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Note 9 - Other Assets | 6 Months Ended
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Jun. 30, 2025
Notes to Financial Statements |
Investments and Other Noncurrent Assets [Text Block] | Note 9. Other Assets Other assets consist of:
|  | June 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Non-marketable equity investments |  | $ | 14,720 |  |  | $ | 1,231 |
Debt security investments |  |  | 5,358 |  |  |  | 6,276 |
Capitalized software |  |  | 10,476 |  |  |  | 7,409 |
Captive investments - available-for-sale marketable securities |  |  | 6,214 |  |  |  | 5,487 |
Other |  |  | 415 |  |  |  | 259 |
Total |  | $ | 37,183 |  |  | $ | 20,662 |
Debt and Non-Marketable Equity Investments The Company records its non-marketable equity investments without a readily determinable fair value, that are not accounted for under the equity method, at cost, with adjustments for impairment and observable price changes. Should assumptions underlying the determination of the fair values of the Company’s non-marketable equity and debt security investments change, it could result in material future impairment charges. In December 2018, the Company acquired a minority interest in General Wireless Operations, Inc. (“GWO”) from SG Gaming LLC for $0.4 million. GWO is 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 may decrease over time based on certain tax sharing payments to Standard General, LP. As a result of this transaction, the Company determined that it no longer has a controlling financial interest in SBB and, as a result, deconsolidated SBB on January 2, 2025, and accounts for its interest in GWO under the equity method of accounting. On January 2, 2025, the Company contributed net assets valued at $13.3 million to GWO as part of the transaction. 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. 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 GWO to acquire this distribution business for fair market value. The option price was approximately $20.0 million with approximately $8.0 million paid at closing and the remining paid quarterly over 18 months beginning in February 2026. SBB will also pay management fees to Turning Point Brands Canada for services to be provided for approximately up to $7.0 million per annum. The Company is currently evaluating the accounting treatment. In October 2020, the Company invested $1.8 million in BOMANI Cold Buzz, LLC (“Bomani”), a manufacturer of alcohol-infused cold brew coffee. In exchange, the Company received rights to receive equity in Bomani in the event of an equity financing. In the second quarter of 2024, due to market conditions in the cold brew, alcohol-infused beverages industry, the Company determined the fair value of Bomani to be zero, and thus recorded a $1.8 million impairment which is included in Investment loss on the Company's Consolidated Statements of Income for the three and six months ended June 30, 2024. 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 July of each year. Accrued interest of $0.2 million, $0.3 million and $0.3 million was rolled into the convertible note in July 2022, 2023 and 2024, respectively, resulting in a total investment of $9.8 million. Old Pal is a leading brand in the cannabis lifestyle space that operates a non-plant touching licensing model. The convertible note bears an interest rate of 3.0% per year and matures July 31, 2027. Interest and principal not paid to date are receivable at maturity, and Old Pal has the option to extend the maturity date of the convertible note in one-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 the three and six months ended June 30, 2025 and 2024. 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 were not met as of June 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 a third-party to perform a quantitative assessment to determine fair value using a Monte Carlo simulation (Level 3) 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. At June 30, 2025, the fair value was determined to be $5.6 million and the Company recorded a $0.9 million allowance for credit losses in Investment loss on its Consolidated Statements of Income. In the second quarter of 2024, the Company recorded an allowance for credit losses related to its investment in Old Pal of $0.8 million included in investment loss at June 30, 2024. The Company has recorded an accrued interest receivable of $0.3 million and $0.1 million at June 30, 2025 and December 31, 2024, respectively, in Other current assets on its Consolidated Balance Sheets. 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, a third-party investor subscribed $11.0 million for an interest in Interchange IC’s parent company, which contributed the investment to Interchange IC. The group captive will write policies for both companies. The Company is currently evaluating the accounting treatment of the subscription. The investments held within the captive are not available for operating activities and are carried at fair value on the consolidated balance sheet. They consist of money market, stocks, corporate bonds, government securities and real estate investment trusts. The Company believes any investments held with gross unrealized losses to be temporary and not the result of credit risk. The Company’s captive investments are summarized in the following table (excludes money market funds):
|  | As of June 30, 2025 |  |  | As of December 31, 2024 |
|  |  |  |  |  | Gross |  |  | Estimated |  |  |  |  |  |  | Gross |  |  | Estimated |
|  | Amortized |  |  | Unrealized |  |  | Fair |  |  | Amortized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains (Losses) |  |  | Value |  |  | Cost |  |  | Gains (Losses) |  |  | Value |
Stocks |  | $ | 1,699 |  |  | $ | 152 |  |  | $ | 1,851 |  |  | $ | 1,517 |  |  | $ | 9 |  |  | $ | 1,526 |
Exchange traded funds |  |  | 1,782 |  |  |  | (19 | ) |  |  | 1,763 |  |  |  | 1,189 |  |  |  | (5 | ) |  |  | 1,184 |
Corporate bonds |  |  | 1,933 |  |  |  | 49 |  |  |  | 1,982 |  |  |  | 2,383 |  |  |  | 50 |  |  |  | 2,433 |
Real estate investment trusts |  |  | 360 |  |  |  | (2 | ) |  |  | 358 |  |  |  | 343 |  |  |  | 1 |  |  |  | 344 |
Other |  |  | 139 |  |  |  | 121 |  |  |  | 260 |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 5,913 |  |  | $ | 301 |  |  | $ | 6,214 |  |  | $ | 5,432 |  |  | $ | 55 |  |  | $ | 5,487 |
The following table summarizes the fair value of the Company’s captive investments by contractual maturity.
|  | As of |
|  | June 30, 2025 |
Due within one year |  | $ | 2,055 |
Due in one to five years |  |  | 187 |
Stocks, real estate investment trusts and exchange traded funds |  |  | 3,972 |
Total investments at fair value |  | $ | 6,214 |

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