| Item 1.01. | Entry Into a Material Definitive Agreement. |
Effective as of November 1,
2022, Charlotte’s Web Holdings, Inc. (the “Company”) entered into a Manufacturing and Sales License Agreement (the
“Agreement”) with Aphria, Inc., an Ontario corporation, an affiliate of Tilray Brands, Inc. (“Tilray”), pursuant
to which the parties entered into a strategic alliance by which Tilray will have the rights to licensing, manufacturing, quality, marketing
and distribution of Charlotte’s WebTM CBD hemp extract products in Canada. Pursuant to the Agreement, Tilray has the
exclusive rights to the sale and distribution of Charlotte’s WebTM CBD hemp extract products in all channels, including
medical, adult-use, and pharmacy (when permissible) where such products may be legally sold and distributed in Canada. Additionally, Tilray
will have the first right exclusively to bring the Company’s new products into Canada. If Tilray fails to exercise such right within
30 days of being given notice by the Company of the proposed product introduction, the Company will have the right to seek an alternative
distributor for such product introduction in Canada. Under the Agreement, Tilray’s responsibilities include sourcing raw materials,
manufacturing the Company’s products, and packaging and labeling the Company’s products, all in accordance with applicable
laws, the Company’s quality standards and specifications.
In consideration for the Agreement,
Tilray has agreed to spend in each calendar year during the term of the Agreement (other than 2022) a minimum of five percent (5%) of
net sales per year on advertising, retail marketing, direct to consumer advertising, and similar third-party marketing expenditures for
the Company’s products. In addition, Tilray will spend an additional $250,000 (Canadian dollars) on marketing in the first contract
year following 2022 to launch the Company’s brand into the Canadian market. Tilray will also pay the Company a monthly royalty of
10% of all net sales revenue received by Tilray from sales to third-party entities during the prior month.
The Agreement expires on October
31, 2026, unless earlier terminated by either party in accordance with the terms of the Agreement. The Agreement is also subject to termination
for convenience by either party upon 6 months’ notice given on or after October 31, 2024.
Other than the Agreement, there
are no other agreements or relationship between the Company and Tilray.
The foregoing description of the Agreement does not
purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, which
is included as Exhibit 10.1 to this Current Report on Form 8-K.
Forward-Looking Statements
Certain statements in this Current Report on Form
8-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. In some
cases, but not necessarily in all cases, forward-looking statements 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 statements. Forward looking statements in this Current Report on
Form 8-K include expectations with respect to the consideration payable to the Company by Tilray under the Agreement.
Forward looking statements are not historical facts
but instead represent management's current expectations, estimates and projections regarding the future of the Company’s business,
future plans, strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements
are necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the
date of this Current Report on Form 8-K, 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 statements. Important factors that could cause actual results and financial condition to differ materially from
those indicated in the forward-looking statements include, among others, the factors discussed throughout the "Risk Factors"
section in the Company's most recently filed Annual Report on Form 10-K and quarterly report on Form 10-Q and other filings with the Securities
and Exchange Commission available on www.SEC.com and the Company's most recently filed annual information form available on www.SEDAR.com.
Except as required by applicable securities laws, the Company undertakes no obligation to publicly update any forward-looking statements,
whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.