Charlotte’s Web Holdings Reports Q2-2020 Results
(TSX: CWEB) (OTCQX: CWBHF), Charlotte’s Web Holdings, Inc. (“Charlotte’s Web” or the “Company”) the market share leader in full spectrum cannabidiol (CBD) hemp extract products, today reported financial results for the second quarter ended June 30, 2020. All amounts are expressed in United States dollars unless otherwise noted. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures (see “Non-GAAP Measures” below).
TSX:CWEB – Charlotte’s Web is the market leader in hemp CBD extract products and is a Certified B Corp publicly traded company. (CNW Group/Charlotte’s Web Holdings, Inc.)
TSX:CWEB – Charlotte’s Web is the market leader in hemp CBD extract products and is a Certified B Corp publicly traded company. (CNW Group/Charlotte’s Web Holdings, Inc.)
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Q2-2020 Financial Highlights
Consolidated revenue of $21.6 million vs. $25.0 million in Q2-2019
Adjusted gross profit of $14.0 million (excluding inventory provisions), or 64.8% of consolidated revenue
Adjusted EBITDA loss of $5.7 million
Direct-to-Consumer (“DTC”) eCommerce sales increased 33.6% year-over-year and contributed 71.8% of Q2 revenue
$99.8 million cash and $155.0 million working capital on June 30, 2020
Business Highlights
Awarded utility patent protecting Charlotte’s Web proprietary varietal
Completed acquisition of Abacus Health Products, Inc.
Surpassed 21,000 unique retail doors
Commenced Abacus product cross-selling though Charlotte’s Web leading DTC channel
Commenced clinical study on CBD effect on liver health with ValidCare
Moved warehousing and fulfillment operations into new 137,000 sq ft facility
Awarded B Corp™ certification for excellence in ESG
Completed $54 million financing for expansion and working capital
Q2-2020 Business Review
COVID-19
COVID-19 has impacted the Company’s retail and health practitioner channels due to lower foot traffic and temporary location closures under the pandemic. Limited disruption has occurred within production and manufacturing operations, however the Company’s back office and reporting functions have been impacted and additional time was required for the consolidated second quarter filing.
Acquisition of Abacus Health
On June 11, 2020 Charlotte’s Web completed the acquisition of Abacus Health Products, Inc. (“Abacus”) in an all-stock transaction. Abacus is a leading provider of over-the-counter (“OTC”) topical products for pain relief and skincare containing CBD hemp extracts. The acquisition greatly extends Charlotte’s Web’s product offerings and reach and solidifies a commanding position in the U.S. hemp CBD topicals category. In the third quarter, Charlotte’s Web commenced implementing operating cost synergies with Abacus and will continue through the remainder of the year. Further cost synergies are targeted in 2021 through integration into the Company’s new production and fulfillment center.
B-Corp Certification
Subsequent to the close of the second quarter, Charlotte’s Web became certified as a B Corporation (“B Corp™”). B Corps are for-profit companies that use the power of business to build a more inclusive and sustainable economy, and the certification recognizes Charlotte’s Web’s rigorous standards for social and environmental performance, transparency, and accountability. B Corp status aligns with the Company’s mission-based principles including a focus on sustainable and regenerative organic farming methods, water stewardship, and a low carbon footprint. CW is the only publicly traded CBD B-Corp certified company.
“Second quarter revenue was below expectations due to the impact of COVID-19 on retail sales,” stated Deanie Elsner, CEO of Charlotte’s Web. “However, our DTC sales increased 33.6%, largely offsetting declines in B2B retail sales. We made excellent progress building out our infrastructure and expanding our products portfolio with the closing of the Abacus acquisition. Abacus CBD Medic™ products are now being sold through our online store and we look forward to realizing more cross-selling revenue synergies with Abacus through our FDM partners.”
Q2-2020 Financial Review
The following table sets forth selected financial information for the periods indicated.
Three months ended
Six months ended
June 30,
June 30,
U.S. $ millions, except per share data
2020
2019
2020
2019
Revenue
$
21.6
$
25.0
$
43.1
$
46.7
Gross profit before biological assets adjustment
11.5
18.5
26.5
34.3
Net impact, fair value of biological assets
—
(0.4)
(0.1)
(0.5)
Gross profit
11.5
18.8
26.6
34.8
Operating expenses
29.5
16.2
52.8
29.5
Other income, net
(4.0)
—
(7.0)
—
(Loss) income before taxes
(14.4)
2.8
(19.6)
5.9
Net (loss) income
$
(14.4)
$
2.2
$
(25.9)
$
4.5
EPS basic
$
(0.13)
$
0.02
$
(0.23)
$
0.05
EPS diluted
$
(0.13)
$
0.02
$
(0.23)
$
0.04
Adjusted EBITDA
$
(5.7)
$
3.8
$
(11.4)
$
8.0
Assets:
June 30, 2020
March 31, 2020
December 31, 2019
Cash and cash equivalents
$
99.8
$
53.0
$
68.6
Total assets
$
357.6
$
190.2
$
222.9
Liabilities:
Long-term liabilities
$
40.8
$
32.9
$
39.8
Total liabilities
$
86.7
$
62.5
$
69.2
The following information sets forth selected quarterly revenue information for the Company’s recent fiscal quarters.
U.S. $ millions
Q2
2020
Q1
2020
Q4
2019
Q3
2019
Q2
2019
Q1
2019
Q4
2018
Q3
2018
Revenue
$
21.6
$
21.5
$
22.8
$
25.1
$
25.0
$
21.7
$
21.5
$
17.7
Consolidated second quarter revenue decreased to $21.6 million, as compared to $25.0 million in 2019 partly due to COVID-19 reduced foot traffic for retailers and temporary closures. Strong DTC sales largely offset a 54.5% decrease in B2B retail sales which accounted for 28.2% of total revenue in the quarter. DTC net sales grew by 33.6% year-over-year as online traffic and high conversion rates increased through ongoing marketing and social media programs. Year-over-year new consumer acquisitions increased 25% and conversion rates increased 77%. DTC net revenue accounted for 71.8% of total revenue in the second quarter compared to 46.4% for the same period in the prior year.
Three months ended
Year-over-year
Six months ended
Year-over-year
June 30,
% Increase (Decrease)
June 30,
% Increase (Decrease)
2020
2019
2020
2019
Revenue – U.S. $ millions
$
21.6
$
25.0
(13.6)
%
$
43.1
$
46.7
(7.7)
%
Direct-to-consumer (“DTC”)
$
15.5
$
11.6
33.6
%
$
29.6
$
22.5
31.6
%
Business-to-business (“B2B”)
$
6.1
$
13.4
(54.5)
%
$
13.5
$
24.2
(44.2)
%
1Percentages for the three and six months ended June 30, 2019 were recategorized to conform with 2020 categorization.
Adjusted gross margin (prior to biological asset adjustments and inventory provisions) was 64.8%, compared to 74.0% last year and 69.8% in the first quarter of 2020. After adjustments gross margin was 53.2% of net revenue, compared to 75.2% for the second quarter of 2019 and 70.2% in Q1-2020.
Operating expenses were $29.5 million, increasing 82.1% year-over-year from $16.2 million. The increase reflects the Company’s investments in capacity expansion and transition to a consumer-packaged goods (“CPG”) operating company capable of supporting mass retail channel growth. The increase includes approximately $6 million of extraordinary expenses related to the Abacus acquisition and legal fees associated with brand and intellectual property protection. Subsequent to Q2-2019, operating expenses increased as the Company relocated into larger office facilities in Boulder, Colorado and added senior CPG management to the leadership team along with related personnel.
Lower than expected revenue has resulted in an increase in operating expenses as a percent of revenue. Management is initiating an expense optimization program targeting a 10 percent reduction in consolidated expense run rate by the end of 2020.
Adjusted EBITDA for the quarter was negative $5.7 million, compared to positive EBITDA of $3.8 million for the second quarter of 2019. The Adjusted EBITDA ratio during the second quarter reflects lower sales and the substantial investments to support expected future revenue growth from the F/D/M channel.
“The pandemic has had a larger and longer impact than we anticipated on retail and health practitioners,” explained Russ Hammer, Chief Financial Officer of Charlotte’s Web. “We are seeing improvements and a stronger back half in our DTC channel, but without a meaningful opening up of the economy and health practitioner channel we expect only flat to modest consolidated net revenue growth for 2020. Our long view market opportunity remains intact and we continue to add new customers, doors, and products. Our Q3 revenues are trending ahead of Q2 sales levels and we anticipate reopening of retail locations in the U.S. will support a positive growth trend. As we see resolutions in COVID-19 and hemp CBD regulations or legislation we can see the category build towards its full potential.” See the advisories contained under “Forward-Looking Information” below.
Balance Sheet and Cash Flow
The Company used $7.1 million of cash in operations during the second quarter of 2020 compared to $11.5 million of cash used in operations during the second quarter of 2019, primarily due to the increase in changes in working capital. The overall increase in cash flows during the second quarter of 2020 is primarily driven by proceeds from the Company’s public offering completed in June 2020. The Company’s cash and working capital at June 30, 2020 were $99.8 million and $155.0 million, respectively, compared to $68.6 million and $116.9 million at December 31, 2019.
Three months ended
June 30
2020
2019
$ Change
% Change
Cash beginning of period
$
53.0
$
69.1
$
(16.1)
(23.3)
%
Cash flows from (used in):
Operating activities
(7.1)
(11.5)
4.4
(38.3)
%
Investing activities
0.8
(5.5)
6.3
(114.5)
%
Financing activities
53.1
(0.7)
53.8
(7,685.7)
%
Cash, end of period
$
99.8
$
51.4
$
48.4
94.2
%
Consolidated Financial Statements and Management’s Discussion and Analysis
The Company’s unaudited financial statements and accompanying notes for the periods ended June 30, 2020 and 2019 and related management’s discussion and analysis of financial condition and results of operations (“MD&A”) are available under the Company’s profile on SEDAR at www.sedar.com and 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 second quarter 2020 results at 8:30a.m. ET on Monday, September 14, 2020. To participate in the call, please dial 1-647-427-7450 or 1-888-231-8191 approximately 10 minutes before the conference call and provide conference ID 4570749. A recording of the call will be available through September 24, 2020. To listen to the rebroadcast please dial 1-416-849-0833 and provide the same conference ID.
A webcast of the call can be accessed through the investor relations section of the Charlotte’s Web website.
About Charlotte’s Web Holdings, Inc.
Charlotte’s Web Holdings, Inc., headquartered in Boulder, Colo., is the market leader in the production and distribution of innovative hemp-derived cannabidiol (“CBD”) wellness products. The Company was founded by the Stanley Brothers with a mission to unleash the healing powers of botanicals with compassion and science, benefitting the planet and all who live upon it. The Company’s premium quality products start with proprietary hemp genetics that are 100-percent American farm grown and responsibly manufactured into hemp-derived CBD extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Charlotte’s Web product categories include CBD Oil tinctures (liquid products), CBD capsules, CBD topicals, as well as CBD pet products. Charlotte’s Web hemp-derived CBD extracts are sold through select distributors, more than 21,000 brick and mortar retailers, and online through the Company’s website at www.CharlottesWeb.com.
The rate the Company pays for agricultural products reflects a fair and sustainable rate driving higher quality yield, encouraging regenerative farming practices, and supporting U.S. farming communities. As a B Labs certified B Corporation™ and a Benefit Company, Charlotte’s Web is a socially and environmentally conscious company and is committed to using business as a force for good and a catalyst for innovation. The Company weighs sound business decisions with consideration of the impact of their decisions on all stakeholders: customers, workers, communities, and the environment, while maximizing profits and strengthening its brands which include Charlotte’s Web™, CBD Medic™, CBD Clinic™, and Harmony Hemp. The Company’s management believes that its socially oriented actions have a positive impact on the Company, its employees and its shareholders.
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 September 11, 2020, Charlotte’s Web had 104,672,925 Common Shares outstanding and 85,738.458 Proportional Voting Shares convertible at 400:1 into Common Shares, for an effective equivalent of 138,968,308 Common Shares outstanding.
Non-GAAP Measures
Certain supplementary measures in this news release do not have any standardized meaning as prescribed under International Financial Reporting Standards (“IFRS”), which are also generally accepted accounting principles (“GAAP”) for publicly accountable entities in Canada, and, therefore, are considered non-GAAP measures. Since non-GAAP measures are unlikely to be comparable to similar measures presented by other companies, securities regulations require that non-GAAP measures be clearly defined, qualified and reconciled to their nearest GAAP measure. Except as otherwise indicated, these non-GAAP measures are calculated and disclosed by Charlotte’s Web on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods.
The intent of non-GAAP measures is to provide additional useful information with respect to Charlotte’s Web’s operational and financial performance to investors and analysts though the measures do not have any standardized meaning under IFRS. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other issuers may calculate these non-GAAP measures differently.
In particular, the terms “Adjusted EBITDA”, “Adjusted gross margin” are used in this news release to describe certain financial information of Charlotte’s Web. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is not a recognized performance measure under IFRS. Adjusted EBITDA does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. The term EBITDA consists of net (loss) income and excludes interest (“financing costs”), taxes, depreciation and amortization. Adjusted EBITDA also excludes share-based compensation, impairment of assets, acquisition costs, legal settlement costs, restructuring charges, and adjustments for fair value of biological assets, warrant liabilities, and stock appreciation rights. Adjusted EBITDA is included as a supplemental disclosure because management of Charlotte’s Web believes that such measurement provides a better assessment of the Company’s operations on a continuing basis by eliminating certain non-cash charges and charges or gains that are nonrecurring. The most directly comparable measure to Adjusted EBITDA calculated in accordance with IFRS is net (loss) income. See “Adjusted EBITDA” in the MD&A for a reconciliation of Adjusted EBITDA to net (loss) income.
Three months ended
Six months ended
June 30,
June 30,
U.S. $ millions
2020
2019
2020
2019
Net (loss) income
$
(14.4)
$
2.2
$
(25.9)
$
4.5
Depreciation of property and equipment
$
2.1
0.5
$
3.9
1.4
Financing costs
0.3
0.1
0.5
0.1
Interest income
—
(0.3)
(0.1)
(0.6)
Income taxes
—
0.6
6.3
1.3
EBITDA
$
(12.0)
$
3.1
(15.3)
6.7
Mark-to-market fair value of warrants and stock appreciation rights
(3.9)
—
(6.9)
—
Fair value changes of biological assets, net
—
(0.4)
(0.1)
(0.5)
Share-based compensation
2.0
0.3
2.3
0.6
Impairment of assets
2.5
0.6
2.5
1.0
Acquisition costs
3.1
—
3.5
—
Legal settlement
2.1
—
2.1
—
Restructuring charges
0.5
0.2
0.5
0.2
Adjusted EBITDA
$
(5.7)
$
3.8
$
(11.4)
$
8.0
Adjusted EBITDA presented in prior periods has been reclassified to conform with the current period presentation to include interest income as a reduction of EBITDA and Adjusted EBITDA.
Forward-Looking Information
Certain information in this news release constitutes forward-looking statements and forward-looking information (collectively, “forward-looking information”). In some cases, but not necessarily in all cases, forward looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Examples of forward-looking information include, among others, statements the Company makes regarding guidance relating to fiscal 2020 revenue and adjusted EBITDA; the impact of the COVID-19 pandemic on the Company, the retail and health practitioner channels and its customers; the impact of the acquisition of Abacus on the Company’s business and financial condition, including potential synergies; customer acceptance of the Company’s products; expansion of the Company’s products; anticipated product category growth; retail expansion; online sales growth; the Company’s anticipated growth; and regulation or legislative changes.
Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding the future of our business, future plans, strategies, projections, anticipated events and trends, the economy and other future conditions.
Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Material assumptions used to develop the forward-looking statements herein include, but are not limited to, the following: (i) the impact of the COVID-19 pandemic; (ii) the regulatory climate in which the Company operates; (iii) the continued sales success of the Company’s products; (iv) the continued success of sales and marketing activities; (v) the Company’s ability to complete the conversion or buildout of its facilities on time and on budget; (vi) there will be no significant delays in the development and commercialization of the Company’s products; (vii) the Company will continue to maintain sufficient and effective production and research and development capabilities to compete on the attributes and cost of its products; (viii) 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; (ix) 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; (xi) demand for hemp-based wellness products will continue to grow in the foreseeable future; (xii) there will be no significant barriers to the acceptance of the Company’s products in the market; (xiii) the Company will be able to maintain compliance with applicable contractual and regulatory obligations and requirements; (xiv) there will be adequate liquidity available to the Company to carry out its operations; (xv) 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; and (xvi) the Company will be able to successfully manage and integrate acquisitions.
The Company’s actual results and financial condition may differ materially from those indicated in the forward-looking information. Therefore, you should not rely on any of the forward-looking information contained in this news release. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking information include, among others, the following: the adverse impact of the COVID-19 pandemic to the Company’s operations, supply chain, distribution chain, and to the broader market for and customers of the Company’s products; revenue fluctuations; the impact of global conditions and unemployment rates on the Company’s stakeholders; nature of government regulations (both domestic and foreign); general economic and financial conditions; loss of key customers or suppliers; 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; cash available to fund operations; crop risk; availability of capital; international and political considerations; the successful integration of acquired businesses; changes in customer demand; and the risk factors described in greater detail in the Company’s annual information form dated March 27, 2020, management’s discussion and analysis filed in respect to the interim period ending June 30, 2020, and other public documents of the Company available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect the Company and the forward-looking information; however, these factors should be considered carefully. There can be no assurance that such expectations, estimates, projections and assumptions will prove to be correct, and the forward-looking information contained in this news release should not be unduly relied upon. the forward-looking statements and information contained in this news release are made as of the date of this news release and speaks only as of the date on which it is made. The Company expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by applicable law.
CHARLOTTE’S WEB HOLDINGS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of United States dollars)
June 30, 2020
December 31, 2019
ASSETS
Current assets:
Cash
$
99,820
$
68,553
Trade and other receivables, net
12,488
5,462
Note receivable
2,366
1,421
Inventories
67,130
64,054
Prepaid expenses and other current assets
7,742
3,592
Income taxes receivable
11,342
3,273
200,888
146,355
Non-current assets:
Property and equipment, net
50,347
42,949
Intangible assets, net
25,703
1,596
Goodwill
76,688
—
Deferred tax assets
22
30,417
Other long-term assets
3,949
1,625
$
357,597
$
222,942
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
15,542
$
8,798
Accrued liabilities
14,806
7,323
Deferred revenue
415
550
Current cultivation liabilities
11,497
10,803
Current notes payable
1,329
9
Current lease obligations
2,342
1,945
45,931
29,428
Non-current liabilities:
Long-term cultivation liabilities
10,034
14,289
Long-term notes payable
312
3
Long-term lease obligations
21,448
22,116
Warrant liabilities
8,766
3,408
Stock appreciation rights liabilities
207
—
86,698
69,244
Shareholders’ equity:
Share capital
275,985
123,927
Contributed surplus
18,585
27,513
(Accumulated deficit) Retained earnings
(23,671)
2,258
270,899
153,698
$
357,597
$
222,942
CHARLOTTE’S WEB HOLDINGS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND OTHER COMPREHENSIVE (LOSS) INCOME
(In thousands of United States dollars, except per share amounts)
Three months ended June 30,
Six months ended June 30,
2020
2019
2020
2019
Revenue
$
21,680
$
25,020
$
43,143
$
46,720
Cost of sales
10,209
6,526
16,675
12,431
Gross profit before (gain) on fair value of biological assets
11,471
18,494
26,468
34,289
Realized fair value (gain) included in inventory sold
(4)
(354)
(86)
(496)
Unrealized fair value loss on growth of biological assets
—
—
—
—
Gross profit
11,475
18,848
26,554
34,785
Expenses:
General and administrative
21,108
9,060
37,139
17,519
Sales and marketing
6,835
6,527
13,367
11,087
Research and development
1,533
654
2,299
845
Operating expenses
29,476
16,241
52,805
29,451
Operating (loss) income
(18,001)
2,607
(26,251)
5,334
Financing costs
364
77
534
134
Interest income
(26)
(310)
(155)
(666)
Other (income) expense, net
(3,929)
4
(7,008)
7
(Loss) income before taxes
(14,410)
2,836
(19,622)
5,859
Income tax expense
20
648
6,307
1,334
Net (loss) income and comprehensive (loss) income
$
(14,430)
$
2,188
$
(25,929)
$
4,525
Weighted average number of common shares – basic
114,206,250
94,986,784
110,821,523
94,105,280
Weighted average number of common shares – diluted
114,206,250
106,272,945
110,821,523
106,245,283
(Loss) earnings per share – basic
$
(0.13)
$
0.02
$
(0.23)
$
0.05
(Loss) earnings per share – diluted
$
(0.13)
$
0.02
$
(0.23)
$
0.04
CHARLOTTE’S WEB HOLDINGS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands of United States dollars)
Six months ended June 30, 2019
Share
capital
Contributed
surplus
Retained
earnings
Total
Balance – December 31, 2018
$
78,316
$
25,357
$
17,825
$
121,498
Exercise of common stock options
1,663
(1,266)
—
397
Exercise of broker stock warrants
1,295
(834)
—
461
Accumulated effect of income tax from stock options
—
7,278
—
7,278
Share-based compensation expense
—
749
—
749
Net income
—
—
4,525
4,525
Balance – June 30, 2019
$
81,274
$
31,284
$
22,350
$
134,908
Six months ended June 30, 2020
Share
capital
Contributed
surplus
Accumulated
deficit
Total
Balance – December 31, 2019
$
123,927
$
27,513
$
2,258
$
153,698
Exercise of common stock options
2,006
(558)
—
1,448
Accumulated effect of income tax from stock options
—
(16,087)
—
(16,087)
Share-based compensation expense
—
2,310
—
2,310
2020 Share Offering
47,959
—
—
47,959
Share issuance costs
(3,368)
—
—
(3,368)
Abacus acquisition
105,461
5,407
—
110,868
Net loss
—
—
(25,929)
(25,929)
Balance – June 30, 2020
$
275,985
$
18,585
$
(23,671)
$
270,899
CHARLOTTE’S WEB HOLDINGS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of United States dollars)
Six months ended June 30,
2020
2019
Cash flows from operating activities:
Net (loss) income
$
(25,929)
$
4,525
Items not involving cash:
Depreciation and amortization
3,931
1,406
Change in fair value of biological assets
(86)
(496)
Change in fair value of warrant liabilities
(6,705)
—
Change in fair value of stock appreciation rights
(195)
—
Expected credit losses
(9)
136
Inventory provision, net
2,523
953
Share-based compensation
2,310
749
Loss/(gain) on disposal of assets
7
8
Deferred income taxes
14,330
(182)
Changes in working capital:
Trade and other receivables, net
(3,095)
(2,693)
Inventories
584
(10,296)
Prepaid expenses and other current assets
(2,739)
(5,611)
Accounts payable
2,058
(1,302)
Accrued liabilities
2,288
(1,336)
Income taxes
(8,034)
(166)
Cultivation liabilities
(3,596)
(1,037)
Other operating assets and liabilities, net
379
98
(21,978)
(15,244)
Cash flows from investing activities:
Cash acquired in business combinations
11,181
—
Funding of notes receivable
(936)
(1,400)
Purchases of property and equipment and intangible assets
(10,187)
(4,059)
Proceeds from sale of assets
41
53
Proceeds from loans due from related parties
—
14
Other investing activities
(895)
(812)
(796)
(6,204)
Cash flows from financing activities:
Proceeds from public offering
57,165
—
Proceeds from common stock option exercises
1,448
397
Proceeds from stock warrant exercises
—
461
Payments on notes payable
(5)
(5)
Payments on lease obligations
(1,199)
(1,378)
Share issuance costs
(3,368)
—
54,041
(525)
Increase (decrease) in cash
31,267
(21,973)
Cash, beginning of year
68,553
73,404
Cash, end of period
$
99,820
$
51,431
Supplemental disclosures of cash flows from operating activities:
Cash paid for interest
$
(48)
$
(57)
Cash paid for interest on lease obligations
(486)
(281)
Cash received from interest
155
666
Cash paid for taxes
(42)
(23)
Non-cash purchases of property and equipment and intangible assets
(3,649)
—
SOURCE Charlotte’s Web Holdings, Inc.
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MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
