OTC: CHUC

Our Products

Charlie’s Product Line

Our business efforts consist primarily of formulating, marketing and distributing our portfolio of proprietary (i) alternative alkaloid (non-nicotine) vapor products, (ii) electronic nicotine delivery devices (“ENDS”), and (iii) premium non-combustible e-liquids, which we collectively refer to as the “Charlie’s Product Line” or “Charlie’s Products”.

Alternative Alkaloid Products

Metatine™ (“Metatine” or “Alternative Alkaloid”) is a synthetically derived molecule that is structurally similar to, but chemically different from, other vaping alkaloids. Notably, even though Metatine is a nicotine salt analogue (a non-nicotine compound), vape devices that contain Metatine provide adult users with a strong sense of satisfaction, pleasure and enjoyment that is largely indistinguishable from that experience provided by traditional nicotine-based vape products. Metatine is the proprietary ingredient in the Company’s SBX Disposable device (“SBX”) product line.

SBX Disposables, with Metatine inside, are currently available in 5-Packs, featuring a 17,000-25,000 puff delivery, 3 firing modes, and active battery and e-liquid monitoring functions. The current portfolio of eighteen unique flavors offers more value to consumers at a competitive retail price. Unlike the tens of thousands of flavored nicotine vapes that may not legally be sold in the United States, SBX contains Metatine and is not, therefore, subject to regulatory restrictions that apply to most other flavored vapes. Metatine is not a tobacco product as defined in the Food, Drug and Cosmetic Act (“FDCA”), as amended by the Tobacco Control Act. Accordingly, neither Metatine nor e-liquids and vape products made with Metatine are subject to the Tobacco Control Act and the various restrictions that apply to new tobacco products.

Similarly, SBX is not subject to sales restrictions in some states that have implemented “flavor bans” on ENDS. Notably, SBX is not subject to the New York State vapor product flavor ban because it is not a “flavored vapor product” as defined in Article 13-F of New York State’s Public Health Law. According to NYS Public Health Law § 1399-mm-1, a “flavored” vapor product is defined, in pertinent part, as “any vapor product intended or reasonably expected to be used with or for the consumption of nicotine ….” As such, because SBX is a closed, non-refillable zero-nicotine product and is not intended or reasonably expected to be used with or for the consumption of nicotine, it is not subject to the flavored vapor product ban in New York State (outside the five boroughs of Manhattan).

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SBX 20mL Disposable. SBX Disposables offer adult consumers Charlie’s award-winning flavors in a zero-nicotine device that provides adult users with a strong sense of satisfaction that is largely indistinguishable from that experience provided by traditional nicotine-based vape products. SBX is currently offered in eighteen flavors with three power modes, and an attractive screen display.

Nicotine-Based Disposables

Disposable vapes, also referred to as (“Disposables”), are pre-filled and pre-charged vapor delivery systems. These single-use electronic vaporizers offer a draw-activated mouthpiece and are infused with e-liquid, making them ready to use upon purchase. Our Disposables are available in a variety of sizes (currently 4ml, 8ml, 12ml and 20ml) and flavors, including some of our award-winning proprietary blends.

Charlie’s disposable nicotine products are produced under two brand names (Pacha and PACHAMAMA) distinguished by their size and intended market, and offer users a variety of premium flavors containing synthetic nicotine (not derived from tobacco) and tobacco-derived nicotine in a compact, discrete format. All Disposables are shipped in flavor-specific consumer display units (“CDUs”) which hold five-ten individually packaged disposables for quick and convenient retail sales.

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Pacha 4mL Disposable. Pacha 4mL Disposables were designed for the US market with the objective of providing a convenient and satisfying user experience.

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Pacha 8mL Disposable. Pacha 8mL Disposables offer customers a moderately higher puff count and are available in a variety of flavors ranging from our innovative “Clear” (flavorless) offering, to novel fruit blends and distinctive dessert flavors.

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Pacha 12mL Disposable. Pacha 12mL Disposables offer customers one of Charlie’s most popular puff-count options, and are available in fruit and “ice” varieties.

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PACHAMAMA 20mL Disposable. PACHAMAMA 20mL Disposables provide the ultimate vaping experience with “the most desirable flavors on earth,” three power modes, and an attractive screen display.

E-Liquids

E-liquids used to produce vapor in vaping devices are sold separately for use in refillable tanks of open system vaporizers. Liquids are available in variable nicotine concentrations (currently 0 mg, 3 mg, and 6 mg per milliliter) to suit user preferences. Liquids are available in a variety of our proprietary-blended flavors. The liquid solution consists of flavoring and/or nicotine dissolved in one or several hygroscopic components, which turns the water in the solution into the smoke-like vapor when heated. The most commonly used hygroscopic components are propylene glycol (“PG”), vegetable glycerin (“VG”) or polyethylene glycol 400. VG imparts sweetness and produces vapor clouds, while PG produces more “throat hit,” which simulates the feeling of smoking. Our proprietary e-liquid brands are manufactured by ISO Class 7 certified manufacturers in the United States, which helps ensure their purity and quality.

Charlie’s e-liquid products are sold primarily under the Pacha (domestic) and PACHAMAMA™ (international) brand names, distinguished by their flavor profiles, packaging art, and ingredient transparency. Consisting of eclectic mixes of natural fruit flavors such as passion fruit raspberry yuzu, blood orange banana gooseberry, and huckleberry pear acai, these products were originally launched in 2016.

In 2024, using our proprietary nicotine salt analog, we launched our PACHAMAMA PLUS+ e-liquid line. Combining the smoothness of an open pod system and the vibrant flavor profiles of disposable vape products, PACHAMAMA PLUS+ provides boosted flavor with an ultra-smooth, uniquely satisfying experience. In addition, PACHAMAMA PLUS+ e-liquids are not subject to sales restrictions in some states that have implemented “flavor bans” on nicotine products.

Nicotine Salt Products

Nicotine salt e-liquids (“NIC salts”) are formulated for use in lower wattage open, semi-open, and closed system vaporizers and are available in higher nicotine concentrations (25mg and 50mg per milliliter) than traditional e-liquids. Nicotine salts consist of nicotine dissolved in an acid that results in a lower PH level than other e-liquids. This form of nicotine has a higher bioavailability resulting in faster blood stream absorption and more closely mimics the effects of combustible tobacco products.

Age-Gating Technology

As part of Charlie’s regulatory strategy, the Company is 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. The Company believes that effective age-verification mechanisms are a critical component in supporting the Company’s Premarket Tobacco Applications (“PMTAs”) for both flavored and “plain” tobacco nicotine vapor products.

On December 18, 2025, Charlie’s Holdings, Inc. entered a Master Hardware, Software, and Cloud Subscription 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. Under the agreement, IKE will supply proprietary Bluetooth Low Energy (“BLE”) chips designed to be embedded in the Company’s devices and to enable wireless communication with a cloud-based software platform that supports device authentication, age-gating, and age-verification functionality prior to device activation. The agreement also provides for access to a subscription-based software platform and related development services, including the potential creation of a customized, white-labeled application. The Company believes the technologies contemplated by the agreement will support its efforts to enhance product-level age-verification and compliance capabilities as regulatory requirements for nicotine products continue to evolve. Under the IKE license, Charlie’s could become the first Company to demonstrate to the FDA that flavored ENDS products are “appropriate for the protection of public health.” Such a regulatory achievement could prove transformational for Charlie’s and for the entire vapor products industry.

Manufacturing and Distribution

Manufacturing

Charlie’s Product Line. We work closely with contract manufacturing partners in the United States and China to manufacture our products. Our e-liquid and NIC salts products are manufactured to meet our proprietary formula specifications in facilities that are ISO Class 7 certified, which helps ensure their purity and quality. Our SBX line of products is produced through a contract manufacturing arrangement in China. The Company closely monitors the supply-chain process for SBX to ensure amble supply and quality. While we have developed long-standing relationships with our manufacturing sources and take great care to ensure that they share our commitment to quality, we do not have any long-term term contracts with these parties for the production of our product lines. We maintain redundancies in our supply chain and are aware of several alternative sources for our products.

Domestic Filling Operations. During the year ended December 31, 2025, the Company opened an ENDS filling operation in Huntington Beach, California. The establishment of this domestic operation is intended to (i) reduce production costs, (ii) mitigate supply chain disruptions associated with importing finished goods, and (iii) enable Charlie’s to meet stringent domestic manufacturing requirements of Texas and other large states. The Company's Huntington Beach facility also enhances the appeal of Charlie’s premium products, broadly, to adult consumers who prefer "Made in America" brands.

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Distribution

Charlie’s Product Line. Charlie’s products are distributed throughout the United States and in select international markets. The Company’s products are sold through more than 3,000 specialty retailers and are distributed through a combination of direct sales, distributors, and wholesalers.

In addition to expanding its base of specialty retailers, the Company has increased product placement in convenience stores, liquor stores, and gas stations. Products sold through third-party distributors and wholesalers are typically sold for resale, and in certain markets the Company maintains exclusive distribution arrangements, which may be formalized through contractual agreements.

Online Sales

Charlie’s Product Line. We do not currently sell our Charlie’s Products on an e-commerce platform. However, we market Charlie’s Products and sell branded merchandise through our websites, charlieschalkdust.com, sbxvape.com, enjoypachamama.com,and pacha.co. Charlie’s does not engage in direct-to-consumer sales.

Sales and Marketing

Charlie’s Product Line. The Company maintains a U.S.-based sales team responsible for promoting the Charlie’s product line to distributors and retail partners in both domestic and international markets. Our sales team focuses on building long-term relationships with customers by supporting product sell-through initiatives, coordinating with our marketing and creative teams, and providing guidance on product positioning and evolving industry dynamics.

Industry trade shows continue to serve as an important platform for marketing and distribution efforts. In addition, the Company has increased its focus on direct engagement with distributors and retailers through targeted marketing initiatives, account visits, and collaborative promotional campaigns designed to strengthen customer relationships and to support product awareness across key markets.

Source and Availability of Raw Materials

Charlie’s Product Line. Our manufacturing partners source the ingredients used in our proprietary vapor products in accordance with the Company’s formulations and quality specifications. Charlie’s proprietary ingredient Metatine™, an alkaloid patented in the United States and in China by the Company’s chemical supplier, is obtained through a domestic supply and distribution agreement and shipped to China for use in the manufacturing process. Subsequently, the Company’s SBX product line is manufactured in China through a contract manufacturing relationship.

The Company sources its proprietary e-liquids from multiple ISO Class 7 certified manufacturers in the United States to support product quality and consistency. Our disposable vapor devices are developed in collaboration with our Chinese manufacturing partner, which is responsible for sourcing the raw materials required to fulfill our purchase orders.

Competition

The industries in which we operate are highly competitive.

Our Charlie’s Product Line competes in a highly fragmented and rapidly evolving industry. Some identifiable competitors of Charlie’s include Coastal Clouds, Juice Head, Breeze, Flum, Lost Mary, Geek Bar, and Raz. Other brands such as Juul, Vuse, Njoy, Logic, Blu, Vaporfi, Group Mark Ten, and Green Smoke all participate in a different but related segment of the electronic cigarette market which focuses heavily on distribution in national and regional chain stores (primarily convenience, gas, and grocery stores).

In the vapor products space, due to low barriers to entry, and despite FDA regulations for nicotine products, illicit new brands and illicit new products emerge frequently. The market is highly fragmented. Recently, the rapid emergence of disposable vapor products from companies such as Heaven Gifts / Elf Bar have become popular in the ENDS market. In order to gain a competitive advantage over the illicit nicotine products, in markets where regulatory enforcement is a priority, the Company introduced SBX Disposables, a proprietary line of Metatine products. Charlie’s SBX vapor products do not contain compounds that meet the definition of nicotine set forth in 21 U.S.C. § 387(12) and therefore do not require FDA approval for sale in the United States. Currently, there are no known individual competitors with significant market share for this product category.

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Intellectual Property

Patents and Trademarks

We are the registered owner of a several federal trademarks for our Charlie’s lines. We also maintain registrations in several international markets and will work with our international distributors to manage intellectual property and trademark registrations when necessary.

We plan to continue to expand our brand names and our proprietary trademarks and designs worldwide as our business grows and plan to seek patent and/or trademark protection as we deem appropriate.

Age-Gating Device Licensing Agreement

Under our license agreement with IKE, we will provide its proprietary Bluetooth Low Energy (“BLE”) chips and develop a customized, white-labeled web application specifically designed for our devices. The technology builds on IKE's FDA-submitted platform, which achieved effectiveness in clinical validation studies at preventing underage activation. The agreement includes a limited exclusivity period for our nicotine analogue line and allows integration into our FDA-regulated ENDS devices.

Government Regulations

Nicotine Products

The U.S. tobacco industry faces a number of business and legal challenges that have materially adversely affected and may continue to materially adversely affect our business and results of operations, including:

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restrictions and requirements imposed by the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”), and restrictions and requirements (and related enforcement actions) that have been, and in the future will be, imposed by the FDA;

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actual and proposed excise tax increases;

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bans and restrictions on tobacco use imposed by governmental entities and private establishments and employers;

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other federal, state and local government actions, including:

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restrictions on the sale of certain tobacco products, the sale of tobacco products by certain retail establishments, the sale of tobacco products with characterizing flavors and the sale of tobacco products in certain package sizes;

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additional restrictions on the advertising and promotion of tobacco products;

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other actual and proposed tobacco-related legislation and regulation;

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reductions in consumption levels of nicotine products;

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increased efforts by tobacco control advocates and other private sector entities (including retail establishments) to further restrict the availability and use of tobacco products and

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additional regulation over synthetic nicotine products and/or nicotine analogues.

FSPTCA and FDA Regulation

The FSPTCA, its implementing regulations and its 2016 deeming regulations establish broad FDA regulatory authority over all tobacco products and, among other provisions:

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impose restrictions on the advertising, promotion, sale and distribution of tobacco products (see Final Tobacco Marketing Rule below);

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establish pre-market review pathways for new and modified tobacco products;

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prohibit any express or implied claims that a tobacco product is or may be less harmful than other tobacco products without FDA authorization;

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authorize the FDA to impose tobacco product standards that are appropriate for the protection of the public health; and

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equip the FDA with a variety of investigatory and enforcement tools, including the authority to inspect product manufacturing and other facilities.

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The FSPTCA also bans descriptors such as “light,” “low” or “mild” when used as descriptors of modified risk, unless expressly authorized by the FDA.

In March 2022, the U.S. Congress expanded the statutory definition of tobacco products to include products containing nicotine derived from any source, including synthetic nicotine. The amendment became effective in April 2022.

Final Tobacco Marketing Rule: As required by the FSPTCA, in March 2010, the FDA promulgated a wide range of advertising and promotion restrictions for cigarettes and smokeless tobacco products (the “Final Tobacco Marketing Rule”). The May 2016 deeming regulations amended the Final Tobacco Marketing Rule to expand specific provisions to all tobacco products, including cigars, pipe tobacco, and e-vapor and oral nicotine products containing tobacco-derived nicotine or other tobacco derivatives.

The Final Tobacco Marketing Rule, as amended, among other things:

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restricts the use of non-tobacco trade and brand names on cigarettes and smokeless tobacco products;

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prohibits sampling of all tobacco products except that sampling of smokeless tobacco products is permitted in qualified adult-only facilities;

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prohibits the sale or distribution of items such as hats and tee shirts with cigarette or smokeless tobacco brands or logos;

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prohibits cigarettes and smokeless tobacco brand name sponsorship of any athletic, musical, artistic or other social or cultural event, or any entry or team in any event; and

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requires the development by the FDA of graphic warnings for cigarettes, establishes warning requirements for other tobacco products, and gives the FDA the authority to require new warnings for any type of tobacco product.

Subject to certain limitations arising from legal challenges, the Final Tobacco Marketing Rule took effect in June 2010 for cigarettes and smokeless tobacco products, in August 2016 for all other tobacco products, including e-vapor and oral nicotine pouch products containing tobacco-derived nicotine, and in April 2022 for tobacco products, including e-vapor and oral nicotine pouch products, that contain synthetic nicotine.

Rulemaking and Guidance: From time to time, the FDA issues proposed regulations and guidance, which may be issued in draft or final form, generally involve public comment, and may include scientific review. The FDA’s implementation of the FSPTCA and related regulations and guidance also may have an impact on enforcement efforts by states, territories and localities of their laws and regulations. Such enforcement efforts may adversely affect our operating companies’ ability to market and sell regulated tobacco products in those states, territories and localities.

FDA’s Comprehensive Plan for Tobacco and Nicotine Regulation: In July 2017, the FDA announced a “Comprehensive Plan for Tobacco and Nicotine Regulation” (“Comprehensive Plan”) designed to strike a balance between regulation and encouraging the development of innovative tobacco products that may be less risky than cigarettes. Since then, the FDA has issued additional information about its Comprehensive Plan in response to concerns associated with the rise in the use of e-vapor products by youth and the potential youth appeal of flavored tobacco.

Pre-Market Review Pathways for Tobacco Products and Market Authorization Enforcement: The FSPTCA permits the sale of tobacco products on the market as of February 15, 2007 and not subsequently modified (“Pre-existing Tobacco Products”) and new or modified products authorized through the pre-market tobacco application (“PMTA”), Substantial Equivalence (“SE”) or SE Exemption pathways. Subsequent FDA rules also provide a Supplemental PMTA pathway designed to increase the efficiency of submission and review for modified versions of previously authorized products. Through these processes, a manufacturer could receive (i) a “not substantially equivalent” determination, (ii) a denial of a PMTA or (iii) a marketing order withdrawal by the FDA on one or more products, which would require the removal of the product or products from the market.

Since there were virtually no e-liquid, e-cigarettes or other vaping products on the market as of February 15, 2007, there is no way to utilize the less onerous substantial equivalence or substantial equivalence exemption pathways that traditional tobacco corporations can utilize for conventional tobacco products. In order to obtain premarket approval, practically all e-liquid, e-cigarettes or other vaping products would have to follow the PMTA pathway which would cost hundreds of thousands of dollars per application. Upon submission of a PMTA, such products would be permitted to be sold pending the FDA’s review of the submitted PMTAs.

During the quarter ended September 30, 2020, the FDA’s Center for Tobacco Products informed us that our PMTA received a valid submission tracking number, passed the FDA’s filing review phase, and entered the substantive review phase.

On March 15, 2022, a new rider to the Federal Food, Drug and Cosmetic Act was passed granting the FDA authority over synthetic nicotine. These regulations make synthetic nicotine products subject to the same FDA rules as tobacco-derived nicotine products. As such, the Company was required to file a PMTA for its existing synthetic nicotine products marketed under the Pacha brands by May 14, 2022 or be subject to FDA enforcement. The Company filed new PMTAs for its synthetic Pacha products, on May 13, 2022, prior to the May 14, 2022, deadline. On November 3, 2022, FDA accepted for scientific review certain of our PMTAs for synthetic nicotine products and, on November 4, 2022, FDA refused to accept (“RTA”) certain other PMTAs for these products, rendering the latter products subject to FDA enforcement. On March 6, 2023, the Company filed a request for supervisory review with FDA's Center for Tobacco Products and resubmitted PMTAs for the affected synthetic nicotine products. On October 30, 2023, the Company received notification from the FDA that its supervisory review appeal had been granted. Accordingly, the FDA rescinded the RTAs, notified the Company that Acceptance Letters for the PMTAs would be issued, and placed our applications into filing review. The Company continues to sell the affected products while we wait for the FDA to grant marketing orders for our numerous PMTAs.

To date, the FDA has received PMTAs for nearly 27 million Electronic Nicotine Delivery System (“ENDS”1) products and has made determinations on more than 99% of the applications. However, the FDA has authorized only 39 tobacco- and menthol-flavored e-cigarette products and devices. At present, no company in the world has received an FDA marketing order for a flavored (non-tobacco or non-menthol) disposable vape product. In this environment, many unauthorized products continue to be sold. In fact, the FDA Center for Tobacco Products estimates that more than half of the U.S. e-cigarette market is illicit.

1 ENDS are defined as battery-powered devices, also known as an e-cigarettes or “vapes,” that deliver nicotine to users through aerosolized solutions. In order for ENDS to be sold legally in the United States, the products must receive marketing authorization through the FDA’s PMTA pathway; FDA marketing authorizations require that PMTAs provide sufficient evidence that new products offer greater benefits to population health than risks.

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On October 28, 2025, we received Marketing Denial Orders (“MDOs”) from the U.S. Food and Drug Administration (“FDA”) with respect to certain of our timely submitted Premarket Tobacco Product Applications (“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.

During the fourth quarter of 2024 the Company began to introduce to stores in select markets a new disposable vape line, under the “SBX™” brand. The Company and its attorneys believe SBX products are not subject to FDA PMTA review. Based on the information provided by the Company’s contracted chemical suppliers and its consultants, the proprietary Metatine™ (patented in the United States and in China by the Company’s chemical supplier) in the Company’s SBX products does not meet the definition of nicotine set forth in 21 U.S.C. § 387(12) and therefore Charlie’s products containing Metatine, as their active ingredient, are not subject to regulation as “tobacco products” under 21 U.S.C. § 321(rr). Further, according to information verified by the Company’s chemists, the other ingredients in the Company’s SBX vape liquid are not made or derived from tobacco, nor do they contain nicotine from any source.

Because the product does not contain nicotine, SBX is also not subject to sales restrictions in some states that have implemented “flavor bans” on ENDS products. Notably, SBX is currently not subject to the New York State vapor product flavor ban because it is not a “flavored vapor product” as defined in Article 13-F of New York State’s Public Health Law. According to NYS Public Health Law § 1399-mm-1, a “flavored” vapor product is defined, in pertinent part, as “any vapor product intended or reasonably expected to be used with or for the consumption of nicotine ….” As such, because SBX is a closed, non-refillable zero-nicotine product and is not intended or reasonably expected to be used with or for the consumption of nicotine, it is not subject to the flavored vapor product ban in New York State (outside the five boroughs of Manhattan).

FDA Regulatory Actions

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Graphic Warnings: In March 2020, the FDA issued a final rule requiring 11 textual warnings accompanied by color graphics depicting certain negative health consequences of smoking on cigarette packaging and advertising. The final rule was set to become effective on October 6, 2023. In December 2022, the U.S. District Court for the Eastern District of Texas found in favor of cigarette manufacturers in one such suit and blocked the rule, finding it unconstitutional on the basis that it compelled speech in violation of the First Amendment. The FDA has appealed the decision.

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Underage Access and Use of Certain Tobacco Products: The FDA announced regulatory actions in September 2018 to address underage access and use of e-vapor products. Additionally, the FDA issued final guidance in April 2020, stating that it intends to prioritize enforcement action against certain product categories, including cartridge-based, flavored e-vapor products and products targeted to minors.

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Potential Product Standards

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Nicotine in Cigarettes and Other Combustible Tobacco Products: In March 2018, the FDA issued an ANPRM seeking comments on the potential public health benefits and any possible adverse effects of lowering nicotine in combustible cigarettes to non-addictive or minimally addictive levels. In January 2023, the Biden Administration published its Fall 2022 Unified Regulatory Agenda, which includes the FDA’s plans to propose, by October 2023, a product standard that would establish a maximum nicotine level in cigarettes and other combustible tobacco products.

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Flavors in Tobacco Products: In April 2022, the FDA issued two proposed product standards: (i) banning menthol in cigarettes and (ii) banning all characterizing flavors (including menthol) in cigars.

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Excise Taxes

Tobacco products are subject to substantial excise taxes in the United States. Significant increases in tobacco-related taxes or fees have been proposed or enacted (including with respect to e-vapor products) and are likely to continue to be proposed or enacted at the federal, state and local levels within the United States. The frequency and magnitude of excise tax increases can be influenced by various factors, including the composition of executive and legislative bodies.

International Treaty on Tobacco Control

The World Health Organization’s Framework Convention on Tobacco Control (the “FCTC”) entered into force in February 2005. The FCTC is the first international public health treaty and its objective is to establish a global agenda for tobacco regulation with the purpose of reducing initiation of tobacco use and encouraging cessation. The treaty recommends (and in certain instances, requires) signatory nations to enact legislation that would address various tobacco-related issues. There are a number of proposals currently under consideration by the governing body of the FCTC, some of which call for substantial restrictions on the manufacture, marketing, distribution and sale of tobacco products.

Other International, Federal, State and Local Regulation

Various states and localities have enacted or proposed legislation that imposes restrictions on tobacco products (including cigarettes, smokeless tobacco, cigars, e-vapor products and oral nicotine pouches), such as legislation that (i) prohibits the sale of all tobacco products or certain tobacco categories, such as e-vapor, (ii) prohibits the sale of tobacco products with characterizing flavors, such as menthol cigarettes and flavored e-vapor products, (iii) requires the disclosure of health information separate from or in addition to federally mandated health warnings and (iv) restricts commercial speech or imposes additional restrictions on the marketing or sale of tobacco products. The legislation varies in terms of the type of tobacco products, the conditions under which such products are or would be restricted or prohibited, and exceptions to the restrictions or prohibitions.

It is not possible to predict what, if any, additional legislation, regulation, or other governmental action will be enacted or implemented (and, if challenged, upheld) relating to the manufacturing, design, packaging, marketing, advertising, sale or use of tobacco products, or the tobacco industry generally. Any such legislation, regulation or other governmental action could have a material adverse impact on our business, results of operations, cash flows or financial position.

Company’s efforts to mitigate risks associated with new and evolving regulation

The Company is consistent in its efforts to remain in compliance with all existing and reasonably expected future regulations. The Company, through its internal compliance team, market consultants, technicians, and testing labs plans to stay in accordance with all standards whether set forth in the New Tobacco Products Directive or the Deeming Regulations. Making sure that all vapor products meet and exceed the standards set forth by each market’s regulatory body is of the highest concern for the Company. Staying in compliance with all marketing and packaging directives is imperative to maintaining access to the markets. Although these processes are costly and time consuming, it is imperative for the Company’s success that these steps are taken and kept up to date. These regulations may limit our ability to enter certain markets outside the U.S. Similar to the costs of regulatory compliance in the U.S., foreign regulations require significant financial and operational resources to ensure compliance, and we cannot assure that we will always be in compliance despite our best efforts to do so. Failure to comply in a timely fashion to any particular directive or regulation could have material adverse effects on the results of business operations.

Research and Development

The Company’s research and development activities include the development and testing of new flavors, formulations, product formats, and delivery methods for existing products, as well as the development of new products within the Charlie’s product line. Research and development activities also include costs associated with preparing and submitting Premarket Tobacco Product Applications (PMTAs) to the U.S. Food and Drug Administration.

For the years ended December 31, 2025 and 2024, Charlie’s recorded research and development expense of $119,000 and income of $68,000, respectively.

Employees

We had 35 full-time employees as of March 31, 2026. We believe that we maintain a good working relationship with our employees, and we have not experienced any labor disputes. None of our employees are represented by labor unions.

Cost of Compliance with Environmental Laws

We have not incurred any costs associated with compliance with environmental regulations, nor do we anticipate any future costs associated with environmental compliance; however, no assurances can be given that we will not incur such costs in the future.

Available Information

As a public company, we are required to file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information (including any amendments) with the SEC. You can also find the Company’s SEC filings at the SEC’s website at www.sec.gov.

We are a Nevada corporation originally incorporated in 2001. Our principal executive offices are located at 1007 Brioso Drive, Costa Mesa, CA 92627 and our phone number is (949) 531-6855. Our Internet address is www.charliesholdings.com. Information contained on our website is not part of this Annual Report on Form 10-K. Our SEC filings (including any amendments) will be made available free of charge on www.charliesholdings.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

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