Company: CHUC
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001437749-25-035731
Chunk: 35

Company: Charlie's Holdings, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 1
Chunk 35
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 brands. These partnerships have allowed us to leverage existing customer relationships and sales infrastructure to generate incremental revenue, but are not a primary focus for the Company.

Cost of Revenue

Cost of revenue, which consists of direct costs of materials, direct labor, third party subcontractor services, and other overhead costs increased by approximately $4,614,000 or 105.7%, to approximately $8,980,000, or 75.2% of revenue, for the nine months ended September 30, 2025, as compared to approximately $4,366,000, or 65.0% of revenue, for the same period in 2024. This cost increased compared to last year due primarily to an increase in the volume of products sold during the period. Sales of third-party brands carry a lower overall margin and therefore dilute the Company’s margin overall.

General and Administrative Expenses

For the nine months ended September 30, 2025, total general and administrative expenses decreased by approximately $157,000 to $4,231,000 as compared to approximately $4,388,000 for the same period in 2024. This change was primarily due to decreases of approximately $395,000 in certain professional fees and $108,000 of bad debt expense, and offset by an increase of $306,000 in non-commission wages and benefits and $40,000 of other general and administrative costs. The decrease in professional fees was primarily the result of reductions in legal and audit costs as well as fees paid to members of our Board of Directors. The increase in payroll and benefits costs was primarily driven by bonuses awarded to certain key employees during the period.

Sales and Marketing Expense

For the nine months ended September 30, 2025, total sales and marketing expense increased by approximately $117,000 to approximately $737,000 as compared to approximately $620,000 for the same period in 2024. The increase was primarily due to increased sales commissions paid and display costs for “first-order” sales of the Company’s SBX product as roll-out continued during the nine-month period ended September 30, 2025. The Company continues to evaluate its spending on advertising, promotional and tradeshow related expenses as it aims to increase sales of its new SBX Disposable vapor products.

Research and Development Expense

For the nine months ended September 30, 2025, research and development expense was approximately $28,000 as compared to income of approximately $103,000 for the same period in 2024