Turning Point Brands, Inc.

Notes to Consolidated Financial Statements (Unaudited)

(dollars in thousands, except where designated and per share data)

Note1. Business and Basis of Presentation

Description of Business

Turning Point Brands, Inc., including its subsidiaries (collectively referred to herein as the “Company,” “we,” “our” or “us”), is a leading manufacturer, marketer and distributor of branded consumer products. The Company sells a wide range of products to adult consumers consisting of staple products with its iconic brandsZig-Zag® andStoker’s® and its next generation products to fulfill evolving consumer preferences. The Company operatestwo segments, Zig-Zag products and Stoker’s products, led by its core proprietary and iconic brands:Zig-Zag® andStoker’s® along withFRE®,Beech-Nut® andTrophy®. The Company’s products are available in more than 220,000 retail outlets in North America.

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.*

As of* December 31, 2024,the assets and liabilities associated with the CDS segment have been 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 hastwo 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 Note3,* "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

The accompanying unaudited, interim, consolidated financial statements have been prepared in accordance with the accounting practices described in the Company’s audited, consolidated financial statements as of and for the year ended* December 31, 2024*. In the opinion of management, the unaudited, interim, consolidated financial statements included herein contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company for the periods presented. Such adjustments, other than nonrecurring adjustments separately disclosed, are of a normal and recurring nature. The operating results for interim periods arenot necessarily indicative of results to be expected for a full year or future interim periods. The unaudited, interim, consolidated financial statements should be read in conjunction with the Company’s audited, consolidated financial statements and accompanying notes as of and for the year ended* December 31, 2024*. The accompanying interim, consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, donot include all the disclosures required by generally accepted accounting principles in the United States (“GAAP”) with respect to annual financial statements.

Certain prior year amounts have been reclassified to conform to the current year’s presentation. The changes didnot have an impact on the Company’s consolidated financial position, results of operations, or cash flows in any of the periods presented.

Note2. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiaries, all of which are wholly-owned, and variable interest entities (“VIEs”) for which the Company is considered to have a controlling interest based on the voting interest entity model or the variable interest entity model. All significant intercompany transactions have been eliminated.

U.S. GAAP requires the Company to identify entities for which control is achieved through means other than voting rights and to determine whether the Company is the primary beneficiary of a VIE. A VIE is broadly defined as an entity withone or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; and (c) the equity investors have voting rights that arenot proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The Company consolidates a VIE when it determines that it is the VIE’s primary beneficiary. The Company* may*change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

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The primary beneficiary of a VIE is the entity that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. 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 and determined that the Canadian distribution business acquired by General Wireless Operations, Inc. (refer to Note9, "Other Assets") is a VIE for which the Company isnot required to consolidate. The Company has a controlling financial interest of 65% of the 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 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. The Company has 49% indirect interest in the Canadian distribution business through the Company's equity interests in General Wireless Operations, Inc. and, through Turning Point Brands Canada, has a variable interest through a purchase option on the equity interests and a management service agreement with the Canadian distribution business. However, the Company doesnot have the ability to direct the activities that most significantly impact the performance of the business. The majority owner designee to the Board of Directors can terminate the management services agreement, and it* maybe terminated at any time without cause. Based on the foregoing, management believes in its judgement that the Canadian distribution business is a VIE for which the Company isnot* required to consolidate. See Note9 "Other Assets" for further discussion of the acquisition of the Canadian distribution business by General Wireless Operations, Inc. and the terms of the option on its equity interests.

Revenue Recognition

The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”)606, Revenue from Contracts with Customers, which includes excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns and incentives, upon delivery of goods to the customer – at which time the Company’s performance obligation is satisfied - at an amount that the Company expects to be entitled to in exchange for those goods in accordance with thefive-step analysis outlined in ASC606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied. The Company includes in its transaction price excise taxes on smokeless tobacco, cigars or other nicotine products billed to customers, and excludes sales taxes and value-added taxes imposed at the time of sale.

The Company records an allowance for sales returns, based principally on historical volume and return rates, which is included in accrued liabilities on the consolidated balance sheets. The Company records sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction in revenues (a portion of which is based on amounts estimated to be due to wholesalers, retailers and consumers at the end of the period) based principally on historical volume and utilization rates. Expected payments for sales incentives are included in accrued liabilities on the consolidated balance sheets.

A further requirement of ASC606 is for entities to disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company’s management views business performance through segments that closely resemble the performance of major product lines. Thus, the primary and most useful disaggregation of the Company’s contract revenue for decision making purposes is the disaggregation by segment which can be found in Note16, “Segment Information”.

Held for Sale and Discontinued Operations

The Company classifies assets and liabilities to be sold (the “disposal group”) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed withinone year.

Assets and liabilities held for sale are presented separately within the Consolidated Balance Sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. Depreciation of property, plant and equipment and amortization of intangible and right-of-use assets arenot recorded while these assets are classified as held for sale. For each period the disposal group remains classified as held for sale, its recoverability is reassessed, and any necessary adjustments are made to its carrying value.

The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that will have a major effect on its operations and financial results. The results of discontinued operations are reported as Loss from discontinued operations, net of tax in the Consolidated Statements of Income commencing in the period in which the held for sale criteria are met. Loss from discontinued operations includes direct costs attributable to the divested business and excludes any cost allocations associated with any shared or corporate functions. Loss from discontinued operations includes any gain or loss recognized upon disposition or from any adjustment of the carrying amount of the assets and liabilities of the discontinued operations to fair value less costs to sell while classified as held for sale.

Shipping Costs

The Company records shipping costs incurred as a component of selling, general and administrative expenses. Shipping costs incurred were approximately $7.7 million and $4.1 million for thethree months ending* September 30, 2025and2024*, respectively, and $22.3 million and $12.3 million for thenine months ended* September 30, 2025* and2024, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value using thefirst-in,first-out method. Leaf tobacco is presented in current assets in accordance with standard industry practice, notwithstanding the fact that such tobaccos are carried longer thanone year for the purpose of curing.

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Fair Value

GAAP establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level1) and the lowest priority to unobservable inputs (Level3).

Thethree levels of the fair value hierarchy under GAAP are described below:

Derivative Instruments

The Company enters into foreign currency forward contracts to hedge a portion of its exposure to changes in foreign currency exchange rates on inventory purchase commitments. The Company accounts for its forward contracts under the provisions of ASC815, Derivatives and Hedging. Under the Company’s policy, the Company* mayhedge up to 100% of its anticipated purchases of inventory in the denominated invoice currency over a forward periodnot* to exceed twelve months. The Company* mayalso, from time to time, hedge up to 100% of its non-inventory purchases (e.g., production equipment) in the denominated invoice currency. Forward contracts that qualify as hedges are adjusted to their fair value through other comprehensive income as determined by market prices on the measurement date, except any hedge ineffectiveness which is recognized currently in income. Gains and losses on these forward contracts are reclassified from other comprehensive income into inventory as the related inventories are received and are transferred to net income as inventory is sold. Changes in fair value of any contracts that donot* qualify for hedge accounting or arenot designated as hedges are recognized currently in income.

Risks and Uncertainties

Manufacturers and sellers of tobacco products are subject to regulation at the federal, state, and local levels. Such regulations include, among others, labeling requirements, limitations on advertising, and prohibition of sales to minors. The tobacco industry is likely to continue to be heavily regulated. There can beno assurance as to the ultimate content, timing, or effect of any regulation of tobacco products by any federal, state, or local legislative or regulatory body, nor can there be any assurance that any such legislation or regulation wouldnot have a material adverse effect on the Company’s financial position, results of operations or cash flows. In a number of states targeted flavor bans have been proposed or enacted legislatively or by the administrative process. Depending on the number and location of such bans, such legislation or regulation could have a material adverse effect on the Company’s financial position, results of operations or cash flows. The U.S. Food and Drug Administration (“FDA”) continues to consider various restrictive regulations around our products, including targeted flavor bans; however, the details, timing and ultimate implementation of such measures remain unclear.

The tobacco industry has experienced, and is experiencing, significant product liability litigation. Most tobacco liability lawsuits have been brought against manufacturers and sellers of cigarettes for injuries allegedly caused by smoking or exposure to smoke. However, several lawsuits have been brought against manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. Typically, such claims assert that use of smokeless products is addictive and causes oral cancer. There can beno assurance the Company willnot sustain losses in connection with such lawsuits and that such losses willnot have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Master Settlement Agreement (MSA)

Pursuant to the Master Settlement Agreement (the “MSA”) entered into in* November 1998by most states (represented by their attorneys general acting through the National Association of Attorneys General) and subsequent states’ statutes, a “cigarette manufacturer” (which is defined to include a manufacturer of make-your-own (“MYO”) cigarette tobacco) has the option of either becoming a signatory to the MSA or opening, funding and maintaining an escrow account to have funds available for certain potential tobacco-related liabilities with sub-accounts on behalf of each settling state. Such companies are entitled to direct the investment of the escrowed funds and withdraw any appreciation but cannot withdraw the principal fortwenty-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 judgement to that state’s plaintiffs in the event of such a final judgement against the Company. The Company chose to open and fund an escrow account as its method of compliance. It is the Company’s policy to record amounts on deposit in the escrow account for prior years as a non-current asset. The Company has begun to receive deposits back from participating states commencing with the deposits from1999.* At* September 30, 2025* and* December 31, 2024,the Company had on deposit approximately $32.0 million and $32.1 million, respectively, the fair values of which were approximately $29.8 million and $28.7 million, respectively. The Company discontinued its generic category of MYO in2019* and its Zig-Zag branded MYO cigarette smoking tobacco in2017. Thus, unless there is a change in MSA legislation, the Company hasno remaining product lines covered by the MSA and willnot be required to make future escrow deposits.

The Company has chosen to invest a portion of the MSA escrow, from time to time, in U.S. Government securities including TIPS, Treasury Notes and Treasury Bonds. These investments are classified as available-for-sale and recorded at fair value. Realized losses are prohibited under the MSA; any investment in an unrealized loss position will be held until the value is recovered, or until maturity.

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Fair values for the U.S. Governmental agency obligations are Level2 in the fair value hierarchy. The following tables show cost and estimated fair value of the assets held in the MSA account, respectively, as well as the maturities of the U.S. Governmental agency obligations held in such account for the periods indicated.

The following shows the amount of deposits by sales year for the MSA escrow account:

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Recent Accounting Pronouncements

Issued butnot 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 fiscal2025* 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.

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. This guidance will be effective for the Company beginning with its fiscal2027* annual financial statements and interim periods thereafter. Early adoption is permitted, in addition to either prospective or retrospective application. The Company is currently assessing the impact and extent to which this guidance will affect its disclosures.

Note3. Assets and Liabilities Held for Sale and Discontinued Operations

On* January 2, 2025,*the Company contributed 100% of its interest in SBB, the subsidiary that owned and operated the Company’s former CDS segment, to GWO in exchange for 49% of the issued and outstanding GWO common stock on a fully-diluted basis. 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 Standard General, LP.

The assets and liabilities of the CDS business were classified as held for sale as of* December 31, 2024,and its financial results were classified as discontinued operations and reported separately for all periods presented herein. Upon meeting the criteria for held for sale classification in2024,* the Company recorded a non-cash charge of $8.8 million with an equivalent valuation allowance against net assets held for sale to reduce the carrying value of the disposal group to fair value. There wasno additional loss upon completion of the sale in thefirst quarter of2025. Fair value of the disposal group utilized inputs within Level3 of the fair value hierarchy, and was determined using both a market and an income approach.

The Company incurredno income or loss from discontinued operations for thethree andnine months ended* September 30, 2025*. The following table summarizes the loss from discontinued operations included in the Consolidated Statements of Income for thethree andnine months ended* September 30, 2024*.

A summary of the held for sale assets and liabilities included in the Consolidated Balance Sheets follows:

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Note4. Derivative Instruments

Foreign Currency

At* September 30, 2025*, the Company hadno foreign currency contracts outstanding. At* December 31, 2024*, the Company had foreign currency contracts outstanding for the purchase and sale of€2.1 million. The foreign currency contracts’ fair value 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.

Note5. Fair Value of Financial Instruments

The estimated fair value amounts have been determined by the Company using the methods and assumptions described below. However, considerable judgment is required to interpret market data to develop estimates of fair value. Accordingly, the estimates presented herein arenot necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies* may*have a material effect on the estimated fair value amounts.

Cash and Cash Equivalents

Cash and cash equivalents are, by definition, short-term. Thus, the carrying amount is a reasonable estimate of fair value.

Accounts Receivable

The fair value of accounts receivable approximates their carrying value due to their short-term nature.

Long-Term Debt

The Company's2032 Notes bear interest at a rate of 7.625% per year. As of* September 30, 2025*, the fair value approximated $308.4 million, with a carrying value of $300.0 million.

The Company’s2026 Notes were retired at par on* February 20, 2025.As of December 31, 2024*, the fair value of the2026 Notes approximated $251.2 million, with a carrying value of $250.0 million.

See Note11, “Notes Payable and Long-Term Debt”, for further information regarding the Company’s long-term debt.

Note6. Inventories

The components of inventories are as follows:

The valuation allowance to write inventory down to its net realizable value at* September 30, 2025* and* December 31, 2024*was $18.7 million and $17.6 million, respectively.

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In* December 2023,athird*-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. The leaf tobacco inventory is covered by the Company’s stock throughput insurance policy and the Company believes the inventory loss is probable of being fully recovered under the policy. As a result, the Company recorded a $15.2 million receivable related to its leaf tobacco inventory which is included in Other current assets on the consolidated balance sheets.

Note7. Other Current Assets

Other current assets consist of:

Note8. Property, Plant, and Equipment

Property, plant, and equipment consists of:

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Note9. Other Assets

Other assets consist of:

Debt and Non-Marketable Equity Investments

The Company records its non-marketable equity investments without a readily determinable fair value, that arenot 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 a joint venture between the Company and 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. In connection with the transaction, the Company has the right to redeem the contribution of SBB from GWO at fair market value under certain circumstances. The Company also received 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 maydecrease over time based on certain tax sharing payments to Standard General, LP. As a result of this transaction, the Company determined that itno* 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. 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 investment" in the consolidated statements of income. On August 8, 2025,SBB acquired a Canadian distribution business. In connection with this acquisition,10233625 Canada Corp. (“Turning Point Brands Canada”) purchased an option from SBB to acquire this distribution business for fair market value less the option price. The option becomes exercisable in March 2027.The option price was approximately $20.0 million with approximately $8.0 million paid at closing and the remining paid quarterly over18* months beginning in* February 2026.There is approximately $20.0 million in other assets, $8.0 million paid at closing, $6.1 million in accrued liabilities, and $6.1 million in other long-term liabilities as of September 30, 2025.The distribution business will also pay management fees to Turning Point Brands Canada for services to be provided for up to approximately $7.0 million per annum for athree*-year period, as agreed upon in a management service agreement.

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.*

Debt Security Investment

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.The Company invested in the form of a convertible note which includes additional follow-on investment rights. Interest on the convertible note is payable annually in arrears in Julyof each year. As of September**2025,* total interest of $1.1 million has been rolled into the convertible note resulting in a total investment of $10.1 million. The convertible note bears an interest rate of 3.0% per year and matures* July 31,2027. Interest and principalnot paid to date are receivable at maturity, and Old Pal has the option to extend the maturity date of the convertible note inone-year increments. The interest rate is subject to change based on Old Pal reaching certain sales thresholds. The weighted average interest rate on the convertible note was 3.0% for thethree andnine months ended September 30, 2025and2024.* Old Pal has the option to convert the note into shares once sales reach a certain threshold. The conditions required to allow Old Pal to convert the note werenot met as of* September 30, 2025*. Additionally, the Company has the right to convert the note into shares at any time. The Company has classified the debt security with Old Pal as available for sale. The Company reports interest income on available for sale debt securities in interest income in its Consolidated Statements of Income. The Company performs a qualitative assessment on a quarterly basis to determine if the fair value of the Old Pal investment could be less than the amortized cost basis. In addition, the Company utilizes athird-party to perform a quantitative assessment to determine fair value using a Monte Carlo simulation (Level3) when indicated, and at least bi-annually. Based upon its fair value assessments, the Company determined the fair value of Old Pal to be $6.4 million at* December 31, 2024.In thesecond* quarter of2025, based upon a quantitative fair value assessment, the Company determined the fair value to be $5.6 million and recorded a $0.9 million allowance for credit losses in Investment loss on its Consolidated Statements of Income for thenine months ended* September 30, 2025.In thesecond* quarter of2024, the Company recorded an allowance for credit losses related to its investment in Old Pal of $0.8 million included in investment loss for thenine months ended* September 30, 2024.The Company has recorded an accrued interest receivable of $0.1 million and $0.1 million at September 30, 2025* and* December 31, 2024*, respectively, in Other current assets on its Consolidated Balance Sheets.

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Captive Available-for-Sale Marketable Securities

In* December 2023,the Company formed a captive insurance company, Interchange, IC, incorporated in the District of Columbia, to write a portion of its insurance coverage, including with respect to general product, and officer and director liability coverages under deductible reinsurance policies. 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 consolidated in the Company’s financial statements. Subsequent to June 30, 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,athird*-party investor subscribed $11.0 million for an interest in Interchange IC’s parent company, which contributed the investment to Interchange IC. There is currentlyno insurance reserve as the claims activity is immaterial and expected to be immaterial for the foreseeable future. As of* September 30, 2025,*no policy has been underwritten for the benefit of thethird-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 arenot 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. The Company believes any investments held with gross unrealized losses to be temporary andnot the result of credit risk.

The Company’s captive investments are summarized in the following table:

The following table summarizes the fair value of the Company’s captive investments by contractual maturity.

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Note10. Accrued Liabilities

Accrued liabilities consist of:

Note11. Notes Payable and Long-Term Debt

Notes payable and long-term debt consists of the following in order of preference:

The components of interest expense, net consists of the following:

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2032 Notes

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 due2032* (the*“2032* Notes”), by and among the Company, the guarantors party thereto and GLAS Trust Company LLC, as trustee and notes collateral agent. The2032 Notes incur interest at a rate of 7.625%, payable semi-annually in arrears on* March 15and September 15of each year, commencing on September 15, 2025.Proceeds from the offering were approximately $293.0 million and were used to redeem the2026* Notes (as defined below) and for general corporate purposes.

The2032 Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by each existing and future wholly-owned domestic restricted subsidiary of the Company (collectively, the “Guarantors” as defined in the indenture governing the2032 Notes or the*“2032* Notes Indenture”). The2032 Notes and the related guarantees are secured byfirst-priority liens on substantially all of the existing and future assets of the Company and the Guarantors that donot secure the2023 ABL Facility (as defined below), subject to certain exceptions. The2032 Notes Indenture contains covenants that, among other things, restrict the ability of the Company and its restricted subsidiaries to: (i) grant or incur liens; (ii) incur, assume or guarantee additional indebtedness; (iii) sell or otherwise dispose of assets, including capital stock of subsidiaries; (iv) make certain investments; (v) pay dividends, make distributions or redeem or repurchase capital stock; (vi) engage in certain transactions with affiliates; and (vii) consolidate or merge with or into, or sell substantially all of our assets to another entity. These covenants are subject to several limitations and exceptions set forth in the2032 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 isnot in default on its debt covenants; however, there are earnings and market capitalization requirements that ifnot met could limit the aggregate amount of quarterly dividends payable during a fiscal year. The2032 Notes Indenture provides for customary events of default.

The Company incurred debt issuance costs attributable to the2032 Notes of $7.1 million which are amortized to interest expense using the straight-line method over the expected life of the2032 Notes.

2026 Notes

On* February 11, 2021,the Company closed a private offering of $250.0 million aggregate principal amount of its 5.625% senior secured notes due2026* (the*“2026* Notes”). The2026 Notes incurred interest at a rate of5.625%, payable semi-annually in arrears on* February 15and August 15of each year, commencing on August 15,*2021. The Company used the proceeds from the offering (i) to repay all obligations under and terminate the2018 First Lien Credit Facility, (ii) to pay related fees, costs and expenses and (iii) for general corporate purposes.

Obligations under the2026 Notes were guaranteed by the Company’s existing and future wholly-owned domestic subsidiaries that guarantee any credit facility (as defined in the indenture governing the2026 Notes) or capital markets debt securities of the Company or Guarantors in excess of $15.0 million. The2026 Notes and the related guarantees were secured byfirst-priority liens on substantially all of the assets of the Company and the Guarantors, subject to certain exceptions. The Company was in compliance with all covenants under the2026 Notes as of* December 31, 2024.*

On* February 20, 2025 (the “Redemption Date”), the Company used a portion of the proceeds from the issuance and sale of the2032* Notes to redeem all $250.0 million of its outstanding2026 Notes at a redemption price equal to 100% of the aggregate principal amount of the2026 Notes, plus accrued and unpaid interest thereon to, but excluding the Redemption Date. Upon redemption of the2026 Notes, the indenture governing the2026 Notes was satisfied and discharged in accordance with its terms.

The Company incurred debt issuance costs attributable to the issuance of the2026 Notes of $6.4 million, with the remaining $1.2 million written off to loss on debt extinguishment upon termination.

2023 ABL Facility

On* November 7, 2023,TPB Specialty Finance, LLC, a wholly-owned subsidiary of the Company (the “ABL Borrower”), entered into a new $75.0 million asset-backed revolving credit facility (the“2023* ABL Facility”), with the several lenders thereunder, and Barclays Bank Plc, as administrative agent (the “Administrative Agent”) and as collateral agent and First-Citizens Bank & Trust Company as additional collateral agent (the “Additional Collateral Agent”). Under the2023 ABL Facility, the ABL Borrower* maydraw up to$75.0* million under Revolving Credit Loans and Last In Last Out (“LILO”) loans. The2023 ABL Facility includes a $40.0 million accordion feature. In connection with the2023 ABL Facility, Turning Point Brands contributed certain existing inventory to the ABL Borrower. The2023 ABL Facility is secured on afirst priority basis (subject to customary exceptions) by all assets of the ABL Borrower.

The2023 ABL Facility contains customary borrowing conditions including a borrowing base equal to the sum of (a) the lesser of (1)85% of the lower of (A) the market value (on afirst infirst out basis) of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (B)85% of the cost of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (2)85% of the net orderly liquidation value (“NOLV”) percentage of the lower of (1)(A) or (1)(B); plus (b)85% of the face value of all eligible accounts of the ABL Borrower minus (c) the amount of all eligible reserves. The2023 ABL Facility also includes a LILO borrowing base equal to the sum of (a) the lesser of: (1)10% of the lower of (A) the market value (on afirst infirst out basis) of the sum of eligible inventory, plus eligible in-transit inventory of the ABL Borrower and (B) the cost of the sum of eligible inventory, plus eligible in-transit inventory and (2)10% of the NOLV percentage of the lower of (1)(A) or (1)(B); plus (b)10% of the face amount of eligible account; minus (c) the amount of all eligible reserves.

Amounts borrowed under the2023 ABL Facility are subject to an interest rate margin per annum equal to (a) from and after the closing date until the last day of thefirst full fiscal quarter ended after the closing date, (i)1.25% per annum, in the case base rate loans, and (ii)2.25% per annum, in the case of revolving credit loans that are secured overnight financing rate (“SOFR”) loans, (b)(i)2.25% per annum, in the case of LILO loans that are base rate loans, and (ii)3.25% per annum, in the case of LILO loans that are SOFR loans, (c) on thefirst day of each fiscal quarter, the applicable interest rate margins will be determined from the pricing grid below based upon the historical excess availability for the most recent fiscal quarter ended immediately prior to the relevant date, as calculated by the Administrative Agent.

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The2023 ABL Facility also requires the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to1.00 as of the end of anyfour consecutive fiscal quarters if excess availability is less than the greater of (a)12.5% of the line cap and (b) $9.4 million, at any time and continuing until excess availability is equal to or exceeds the greater of (i)12.5% of the line and (ii)$9.4 million forthirty (30) consecutive calendar days; provided that such$9.4 million level shall automatically increase in proportion to the amount of any increase in the aggregate revolving credit commitments in connection with any incremental facility.

The2023 ABL Facility matures on the earlier of (x)* November 7, 2027and (y) the date that is 91 days prior to the maturity date of any material debt of the ABL Borrower or the Company or any of its restricted subsidiaries (subject to customary extensions agreed by the lenders thereunder); provided that clause (y) willnot* apply to the extent that on any applicable date of determination (on any date prior to the date set forth in clause (y)), (A) the sum of (x) cash that is held in escrow for the repayment of such material debt pursuant to arrangements satisfactory to the Administrative Agent, (y) cash that is held in accounts with the Administrative Agent and/or the Additional Collateral Agent, plus (z) excess availability, is sufficient to repay such material debt and (B) the ABL Borrower has excess availability of at least $15.0 million after giving effect to such repayment of material debt, including any borrowings under the commitments in connection therewith.

The Company hasnot drawn any borrowings under the2023 ABL Facility but has letters of credit of approximately $2.3 million outstanding under the facility and has an available balance of $66.6 million based on the borrowing base as of* September 30, 2025*.

The Company incurred debt issuance costs attributable to the2023 ABL Facility of $2.6 million which are amortized to interest expense using the straight-line method over the expected life of the2023 ABL Facility.

Convertible Senior Notes

In* July 2019,the Company closed an offering of $172.5 million in aggregate principal amount of its 2.50% convertible senior notes due July 15, 2024 (the “Convertible Senior Notes”). 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, 2024withno principal amounts remaining outstanding or held bythird* parties.

Note12. Income Taxes

The Company’s effective income tax rate for thethree andnine months ended* September 30, 2025* was 21.4% and 18.4%, respectively. The Company’s effective income tax rate for thethree andnine months ended* September 30, 2024* was 27.1% and 25.4%, respectively. The effective tax rate for thenine months ended* September 30, 2025* includes permanent tax differences related to the Company's restricted stock units that were issued in thefirst quarter of2025 and stock options that were exercised during thenine months ended* September 30, 2025*.

The Company follows the provisions of ASC740-10-25, which 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. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than50 percent likely of being realized upon ultimate settlement. The Company has determined that the Company didnot have any uncertain tax positions requiring recognition under the provisions of ASC740-10-25. The Company’s policy is to recognize interest and penalties accrued on uncertain tax positions, if any, as part of interest expense. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. In general, the Company isno longer subject to U.S. federal and state tax examinations for years prior to 2021.

On* July 4, 2025,the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions, was signed into law in the United States. The Company is currently evaluating the potential impact of this legislation and has determined that the legislation willnot* have a significant impact on its2025 consolidated financial statements.

In2020, 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 in2024.

The Company considered the ERC to be a contingent gain. During the quarter ended* September 30, 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.

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Note13. Share Incentive Plans

On* March 22, 2021,the Company’s Board of Directors adopted the Turning Point Brands, Inc.2021 Equity Incentive Plan (the“2021* Plan”), pursuant to which awards* maybe granted to employees, non-employee directors, and consultants. In addition, the2021* Plan provides for the granting of nonqualified stock options to employees of the Company or any subsidiary of the Company. Pursuant to the2021 Plan,1,290,000 shares, plus 100,052 shares remaining available for issuance under the2015 Equity Incentive Plan (the*“2015* Plan”), of TPB Common Stock are reserved for issuance as awards to employees, non-employee directors, and consultants as compensation for past or future services or the attainment of certain performance goals. The2021 Plan is scheduled to terminate on* March 21, 2031.The2021* Plan is administered by the compensation committee (the “Committee”) of the Company’s Board of Directors. The Committee determines the vesting criteria for the awards, with such criteria to be specified in the award agreement. As of* September 30, 2025*, net of forfeitures, there were 437,087 Restricted Stock Units (“RSUs”),122,570 options and 94,684 Performance Based Restricted Stock Units (“PRSUs”) granted under the2021 Plan. There are 735,711 shares available for future grant under the2021 Plan as of* September 30, 2025*.

On* April 28, 2016,the Board of Directors of the Company adopted the2015* Plan, pursuant to which awards could have been granted to employees, non-employee directors, and consultants. In addition, the2015 Plan provided for the granting of nonqualified stock options to employees of the Company or any subsidiary of the Company. Upon adoption of the2021 Plan, the2015 Plan was terminated, and the Company determinedno additional grants would be made under the2015 Plan. However, all awards issued under the2015 Plan that havenot been previously terminated or forfeited remain outstanding and continue unaffected. There areno shares available for grant under the2015 Plan.

Stock option activity for the2015 and2021 Plans is summarized below:

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Under the2015 and2021 Plans, the total intrinsic value of options exercised during thenine months ended* September 30, 2025and2024*, was $7.8 million, and $2.0 million, respectively.

At* September 30, 2025*, under the2015 and2021 Plans, the risk-free interest rate is based on the U.S. Treasury rate for the expected life at the time of grant. The expected volatility is based on the average long-term historical volatilities of peer companies. We intend to continue to consistently use the same group of publicly traded peer companies to determine expected volatility until sufficient information regarding volatility of our share price becomes available or until the selected companies areno longer suitable for this purpose. Due to our limited trading history, we are using the simplified method presented by SEC Staff Accounting BulletinNo. 107 to calculate expected holding periods, which represent the periods of time for which options granted are expected to be outstanding. We will continue to use this method until we have sufficient historical exercise experience to give us confidence in the reliability of our calculations. The fair values of these options were determined using the Black-Scholes option pricing model.

The following table outlines the assumptions based on the number of options granted under the2015 Plan.

The following table outlines the assumptions based on the number of options granted under the2021 Plan.

The Company records compensation expense related to the options based on the provisions of ASC718 under which the fixed portion of such expense is determined as the fair value of the options on the date of grant and amortized over the vesting period. In2025, the Company has recordedno compensation expense related to the options, which are fully expensed. The Company recorded compensation expense related to the options of approximately $0.1 million and $0.5 million for thethree andnine months ended* September 30, 2024,*respectively.

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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 afive-year period. PRSUs will vest on the measurement date, which isno more than 65 days after the performance period provided the applicable service and performance conditions are satisfied. As of* September 30, 2025*, there are 273,361 PRSUs outstanding. The following table outlines the PRSUs granted and outstanding as of* September 30, 2025*.

The Company records compensation expense related to the PRSUs based on the probability of achieving the performance condition. The Company recorded compensation expense related to the PRSUs of approximately $0.8 million and $0.8 million for thethree months ended* September 30, 2025* and2024, respectively, and $2.2 million and $2.5 million for thenine months ended* September 30, 2025* and2024, respectively. Total unrecognized compensation expense related to these awards at* September 30, 2025*, is $3.1 million which will be expensed over the service periods based on the probability of achieving the performance condition.

The Company has granted 158,982 RSUs which are outstanding and vest overone tofive years. The following table outlines the RSUs granted and outstanding as of* September 30, 2025*.

The Company records compensation expense related to the RSUs based on the provisions of ASC718 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 $1.1 million and $0.9 million for thethree months ended* September 30, 2025and2024,* respectively, and $3.0 million and $2.7 million for thenine months ended* September 30, 2025and2024* respectively. Total unrecognized compensation expense related to RSUs at* September 30, 2025,*is $3.1 million, which will be expensed over 1.72 years.

Note14. Contingencies

Other major tobacco companies are defendants in product liability claims. 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 potential losses associated with any such lawsuits arenot currently reasonably estimable and therefore arenot accrued.

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Note15. Income Per Share

The Company calculates earnings per share using the treasury stock method for its options and non-vested restricted stock units, and the if-converted method for its Convertible Senior Notes.

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations of net income:

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Note16. Segment Information

In accordance with ASC280, Segment Reporting, the Company hastwo reportable segments, Zig-Zag products and Stoker’s products. The Zig-Zag products segment markets and distributes (i) rolling papers, tubes, and related products; (ii) finished cigars and MYO cigar wraps; and (iii) lighters and other accessories. The Stoker’s products segment (i) manufactures and markets moist snuff, (ii) contracts for and markets loose-leaf chewing tobacco products, and (iii) contracts for and markets its modern oral product. The Company's products are distributed primarily through wholesale distributors in the U.S. and Canada. Corporate unallocated includes the costs and assets of the Companynot assigned toone of thetwo 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’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. On a quarterly basis, the CODM reviews segment operating income budget-to-actual variances to assess segment performance and make resource allocation decisions. For both reportable segments, cost of sales is the significant segment expense that is regularly provided to the CODM.

The accounting policies of these segments are the same as those of the Company. Corporate costs arenot directly charged to thetwo reportable segments in the ordinary course of operations.

The tables below present financial information about reportable segments:

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Net Sales: D**omestic and Foreign

The following table shows a breakdown of consolidated net sales between domestic and foreign customers:

Note17. Dividends and Shares Repurchases

A dividend of $0.075 per common share was paid on* October10,* 2025, to shareholders of record at the close of business on* September19,* 2025.

The Company currently pays a quarterly cash dividend. Dividends are considered restricted payments under the2032 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 isnot in default on its debt covenants; however, there are earnings and market capitalization requirements that ifnot met could limit the aggregate amount of restricted, quarterly dividends during a fiscal year.

On* February 25, 2020,the Company’s Board of Directors approved a $50.0 million share repurchase program which is intended for opportunistic execution based upon a variety of factors including market dynamics. The program is subject to the ongoing discretion of the Board of Directors. On October 25, 2021,the Board of Directors increased the approved share repurchase program by $30.7 million, and by an additional $24.6 million on February 24, 2022.On November 6, 2024,the Company's Board of Directors increased the share repurchase authorization by $77.9 million to an aggregate amount of $100.0 million. 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 thenine months ended September 30, 2025*, there wereno repurchases under the share repurchase program.

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. The Company is filing an amendment to the prospectus supplement to increase the aggregate dollar amount of shares of common stock that it maysell under the ATM Program by an additional$200,000,000. 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 afirst* infirst 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.

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