CHUC 10-K & 10-Q changes, risk factors and insider trading

Although Charlie’s generated net revenue of approximately $8.5$20.9 million during the year ended December 31, 20242025 and $16.3$7.8 million for the year ended December 31, 2023,2024, 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 $1.6$6.3 million and $0.8$2.0 million during the years ended December 31, 20242025 and 2023,2024, 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. There is no guarantee that we will be able to achieve or sustain positive cash flows and profitability in the future. Our inability to successfully achieve positive cash flows and profitability will decrease our long-term viability and prospects.

Our business is primarily involved in the sales of products that contain nicotine,nicotine or 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.

Recently enacted legislative changes to theThe 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.

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. 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.

Recent bansBans 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.

Our Charter currently authorizes the issuance of up to 500.0 million shares of Common Stock, of which approximately 257.3270.6 million shares are issued and outstanding as of March 31, 2025.2026. 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, warrantsPreferred 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. Further, any such issuance may result in a change of control of our corporation.

You should read the following discussion and analysis in conjunction with our financial statements, including the notes thereto contained in this Annual Report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of certain factors, including those set forth under “Risk Factors Associated with Our Business” and elsewhere in this Annual Report.

In today’s economic landscape, particularly within the vapor products industry, seeking and securing competitive advantage is paramount. Unlike many competitors in our industry, Charlie’s has focused on achieving full compliance with FDA regulations – while also establishing a regulatory “hedge” through the development of alternative “zero-nicotine” product lines that are not currently subject to FDA review. Simultaneous to undertaking these initiatives, in 20242025 management took aggressive steps to “right(i) size”monetize sixteen of the business,Company’s preservePMTA workingproducts, capital,(ii) launch the SBX product line, (iii) establish a U.S. manufacturing facility, and (iv) achieve profitabilityprofitability. Charlie’s success, in 2025.all Ourthese keyendeavors, initiativesset include:the stage for continued growth, potential FDA marketing orders, and a potential uplist to a national securities exchange.

InOur 2024,market toresearch test consumer acceptance of nicotine substitute vapor products in the marketplace, we launched the SPREE BAR disposable flavor pod system (with Metatine inside) in select markets across the US. This initiative demonstratedindicates that adult consumers: (i) overwhelmingly prefer “"flavored”" vapor products over plain tobacco products; (ii)and are highly receptive to nicotine substitute products that offer the same vaping experience as that provided by conventional nicotine vapor products;products. and,SBX surprisinglyDisposables feature Charlie's award-winning flavors (iii)preferred areover notplain particularlytobacco interestedvapor inby themore costthan savings80% thatof SPREEadult BAR flavor pods (with reusable batteries) represent vs. conventional disposable vapes (with single use batteriesconsumers).

In a Company-sponsored focus group survey of adult consumers who vape, Charlie's SBX Disposables were overwhelmingoverwhelmingly preferred over Juul tobacco-flavored vapes. Of 306 survey participants, 287 preferred SBX over Juul. In Company marketing materials, SBX advantages are highlighted: "Compared to mass-market vapes offered by Big Tobacco ̶ namely Juul ̶ SBX provides many MORE FLAVOR options, UNBEATABLE TAX ADVANTAGES, and THOUSANDS MORE PUFFS!”

Priority 4: In order to further mitigate FDA regulatory risk in the domestic market and to capture what management continues to believe is a significant commercial opportunity, we have dedicated additional resources to efforts focused on growing our market share internationally. Presently, approximately 10%8% of our vapor product sales come from the international marketmarket. and weWe are well positionedwell-positioned to increase sales in countries where we already have presence and,and to capture new business in several additional overseas markets, as we have already built an international distribution platform.markets.

Risks and Uncertainties and Ability to Continue as a Going Concern

The Company operates in an environment that is subject to rapid changes and developments in laws and regulations that could have a significant impact on the Company’s ability to sell its products. Beginning in September 2019, certain states temporarily banned the sale of flavored e-cigarettes, and several states and municipalities are considering implementing similar restrictions. Federal, state, and local governmental bodies across the United States have indicated that flavored e-cigarette liquid, vaporization products and certain other consumption accessories may become subject to new laws and regulations at the federal, state, and local levels. In addition, in JuneSeptember 2022, the FDA announced a plan to reduce nicotine levels in cigarettes to minimally or non-addictive levels. The application of any new laws or regulations that may be adopted in the future, at a federal, state, or local level, directly or indirectly implicating nicotine, flavored e-cigarette liquid, and other electronic nicotine delivery system (“ENDS”) products, could significantly limit the Company’s ability to sell such products, result in additional compliance expenses, and/or require the Company to change its labeling and/or methods of distribution. Any ban of the sale of flavored e-cigarettes directly limits the markets in which the Company may sell its products. In the event the prevalence of such bans and/or changes in laws and regulations increase across the United States, or internationally, the Company’s business, results of operations, and financial condition could be adversely impacted. In addition, the Company is presently seeking to obtain marketing authorization for certain of its tobacco-derived nicotine e-liquid products. The Company’s applications were submitted in September 2020 on a timely basis, which if approved, will allow the Company to continue to sell its approved products in the United States. Beginning in August 2021, the FDA began issuing Marketing Denial Orders (“MDO”) for ENDS products that lack evidence to demonstrate that permitting the marketing of such products would be appropriate for the protection of the public health. The Company has not received an MDO for any of its 2020 PMTA submissions; however, there is no assurance that regulatory approval to sell our products will be granted or that we would be able to raise additional financing if required, which could have a significant impact on our sales. 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 the Company’s 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 certain other PMTAs for these products, rendering the latter products subject to FDA enforcement. The Company submitted an administrative appeal with FDA regarding its refusal to accept certain of the PMTAs. The administrative appeal was granted on October 30, 2023 and the products were accepted to move forward in the PMTA review process. TheOn October 28, 2025, the Company continuesreceived an MDO from the FDA with respect to sellcertain of our timely-submitted PMTAs. On November 5, 2025, the affectedCompany syntheticfiled nicotinea productsmotion whilefor a temporary administrative stay with the United States Court of Appeals for the Fifth Circuit. On November 10, 2025, the Court granted the Company’s opposed motion for a temporary administrative stay pending resolution of our forthcoming stay motion. We intend to promptly seek a preliminary injunction to remain in effect during the pendency of the litigation. Though a very small percentage of our current sales are related to our affected PMTA reviewProducts, processwe continues.plan to vigorously defend our PMTAs and pursue all available legal remedies. The FDA may bring an enforcement action against our synthetic nicotine products for lack of premarket authorization and/or issue an MDO to our other pending applications at any time. More generally, FDA’s regulatory initiatives and enforcement priorities regarding ENDS products are unpredictable and continue to evolve, and we cannot predict whether FDA’s priorities and review of our premarket submissions will impact our products to a greater degree than our competitors in the industry. In the event the FDA denies our PMTAs, absent a court-ordered stay, we would be required to remove products and cease selling them.

The Company recently launched new alternative alkaloid Metatine-based disposable vape products, under the “SBX™” brand, that the Company expects will (i) replace a significant portion of its legacy products and (ii) become the single largest, most important commercial opportunity in Charlie’s history. The Company and its attorneys believe Metatine-based products are not subject to FDA 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 alternative alkaloid products does not meet the definition of nicotine set forth in 21 U.S.C. § 387(12) and therefore its 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 provided by the Company’s chemists, the other ingredients in the Company’s alternative alkaloids vape liquid are not made or derived from tobacco, nor do they contain nicotine from any source. The documentary support for these facts, including a Certificate of Analysis (COA) for the Metatine used in the Company’s alternative alkaloid products, corroborates these conclusions. However, should any of these understandings be incorrect, the Company’s position on Metatine not qualifying as a “tobacco product” would need to be revisited. Further, should Congress bestow regulatory control over Metatine to the FDA, or should the FDA deem Metatine disposable vape devices “tobacco products” despite the facts that Metatine is not a salt or complex of nicotine, and is not itself derived from nicotine or tobacco, Metatine-based products might then be subject to the FDA tobacco requirements, including, but not limited to, the requirement that all newly deemed tobacco products obtain premarket authorization before entering the U.S. market. If this were to happen, the FDA could bring an enforcement action against our Metatine products for lack of premarket authorization. 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 prompt the Agency to attempt to require us to remove our products from the market and to cease selling them.

Our results of operations and financial condition are subject to numerous risks and uncertainties described in theour 2025 Annual Report. In addition to the other information set forth in this Report, you should carefully consider the risk factors discussed in Part 1,I, Item 1A, of the 2025 Annual Report and subsequent reports filed pursuant to the Exchange Act which could materially and adversely affect the Company’s business, financial condition, results of operations, and stock price. Any losses or damages we incur could have a material adverse effect on our financial results and our ability to conduct business as expected. The risks described in our 2025 Annual Report and in our subsequent reports filed pursuant to the Exchange Act are not the only risks facing the Company. Additional risks and uncertainties not presently known to management, or that management presently believes not to be material, may also result in material and adverse effects on our business, financial condition, and results of operations.

The following discussion of the financial condition and results of operations of Charlie’s Holdings, Inc. should be read in conjunction with the financial statements and the notes to those statements appearing elsewhere in this Quarterly Report on Form 10-Q (this “Report”) and withoutwith audited financial statements and other information presented in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Report, and in our other filings with the Securities and Exchange Commission (“SEC”), including particularly matters set forth under Part I, Item 1A (Risk Factors) of the 2025 Annual Report. Furthermore, such forward-looking statements speak only as of the date of this Report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

With a growing number of states instituting state registries each year, we believe that Pachamama, and PACHA and (non-nicotine) SBX will expect to see continued (and growing) success in the marketplace and that Charlie’s competitive advantages will expand significantly.

Specifically designed with consumer needs and preferences in mind, Charlie’s new generation of 75K Disposables feature an impressive Dual Mesh Coil and provide significantly more vape… and surprisingly better taste… than market-leading disposables. With a large tank capacity, SBX and Pachamama 75K Disposables offer 75,000 uniquely satisfying puffs and feature a transparent shell for accurate liquid measurement, easy-to-use button control, and low-key LED indicators. Both brands feature three power modes, allowing users to select "ECO MODE," "BOOST MODE," or "X MODE"… while simultaneously providing adjustable airflow settings that range from "tight and very enjoyable," to "the standard experience," to "no restrictions." SBX and Pachamama 75K Disposables each offer fourteen of Charlie's most popular award-winning flavors. Initial orders will ship in Q2 2026.

The Company operates in an environment that is subject to rapid changes and developments in laws and regulations that could have a significant impact on the Company’s ability to sell its products. Beginning in September 2019, certain states temporarily banned the sale of flavored e-cigarettes, and several states and municipalities are considering implementing similar restrictions. Federal, state, and local governmental bodies across the United States have indicated that flavored e-cigarette liquid, vaporization products and certain other consumption accessories may become subject to new laws and regulations at the federal, state, and local levels. In addition, in September 2022, the FDA announced a plan to reduce nicotine levels in cigarettes to minimally or non-addictive levels. The application of any new laws or regulations that may be adopted in the future, at a federal, state, or local level, directly or indirectly implicating nicotine, flavored e-cigarette liquid, and other electronic nicotine delivery system (“ENDS”) products, could significantly limit the Company’s ability to sell such products, result in additional compliance expenses, and/or require the Company to change its labeling and/or methods of distribution. Any ban of the sale of flavored e-cigarettes directly limits the markets in which the Company may sell its products. In the event the prevalence of such bans and/or changes in laws and regulations increase across the United States, or internationally, the Company’s business, results of operations, and financial condition could be adversely impacted. In addition, the Company is presently seeking to obtain FDA marketing authorization for certain of its tobacco-derived nicotine e-liquid products. The Company’s applications were submitted in September 2020 on a timely basis,basis whichwhich, if approved, will allow the Company to continue to sell its approved products in the United States. Beginning in August 2021, the FDA began issuing Marketing Denial Orders (“MDO”) for ENDS products that lack evidence to demonstrate that permitting the marketing of such products would be appropriate for the protection of the public health. On April 1, 2026, the Company received an MDO from the FDA with respect to certain SKUs of our timely-submitted 2020 PMTAs. On May 1, 2026, the Company filed a Petition for Review challenging the MDO with the U.S. Court of Appeals for the Fifth Circuit. On May 11, 20262026, the Companypetitioners moved to stay the MDO pending judicial review.review, The Company anticipatesand the CourtFifth rulingCircuit ongranted our opposed staythat motion on orJune about8, 2026. The FDA’s response brief is currently due on October 2, 2026, after which the beginningpetitioners ofmay Junefile 2026.a reply brief. Though only a very small percentage of our current sales are related to these affected PMTA e-liquid products, we plan to vigorously defend our PMTA products on the merits while also continuing to amend our applications with the latest science. Notably, the Company has not received an MDO for its 2020 “tobacco-flavor” PMTA submission; however, there is no assurance that regulatory approval to sell our products will be granted or that we wouldwill be able to raise additional financing if required, which could have a significant impact on our sales. 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 the Company’s 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 certain other PMTAs for these products, rendering the latter products subject to FDA enforcement. The Company submitted an administrative appeal with FDA regarding its refusal to accept certain of the PMTAs. The administrative appeal was granted on October 30, 2023 and the products were accepted to move forward in the PMTA review process. On October 28, 2025, the Company received an MDO from the FDA with respect to certain of our timely-submitted 2022 PMTAs. On November 5, 2025, the Company filed a motion for a temporary administrative stay with the United States Court of Appeals for the Fifth Circuit. On November 10, 2025, the Court granted the Company's opposed motion for a temporary administrative stay pending resolution of our forthcoming stay motion. 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 products 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. Though only a very small percentage of our current sales are related to our affected PMTA Products, we plan to vigorously defend our PMTAs on the merits while also continuing to amend our applications with the latest science.

On May 20,19, 2026, the Company completed a private placement of 8,750,0006,350,000 shares of its common stock at a purchase price of $0.20 per share, resulting in aggregate consideration of $1,750,000.$1,670,000. Of the total consideration, $750,000$270,000 was received in cashcash, $868,000 of which was paid in the form of debt and $1,000,000outstanding accounts payable forgiveness, and the remainder was satisfiedpaid throughin theexchange forgivenessfor of certain outstanding indebtedness owed by the Company (see Note XX). The issuance of shares increased the Company’s liquiditysupplies and reducedfixed a portion of its outstanding debt obligations.assets.

Results of Operations for the Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

A review of the three-month period ended MarchJune 31,30, 2026, follows:

Revenue for the three months ended MarchJune 31,30, 2026, increased by approximately $3,226,000$2,041,000 or 204.4%,115.9%, to approximately $4,804,000,$3,802,000, as compared to approximately $1,578,000$1,761,000 for same period in 2025, which is all due to the increase in our nicotine-based product and nicotine alternative products sales. Sales of SBX, a non-nicotine, disposable vapor product which is not subject to FDA review, experienced a significant increase in 2026.

Cost of revenue, which consists of direct costs of materials, direct labor, third party subcontractor services, and other overhead costs increased by approximately $2,432,000$1,409,000 or 204.0%,110.5%, to approximately $3,624,000,$2,684,000, or 75.4%70.6% of revenue, for the three months ended MarchJune 31,30, 2026, as compared to approximately $1,192,000,$1,275,000, or 75.5%72.4% of revenue, for the same period in 2025. This cost increased compared to last year due primarily to an increase in the volume of products sold during the period.

For the three months ended MarchJune 31,30, 2026, total general and administrative expenses increased $652,000$564,000 to $1,738,000$1,924,000 as compared to approximately $1,086,000$1,360,000 for the same period in 2025. The increase was primarily comprised of an increase of approximately $284,000$120,000 of non-commission wages and benefits, $90,000$170,000 of professional fees, as well as $278,000$274,000 in other general and administrative expenses. The increase in non-commission wages and benefits of $284,000$120,000 reflects headcount additions in operations and manufacturing to support the Company's revenuenew growthHuntington duringBeach themanufacturing period.facility. The $90,000$170,000 increase in professional fees was primarily driven by higher legal and board-related costs incurred during the period. The $278,000$274,000 increase in other general and administrative expenses was driven by higher occupancy costs, bad debt expense, and merchant processing fees — the latter of which increases commensurately with sales volume.

For the three months ended MarchJune 31,30, 2026, total sales and marketing expense was approximately $383,000$378,000 as compared to approximately $173,000$79,000 for the same period in 2025. The increase was primarily due to increased sales commissions paid as well as a significant increase in tradeshow and customer event related costs. The Company continues to evaluate its spending on advertising, promotional and tradeshow related expenses as it aims to increase sales of its new SBX Disposable vapor products.

For the three months ended MarchJune 31,30, 2026, total research and development expense was approximately $34,000$50,000 as compared to $6,000$1,000 for the same period in 2025. The $28,000$49,000 increase reflects ongoing product development and testing activity in support of the Company's active PMTA portfolio, consistent with management's strategy of advancing regulatory approvals for its nicotine product lines.

We incurred a loss from operations of approximately $975,000$1,234,000 for the three months ended MarchJune 31,30, 2026, compared to a loss of approximately $879,000$954,000 for the same period in 2025, due primarily to higher general and administrative expenses. Net income (loss) is determined by adjusting loss from operations by the following items:

For the threesix months ended MarchJune 31,30, 2026 and 2025, wethe incurredCompany netrecorded lossan income tax provision of $1,050,000approximately $0 and $1,269,000,$388,000, respectively.

As of MarchJune 31,30, 2026, we had working capital of approximately $4,843,000,$4,742,000, which consisted of current assets of approximately $14,117,000$11,986,000 and current liabilities of approximately $9,274,000,$7,244,000, as compared to working capital of approximately $3,137,000 at December 31, 2025. The current liabilities include approximately $8,751,000$6,865,000 of accounts payable and accrued expensesexpenses, $251,000 of lease liabilities and approximately $260,000$128,000 of deferred revenue associated with product shipped but not yet received by customers.

Our cash and cash equivalents balance at MarchJune 31,30, 2026 was approximately $640,000.$527,000. As of MarchJune 31,30, 2026, we have the following notes outstanding:

For the threesix months ended MarchJune 31,30, 2026, net cash used in continuing operating activities was approximately $1,105,000,$1,488,000, resulting from a net loss from continuing operations of $1,050,000 and a change in operating assets and liabilities of $130,000, and offset by a net non-cash activity of $75,000. For the three months ended March 31, 2025, net cash used in continuing operating activities was approximately $691,000, resulting from a net loss from continuing operations of $1,269,000$2,712,000, and offset by a change in operating assets and liabilities of $244,000$640,000 and a net non-cash activity of $584,000. For the six months ended June 30, 2025, net cash used in continuing operating activities was approximately $3,385,000, resulting from a net income from continuing operations of $3,655,000 and offset by a change in operating assets and liabilities of $1,205,000 and net non-cash activity of $334,000.$5,835,000.

For the threesix months ended MarchJune 31,30, 2026, we generated approximately $425,000$695,000 in cash from financing activities related to the issuance of common shares of $510,000$780,000 and the repayment of $85,000 in notes payable to a related party. For the threesix months ended MarchJune 31,30, 2025, we generatedused approximately $310,000$2,195,000 in cash from financing activities related to the issuance of notes payable of $546,000, notes payable to a related party of $100,000 and the repayment of $325,000$2,841,000 in notes payable, including $11,000$917,000 to a related party.

Our condensed consolidated 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. For the threesix months ended MarchJune 31,30, 2026, the Company’s revenue increased, the Company incurred a loss from operations of approximately $975,000,$2,209,000, and a net loss from continuing operations of approximately $1,050,000.$2,712,000. Net cash used in continuing operating activities was approximately $1,105,000.$1,488,000. The Company had a stockholders’ equity of $3,108,000$3,135,000 at MarchJune 31,30, 2026. During the threesix months ended MarchJune 31,30, 2026, the Company’s working capital was increased to $4,843,000$4,742,000 from $3,137,000 as of December 31, 2025.

The proceeds from these transactions have significantly improved the Company’s liquidity position, reduced outstanding obligations, and strengthened working capital.

The condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expense in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. The critical accounting estimates that affect the consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of our Annual Report on Form 10-K for the 2025year Annualended Report.December 31, 2025.