Company: CHUC
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001437749-25-035731
Chunk: 33

Company: Charlie's Holdings, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Part I, Item 1
Chunk 33
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 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 $4,328,000 or 435.4%, to approximately $5,322,000, or 75.1% of revenue, for the three months ended September 30, 2025, as compared to approximately $994,000, or 61.2% 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 three months ended September 30, 2025, total general and administrative expenses were $1,685,000 as compared to approximately $1,420,000 for the same period in 2024. The increase was primarily comprised of an increase of approximately $190,000 of non-commission wages and benefits, $60,000 of merchant processing fees, as well as $91,000 in other general and administrative expenses, and offset by a decrease of $40,000 of bad debt expense and certain professional fees of $36,000. The increase in payroll and benefits costs was primarily driven by bonuses awarded to certain key employees during the period.

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Sales and Marketing Expense

For the three months ended September 30, 2025, total sales and marketing expense was approximately $398,000 as compared to approximately $169,000 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 quarter. 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 three months ended September 30, 2025, total research and development expense was approximately $18,000 as compared to an income of $83,000 for the same period in 2024. The income in 2024 period was primarily due to a vendor refund of approximately $83,000.

Income (Loss) from Operations

We incurred a loss from operations of approximately $339,000 for the three months ended September 30, 2025, compared to a loss of approximately $