5 unchanged sentences
Cash used in operating activities was approximately $1.6 million and $0.8 million during the years ended December 31, 2024 and 2023, respectively.
−Removed: Generating positive cash flows in the future will depend on our ability to successfully create, sell and market nicotine, nicotine alternative and hemp-derived products.
+Added: Generating positive cash flows in the future will depend on our ability to successfully create, sell, market, and finance nicotine, nicotine alternative, and other alternative products.
There is no guarantee that we will be able to achieve or sustain positive cash flows and profitability in the future.
1 unchanged sentence
We have limited cash resources and may require additional financing.
−Removed: As of December 31, 2023, we had working capital of approximately $0.3 million, which consisted of current assets of approximately $5.1 million and current liabilities of approximately $4.8 million.
−Removed: If needed, our ability to obtain additional financing will be subject to many factors, including limitations on incurring debt in with respect to our Series A convertible preferred stock (“ Series A Preferred ”), market conditions, our operating performance and investor sentiment.
+Added: As of December 31, 2024, we had working capital deficit of approximately $1.8 million, which consisted of current assets of approximately $3.5 million and current liabilities of approximately $5.3 million.
+Added: If needed, our ability to obtain additional financing will be subject to many factors, including market conditions, our operating performance and investor sentiment.
If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly restrict our operations or obtain funds by entering into agreements on unattractive terms, which would likely have a material adverse effect on our business, stock price, and our relationships with third parties with whom we have business relationships, at least until additional funding is obtained.
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There was significant cost associated with the application process and there can be no assurance the FDA will approve previous and/or future application.
−Removed: The issuance of one or several Marketing Denial Orders (“ MDO ”) from the FDA would increase the potential for inventory obsolescence and uncollectable accounts receivables.
+Added: The issuance of one or several Marketing Denial Orders (“ MDOs ”) from the FDA would increase the potential for inventory obsolescence and uncollectable accounts receivables.
These regulatory risks, as well as other industry-specific challenges and our low working capital and cash position, remain factors that lead the Company to conclude that there is substantial doubt about the Company’s ability to continue as a going concern.
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We have not yet developed a succession plan.
−Removed: Furthermore, as we grow, we will be required to hire and attract additional qualified professionals such as accounting, legal, finance, production, market and sales experts.
+Added: Furthermore, as we grow, we will be required to hire and attract additional qualified professionals such as accounting, legal, finance, production, marketing and sales experts.
We may not be able to locate or attract qualified individuals for such positions, which will affect our ability to grow and expand our business.
−Removed: We rely on contractual arrangements with Don Polly, our consolidated variable interest entity for our hemp-related business operations, which may not be as effective as direct ownership in providing operational control.
−Removed: We have relied and expect to continue to rely on contractual arrangements with Don Polly and its shareholder, an entity controlled by Ryan Stump, for the operation of our hemp-derived operations.
+Added: We rely on contractual arrangements with Don Polly, our consolidated variable interest entity for some of ourbusiness operations, which may not be as effective as direct ownership in providing operational control.
+Added: We have relied and expect to continue to rely on contractual arrangements with Don Polly and its shareholder, an entity controlled by Ryan Stump, for the operation of some of our operations.
These contractual arrangements may not be as effective as direct ownership in providing us with control over our consolidated variable interest entity.
6 unchanged sentences
The shareholders of Don Polly, our consolidated variable interest entity, may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.
−Removed: The equity interests of Don Polly, our consolidated VIE, are held by an entity controlled by Ryan Stump, the Company’s Chief Operating Officer and member of our Board of Directors.
+Added: The equity interests of Don Polly, our consolidated VIE, are held by an entity controlled by Ryan Stump, the Company’s Chief Operating Officer and a member of our Board of Directors.
Their interests in Don Polly may differ from the interests of our company as a whole.
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These factors or any combination of these factors may adversely affect our revenue or our overall financial performance.
−Removed: A future outbreak of COVID-19 or another pandemic could adversely affected our business.
+Added: A future outbreak of COVID-19 or another pandemic could adversely affect our business.
In the event of a pandemic, epidemic or outbreak of an infectious disease, such as the recent COVID-19 pandemic, our business may be adversely affected.
6 unchanged sentences
Our business is primarily involved in the sales of products that contain nicotine, alternative alkaloids, and/or hemp-derived ingredients, all of which face significant regulation and actions that may have a material adverse effect on our business .
−Removed: Our current business is primarily the sale of products that contain nicotine, alternative alkaloids and/or hemp-derived ingredients.
+Added: Our current business is primarily the sale of products that contain nicotine or alternative alkaloids.
The general market in which our products are sold faces significant governmental and private sector actions, including efforts aimed at reducing the incidence of use in minors and efforts seeking to hold the makers and sellers of these products responsible for the adverse health effects associated with them.
19 unchanged sentences
Postal Service to mail cigarette and smokeless tobacco products and also amended the Jenkins Act, which established cigarette sales reporting requirements for state excise tax collection, to require individuals and businesses that make interstate sales of certain cigarette or smokeless tobacco comply with state tax laws.
−Removed: The PACT Act was recently amended expanding the definition of “cigarette” to include “electronic nicotine delivery systems,” “r ( " ” NDS" ), and requires that the United States Postal Service ("” SPS ") promulgate regulations clarifying the applicability of the prohibition on delivery sales of cigarettes to ENDS.
+Added: The PACT Act was recently amended expanding the definition of “cigarette” to include “electronic nicotine delivery systems,”(“ ENDS ”), and requires that the United States Postal Service (“ USPS ”) promulgate regulations clarifying the applicability of the prohibition on delivery sales of cigarettes to ENDS.
This amendment to the PACT Act applies to certain products manufactured and sold by the Company, which has impacts at the federal and state levels.
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These regulations make synthetic nicotine products subject to the same FDA rules as tobacco-derived nicotine products.
−Removed: As such, the Company filed a PMTA for its existing synthetic nicotine products marketed under the Pacha brand by May 14, 2022.
+Added: As such, the Company filed a PMTA for its existing synthetic nicotine products marketed under the Pacha brand before May 14, 2022.
If the PMTA is ultimately unsuccessful, or if the FDA issues a warning letter, or takes other action against the Company resulting in us not being able to distribute our Pacha branded products in the United States, our revenues and, thereby our financial results and condition, could be materially adversely affected.
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The “Deeming Regulations” issued by the FDA in May 2016 require any e-liquid, e-cigarettes, and other vaping products considered to be Deemed Tobacco Products that were not commercially marketed as of the grandfathering date of February 15, 2007, to obtain premarket approval by the FDA before any new e-liquid or other vaping products can be marketed in the United States.
−Removed: However, any Deemed Tobacco Products such as certain products from our Charlie’s Chalk Dust product lines that were on the market in the United States prior to August 8, 2016 have a grace period to continue to market such products, ending on September 9, 2020 whereby a premarket application, likely though the PMTA pathway, must have been filed with the FDA.
+Added: However, any Deemed Tobacco Products such as certain products from our Charlie’s Chalk Dust product lines that were on the market in the United States prior to August 8, 2016 had a grace period to continue to market such products, that ended on September 9, 2020, whereby a premarket application, likely though the PMTA pathway, must have been filed with the FDA.
Upon submission of a PMTA, products are able to be marketed pending the FDA’s review of the submission.
−Removed: Without obtaining marketing authorization by the FDA prior to the September 9, 2020 deadline or having submitted a PMTA by such date, non-authorized products were be required to be removed from the market in the United States until such authorization could be obtained, although such products may continue to be sold if a PMTA was pending as of the September 9, 2020 deadline.
+Added: Without obtaining marketing authorization by the FDA prior to the September 9, 2020 deadline, or having submitted a PMTA by such date, non-authorized products would be required to be removed from the market in the United States until such authorization could be obtained, although such products could continue to be sold if a PMTA was pending as of the September 9, 2020 deadline.
As at the date of this Report, we have submitted PMTAs for certain of our nicotine vapor products, including, but not limited to menthol and/or tobacco products with the assistance of Avail, pursuant to the terms of the Avail Agreement, as well other vendors to assist with our May 13, 2022 submissions.
The costs to date associated with these PMTAs are approximately $6.5 million in total.
−Removed: We are also evaluating the potential market perception and clinical studies that may be required in connection with each PMTA.
−Removed: If we do not submit a PMTA for any Charlie’s products considered to be Deemed Tobacco Products prior to the lapse of the grace period or if any PMTA submitted by the Company is denied, we will be required to cease the marketing and distribution of such Charlie’s products, which, in turn, would have a material adverse effect on the Company’s business, results of operations and financial condition.
+Added: If any PMTA submitted by the Company is denied, we will be required to cease the marketing and distribution of such Charlie’s products, which, in turn, would have a material adverse effect on the Company’s business, results of operations and financial condition.
Furthermore, there can be no assurance that if the Company were to complete a PMTA for any of the affected Charlie’s products, that any application would be approved by the FDA and any non-approval would require us to remove products from the marketplace, which would have an adverse impact on our business.
−Removed: The regulation of SPREE BAR by the FDA or others could materially adversely affect us.
−Removed: We recently launched new disposable vape products, under the “SPREE BAR™” brand, that we expect will (i) replace most of our legacy products and (ii) become the single largest, most important commercial opportunity our history.
−Removed: As SPREE BAR is not made from or derived from tobacco, we believe that SPREE BAR products are not subject to regulation as “tobacco products” under 21 U.S.C.
−Removed: In the event that our SPREE BAR products were to be deemed by the FDA to be “tobacco products” or if the FDA or another regulatory authority were to otherwise assume regulatory control of such products, we could be required to cease selling such products (including recalling existing products), subject to an enforcement action or otherwise be required to comply with various regulations that could be expensive.
+Added: The regulation of SBX by the FDA or others could materially adversely affect us.
+Added: We recently launched new disposable vape products, under the “SBX™” brand, that we expect will (i) replace most of our legacy products and (ii) become the single largest, most important commercial opportunity our history.
+Added: As SBX is not made from or derived from tobacco, we believe that SBX products are not subject to regulation as “tobacco products” under 21 U.S.C.
+Added: In the event that our SBX products were to be deemed by the FDA to be “tobacco products” or if the FDA or another regulatory authority were to otherwise assume regulatory control of such products, we could be required to cease selling such products (including recalling existing products), subject to an enforcement action or otherwise be required to comply with various regulations that could be expensive.
More generally, FDA’s regulatory initiatives and enforcement authority regarding our products are unpredictable and continue to evolve and we cannot predict whether FDA’s priorities and/or potential jurisdiction over our products will require us to remove our products from the market and to cease selling them.
−Removed: As a result, any regulation over SPREE BAR could material adversely affect us.
−Removed: Certain of our products contain nicotine, which is considered to be a highly addictive substance.
−Removed: Certain of our products contain nicotine, a chemical found in cigarettes, e-cigarettes, certain other vapor products and other tobacco products, which is considered to be highly addictive.
−Removed: The Family Smoking Prevention and Tobacco Control Act empowers the FDA to regulate the amount of nicotine found in vapor products, but may not require the reduction of nicotine yields of a vapor product to zero.
−Removed: Any FDA regulation may require us to reformulate, recall and or discontinue certain of the products we may sell from time to time, which may have a material adverse effect on our ability to market our products and have a material adverse effect on our business, financial condition, results of operations, cash flows and or future prospects.
+Added: As a result, any regulation over SBX could material adversely affect us.
+Added: Certain of our products contain nicotine or Metatine which are considered to be highly addictive substances.
+Added: Certain of our products contain nicotine or Metatine, chemicals found in cigarettes, e-cigarettes, certain other vapor products and other tobacco products, which are considered to be highly addictive.
+Added: Though the FDA does not currently have regulatory jurisdiction over Metatine, the Family Smoking Prevention and Tobacco Control Act empowers the FDA to regulate the amount of nicotine found in vapor products.
+Added: Any new FDA regulation over nicotine may require us to reformulate, recall, and/or discontinue certain of the products we may sell from time to time, which may have a material adverse effect on our ability to market our products and have a material adverse effect on our business, financial condition, results of operations, cash flows and or future prospects.
Recent bans on the sales of flavored e-cigarettes directly impacts the markets in which we may sell Charlie ’ s products, and significant increases in state and local regulation of Charlie ’ s products have been proposed or enacted and are likely to continue to be proposed or enacted in numerous jurisdictions.
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If the medical profession were to determine conclusively that vapor product usage poses long-term health risks, the use of such products, including Charlie’s products, could decline, which could have a material adverse effect on our business, results of operations and financial condition.
−Removed: The marketing and sale of Delta-8-THC, other cannabinol and/or CBD products by the Company could subject it to limitations or restrictions imposed by the FDA, the states or other regulatory authorities.
−Removed: The Company’s production of Delta-8-Tetrahydrocannabinl (" Delta-8 THC "), other cannabinol and/or CBD products derived from hemp could subject it to limitations or restrictions, which could result in an outright ban on such marketing or sale.
−Removed: Regulatory uncertainties regarding potential adverse changes in Federal and state laws may have a materially adverse effect on our business and the trading price of our common stock.
−Removed: These risks are heightened as they relate to the nicotine, marijuana, Delta-8-THC, Synthetic THC, CBD and other cannabinoid varieties, derivatives and /or equivalents which are controversial socially, scientifically and legally.
−Removed: In addition, although we believe that Delta-8-THC is legal under the Farm Bill, certain states have moved to ban Synthetic THC or have moved to regulate Synthetic THC as marijuana.
−Removed: Notwithstanding the foregoing, the legality of hemp derived Synthetic THC is in a gray area and varies from state-to-state, with some states allowing Synthetic THC, others not addressing Synthetic THC specifically, while others have banned Synthetic THC due to its similarity to tetrahydrocannabinol.
−Removed: The Federal legality of Synthetic THC is still unknown, and the Federal government has yet to take a definitive position.
−Removed: Additionally, the FDA has indicated its view that certain types of products containing CBD may not be permissible under the FDCA.
−Removed: The FDA’s position is related to its approval of Epidiolex, a marijuana-derived prescription medicine to be available in the United States.
−Removed: The active ingredient in Epidiolex is CBD.
−Removed: On December 20, 2018, after the passage of the 2018 Farm Act, FDA Commissioner Scott Gottlieb issued a statement in which he reiterated the FDA’s position that, among other things, the FDA requires a cannabis product (hemp-derived or otherwise) that is marketed with a claim of therapeutic benefit, or with any other disease claim, to be approved by the FDA for its intended use before it may be introduced into interstate commerce and that the FDCA prohibits introducing into interstate commerce food products containing added CBD, and marketing products containing CBD as a dietary supplement, regardless of whether the substances are hemp-derived.
−Removed: Should the Company become subject to enforcement action by Federal, state or other regulatory agencies, it could be forced to spend significant sums defending against such enforcement action and ultimately could be forced to stop marketing and selling some or all of its products and/or be subject to other sanctions, which would have a material adverse effect on the Company’s business and shareholders’ investments.
The market for vapor products is a niche market, subject to a great deal of uncertainty, and is still evolving.
4 unchanged sentences
Therefore, we are subject to all of the business risks associated with a new enterprise in a niche market, including risks of unforeseen capital requirements, failure of widespread market acceptance of vapor products, in general or, specifically our products, failure to establish business relationships and competitive disadvantages as against larger and more established competitors.
−Removed: Sources of hemp-derived CBD depend upon legality of cultivation, processing, marketing and sales of products derived from those plants under state law.
−Removed: Hemp-derived CBD can only be legally produced in states that have laws and regulations that allow for such production and that comply with the 2018 Farm Act, apart from state laws legalizing and regulating medical and recreational cannabis or marijuana, which remains illegal under federal law and regulations.
−Removed: We purchase all of our hemp-derived CBD from licensed growers and processors in states where such production is legal.
−Removed: As described in the preceding risk factor, in the event of repeal or amendment of laws and regulations which are now favorable to the cannabis/hemp industry in such states, we would be required to locate new suppliers in states with laws and regulations that qualify under the 2018 Farm Act.
−Removed: If we were to be unsuccessful in arranging new sources of supply of our raw ingredients, or if our raw ingredients were to become legally unavailable, our intended business plan with respect to such products could be adversely impacted.
−Removed: We have limited supply sources for industrial hemp, and price increases or supply shortages of key raw materials could materially and adversely affect our business, financial condition and results of operations.
−Removed: Our hemp-based cannabinoid products are composed of certain key raw materials.
−Removed: If the prices of such raw materials increase significantly, it could result in a significant increase in our product development costs.
−Removed: If raw material prices increase in the future, we may not be able to pass on such price increases to our customers.
−Removed: A significant increase in the price of industrial hemp or other raw materials that cannot be passed on to customers could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our success will depend upon the availability of industrial hemp and other raw materials that permit us to meet our labeling claims and quality control standards.
−Removed: The supply of our industrial hemp is subject to the same risks normally associated with agricultural production, such as climactic conditions, insect infestations and availability of manual labor or equipment for harvesting.
−Removed: Any significant delay in or disruption of the supply of raw materials could substantially increase the cost of such materials, could require product reformulations, the qualification of new suppliers and repackaging and could result in a substantial reduction or termination by us of our sales of certain products, any of which could have a material adverse effect upon us.
−Removed: Accordingly, there can be no assurance that the disruption of our supply sources will not have a material adverse effect on us.
−Removed: Because our distributors may only sell and ship our products containing hemp-derived CBD in states that have adopted laws and regulations qualifying under the 2018 Farm Act, a reduction in the number of states having such qualifying laws and regulations could limit, restrict or otherwise preclude the sale of intended products containing hemp-derived CBD.
−Removed: The interstate shipment of hemp-derived CBD from one state to another is legal only where both states have laws and regulations that allow for the production and sale of such products and that qualify under the 2018 Farm Act.
−Removed: Therefore, the marketing and sale of our intended products containing hemp-derived CBD is limited by such factors and is restricted to such states.
−Removed: Although we believe we may lawfully sell any of our finished products, including those containing CBD, in a majority of states, a repeal or adverse amendment of laws and regulations that are now favorable to the distribution, marketing and sale of finished products we intend to sell could significantly limit, restrict or prevent us from generating revenue related to our products that contain hemp-derived CBD.
−Removed: Any such repeal or adverse amendment of now favorable laws and regulations could have an adverse impact on our business plan with respect to such products.
−Removed: Due to recent expansion into the CBD industry, we may have a difficult time obtaining the various insurances that are desired to operate our business, which may expose us to additional risk and financial liability .
−Removed: Insurance that is otherwise readily available, such as general liability, and directors and officer’s insurance, may become more difficult for us to find, and more expensive, due to our recent launch of certain products containing hemp-derived CBD.
+Added: Due to our operations in several highly regulated industries, we may have a difficult time obtaining the various insurances that are desired to operate our business, which may expose us to additional risk and financial liability .
+Added: Insurance that is otherwise readily available, such as general liability, and directors and officer’s insurance, may become more difficult for us to find, and more expensive, due to our operations in highly regulated industries.
There are no guarantees that we will be able to find such insurances in the future, or that the cost will be affordable to us.
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Because of their well-established sales and distribution channels, marketing depth, financial resources, and proven expertise navigating complex regulatory landscapes, “big tobacco” is better positioned than small competitors like us to capture a larger share of the vapor markets.
−Removed: We also face competition from companies in the vapor market that are much larger, better funded, and more established than us.
+Added: We also face competition from companies in the vapor market that are much larger, better funded, and more established than we are.
Companies with greater capital and research capabilities could re-formulate existing products or formulate new products that could gain wide marketplace acceptance, which could have a depressive effect on our future sales.
14 unchanged sentences
Any of these failures or occurrences could negatively affect our business and financial performance.
−Removed: There is limited availability of clinical studies related to hemp-based products.
−Removed: Although hemp plants have a long history of human consumption, there is little long-term experience with human consumption of certain of these innovative product ingredients or combinations thereof in concentrated form.
−Removed: Although we perform research and/or tests the formulation and production of our products, there is limited clinical data regarding the safety and benefits of ingesting industrial hemp-based products.
−Removed: Any instance of illness or negative side effects of ingesting industrial hemp-based products would have a material adverse effect on our business and operations.
+Added: There is limited availability of clinical studies related to many of our products.
+Added: There is little long-term experience with human consumption of certain of the innovative product ingredients or combinations that we utilize in our products.
+Added: Although we perform research and/or tests the formulation and production of our products, there is limited clinical data regarding the safety and benefits of ingesting certain of our products.
+Added: Any instance of illness or negative side effects of using or ingesting our products would have a material adverse effect on our business and operations.
The sale of our products involves product liability and related risks that could expose us to significant insurance and loss expense.
12 unchanged sentences
Our success will be dependent upon our ability to convey to consumers that our products are superior to those of our competitors.
−Removed: The presence of trace amounts of THC in our products may cause adverse consequences to users of such products that will expose us to the risk of litigation, liability and other consequences.
−Removed: Some of our products that contain hemp-derived CBD, or other hemp-derived cannabinoids, may contain trace amounts of THC.
−Removed: THC is a controlled substance in many jurisdictions, including under the federal laws of the U.S.
−Removed: Whether or not ingestion of THC (at low levels or otherwise) is permitted in a particular jurisdiction, there may be adverse consequences to consumers of our products who test positive for any amounts of THC because of the presence of trace amounts of THC in our hemp products.
−Removed: In addition, certain metabolic processes in the body may negatively affect the results of drug tests.
−Removed: Positive tests for THC may expose us to litigation from our consumers, adversely affect our reputation, our ability to obtain or retain customers and individuals’ participation in certain athletic or other activities.
−Removed: A claim or regulatory action against us based on such positive test results could materially and adversely affect our business, financial condition, operating results, liquidity, cash flow and operational performance.
We must develop and introduce new products to succeed.
12 unchanged sentences
customer acceptance of new products.
−Removed: Competition from the illicit cannabis market could impact our ability to succeed.
−Removed: We face competition from illegal market operators that are unlicensed and unregulated including illegal dispensaries and illicit market suppliers selling cannabis and cannabis-based products.
−Removed: As these illegal market participants do not comply with the regulations governing the cannabis industry, their operations may have significantly lower costs.
−Removed: The perpetuation of the illegal market for cannabis may have a material adverse effect on our business, results of operations, as well as the perception of cannabis use.
If we are not able to adequately protect our intellectual property, then we may not be able to compete effectively, and we may not be profitable.
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These sales, or the perception that such sales may occur, may adversely impact the price of our Common Stock, even if there is no relationship between such sales and the performance of our business.
−Removed: As of December 31, 2023, we had 228,535,886 shares of Common Stock outstanding, as well as outstanding options to purchase an aggregate of 5,271,637 shares of our Common Stock at a weighted average exercise price of $0.58 per share, up to 28,926,313 shares of Common Stock issuable upon conversion of outstanding shares of Series A Preferred and outstanding warrants to purchase up to an aggregate of 40,424,136 shares of our Common Stock at a weighted average exercise price of $0.44313 per share that expire on April 26, 2024 unless exercised.
+Added: As of December 31, 2024, we had 257,286,631 shares of Common Stock outstanding, as well as outstanding options to purchase an aggregate of 4,647,814 shares of our Common Stock at a weighted average exercise price of $0.46 per share, up to 27,741,333 shares of Common Stock issuable upon conversion of outstanding shares of Series A Preferred.
The exercise and/or conversion of such outstanding derivative securities may result in further dilution to our stockholders.
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In the case of publicly traded companies, it is common for a broker to hold securities on your behalf, in “street name” (meaning the broker is shown as the holder on the issuer’s records and then you show up on the broker’s records as the person the broker is holding for).
−Removed: Due to regulatory uncertainties, certain brokers may not agree to hold securities of companies whose products include hemp-derived CBD for their customers, meaning that you may not be able to take advantage of the convenience of having all your holdings reflected in one place.
+Added: Due to regulatory uncertainties, certain brokers may not agree to hold securities of our Company, meaning that you may not be able to take advantage of the convenience of having all your holdings reflected in one place.
You should not rely on an investment in our Common Stock for the payment of cash dividends.
3 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.