Company: CHUC
Filing Date: 2025-06-27
Form Type: 10-Q
Source: 0001437749-25-021440
Chunk: 1

Company: Charlie's Holdings, Inc.
Filing Date: 2025-06-27
Form: 10-Q
Item: Part I, Item 1
Chunk 1
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 assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company operates in a rapidly changing legal and regulatory environment; new laws and regulations or changes to existing laws and regulations could significantly limit the Company’s ability to sell its products, and/or result in additional costs. Additionally, the Company was required to obtain approval from the United States Food and Drug Administration (“ FDA”) to continue selling and marketing certain of products used for the vaporization of nicotine in the United States. Currently, a substantial portion of the Company’s sales are derived from products that are subject to approval by the FDA. There was a significant cost associated with the application process and there can be no assurance the FDA will approve previous and/or future applications. For the three months ended March 31, 2025, the Company’s revenue declined, the Company generated a loss from operations of approximately $826,000, and a consolidated net loss of approximately $1,217,000. Cash used in operations was approximately $409,000. The Company had a stockholders’ deficit of $2,809,000at March 31, 2025. During the three months ended March 31, 2025, the Company’s working capital deficit was increased to $2,829,000from deficit of $1,855,000as of December 31, 2024. Considering these facts, the issuance of one or several Marketing Denial Orders ("MDOs”) from the FDA would increase the potential for inventory obsolescence and uncollectable accounts receivables and potentially require us to remove products from circulation. These regulatory risks, as well as other industry-specific challenges, our low working capital and cash position remain factors that raise substantial doubt about the Company’s ability to continue as a going concern. However, as disclosed below in “Subsequent Events,” in the second quarter of 2025, the Company entered into and closed an Asset Purchase Agreement (the “ Agreement”) and subsequent amendment with R. J. Reynolds Vapor Company (the “ Buyer”) pursuant to which the Buyer purchased 15 of the Company’s PACHA synthetic products and related assets (the “ Assets”) that are covered by a premarket tobacco application (“ PMTA”) first submitted by the Company in 2022. The combined purchase price for the Assets was $6.5million paid at closings in April and May 2025, plus a contingent one-time payment of up to $4.2