What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-02 compared with 2025-03-06 · 285 added, 300 removed, 1253 unchanged (32% of the section changed)

1 unchanged sentence

TURNING POINT BRANDS, INC.

Reports of KPMG LLP (PCAOB ID:

Reports of RSM US LLP (PCAOB ID:

7 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

Turning Point Brands, Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheet of Turning Point Brands, Inc.

and subsidiaries (the Company) as of December 31, 2025, the related consolidated statements of income, comprehensive income, cash flows and changes in stockholders’ equity for the year ended December 31, 2025, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with U.S.

generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of whether General Wireless Operations, Inc.

and its distribution business were variable interest entities of the Company

As discussed in Notes 2 and 12 to the consolidated financial statements, during the year ended December 31, 2025, the Company contributed 100% of its interest in South Beach Brands LLC (SBB) to General Wireless Operations, Inc.

(GWO) in exchange for 49% of the issued and outstanding GWO common stock.

The Company has the right to redeem the contribution of SBB from GWO at fair market value under certain circumstances and also received a purchase option with a 15-year term to acquire the remaining 51% equity interest in GWO.

Subsequent to this first transaction, on August 8, 2025, SBB acquired a distribution business.

In connection with this acquisition, 10233625 Canada Corp.

(Turning Point Brands Canada), an indirect consolidated subsidiary of the Company, purchased an option from SBB to acquire this distribution business for fair market value less the option price.

The Company evaluates whether it holds a controlling financial interest in unconsolidated entities, whether the entities are variable interest entities (VIEs) and if the Company is the primary beneficiary of any identified VIE to determine whether the Company is required to consolidate the entities.

The Company performs this analysis on an ongoing basis.

The Company concluded that the distribution business acquired by GWO is a VIE that the Company is not required to consolidate and, upon reconsideration, concluded GWO meets the definition of a VIE and is accounted for as an equity method investment.

Report of Independent Registered Public Accounting Firm (continued)

We identified the evaluation of whether the distribution business acquired by GWO and, upon reconsideration, GWO were VIEs of the Company as a critical audit matter.

Complex auditor judgment and increased extent of audit effort was required to evaluate the Company’s determination of (1) whether GWO and the distribution business acquired by GWO were VIEs and (2) the primary beneficiary of the VIEs, which required management to apply complex consolidation accounting standards and make significant judgments.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s application of the variable interest model and assessment of reconsideration events.

We evaluated the reasonableness of the Company’s conclusions related to whether the distribution business acquired by GWO was a VIE of the Company.

Specifically, we (1) evaluated the terms of the agreements by reading the purchase agreements and other related documents that govern the formation and activities of the entities (the Contractual Arrangements), (2) tested whether the Company appropriately determined the primary beneficiary by evaluating the Contractual Arrangements of the entities to determine if the Company has the power to direct activities that most significantly impact the economic performance of the VIE, and if the Company has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could be significant to the VIE, (3) read the terms of the option purchased by the Company, through the Canadian subsidiary, and evaluated whether the terms met the power criterion, and (4) evaluated the terms and tested whether any party has the unilateral and substantive right to terminate related agreements, including through inquiry of internal counsel.

Additionally, we evaluated the Company’s assessment that the reconsideration event resulted in GWO becoming a VIE of the Company accounted for under the equity method of accounting by assessing the underlying terms and nature of agreements between the Company, GWO and its acquired distribution business.

We have served as the Company’s auditor since 2025.

Louisville, Kentucky

March 2, 2026

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Turning Point Brands, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Turning Point Brands, Inc.

and its subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Our report dated March 6, 2025 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have audited the accompanying consolidated balance sheet of Turning Point Brands, Inc.

and its subsidiaries (the Company) as of December 31, 2024, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Controlling Financial Interest Assessment of Equity Investment

As described in Notes 3 and 24 to the financial statements, on January 2, 2025, the Company sold 100% of its equity interest in South Beach Brands LLC (“SBB”), the subsidiary that owns and operates the Company’s Creative Distribution Solutions (“CDS”) segment, to General Wireless Operations, Inc.

(“GWO”) in exchange for 1,006.45 shares of GWO common stock and 680 shares of GWO Series B Preferred Stock, which together represent 49% of the issued and outstanding GWO common stock on a fully-diluted basis (“SBB Exchange Transaction”).

The Company determined that, upon completion of the SBB Exchange Transaction, it will not have a controlling financial interest in GWO and, as a result, will deconsolidate SBB on January 2, 2025.

Having met applicable criteria prior to December 31, 2024, the Company recorded the assets and liabilities of SBB as held for sale as of December 31, 2024 and 2023 and the results of operations and cash flows of SBB as discontinued operations for each of the three years in the period ended December 31, 2024.

As described in Note 2 to the financial statements, when the Company concludes it has a controlling financial interest in a legal entity, the Company consolidates the legal entity as a subsidiary.

The evaluation of whether or not the Company has a controlling financial interest in a legal entity requires the application of complex accounting rules and the evaluation of a number of factors, including determining the consolidation model that applies, the Company’s decision-making ability through voting or other rights, and the Company’s exposure to variability to the legal entity, among other items.

We identified the Company’s accounting conclusion that it will not have a controlling financial interest in GWO as a critical audit matter because of the complexity involved in evaluating the exchange transaction structure and related agreements with management’s interpretation and application of the accounting rules.

Auditing management’s accounting conclusion involved a high degree of auditor judgment and an increase in audit effort due to the impact management’s conclusion would have on the Company’s financial statement presentation.

Our audit procedures related to the Company’s assessment of whether or not it will have a controlling financial interest in GWO included the following, among others:

We obtained management’s accounting memoranda and evaluated the reasonableness of management’s application of accounting rules used to support the Company’s accounting conclusion for its investment in GWO.

We assessed the accuracy and completeness of management’s application of the applicable accounting rules by reading the relevant SBB exchange transaction agreements and contracts to understand the nature of the Company’s involvement with GWO and GWO’s structure and operations.

Our assessment included:

Evaluating the capitalization of GWO and the relative power held by the equity holders in GWO to determine the appropriate consolidation model that is required to be applied.

This included evaluating if any close business relationships and/or any de facto agent relationships exist that could potentially have impacted management’s assessment.

Evaluating the Company’s decision-making power over GWO, including determining whether the Company has control without a majority voting interest.

Evaluating the impact certain future rights held by the Company would have on the accounting conclusion.

Fair Value of Creative Distribution Solutions Segment

As described in Note 3 to the financial statements, the Company has classified the assets and liabilities of the Creative Distribution Solutions (“CDS”) segment as held for sale as of December 31, 2024 and 2023, and recognized a valuation allowance of $8.8 million against the net assets of CDS as of December 31, 2024 to adjust the carrying value of the CDS segment to fair value less cost to sell.

The Company estimated the fair value of the CDS segment using a weighted average of three valuation methodologies that consisted of a discounted cash flow method, a guideline public company method and a guideline transaction method.

We identified the estimate of the fair value of the Company’s CDS segment as a critical audit matter because of the significant estimates and assumptions used by management when estimating the fair value of the segment, including management’s forecasts of expected revenue growth rates, management’s selection of the discount rate and management’s estimate of the terminal value, which were all used in the discounted cash flow method.

Auditing management’s estimates and assumptions involved a high degree of auditor judgment and increased audit effort, including the use of our valuation specialists, due to the impact these assumptions have on the estimated fair value of the CDS segment.

Our audit procedures related to the estimated fair value of the CDS segment included the following, among others:

We evaluated the reasonableness of management’s forecasts of revenue growth rates by comparing the projections to historical results.

We tested the accuracy of management’s estimation process by comparing current year results to prior year estimates.

We utilized our valuation specialists to assist in the following, among others:

Assessing the appropriateness of management’s valuation methodologies and testing their mathematical accuracy.

Assessing the appropriateness of the methodology used by management to estimate the terminal value in the discounted cash flow method.

Assessing the reasonableness of the discount rate used in the discounted cash flow method by comparing the underlying source information to publicly available market data and testing the mathematical accuracy of the calculation.

We recomputed the estimated fair value of the CDS segment, using the weighting ascribed by management to each valuation methodology, for mathematical accuracy.

/s/ RSM US LLP

We have served as the Company’s auditor since 2006.

Charlotte, North Carolina

March 6, 2025

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Turning Point Brands, Inc.

Opinion on the Internal Control Over Financial Reporting

We have audited Turning Point Brands, Inc.’s (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements of the Company and our report dated March 6, 2025 expressed an unqualified opinion.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment:

There were deficiencies in the design and operation of information technology general controls (ITGCs) in the areas of user access and program change-management over certain information technology systems that support the Company’s financial reporting processes.

The business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 financial statements, and this report does not affect our report dated March 6, 2025 on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

/s/ RSM US LLP

We served as the Company’s auditor from 2006 to 2025.

Charlotte, North Carolina

11 unchanged sentences

Current assets held for sale

11,470 12,267

Other current assets

4 unchanged sentences

36,247 26,337

Deferred tax assets, net

Deferred income tax assets, net

Right of use assets

15 unchanged sentences

54,587 31,096

Current portion of long-term debt

Current liabilities held for sale

1 unchanged sentence

75,007 44,820

Deferred income tax liabilities, net

Notes payable and long-term debt

293,625 248,604

Other long-term liabilities

Lease liabilities

Noncurrent liabilities held for sale

Total liabilities

32 unchanged sentences

For the years ended December 31,

$ 360,660 $ 325,064 $ 321,229

Cost of sales

159,095 142,122 143,399

201,565 182,942 177,830

Selling, general, and administrative expenses

122,407 104,327 103,822

Other operating income

( 1,674 ) ( 4,345 ) -

Operating income

80,832 82,960 74,008

Other income, net

Interest expense, net

13,983 14,645 19,524

Investment loss

1,893 11,914 13,303

- ( 4,000 ) -

Gain on extinguishment of debt

- ( 1,664 ) ( 885 )

Investment (gain) loss

(Income) losses from equity method investment

Loss (gain) on extinguishment of debt

Income from continuing operations before income taxes

64,956 62,065 42,066

Income tax expense

16,929 23,999 10,980

Income from continuing operations

48,027 38,066 31,086

Loss from discontinued operations, net of tax

( 7,517 ) ( 285 ) ( 19,929 )

Consolidated net income

40,510 37,781 11,157

Net income (loss) attributable to non-controlling interest

701 ( 681 ) ( 484 )

Net income attributable to Turning Point Brands, Inc.

$ 39,809 $ 38,462 $ 11,641

Basic income (loss) per common share:

Continuing operations

$ 2.67 $ 2.20 $ 1.76

Discontinued operations

( 0.43 ) ( 0.01 ) ( 1.11 )

Basic earnings per share

$ 2.24 $ 2.19 $ 0.65

Diluted income (loss) per common share:

Continuing operations

$ 2.53 $ 2.02 $ 1.75

Discontinued operations

( 0.39 ) ( 0.01 ) ( 1.11 )

Diluted earnings per share

$ 2.14 $ 2.01 $ 0.64

Weighted average common shares outstanding:

17,734,239 17,578,270 17,899,794

19,362,806 20,467,406 18,055,015

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

14 unchanged sentences

63 ( 173 ) ( 747 )

Unrealized gain on investments, net of tax of $ 0 in 2024

Unrealized gain on investments, net of tax of $ 48 in 2025 and $ 0 in 2024

1,385 ( 337 ) ( 279 )

16 unchanged sentences

Loss from discontinued operations, net of tax

7,517 285 19,929

Adjustments to reconcile net income to net cash provided by operating activities:

Gain on extinguishment of debt

Loss (gain) on extinguishment of debt

1,235 - ( 1,664 )

Loss (gain) on sale of property, plant, and equipment

Loss on sale of property, plant, and equipment

Gain on insurance recovery of inventory loss

- - ( 15,181 )

Loss on investments

Loss (gain) from equity method investments

1,159 ( 75 ) 2,313

(Gain) Loss on investments

( 484 ) 2,797 9,864

Depreciation and other amortization expense

4 unchanged sentences

1,714 2,430 2,445

Deferred income tax (benefit) expense

Deferred income tax expense

8,931 519 7,024

1 unchanged sentence

6,974 7,243 6,561

Noncash lease (income) expense

Noncash lease income

( 1,797 ) ( 622 ) ( 72 )

Gain on MSA investments

( 14 ) - ( 54 )

Changes in operating assets and liabilities:

21 unchanged sentences

Proceeds from sale of investments

6,363 5,420 -

Purchase of options agreement

( 8,000 ) - -

Purchases of non-marketable equity investments

( 2,783 ) ( 500 ) -

Proceeds on sale of property, plant and equipment

MSA escrow deposits, net

46 - ( 10,170 )

Investing cash flows from continuing operations

12 unchanged sentences

$ - $ ( 118,541 ) $ ( 41,794 )

Payment of Convertible Senior Notes

Payment of 2026 Senior Notes

( 250,000 ) - -

Proceeds from 2032 Notes

At the market offering proceeds

Interchange subscription agreement

Proceeds from call options

9 unchanged sentences

( 2,324 ) ( 914 ) ( 995 )

Issuance of restricted stock units

Redemption of performance based restricted stock units

( 2,626 ) ( 1,212 ) -

Issuance of performance based restricted stock units

Common stock repurchased

3 unchanged sentences

Financing cash flows from discontinued operations

Net cash used in financing activities

Net cash provided by (used in) financing activities

$ 148,274 $ ( 128,284 ) $ ( 49,505 )

Net (decrease) increase in cash

Net increase (decrease) in cash

$ 173,977 $ ( 71,731 ) $ 11,470

18 unchanged sentences

Accrued capital expenditures

$ 18 $ 8 $ 11

Accrued consideration for acquisition of investments

33 unchanged sentences

( 8,590 ) - ( 195 ) - - - - ( 195 )

Cost of repurchased common stock

( 1,021,052 ) - - ( 29,224 ) - - - ( 29,224 )

Settlement of call options, net of tax of $ 28

10 unchanged sentences

- - - - ( 115 ) - ( 82 ) ( 197 )

Unrealized gain on investments, net of tax of $ 0

- - - - 50 - - 50

Acquisition of non-controlling interest

- - - - - - 750 750

Stock compensation expense

12 unchanged sentences

( 31,483 ) - ( 993 ) - - - - ( 993 )

Settlement of call options, net of tax of $ 28

Cost of repurchased common stock

( 154,945 ) - - ( 5,051 ) - - - ( 5,051 )

11 unchanged sentences

- - - - 99 - - 99

Acquisition of non-controlling interest

- - - - - - 750 750

Stock compensation expense

12 unchanged sentences

( 30,590 ) - ( 2,324 ) - - - - ( 2,324 )

Cost of repurchased common stock

Interchange subscription agreement contribution

- - 5,752 - - - 5,248 11,000

Issuance of common stock in connection with the At-the-Market Offering Program, net of fees

1,014,262 10 61,664 35,507 - - - 97,181

- - - - - ( 5,668 ) - ( 5,668 )

- - - - - 58,165 9,987 68,152

Ending balance December 31, 2025

13 unchanged sentences

The Company operates two segments, Zig-Zag products and Stoker’s products.

Contribution of Creative Distribution Solutions

On January 2, 2025, the Company contributed 100 % of its interest in South Beach Brands LLC ("SBB"), the subsidiary that owns and operates the Company’s Creative Distribution Solutions (“CDS”) segment, to General Wireless Operations, Inc.

Discontinued Operations

On January 2, 2025, the Company contributed 100 % of its interest in South Beach Brands LLC (“SBB”), the subsidiary that owned and operated the Company’s former Creative Distribution Solutions (“CDS”) reportable segment, to General Wireless Operations, Inc.

(“GWO”) in exchange for 49 % of the issued and outstanding GWO common stock.

GWO is a joint venture between the Company and Standard General, LP entered into in December 2018.

The Company will provide certain transition services to GWO in connection with the operation of SBB on an arm’s length basis.

For all periods presented in these consolidated financial statements, the assets and liabilities associated with the CDS disposal group have been classified as held for sale in the Consolidated Balance Sheets and its operations have been classified as discontinued operations in the Consolidated Statements of Income and Cash Flows.

See Note 3, "Assets Held for Sale and Discontinued Operations" for additional information regarding the CDS divestiture, including the assets and liabilities held for sale and the loss from discontinued operations.

Unless otherwise noted, disclosures in the notes to these consolidated financial statements relate solely to the Company's continuing operations.

GWO is majority owned by Standard General, LP.

The Company established RSH Holding Trust ("RSH Trust") to hold its interest in GWO which is managed by an independent trustee that votes our interest in GWO in accordance with GWO's board's recommendation, and GWO is controlled by Standard General, L.P.

As of December 31, 2024, the assets and liabilities associated with the CDS segment were classified as held for sale.

Accordingly, the financial results of the CDS segment were classified as discontinued operations and reported separately for all periods presented herein until its disposition on January 2, 2025.

Following the discontinued operations classification, the Company has two reportable segments, which are reflected herein.

Unless otherwise noted, disclosures in the notes to these consolidated financial statements relate solely to the Company's continuing operations, comprised of the Zig-Zag and Stoker’s segments.

See Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" for additional information regarding the CDS divestiture, including the assets and liabilities held for sale and the income or losses from discontinued operations.

Basis of Presentation

4 unchanged sentences

Actual results could differ from those estimates.

The Company’s estimates include those affecting the valuation of goodwill and other intangible assets, the fair value of assets held for sale, deferred income tax valuation allowances, the valuation of investments and the valuation of inventory, including reserves.

The Company’s estimates include those affecting the valuation of goodwill and other intangible assets, the fair value of assets held for sale, deferred income tax valuation allowances, the valuation of investments, share-based payments, and the valuation of inventory, including reserves.

Certain prior year amounts have been reclassified to conform to the current year’s presentation.

15 unchanged sentences

The Company performs this analysis on an ongoing basis.

Management of the Company has determined that Turning Point Brands Canada and ALP Supply Co, LLC ("ALP") are VIEs for which the Company is required to consolidate.

The Company has a controlling financial interest of 65 % equity in Turning Point Brands Canada, provides additional subordinated financing, and has a distribution agreement for the sale of the Company’s products that makes up a significant portion of Turning Point Brands Canada’s business activities.

The Company determines whether an entity is a VIE at the inception of its variable interest in the entity and upon the occurrence of certain reconsideration events.

Management of the Company has determined that Turning Point Brands Canada and ALP Supply Co, LLC (“ALP”) are VIEs for which the Company is required to consolidate and determined that the distribution business acquired by General Wireless Operations, Inc.

(refer to Note 12, "Other Assets") is a VIE for which the Company is not required to consolidate.

The Company has a 65 % financial interest in the equity of Turning Point Brands Canada, provides additional subordinated financing and has a distribution agreement for the sale of the Company’s products that makes up a significant portion of Turning Point Brands Canada’s business activities.

The Company has a 50 % equity interest in ALP, provides additional financing, has a supply agreement to be the exclusive provider of product and is the primary beneficiary due to the power the Company has over the activities that most significantly impact the economic performance, and the right to receive benefits and the obligation to absorb losses.

See Note 4,"Joint Venture Agreement" for additional information on the current year ALP transaction.

RSH Trust, which was established by the Company and is managed by an independent trustee that votes our interest in GWO in accordance with GWO's board's recommendations, holds 49 % indirect interest in the distribution business through its interests in General Wireless Operations, Inc.

("GWO") and, through Turning Point Brands Canada, the Company has a variable interest through a purchase option to acquire the equity interests of GWO's distribution business.

However, the Company does not have the ability to direct the activities that impact the performance of the business.

GWO is controlled by Standard General, L.P.

Based on the foregoing, management believes in its judgement that the distribution business is a VIE for which the Company is not required to consolidate.

See Note 12 "Other Assets" for further discussion of the acquisition of the distribution business by General Wireless Operations, Inc.

and the terms of the option on its equity interests.

Turning Point Brands Canada charged a fee to the distribution business in 2025.

The agreement was terminated in the fourth quarter.

Subsequent to the acquisition of the distribution business by General Wireless Operations, the Company determined that the General Wireless Operations Equity Method Investment is a VIE of which we are not the primary beneficiary.

We considered the Company’s interest at risk due to a lack of power, through voting rights, to direct the activities that most significantly impact General Wireless Operations’ economic performance.

Standard General, L.P’s voting rights are conveyed through an equity interest that is not considered at risk.

Based on the foregoing, management believes in its judgement that General Wireless Operations is a VIE for which the Company is not required to consolidate.

Revenue Recognition

40 unchanged sentences

Expenditures for repairs and maintenance are charged to expense as incurred.

The costs of major renewals and improvements are capitalized and depreciated over their estimated useful lives.

The costs of major repairs and improvements are capitalized and depreciated over their estimated useful lives.

Upon disposition of fixed assets, the costs and related accumulated depreciation amounts are relieved.

83 unchanged sentences

The purpose of these statutes is expressly stated to be to eliminate the cost disadvantage the settling manufacturers have as a result of entering into the MSA.

Such companies are entitled to direct the investment of the escrowed funds and withdraw any appreciation, but cannot withdraw the principal for twenty-five years from the year of each annual deposit, except to withdraw funds deposited pursuant to an individual state’s escrow statute to pay a final judgment to that state’s plaintiffs in the event of such a final judgment against the company.

Such companies are entitled to direct the investment of the escrowed funds and withdraw any appreciation, but cannot withdraw the principal for 25 years from the year of each annual deposit, except to withdraw funds deposited pursuant to an individual state’s escrow statute to pay a final judgment to that state’s plaintiffs in the event of such a final judgment against the company.

Either option – becoming an MSA signatory or establishing an escrow account – is permissible.

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Pursuant to the MSA escrow account statutes, in order to be compliant with the MSA escrow requirements, companies selling products covered by the MSA are required to deposit such funds for each calendar year into a qualifying escrow account by April 15 of the following year.

At December 31, 2024 and 2023, the Company had on deposit approximately $ 32.1 million, the fair value of which was approximately $ 28.7 million.

At December 31, 2025, the Company had on deposit approximately $ 32.0 million, the fair value of which was approximately $ 29.9 million.

At December 31, 2024, the Company had on deposit approximately $ 32.1 million, the fair value of which was approximately $ 28.7 million.

During 2025 , no monies were deposited into this qualifying escrow account.

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and also sells Zig-Zag ® premium cigarette papers in Canada and some smaller quantities in other countries.

For 2024, the Company had one customer that accounted for 10.2 % of net sales.

There were no customers that accounted for more than 10% of net sales for 2023 or 2022 .

For 2025, the Company did not have any customers that accounted for more than 10% of net sales.

There was one customer that accounted for more than 10% of net sales for 2024 and there were no customers that accounted for more than 10% of nets sales for 2023 .

The Company performs periodic credit evaluations of its customers and generally does not require collateral on trade receivables.

10 unchanged sentences

Deductions of allowance account during period

( 35 ) - ( 13 )

Balance at end of period

2 unchanged sentences

Recently adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance that enhances reportable segment disclosures by requiring disclosure of significant reportable segment expenses and other items regularly provided to the Chief Operating Decision Maker (“CODM”) and included within measures of a segment’s profit or loss.

Additional requirements include the title and position of the CODM and an explanation of how the CODM uses the reported measure of a segment’s profit or loss to assess performance and allocate resources, and the amount and composition of other segment items necessary to reconcile segment revenue, significant expenses, and the reported measure of profit or loss.

The Company adopted this guidance retrospectively beginning with its fiscal 2024 annual financial statements.

See Note 21, "Segment Information" for the additional disclosures required by this guidance.

Issued but not yet adopted

In December 2023, the FASB issued guidance which enhances income tax disclosures to require reporting entities to disclose annual income taxes paid, net of refunds, disaggregated by federal, state, and foreign taxes and to provide additional disaggregated information for individual jurisdictions under certain conditions.

The guidance also requires disclosure of amounts and percentages in the annual rate reconciliation table, rather than amounts or percentages, and will eliminate certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities.

This guidance will be effective for the Company beginning with its fiscal 2025 annual financial statements, with early adoption permitted.

The guidance may be applied prospectively, while retrospective application is permitted.

The Company is currently assessing the impact of this guidance and expects its incremental disclosures will likely be provided on a prospective basis upon adoption.

The Company adopted ASU 2023 - 09 prospectively in the 2025.

See Note 15 "Income Taxes" for new disclosures relating to 2025 only.

Issued but not yet adopted

In November 2024, the FASB issued guidance requiring reporting entities to disclose in the notes to the financial statements, specified information about certain categories of expenses including purchases of inventory, employee compensation, depreciation and amortization for each caption on the income statement where such expenses are included.

4 unchanged sentences

On January 2, 2025, the Company entered into an agreement to contribute 100 % of its interest in SBB, the subsidiary that owns and operates the Company’s CDS segment, to GWO in exchange for 49 % of the issued and outstanding GWO common stock on a fully-diluted basis.

GWO is a joint venture between the Company and Standard General, LP entered into in December 2018.

Under certain circumstances the Company has the right to redeem the contribution of SSB from GWO at fair market value.

GWO is majority owned by Standard General, LP.

Under certain circumstances the Company has the right to redeem the contribution of SBB from GWO at fair market value.

In addition, the Company received an option with a 15 -year term to purchase the remaining 51 % of GWO at an exercise price initially set at $ 22.0 million, which decreases over time based on certain tax sharing payments to GWO.

4 unchanged sentences

Fair value of the disposal group utilized inputs within Level 3 of the fair value hierarchy, and was determined using both a market and an income approach.

The Company incurred no income or loss from discontinued operations for the year ended December 31, 2025.

The following table summarizes income from discontinued operations, net of tax, included in the Consolidated Statements of Income:

8 unchanged sentences

Amortization of other intangible assets

1,843 1,899 1,386

Goodwill and intangible impairment loss

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Current assets

$ 2,783 $ 1,161

Inventories, net

1 unchanged sentence

Current assets held for sale

11,470 12,267

Noncurrent assets

Property, plant, and equipment, net

Right of use assets

Other intangible assets, net

12,609 14,452

Allowance to adjust held for sale assets to fair value

1 unchanged sentence

Total assets held for sale

$ 15,329 $ 26,998

Current liabilities

6 unchanged sentences

Total liabilities held for sale

$ 2,049 $ 2,261

Joint Venture Agreement

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As a result, the assets, liabilities and result of operations of ALP have been included in the Company's consolidated financial statements.

The assets and liabilities of ALP included in the consolidated balance sheet at December 31, 2024 primarily include $ 5.3 million in cash, $ 0.9 million of inventory, $ 1.1 million of other assets, and accounts payable and accrued liabilities of $ 3.6 million inclusive of amounts payable to the Company of $ 3.2 million.

The assets and liabilities of ALP included in the consolidated balance sheet at December 31, 2025, primarily include $ 28.1 million in cash, $ 2.3 million in accounts receivable, $ 4.6 million of inventory, $ 5.1 million of other assets, $ 0.1 million of property, plant and equipment, and accounts payable and accrued liabilities of $ 18.1 million inclusive amounts payable to the Company of $ 8.1 million.

The assets and liabilities of ALP included in the consolidated balance sheet at December 31, 2024 primarily included $ 5.3 million in cash, $ 0.9 million of inventory, $ 1.1 million of other assets, and accounts payable and accrued liabilities of $ 3.6 million inclusive of amounts payable to the Company of $ 3.2 million.

Derivative Instruments

3 unchanged sentences

The Company may, from time to time, hedge currency for non-inventory purchases, e.g., production equipment, not to exceed 100 % of the purchase price.

During 2025 , the Company did not execute any foreign currency contracts.

During 2024, the Company executed various foreign exchange contracts which met hedge accounting requirements for the purchase of €3.6 million and sale of €3.6 million.

During 2023 , the Company executed various foreign exchange contract, which met hedge accounting requirements for the purchase of €20.1 million and sale of €15.2 million.

At December 31, 2024 , the Company had foreign currency contracts outstanding for the purchase of €2.1 million and sale of €2.1 million.

The fair value of the foreign currency contracts at December 31, 2024 , resulted in an asset of $ 0.0 million included in Other current assets and a liability of $ 0.1 million included in Accrued liabilities .

At December 31, 2025 , the Company had no foreign currency contracts outstanding.

At December 31, 2024, the Company had foreign currency contracts outstanding for the purchase of €2.1 million and sale of €2.1 million.

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Long-Term Debt

The Company’s Senior Secured Notes bear interest at a rate of 5.625 % per year.

As of December 31, 2024 , the fair value approximated $ 251.2 million, with a carrying value of $ 250 million.

As of December 31, 2023 , the fair value approximated $ 234.9 million with a carrying value of $250 million.

The Convertible Senior Notes with a carrying value of $ 118.5 million were retired with cash on July 15, 2024.

The Company's 2032 Notes bear interest at a rate of 7.625 % per year.

As of December 31, 2025 , the fair value approximated $ 313.8 million, with a carrying value of $ 300.0 million.

The Company’s 2026 Notes were retired at par on February 20, 2025.

As of December 31, 2024, the fair value of the 2026 Notes approximated $ 251.2 million, with a carrying value of $ 250.0 million.

See Note 14, “Notes Payable and Long-Term Debt” for further information regarding the Company’s long-term debt.

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18,361 12,966

$ 107,989 $ 96,253

The following represents the activity in the inventory valuation allowance for the years ended December 31:

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$ ( 16,665 ) $ ( 17,575 ) $ ( 16,927 )

In December 2023, a third -party warehouse in Tennessee used to store some of the Company’s leaf tobacco incurred significant tornado damage resulting in damage to the leaf tobacco.

In December 2023, a third -party warehouse in Tennessee used by the Company incurred significant tornado damage resulting in damage to the leaf tobacco.

As a result, the Company recorded a $ 15.2 million inventory reserve related to its leaf tobacco inventory, which is included in Other operating income, net in the Consolidated Statement of Income for the year ended December 31, 2023.

2 unchanged sentences

In 2022, the Company determined that the incorrect weight had been used in calculating the amount of federal excise tax assessed and paid on its imported MYO cigar wraps during the years 2019 - 2021.

As a result, the Company filed a refund claim for $ 4.3 million with the Alcohol and Tobacco Tax and Trade Bureau for the overpayment of federal excise taxes, which was approved and paid.

The Company filed an additional claim for $ 1.7 million in 2023, which was approved and paid in 2024.

The refunds are presented in Other operating income in the Consolidated Statements of Income.

As a result, the Company filed a refund claim for $ 1.7 million with the Alcohol and Tobacco Tax and Trade Bureau for the overpayment of federal excise taxes, which was approved and paid in 2024.

This refund is presented in Other operating income, net on the Company’s Consolidated Statements of Income for the year ended December 31, 2023.

Other Current Assets

2 unchanged sentences

$ 28,721 $ 5,981

Insurance deposit

Prepaid taxes

Settlement receivable

Insurance recovery receivable

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Deferred financing costs consist of:

Deferred financing costs, net of accumulated amortization of $ 747 and $ 104 , respectively

Deferred financing costs, net of accumulated amortization of $ 1.4 million and $ 0.7 million, respectively

$ 1,180 $ 1,823

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Cumulative translation adjustment

( 318 ) - ( 318 )

Balance as of December 31, 2025

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The Company tests goodwill for impairment annually as of December 31, or more frequently when events or changes in circumstances indicate that the fair value is below its carrying value.

The Company performed a quantitative assessment in evaluating its Zig-Zag and Stoker’s reporting units for impairment as of December 31, 2024.

For the quantitative assessment, the Company used a discounted cash flow model (income approach) utilizing Level 3 unobservable inputs.

The Company performed a qualitative assessment in evaluating its Zig-Zag and Stoker’s reporting units for impairment as of December 31, 2025 .

For the qualitative assessment, the Company considered macro and micro-economic indicators, changes in costs, overall financial performance and other relevant entity-specific events and noted no indications of impairment.

The Company also considered the significant excess of fair values over carrying values as determined in the 2024 quantitative assessment.

The underlying assumptions utilized during the 2024 quantitative assessment remained sufficiently similar in 2025 and in line with Company projections.

Accordingly, such underlying assumptions on which the previous fair values were based had not sufficiently changed from 2024 to suggest a material difference in the 2025 fair value assessments and thus indicated that the fair values of the reporting units as of December 31, 2025 remained above their carrying amounts.

In 2024, the Company performed a quantitative assessment in evaluating its Zig-Zag and Stoker's reporting units.

As part of that assessment, the Company used a discounted cash flow model (income approach) utilizing Level 3 unobservable inputs.

The Company’s significant assumptions for the discount cash flow model include, but are not limited to, future cash flow projections, the weighted average cost of capital, the terminal growth rate, and the tax rate.

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Based on the analysis performed, the Company concluded that no impairment exists for its Zig-Zag or Stoker's reporting units as of December 31, 2024.

In 2023, the Company performed a qualitative assessment in evaluating its Zig-Zag and Stoker’s reporting units.

As part of that assessment, the Company considered macro and micro-economic indicators, changes in costs, overall financial performance and other relevant entity-specific events, and noted no indications of impairment.

The Company also considered the significant excess of fair values over carrying values as determined in the 2022 quantitative assessment.

The underlying assumptions utilized during the 2022 quantitative assessment remained sufficiently similar in 2023 and in line with Company projections.

Accordingly, such underlying assumptions on which the previous fair values were based had not sufficiently changed from 2022 to suggest a material difference in the 2023 fair value assessments, and thus indicated that the fair values of the reporting units as of December 31, 2023 remained above their carrying amounts.

The following tables summarize information about the Company’s other intangible assets.

6 unchanged sentences

$ 42,245 $ 8,553 $ 50,798 $ 42,245 $ 8,553 $ 50,798

In 2025, the Company performed a qualitative assessment of its indefinite-lived intangible assets.

As part of this assessment, the Company evaluated whether indicators of impairment were present by considering macro and micro-economic factors, along with market and other relevant company-specific events and determined that there were no indications of impairment as of December 31, 2025.

In 2024, the Company performed a quantitative assessment of its indefinite-lived intangible assets and noted no indicators of impairment as of December 31, 2024.

1 unchanged sentence

Significant assumptions in this approach include, but are not limited to, projected revenue, the weighted average cost of capital and royalty rate.

In 2023, the Company performed a qualitative assessment of its indefinite-lived intangible assets.

In January 2023, the Company transferred certain of its indefinite-lived formulas within the Zig-Zag segment to amortized intangible assets.

The Company began to amortize the formula over its useful life of 15 years and, as a result, incurred additional amortization expense of $ 0.7 million in 2023.

The effect of this change in estimate reduced 2023 net income by $ 0.4 million and reduced 2023 basic and diluted earnings per share by $ 0.02 per share.

The estimated annual straight line amortization expense related to this transfer is $0.7 million per year for each of the next five years.

Amortized intangible assets consists of:

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Captive investments - available-for-sale marketable securities

Option agreements

$ 64,667 $ 20,662

Debt Security and Non-Marketable Equity Investments

Non-Marketable Equity Investments and Option Agreements

The Company records its non-marketable equity investments without a readily determinable fair value, that are not accounted for under the equity method, at cost, with adjustments for impairment and observable price changes.

Should assumptions underlying the determination of the fair values of the Company’s non-marketable equity and debt security investments change, it could result in material future impairment charges.

In December 2018, the Company acquired a minority interest in General Wireless Operations, Inc.

(“GWO”) from SG Gaming LLC for $ 0.4 million.

GWO is majority owned by Standard General, LP.

On January 2, 2025, the Company contributed 100 % of its interest in SBB, the subsidiary that owned and operated the Company’s former CDS reportable segment, to GWO in exchange for a 49 % equity interest.

The Company established RSH Trust, which is managed by an independent trustee that votes our interests in GWO in accordance with GWO's board's recommendation, to hold its interest in GWO, and GWO is controlled by Standard General, L.P.

The trust also has a purchase option with a 15 -year term to acquire the remaining 51 % equity interest in GWO.

The purchase option includes an initial exercise price of $ 22.0 million, which may decrease over time based on certain tax sharing payments to Standard General, LP.

As a result of this transaction, the Company determined that it no longer has a controlling financial interest in SBB and, as a result, deconsolidated SBB on January 2, 2025, and accounts for its interest in GWO under the equity method of accounting.

On January 2, 2025, the Company contributed net assets valued at $ 13.3 million to GWO as part of the transaction, inclusive of common shares for an amount of $ 7.7 million and freestanding instruments for an amount of $ 5.5 million recognized through the caption "Option agreements".

Fair value of the Company's interest in GWO was determined utilizing the market approach and the income approach in the form of the discount cash flow method.

The results of GWO are recognized through the caption "(income) losses from equity method investments" in the consolidated statements of income.

On August 8, 2025, SBB acquired a distribution business.

In connection with this acquisition, Turning Point Brands Canada purchased an option from SBB to acquire the distribution business for fair market value less the option price.

The option becomes exercisable in March 2027.

The option price is approximately $ 20.0 million with approximately $ 8.0 million paid at execution of the option and the remaining paid quarterly over 18 months beginning in February 2026.

There is approximately $ 20.4 million in other assets, $ 8.0 million paid at closing, $ 8.3 million in accrued liabilities, and $ 4.1 million in other long-term liabilities as of December 31, 2025 .

Turning Point Brands Canada charged a fee to the distribution business in 2025.

The agreement was terminated in the fourth quarter.

In August 2025, the Company and Standard General, LP amended the GWO purchase option held by the Company, delaying the Company's ability to exercise the purchase option until August 2027.

In January 2024, the Company invested $ 0.8 million to acquire an 18.7 % stake in Teaza Energy, LLC (“Teaza”).

3 unchanged sentences

The Company accounts for its investment in Teaza using the equity method of accounting.

Debt Security Investments

In July 2021, the Company invested $ 8.0 million in Old Pal Holding Company, LLC (“Old Pal”), with an additional $ 1.0 million invested in July 2022.

1 unchanged sentence

Interest on the convertible note is payable annually in arrears in July of each year.

Accrued interest of $ 0.2 million, $ 0.3 million and $0.3 million was rolled into the convertible note in July 2022, 2023 and 2024, respectively, resulting in a total investment of $ 9.8 million.

Accrued interest of $ 1.1 million was rolled into the convertible note between 2022 and 2025, resulting in a total investment of $ 10.1 million.

Old Pal is a leading brand in the cannabis lifestyle space that operates a non-plant touching licensing model.

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(“Docklight”).

In 2023, based on Docklight’s financial results, a decline in the revenue multiples for comparable public companies, and a significant change in Docklight’s business model, the Company deemed the investment in Docklight fully impaired resulting in a loss of $ 8.7 million which was recorded in investment loss for the year ended December 31, 2023.

Fair value was determined using a valuation derived from relevant revenue multiples (Level 3 ).

4 unchanged sentences

Fair value for the Company’s share of investment in Wild Hempettes was determined using a valuation derived from relevant revenue multiples (Level 3 ).

In 2024, the Company reached an agreement to return its 20% equity stake to Wild Hempettes for no consideration resulting in an impairment charge of $ 0.3 million recorded in investment loss for the year ended December 31, 2024.

The Company accounted for its 20% share of Wild Hempettes using the equity method of accounting.

There were no purchases of inventory from, or amounts payable to Wild Hempettes at December 31, 2025 and 2024 .

The Company had a $ 0.2 million receivable from Wild Hempettes at December 31, 2023 for the return of previously purchased and paid for product.

In October 2020, the Company invested in BOMANI Cold Buzz, LLC (“Bomani”).

In 2024, due to market conditions in the cold brew, alcohol-infused caffeinated beverages industry, the Company has determined that the fair value of Bomani is zero, and thus recorded a $ 1.8 million impairment which is included in investment loss for the year ended December 31, 2024.

There were no purchases of inventory from, or amounts payable to Bomani at December 31, 2025 and 2024 .

In December 2018, the Company acquired a minority ownership position in General Wireless Operations, Inc.

from 5G gaming LLC for $ 0.4 million.

In December 2024, the Company entered into an agreement to contribute 100 % of its interest in SBB, the subsidiary that owns and operates the Company’s CDS segment, to General Wireless Operations, Inc.

in exchange for 49 % of the issued and outstanding GWO common stock.

See Note 3, "Assets Held for Sale and Discontinued Operations" for more information regarding the disposal of the Company's CDS business.

There were no amounts payable to General Wireless Operations, Inc.

at December 31, 2024 and 2023 .

In October 2020, the Company invested $ 15.0 million in dosist™ (“Dosist”), a global cannabinoid company.

In 2021, based on the financial results of Dosist and the overall cannabinoid market, the Company deemed its investment was impaired resulting in a loss of $ 7.1 million recorded in investment loss for the year ended December 31, 2021.

In 2022, after a contemplated sale of the assets of Dosist did not occur, Dosist entered into an agreement with a new buyer receiving the assets of Dosist for the assumption of its liabilities.

As such, the Company considered its remaining investment in Dosist to be fully impaired and recorded an additional loss of $ 7.9 million in investment loss for the year ended December 31, 2022.

The Company had a minority ownership position in Canadian American Standard Hemp (“CASH”).

CASH is headquartered in Warwick, Rhode Island, and manufactures cannabidiol isolate (“CBD”) developed through highly efficient and proprietary processes.

In 2022, as a result of a significant decline in the enterprise value, the Company determined that the fair value of the investment was $ 0.0 and fully impaired the investment.

The impairment resulted in a loss of $ 4.3 million which is recorded in investment loss for the year ended December 31, 2022.

Captive Investments - Available-for-Sale Marketable Securities

1 unchanged sentence

Interchange, IC is a fully licensed captive insurance company holding a certificate of authority from the District of Columbia Department of Insurance, Securities and Banking.

Interchange, IC is a wholly-owned subsidiary of Turning Point Brands and is consolidated in the Company’s financial statements.

The investments held within the captive insurance company are not available for operating activities and are carried at fair value on the Consolidated Balance Sheet as of December 31, 2024.

Interchange, IC is consolidated in the Company’s financial statements.

During 2025, Interchange IC received approval from the District of Columbia Department of Insurance, Securities and Banking to operate as a group captive.

On July 14, 2025, a third -party investor subscribed $ 11.0 million for an interest in Interchange IC’s parent company, which contributed the investment to Interchange IC.

Insurance reserves were $ 0.4 million and $ 0.0 for December 31, 2025 and 2024, respectively.

As of December 31, 2025 , no policy has been underwritten for the benefit of the third -party investor.

The group captive will write policies for both companies.

The Company will continue to control and consolidate the entity.

The investments held within the captive are not available for operating activities and are carried at fair value on the consolidated balance sheet.

They consist of money market, stocks, corporate bonds, government securities and real estate investment trusts.

2 unchanged sentences

As of December 31, 2025

As of December 31, 2024

Amortized Cost

1 unchanged sentence

Estimated Fair Value

Amortized Cost

Gross Unrealized Gains (Losses)

Estimated Fair Value

$ 1,118 $ 447 $ 1,565 $ 1,517 $ 9 $ 1,526

5 unchanged sentences

377 ( 5 ) 372 343 1 344

4,809 - 4,809 - - -

$ 14,479 $ 459 $ 14,938 $ 5,432 $ 55 $ 5,487

The following table summarizes the fair value of the Company's captive investments by contractual maturity:

2 unchanged sentences

Due in one to five years

Stocks, real estate investment trusts and exchange traded funds

Stocks, real estate investment trusts, mutual funds and exchange traded funds

Total investments at fair value

7 unchanged sentences

Accrued interest

Option agreement

$ 54,587 $ 31,096

2 unchanged sentences

$ 300,000 $ -

Convertible Senior Notes

Gross notes payable and long-term debt

2 unchanged sentences

( 6,375 ) ( 1,396 )

Less current maturities

Notes payable and long-term debt

8 unchanged sentences

$ 17,466 $ 13,983 $ 14,645

On February 11, 2021, we closed a private offering of $ 250.0 million aggregate principal amount of our 5.625 % senior secured notes due 2026 (the “2026 Notes”).

The 2026 Notes incurred interest at a rate of 5.625%.

Interest on the 2026 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2021.We used the proceeds from the offering (i) to repay all obligations under and terminate the 2018 First Lien Credit Facility, (ii) to pay related fees, costs and expenses and (iii) for general corporate purposes.

Obligations under the 2026 Notes were guaranteed by the Company’s existing and future wholly-owned domestic subsidiaries (the “Guarantors”) that guarantee any credit facility (as defined in the indenture governing the 2026 Notes or the “2026 Notes Indenture”) or capital markets debt securities of the Company or Guarantors in excess of $ 15.0 million.

The 2026 Notes and the related guarantees are secured by first -priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions.

We were in compliance with all covenants under the 2026 Notes as of December 31, 2024.

On February 19, 2025, the Company entered into an indenture relating to the issuance and sale of $ 300.0 million aggregate principal amount of its 7.625 % Senior Secured Notes due 2032 (the “2032 Notes”), by and among the Company, the guarantors party thereto and GLAS Trust Company LLC, as trustee and notes collateral agent.

The 2032 Notes incur interest at a rate of 7.625 %, payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2025.

Proceeds from the offering were approximately $ 293.0 million and were used to redeem the 2026 Notes (as defined below) and for general corporate purposes.

The 2032 Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by certain existing and future wholly-owned domestic subsidiaries of the Company (collectively, the “Guarantors” as defined in the indenture governing the 2032 Notes or the “2032 Notes Indenture”).

The 2032 Notes and the related guarantees are secured by first -priority liens on substantially all of the existing and future assets of the Company and the Guarantors that do not secure the 2023 ABL Facility (as defined below), subject to certain exceptions.

The 2032 Notes Indenture contains covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to:

6 unchanged sentences

and (vii) consolidate or merge with or into, or sell substantially all of our assets to another entity.

These covenants are subject to a number of limitations and exceptions set forth in the Senior Secured Notes Indenture.

For instance, the Company is generally permitted to make restricted payments, including the payment of dividends to shareholders, provided that, at the time of payment, or as a result of payment, the Company is not in default on its debt covenants;

These covenants are subject to several limitations and exceptions set forth in the 2032 Notes Indenture.

however, there are earnings and market capitalization requirements that if not met could limit the aggregate amount of quarterly dividends payable during a fiscal year.

The 2032 Notes Indenture provides for customary events of default.

The Company incurred debt issuance costs attributable to the issuance of the 2026 Notes of $ 6.4 million which are amortized to interest expense using the straight-line method over the expected life of the 2026 Notes.

The 2026 Notes were redeemed on February 20, 2025.

See Note 24, "Subsequent Events" for additional information.

The Company was compliance with all covenants under the 2032 Notes as of December 31, 2025.

The Company incurred debt issuance costs attributable to the 2032 Notes of $ 7.3 million which are amortized to interest expense using the straight-line method over the expected life of the 2032 Notes.

On February 11, 2021, the Company closed a private offering ("the Offering") of $ 250.0 million aggregate principal amount of its 5.625 % senior secured notes due 2026 (the “2026 Notes”).

The 2026 Notes incurred interest at a rate of 5.625%, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2021.

The Company used the proceeds from the offering (i) to repay all obligations under and terminate the 2018 First Lien Credit Facility, (ii) to pay related fees, costs and expenses and (iii) for general corporate purposes.

Obligations under the 2026 Notes were guaranteed by the Company’s existing and future wholly-owned domestic subsidiaries that guaranteed any credit facility (as defined in the indenture governing the 2026 Notes) or capital markets debt securities of the Company or Guarantors in excess of $ 15.0 million.

The 2026 Notes and the related guarantees were secured by first -priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions.

On February 20, 2025 ( the “Redemption Date”), the Company used a portion of the proceeds from the issuance and sale of the 2032 Notes to redeem all $ 250.0 million of its outstanding 2026 Notes at a redemption price equal to 100 % of the aggregate principal amount of the 2026 Notes, plus accrued and unpaid interest thereon to, but excluding the Redemption Date.

Upon redemption of the 2026 Notes, the indenture governing the 2026 Notes was satisfied and discharged in accordance with its terms.

The Company incurred debt issuance costs attributable to the issuance of the 2026 Notes of $ 6.4 million, with the remaining $ 1.2 million written off to loss on debt extinguishment upon redemption of the 2026 Notes.

2021 Revolving Credit Facility

1 unchanged sentence

On May 10, 2023, the Company and certain of its subsidiaries, as guarantors, entered into an amendment (the “Amendment”) to the 2021 Revolving Credit Facility (as amended, the “Amended Revolving Credit Facility”).

The Amendment includes certain modifications to the 2021 Revolving Credit Facility relating to the replacement of the London Inter-Bank Offered Rate with a Secured Overnight Financing Rate (“SOFR”) as the interest rate benchmark under the 2021 Revolving Credit Facility and adjusts certain other provisions to reflect current documentation standards and other agreed modifications.

On November 7, 2023, in connection with the entry by a subsidiary of the Company in a new asset-backed revolving credit facility, the Company terminated the Amended Revolving Credit Facility.

The Amendment included certain modifications to the 2021 Revolving Credit Facility relating to the replacement of the London Inter-Bank Offered Rate with a Secured Overnight Financing Rate (“SOFR”) as the interest rate benchmark under the 2021 Revolving Credit Facility and adjusted certain other provisions to reflect current documentation standards and other agreed modifications.

On November 7, 2023, in connection with the entry by a subsidiary of the Company into a new asset-backed revolving credit facility, the Company terminated the Amended Revolving Credit Facility.

See “2023 ABL Facility” below.

33 unchanged sentences

The Convertible Senior Notes were senior unsecured obligations of the Company and the remaining outstanding balance of $ 118.5 million was retired with cash on July 15, 2024.

In 2022, a wholly owned subsidiary of the Company repurchased $ 10.0 million in aggregate principal amount of the Convertible Senior Notes on the open market resulting in a $ 0.9 million gain on extinguishment of debt.

Subsequent principal repurchases occurred in 2023 for an aggregate principal amount of $ 44.0 million resulting in a gain on extinguishment of debt of $ 1.9 million.

Including amounts repurchased in 2022, a total of $ 54.0 million in aggregate principal amount of the Convertible Senior Notes had been repurchased as of December 31, 2023.

The repurchased notes were retired on July 1, 2024, with no principal amounts remaining outstanding or held by third parties as of December 31, 2024.

As of December 31, 2023, $ 118.5 million aggregate principal was recorded in current liabilities on the Company’s Consolidated Balance Sheet.

The components of income before provisions for income taxes for year ended December 31, 2025, as required by ASU 2023 - 09 is as follows:

Income tax expense (benefit) for the years ended December 31 consists of the following components:

17 unchanged sentences

3,928 3,706 3,278 3,004

Original issue discount

Stock compensation

4 unchanged sentences

4,071 - 4,108 -

4,241 3,056 5,117 2,006

Gross deferred income taxes

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The Company has determined that at December 31, 2025 and 2024, its ability to realize future benefits of its capital loss carryforward, unrealized loss on investments and foreign NOL carryforwards do not meet the “more likely than not” criteria in ASC 740, Income Taxes.

Therefore, a valuation allowance for capital loss carryforward of $ 4.1 million, unrealized loss on investments of $ 3.1 million and foreign NOL carryforwards of $ 1.8 million has been recorded at December 31, 2024

and a valuation allowance for unrealized loss on investments of $ 6.4 million and foreign NOL carryforwards of $ 1.7 million has been recorded as of December 31, 2023.

Therefore, a valuation allowance for capital loss carryforward of $ 4.1 million, unrealized loss on investments of $ 3.1 million and foreign NOL carryforwards of $ 1.4 million has been recorded at December 31, 2025 and a valuation allowance for capital loss carryforward of $ 4.1 million, unrealized loss on investments of $ 3.1 million and foreign NOL carryforwards of $ 1.8 million has been recorded as of December 31, 2024.

ASC 740 - 10 - 25 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

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federal and state tax examinations for years prior to 2022.

Reconciliation of the federal statutory rate and the effective income tax rate for the years ended December 31 is as follows:

In 2020, the U.S.

government enacted the Coronavirus Aid, Relief, and Security Act (the “CARES Act”) to provide certain relief as a result of the COVID- 19 Pandemic.

The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”).

ERC is a refundable tax credit for employers who kept employees on their payroll during the COVID- 19 Pandemic.

The Company applied for the ERC in 2024.

The Company considered the ERC to be a contingent gain.

During the year ended December 31, 2025, the Company received and recorded an employee retention credit totaling $ 5.5 million, within the “Other income, net” in our Consolidated Statements of Income.

Reconciliation of the federal statutory rate and the effective income tax rate for the year ended December 31, 2025 as required by ASU 2023 - 09 (see New Accounting Pronouncements caption in Note 2 for more information):

Federal statutory rate

$ 17,460 21.0 %

Foreign rate differential

Foreign tax effects

( 320 ) ( 0.4 )%

State and local income taxes, net of federal benefit (1)

Effect of cross-boarder tax laws

Global Intangible Low-Taxed Income (GILTI)

Non-taxable or non-deductible items

Stock Compensation

( 4,229 ) ( 5.1 )%

Permanent differences

Non-deductible compensation

Research and development (R&D) credits

( 142 ) ( 0.2 )%

Foreign tax credits

( 72 ) ( 0.1 )%

Valuation allowance

Noncontrolling interest in joint venture earnings

( 1,938 ) ( 2.3 )%

( 411 ) ( 0.5 )%

Change in valuation allowance

( 346 ) ( 0.5 )%

Effective income tax rate

$ 14,991 18.0 %

( 1 ) State taxes in Tennessee, California, and Michigan made up the majority (greater than 50% ) of the tax effect in this category.

Reconciliation of the federal statutory rate and effective income tax rate for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023 - 09 is as follows:

Federal statutory rate

21.0 % 21.0 %

Foreign rate differential

( 0.1 )% ( 0.1 )%

Permanent differences

( 0.6 )% ( 0.1 )%

Valuation allowance

Effective income tax rate

26.1 % 38.7 %

The permanent differences for the years ended December 31, 2025, 2024 and 2023 are not significant in the aggregate.

The amount of cash taxes paid by the Company for the year ended December 31, 2025, as required by ASU 2023 - 09 is as follows:

State and Local

Income taxes, net of amounts refunded

401 (k) Retirement Savings Plan

93 unchanged sentences

( 2,643 ) 36.11 10.88

( 42,878 ) 38.11 11.94

Outstanding, December 31, 2025

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PRSUs are restricted stock units subject to both performance-based and service-based vesting conditions.

The number of shares of TPB Common Stock a recipient will receive upon vesting of a PRSU will be calculated by reference to certain performance metrics related to the Company’s performance over a five -year period.

The number of shares of TPB Common Stock a recipient will receive upon vesting of a PRSU is calculated by reference to certain performance metrics related to the Company’s performance over a five -year period.

PRSUs will vest on the measurement date, which is no more than 65 days after the performance period provided the applicable service and performance conditions are satisfied.

At December 31, 2024 , there are 372,218 PRSUs outstanding.

At December 31, 2025 , there were 273,098 PRSUs outstanding.

The following table outlines the PRSUs granted and outstanding as of December 31, 2025 .

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The Company has recorded compensation expense related to the RSUs based on the provisions of ASC 718 under which the fixed portion of such expense is determined as the fair value of the RSUs on the date of grant and amortized over the vesting period.

The Company recorded compensation expense related to the RSUs of approximately $ 3.3 million, $ 2.9 millionand $ 1.3 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

The Company recorded compensation expense related to the RSUs of approximately $ 3.9 million, $ 3.3 million and $ 2.9 million for the years ended December 31, 2025, 2024 and 2023 , respectively.

Total unrecognized compensation expense related to RSUs at December 31, 2025 , is $ 2.2 million, which will be expensed over 1.6 years.

8 unchanged sentences

In a number of these cases, the amounts of punitive and compensatory damages sought are significant and, if such a claim were brought against the Company, could have a material adverse effect on our business and results of operations.

The CDS segment has several subsidiaries engaged in making, distributing, and selling liquid nicotine products.

As a result of the overall publicity and controversy surrounding the industry generally, many companies have received informational subpoenas from various regulatory bodies and in some jurisdictions regulatory lawsuits have been filed regarding marketing practices and possible underage sales.

We expect that our subsidiaries will be subject to some such cases and investigative requests.

To the extent that litigation becomes necessary, we believe that the subsidiaries have strong factual and legal defenses against claims that they unfairly marketed products.

The probable losses, if any, associated with any such lawsuits are not currently reasonably estimable and therefore are not accrued.

33 unchanged sentences

18,730,635 19,362,806 20,467,406

For 2022, the effect of 3,208,172 shares issuable upon conversion of the Convertible Senior Notes were excluded from the diluted net income per share calculation because the effect would have been antidilutive.

( 1 ) There were 0.0 million, 0.2 million and 0.2 million outstanding stock options not included in the computation of diluted earnings per share for the years ended December 31, 2025, 2024 and 2023, respectively, because the effect would have been antidilutive.

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Corporate unallocated includes the costs and assets of the Company not assigned to one of the two reportable segments and includes corporate overhead expense, including executive management, finance, legal and information technology salaries, and professional services such as audit, external legal costs and information technology services, as well as costs related to the FDA premarket tobacco product application.

The Company had one customer that accounted for 10.2 % of net sales in 2024, of which 54 % was in the Stoker's product segment and 46 % was in the Zig-Zag products segment.

The Company had no customer that accounted for more than 10% of net sales in 2023 , or 2022 .

The Company did not have any customers that accounted for more than 10% of net sales in 2025.

The Company had one customer that accounted for 10.2 % of net sales in 2024, of which 54 % was in the Stoker's product segment and 46 % was in the Zig-Zag products segment in 2024.

There were no customers that accounted for more than 10% of net sales in 2023.

The Company’s CODM is its President and Chief Executive Officer and uses segment operating income as the measure of earnings to evaluate the performance of each segment and to make decisions about allocating resources, including employees, property, plant and equipment, as well as financial and capital resources.

37 unchanged sentences

$ 95,327 $ 80,832 $ 82,960

( 6,616 ) - ( 4,000 )

Interest expense, net

17,466 13,983 14,645

Investment loss

Investment (gain) loss

( 1,060 ) 1,968 9,601

(Income) losses from equity investments

1,159 ( 75 ) 2,313

Gain on extinguishment of debt

Loss (gain) on extinguishment of debt

1,235 - ( 1,664 )

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Includes primarily selling and marketing costs

Includes corporate costs that are not allocated to any of the three reportable segments

Includes corporate costs that are not allocated to any of the two reportable segments

( 3 ) Includes costs related to PMTA of $ 4.8 million, $ 3.6 million and $ 2.1 million in 2025 , 2024 , and 2023 , respectively.

4 unchanged sentences

Assets held for sale

15,329 26,998

Corporate unallocated (1)

9 unchanged sentences

$ 463,062 $ 360,660 $ 325,064

Dividends and Share Repurchase

Dividends, Share Issuances and Share Repurchases

The Company currently pays a quarterly cash dividend.

Dividends are considered restricted payments under the Senior Secured Notes Indenture.

The Company is generally permitted to make restricted payments provided that, at the time of payment, or as a result of payment, the Company is not in default on its debt covenants;

The Company is generally permitted to make restricted payments provided that, at the time of payment, or as a result of payment, the Company is not in default on its covenants;

however, there are earnings and market capitalization requirements that if not met could limit the aggregate amount of restricted, quarterly dividends during a fiscal year.

4 unchanged sentences

On November 6, 2024, the Board of Directors of the Company increased the Company’s share repurchase authorization by $ 77.9 million to an aggregate amount of $ 100.0 million.

The total number of shares repurchased for the year ended December 31, 2024 was 154,945 shares for a total cost of $ 5.1 million and an average price per share of $ 32.60 .

On November 4, 2025, the Company's Board of Directors increased the share repurchase authorization by $ 100.0 million to an aggregate amount of $ 200.0 million.

For the year ended December 31, 2025, there were no repurchases under the share repurchase program.

As of December 31, 2025, $ 200.0 million remains available for share repurchases under the program.

The total number of shares repurchased for the year ended December 31, 2024 was 154,945 shares for a total cost of $ 5.1 million and an average price per share of $ 32.60 .

There were no shares repurchased for the year ended December 31, 2023.

The Company repurchased 1,021,052 shares for a total cost of $ 29.2 million for the year ended December 31, 2022.

Selected Quarterly Financial Information (Unaudited)

The following table presents the quarterly operating results:

(Per-share amounts in dollars)

First Quarter Second Quarter Third Quarter Fourth Quarter

$ 83,064 $ 75,549 $ 93,225 $ 82,778 $ 90,704 $ 83,670 $ 93,667 $ 83,067

$ 48,354 $ 41,855 $ 50,398 $ 46,390 $ 50,395 $ 47,317 $ 52,418 $ 47,380

Operating income

$ 19,270 $ 17,581 $ 22,872 $ 20,085 $ 20,805 $ 20,697 $ 17,885 $ 24,597

Income from continuing operations

$ 12,181 $ 7,147 $ 12,961 $ 9,363 $ 12,525 $ 11,211 $ 10,360 $ 10,345

(Loss) Income from discontinued operations, net of tax

$ ( 2 ) $ 195 $ ( 41 ) $ 345 $ ( 165 ) $ ( 345 ) $ ( 7,309 ) $ ( 480 )

$ 12,179 $ 7,342 $ 12,920 $ 9,708 $ 12,360 $ 10,866 $ 3,051 $ 9,865

Net income (loss) attributable to non-controlling interests

$ 169 $ ( 255 ) $ ( 87 ) $ ( 217 ) $ ( 16 ) $ 35 $ 635 $ ( 244 )

Net Income attributable to Turning Point Brands, Inc.

$ 12,010 $ 7,597 $ 13,007 $ 9,925 $ 12,376 $ 10,831 $ 2,416 $ 10,109

Net Earnings per share

Continuing operations

$ 0.68 $ 0.42 $ 0.74 $ 0.54 $ 0.71 $ 0.64 $ 0.55 $ 0.60

Discontinued operations

( 0.00 ) 0.01 ( 0.00 ) 0.02 ( 0.01 ) ( 0.02 ) ( 0.41 ) ( 0.03 )

Basic earnings per share

$ 0.68 $ 0.43 $ 0.74 $ 0.56 $ 0.70 $ 0.62 $ 0.14 $ 0.57

Continuing operations

$ 0.63 $ 0.40 $ 0.68 $ 0.51 $ 0.69 $ 0.59 $ 0.53 $ 0.56

Discontinued operations

(0.00 ) 0.01 (0.00 ) 0.02 (0.01 ) (0.01 ) (0.40 ) (0.03 )

Diluted earnings per share

$ 0.63 $ 0.41 $ 0.68 $ 0.53 $ 0.68 $ 0.58 $ 0.13 $ 0.53

The amounts presented in the table above are computed independently for each quarter.

As a result, their sum may not equal the total year amounts.

The Company entered into an at-the-market offering program (the "ATM Program") on December 13, 2024, with B.

Riley Securities Inc.

and Barclays Capital Inc.

Between August 15, 2025, and September 11, 2025, the Company sold 1,014,262 shares of our Common Stock under the ATM Program at an average selling price of $ 98.59 per share for gross proceeds of $ 100.0 million, less underwriter's commission and expenses of approximately $ 2.5 million, for net proceeds of $ 97.5 million.

The shares were issued from repurchased common stock on a first in first out basis.

The Company recorded the gain, corresponding to the difference in between the reacquisition cost of treasury stock and the value of treasury stock reissued, into APIC within the Consolidated Statements of Changes in Stockholders' Equity.

As of December 31, 2025, there was $ 200 million of capacity remaining under the ATM Program.

Subsequent Events

Contribution of Creative Distribution Solutions

On January 2, 2025, the Company contributed 100 % of its interest in South Beach Brands LLC (“SBB”), the subsidiary that owns and operates the Company’s Creative Distribution Solutions (“CDS”) segment, to General Wireless Operations, Inc.

(“GWO”) in exchange for a 49 % equity interest in GWO.

GWO is a joint venture between the Company and Standard General, LP entered into in December 2018.

Under certain circumstances the Company has the right to redeem the contribution of SSB from GWO at fair market value.

The Company will provide certain transition services to GWO in connection with the operation of SBB on an arm’s length basis.

The Company determined that, upon completion of the SBB exchange transaction, it will not have a controlling financial interest in GWO and, as a result, will deconsolidate SBB on January 2, 2025, and account for its interest in GWO under the equity method of accounting.

Obligations under the 2032 Notes are guaranteed by the Company’s current wholly-owned domestic restricted subsidiaries that guaranteed its 2026 Notes.

The 2032 Notes and the related guarantees are secured by first -priority liens on substantially all of the assets of the Company and the guarantors, subject to certain exceptions.

Proceeds from the offering were approximately $ 294.0 million and were used to redeem the 2026 Notes and for general corporate purposes.

Upon redemption of the 2026 Notes, the indenture governing the 2026 Notes was satisfied and discharged in accordance with its terms.

As a result of the U.S.

trade policies beginning in 2025, we incurred tariff charges on certain products we import from overseas manufacturers.

Certain of these tariffs were imposed by the administration utilizing the International Emergency Economic Powers Act(IEEPA).

In February 2026, the United States Supreme Court held that the International Emergency Economic Powers Act does not authorize the president to impose tariffs and the government immediately ceased collecting such tariffs.

While this ruling prohibits the imposition of tariffs under IEEPA it does not provide for a refund mechanism, and we cannot assure as to when or how much of the tariffs the Company previously paid under IEEPA will be refunded.

In addition, the ruling does not prohibit the imposition of tariffs pursuant to other statutes.

For instance, in response to the ruling the administration imposed a blanket 10% on all products importers pursuant to section 122 of the Trade Act of 1974.

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data