Charlotte Web : Quarterly Report - CWBHF Q3-2021 Financial Statements

CHARLOTTE'S WEB HOLDINGS, INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 and 2020

(Expressed in United States dollars)

UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL

STATEMENTS

For the three and nine months ended September 30, 2021 and 2020

CONTENTS

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
STATEMENTS OF FINANCIAL POSITION	1
STATEMENTS OF LOSS AND OTHER COMPREHENSIVE LOSS	2
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY	3
STATEMENTS OF CASH FLOWS	4
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	6

CHARLOTTE'S WEB HOLDINGS, INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (In thousands of United States dollars)

		September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	21,069	$	52,803
Trade and other receivables, net (note 4)		5,726		6,274
Note receivable (note 5)		1,324		1,753
Note receivable - related party (note 6)		1,029		1,004
Current finance lease receivable (note 11)		1,013		-
Inventories (note 7)		62,334		61,936
Prepaid expenses and other current assets (note 12)		7,739		7,390
Income taxes receivable		10,876		11,440
		111,110		142,600
Non-current assets:
Property and equipment, net (note 8)		56,978		60,269
Intangible assets, net (note 9)		23,434		25,376
Goodwill (note 9)		77,454		77,454
Stanley Brothers USA Holdings purchase option (note 10)		12,900		-
Long-term finance lease receivable (note 11)		2,487		-
Other long-term assets (note 13)		2,218		5,182
	$	286,581	$	310,881
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	7,574	$	4,891
Accrued liabilities		8,781		11,519
Deferred revenue		801		615
Current cultivation liabilities (note 17)		4,129		9,304
Current notes payable (note 14)		229		629
Current lease obligations (note 15)		2,091		2,015
		23,605		28,973
Non-current liabilities:
Long-term cultivation liabilities (note 17)		-		2,513
Long-term notes payable (note 14)		-		144
Long-term lease obligations (note 15)		21,035		20,567
Warrant liabilities (note 16)		223		4,304
Other long-term liabilities		45		151
		44,908		56,652
Shareholders' equity:
Share capital		283,720		279,308
Contributed surplus		23,108		19,849
Accumulated deficit		(65,155)		(44,928)
		241,673		254,229
	$	286,581	$	310,881

1

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

CHARLOTTE'S WEB HOLDINGS, INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND OTHER COMPREHENSIVE LOSS (In thousands of United States dollars, except per share amounts)

	Three months ended September 30,	Nine months ended September 30,
		2021		2020		2021		2020
Revenue	$	23,704	$	25,156	$	71,263	$	68,299
Cost of sales (note 19)		8,789		9,898		26,884		26,573
Gross profit before (gain) loss on fair value of
biological assets		14,915		15,258		44,379		41,726
Realized fair value (gain) included in inventory
sold		-		-		(206)		(86)
Unrealized fair value loss on growth of
biological assets		-		501		165		501
Gross profit		14,915		14,757		44,420		41,311
Expenses:
General and administrative (note 19)		14,051		17,816		43,904		54,955
Sales and marketing (note 19)		8,378		8,512		24,552		21,879
Research and development (note 19)		1,471		1,984		4,434		4,283
Operating expenses		23,900		28,312		72,890		81,117
Operating loss		(8,985)		(13,555)		(28,470)		(39,806)
Financing costs		307		369		979		903
Interest income		2		(24)		(33)		(179)
Change in fair value of financial instruments
and other expense (income), net		(8,381)		(7,379)		(9,223)		(14,387)
Loss before taxes		(913)		(6,521)		(20,193)		(26,143)
Income tax expense (note 20)		-		18		34		6,325
Net loss and comprehensive loss	$	(913)	$	(6,539)	$	(20,227)	$	(32,468)
Weighted average number of common shares -
basic (note 18b)		140,521,244		138,866,673		140,054,738		120,238,141
Weighted average number of common shares -
diluted (note 18b)		140,521,244		138,866,673		140,054,738		120,238,141
Loss per share - basic (note 18b)	$	(0.01)	$	(0.05)	$	(0.14)	$	(0.27)
Loss per share - diluted (note 18b)	$	(0.01)	$	(0.05)	$	(0.14)	$	(0.27)

2

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

CHARLOTTE'S WEB HOLDINGS, INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (In thousands of United States dollars)

				Contributed		Accumulated
Nine months ended September 30, 2020		Share capital		surplus		deficit		Total
Balance - December 31, 2019	$	123,927	$	27,513	$	2,258	$	153,698
Exercise of stock options		2,140		(599)		-		1,541
Withholding of common stock upon vesting of restricted share awards		1,269		(1,285)		-		(16)
Accumulated effect of income tax from stock options		-		(16,087)		-		(16,087)
Share-based compensation expense (note 18c)		-		4,336		-		4,336
2020 Share Offering		47,959		-		-		47,959
Share issuance costs		(3,368)		-		-		(3,368)
Abacus acquisition		105,461		5,407		-		110,868
Net loss and comprehensive loss		-		-		(32,468)		(32,468)
Balance - September 30, 2020	$	277,388	$	19,285	$	(30,210)	$	266,463
				Contributed		Accumulated
Nine months ended September 30, 2021		Share capital		surplus		deficit		Total
Balance - December 31, 2020	$	279,308	$	19,849	$	(44,928)	$	254,229
Exercise of stock options (note 18a)		61		(31)		-		30
Exercise of warrants (note 18a)		485		(45)		-		440
Withholding of common stock upon vesting of restricted share awards		1,109		(1,251)		-		(142)
Share-based compensation expense (note 18c)		-		4,586		-		4,586
ATM Program (note 18a)		3,234		-		-		3,234
Share issuance costs (note 18a)		(477)		-		-		(477)
Net loss and comprehensive loss		-		-		(20,227)		(20,227)
Balance - September 30, 2021	$	283,720	$	23,108	$	(65,155)	$	241,673

3

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.