of the category. Charlotte's Web is actively supporting work
towards an aligned industry voice coming back to Congress.
"Executing on one of our stated strategic pillars, 'Winning in
Washington DC', Charlotte's Web is
pleased to be a part of the influential collaboration among
consumers and industry stakeholders under a united strategy that is
proactively engaged with Congress to support the regulation of
hemp CBD as a dietary supplement," said Jared Stanley, Chief Operating Officer.
"Additionally, in July, Coalition for Access Now ("CAN"), a 501-c4
political non-profit organization, founded and led by Paige Figi, announced a partnership with the
U.S. Pain Foundation, to further advocate for the passage of CBD
products to be regulated as a dietary supplement. CAN also has
other influential groups such as the American Legion, the
nation's largest veteran organization, that has expressed support
for CAN's efforts. These partnerships acknowledge the benefits of
CBD and the urgency for Congress to pass legislation to ensure
consumer access to safe and accurately labeled products for the
millions of Americans who use CBD daily."
Business Review
Charlotte's Web progressed on its stated strategic pillars:
winning in Washington DC,
returning to growth, and expanding into botanical wellness.
"Executing on our strategic pillar for growth, in the second
quarter, we launched ReCreate™ by Charlotte's Web, a new
broad-spectrum CBD brand focused on cultural lifestyles for
Millennials and GenZers who make up approximately half of the
multi-billion-dollar CBD market1," said Jacques Tortoroli, Chief Executive Officer of
Charlotte's Web. "These groups are anticipated to become the
largest consumer group by 20262 and often view sports
and fitness as a form of self-care."
ReCreate is NSF Certified for Sport® and is the
official CBD of Major League Baseball© ("MLB") and Angel
City Football Club. In July, the Company further cemented its
leading position in professional sports by becoming the official
CBD partner of the Premier Lacrosse League. Professional sports
leagues raise brand awareness and relevance to their audiences,
fans, players, and teams, which are ReCreate's target
consumers.
"This exposure is particularly important for our e-commerce
channel where increased traffic and sessions to
www.CharlottesWeb.com and www.ReCreateYou.com are our
highest priorities," explained Mr. Tortoroli. "ReCreate products
are available on our webstore, and we are launching the portfolio
across select retail customers later this year, including Vitamin
Shoppe, Fresh Thyme, and Stark International among others - with
more to come over time."
To drive future growth in the retail channel, Charlotte's Web
achieved category-leading All Commodity Volume (ACV)
distribution gains within the Natural Products Retail channel over
the first six months of 2023. In the U.S., Charlotte's Web holds
the number one market share position in overall retail and
e-commerce channels per Nielsen Company (US), LLC, SPINS, LLC/IRI,
and The Brightfield Group. In May
2023, the Company's distribution was further expanded in pet
retail through a new partnership with Phillips Pet Food &
Supplies, America's largest distributor in the pet specialty retail
channel, covering more than 6,000 retailers, representing more than
14,000 retail locations.
"We have a robust pipeline of innovation-to-market products that
respond to consumer needs with new formulations, formats, and
packaging, leveraging our intellectual property and leading science
in minor cannabinoids and botanical wellness. We launched ReCreate
gummies on July 11th on
our new website www.ReCreateYou.com, which directly integrates into
our current e-commerce platform," said Mr. Tortoroli.
"Lastly, in May, we began an initiative to insource the
production of topical products, leveraging our Louisville facility and Operations team, while
driving down costs."
Charlotte's Web also progressed on its third strategic pillar,
expanding into broader Botanical Wellness. On April 6, 2023, Charlotte's Web announced (Press
Release) the formation of DeFloria LLC, with a subsidiary of
British American Tobacco PLC (LSE: BATS and NYSE: BTI), and AJNA
BioSciences PBC, a botanical drug development company. DeFloria was
established to pursue a botanical IND through the FDA drug
development pathway for a botanical drug to target a neurological
condition. In August, DeFloria received Ethics Committee approval
to commence a phase 1 clinical trial in Australia.
"We continue to believe we are deploying the right strategies
and are confident in our long-term growth outlook; however, we have
not yet returned to revenue growth year-over-year, although B2B was
essentially flat year-over-year in Q2. We maintain our market
leading position which speaks to the overall CBD sector remaining
challenged," added Mr. Tortoroli.
Financial Review
The following table sets forth selected financial information
for the periods indicated.
|
|
Three Months Ended,
June 30,
|
U.S. $ millions, except
per share data
|
|
2023
|
|
2022
|
|
|
|
|
|
Revenue
|
|
$16.0
|
|
$18.9
|
Cost of goods
sold
|
|
7.1
|
|
9.6
|
Gross profit
|
|
8.9
|
|
9.3
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
19.6
|
|
17.3
|
Operating
loss
|
|
(10.7)
|
|
(7.9)
|
|
|
|
|
|
Gain on investment in
unconsolidated entity
|
|
10.7
|
|
-
|
Change in fair value of
financial instruments
and other
|
|
4.2
|
|
-
|
Other income,
net
|
|
(1.4)
|
|
0.1
|
Net income
(loss)
|
|
$2.8
|
|
$(7.9)
|
Net income (loss) per
common share, basic
and diluted
|
|
$0.02
|
|
$(0.05)
|
Consolidated net revenue for the second quarter ended
June 30, 2023, was $16.0 million, a decrease from $18.9 million in the second quarter of 2022. The
Company believes that continued positive legislative progress in
Washington DC for the regulation
of CBD will increase consumer interest and confidence as well as
unlock incremental customer opportunities.
Gross profit was $8.9 million, or
55.7% of revenue, as compared to gross profit of $9.3 million, or 49.4% of revenue, in the second
quarter of 2022. The improvement was primarily due to higher
inventory provisions recorded in Q2 2022.
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
|
2023
|
|
2022
|
|
Total Revenue - U.S.
$ millions
|
|
$16.0
|
|
$18.9
|
|
Direct-to-consumer
("DTC")
|
|
$10.7
|
|
$13.3
|
|
Business-to-business
("B2B")
|
|
$5.3
|
|
$5.6
|
|
Direct-to-consumer ("DTC") net revenue through the Company's
webstore was $10.7 million, as
compared to $13.3 million in Q2 2022.
E-commerce sales were negatively impacted by aggressive competitive
online pricing and lower traffic to the Company's webstore.
Charlotte's Web holds the number one market share position across
e-commerce, which is the largest purchase channel for CBD according
to the Brightfield Group. The Company continues to invest in this
significant category, including a new platform to improve the
consumer experience.
Business-to-business ("B2B") retail net revenue was $5.3 million, as compared to $5.6 million in Q2 2022. Lower unit sales to
existing retail customers were substantially offset by retail
distribution gains achieved in the first six months of 2023.
SG&A Expenses
Total selling, general and administrative ("SG&A") expenses
in the quarter were $19.6 million, a
13.7% increase from $17.3 million in
Q2 2022. The increase reflects the timing of marketing expenses and
includes the amortization of the MLB license and media rights
assets of $2.1 million, which were
not present in the comparable period. Excluding
amortization, SG&A increased 1.7% year-over-year. SG&A
expenses in the six months ended June
30th were comparable at approximately
$37.1 million in 2023 and
$37.6 million in 2022, although the
prior year period did not include expenses related to the MLB
partnership.
Net Income and Adjusted EBITDA
Net income benefited from non-cash gains during the quarter,
including a $4.2 million gain in fair
value of the Company's derivative instruments, and a $10.7 million gain on a non-cash investment
in DeFloria. These gains offset the operating loss and
interest expense, resulting in net income of $2.8 million, or $0.02 per share basic and diluted, for the second
quarter of 2023. This was an improvement versus a net loss of
$7.9 million, or ($0.05) per share basic and diluted, in Q2
2022.
Adjusted EBITDA3 loss for the second quarter of 2023
was $7.1 million, compared to an
Adjusted EBITDA loss of $5.4 million
in the second quarter of 2022.
Balance Sheet and Cash Flow
Net cash provided from operations, for the three months ended
June 30, 2023, was $1.0 million as compared to $0.3 million in Q2 2022. Additionally, the second
quarter of 2023 included a rights fee payment to MLB, which did not
occur in the prior year period.
"We reported positive cash flow in the second quarter, including
collecting our $4.2 million IRS
Employee Retention Credit as well as prudent expense management,
partially offset by MLB quarterly Rights payment of $2.0 million," said Jessica Saxton, Chief Financial Officer of
Charlotte's Web. "Our cash balance increased to $61.7 million at quarter end, providing ample
working capital to support continued execution of our
strategy."
Net cash used in the six months ended June 30th was $5.2 million and $4.3
million in 2023 and 2022, respectively. In the current year,
collection of the $4.2 million
Employee Retention Credit was offset by MLB Rights payments of
$4.0 million. Last year's cashflow
included $3.2 million in IRS tax
refunds.
The Company's cash and working capital as of June 30, 2023, were $61.7
million and $72.3 million
respectively, compared to $67.0
million and $82.3 million on
December 31, 2022, respectively.
Consolidated Financial Statements and Management's Discussion
and Analysis
The Company's audited consolidated financial statements and
accompanying notes for the three months ended June 30, 2023, and 2022 and related management's
discussion and analysis of financial condition and results of
operations ("MD&A") are reported in the Company's 10-Q filing
on the Securities and Exchange Commission website
at www.sec.gov and on SEDAR at www.sedarplus.ca and will
be available on the Investor Relations section of the Company's
website at https://investors.charlottesweb.com.
Conference Call
Management will host a conference call to discuss the Company's
2023 second quarter at 11:00 a.m. ET
on August 10, 2023. There are three
ways to join the call:
There are three ways to join the call:
- Register and enter your phone number at
https://emportal.ink/3JQUm05 to receive an instant automated call
back, or
- Dial 1-416-764-8659 or 1-888-664-6392 approximately 10 minutes
before the conference call and provide confirmation number
98335923, or
- Listen to the live webcast online.
Earnings Call Replay
A recording of the call will be available through August 17, 2023. To listen to a replay of the
earnings call please dial 1-416-764-8677 or 1-888-390-0541 and
provide conference replay ID 335923#. A webcast of the call will
also be accessible through the investor relations section of the
Company's website for an extended period of time.
Subscribe to Charlotte's Web investor news.
About Charlotte's Web Holdings, Inc.
Charlotte's Web Holdings, Inc., a Certified B Corporation
headquartered in Louisville,
Colorado, is the market leader in innovative hemp extract
wellness products under a family of brands that includes
Charlotte's Web™, ReCreate™, CBD Medic™, and CBD Clinic™.
Charlotte's Web whole-plant CBD extracts come in full-spectrum and
broad-spectrum options, including ReCreate™ by Charlotte's Web,
broad-spectrum CBD certified NSF for Sport®. ReCreate is the
official CBD of Major League Baseball©, Angel City Football Club
and the Premier Lacrosse League. Charlotte's Web branded premium
quality products start with proprietary hemp genetics that are
North American farm-grown using organic and regenerative
cultivation practices. The Company's hemp extracts have naturally
occurring botanical compounds including cannabidiol ("CBD"), CBC,
CBG, terpenes, flavonoids, and other beneficial compounds.
Charlotte's Web product categories include CBD oil tinctures
(liquid products) CBD gummies (sleep, calming, exercise recovery,
immunity), CBD capsules, CBD topical creams and lotions, as well as
CBD pet products for dogs. Through its substantially vertically
integrated business model, Charlotte's Web maintains stringent
control over product quality and consistency with analytic testing
from soil to shelf for quality assurance. Charlotte's Web products
are distributed to retailers and health care practitioners
throughout the U.S.A, and online
through the Company's website at www.charlottesweb.com.
© Major League Baseball
trademarks and copyrights are used with permission of Major League
Baseball. Visit MLB.com.
|
Shares of Charlotte's Web trade on the Toronto Stock Exchange
(TSX) under the symbol "CWEB" and are quoted in U.S. Dollars in
the United States on the OTCQX
under the symbol "CWBHF". As of June 30,
2023, Charlotte's Web had 152,825,118 Common Shares
outstanding.
Forward-Looking Information
In the interest of providing the shareholders and potential
investors of Charlotte's Web Holdings, Inc. with information about
the Company, certain information provided herein constitutes
forward-looking statements or information (collectively,
"forward-looking statements") within the meaning of applicable
securities laws. Forward-looking statements are typically
identified by words such as "may", "will", "should", "could",
"anticipate", "expect", "project", "estimate", "forecast", "plan",
"intend", "target", "believe" and similar words suggesting future
outcomes or statements regarding an outlook. Although these
forward-looking statements are based on assumptions the Company
considers to be reasonable based on the information available on
the date such statements are made, such statements are not
guarantees of future performance and readers are cautioned against
placing undue reliance on forward-looking statements. By their
nature, these statements involve a variety of assumptions, known
and unknown risks and uncertainties, and other factors which may
cause actual results, levels of activity, and achievements to
differ materially from those expressed or implied by such
statements. The forward-looking statements contained in this press
release are based on certain assumptions and analysis by management
of the Company in light of its experience and perception of
historical trends, current conditions and expected future
development and other factors that it believes are
appropriate.
Specifically, this press release contains forward-looking
statements relating to, but not limited to: activities relating to,
and sponsorship of, legislation to advance regulatory framework;
anticipated consumer trends and corresponding product innovation;
anticipated future financial results; the conversion of the
convertible debenture held by BAT; sales volume, product, channel
and international expansion plans; growth of the Company's market
share position; the impact of the Company's partnership with the
MLB on the health and wellness of its players and fans; the impact
of the Company's new distribution partners on sales; the Company's
ability to increase online traffic and demographic exposure through
new products and marketing; anticipated new marketing partners; the
impact of certain activities on the Company's business and
financial condition; suggested regulatory developments; and the
Company's anticipated trajectory, long-term growth expectations and
shareholder value creation.
The material factors and assumptions used to develop the
forward-looking statements herein include, but are not limited to,
the following: the regulatory climate in which the Company
currently operates and may in the future operate; successful sales
of the Company's products; the success of sales and marketing
activities; there will be no significant delays in the development
and commercialization of the Company's products, including in
relation to supply chain disruptions; outcomes from R&D
activities; ability for the Company to leverage R&D and brand
recognition for product sales; the Company's ability to deal with
adverse growing conditions (due to pests, disease, fungus, climate
or other factors) in a timely and cost-effective manner; there will
be no significant reduction in the availability of qualified and
cost-effective human resources; new products will continue to be
added to the Company's portfolio; demand for the Company's products
will grow in the foreseeable future; there will be no significant
barriers to the acceptance of the Company's products in the market,
including in international markets; the Company will be able to
maintain compliance with applicable contractual and regulatory
obligations and requirements; there will be adequate liquidity
available to the Company to carry out its operations and business
plans; the Company will have sufficient capital to pursue its sales
volume, product, channel and international expansion; and products
do not develop that would render the Company's current and future
product offerings undesirable and the Company is otherwise able to
minimize the impact of competition and keep pace with changing
consumer preferences.
The Company's forward-looking statements are subject to risks
and uncertainties pertaining to, among other things, supply chain,
distribution chain, and to the broader market for the Company's
products; revenue fluctuations; nature of government regulations
(both domestic and foreign); economic conditions; loss of key
customers; retention and availability of executive talent;
competing products; common share price volatility; loss of
proprietary information; product acceptance; internet and system
infrastructure functionality; information technology security;
available capital to fund operations and business plans; crop risk;
international and political considerations; regulatory changes; and
including but not limited to those risks and uncertainties
discussed under the heading "Risk Factors" in the Company's Annual
Report on Form 10-K for the year ending December 31, 2022 and other risk factors
contained in other filings with the Securities and Exchange
Commission available on www.sec.gov and
filings with Canadian securities regulatory authorities available
on www.sedarplus.ca. The impact of any one risk,
uncertainty, or factor on a particular forward-looking statement is
not determinable with certainty as these are interdependent, and
the Company's future course of action depends on management's
assessment of all information available at the relevant
time.
Except as required by applicable law, the Company assumes no
obligation to publicly update or revise any forward-looking
statements made, whether as a result of new information, future
events, or otherwise. All forward-looking statements, whether
written or oral, attributable to the Company or persons acting on
the Company's behalf, are expressly qualified in their entirety by
these cautionary statements.
(1) The Brightfield
Group, August 2023
|
(2) Accenture: "The
Future of Business is Experience: Accenture Strategy Global
Consumer Pulse Research", and Insider Intelligence
|
(3) Non-GAAP Measures:
The press release contains non-GAAP measures, including EBITDA and
Adjusted EBITDA. Please refer to the section in the tables
captioned "Non-GAAP Measures" below for additional information and
a reconciliation to GAAP for all Non-GAAP metrics.
|
CHARLOTTE'S WEB
HOLDINGS, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
|
|
|
June
30,
|
|
December
31,
|
|
2023
(unaudited)
|
|
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
61,728
|
|
$
66,963
|
Accounts receivable,
net
|
2,479
|
|
1,847
|
Inventories,
net
|
23,755
|
|
26,953
|
Prepaid expenses and
other current assets
|
6,900
|
|
7,998
|
Total current
assets
|
94,862
|
|
103,761
|
Property and equipment,
net
|
26,608
|
|
29,330
|
License and media
rights
|
22,968
|
|
26,871
|
Operating lease
right-of-use assets, net
|
15,543
|
|
16,519
|
Investment in
unconsolidated entity
|
10,700
|
|
—
|
SBH purchase option and
other derivative assets
|
2,893
|
|
3,620
|
Intangible assets,
net
|
1,500
|
|
1,771
|
Other long-term
assets
|
1,515
|
|
5,770
|
Total assets
|
$
176,589
|
|
$
187,642
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
3,193
|
|
$
4,018
|
License and media
rights payable - current
|
8,833
|
|
7,759
|
Accrued and other
current liabilities
|
8,336
|
|
7,344
|
Lease obligations –
current
|
2,247
|
|
2,306
|
Total current
liabilities
|
22,609
|
|
21,427
|
Convertible
debenture
|
40,307
|
|
37,421
|
Lease
obligations
|
16,529
|
|
17,905
|
License and media
rights payable
|
15,869
|
|
20,383
|
Derivatives and other
long-term liabilities
|
2,914
|
|
13,001
|
Total
liabilities
|
98,228
|
|
110,137
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common shares, nil par
value; unlimited shares authorized as of June 30,
2023 and December 31, 2022, respectively;
152,825,118 and 152,135,026
shares issued and outstanding as of
June 30, 2023 and December 31, 2022
|
1
|
|
1
|
Additional paid-in
capital
|
326,355
|
|
325,431
|
Accumulated
deficit
|
(247,995)
|
|
(247,927)
|
Total shareholders'
equity
|
78,361
|
|
77,505
|
Total liabilities and
shareholders' equity
|
$
176,589
|
|
$
187,642
|
CHARLOTTE'S WEB
HOLDINGS, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(in thousands, except share and per share
amounts)
|
|
|
|
|
|
Three Months Ended
June 30,
(unaudited)
|
|
Six Months Ended
June 30,
(unaudited)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Revenue
|
$
16,006
|
|
$
18,877
|
|
$
33,016
|
|
$
38,234
|
Cost of goods
sold
|
7,088
|
|
9,556
|
|
14,181
|
|
17,199
|
Gross profit
|
8,918
|
|
9,321
|
|
18,835
|
|
21,035
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
19,627
|
|
17,259
|
|
37,140
|
|
37,614
|
Operating
loss
|
(10,709)
|
|
(7,938)
|
|
(18,305)
|
|
(16,579)
|
|
|
|
|
|
|
|
|
Gain on investment in
unconsolidated
entity
|
10,700
|
|
—
|
|
10,700
|
|
—
|
Change in fair value of
financial
instruments and other
|
4,229
|
|
—
|
|
9,612
|
|
100
|
Other income (expense),
net
|
(1,376)
|
|
68
|
|
(2,074)
|
|
(17)
|
Income (loss) before
provision for income
taxes
|
2,844
|
|
(7,870)
|
|
(67)
|
|
(16,496)
|
Income tax benefit
(expense)
|
—
|
|
—
|
|
—
|
|
—
|
Net income
(loss)
|
$
2,844
|
|
$
(7,870)
|
|
$
(67)
|
|
$
(16,496)
|
|
|
|
|
|
|
|
|
Per common share
amounts
|
|
|
|
|
|
|
|
Net income (loss) per
common share,
basic
|
$
0.02
|
|
$
(0.05)
|
|
$
—
|
|
$
(0.11)
|
Net income (loss) per
common share,
diluted
|
$
0.02
|
|
$
(0.05)
|
|
$
—
|
|
$
(0.11)
|
CHARLOTTE'S WEB
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except share amounts)
(unaudited)
|
|
|
Common
Shares
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
Total
Shareholders'
Equity
|
Balance—December 31, 2022
|
152,135,026
|
|
$
1
|
|
$
325,431
|
|
$
(247,927)
|
|
$
77,505
|
Common shares issued
upon vesting of restricted
share units, net of withholding
|
297,888
|
|
—
|
|
(69)
|
|
—
|
|
(69)
|
Share-based
compensation
|
—
|
|
—
|
|
375
|
|
—
|
|
375
|
Net income
(loss)
|
|
|
—
|
|
|
|
(2,912)
|
|
(2,912)
|
Balance— March 31,
2023
|
152,432,914
|
|
$
1
|
|
$
325,737
|
|
$
(250,839)
|
|
$
74,899
|
Common shares issued
upon vesting of restricted
share units, net of withholding
|
392,204
|
|
—
|
|
(6)
|
|
—
|
|
(6)
|
Share-based
compensation
|
—
|
|
—
|
|
624
|
|
—
|
|
624
|
Net income
(loss)
|
—
|
|
—
|
|
—
|
|
2,844
|
|
2,844
|
Balance—June 30,
2023
|
152,825,118
|
|
$
1
|
|
$
326,355
|
|
$
(247,995)
|
|
$
78,361
|
|
Common
Shares
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total
Shareholders'
Equity
|
|
Shares
|
|
Amount
|
|
|
|
Balance—December 31, 2021
|
144,659,964
|
|
$
1
|
|
$
319,059
|
|
$
(188,614)
|
|
$
130,446
|
Common shares issued
upon vesting of restricted
share units, net of withholding
|
77,193
|
|
—
|
|
(45)
|
|
—
|
|
(45)
|
Harmony Hemp
contingent equity compensation
|
169,045
|
|
—
|
|
165
|
|
—
|
|
165
|
ATM program issuance
costs
|
239,500
|
|
—
|
|
(2)
|
|
—
|
|
(2)
|
Share-based
compensation
|
—
|
|
—
|
|
1,214
|
|
—
|
|
1,214
|
Net income
(loss)
|
—
|
|
—
|
|
—
|
|
(8,626)
|
|
(8,626)
|
Balance—March 31,
2022
|
145,145,702
|
|
$
1
|
|
$
320,391
|
|
$
(197,240)
|
|
$
123,152
|
Common shares issued
upon vesting of restricted
share units, net of withholding
|
132,463
|
|
—
|
|
(13)
|
|
—
|
|
(13)
|
Share-based
compensation
|
—
|
|
—
|
|
643
|
|
—
|
|
643
|
Net income
(loss)
|
—
|
|
—
|
|
—
|
|
(7,870)
|
|
(7,870)
|
Balance—June 30,
2022
|
145,278,165
|
|
$
1
|
|
$
321,021
|
|
$
(205,110)
|
|
$
115,912
|
CHARLOTTE'S WEB
HOLDINGS, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
Six Months Ended
June 30,
(unaudited)
|
|
2023
|
|
2022
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
Net loss
|
$
(67)
|
|
$
(16,496)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
7,769
|
|
3,940
|
Change in fair value
of financial instruments and other
|
(9,612)
|
|
(100)
|
Gain on investment in
unconsolidated entity
|
(10,700)
|
|
—
|
Convertible debenture
accrued interest
|
1,954
|
|
—
|
Share-based
compensation
|
999
|
|
2,022
|
Loss on foreign
currency translation
|
979
|
|
—
|
Changes in
right-of-use assets
|
976
|
|
1,236
|
Inventory
provision
|
320
|
|
1,857
|
Other
|
957
|
|
(434)
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
(1,104)
|
|
2,430
|
Inventories,
net
|
2,878
|
|
(2,411)
|
Prepaid expenses and
other current assets
|
764
|
|
3,706
|
Accounts payable,
accrued and other liabilities
|
183
|
|
(2,194)
|
Operating lease
obligations
|
(1,436)
|
|
(896)
|
License and media
rights
|
(4,000)
|
|
—
|
Income taxes
receivable
|
4,261
|
|
3,185
|
Other operating assets
and liabilities, net
|
(130)
|
|
(129)
|
Net cash used in
operating activities
|
(5,009)
|
|
(4,284)
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property
and equipment and intangible assets
|
(187)
|
|
(333)
|
Proceeds from sale of
assets
|
36
|
|
—
|
Net cash used in
investing activities
|
(151)
|
|
(333)
|
Cash flows from
financing activities:
|
|
|
|
Other financing
activities
|
(75)
|
|
(60)
|
Net cash used in
financing activities
|
(75)
|
|
(60)
|
Net decrease in cash
and cash equivalents
|
(5,235)
|
|
(4,677)
|
Cash and cash
equivalents —beginning of period
|
66,963
|
|
19,494
|
Cash and cash
equivalents —end of period
|
$
61,728
|
|
$
14,817
|
Non-cash
activities:
|
|
|
|
Non-cash purchase of
intangible asset
|
(163)
|
|
—
|
Non-cash issuance of
note receivable
|
(156)
|
|
—
|
(3) Non-GAAP Measures – EBITDA and Adjusted EBITDA
Earnings before interest, taxes, depreciation, and amortization
("EBITDA") is not a recognized performance measure under U.S. GAAP.
The term EBITDA consists of net loss and excludes interest, taxes,
depreciation, and amortization. Adjusted EBITDA also excludes other
non-cash items such as changes in fair value of financial
instruments (Mark-to-Market), Share-based compensation, and
impairment of assets. These non-GAAP financial measures should be
considered supplemental to, and not a substitute for, our reported
financial results prepared in accordance with GAAP. The non-GAAP
financials measures do not have a standardized meaning prescribed
under U.S. GAAP and therefore may not be comparable to similar
measures presented by other issuers. The primary purpose of using
non-GAAP financial measures is to provide supplemental information
that we believe may be useful to investors and to enable investors
to evaluate our results in the same way we do. We also present the
non-GAAP financial measures because we believe they assist
investors in comparing our performance across reporting periods on
a consistent basis, as well as comparing our results against the
results of other companies, by excluding items that we do not
believe are indicative of our core operating performance.
Specifically, we use these non-GAAP measures as measures of
operating performance; to prepare our annual operating budget; to
allocate resources to enhance the financial performance of our
business; to evaluate the effectiveness of our business strategies;
to provide consistency and comparability with past financial
performance; to facilitate a comparison of our results with those
of other companies, many of which use similar non-GAAP financial
measures to supplement their GAAP results; and in communications
with our board of directors concerning our financial performance.
Investors should be aware, however, that not all companies define
these non-GAAP measures consistently.
Adjusted EBITDA for the three and six months ended June 30, 2023, and 2022 is as follows:
|
|
Three Months
Ended
June
30
(Unaudited)
|
|
Six Months
Ended
June
30
(Unaudited)
|
U.S. $
Thousands
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
2,844
|
|
$ (7,870)
|
|
$
(67)
|
|
$
(16,496)
|
|
|
|
|
|
|
|
|
|
Depreciation of
property and
equipment and amortization
of intangibles
|
|
3,977
|
|
1,862
|
|
7,769
|
|
3,940
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
348
|
|
1
|
|
1,147
|
|
20
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
7,169
|
|
(6,077)
|
|
8,849
|
|
(12,536)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Comp
|
|
624
|
|
643
|
|
999
|
|
2,022
|
Mark-to-market
financial
instruments
|
|
(4,229)
|
|
-
|
|
(9,612)
|
|
(100)
|
Gain on Investment in
DeFloria
|
|
(10,700)
|
|
-
|
|
(10.700)
|
|
-
|
Adjusted
EBITDA
|
|
$
(7,136)
|
|
$ (5,364)
|
|
$
(10,464)
|
|
$
(10,614)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain prior year amounts in the table above have been
conformed to the current year presentation in accordance with how
the Company is defining the EBITDA and Adjusted EBITDA calculation
on June 30, 2023
View original content to download
multimedia:https://www.prnewswire.com/news-releases/charlottes-web-reports-2023-second-quarter-financial-results-301897770.html
SOURCE Charlotte's Web Holdings, Inc.