CHUC

New in FY2025

• RISK FACTORS 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.
• 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 from continuing operations was approximately $6.3 million and $2.0 million during the years ended December 31, 2025 and 2024, respectively.
• Our products could fail to attract or retain users or generate revenue and profits.
• 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. -9- We have no commercial manufacturing capacity and rely on third-party contract manufacturers to produce commercial quantities of our products.
• Such disruptions or misappropriations and the resulting repercussions, including reputational damage and legal claims or proceedings, may adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.
• The business that we conduct outside the United States may be adversely affected by international risk and uncertainties.
• Regulatory and Market Risks 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 .
• Any ban on flavored e-cigarettes, or similar enforcement action by the FDA, or any order by the FDA requiring us to cease selling any of our products, would have a significant adverse impact on Charlie’s products, which would, in turn, have a material adverse impact on our overall business material. -10- Additional regulatory challenges may come in future months and years, including the FDA’s publication of new product standards or additional rule making that may impact vape shops or other small manufacturers, limit adult consumer choices, delay or prevent the launch of new or modified risk tobacco products or products with claims of reduced risk, require the recall or other removal of certain products from the marketplace, restrict communications including marketing, advertising, and educational campaigns regarding the product category to adult consumers, restrict the ability to differentiate products, create a competitive advantage or disadvantage for certain companies, impose additional manufacturing, labeling or packaging requirements, interrupt manufacturing or otherwise significantly increase the cost of doing business, or restrict or prevent the use of specified products in certain locations or the sale of products by certain retail establishments.
• 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.
• 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. -11- The regulation of tobacco products by the FDA in the United States and the issuance of Deeming Regulations may materially adversely affect the Company.
• 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.
• 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.
• 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.
• Changes to the application of existing laws and regulations, and/or the implementation of any new laws or regulations that may be adopted in the future, at a federal, state, or local level, directly or indirectly implicating or banning flavored e-cigarette liquid and products used for the vaporization of nicotine would materially limit our ability to sell such products, result in additional compliance expenses, and require us to change our labeling and methods of distribution, any of which would have a material adverse effect on our business, results of operations and financial condition. -12- There is substantial concern regarding the effect of long-term use of vaping products.
• 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.
• 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 .
• If we are forced to go without such insurances, it may prevent us from entering into certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities.
• We face significant competition from existing suppliers of products similar to ours.
• Any of these failures or occurrences could negatively affect our business and financial performance. -13- 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.
• In addition, our product liability insurance may fail to cover future product liability claims, which, if adversely determined, could subject us to substantial monetary damages.
• The success of our business will depend upon our ability to create and expand our brand awareness.
• Our inability to protect our intellectual property could have a material adverse impact on our ability to compete and could make it difficult for us to achieve a profit. -14- Risks Related to Our Common Stock A limited trading market currently exists for our securities, and we cannot assure you that an active market will ever develop, or if developed, will be sustained.
• As of December 31, 2025, we had 270,653,242 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 21,190,885 shares of Common Stock issuable upon conversion of outstanding shares of Series A Preferred.
• 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 and stock options, as well as for issuance as awards under our 2019 Omnibus Incentive Plan.
• Either or both of which could adversely affect the price of our Common Stock. -15- The price of our securities could be subject to wide fluctuations and your investment could decline in value.
• Although we believe this provision benefits us by providing increased consistency in the application of Nevada law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers. -16- You may not be able to hold our securities in your regular brokerage account.

Gone since FY2024

• RISK FACTORS 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.
• Although Charlie’s generated net revenue of approximately $8.5 million during the year ended December 31, 2024 and $16.3 million for the year ended December 31, 2023, 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.
• 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. -13- Our products could fail to attract or retain users or generate revenue and profits.
• 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. -14- 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.
• Such disruptions or misappropriations and the resulting repercussions, including reputational damage and legal claims or proceedings, may adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock. -15- The business that we conduct outside the United States may be adversely affected by international risk and uncertainties.
• 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.

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