Charlie’s Holdings Reports 40% Revenue Decline and Increased Net Loss in Q3 2024

Charlie’s Holdings, Inc. reported a significant decline in financial performance for the third quarter of 2024, with revenues totaling approximately $1.62 million, a decrease of 40% from $2.71 million in the same period last year. The decline was primarily attributed to a $824,000 drop in sales of nicotine-based vapor products and a $258,000 decrease in sales of hemp-derived products. The company also recorded a net loss of $1.02 million for the quarter, compared to a net loss of $708,000 in the prior year, reflecting ongoing challenges in the market and operational adjustments.

For the nine months ended September 30, 2024, total revenues were approximately $6.72 million, down 37.3% from $10.71 million in the same period of 2023. The company’s net loss for this period increased to $3.03 million from $2.07 million a year earlier. The financial results indicate a continued struggle with sales performance, particularly in the nicotine vapor product segment, which has been impacted by resource allocation towards the launch of new Metatine-based products.

In terms of operational developments, Charlie’s Holdings has focused on launching new product lines, including the Metatine-based disposable vape products under the “SPREE BAR™” brand. The company believes these products are not subject to FDA review, which could provide a competitive advantage. However, the transition to these new products has led to inconsistent sales and stockouts in existing product lines, contributing to the revenue decline. The company has also implemented cost-cutting measures, including salary reductions and a reduction in headcount, to manage expenses amid declining revenues.

As of September 30, 2024, Charlie’s Holdings reported a working capital deficit of approximately $1.39 million, a significant decrease from a working capital surplus of $332,000 at the end of 2023. The company’s total assets were approximately $4.22 million, while total liabilities stood at $5.48 million, resulting in a stockholders' deficit of $1.26 million. The company’s cash position improved slightly to $601,000 from $367,000 at the end of the previous fiscal year, but ongoing liquidity concerns remain.

Looking ahead, Charlie’s Holdings faces substantial doubt regarding its ability to continue as a going concern, primarily due to regulatory risks and the need for additional financing to support its operations and product development efforts. The company has invested approximately $6.5 million in its PMTA process for FDA submissions and may require further financing to sustain its business model. The management's outlook emphasizes the need to increase revenues and secure cost-effective financing to navigate the challenging market landscape.