SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                      

Commission file number 000-54435

VPR Brands, LP.

(Exact name of registrant as specified in its charter)

1141 Sawgrass Corporate Parkway,
Sunrise, FL 33323

(Address of principal executive offices) (zip code)

(954) 715-7001

(Registrant’s telephone number, including area code)

N/A

Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of units outstanding of each of the registrant’s classes of common units as of the latest practicable date.

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs.

You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in this report, in Part I, Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2025, as the same may be amended from time to time, and our other filings with the Securities and Exchange Commission.

Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “VPR Brands,” the “Company,” “we,” “our,” “us,” and similar terms refer to VPR Brands, LP, a Delaware limited partnership.

The information which appears on any website referenced herein, including, but not limited to www.vprbrands.com, is not part of this report.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

VPR BRANDS, LP.

CONDENSED BALANCE SHEETS

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

VPR BRANDS, LP.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

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

VPR BRANDS, LP.

CONDENSED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL SURPLUS (DEFICIT) 

(Unaudited)

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

VPR BRANDS, LP.

CONDENSED STATEMENTS OF CASH FLOWS  

(Unaudited)

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

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of operations of VPR Brands, LP (“VPRB” or the “Company”) should be read in conjunction with our unaudited condensed financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to the Company. This Quarterly Report on Form 10-Q includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Reference is made to the “Risk Factors” section of the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2026, as the same may be updated from time to time.

Overview

We are a company engaged in the electronic cigarette, electronic cigar, personal vaporizer and pocket lighter industry. We own a portfolio of electronic cigarette, personal vaporizer and pocket lighter patents, and several trademarks, which intellectual property forms the basis for our efforts to:

Recent Developments

Effective March 2026, Greg Pan ceased to be a member of the General Partner. Accordingly, Kevin Frija, our Chief Executive Officer, is now the sole member of the General Partner.

On April 28, 2026, Soleil Capital Management LLC, the Company’s general partner (the “General Partner”) executed the Third Amendment (the “Third Amendment”) to the Company’s Limited Partnership Agreement, as amended (the “Partnership Agreement”), in order to amend the terms of the Company’s Class A preferred units.

The designation, powers, preferences and rights of the Class A preferred units and the qualifications, limitations and restrictions thereof are summarized as follows:

Number and Stated Value. The number of authorized Class A preferred units is 250,000,000. Each Class A preferred unit will have a stated value of $1.00 (the “Stated Value”).

The Third Amendment had the effect of increasing the number of authorized Class A preferred units from 1,000,000 to 250,000,000, and decreasing the stated value from $2.00 to $1.00 per unit.

Rights. Except as set forth in the Third Amendment, each Class A preferred unit has all of the rights, preferences and obligations of the common units as set forth in the Partnership Agreement and will be treated as a common unit for all other purposes of the Partnership Agreement.

Dividends. The Class A preferred units have no mandatory dividend or distribution rights, and any distributions on or with respect to the Class A preferred units will be at the sole discretion of the Company.

The Third Amendment had the effect of eliminating an annual dividend.

Voting. The Class A preferred units have no voting rights other than as required by applicable law, and, for the avoidance of doubt, the Class A preferred units have no management rights or other governance participation of any kind.

Liquidation. The Class A preferred units have no preferential rights on any liquidation or dissolution of the Company, and rank pari passu with the Company’s common units on any liquidation or dissolution of the Company.

The Third Amendment had the effect of eliminating preferential rights of the Class A preferred units upon liquidation or dissolution of the Company equal to any accrued and unpaid dividends.

Non-transferable. The Class A preferred units are not transferable without the prior written consent of the Company, to be given or withheld in the sole discretion of the Company.

Conversion Rights. Each Class A preferred unit is convertible into common units of the Company at any time following the date on which the closing price of the common units for the preceding 20 consecutive trading days has equaled or exceeded $1.15 (the “Conversion Commencement Date”), subject to adjustment as set forth in the Third Amendment (the “Conversion Price”); provided, however, that if the Conversion Commencement Date has not occurred on or before July 31, 2030, the Class A preferred units will not be convertible into common units. Each Class A preferred unit is convertible into a number of conversion units equal to (x) the Stated Value, divided by the Conversion Price, subject to a 4.99% equity blocker, which may be waived by the Class A preferred unit holder upon not less than 61 days’ prior notice to the Company.

The Third Amendment had the effect of revising the conversion rights of the Class A preferred units. Prior to adopting the Third Amendment, the Class A preferred units were convertible, at the option of the holder thereof, into a number of common units equal to (x) the then-stated value of $2.00 plus any accrued and unpaid dividends, divided by (y) the conversion price, equal to 85% of the 5-trading day VWAP, subject to a 4.99% equity blocker that could be waived by the Class A preferred unit holder upon not less than 61 days’ prior notice to the Company.

Financial Condition

For the three and six months ended June 30, 2026, we generated total revenue of $703,770 and $1,283,841, respectively, and net loss of $353,447 and net income of $1,587,115, respectively. For the six months ended June 30, 2026, net cash provided by operating activities was $2,036,603. As of June 30, 2026, we had cash of $2,135,574, positive working capital of $1,153,294 and an accumulated deficit of $7,203,464, compared with cash of $125,345, negative working capital of $814,742 and an accumulated deficit of $8,790,579 as of December 31, 2025. Our financial position improved primarily as a result of settlement proceeds received during the first quarter of 2026.

 Results of Operations

Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025

Revenue

Product sales were $703,770 for the three months ended June 30, 2026, compared with $967,300 for the three months ended June 30, 2025, a decrease of $263,530, or 27%. We did not recognize royalty revenue during the 2026 period, compared with royalty revenue of $62,237 during the 2025 period. Accordingly, total revenue decreased by $325,767, or 32%, to $703,770. The decrease primarily reflected lower product sales and the absence of royalty revenue following the termination of the ELF® brand license in January 2026.

Cost of Sales

Cost of sales was $542,695 for the three months ended June 30, 2026, compared with $650,068 for the three months ended June 30, 2025, a decrease of $107,373, or 17%, primarily due to lower product sales. Gross profit decreased by $218,394, or 58%, to $161,075. Gross profit as a percentage of total revenue decreased to approximately 23% from approximately 37%, principally because product costs did not decline in proportion to the reduction in revenue and because the prior-year period included royalty revenue with no corresponding cost of sales.

Operating Expenses

Operating expenses were $493,617 for the three months ended June 30, 2026, compared with $653,159 for the three months ended June 30, 2025, a decrease of $159,542, or 24%. The decrease reflected reductions across several selling, general and administrative expense categories. Despite the decrease in operating expenses, operating loss increased by $58,852 to $332,542 from $273,690, primarily as a result of the decrease in gross profit.

Other Income (Expense)

Other expense, net, was $117,526 for the three months ended June 30, 2026, compared with $47,311 for the three months ended June 30, 2025. The increase in other expense was primarily attributable to settlement-related expense recorded during the 2026 period, partially offset by a decrease in interest expense from $64,797 to $26,740.

Net Income (Loss)

Net loss was $353,447 for the three months ended June 30, 2026, compared with a net loss of $321,001 for the three months ended June 30, 2025, an increase in net loss of $32,446. The decrease in operating expenses and interest expense was more than offset by lower gross profit and net settlement-related expense of $91,265 during the 2026 period.

Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025

Revenue

Product sales were $1,283,841 for the six months ended June 30, 2026, compared with $1,852,583 for the six months ended June 30, 2025, a decrease of $568,742, or 31%. We did not recognize royalty revenue during the 2026 period, compared with $110,282 during the 2025 period. Accordingly, total revenue decreased by $679,024, or 35%, to $1,283,841, primarily due to lower product sales and the absence of royalty revenue following the termination of the ELF® brand license in January 2026.

Cost of Sales

Cost of sales was $984,192 for the six months ended June 30, 2026, compared with $1,362,454 for the six months ended June 30, 2025, a decrease of $378,262, or 28%. Gross profit decreased by $300,762, or 50%, to $299,649. Gross profit as a percentage of total revenue decreased to approximately 23% from approximately 31%, principally due to the absence of royalty revenue and changes in product mix and product costs.

Operating Expenses

Operating expenses were $1,096,657 for the six months ended June 30, 2026, compared with $1,149,618 for the six months ended June 30, 2025, a decrease of $52,961, or 5%. Despite the decrease in operating expenses, operating loss increased by $247,801 to $797,008 because of the decline in gross profit.

Other Income (Expense)

Other income, net, was $2,937,762 for the six months ended June 30, 2026, compared with other expense, net, of $62,658 for the six months ended June 30, 2025. The improvement was primarily attributable to net settlement income of $3,000,990 recognized during the 2026 period, partially offset by interest expense of $64,047.

Net Income (Loss)

Net income was $1,587,115 for the six months ended June 30, 2026, compared with a net loss of $611,865 for the six months ended June 30, 2025. The improvement was primarily attributable to $3,000,990 of net settlement income recognized during the 2026 period, partially offset by a $247,801 increase in operating loss and income tax expense of $553,639.

Liquidity and Capital Resources

The following table sets forth a summary of our net cash flows for the periods indicated:

Cash provided by operating activities was $2,036,603 for the six months ended June 30, 2026, compared with cash used in operating activities of $595,117 for the six months ended June 30, 2025. The improvement was primarily attributable to net income generated during the 2026 period, including settlement income, and favorable changes in accounts payable and accrued expenses and income taxes payable. These factors were partially offset by increases in accounts receivable and vendor deposits.

Net cash used in financing activities was $26,373 for the six months ended June 30, 2026, compared with $87,018 for the six months ended June 30, 2025. The decrease in cash used in financing activities was primarily due to the absence of convertible-note repayments and lower repayments of notes payable during 2026. We did not use cash in investing activities during the six months ended June 30, 2026, compared with $16,000 used to purchase intangible assets during the six months ended June 30, 2025.

Assets

As of June 30, 2026 and December 31, 2025, we had total assets of $3,330,958 and $1,593,684, respectively. The increase of $1,737,274 was primarily attributable to an increase in cash of $2,010,229 and an increase in accounts receivable, partially offset by decreases in inventory and the right-of-use asset.

Liabilities

As of June 30, 2026 and December 31, 2025, we had total liabilities of $2,221,748 and $2,071,589, respectively. The increase of $150,159 was primarily attributable to a $83,052 increase in income taxes payable and a $108,396 increase in accounts payable and accrued expenses, partially offset by repayments of notes payable and reductions in lease liabilities.

Availability of Additional Funds

Our capital requirements going forward will consist primarily of funding operations, working capital needs, intellectual property enforcement and potential strategic acquisitions. Although our liquidity improved during and subsequent to the six months ended June 30, 2026, there can be no assurance that operating cash flows and amounts collected under the settlement and license agreements will be sufficient for all future needs or will be received when expected.

Since inception, our operations have primarily been funded through proceeds from operations and equity and debt financing. As of June 30, 2026, we had cash of $2,135,574 and positive working capital of $1,153,294. In July 2026, the Company entered into a settlement and patent license agreement with R.J. Reynolds Vapor Company providing for consideration of $14.9 million and a license and release agreement with JUUL Labs, Inc. providing for consideration of $11.0 million payable pursuant to an installment schedule. On July 16, 2026, the Company received the $14.9 million in cash from R.J. Reynolds Vapor Company, and on July 27, 2026, the Company received an initial $4.0 million cash payment from JUUL Labs, Inc. pursuant to the installment schedule. These agreements have provided, and are expected to continue to provide, additional liquidity; however, the timing of the remaining JUUL proceeds remains subject to the terms of the agreement and the accounting recognition of the proceeds remains subject to our ongoing accounting analysis.We also agreed to pay $135,000 to settle the remaining Dissim royalty obligation. We believe our existing cash, cash received under the settlement and license agreements, remaining contractual proceeds and cash generated from operations will be sufficient to meet our obligations for at least twelve months from the issuance of these financial statements. Nevertheless, future liquidity will depend on the timing of remaining collections, operating performance and our ability to manage working capital.

In addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell all or a portion of our assets, enter into a business combination, or reduce or eliminate operations. These possibilities, to the extent available, may be on terms that result in significant dilution to our unitholders or that result in our unitholders losing all of their investment in our Company.

If we are able to raise additional capital, we do not know what the terms of any such capital raising would be. In addition, any future sale of our equity securities would dilute the ownership and control of your units and could be at prices substantially below prices at which our units currently trade. Our inability to raise capital could require us to significantly curtail or terminate our operations. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our unitholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties.

Our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared in conformity with U.S. GAAP on a going-concern basis. Based on the settlement income received during the first quarter of 2026, positive working capital and management’s plans, management concluded that the substantial doubt that historically existed regarding our ability to continue as a going concern has been alleviated for at least twelve months from the date the financial statements are issued.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors. 

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. Our significant accounting policies are described in notes accompanying the financial statements. The preparation of the financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. Estimates are based on information available as of the date of the financial statements, and accordingly, actual results in future periods could differ from these estimates. Significant judgments and estimates used in the preparation of the financial statements apply critical accounting policies described in the notes to our financial statements.

We consider the recognition and related assumptions used in determining the collectability of accounts receivable and the realizability of the deferred tax assets and liabilities to be most critical in understanding the judgments that are involved in the preparation of our financial statements.

Together with our critical accounting policies set out below, our significant accounting policies are summarized in Note 2 to our unaudited condensed financial statements as of and for the three and six months ended June 30, 2026.

Accounts Receivable

We recognize an allowance for expected credit losses in accordance with Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses, issued by the Financial Accounting Standards Board (“FASB”). This ASU establishes a current expected credit loss model, which requires us to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. 

To estimate expected credit losses, we segregated our receivables into four risk-based categories, each reflecting distinct credit risk characteristics. A loss rate was then applied to each category based on historical experience and anticipated losses given the associated risk factors.

An allowance for credit losses is recorded through a provision for bad debts charged to earnings. The evaluation of expected credit losses is inherently subjective and requires management to make estimates that may be subject to significant revision as additional information becomes available.

As of June 30, 2026 and December 31, 2025, the Company had an allowance for expected credit losses of $105,871 and $105,792, respectively. 

Income Taxes

The Company has recorded income taxes in accordance with ASC 740, “Income Taxes,” which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Additionally, the Company follows the provisions of FASB ASC 740-10, “Uncertainty in Income Taxes,” which establishes recognition thresholds for tax positions. Under this standard, an entity may only recognize tax positions that meet a “more-likely-than-not” threshold. As of June 30, 2026 and December 31, 2025, the Company does not believe it has any uncertain tax positions that would require recognition or disclosure in the accompanying unaudited condensed financial statements. 

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that may have an impact on the Company’s accounting and reporting.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update aims to enhance transparency for users of financial statements by requiring public business entities to disaggregate specific expense categories. The update mandates disclosures in the notes to financial statements, detailing the composition and trends of key expense categories within major income statement captions. These enhanced disclosures are expected to help investors more effectively assess the entity’s performance, understand its cost structure, and make more accurate forecasts of future cash flow. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the potential impact of ASU 2024-03 on its financial reporting and disclosures.

In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which revises the effective date of ASU 2024-03 (on disclosures about disaggregation of income statement expenses) “to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.” Entities within the ASU’s scope are permitted to early adopt the ASU. The Company is currently evaluating the potential impact of ASU 2024-03 on its financial reporting and disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instrument-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU affects entities that apply the practical expedient and accounting policy election (if applicable) when estimating expected credit losses on current accounts receivable and/or current contract assets arising from transactions under Topic 606, including those assets acquired in a transaction accounted for under Topic 805, Business Combinations. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of ASU 2025-05 on its financial reporting and disclosures.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, we are not required to include disclosure under this item. 

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and principal financial officer, has reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2026. Based on such review and evaluation, our Chief Executive Officer and principal financial officer have concluded that, as of June 30, 2026, the disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure, because of a continuing material weakness in our internal control over financial reporting, as described below.

The Company did not maintain an effective financial reporting process to prepare financial statements in accordance with U.S. GAAP. Specifically, our process lacked timely and complete financial statement reviews and procedures to ensure all required disclosures were made in our financial statements. Also, the Company lacked documented procedures, including documentation related to testing of internal controls and entity-level controls, disclosure review, and other analytics. Furthermore, the Company lacked sufficient personnel to properly segregate duties.

A material weakness, as defined in PCAOB AS 2201,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 our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness; yet important enough to merit attention by those responsible for oversight of the Company’s financial reporting.

Remedial Efforts Related to the Material Weakness in Internal Control

In an effort to address the material weakness, we have implemented, or are in the process of implementing, the following remedial steps:

We believe these additional internal controls will be effective in remediating the material weakness described above; however, we may determine to modify the remediation plan described above by adding remedial steps to or modifying or no longer pursuing (if determined to be unnecessary in remediating the material weakness) the remedial steps set forth above. Until the remediation steps set forth above are fully implemented, the material weakness described above will continue to exist. Notwithstanding, through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, the Company’s management, including its Chief Executive Officer and principal financial officer, does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

The information set forth under Note 9, “Commitments and Contingencies—Legal Matters,” is incorporated herein by reference. The R.J. Reynolds matter pending as of June 30, 2026 was subsequently resolved as described in Note 11, “Subsequent Events.”

ITEM 1A. RISK FACTORS

Risk factors describing the major risks to our business can be found under Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2025, as the same may be amended from time to time. There has been no material change in our risk factors from those previously discussed in the Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable to our operations.

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.