VPR Brands, LP 10-Q for FY2026 Q2
VPR Brands, LP. (VPRB)
About this 10-Q
VPR Brands, LP filed this 10-Q on August 14, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $703.77K
- down 31.6% from $1.03M a year earlier
- Net loss
- $353.45K
- compared with a net loss of $321K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
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(Exact name of registrant as specified in its charter)
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(Address of principal executive offices) (zip code)
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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:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
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.
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| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
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. ☐
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Indicate the number of units outstanding of each of the registrant’s classes of common units as of the latest practicable date.
| Class | Outstanding at August 14, 2026: | |
| Common Units, No par value |
TABLE OF CONTENTS
i
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.
ii
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
VPR BRANDS, LP.
CONDENSED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Vendor deposits | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Right-of-use asset | ||||||||
| Deferred tax asset | ||||||||
| Intangible assets, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND PARTNERS’ SURPLUS (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable - related party | ||||||||
| Customer deposits | ||||||||
| Lease liabilities, current portion | ||||||||
| Notes payable, current portion | ||||||||
| Refund liability | ||||||||
| Income tax payable | ||||||||
| Total current liabilities | ||||||||
| Notes payable, less current portion | ||||||||
| Lease liabilities, net of current portion | ||||||||
| Total liabilities | ||||||||
| Partners’ Surplus (Deficit): | ||||||||
| Class A preferred units, $ | ||||||||
| Common units - | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total partners’ surplus (deficit) | ( | ) | ||||||
| Total liabilities and partners’ surplus (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim financial statements.
1
VPR BRANDS, LP.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | ||||||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Royalty revenue | - | |||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of Sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Settlement income (expense), net | ( | ) | ||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense) net | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Loss before Provision for Income Tax | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Income Tax Benefit (Expense) | ( | ) | - | |||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Income (Loss) Per Common Unit - Basic | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Net Income (Loss) Per Common Unit - Diluted | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Weighted-Average Common Units Outstanding Basic | ||||||||||||||||
| Weighted-Average Common Units Outstanding Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim financial statements.
2
VPR BRANDS, LP.
CONDENSED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL SURPLUS (DEFICIT)
(Unaudited)
| Total | ||||||||||||||||||||||||
| Common Units | Common Units to be Issued | Accumulated | Partners’ Capital | |||||||||||||||||||||
| Number | Amount | Number | Amount | Deficit | Surplus | |||||||||||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance at March 31, 2025 | $ | ( | ) | $ | ||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | ( | ) | $ | |||||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Net Income | - | - | ||||||||||||||||||||||
| Balance at March 31, 2026 | $ | ( | ) | |||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim financial statements.
3
VPR BRANDS, LP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||
| Amortization of right-of-use asset | ||||||||
| Amortization of intangible | ||||||||
| Interest on lease liability | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Royalty receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Vendor deposits | ( | ) | ||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Customer deposits | ( | ) | ||||||
| Other current assets | ||||||||
| Deferred tax asset | - | |||||||
| Refund liability | ( | ) | ( | ) | ||||
| Accounts payable - related party | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Income tax payable | ( | ) | ||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of intangible assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Payments of convertible notes payable | ( | ) | ||||||
| Payments of notes payable | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Change in Cash | ( | ) | ||||||
| Cash - Beginning of the Year | ||||||||
| Cash - End of the Year | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Interest paid in cash | $ | $ | ||||||
| Income taxes paid in cash | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim financial statements.
4
NOTE 1: ORGANIZATION
VPR Brands, LP (the “Company”, “we”,
“our”) was incorporated in New York on
The Company is engaged in the electronic cigarette, electronic cigar, personal vaporizer and pocket lighter industry and owns a portfolio of electronic cigarette, personal vaporizer and pocket lighter patents and several trademarks. The Company designs, markets and distributes pocket lighters under the DISSIM brand; vaporizers for essential oils, concentrates and dry herbs under the HONEYSTICK brand; hemp-derived cannabidiol products under the GOLD LINE brand; and cigar-style vapor products under the GRANDFADDA brand. The Company also prosecutes and enforces its patent and trademark rights, licenses its intellectual property and develops private label manufacturing programs.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
In the opinion of management, the accompanying unaudited condensed financial statements are prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which we considered as necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission. The results of operations for the three and six months ended June 30, 2026, are not necessarily indicative of the results to be expected for future periods or the full year.
Certain amounts in the prior-period statement of cash flows have been reclassified to conform to the current-period presentation. Payments of operating lease liabilities, previously presented within financing activities, are presented within operating activities in the current period. The reclassification had no effect on previously reported net income, total assets, or partners' surplus.
Use of Estimates
GAAP requires the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of revenue and expenses, cash flows and the related footnote disclosures during the period. On an on-going basis, the Company reviews and evaluates its estimates and assumptions. Actual results could differ from these estimates.
Financial Condition
For the three and six months ended June 30, 2026,
we generated total revenue of $
Cash
Cash is carried at cost and represents cash on
hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of
three months or less as of the purchase date of such investments. The Company had no cash equivalents as of June 30, 2026, and December
31, 2025. The Company’s cash is held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation
(“FDIC”) limit. To date, the Company has not experienced any losses on its invested cash. On June 30, 2026, and December 31,
2025, the Company had approximately $
5
Accounts Receivable and Royalty Receivable
The Company recognizes 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 the Company 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, the Company segregated its 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 $
Inventory
Inventory consisting of finished products is stated at the lower of cost or net realizable value. At each balance sheet date, the Company evaluates its ending inventories for excess quantities and obsolescence. This evaluation primarily includes an analysis of forecasted demand in relation to the inventory on hand, among consideration of other factors. The physical condition (e.g., age and quality) of the inventories is also considered in establishing its valuation. Based upon the evaluation, provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the respective inventories. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from the amounts that the Company may ultimately realize upon the disposition of inventories if future economic conditions, customer inventory levels, product discontinuances, sales return levels or competitive conditions differ from the Company’s estimates and expectations.
Leases
The Company applied the FASB’s Accounting Standards Codification (“ASC”) Topic 842, Leases (Topic 842) to arrangements with lease terms of 12 months or more. Operating lease right of use assets (“ROU”) represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the statements of operations.
The Company has an operating lease principally for warehouse and office space. Management evaluates each lease independently to determine the purpose, necessity to its future operations, and other appropriate facts and circumstances.
Revenue Recognition
The Company recognizes revenue when its customer obtains control of promised goods or services which occurs at a point in time, typically upon shipment to the customer, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenue following the five-step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the performance obligation is satisfied.
Product Revenue
Revenue from product sales is recognized when
the customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment to the customer.
The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that
it would have recognized is one year or less or the amount is immaterial.
6
Royalty Revenue
The Company generates royalty revenue from license and sublicense agreements that grant third parties the right to use its intellectual property, including trademarks and patents, in exchange for sales-based royalties.
License and Sublicense Agreements
On January 2, 2023, the Company entered into a
license agreement granting a third-party licensee exclusive rights to use certain trademark and patent assets in exchange for minimum
monthly royalty payments of $
In March 2023, the licensee entered into a sublicense
agreement with a third-party sublicensee, under which the sublicensee agreed to pay the Company sales-based royalties of
During the fourth quarter of 2023, the Company and the licensee ended the exclusivity agreement and transitioned to a sales-based royalty structure. Under the revised agreement:
| ● | The sublicensee continues to pay the Company a |
| ● | The licensee now pays a matching |
On January 30, 2026, the Company entered into
a settlement with ELF Brand LLC (“EBL”) to terminate its ELF® brand license. The Company paid $
The Company recognizes royalty revenue in the period in which the criteria for revenue recognition under ASC 606, Revenue from Contracts with Customers, are met, which may be based on reported sales or upon receipt of payment.
The following table provides certain information about accounts receivable and royalty receivable from contracts with customers as of June 30, 2026 and December 31, 2025:
| Accounts | Royalty | |||||||
| Receivable | Receivable | |||||||
| December 31, 2025 | $ | $ | ||||||
| June 30, 2026 | $ | $ | ||||||
Voluntary Recall
In February 2024, the Company initiated a voluntary
recall of approximately
The Company has begun processing claims and returns
stemming from this recall. To date, the volume of returns has been minimal, and it is not anticipated that returns will exceed the revenue
amount already written off. The Company has accounted for this adjustment as a liability and will continue to reevaluate its assumptions
based on incoming data. The total refund liability relating to the recall of the lighters was $
7
Customer Concentration
During the six months ended June 30, 2026, four
customers accounted for approximately
| 2026 | 2026 | 2026 | 2026 | |||||||||||||
| Customer | Revenue ($) | Revenue % | Receivables ($) | Receivables % | ||||||||||||
| A | $ | % | $ | % | ||||||||||||
| B | % | % | ||||||||||||||
| C | % | % | ||||||||||||||
| D | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
During the six months ended June 30, 2025, four
customers accounted for approximately
| 2025 | 2025 | 2025 | 2025 | |||||||||||||
| Customer | Revenue ($) | Revenue % | Receivables ($) | Receivables % | ||||||||||||
| A | $ | % | $ | % | ||||||||||||
| B | % | % | ||||||||||||||
| C | % | % | ||||||||||||||
| D | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
Unit-Based Compensation
The Company may issue restricted units to consultants for various services. Costs for these transactions will be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common units is to be measured at the earlier of: (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached, or (ii) the date at which the counterparty’s performance is complete. The Company may issue units as compensation in future periods for services associated with the registration of the common units.
Unit-based payments to employees, including grants of employee options, are recognized as compensation expense in the financial statements based on their fair value, in accordance with ASC Topic 718. This expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (typically the vesting period).
For the three and six months ended June 30, 2026
and 2025, the Company recognized $
Convertible Instruments
The Company accounts for convertible instruments in accordance with ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” This update significantly simplifies the accounting for convertible instruments by eliminating the requirement to bifurcate embedded conversion options from their host instruments, unless the conversion feature independently meets the definition of a derivative under ASC 815, Derivatives and Hedging Activities. Under ASC 815, a conversion feature is treated as a derivative only if its economic characteristics and risks are not clearly and closely related to those of the host contract, and other specific conditions are met.
When it is determined that the embedded conversion options do not require bifurcation, the entire convertible instrument is accounted for as a single liability at amortized cost. Discounts or premiums on convertible instruments are recognized based on the difference between the proceeds received and the principal amount and are amortized over the life of the instrument using the effective interest method.
8
When a conversion option is bifurcated and accounted for as a derivative, the Company applies the applicable accounting guidance to the debt host and the derivative. Any subsequent modification, conversion, or extinguishment of the related instruments is accounted for in accordance with the applicable guidance based on the specific terms and circumstances of the transaction.
Fair Value
The carrying values of the Company’s notes payables, convertible notes, and accounts payable and accrued expenses approximate their fair values because of the short-term nature of these instruments.
Basic and Diluted Net Income (Loss) Per Unit
The Company computes net income (loss) per unit in accordance with FASB ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common unitholders by the weighted average number of common units outstanding during the period. Diluted EPS gives effect to all dilutive potential common units outstanding during the period including options, using the treasury stock method, and convertible notes, using the if-converted method. Diluted EPS excludes all dilutive potential common units if their effect is anti-dilutive.
For the three and six months ended June 30, 2026, there were no potentially dilutive securities outstanding, as all previously outstanding convertible notes had been fully settled in January 2025. Accordingly, basic and diluted net income (loss) per common unit were the same for both periods.
For the three and six months ended June 30, 2025,
diluted net loss per common unit was the same as basic net loss per common unit because the Company reported a net loss and the effect
of any potentially dilutive securities would have been anti-dilutive. Prior to the settlement of the Company’s convertible notes in January
2025, approximately
The following table presents the computation of basic and diluted net income (loss) per common unit:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Weighted-average common units outstanding – Basic | ||||||||||||||||
| Dilutive effect of common units | ||||||||||||||||
| Weighted-average common units outstanding – Diluted | ||||||||||||||||
| Net income (loss) per common unit – Basic | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Net income (loss) per common unit – Diluted | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
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
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. We are currently evaluating the potential impact of ASU 2024-03 on our financial reporting and disclosures.
9
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.
NOTE 3: LIQUIDITY
The accompanying unaudited condensed financial
statements have been prepared on a going concern basis, which contemplates the Company will continue to realize its assets and discharge
its liabilities in the normal course of business. Historically, the Company’s recurring losses from operations and accumulated deficit
raised substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going
concern has depended upon, among other things, the continued financial support from its common unitholders, the ability of the Company
to obtain necessary equity or debt financing, and the attainment of profitable operations. However, the Company’s financial position
significantly improved in the six months ended June 30, 2026, reflecting net income of $
The Company expects to meet its current capital requirements through existing operations. However, there can be no assurance that the Company will generate sufficient cash flows to meet all working capital needs. If operating cash flows are insufficient, the Company may need to explore alternative sources of capital to satisfy its liquidity requirements.
NOTE 4: INTANGIBLE ASSETS
On November 16, 2023, the Company entered into
a Bill of Sale and Assignment and Assumption Agreement with CartDub LLC, a Florida Corporation (“Seller”), to purchase certain
intangible assets for a total purchase price of $
On March 20, 2025, the Company and KS Brushes
DBA Kief Sweeper LLC (“Kief Sweeper”) entered into a Bill of Sale and Assignment and Assumption Agreement (the “Kief
Sweeper Agreement”). Pursuant to the terms of the Kief Sweeper Agreement, the Company agreed to purchase and Kief Sweeper agreed
to sell to the Company, subject to the provisions of the Kief Sweeper Agreement, certain assets consisting of certain intellectual property,
including but not limited to the trade name “Kief Sweeper”, the internet domain www.kiefsweeper.com, and a patent pending
amounting to $
The Company has allocated the purchase price among the acquired intangible assets based on their fair values at the acquisition date. These intangible assets are considered to have definite lives and will be amortized on a straight-line basis over their estimated useful lives, which are as follows:
June 30, 2026 | December 31, 2025 | Useful Life | ||||||||
| Intellectual Property | $ | $ | ||||||||
| Trademarks | ||||||||||
| Trade name | ||||||||||
| Total Intangible Assets | $ | $ | ||||||||
10
For the
three and six months ended June 30, 2026, the Company recognized amortization expense related to intangible assets of $
For the
three and six months ended June 30, 2025, the Company recognized amortization expense related to intangible assets of $
This expense is recognized within the “Selling, General and Administrative Expenses” line item of the income statement and is included in the Company’s unaudited financial statements for the three and six months ended June 30, 2026, and 2025.
The following table presents the intangible assets net of accumulated amortization:
Intangible Assets, Net of Amortization | June 30, 2026 | December 31, 2025 | ||||||
| Total Intangible Assets | $ | $ | ||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible Assets Net of Amortization | ||||||||
The following table presents the future amortization expenses related to the acquired intangible assets:
For the fiscal year ending December 31, | Amortization Expense | |||
| 2026 (remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| $ | ||||
NOTE 5: NOTES PAYABLE
Paypal Note
On September 24, 2019, the Company entered into
a working capital note agreement with Paypal Working Capital (“Paypal Note”), pursuant to which the Company borrowed $
Economic Injury Disaster Loan
On July 9, 2020 and June 24, 2020, the Company
received an Economic Injury Disaster Loan (“EIDL”) in the aggregate amount of $
Daiagi Note
On May 18, 2022, the Company issued a promissory
note to Sara Daiagi in the principal amount of $
The Company subsequently renegotiated the repayment terms with Ms. Daiagi. Under the revised repayment schedule, the Company makes weekly periodic payments that are applied to outstanding principal and accrued interest. The revised payment schedule commenced on January 28, 2025, and the revised maturity date is January 16, 2029.
The Daiagi Note and the amounts payable thereunder
are unsecured obligations of the Company and are senior in right of payment and otherwise to all indebtedness, as provided in the Daiagi
Note. The balance of the Daiagi Note was $
11
The following is a summary of notes payable activity as of June 30, 2026 and December 31, 2025:
| Total notes payable at December 31, 2025 | $ | |||
| Repayments of notes payable | $ | ( | ) | |
| Balance as of June 30, 2026 | $ |
NOTE 6: RELATED PARTY TRANSACTIONS
Other related party transactions
As of June 30, 2026, and December 31, 2025, the
Company had a payable balance of $
As of June 30, 2026, and December 31, 2025, the
Company owed $
NOTE 7: CONVERTIBLE NOTES PAYABLE
Brikor Note
On February 15, 2019, the Company issued a senior
convertible promissory note (the “Brikor Note”) in the principal amount of $
At any time after the first anniversary of the issue date, the holder may require the Company, upon at least 30 business days’ written notice, to redeem all or any portion of the Brikor Note. The portion of the Brikor Note subject to redemption would be redeemed by the Company in cash.
The Brikor Note was convertible into common units
of the Company. Pursuant to the terms of the Brikor Note, Brikor had the right, at its option, to convert any portion of the outstanding
and unpaid Conversion Amount (as hereinafter defined) into common units in accordance with the provisions of the Brikor Note at the Conversion
Rate (as hereinafter defined). The number of common units issuable upon conversion of any Conversion Amount was determined by dividing
(x) such Conversion Amount by (y) $
12
Daiagi and Daiagi Note
On February
15, 2019, the Company issued a senior convertible promissory note in the principal amount of $
At any time after the first anniversary of the issue date, the holder may require the Company, upon at least 30 business days’ written notice, to redeem all or any portion of the Daiagi and Daiagi Note. The portion of the Daiagi and Daiagi Note subject to redemption would be redeemed by the Company in cash.
The Daiagi and Daiagi Note was convertible into
common units of the Company. Pursuant to the terms of the Daiagi and Daiagi Note, the Daiagis had the right, at their option, to convert
any portion of the outstanding and unpaid Conversion Amount into common units in accordance with the provisions of the Daiagi and Daiagi
Note at the Conversion Rate. The number of common units issuable upon conversion of any Conversion Amount was determined by dividing (x)
such Conversion Amount by (y) $
Amber Investments Note
On February 15, 2019, the Company issued a senior
convertible promissory note in the principal amount of $
At any time after the first anniversary of the issue date, the holder may require the Company, upon at least 30 business days’ written notice, to redeem all or any portion of the Amber Investments Note. The portion of the Amber Investments Note subject to redemption would be redeemed by the Company in cash.
The Amber Investments Note was convertible into
common units of the Company. Pursuant to the terms of the Amber Investments Note, Amber Investments had the right, at its option, to convert
any portion of the outstanding and unpaid Conversion Amount into common units in accordance with the provisions of the Amber Investments
Note at the Conversion Rate. The number of common units issuable upon conversion of any Conversion Amount was determined by dividing (x)
such Conversion Amount by (y) $
K& S Pride Note
On February 19, 2019, the Company issued a senior
convertible promissory note in the principal amount of $
At any time after the first anniversary of the issue date, the holder may require the Company, upon at least 30 business days’ written notice, to redeem all or any portion of the K & S Pride Note. The portion of the K & S Pride Note subject to redemption would be redeemed by the Company in cash.
The K & S Pride Note was convertible into
common units of the Company. Pursuant to the terms of the K & S Pride Note, K & S Pride had the right, at its option, to convert
any portion of the outstanding and unpaid Conversion Amount into common units in accordance with the provisions of the K & S Pride
Note at the Conversion Rate. The number of common units issuable upon conversion of any Conversion Amount was determined by dividing (x)
such Conversion Amount by (y) $
13
Surplus Depot Note
On February 20, 2019, the Company issued a senior
convertible promissory note in the principal amount of $
At any time after the first anniversary of the issue date, the holder may require the Company, upon at least 30 business days’ written notice, to redeem all or any portion of the Surplus Depot Note. The portion of the Surplus Depot Note subject to redemption would be redeemed by the Company in cash.
The Surplus Depot Note was convertible into common
units of the Company. Pursuant to the terms of the Surplus Depot Note, Surplus Depot had the right, at its option, to convert any portion
of the outstanding and unpaid Conversion Amount into common units in accordance with the provisions of the Surplus Depot Note at the Conversion
Rate. The number of common units issuable upon conversion of any Conversion Amount would be determined by dividing (x) such Conversion
Amount by (y) $
The following is a summary of convertible notes payable activity for the year ended December 31, 2025:
| Balance at January 1, 2025 | ||||
| Repayments of principal | ( | ) | ||
| Balance at December 31, 2025 | $ |
As of June 30, 2026, the Company did not have any senior convertible promissory notes outstanding.
NOTE 8: PARTNERS’ CAPITAL SURPLUS
The Company is authorized to issue
For the three and six months ended June 30, 2026 and 2025, the Company did not recognize any unit-based compensation.
Class A Preferred Units
On April 28, 2026, the General Partner executed the Third Amendment (the “Third Amendment”) to the Company’s Limited Partnership Agreement (the “Partnership Agreement”) to amend the terms of the Company’s Class A preferred units. As of June 30, 2026, the designation, powers, preferences and rights of the Class A preferred units, and the qualifications, limitations and restrictions thereof, were as follows:
Number and Stated Value. The number
of authorized Class A preferred units is
Rights. Except as otherwise set forth in the Third Amendment, each Class A preferred unit has all of the rights, preferences and obligations of the Company’s common units as set forth in the Partnership Agreement and is treated as a common unit for all other purposes of the Partnership Agreement.
14
Voting. The Class A preferred units have no voting rights except as required by applicable law. For the avoidance of doubt, the Class A preferred units have no management rights or other governance participation of any kind.
Dividends The Class A preferred units have no mandatory dividend or distribution rights. Any distributions on or with respect to the Class A preferred units are at the sole discretion of the Company.
Liquidation. Upon any liquidation, dissolution or winding up of the Company, the Class A preferred units have no liquidation preference and rank pari passu with the Company’s common units.
Transfer Restrictions. The Class A preferred units may not be transferred without the prior written consent of the Company, which may be granted or withheld in the Company’s sole discretion.
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 Company’s common
units for the preceding
Each Class A preferred unit is convertible into
a number of common units equal to (x) the Stated Value divided by (y) the Conversion Price, subject to a
NOTE 9: COMMITMENTS AND CONTINGENCIES
Lease Agreements
Warehouse and Office Space
On May 19, 2022, the Company entered into a
As of June 30, 2026, and December 31, 2025, right-of-use assets (“ROU”) are summarized as follows:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Warehouse and office lease right-of-use assets | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Right-of-use assets, net | $ | $ | ||||||
As of June 30, 2026, and December 31, 2025, operating lease liabilities related to the ROU assets are summarized as follows:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Lease liabilities related to warehouse and office lease right-of-use assets | $ | $ | ||||||
| Less: current portion of lease liabilities | ( | ) | ( | ) | ||||
| Lease liabilities, net of current portion | $ | $ | ||||||
As of June 30, 2026, the weighted average lease term remaining is
15
The following table presents the maturity of the Company’s operating lease liabilities as of June 30, 2026:
Twelve Months Ended June 30, | Amount | |||
| 2026 (Remainder) | $ | |||
| 2027 | ||||
| Total minimum non-cancelable operating lease payments | ||||
| Less: discount to fair value | ( | ) | ||
| Total lease liability as of June 30, 2026 | $ | |||
The Company amortized $
For the three months ended June 30, 2026, and
June 30, 2025, the Company recognized rent expense totaled $
For the six months ended June 30, 2026, and June
30, 2025, the Company recognized rent expense totaled $
Legal Matters
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. Except as set forth below and/or as previously disclosed, there are no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations and there are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
On December 17, 2024, the Company entered into
a Settlement Agreement and Release (“Daze Agreement”) with 7 Daze, LLC (“Daze”) following assertion by the Company
of patent infringement of U.S. patent no. 8,205,622 (the “Patent”) by Daze’s auto draw electronic cigarettes (the “Dispute”).
Pursuant to the terms of the Daze Agreement, the parties agreed to settle the Dispute, and the Company granted to Daze and certain of
its affiliates a fully paid-up, royalty free, non-exclusive license to practice the invention in the Patent. Pursuant to the terms of
the Daze Agreement, Daze agreed to pay the Company the sum of $
|
| (i) | $ |
| (ii) | Six monthly payments of |
As of December 31, 2025, the Company has received all of the amounts due under the Daze Agreement.
On February 17, 2025, the Company entered into
a Settlement Agreement and Release (the “Pop Vapor Agreement”) with Pop Vapor Co, LLC (“Pop Vapor”) regarding
Patent (United States Patent No. 8,205,622) infringements of Company branded products. Pursuant to the terms of the Pop Vapor Agreement,
Pop Vapor agreed to pay the Company $
On March 27, 2025, the Company entered into a
Settlement Agreement and Release (the “Zaydan Agreement”) with Zaydan Innovations, Inc. (“Zaydan”) regarding Patent
infringements of Company branded products. Pursuant to the terms of the Zaydan Agreement, Zaydan agreed to pay the Company $
On May 5, 2025, the Company entered into a Settlement
Agreement and Release (the “Ashh Agreement”) with Ashh, Inc. (“Ashh”) regarding trademark and patent infringements
of Company branded products. Pursuant to the terms of the Ashh Agreement, Ashh agreed to pay the Company $
16
On May 29, 2025, the Company entered into a Settlement Agreement and Release (the “All Rise Agreement”) with All Rise Records
Inc. (“All Rise”) regarding Patent infringements of Company branded products. Pursuant to the terms of the All Rise Agreement,
All Rise agreed to pay the Company $
On September 10, 2025, the Company entered into
a Settlement Agreement and Release (the “Ferrara Agreement”) with Ferrara Candy Company (Ferrara) in relation to the ‘935
Application and the WIPO Registration, and Ferrara has filed Opposition Proceeding before the Trademark and Trial and Appeal Board. Pursuant
to the terms of the Ferrara Agreement, Ferrara agreed to pay the Company $
In November 2025, the Company entered into a Settlement
Agreement and Release (the “Flumgio Agreement”) with Flumgio Technology Inc. (Flumgio) regarding Patent infringements of Company
branded products. Pursuant to the terms of the Flumgio Agreement, Flumgio agreed to pay the Company $
In December 2025, the Company entered into a Settlement
Agreement and Release (the “J Brands Agreement”) with J Brands LLC (J Brands) regarding Patent infringements of Company branded
products. Pursuant to the terms of the J Brands Agreement, J Brands agreed to pay the Company $
On January 30, 2026, the Company and EBL, an unaffiliated licensee of the Company, entered into a Litigation Resolution Agreement (the “EBL Agreement”) with Shenzhen Weiboli Technology Co, Ltd (“Weiboli”), Shenzhen iMiracle Technology Co. Ltd. (“SIT”), iMiracle (HK) Limited (“iMiracle”), Heaven Gifts International Limited (“Heaven Gifts”), YLSN Distribution LLC (“YLSN”), ECTO World LLC (“ECTO”), D&A Distribution LLC (“D&A”), UNISHOW (U.S.A.), Inc. (“UNISHOW”), SV3 LLC d/b/a MI-POD (“MI-POD”), Kingdom Vapor Inc. (“Kingdom Vapor”), and GD Sigelei Electronic Tech. Co Ltd. (“GD Sigelei”), Waterfall Holding LLC (“Waterfall”), LA Vapor, Inc. (“LA Vapor”), World Wholesale Inc. (“WWI”), G&A Wholesale Distributors Inc. (“G&A”), and Kloud King Distributors, Inc. d/b/a KKSMOKE.COM (“Kloud King” and collectively with Weiboli, SIT, iMiracle, Heaven Gifts, YLSN, ECTO, D&A, UNISHOW, MI-POD, Kingdom Vapor, GD Sigelei, Waterfall, LA Vapor, WWI and G&A, the “Defendants”). The parties entered into the EBL Agreement in connection with settlement of all disputes between them, including certain pending litigation identified in the EBL Agreement (collectively, the “Actions”) concerning U.S. trademark 5,486,616 (the “616 Trademark”) for the mark ELF in International Class 34 for use in connection with “Electronic cigarette lighters; Electronic cigarettes; Smokeless cigarette vaporizer pipe” and U.S. patent number 8,205,622 entitled “Electronic Cigarette” (the “622 Patent”). The parties to the EBL Agreement deny any other party’s allegations and claims in such litigation, do not admit liability, and desire to settle and compromise all disputes between them, including the Actions, on the terms and conditions set forth in the EBL Agreement.
Pursuant to the terms of the EBL Agreement, (i)
the Company and the Defendants agreed to dismiss the Actions with prejudice within one business day of receipt by the Company of $
17
On March 9, 2026, the Company entered into a settlement agreement with Boulder International Inc. to resolve patent infringement litigation related to U.S. Patent No. 8,205,622, covering Boulder’s “Pro” and “Twilight” vape devices.
Under the agreement, Boulder agreed to pay a total
settlement amount of $
In addition to the settlement payment, the Company
granted Boulder a non-exclusive, non-transferable, perpetual license to the patent. Under the license, Boulder will pay royalties of
Additionally, the Company irrevocably conveyed, transferred and assigned to iMiracle all of the Company’s right, title and interest in and to the ‘616 Trademark and all U.S. trademark registrations and trademark applications for any elf-formative marks, together with the goodwill of the business connected with the use of, and symbolized by, the Assigned Trademarks (as defined in the EBL Agreement). In furtherance thereof, the Company agreed to transfer, assign, convey and deliver to iMiracle, at no additional consideration, certain tangible and/or intangible assets materially related to and necessary to evidence and preserve the goodwill symbolized by the Assigned Trademarks, and to assign and transfer to iMiracle all of the Company’s right, title and interest in the ELF trademarks identified in the EBL Agreement. Pursuant to the terms of the EBL Agreement, within the 75-day period after the effective date of the EBL Agreement, the Company and EBL may sell off existing inventory of ELF branded products already manufactured and in stock as of the effective date of the EBL Agreement. The Company and its affiliates may not manufacture or produce any new products bearing the Assigned Trademarks, including but not limited to, any products branded, labeled, packaged or otherwise identified as “ELF” or any confusingly similar designation, at any time on or after the effective date of the EBL Agreement. The Company also agreed to, and agreed to cause its affiliates to, irrevocably withdraw, dismiss and terminate all ELF Trademark Challenge Proceedings (as defined in the EBL Agreement) within 10 business days following execution of the EBL Agreement.
The Company also agreed to file with the U.S. Patent and Trademark Office, within 14 days of execution of the EBL Agreement, a request for the express abandonment of U.S. Application Serial No. 97834845, and to irrevocably withdraw and abandon the trademark applications identified in the EBL Agreement filed with the European Union.
Pursuant to the terms of the EBL Agreement, the Company granted to Defendants a fully paid, worldwide, irrevocable, non-exclusive, perpetual license to the ‘622 Patent.
The EBL Agreement contains customary representations, warranties and covenants of the Company and the Defendants.
On January 30, 2026, the Company entered into
a settlement with EBL to terminate its ELF® brand license. The Company paid $
On April 21, 2026, R.J. Reynolds Vapor Company (“RJR”) filed a declaratory judgment action against the Company in the U.S. District Court for the District of Delaware, Case No. 1:26-cv-00459, seeking a declaration of non-infringement of U.S. Patent No. 8,205,622 B2 with respect to certain Vuse electronic cigarette products. The matter remained pending as of June 30, 2026 and was subsequently resolved pursuant to the Settlement and Patent License Agreement described in Note 11.
During the six months ended June 30, 2026 and
2025, the Company recognized net settlement income of $
During the three months ended June 30, 2026, the
Company recognized net settlement-related expense of $
18
NOTE 10: INCOME TAXES
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to reverse.
The Company also follows the provisions of ASC 740-10, Accounting for Uncertainty in Income Taxes, which prescribes a recognition threshold and measurement attribute for uncertain tax positions. The Company recognizes tax benefits only when management determines that it is more likely than not that the position will be sustained upon examination by the applicable taxing authorities. As of June 30, 2026 and December 31, 2025, the Company had no uncertain tax positions requiring recognition or disclosure in the accompanying condensed financial statements, and no interest or penalties relating to uncertain tax positions were recognized during the periods presented.
Income Taxes
For the six months ended June 30, 2026, the Company reported income
before income taxes of $
During the six months
ended June 30, 2026, the Company made income tax payments of $
Deferred Tax Assets
As of December 31, 2025, the Company had approximately
$
In assessing the realizability of deferred tax assets, management considers all available positive and negative evidence, including historical operating results, projected future taxable income, and the reversal of existing taxable temporary differences. Based on the Company's recent operating performance, the taxable income generated during the period and expectations of future taxable income, management concluded that it is more likely than not that the deferred tax assets will be realized. Accordingly, management concluded that no valuation allowance was required against the Company's deferred tax assets as of June 30, 2026.
Income Tax Provision
The Company's provision for income taxes is determined
using the estimated annual effective tax rate method prescribed by ASC 740-270 and is adjusted for discrete tax items recognized in the
period in which they occur. Net settlement income of $
For the three months ended June 30, 2026, the
Company recognized an income tax benefit of $
The Company's effective income tax rate for the
six months ended June 30, 2026 was approximately
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Current federal income tax (benefit) expense | $ | ( | ) | $ | $ | $ | ||||||||||
| Current state income tax (benefit) expense | ( | ) | ||||||||||||||
| Deferred income tax expense | ( | ) | ( | ) | ||||||||||||
| Provision for income taxes | $ | ( | ) | $ | $ | $ | ||||||||||
19
The following table reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate for the six months ended June 30, 2026 and 2025:
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Tax (credit) at statutory federal income tax rate | % | ( | )% | |||||
| State income taxes, net of federal benefit | % | % | ||||||
| Permanent differences and interim allocation | % | |||||||
| Valuation allowance | % | % | ||||||
| Effective tax rate | % | % | ||||||
NOTE 11: SUBSEQUENT EVENTS
R.J. Reynolds Settlement and Patent License Agreement
On July 10, 2026, the Company entered into a Settlement
and Patent License Agreement with R.J. Reynolds Vapor Company relating to litigation concerning the Company’s U.S. Patent No. 8,205,622
B2. Under the agreement, the Company is entitled to receive consideration of $
Dissim Royalty Buyout
On July 15, 2026, the Company agreed to pay an
aggregate of $
The agreement was entered into subsequent to June 30, 2026, and no
liability related to the $
JUUL License and Release Agreement
On July 22, 2026, the Company entered into a License
and Release Agreement with JUUL Labs, Inc. relating to the Company’s U.S. Patent No. 8,205,622 B2 and certain other patent claims.
Under the agreement, the Company is entitled to receive aggregate consideration of $
20
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:
| ● | Design, market and distribute a line of pocket lighters under the “DISSIM” brand; |
| ● | Design, market and distribute a line of vaporizers for essential oils, concentrates, and dry herbs under the “HONEYSTICK” brand; |
| ● | Design, market and distribute a line of hemp-derived cannabidiol (“CBD”) products under the “GOLD LINE” brand; |
| ● | Design, market and distribute cigar-style vapor products under the “GRANDFADDA” brand; |
| ● | Prosecute and enforce our patent and trademark rights; |
| ● | License our intellectual property; and |
| ● | Develop private label manufacturing programs. |
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.
21
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.
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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.
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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:
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash flows provided by (used in) operating activities | $ | 2,036,603 | $ | (595,117 | ) | |||
| Net cash flows used in financing activities | $ | (26,373 | ) | $ | (87,018 | ) | ||
| Net cash flows used in investing activities | $ | - | (16,000 | ) | ||||
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.
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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.
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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.
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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.
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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 intend to establish an audit committee of the board of directors as soon as practicable. We envision that the audit committee will be primarily responsible for reviewing the services performed by our independent auditors, evaluating our accounting policies and our system of internal controls. |
| ● | We intend to establish an internal audit function and engage a public accounting firm to perform internal audit services under an outsourcing arrangement. We intend for the internal audit service provider to review the policies, procedures and systems to address the material weakness. |
| ● | In addition to supervising all financial aspects of the Company, our principal financial officer is also supervising our Information Technology (“IT”) functions to better facilitate the coordination and development of improved systems to support our financial reporting process. |
| ● | In furtherance of timely and complete financial statement reviews and procedures to ensure all required disclosures are made in our financial statements and promoting the segregation of duties, we have (i) hired experienced accounting personnel and expect to hire additional experienced accounting personnel, (ii) hired staff to handle the increased workload associated with the reporting structure in place and continue to recruit additional staff in key areas including financial reporting and tax accounting as well as we have engaged temporary staff and (iii) hired consultants to assist in achieving accurate and timely reporting, including hiring additional consultants to assist in the development and enhancement of IT infrastructure systems to support accounting. |
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| ● | We have provided and will continue to provide training to our finance and accounting personnel for timely and accurate preparation and management review of documentation to support our financial reporting and period-end close procedures including documentation related to testing of internal controls and entity-level controls, disclosure review, and other analytics. |
| ● | We have been conducting and continue to conduct the assessment and review of our accounting general ledger system to further identify changes that can be made to improve our overall control environment with respect to journal entries. We are continuing to implement more formal procedures related to the review and approval of journal entries. |
| ● | We have been formalizing the periodic account reconciliation process for all significant balance sheet accounts. We are continuing to implement more formal review of these reconciliations by our accounting management and we will increase the number of supervisory personnel to ensure that reviews are performed. |
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.
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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
| (a) | None. |
| (b) | There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the Company last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K. |
| (c) | During the quarter ended June 30, 2026, no director or officer of the Company |
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ITEM 6. EXHIBITS
| * | Filed herewith |
| ** | Furnished herewith |
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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.
| VPR BRANDS, LP | ||
| Dated: August 14, 2026 | By: | /s/ Kevin Frija |
| Chief Executive Officer | ||
| (principal executive officer, | ||
| principal financial officer and | ||
| principal accounting officer) | ||
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Exhibit 10.2
LICENSE AND RELEASE AGREEMENT
This LICENSE AND RELEASE AGREEMENT (the “Agreement”) is made and entered and is effective as of the date of the last signature in the execution block below (the “Effective Date”) by and between VPR Brands, LP, a limited partnership organized under the laws of the State of Delaware, having a place of business at 1141 Sawgrass Corporate Parkway, Sunrise, Florida 33323 (“Licensor”), and JUUL Labs, Inc., a corporation organized under the laws of the State of Delaware, having a place of business at 1000 F St. NW, Suite 800, Washington, DC 20004 (“Licensee”). Licensor and Licensee are each individually referred to herein as a “Party,” and collectively as the “Parties.”
RECITALS
WHEREAS, Licensor is the owner of all right, title, and interest in and to, including the right to sue for past, present, and future infringement of the Licensed ’622 Patent; and
WHEREAS, Licensee wishes to acquire from Licensor, and Licensor is willing to grant to Licensee, a license, release, and other rights under the Licensed ’622 Patent and to settle any potential disputes with regards to Other Patent Claims.
NOW, THEREFORE, in consideration of the foregoing and mutual covenants in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, without admitting any liability or making any admission regarding the validity, enforceability, or infringement of any patent, the Parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings:
1.1 “Affiliate” means, with respect to a Party, any Person that now or hereafter, directly or indirectly, Controls, is Controlled by, or is under common Control with such Party, but any such Person will be deemed to be an Affiliate only as long as Control exists.
1.2 “Claims” means claims, counterclaims, proceedings, actions, damages, costs, expenses, liabilities, losses, third-party claims, contribution claims, indemnity claims, demands, causes of action, and all other claims of every kind and nature in law or equity, whether arising under state, federal, international or other law, whether such claims are absolute or contingent, in tort, contract or otherwise, direct or indirect, past, present or future, known or unknown.
1.3 “Control” means, with regard to a Person, direct or indirect ownership of fifty percent (50%) or more or, in jurisdictions where a foreign investor may not own fifty percent (50%) or more, the maximum percentage that a foreign investor may own pursuant to local laws and regulations, of the voting power of the outstanding stocks or equity interests.
1.4 “Current Affiliate” means, with respect to Licensee, any Person that, on the Effective Date, directly or indirectly, Controls, is Controlled by, or is under common Control with Licensee.
1.5 “Current Product(s)” means any Electronic Nicotine Delivery System (“ENDS”) product(s) Exploited by Licensee or Current Affiliates on or before the Effective Date.
1.6 “Exploit” or “Exploitation” means to sell, offer for sale, lease, import, export, supply, or otherwise market, distribute, or provide, to a third party anywhere in the world.
1.7 “Future Affiliate” means any Person, excluding Current Affiliates, that, directly or indirectly, Controls, is Controlled by, or is under common Control with Licensee after the Effective Date and that is engaged in the design or manufacture of ENDS products, but any such Person will be deemed to be a Future Affiliate only as long as Control exists.
1.8 “Future Product(s)” means any ENDS product(s) Exploited by Licensee, Current Affiliates, or Future Affiliates other than Current Products.
1.9 “Excluded Product(s)” means any ENDS product(s) Exploited by a Future Affiliate prior to such Future Affiliate becoming an Affiliate of Licensee, or any ENDS product(s) Exploited at any time (other than Current Products including any Immaterial Product Variations or Future Products Exploited by Licensee prior to becoming an Affiliate of any of the Listed Companies) by any of Altria Client Services Group Inc., R.J. Reynolds Tobacco Company, Philip Morris International Inc., British American Tobacco p.l.c., Japan Tobacco Inc., Imperial Brands PLC, GLAS Inc., or any Affiliates of any of the foregoing (the “Listed Companies”).
1.10 “Immaterial Product Variation” means, with respect to any product(s), any change or modification to such product(s) that (a) is a cosmetic or dimensional change, (b) is a replacement or change of “commodity” components such as batteries, circuit components, charging hardware, and/or (c) does not significantly alter its function or structure.
1.11 “Licensed Product(s)” means any Current Product(s) and/or Future Product(s) but not Excluded Products.
1.12 “Licensed ’622 Patent” means U.S. Patent No. 8,205,622 B2 and, throughout the world, (i) any reissues, reexaminations, continuations, continuations-in-part, divisionals, pending applications and/or foreign counterparts owned or controlled by Licensor and claiming priority, in whole or in part, to such patent(s) or application(s), and all reissues, reexaminations, continuations, continuations-in-part, divisionals thereof; (ii) any foreign or domestic patent issuing from any application claiming priority to or sharing priority with, in whole or in part, any of the foregoing; (iii) any patent or patent application terminally disclaimed over any of the patents or patent applications described in this definition; and (iv) any and all extensions, substitutions, or renewals of any of the patents or patent applications described in this Section 1.12.
2
1.13 “Other Patent Claim(s)” means, excluding the claims of the Licensed ’622 Patent, throughout the world only those existing or future issued claims of the following that, in the absence of this Agreement, would be infringed by any of Licensee’s and its Current Affiliates’ ENDS products, standing alone or in combination with any third-party product(s), that were sold commercially and, in the case of such a combination, also used together, on or before the Effective Date: (i) U.S. and foreign patents and/or patent applications owned or controlled by Licensor, its Affiliates, or Kevin Frija or any entity under his Control as of or after the Effective Date; (ii) any reissues, reexaminations, continuations, continuations-in-part, divisionals, pending applications and/or foreign counterparts claiming priority, in whole or in part, to such patent(s) or application(s), and all reissues, reexaminations, continuations, continuations-in-part, divisionals thereof; (iii) any foreign or domestic patent issuing from any application claiming priority to or sharing priority with, in whole or in part, any of the foregoing; (iv) any patent or patent application terminally disclaimed over any of the patents or patent applications described in this definition; and (v) any and all extensions, substitutions, or renewals of any of the patents or patent applications described in this Section 1.13.
1.14 “Person” means any natural person, joint venture, general or limited partnership, corporation, limited liability company, limited liability partnership, firm, trust, association or organization or other legal entity.
1.15 “Transfer” or “Transferred” means the consummation, on or after the Effective Date, of an assignment, asset sale, merger, consolidation, stock sale, share exchange or other transaction or series of related transactions that results in a Third Party having (a) ownership of the Licensed ’622 Patent or any Other Patent Claim; (b) an exclusive license under the Licensed ’622 Patent or any Other Patent Claim; or (c) the right to enforce the Licensed ’622 Patent or any Other Patent Claim.
1.16 “Transferee” means any Third Party to which the Licensed ’622 Patent or any Other Patent Claim is Transferred.
1.17 “Third Party” means any Person that is not a Party.
ARTICLE II
LICENSES
2.1 License Grant. Subject to the terms of Sections 6.2, 6.4, and 8.2, Licensor hereby grants to Licensee and its Affiliates, with no right to sublicense, a nonexclusive, worldwide, irrevocable, perpetual, non-transferable, except as set forth in Sections 5.2, 10.2, 10.3, 10.4, and 10.5, license under the Licensed ’622 Patent and any Other Patent Claim, to make, have made, import, export, use, sell, develop, offer to sell and otherwise distribute Licensed Products.
ARTICLE III
RESERVATION OF RIGHTS
3.1 All rights not expressly granted in this Agreement with respect to the Licensed ’622 Patent are hereby reserved and retained exclusively by Licensor. Licensor grants no other licenses by implication, estoppel, or otherwise to the Licensed ’622 Patent.
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ARTICLE IV
RELEASES
4.1 Releases of Licensee. Subject to the terms of Sections 6.2, 6.4, and 8.2, Licensor, and with respect to any Other Patent Claim, Kevin Frija, releases, acquits, and discharges Licensee and its respective Affiliates, and their members, shareholders, employees, officers, directors, attorneys, principals, trustees, representatives, manufacturers, suppliers, distributors, resellers, and customers and agents, from all Claims relating to acts of alleged infringement of the Licensed ’622 Patent and any Other Patent Claim by Licensed Products or the negotiation of this Agreement, in each case occurring prior to the Effective Date.
4.2 Release of Licensor. Licensee releases, acquits, and discharges Licensor, and its members, shareholders, employees, officers, directors, attorneys, principals, trustees, representatives and agents, from all Claims relating to the Licensed ’622 Patent, the Licensed Products, or the negotiation of this Agreement, in each case occurring prior to the Effective Date.
4.3 Mutual Release. The Parties acknowledge and covenant that (a) the applicable releasing Parties have not heretofore made or filed and will not make or file any allegations or any action against any of the released Parties in connection with, based upon or arising out of any Claims and (b) such releasing Parties have not and will not assign to any Person any released Claims or rights including any released Claims (or any part thereof).
4.4 Unknown Claims. The Parties, having specific intent to release the identified potential Claims described in the foregoing Sections 4.1 and 4.2, whether known or unknown, hereby acknowledge and expressly waive the provisions of Section 1542 of the California Civil Code (and similar provisions in other jurisdictions, whether by statute or common law), which provides:
“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with debtor or released party.”
4.5 Costs and Attorneys’ Fees. Each Party agrees that it shall bear its own costs and attorneys’ fees relating to the negotiation and performance of this Agreement.
ARTICLE V
COVENANTS
5.1 Licensee Covenants. Licensee represents, warrants and covenants that, except in defense to a claim of patent infringement, as required by law or by a court in response to a subpoena, or if this Agreement terminates, it will take no action, directly or indirectly to render any claim of the Licensed ’622 Patent invalid or unenforceable or not infringed and that it will take no action, directly or indirectly, to aid or assist any third party to render any claim of the Licensed ’622 Patent invalid or unenforceable or not infringed. For the avoidance of doubt, neither Party shall allege that Licensee’s compliance with any court or administrative order, discovery request, or subpoena is a violation of this provision. Moreover, membership in a multi-member organization, including but not limited to Allied Security Trust, RPX, or Unified Patents, shall not by itself constitute such challenge or assistance.
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5.2 (a) Licensor Covenant Upon Transfer. Effective immediately upon a Transfer, Licensor, on behalf of itself and its Affiliates, and Kevin Frija with respect to any Other Patent Claim, and binding on any Transferee of the Licensed ’622 Patent or any Other Patent Claim, hereby grants to Licensee and its Affiliates, a worldwide, perpetual and irrevocable (subject to Sections 6.2, 6.4, and 8.2), royalty-free, fully paid up, non-exclusive, non-sublicensable, non-transferable (except as permitted under Sections 5.2, 10.2, 10.3, 10.4, and 10.5) license, under the Licensed ’622 Patent and/or any Other Patent Claim that are Transferred, to make, have made, import, export, use, sell, develop, offer to sell and otherwise distribute Licensed Products.
(b) Distribution Chain Covenant. As of the Effective Date, and subject to Sections 6.2, 6.4, and 8.2, Licensor, on behalf of itself and its Affiliates, and Kevin Frija solely with respect to any Other Patent Claim, covenants not to sue Licensee, its Affiliates, or the suppliers, manufacturers, distributors, resellers, retailers, service providers, customers (direct and indirect), and users, for infringement arising solely from activities authorized by Licensee or its Affiliates involving Licensed Products. This covenant is coextensive with, and shall not exceed, the scope of the licenses, products, persons, activities, limitations, conditions, and remedies expressly provided in this Agreement, and shall run with, terminate, or be rescinded automatically to the same extent as the applicable licenses granted under Section 2.1. For clarity, this covenant creates no independent license, sublicense, or third-party-beneficiary right, protects no product or activity not otherwise covered by this Agreement, and may be invoked by a protected Person only as a defense consistent with Section 11.15.
5.3 No Implied Licenses or Rights. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NO LICENSE, COVENANT, RELEASE, OR OTHER IMMUNITY IS GRANTED TO LICENSEE OR ANY THIRD PERSON OR ENTITY, EITHER DIRECTLY OR BY IMPLICATION, ESTOPPEL OR OTHERWISE. NO RIGHTS OR LICENSES ARE EXTENDED FOR PRODUCTS OR SERVICES NOT EXPRESSLY LICENSED HEREUNDER.
ARTICLE VI
CONSIDERATION TO LICENSOR FOR LICENSE
AND RELEASES UNDER THE LICENSED ’622 PATENT
6.1 Total Consideration Amount. As consideration to Licensor for the license and releases granted herein, Licensee agrees to pay Licensor a total, fixed fee of Eleven Million U.S. dollars ($11,000,000) (the “Total Consideration”).
6.2 Installment Schedule. The Total Consideration shall be paid in four (4) non-refundable installment payments (each payment an “Installment Payment”) in accordance with the following schedule:
| (i) | On or before July 27, 2026, Four Million U.S. dollars ($4,000,000) (the “First Installment”); |
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| (ii) | On or before July 1, 2027, Four Million U.S. dollars ($4,000,000) (the “Second Installment”); |
| (iii) | On or before July 1, 2028, Two Million U.S. dollars ($2,000,000) (the “Third Installment”); |
| (iv) | On or before July 1, 2029, One Million U.S. dollars ($1,000,000) (the “Fourth Installment”). |
6.3 The First Installment and each subsequent Installment Payment shall be wired to the following bank account pursuant to the schedule set forth in Section 6.2 above:
Bank Name:
Account No:
Domestic Wire Routing No:
Beneficiary:
Any payment once made by Licensee to Licensor will not be refunded or refundable to Licensee. Notwithstanding the foregoing, in the case of any clerical error with respect to a payment made hereunder, the Parties will remedy such clerical error through timely proper payment adjustments. No payment shall be deemed made under this Agreement until the funds in the appropriate amount and as specified in this Agreement are actually received by and credited to Licensor’s bank account. For avoidance of doubt, Licensee acknowledges that the Installment Schedule prescribed in Section 6.2 is simply a periodic payment arrangement, and the Total Consideration is due and fully payable to Licensor regardless of the continued validity of the Licensed ’622 Patent.
6.4 Timeliness of Licensee Payments. If Licensee fails to pay the First Installment or any Installment Payment according to the schedule set forth in Section 6.2 above, Licensor shall provide Licensee notice of the failure to pay the installment. If Licensee fails to cure within thirty
(30) days, such failure to cure shall constitute a material breach, and Licensor may either (i) terminate the license and rescind the releases granted in Section 4.1 above, and the releases granted in Section 4.2 above would then automatically be reciprocally rescinded or (ii) pursue remedies for breach of contract.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.1 Representations and Warranties by Parties. Each Party represents and warrants that it has the corporate power and authority to enter into this Agreement, and to carry out the terms and perform its obligations set forth in this Agreement, and that the person executing this Agreement on its behalf has the authority to act for and bind such Party.
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7.2 Representations and Warranties by Licensor. Licensor represents and warrants that as of the Effective Date (i) it is the sole and exclusive owner of all right, title, and interest in and to the Licensed ’622 Patent, and that no other third party owns any right to recover for infringement of or to assert any rights in or under the Licensed ’622 Patent for any time prior to or during the Term; (ii) it has the full and exclusive authority to grant the licenses in the Licensed ’622 Patent as set forth herein; (iii) it has the full, sole, and exclusive right to grant the releases and covenants set forth herein without the need for any consents, authorizations, or approvals not yet granted or obtained; (iv) there are no liens, conveyances, mortgages, assignments, encumbrances, or any other agreements or understandings that would prevent or impair the full and complete exercise of the terms of this Agreement, including the grant of the licenses, covenants, and releases hereunder; (v) Licensor has no Affiliates; (vi) Licensor has not assigned or otherwise transferred to any other entity any rights to the Licensed ’622 Patent or any Other Patent Claim that would conflict or prevent it from entering into this Agreement; and (vii) Licensor is not involved in any action or proceeding, or under the threat of any action or proceeding, brought by any third party against Licensor or its directors, officers, employees, or licensees, concerning any rights associated with the Licensed ’622 Patent. If Licensor proposes to undertake (x) any reorganization, recapitalization, or other transaction, or (y) the direct or indirect sale, assignment, transfer, divestiture, or other disposition (including by way of merger, dissolution, liquidation, or winding-up) of Control of any Licensor Affiliate, Licensor shall, prior to such reorganization, recapitalization, or other transaction or sale, assignment, transfer, divestiture, or other disposition, cause the Person, corporation, or other entity that will become such parent or acquirer to agree, in a writing executed by such Person, corporation, or other entity, to assume all obligations of Licensor hereunder immediately upon becoming such parent or acquirer and Licensor shall provide a copy of any and all such agreements to Licensee, which may be redacted to exclude terms other than the foregoing. The Parties agree that the complaint filed by R.J. Reynolds in Delaware District Court seeking a declaratory judgment of non-infringement does not concern “rights associated with the Licensed ’622 Patent” for the purposes of this Section 7.2.
7.3 Representations and Warranties by Licensee. Licensee represents and warrants that, as of the Effective Date, none of Altria Client Services Group Inc., R.J. Reynolds Tobacco Company, Philip Morris International Inc., British American Tobacco p.l.c., Japan Tobacco Inc., Imperial Brands PLC, GLAS Inc., or any Affiliates of any of the foregoing is a Current Affiliate.
7.4 Indemnification. Each Party shall indemnify the other Party from Claims arising from its own breach of any of its representations and warranties set forth in this Article VII.
ARTICLE VIII
TERM
8.1 Term. The term of this Agreement shall commence upon the Effective Date and shall remain in full force and effect until six (6) years after the later of the expiration of the Licensed ’622 Patent or the last of any Other Patent Claim to expire (the “Term”). At the end of the Term, the licenses, covenants, releases, and other provisions of Articles II, IV, V, VII, and X shall remain in full force and effect in perpetuity (or any specific shorter period expressly set forth therein) with respect to rights granted prior to the expiration or termination.
8.2 Termination. Licensor may terminate this Agreement if Licensee commits a material breach of this Agreement pursuant to Section 6.4 above and/or breaches the covenants set forth in Section 5.1 above. The Parties further acknowledge and agree that the licenses, covenants, and releases granted by Licensor under this Agreement are fundamental and material to this Agreement. Any failure by Licensor or Licensee to timely perform any of the material obligation(s), or any material violation thereof, shall constitute a material breach of this Agreement. In the event of a material breach, the non-breaching Party shall be entitled to seek injunctive relief, specific performance, and any other equitable relief available under applicable law, without the necessity of proving actual damages, to the extent permitted by law, in addition to any other remedies available at law or in equity. Upon the expiration or early termination of this Agreement other than due to any default by Licensee to timely pay all amounts due under Section 6, all licenses, release, and rights granted by Licensor under this Agreement shall remain in force and effect.
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ARTICLE IX
WARRANTIES
9.1 EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE VII ABOVE, THE PARTIES MAKE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED. Any warranty made by Licensee to its customers or other third parties will be the sole responsibility of Licensee and will not bind Licensor or be deemed or treated as having been made by Licensor.
ARTICLE X
ASSIGNMENT AND PARTIAL OR FULL DISPOSITIONS
10.1 This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns whether by merger, consolidation, operation of law, or otherwise, subject to the restrictions of Sections 10.2, 10.3, 10.4, and 11.7.
10.2 Sale of Business. If Licensee is acquired in a merger, consolidation, stock sale, share exchange, reorganization, recapitalization, spin-off, sale of substantially all assets, or other transaction or series of related transactions resulting in a Third Party acquiring Control of Licensee (the “Acquirer”) or a change in the Person or Persons that Control Licensee (each, a “Full Disposition”), Licensee may assign or otherwise transfer this Agreement and the licenses, covenants, and releases granted hereunder (including any remaining Installment Payment obligations) in whole to such Acquirer or successor, such that, following such Full Disposition, such Acquirer or successor shall be entitled to exercise all rights and benefits under this Agreement as if it were the Licensee hereunder, but the License shall be strictly limited to Licensed Products as of the effective date of such transaction and Immaterial Product Variations of such Licensed Products (regardless of whether such Immaterial Product Variations are made prior to such transaction or thereafter made by the Acquirer or successor), and the License will remain worldwide and otherwise be subject in all respects to the restrictions and obligations of this Agreement.
10.3 Disposition of Product Line or Business. If Licensee or an Affiliate sells or otherwise disposes of a product line, assets, business, or division that includes Licensed Products (other than a sale or disposition of all or substantially all of Licensee’s ENDS-related business and assets as set forth above in Section 10.2) (a “Partial Disposition”) to a Third Party (the “Partial Acquirer”), (a) Licensee shall give Licensor written notice of any such Partial Disposition no later than thirty (30) days following the effective date of such Partial Disposition; (b) for any Licensed Product(s) as of the effective date of such Partial Disposition that is included in the product line, assets, business, or division that is the subject of the Partial Disposition, Licensee may assign or otherwise transfer in part to such Acquirer this Agreement and the licenses, covenants, and releases granted hereunder, in each case as they apply to such Licensed Product(s) and Immaterial Product Variations thereof (regardless of whether such Immaterial Product Variations are made prior to such transaction or thereafter made by the Acquirer), such that, following such Partial Disposition, such Partial Acquirer shall be entitled to exercise all rights and benefits under this Agreement with respect to such Licensed Product(s) and Immaterial Product Variations thereof as if it were the Licensee hereunder; and (c) following such Partial Disposition, the License shall continue in full force and effect as to the Licensee, its remaining Affiliates, and their respective remaining Licensed Products. For clarity, Licensee or any of its Affiliates may assign its rights under this Agreement in part in compliance with this Section 10.3 while it continues to retain its rights under this Agreement for its remaining products and business.
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10.4 For the avoidance of doubt, any licenses, covenants, and releases assigned or otherwise transferred in whole or in part to an Acquirer or successor or Partial Acquirer under Sections 10.2 or 10.3 shall not apply to any other products, businesses, or assets owned or Exploited by the Acquirer or successor or Partial Acquirer or their Affiliates whether prior to or after the effective date of the Disposition.
10.5 Notwithstanding Sections 10.2 and 10.3, in the case of any assignment or transfer to any of the Listed Companies, the scope of the licenses, covenants, and releases assigned or transferred shall be limited to Licensed Products as of the effective date of such assignment or transfer and Immaterial Product Variations thereof, and shall not extend to any other products owned or Exploited by the Listed Companies or their Affiliates.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Confidentiality. The existence, terms, and conditions of this Agreement shall be treated as confidential, provided, however, that each of the Parties may disclose this Agreement (i) as required by discovery requests in pending litigation subject to a protective order with a confidentiality designation of “Outside Attorneys’ Eyes Only” or higher; (ii) to any court, administrative forum, governmental body, or governmental agency or as may otherwise be required by law, order, rule, or regulation or in connection with an investigation by a governmental agency; (iii) based on the advice of counsel, in filings under applicable securities laws or regulations or per the rules of any securities exchange or similar organization (collectively, “Securities Filings”); (iv) to their respective employees, directors, legal advisors, accountants, auditors, financial advisors, and other professional advisors, with needs to know, subject to reasonable non-use and non-disclosure requirements; and (v) to potential and actual acquirers, investors, underwriters and lenders, subject to reasonable non-use and non-disclosure requirements. In the event that a Party is required or intends to disclose the terms of this Agreement in response to a discovery request, subpoena, or similar disclosure in a legal or regulatory proceeding, the disclosing Party (a) shall give prior written notice to the other Parties, including providing the other Parties with a copy of the relevant request for production or subpoena; (b) shall not disclose the terms of this Agreement until ten (10) business days after the notification set forth in clause (a) above; and (c) shall make reasonable best efforts to ensure that the disclosure is pursuant to the highest level of confidentiality available under the applicable protective order or other governing agreement, order, or regulation. Licensee acknowledges and agrees that following execution of this Agreement, Licensor intends to file with the SEC, as required by applicable U.S. federal securities laws and/or regulations, a Current Report on Form 8-K relating to the Agreement, substantially in the form agreed to by the Parties and attached hereto as Exhibit A. In connection with any Securities Filings, Licensor shall (I) provide Licensee with reasonable advance notice of the proposed disclosure to the extent legally permissible; (II) provide Licensee with a reasonable opportunity to review and comment on the proposed disclosure and identify information that Licensee believes should be redacted or otherwise treated as confidential; (III) consider in good faith any comments provided by Licensee regarding such disclosure; and (IV) use commercially reasonable efforts to redact, omit, or otherwise seek confidential treatment of all non-public business information, commercially sensitive information, technical information, product-specific information, financial terms, and other competitively sensitive terms related to this Agreement to the maximum extent permitted by applicable securities laws or regulations. Licensor and Kevin Frija acknowledge and agree that each of them shall use all reasonable efforts to maintain the confidentiality of this Agreement and any terms or conditions hereunder. Except as otherwise provided in this Section, no Party shall make any publication, press release, or advertisement with respect to this Agreement or any activities which are undertaken in accordance with this Agreement, without the prior written consent of the other Party.
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11.2 Notices. All notices required or permitted to be given hereunder must be in writing and must be delivered by email addressed as follows:
| For Licensee: | Kevin Frija |
Email:
Chief Executive Officer
VPR Brands, LP
1141 Sawgrass Corporate Parkway Sunrise, FL 33323
| With copies to: | Matthew G. McAndrews |
Email:
Peter J. McAndrews
Email:
McAndrews, Held & Malloy, Ltd.
500 West Madison Street, 34th Floor Chicago, IL 60661
| For Licensee: | Tyler Mace |
Email:
Chief Legal Officer
JUUL Labs
1000 F Street NW, Suite 800
Washington DC 20004
| With copies to: | Michael Renaud |
Email:
Mintz
One Financial Center
10
Boston, MA 02111 Michael Van Loy
Email:
Mintz
3580 Carmel Mountain Road San Diego, CA 92130
Justin D. Hovey
Email:
Pillsbury Winthrop Shaw Pittman LLP Four Embarcadero Center, 22nd Floor San Francisco, CA 94111
Veronica T. Nunn
Email:
Pillsbury Winthrop Shaw Pittman LLP
31 West 52nd Street, New York, NY 10019
Such notices shall be deemed to have been served when received by addressee. Any Party may give written notice of a change of address and, after notice of such change has been received, any notice or request must thereafter be given to such Party as above provided at such changed address.
11.3 Choice of Law. This Agreement and matters connected with the performance thereof shall be construed, interpreted, and governed in all respects in accordance with the laws of the United States of America and the State of Delaware, without reference to conflict of laws principles.
11.4 Dispute Resolution. The Parties agree (i) that any disputes and litigation between Parties regarding this Agreement, its construction, and matters connected with its performance shall be subject to the exclusive jurisdiction of the United States District Court for the District of Delaware, except as set forth in Section 11.5 below; and (ii) to submit any disputes, matters of interpretation, or enforcement actions between Parties arising with respect to the subject matter of this Agreement exclusively to such Court, except as set forth in Section 11.5 below. The Parties hereby waive any challenge to the jurisdiction or venue of such Court and consent to personal jurisdiction and venue in the foregoing court over and in such matters. A Party that obtains a judgment against the other Party in the court identified in this Section may enforce that judgment in any court that has jurisdiction over the Parties. Notwithstanding anything in this Section to the contrary, nothing in this Section 11.4 will (i) restrict Licensor from bringing infringement claims against third parties (other than those released or protected under Sections 4.1 and 4.2) under the Licensed ’622 Patent outside of such Court; (ii) provide any third party involved in a lawsuit relating to the Licensed ’622 Patent outside the Court with a basis or any rights to transfer or otherwise move such lawsuit to the Court; and/or (iii) provide any third party with a basis to file a declaratory judgment action under the Licensed ’622 Patent before the Court.
11.5 Limited Arbitration. This Section 11.5 shall apply solely to the resolution of disputes arising as to whether (a) a claim of a patent acquired by Licensor constitutes an Other Patent Claim; (b) whether a product is an Excluded Product pursuant to Section 1.9; and (c) whether a product is an Immaterial Product Variation of a Licensed Product as of the effective date of a Partial Disposition pursuant to Section 10.3 or a Full Disposition pursuant to Section 10.2. Any such dispute will be determined exclusively by binding arbitration in New York City, NY. The decision of the arbitrator shall be final and binding on the Parties. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules and shall be conducted before a single arbitrator, which arbitrator will be a retired U.S. federal court judge with experience in judging patent cases chosen in accordance with such rules. Judgment on any award may be entered in any court of appropriate jurisdiction. This clause shall not preclude the Parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction. The arbitrator may not award damages or other monetary amounts to either Party.
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11.6 No Admission of Liability. It is expressly understood that this Agreement is entered into solely for the purpose of allowing the Parties to avoid potential or actual disputes. This Agreement does not constitute an admission of infringement, enforceability, validity, or liability, including by the negotiation, execution, and performance of this Agreement, nor an admission by either Party of any wrongdoing, contractual obligation, or of any duty whatsoever, whether based in statute, regulation, common law, or otherwise, and each Party expressly denies that any liability or any such violation has occurred.
11.7 Assignment by Licensor. Licensor may sell, assign or otherwise transfer the Licensed ’622 Patent or any Other Patent Claim to any other third party, provided that (a) such sale, assignment, or transfer is subject to all of the terms and conditions of this Agreement; and (b) such third party executes a valid and enforceable written agreement agreeing to be bound by all of the terms and conditions of this Agreement with respect to the rights being sold, assigned or otherwise transferred, including without limitation the licenses, releases, and covenants granted herein.
11.8 Further Acts. The Parties agree to perform any further acts and execute and deliver any further documents that may be reasonably necessary to carry out this Agreement.
11.9 Non-Circumvention. Licensor and Kevin Frija agree that Licensor and Kevin Frija shall not take or fail to take any action circumventing, or to assist any third party in circumventing, Licensor’s obligations hereunder, including Licensor shall not pay money or provide any other valuable consideration to any third party to fund litigation, proceedings, licensing, or other assertions of (a) the Licensed ’622 Patent or any Other Patent Claim during the Term, or (b) any other patents or patent applications during the Term, in either case of (a) and (b), against Licensee or its Affiliates.
11.10 Severability. The Parties intend that if a court holds that any provision or part of this Agreement is invalid or unenforceable, the court will modify that provision or part to the minimum extent necessary to make it valid and enforceable, or if it cannot be made valid and enforceable, will sever and delete that part. That modification or severance will not affect the validity or enforceability of the remainder of this Agreement, which will continue in full force and effect. The Parties agree to negotiate in good faith an enforceable substitute provision for any invalid, illegal, or unenforceable provision that most nearly achieves the intent of the provision.
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11.11 Entire Agreement. This Agreement embodies the entire understanding of the Parties with respect to the subject matter hereof, and merges all prior discussions among them, and none of the Parties shall be bound by any conditions, definitions, warranties, understandings, or representations with respect to the subject matter hereof other than as expressly provided herein. No oral explanation or oral information by any Party hereto shall alter the meaning or interpretation of this Agreement.
11.12 Modification; Waiver. No modification or amendment to this Agreement will be effective unless in writing and signed by authorized representatives of the Parties. No waiver of any provision, breach, or default of this Agreement will be valid unless in a writing signed by the waiving Party that specifies what is being waived. A valid waiver under this Section 11.12 will be limited in scope to the waiver specified and will not constitute a waiver of any other provision, breach, or default under this Agreement. A Party’s failure or delay in enforcing any provision of this Agreement will not operate as a waiver.
11.13 Waiver. In addition, each Party expressly waives and disclaims all understandings, conditions, representations, warranties, or communications made before the Effective Date by itself or the other Party and agrees to rely solely on those expressly set forth in this Agreement.
11.14 Construction; Language. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party will not be applied in the construction or interpretation of this Agreement. As used in this Agreement, the words “include” and “including” and variations thereof will not be deemed to be terms of limitation but rather will be deemed to be followed by the words “without limitation.” The headings in this Agreement will not be referred to in connection with the construction or interpretation of this Agreement. This Agreement is in the English language only, which language shall be controlling in all respects, and all notices under this Agreement shall be in the English language.
11.15 No Third-Party Beneficiaries. Notwithstanding any other provision in this Agreement that may be read to the contrary, this Agreement does not confer on any Person other than the Parties hereto any right to bring an action based upon an alleged breach of this Agreement; however, this Section shall not prevent a third party, including but not limited to Licensee’s Affiliates, manufacturers, suppliers, resellers, distributors, customers, service providers, retailers, and users, from pleading this Agreement as a defense in an action initiated against a third party concerning infringement of the Licensed ’622 Patent or any Other Patent Claim in respect of Licensed Products.
11.16 Counterparts. This Agreement may be executed in counterparts or duplicate originals, all of which shall be regarded as one and the same instrument, and which shall be the official and governing version in the interpretation of this Agreement. This Agreement may be executed by electronic or digital signatures, including by use of the DocuSign electronic signature platform, and such signatures shall be deemed to bind each Party as if they were original signatures.
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11.17 Licensor agrees that this Agreement is not evidence of a domestic industry for purposes of any proceeding before the International Trade Commission, and that Licensor shall not use this Agreement or any Licensee activity as evidence of the same. Licensor further agrees that it shall not seek discovery from Licensee or any Licensee Affiliate relating to this Agreement in any action, suit or proceeding, including but not limited to discovery regarding domestic industry relating to any patent in any action before the United States International Trade Commission and hereby irrevocably waives any such argument.
11.18 The Parties acknowledge and agree that, for purposes of section 365(n) of the Bankruptcy Reform Act of 1978, 11 U.S.C. §§101 et seq., as amended (the “Bankruptcy Code”), all rights and licenses under this Agreement are, and shall otherwise be deemed to be, rights and licenses to “intellectual property” as defined under section 101 of the Bankruptcy Code. All written agreements entered into in connection with the Parties’ performances hereunder from time to time shall be considered agreements “supplementary” to this Agreement for purposes of said section 365(n). The Parties agree that, notwithstanding anything else in this Agreement, Licensee, as a licensee of intellectual property under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code, including, without limitation, the rights of Licensee to the continued enjoyment of the rights, licenses and covenants under this Agreement. Each Party acknowledges that if the Party granting the license or covenant hereunder (the “Bankruptcy Licensor”), as a debtor in possession, or a trustee-in-bankruptcy for such Bankruptcy Licensor, in a case under the Bankruptcy Code, seeks to reject this Agreement, it shall provide notice to the Licensee of its intent to reject the Agreement so that Licensee may elect to retain their rights under this Agreement as provided in section 365(n) of the Bankruptcy Code (a “365 Election”). The obligations of the Bankruptcy Licensor shall not be (i) discharged or released pursuant to any plan or confirmation order entered in the bankruptcy of such Licensor or (ii) deemed rejected under section 365 of the Bankruptcy Code in the absence of proof that Licensee has been afforded the opportunity to make a 365 Election (a “365 Election Notice”). For the avoidance of doubt, without acknowledgment by Licensee of their receipt of the 365 Election Notice, any failure by Licensee to make such election shall not be deemed (i) a waiver of Licensee’s rights under section 365 of the Bankruptcy Code; (ii) consent to a departure from the requirements of section 365 of the Bankruptcy Code, this provision or any other term, covenant, provision or condition set forth in this Agreement; or (iii) a waiver by Licensee to treat the Bankruptcy Licensor’s failure to provide the 365 Election Notice as a post-petition default under this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed below.
| VPR BRANDS, LP, | JUUL LABS, INC. | |||
| By: | /s/ Kevin Frija | By: | /s/ Vittal Kadapakkam | |
| Name: | Kevin Frija | Name: | Vittal Kadapakkam | |
| Title: | Chief Executive Officer | Title: | Chief Financial Officer | |
| Date: | 7/22/2026 | Date: | 7/22/2026 | |
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Exhibit 31.1
CERTIFICATIONS
I, Kevin Frija, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 of VPR Brands, LP; and |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; and |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 14, 2026 | By: | /s/ Kevin Frija |
| Kevin Frija | ||
| Chief Executive Officer (principal executive officer) |
Exhibit 31.2
CERTIFICATIONS
I, Kevin Frija, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 of VPR Brands, LP; and |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; and |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 14, 2026 | By: | /s/ Kevin Frija |
| Kevin Frija | ||
| Chief Executive Officer (principal executive officer) |
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of VPR Brands, LP (the “Company”) on Form 10-Q for the quarter ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin Frija, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: August 14, 2026 | /s/ Kevin Frija |
| Kevin Frija | |
| Chief Executive Officer (principal executive officer and principal financial officer) |
This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.