What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-04-01 compared with 2025-05-29 · 20 added, 48 removed, 250 unchanged (21% of the section changed)

We are subject to various risks that could have a negative effect on the Company and its financial condition.

These risks could cause actual operating results to differ from those expressed in certain “forward looking statements” contained in this Annual Report on Form 10-K as well as in other communications.

You should carefully consider the risk factors set forth below and in other reports that we file from time to time with the Securities and Exchange Commission and the other information in this Annual Report on Form 10-K.

The matters discussed in the risk factors, and additional risks and uncertainties not currently known to us or that we currently deem immaterial, could have a material adverse effect on our business, financial condition, results of operation and future growth prospects and could cause the trading price of our common stock to decline.

Risks Related to the Company

1 unchanged sentence

Although Charlie’s generated net revenue of approximately $20.9 million during the year ended December 31, 2025 and $7.8 million for the year ended December 31, 2024, there can be no guarantee that the Company will grow revenue or achieve positive cash flow in the future.

Cash used in operating activities was approximately $1.6 million and $0.8 million during the years ended December 31, 2024 and 2023, respectively.

Cash used in operating activities from continuing operations was approximately $6.3 million and $2.0 million during the years ended December 31, 2025 and 2024, respectively.

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.

1 unchanged sentence

Our inability to successfully achieve positive cash flows and profitability will decrease our long-term viability and prospects.

We have limited cash resources and may require additional financing.

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.

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.

These conditions lead the Company to conclude there is substantial doubt about our ability to continue as a going concern.

If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that would likely result in our stockholders losing some or all their investment in us.

As of December 31, 2024, the Company has substantial doubt about its ability to continue as a going concern.

Our financial statements have been prepared 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 apply for FDA approval to continue selling and marketing its products used for the vaporization of nicotine in the United States.

There was significant cost associated with the application process and there can be no assurance the FDA will approve previous and/or future application.

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.

The financial statements do not include any adjustments to the carrying amount and classification of recorded assets and liabilities should the Company be unable to continue operations.

If we are unable to generate sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that would likely result in our stockholders losing some or all their investment in us.

Our products could fail to attract or retain users or generate revenue and profits.

8 unchanged sentences

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.

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.

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.

For example, Don Polly and its shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations, including maintaining our website and using the domain names and trademarks, in an acceptable manner or taking other actions that are detrimental to our interests.

If we had direct ownership of Don Polly, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of Don Polly, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level.

However, under the current contractual arrangements, we rely on the performance by Don Polly, and its shareholders of their obligations under the contracts.

The shareholders of Don Polly may not act in the best interests of our Company or may not perform their obligations under these contracts.

Such risks exist throughout the period in which we intend to operate our business through the contractual arrangements with Don Polly.

Therefore, our contractual arrangements with Don Polly, our consolidated variable interest entity (“ VIE ”), may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.

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.

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.

These shareholders may breach, or cause Don Polly to breach, the existing contractual arrangements we have with them and Don Polly, which would have a material adverse effect on our ability to effectively control Don Polly and receive economic benefits from it.

For example, the shareholders may be able to cause our agreements with Don Polly to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis.

We cannot assure you that when conflicts of interest arise, any or all of these shareholders will act in the best interests of our Company or such conflicts will be resolved in our favor.

Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and the Company.

If we cannot resolve any conflict of interest or dispute between us and the shareholders of Don Polly, we would have to rely on legal proceedings, which could result in the disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

We have no commercial manufacturing capacity and rely on third-party contract manufacturers to produce commercial quantities of our products.

25 unchanged sentences

These factors or any combination of these factors may adversely affect our revenue or our overall financial performance.

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.

Such events may result in a period of business and travel disruption, and in reduced sales and operations, any of which could materially affect our business, financial condition and results of operations.

For example, the spread of COVID-19 in the United States resulted in travel restrictions that impacted our sales professionals and caused disruptions to our manufacturing supply chain.

These conditions previously negatively affected our sales and revenue.

However, if another outbreak of COVID-19 or another pandemic occurs, it could have an adverse impact on our business.

The extent to which COVID-19 or another pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted.

Regulatory and Market Risks

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 .

Our business is primarily involved in the sales of products that contain nicotine or alternative alkaloids, all of which face significant regulation and actions that may have a material adverse effect on our business .

Our current business is primarily the sale of products that contain nicotine or alternative alkaloids.

34 unchanged sentences

There can be no assurance as to the ultimate content, timing or effect of any regulation of tobacco products by governmental bodies, nor can there be any assurance that potential corresponding declines in demand resulting from negative media attention would not have a material adverse effect on our business, results of operations and financial condition.

Recently enacted legislative changes to the Federal Food, Drug and Cosmetic Act could materially affect sales of our Pacha branded products, and if we do not receive acceptance filings from the FDA for these products, we will not be able to market them which could materially affect our revenue and financial results.

The Federal Food, Drug and Cosmetic Act could materially affect sales of our Pacha branded products, and if we do not receive acceptance filings from the FDA for these products, we will not be able to market them which could materially affect our revenue and financial results.

During, 2022, a new rider to the Federal Food, Drug and Cosmetic Act was passed granting the FDA authority over synthetic nicotine.

7 unchanged sentences

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.

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.

The costs to date associated with these PMTAs are approximately $6.5 million in total.

On October 28, 2025, we received Marketing Denial Orders (“MDOs”) from the FDA with respect to certain of our timely submitted PMTAs.

On November 5, 2025, we filed an emergency motion for a temporary administrative stay with the U.S.

Court of Appeals for the Fifth Circuit, which the Court granted on November 10, 2025.

On December 24, 2025, a Fifth Circuit panel granted our motion to stay the MDOs pending judicial review.

As a result of the stay, the affected PMTAs revert to pending status and continue to be treated as timely filed (May 2022) while the case is litigated on the merits.

Accordingly, the subject products remain eligible, where permitted by state law, for listing on state vapor product directories (e.g., Louisiana) that allow the sale of products associated with timely submitted synthetic-nicotine PMTAs that are pending FDA’s review, subject to satisfaction of all other applicable state requirements.

We plan to continue to vigorously defend our PMTAs and on the merits while also continuing to amend our applications with the latest science.

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.

10 unchanged sentences

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.

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.

On January 2, 2020 the FDA issued an enforcement policy effectively banning the sale of flavored cartridge-based e-cigarettes marketed primarily by large manufacturers in the United States without prior authorization from the FDA.

52 unchanged sentences

Any of these failures or occurrences could negatively affect our business and financial performance.

Any Age-Gating Technology we develop or acquire is subject to becoming obsolete.

As part of our regulatory strategy, we are investing in the development of advanced age-gating and access-control technologies designed to prevent youth access while maintaining availability for adult smokers who seek alternatives to combustible cigarettes.

We also entered into an agreement with IKE to integrate IKE’s age-verification technology into certain of the Company’s nicotine analogue and electronic nicotine delivery system (“ENDS”) products.

An investment into age-gating technology is expensive and time consuming and does not guarantee that such technology will be successful or rendered obsolete by superior technology.

Any failure to develop successful age-gating technology could have a negative impact on our business and strategy.

There is limited availability of clinical studies related to many of our products.

51 unchanged sentences

Our Charter currently authorizes the issuance of up to 500.0 million shares of Common Stock, of which approximately 270.6 million shares are issued and outstanding as of March 31, 2026.

In addition, we have reserved approximately 32.0 million shares for issuance upon conversion and/or exercise of our outstanding shares of Series A Preferred, warrants and stock options, as well as for issuance as awards under our 2019 Omnibus Incentive Plan.

In addition, we have reserved approximately 32.0 million shares for issuance upon conversion and/or exercise of our outstanding shares of Series A Preferred and stock options, as well as for issuance as awards under our 2019 Omnibus Incentive Plan.

The issuance of any additional shares of our Common Stock, including those shares issuable upon conversion and/or exercise of our outstanding derivative securities, will result in significant dilution to our stockholders and a reduction in value of our outstanding Common Stock.

40 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.

What changed 10-K

Item 1A. Risk Factors