Charlie’s Holdings Reports Significant Operating and Financial Improvements for First Quarter 2021 vs. Fourth Quarter 2020
Charlie's Holdings, Inc. (OTC PINK:CHUC) reported significant improvements for Q1 2021, with revenue rising 3% to $4,361,000 from Q4 2020, despite a 1% year-over-year decline. Gross profit increased more than 14% to $2,418,000, with gross margin expanding to 55%. Operating loss decreased by 95% to $229,000. The company closed a $3 million capital raise and introduced the new Pachamama Disposables™ line. Charlie's PMTA is under substantive review with the FDA, providing a potential competitive edge in the premium e-liquid market.
- Revenue increased 3% from Q4 2020 to $4,361,000.
- Gross profit improved by over 14% from Q4 2020 to $2,418,000.
- Gross margin expanded to 55%, up from 50% in Q4 2020.
- Operating loss decreased by 95% year-over-year to $229,000.
- Company closed a $3 million capital raise, strengthening its financial position.
- Introduced Pachamama Disposables™, tapping into the growing disposable e-cigarette market.
- Revenue decreased by 1% year-over-year, reflecting challenges in the CBD wellness product segment.
- Net loss increased significantly to $20,137,000 from $3,916,000 year-over-year due to non-cash items.
- Uncertainty surrounding FDA's PMTA review timeline may affect future sales.
Revenue, Gross Profit, Gross Margin and Cash Balance Increased
Charlie's PMTA is in Substantive Review with the FDA
COSTA MESA, CA / ACCESSWIRE / May 18, 2021 / Charlie's Holdings, Inc. (OTC PINK:CHUC) ("Charlie's" or the "Company"), an industry leader in both the premium, nicotine-based, e-cigarette space and the hemp-derived CBD wellness space, announced today the Company's financial results for the first quarter ending March 31, 2021. The Company reported that revenue, gross profit, gross margin, and cash balance all increased from Q4 2020 to Q1 2021.
Key Business and Financial Highlights for Q1 2021
- Revenue decreased
1% year-over-year to$4,361,000 , but increased3% from Q4 2020 - Gross profit decreased
1% year-over-year to$2,418,000 , but increased by more than14% from Q4 2020 - Gross margin remained at
55% year-over-year and expanded5% , from50% , for Q4 2020 - Operating loss decreased
95% year-over-year, and70% from Q4 2020, to$229,000 - Cash balance of
$3.5 million - Total assets of
$8.1 million - Closed a
$3 million capital raise in common stock (priced at$0.00 85) with Company founders - Introduced Pachamama Disposables™, Charlie's first-ever entrant into the rapidly expanding U.S. disposable e-cigarette market, to offer adult smokers a less harmful, more enjoyable alternative to combustible cigarettes
- Successfully assembled a solution "network" in order to meet the requirements of both the Consolidated Appropriations Act of 2021 and the Prevent All Cigarette Trafficking Act ("PACT Act") to ensure uninterrupted service to the Company's distributor partners
In Substantive Review Phase of the PMTA Process
In Q4 2020, the United States Food and Drug Administration's ("FDA") Center for Tobacco Products informed the Company that Charlie's Premarket Tobacco Application ("PMTA") had entered Substantive Review. Having engaged a team of more than 200 professionals and invested nearly
The Company believes its comprehensive PMTA will ultimately prove a competitive advantage for Charlie's. Most of the Company's competitors did not have the desire, the technical expertise, or the financial resources to complete the PMTA process. As a result, in fewer than twelve months' time, when others are forced to withdraw their products from the market, Charlie's may be one of a very select group still legally allowed to operate in the premium e-liquid product space.
Subsequent to the End of Q1 2021
April 1, 2021, Charlie's hired Henry Sicignano, III, as President of the Company, to spearhead business strategy and capital markets initiatives. Mr. Sicignano previously served as President and CEO of 22nd Century Group, Inc. (NYSE American: XXII), a leading plant-based, biotechnology company focused on tobacco harm reduction and hemp/cannabis research.
As President of Charlie's, Mr. Sicignano will work closely with Charlie's Chief Executive Officer, Brandon Stump, to develop and execute business strategy in the rapidly changing Electronic Nicotine Delivery System ("ENDS") marketplace; he will lead and oversee the Company's branding strategy and marketing personnel; and he will serve as the Company officer with primary responsibility for Charlie's capital markets and investor relations initiatives. Of particular importance to the Company's shareholders, Mr. Sicignano will ensure that Charlie's meets the targets required for the Company's applications to one or more senior stock exchanges.
Management Commentary
"We are steadfast in our commitment to providing adult smokers with high quality, regulatory-compliant alternatives to highly addictive combustible cigarettes... and we remain highly confident about our PMTA submission and review," reported Brandon Stump, Charlie's Holdings, Inc. Chief Executive Officer. "A win with the FDA will distinguish Charlie's as a true industry leader in the e-liquid space and will enable us to capture significantly increased market share."
Stump, continued, "Though 2020 was a difficult year for our entire industry, Charlie's financial performance turned the corner in the first quarter of 2021. Incorporating a right-sized cost structure, strengthened balance sheet, and launch of Pachamama Disposables, the Company achieved growth in both revenue and gross margin versus the last quarter of 2020. Most importantly, we feel confident that Charlie's is now positioned for accelerated growth going forward."
Stump, concluded, "We are very pleased about the recent addition of Henry Sicignano as our President. His past successes - in both his initiatives to provide adult smokers with alternatives to traditional combustible cigarettes, and his experience growing and uplisting a public company - will prove invaluable to Charlie's. So confident are we in Charlie's future, my brother Ryan and I invested
Financial Results for the Three Months Ended March 31, 2021
Revenue for the three months ended March 31, 2021 was
Gross profit for the three months ended March 31, 2021 was
General and administrative expense for the three months ended March 31, 2021 was
The Company routinely evaluates its business forecast on a quarterly basis and periodically makes necessary changes in order to align its cost structure with revenue. Management believes that, with Charlie's current staff, business processes and system infrastructure, the Company is now "right-sized" to execute its operating plan.
Sales and marketing expenses for the three months ended March 31, 2021 was
Research and development expense for the three months ended March 31, 2021 was
Operating loss for the three months ended March 31, 2021 was
Net loss, which includes the non-cash loss in the fair value of derivative warrant liability (explained below), for the three months ended March 31, 2021 was
Net loss was determined by adjusting income from operations by the following non-cash items:
Change in Fair Value of Derivative Liabilities. For the three months ended March 31, 2021 and 2020, the loss and gain in fair value of derivative liabilities was
Interest Expense. For the three months ended March 31, 2021 and 2020, the Company recorded interest expense related to notes payable of
Other Income. For the three months ended March 31, 2021 and 2020, the Company recorded other income of
About Charlie's Holdings, Inc.
Charlie's Holdings, Inc. (OTC Pink: CHUC) is an industry leader in both the premium, nicotine-based, e-cigarette space and the hemp-derived, CBD wellness space through its subsidiary companies Charlie's Chalk Dust, LLC and Don Polly, LLC. Charlie's Chalk Dust produces high quality vapor products currently distributed in more than 90 countries around the world. Charlie's Chalk Dust has developed an extensive portfolio of brand styles, flavor profiles and innovative product formats. Launched in 2019, Don Polly creates brands and products in the hemp-derived marketplace aimed to meet the needs of the ever-evolving wellness consumer.
For additional information, please visit our corporate website at: CharliesHoldings.com and our branded online websites: CharliesChalkDust.com and PachamamaCBD.com.
Safe Harbor Statement
This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding the Company's overall business, existing and anticipated markets and expectations regarding future sales and expenses. Words such as "expect," "anticipate," "should," "believe," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control. The Company's actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to: the Company's ability to successful increase sales and enter new markets; the FDA's decision with respect to the Company's PMTAs; the Company's ability to manufacture and produce product for its customers; the Company's ability to formulate new products; the acceptance of existing and future products; the complexity, expense and time associated with compliance with government rules and regulations affecting nicotine and products containing cannabidiol; litigation risks from the use of the Company's products; risks of government regulations; the impact of competitive products; and the Company's ability to maintain and enhance its brand, as well as other risk factors included in the Company's most recent quarterly report on Form 10-K, Form 10-Q and other SEC filings. These forward-looking statements are made as of the date of this press release and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.
Investors Contact:
IR@charliesholdings.com
Phone: 949-570-0691
SOURCE: Charlie's Holdings, Inc.
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