Company: CHUC
Filing Date: 2025-06-27
Form Type: 10-Q
Source: 0001437749-25-021440
Chunk: 31

Company: Charlie's Holdings, Inc.
Filing Date: 2025-06-27
Form: 10-Q
Item: Part I, Item 1
Chunk 31
---
000, as compared to approximately $3,051,000 for same period in 2024 due to a $2,875,000 decrease in sales of our nicotine-based vapor products, and offset by an increase of $551,000 in sales of other alternative products distributed by Don Polly. The decrease in our nicotine-based vapor product sales was primarily driven by decreased sales of our Pacha Disposable line as well as reduced demand for our e-liquid products. The launch of the Company’s SPREE BAR nicotine substitute vapor products did not meet performance expectations, resulting in further development efforts and ultimately the release our Metatine-based, SBX line of disposable vapor products. The increase in alternative products primarily consisted of products distributed through Don Polly on behalf of other brands. These partnerships have allowed us to leverage existing customer relationships and sales infrastructure to generate incremental revenue.

Cost of Revenue

Cost of revenue, which consists of direct costs of materials, direct labor, third party subcontractor services, and other overhead costs decreased by approximately $329,000 or 15.6%, to approximately $1,778,000, or 77.1% of revenue, for the three months ended March 31, 2025, as compared to approximately $2,107,000, or 69.1% of revenue, for the same period in 2024. This cost, decreased compared to last year due primarily to lower sales volume across all product categories. As a percentage of sales it increased slightly due to lower fixed cost absorption and overall margin compression across certain of our products.

General and Administrative Expenses

For the three months ended March 31, 2025, total general and administrative expenses decreased by approximately $411,000 to $1,134,000 as compared to approximately $1,545,000 for the same period in 2024. This change was primarily due to decreases of approximately $73,000 in non-sales related payroll and benefits costs, $188,000 in certain professional fees and $150,000 of other general and administrative costs. The decrease in payroll and benefits costs was primarily driven by reduced headcount compared to the same period in 2024. The decrease in professional fees was primarily the result of reductions in audit costs as well as fees pays to members of our Board of Directors. The decrease in other general and administrative costs was primarily due to lower insurance costs as well as bad debt and merchant processing fees, both of which vary with sales.

22

Sales and Marketing Expense

For the three months ended March 31