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Note 12 - Other Assets | 12 Months Ended
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Dec. 31, 2025
Notes to Financial Statements |
Investments and Other Noncurrent Assets [Text Block] | Note 12. Other Assets Other assets consists of:
|  | December 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Non-marketable equity investments |  | $ | 7,833 |  |  | $ | 1,231 |
Debt security investment |  |  | 5,633 |  |  |  | 6,276 |
Capitalized software |  |  | 10,133 |  |  |  | 7,409 |
Captive investments - available-for-sale marketable securities |  |  | 14,938 |  |  |  | 5,487 |
Option agreements |  |  | 25,963 |  |  |  | - |
Other |  |  | 167 |  |  |  | 259 |
Total |  | $ | 64,667 |  |  | $ | 20,662 |
Non-Marketable Equity Investments and Option Agreements The Company records its non-marketable equity investments without a readily determinable fair value, that are not accounted for under the equity method, at cost, with adjustments for impairment and observable price changes. Should assumptions underlying the determination of the fair values of the Company’s non-marketable equity and debt security investments change, it could result in material future impairment charges. In December 2018, the Company acquired a minority interest in General Wireless Operations, Inc. (“GWO”) from SG Gaming LLC for $0.4 million. GWO is majority owned by Standard General, LP. On January 2, 2025, the Company contributed 100% of its interest in SBB, the subsidiary that owned and operated the Company’s former CDS reportable segment, to GWO in exchange for a 49% equity interest. The Company established RSH Trust, which is managed by an independent trustee that votes our interests in GWO in accordance with GWO's board's recommendation, to hold its interest in GWO, and GWO is controlled by Standard General, L.P. The trust also has a purchase option with a 15-year term to acquire the remaining 51% equity interest in GWO. The purchase option includes an initial exercise price of $22.0 million, which may decrease over time based on certain tax sharing payments to Standard General, LP. As a result of this transaction, the Company determined that it no longer has a controlling financial interest in SBB and, as a result, deconsolidated SBB on January 2, 2025, and accounts for its interest in GWO under the equity method of accounting. On January 2, 2025, the Company contributed net assets valued at $13.3 million to GWO as part of the transaction, inclusive of common shares for an amount of $7.7 million and freestanding instruments for an amount of $5.5 million recognized through the caption "Option agreements". Fair value of the Company's interest in GWO was determined utilizing the market approach and the income approach in the form of the discount cash flow method. The results of GWO are recognized through the caption "(income) losses from equity method investments" in the consolidated statements of income. On August 8, 2025, SBB acquired a distribution business. In connection with this acquisition, Turning Point Brands Canada purchased an option from SBB to acquire the distribution business for fair market value less the option price. The option becomes exercisable in March 2027. The option price is approximately $20.0 million with approximately $8.0 million paid at execution of the option and the remaining paid quarterly over 18 months beginning in February 2026. There is approximately $20.4 million in other assets, $8.0 million paid at closing, $8.3 million in accrued liabilities, and $4.1 million in other long-term liabilities as of December 31, 2025. Turning Point Brands Canada charged a fee to the distribution business in 2025. The agreement was terminated in the fourth quarter. In August 2025, the Company and Standard General, LP amended the GWO purchase option held by the Company, delaying the Company's ability to exercise the purchase option until August 2027. In January 2024, the Company invested $0.8 million to acquire an 18.7% stake in Teaza Energy, LLC (“Teaza”). Teaza is an innovative brand of flavorful oral pouch products that can be dipped or sipped, designed as a health-conscious alternative to high energy drinks and other conventional oral stimulants. The investment was comprised of $0.5 million in cash and a $0.3 million payable to be offset against the Company’s allocated portion of future profit distributions. The Company also has the option to purchase, at fair value, up to 100% of the equity interest from February 1, 2025 through June 30, 2026. The Company accounts for its investment in Teaza using the equity method of accounting. Debt Security Investments In July 2021, the Company invested $8.0 million in Old Pal Holding Company, LLC (“Old Pal”), with an additional $1.0 million invested in July 2022. 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 $1.1 million was rolled into the convertible note between 2022 and 2025, resulting in a total investment of $10.1 million. Old Pal is a leading brand in the cannabis lifestyle space that operates a non-plant touching licensing model. 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. 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% as of December 31, 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 December 31, 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 our Consolidated Statements of Income. The Company performs a qualitative assessment on a quarterly basis to determine if the fair value of the 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 a quantitative fair value assessment, the Company determined the fair value to be $6.5 million, $6.4 million and $6.9 million as of December 31, 2025, 2024 and 2023, respectively. The Company recorded an allowance for credit losses of $0.9 million, $0.8 million and $1.3 million included in investment loss for the years ended December 31, 2025, 2024 and 2023, respectively. The Company has recorded an accrued interest receivable of $0.1 million and $0.1 million at December 31, 2025 and 2024, respectively, in Other current assets on our Consolidated Balance Sheets. In April 2021, the Company invested in Docklight Brands, Inc. (“Docklight”). In 2023, based on Docklight’s financial results, a decline in the revenue multiples for comparable public companies, and a significant change in Docklight’s business model, the Company deemed the investment in Docklight fully impaired resulting in a loss of $8.7 million which was recorded in investment (gain) loss for the year ended December 31, 2023. Fair value was determined using a valuation derived from relevant revenue multiples (Level 3). There were no purchases of inventory from, or amounts payable to Docklight Brands, Inc. at December 31, 2025 and 2024. In October 2020, the Company acquired a 20% stake in Wild Hempettes, LLC (“Wild Hempettes”). In 2023, based on Wild Hempettes' financial results, the Company deemed its investment in Wild Hempettes to be impaired resulting in a $2.2 million impairment charge included in investment loss for the year ended December 31, 2023. Fair value for the Company’s share of investment in Wild Hempettes was determined using a valuation derived from relevant revenue multiples (Level 3). In 2024, the Company reached an agreement to return its 20% equity stake to Wild Hempettes for no consideration resulting in an impairment charge of $0.3 million recorded in investment (gain) loss for the year ended December 31, 2024. The Company accounted for its 20% share of Wild Hempettes using the equity method of accounting. There were no purchases of inventory from, or amounts payable to Wild Hempettes at December 31, 2025 and 2024. In October 2020, the Company invested in BOMANI Cold Buzz, LLC (“Bomani”). In 2024, due to market conditions in the cold brew, alcohol-infused caffeinated beverages industry, the Company has determined that the fair value of Bomani is zero, and thus recorded a $1.8 million impairment which is included in investment (gain) loss for the year ended December 31, 2024. There were no purchases of inventory from, or amounts payable to Bomani at December 31, 2025 and 2024. Captive Investments - 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. During 2025, Interchange IC received approval from the District of Columbia Department of Insurance, Securities and Banking to operate as a group captive. On July 14, 2025, a third-party investor subscribed $11.0 million for an interest in Interchange IC’s parent company, which contributed the investment to Interchange IC. Insurance reserves were $0.4 million and $0.0 for December 31, 2025 and 2024, respectively. As of December 31, 2025, no policy has been underwritten for the benefit of the third-party investor. The group captive will write policies for both companies. The Company will continue to control and consolidate the entity. The investments held within the captive are not available for operating activities and are carried at fair value on the consolidated balance sheet. They consist of money market, stocks, corporate bonds, government securities and real estate investment trusts. 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 December 31, 2025 |  |  | As of December 31, 2024 |
|  | Amortized Cost |  |  | Gross Unrealized Gains (Losses) |  |  | Estimated Fair Value |  |  | Amortized Cost |  |  | Gross Unrealized Gains (Losses) |  |  | Estimated Fair Value |
Stocks |  | $ | 1,118 |  |  | $ | 447 |  |  | $ | 1,565 |  |  | $ | 1,517 |  |  | $ | 9 |  |  | $ | 1,526 |
Exchange traded funds |  |  | 5,338 |  |  |  | (16 | ) |  |  | 5,322 |  |  |  | 1,189 |  |  |  | (5 | ) |  |  | 1,184 |
Corporate Bonds |  |  | 2,837 |  |  |  | 33 |  |  |  | 2,870 |  |  |  | 2,383 |  |  |  | 50 |  |  |  | 2,433 |
Real estate investment trusts |  |  | 377 |  |  |  | (5 | ) |  |  | 372 |  |  |  | 343 |  |  |  | 1 |  |  |  | 344 |
Mutual funds |  |  | 4,809 |  |  |  | - |  |  |  | 4,809 |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 14,479 |  |  | $ | 459 |  |  | $ | 14,938 |  |  | $ | 5,432 |  |  | $ | 55 |  |  | $ | 5,487 |
The following table summarizes the fair value of the Company's captive investments by contractual maturity:
|  | As of |
|  | December 31, 2025 |
Due within one year |  | $ | 1,973 |
Due in one to five years |  |  | 897 |
Stocks, real estate investment trusts, mutual funds and exchange traded funds |  |  | 12,068 |
Total investments at fair value |  | $ | 14,938 |

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