Charlotte's Web Enters $1.58M Convertible Note with DeFloria

What Happened Charlotte’s Web Holdings, Inc. (through its wholly owned subsidiary Charlotte’s Web, Inc.) announced on Aug. 14, 2026 that it entered into a convertible promissory note with DeFloria, Inc. (a joint venture among Charlotte’s Web, AJNA BioSciences, and a BAT subsidiary) under an amended Note Purchase Agreement dated Feb. 12, 2024. The new note has aggregate principal of $1,582,500 (superseding a July 15, 2025 note) and carries a non‑compounding interest rate equal to 8.0% plus the Bank of England Base Rate (initial rate 11.25% per annum, quarterly resets, capped at 14%). The note is unsecured, restricts prepayment without majority holder consent, and matures either 90 days after written demand by holders of a majority of outstanding notes (subject to timing rules) or earlier upon certain Events of Default.

Key Details

• Principal: $1,582,500 (incorporates prior note of $750,000 plus accrued interest).
• Interest: 8.0% + Bank of England Base Rate; initial rate 11.25% p.a.; quarterly resets; cap 14% p.a.
• Conversion on financing: Auto‑conversion on a “qualified financing” of ≥ $10,000,000; conversion price = the lesser of (i) 80% of the lowest investor price or (ii) $146,000,000 valuation cap divided by fully‑diluted capitalization.
• Other conversion/repayment terms: CW may opt to convert on certain non‑qualified financings; at maturity majority holders can demand conversion into a new series of senior preferred stock priced using the $146M valuation cap. Deemed liquidation triggers require accelerated repayment of principal + accrued interest + 20% premium unless CW elects conversion prior to closing.
• Default and enforcement: Events of Default include missed payments, material covenant/representation breaches, insolvency, and specified contract terminations; majority holders may accelerate repayment on default. Note governed by Delaware law.

Why It Matters This filing shows Charlotte’s Web has a material financing exposure to DeFloria via a $1.58M convertible note with equity conversion mechanics tied to future DeFloria financings. For investors, key points are the potential for conversion into preferred equity (which could dilute ownership if DeFloria raises capital), the relatively high interest rate and lack of collateral (the note is unsecured), and the acceleration/default provisions that could require near‑term cash or equity consequences if triggers occur. Monitor DeFloria’s fundraising activity and the Company’s disclosures (the full Note will be filed as an exhibit to CWBHF’s upcoming 10‑Q) for developments that could affect Charlotte’s Web’s financials or ownership stakes.