Le Lézard
Classified in: Business
Subjects: ERN, ACC, MAT

Charlie's Holdings, Inc. Announces Financial Results for 2019 Second Quarter and Year to Date


COSTA MESA, California, Aug. 15, 2019 /PRNewswire/ -- Charlie's Holdings, Inc. (the "Company" or "Charlies") (OTC: CHUC), an industry leader in the premium e-cigarette and CBD products space, announced today that on August 14, 2019, it filed its Quarterly Report on Form 10-Q for the three and six months ended June 30, 2019.

"This filing represents our first public quarterly financial disclosure since completing our share exchange with Charlie's Chalk Dust, LLC and the related financing on April 26, 2019. We are pleased to report that, following our transition to a public reporting company, we continue to achieve profitability and top line revenue growth from both our nicotine and CBD based products," said Brandon Stump, CEO of Charlie's. "We continue to be excited for our future and anticipate that we are now well positioned to achieve consolidated profits, as we have recognized certain non-recurring transaction related costs in our combined operating statement." Mr. Stump continued, "our CBD product line showed great success from our initial launch in June of this year, and we plan to further diversify this product line and continue to create products that our customers will enjoy."

Highlights from Second Quarter

Financial Results for the Three Months Ended June 30, 2019

Consolidated revenue for the three months ended June 30, 2019 increased $1,332,000, or 24%, to $6,819,000, as compared to $5,486,000 for prior year period due to an increase in revenue of (i) $289,000 in our nicotine-based products sold by our wholly-owned subsidiary, Charlie's Chalk Dust, LLC, (ii) $1,022,000 from sales of our CBD products sold through our related consolidated entity, Don Polly, LLC, which launched in June 2019, and (iii) $21,000 in sales from our legacy product, Bazi® All Natural Energy, which we intend to discontinue.

The Company had a consolidated net loss from operations of $3,211,000 for the three months ended June 30, 2019 due primarily to operating profits of $1,169,000 generated from sales of our nicotine-based and CBD products, offset by $4,381,000 attributable to non-recurring corporate and transaction related expenses incurred in connection with the share exchange with Charlie's Chalk Dust, LLC and related financing transaction which closed on April 26, 2019.

Financial Results for the Six Months Ended June 30, 2019

Consolidated revenue for the six months ended June 30, 2019 increased $2,548,000, or 23%, to $13,466,000, as compared to $10,919,000 for same prior year period due to an increase in revenue of (i) $1,504,000 in our nicotine based products sold by our wholly-owned subsidiary, Charlie's Chalk Dust, LLC, (ii) $1,022,000 from sales of our CBD products sold through our related consolidated entity, Don Polly, LLC, which launched in June 2019, and (iii) $21,000 in sales from our legacy product, Bazi® All Natural Energy, which we intend to discontinue.

The Company had a consolidated net loss from operations of $736,000 for the six months ended June 30, 2019 due, primarily, to operating profits of $3,644,000 generated from the sales of our nicotine-based and CBD products, offset by $4,381,00 attributable to non-recurring corporate and transaction related expenses incurred in connection with the share exchange with Charlie's Chalk Dust, LLC and the related financing completed on April 26, 2019.

About Charlie's Holdings, Inc.

Charlie's Holdings Inc. (OTC: CHUC) is an industry leader in the premium e-cigarette and CBD liquid spaces 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 over 80 countries around the world. Charlie's Chalk Dust has developed an extensive portfolio of brand styles, flavor profiles and innovative product formats. Launched in June of 2019, Don Polly, LLC formulates innovative hemp-derived, non-THC (less than 3%), CBD wellness products. Don Polly's high quality CBD products derive from single-strain-sourced hemp extract and high purity CBD isolate crystals. Additional information about Charlie's Chalk Dust can be found at www.charlieschalkdust.com.

Cautionary Note on Forward-Looking Statements ? 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 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 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.

 

 

Appendix: 

 

CHARLIE'S HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited)













June 30,



December 31,




2019



2018


ASSETS







Current assets:







Cash


$

5,120



$

304


Accounts receivable, net



1,980




711


Inventories, net



1,236




658


Prepaid expenses and other current assets



973




427


Total current assets



9,309




2,100











Non-current assets:









Property, plant and equipment, net



216




45


Right-of-use asset, net



748




-


Other assets



68




42


Total non-current assets



1,032




87











TOTAL ASSETS


$

10,341



$

2,187




















LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:









Accounts payable and accrued expenses


$

1,548



$

1,216


Derivative liability



7,584




-


Lease liabilities



249




-


Deferred revenue



142




180


Total current liabilities



9,523




1,396











Non-current liabilities:









Lease liabilities, net of current portion



519




-


Total non-current liabilities



519




-











Total liabilities



10,042




1,396











COMMITMENTS AND CONTINGENCIES


















Stockholders' equity:









Convertible preferred stock ($0.001 par value); 1,800,000 shares authorized









Series A, 300,000 shares designated, 206,248 and 0 shares issued and outstanding as of
June 30, 2019 and December 31, 2018, respectively



-




-


Series B, 1.5 million shares designated, 0 and 1.4 million shares issued and outstanding
as of June 30, 2019 and December 31, 2018, respectively



-




1


Common stock ($0.001 par value); 50 billion shares authorized; 18,936 million shares
and 141 million shares issued and outstanding as of June 30, 2019 and December 31,
2018, respectively



18,936




141


Additional paid-in capital



(17,749)




-


Retained earnings (accumulated deficit)



(888)




649


Total stockholders' equity



299




791


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

10,341



$

2,187


 

 

 

CHARLIE'S HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)  

















For the three months
ended



For the six months
ended




June 30,



June 30,




2019



2018



2019



2018


Revenues:













Product revenue, net


$

6,819



$

5,486



$

13,466



$

10,919


Total revenues



6,819




5,486




13,466




10,919


Operating costs and expenses:

















Cost of goods sold - product revenue



2,846




2,054




5,596




4,220


General and administrative



6,374




524




7,029




1,016


Sales and marketing



810




783




1,577




1,500


Total operating costs and expenses



10,030




3,361




14,202




6,736


Loss from operations



(3,211)




2,125




(736)




4,183


Other income:

















Change in fair value of derivative liabilities



178




-




178




-


Total other income



178




-




178




-


Net income (loss)


$

(3,033)



$

2,125



$

(558)



$

4,183



















Net earnings (loss) per share applicable to common
stockholders

 
















Basic


$

(0.00)



$

0.02



$

(0.00)



$

0.03


Diluted


$

(0.00)



$

0.00



$

(0.00)



$

0.00


Weighted average shares used in computing basic
earnings (loss) per share



4,259,080




141,041




2,211,436




141,041


Weighted average shares used in computing diluted
earnings (loss) per share



4,259,080




14,104,089




2,211,436




14,104,089


 

 

 


CHARLIE'S HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)











For the six months
ended




  June 30,




2019



2018


Cash Flows from Operating Activities:







Net (loss) income


$

(558)



$

4,183


Reconciliation of net (loss) income to net cash provided by operating activities:









Bad debt recoveries



(35)




-


Depreciation and amortization



12




10


Change in fair value of derivative liabilities



(178)




-


Amortization of operating lease right-of-use asset



46




-


Stock based compensation



3,077




-


Subtotal of non-cash charges



2,922




10


Changes in operating assets and liabilities:









Accounts receivable



(1,235)




(241)


Inventories



(578)




(440)


Prepaid expenses and other current assets



(546)




303


Other assets



(26)




(4)


Accounts payable and accrued expenses



332




(326)


Deferred revenue



(38)




130


Lease liabilities



(26)




-


Net cash provided by operating activities



247




3,615


Cash Flows from Investing Activities:









Purchase of property, plant and equipment



(182)




(5)


Net cash used in investing activities



(182)




(5)


Cash Flows from Financing Activities:









Proceeds from issuance of common stock and warrants in a private offering, net



23,160




-


Cash distributions to CCD Members



(18,409)




(3,402)


Net cash provided by (used in) financing activities



4,751




(3,402)


Net increase in cash



4,816




208











Cash, beginning of the period



304




655


Cash, end of the period


$

5,120



$

863











Supplemental disclosure of cash flow information









Cash paid for interest


$

-



$

-


Cash paid for income taxes


$

-



$

-











Supplemental disclosure of cash flow information









Effect of reverse merger 


$

2,378



$

-


Conversion of Series B convertible preferred stock


$

13,963



$

-




















The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

For more information, contact: 
Investor Relations
Charlie's Holdings, Inc.
1007 Brioso Dr.
Costa Mesa, CA 92627
ir@charliesholdings.com

 

 

 

SOURCE Charlie's Holdings, Inc.


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