Charlie's Holdings Reports Continued Operating and Financial Improvements for Second Quarter 2021 - Yahoo Finance

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Revenue Growth of 31% to $5.4 Million
Operating Loss Reduced to $168,000

COSTA MESA, CA / ACCESSWIRE / August 16, 2021 / Charlie's Holdings, Inc. (OTCQB: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, today announced the Company's financial results for the second quarter ending June 30, 2021. The Company reported an increase in revenue and gross profit as compared to both the corresponding second quarter of the 2020 fiscal year, and the first quarter of the 2021 fiscal year. Additionally, the Company reported a reduced operating loss as compared to both the corresponding second quarter of the 2020 fiscal year, and the first quarter of the 2021 fiscal year.

Key Financial Highlights for Q2 2021 (compared with Q2 2020)

• Revenue increased 31% to $5.4 million

• Gross profit increased 9% to $2.6 million

• Operating loss decreased 78% to $0.2 million

Key Business Highlights during and subsequent to Q2 2021

• Inclusion of the Company's Best-selling E-Liquids on the FDA's List of Products with Timely Premarket Tobacco Application ("PMTA") Submission

• Launched Pachamama Disposables - the fastest selling new product in the Company's history - into Rapidly Expanding U.S. Disposable E-Cigarette Market

• Launched New CBD Product: Sleep Well Gummies

• Initiated PACT Act Compliance Measures to Ensure Uninterrupted Service to Distributor Partners

• Uplisted successfully to OTCQB Venture Market

• Hired Former 22nd Century Group (NASDAQ: XXII) CEO, Henry Sicignano III, as President

• Named Matt Montesano Chief Financial Officer and Appointed David Allen to Board of Directors

Charlie's Best-selling E-liquids Included onFDA's List of Products with Timely PMTA Submission

All of Charlie's best-selling e-liquids were included on the list recently released by the U.S. Food and Drug Administration's ("FDA") of deemed new tobacco products for which a Premarket Tobacco Product Application ("PMTA") was submitted to the FDA prior to the September 9, 2020 deadline for currently marketed products.

Management Commentary

"Charlie's is well on its way to achieving - in 2021 - the highest annual sales revenue in the Company's history," announced Matt Montesano, Charlie's Holdings, Inc. Chief Financial Officer. "What's more, our revenue growth has accelerated Charlie's path toward profitability. These facts, combined with a significantly improved balance sheet, suggest excellent near-term prospects for the Company."

Ryan Stump, Chief Operating Officer explained, "while the FDA recently rejected more than 4.5 million deficient PMTA's that were submitted by other companies, we remain highly confident in Charlie's PMTA submissions." Stump continued, "years ago Charlie's made the conscious decision to invest very substantial financial and human resources to complete the extensive PMTA process. Now, we are pleased to have entered the FDA's Substantive Review phase and, if the PMTA is approved, we look forward to Charlie's best-selling e-liquids being designated ‘appropriate for the protection of public health' through the all-important PMTA process."

"PMTA authorization, if received, will dramatically increase Charlie's sales, profits, and market share," explained Henry Sicignano, Charlie's President. "With a steadfast commitment to regulatory compliance, strong sales momentum, and a much improved balance sheet, the Company aims to uplist to a national securities exchange. We look forward to reporting our progress along the way and to cementing our position in the market as America's #1 premium, e-cigarette company!"

Financial Results for the Three Months Ended June 30, 2021:

• Revenue: For the three months ended June 30, 2021, revenue was $5.4 million, an increase of $1.3 million, or 31%, compared with $4.2 million for the three months ended June 30, 2020. This increase was primarily due to the launch of Pachamama Disposables, Charlie's first-ever entrant into the rapidly expanding U.S. disposable e-cigarette market.

• Gross Profit: For the three months ended June 30, 2021, gross profit was $2.6 million, an increase of $0.2 million, or 9%, compared with $2.4 million for the three months ended June 30, 2020. The resulting gross margin was 48.6%, compared with 58.4% for the same quarter last year. The decrease in gross margin is primarily due to a higher sales mix consisting of the Company's Pachamama Disposable products, which carry a lower margin per unit.

• Total Operating Expenses: For the three months ended June 30, 2021, total operating expenses, including general and administrative, sales and marketing and research and development costs, were $2.8 million, a decrease of $0.4 million, or 12%, compared with $3.2 million for the same quarter last year. Operating expenses as a percentage of revenue decreased to 52% from 77% for the quarter just ended, reflecting the Company's focus on increasing revenue, reducing expenses, and performing more efficiently. Management believes this ratio will decrease going forward as revenues continue to grow at a higher rate than operating expenses.
  Of note, approximately $0.3 million of the Company's operating expenses for the three months ended June 30, 2021 were non-cash expenses, including depreciation, amortization, provision for bad debt, and stock-based compensation.

• Operating Loss: For the three months ended June 30, 2021, operating loss was $0.2 million, an improvement of $0.6 million, compared with an operating loss of $0.8 million for the same quarter last year.

• Net Income: For the three months ended June 30, 2021, net income was $19.8 million, compared with a net loss of $0.6 million, for the three months ended June 30, 2020. Of note, net income for the three months ended June 30, 2021 included a $19.3 million gain in fair value of derivative liabilities.

• Cash: Cash and cash equivalents totaled $2.0 million as of June 30, 2021.

Financial Results for the Six Months Ended June 30, 2021:

• Revenue: For the six months ended June 30, 2021, revenue was $9.8 million, an increase of $1.2 million, or 14%, compared with $8.6 million for the same period last year.

• Gross Profit: For the six months ended June 30, 2021, gross profit was $5.1 million, an increase of $0.2 million, or 4%, compared with $4.9 million for the same period last year. The resulting gross margin was 51.6%, compared with 56.9% for the same period last year. The decrease in gross margin is primarily due to a higher sales mix consisting of the Company's Pachamama Disposable products, which carry a lower margin per unit.

• Total Operating Expenses: For the six months ended June 30, 2021, total operating expenses, including general and administrative, sales and marketing and research and development costs, were $5.5 million, a decrease of $4.5 million, compared with $10.0 million for the same period last year. Operating expenses as a percentage of revenue decreased to 56% from 117% for the periods compared. This was primarily due to costs incurred during 2020 associated with the Company's PMTA submissions to the FDA. Of note, $0.7 million of the Company's operating expenses for the six months ended June 30, 2021 were non-cash expenses, including depreciation, amortization, provision for bad debt, and stock-based compensation.

• Operating Loss: For the six months ended June 30, 2021, operating loss was $0.4 million, an improvement of $4.7 million, compared with an operating loss of $5.1 million for the same period last year.

• Net Loss: For the six months ended June 30, 2021, net loss was $0.4 million, compared with $4.6 million for the same period last year. Of note, net income for the six months ended June 30, 2021 included a $0.9 million loss in fair value of derivative liabilities.

About Charlie's Holdings, Inc.

Charlie's Holdings, Inc. (OTCQB:CHUC) is an industry leader in the premium, nicotine-based, vapor products space and the hemp-derived CBD wellness market. The Company's products are sold around the world to select distributors, specialty retailers, and third-party online resellers through subsidiary companies Charlie's Chalk Dust, LLC and Don Polly, LLC. Charlie's Chalk Dust, LLC has developed an extensive portfolio of brand styles, flavor profiles, and innovative product formats. Don Polly, LLC creates innovative wellness products and brands in the hemp-derived CBD marketplace.

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 ongoing ability to quote its shares on the OTCQB; whether the Company will meet the requirements to uplist onto a national securities exchange in the future; the Company's ability to successful increase sales and enter new markets; whether the Company's PMTA will be approved by the FDA, and the FDA's decisions with respect to the Company's future 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-Q, Annual Report on Form 10-K, 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.

View source version on accesswire.com:
https://www.accesswire.com/659872/Charlies-Holdings-Reports-Continued-Operating-and-Financial-Improvements-for-Second-Quarter-2021

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Charlie's Holdings Reports Continued Operating and Financial Improvements for Second Quarter 2021 - Yahoo Finance
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