VPR Brands, LP.

Item 1A. Risk Factors

Various portions of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties. Actual results, performance or achievements could differ materially from those anticipated in these forward-looking statements as a result of certain risk factors, including those set forth below and elsewhere in this report. These risk factors are not presented in the order of importance or probability of occurrence. For purposes of these risk factors, the term electronic cigarettes is deemed to include vaporizers.

Below is a summary of material risks, uncertainties and other factors that could have a material effect on our business and our operations:

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RISKS RELATED TO OUR BUSINESS

We are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar other constraints, which can make compliance costly and subject us to enforcement actions by governmental agencies.

The formulation, manufacturing, packaging, labeling, holding, storage, distribution, advertising and sale of our products are affected by extensive laws, governmental regulations and policies, administrative determinations, court decisions and similar constraints at the federal, state and local levels, both within the United States and in any country where we conduct business. There can be no assurance that we, or our independent distributors, will be in compliance with all of these regulations. A failure by us or our distributors to comply with these laws and regulations could lead to governmental investigations, civil and criminal prosecutions, administrative hearings and court proceedings, civil and criminal penalties, injunctions against product sales or advertising, civil and criminal liability for us and/or our principals, bad publicity, and tort claims arising out of governmental or judicial findings of fact or conclusions of law adverse to us or our principals. In addition, the adoption of new regulations and policies or changes in the interpretations of existing regulations and policies may result in significant new compliance costs or discontinuation of product sales, and may adversely affect the marketing of our products, resulting in decreases in revenue.

We face intense competition and our failure to compete effectively could have a material adverse effect on our business, results of operations and financial condition.

Competition in the electronic cigarette and related e -liquids industry is intense. We compete with other sellers of electronic cigarettes, most notably Lorillard, Inc., Altria Group, Inc. and Reynolds American Inc., big tobacco companies, through their electronic cigarettes business segments; the nature of our competitors is varied as the market is highly fragmented and the barriers to entry into the business are low.

We compete primarily on the basis of product quality, brand recognition, brand loyalty, service, marketing, advertising and price. We are subject to highly competitive conditions in all aspects of our business. The competitive environment and our competitive position can be significantly influenced by weak economic conditions, erosion of consumer confidence, competitors introduction of low-priced products or innovative products, cigarette excise taxes, higher absolute prices and larger gaps between price categories, and product regulation that diminishes the ability to differentiate tobacco products.

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Our principal competitors are big tobacco, U.S. cigarette manufacturers of both conventional tobacco cigarettes and electronic cigarettes like Altria Group, Inc., Lorillard, Inc. and Reynolds American Inc. We compete against big tobacco who offers not only conventional tobacco cigarettes and electronic cigarettes but also smokeless tobacco products such as snus (a form of moist ground smokeless tobacco that is usually sold in sachet form that resembles small tea bags), chewing tobacco and snuff. Furthermore, we believe that big tobacco will devote more attention and resources to developing and offering electronic cigarettes as the market for electronic cigarettes grows. Because of their well-established sales and distribution channels, marketing expertise and significant resources, big tobacco is better positioned than small competitors like us to capture a larger share of the electronic cigarette market. We also compete against numerous other smaller manufacturers or importers of cigarettes. There can be no assurance that we will be able to compete successfully against any of our competitors, some of whom have far greater resources, capital, experience, market penetration, sales and distribution channels than us. If our major competitors were, for example, to significantly increase the level of price discounts offered to consumers, we could respond by offering price discounts, which could have a materially adverse effect on our business, results of operations and financial condition.

We may be unable to promote and maintain our brands.

We believe that establishing and maintaining our brand is a critical aspect of attracting and expanding a large customer base. Promotion and enhancement of our brands will depend largely on our success in continuing to provide high quality products. If our customers and end users do not perceive our products to be of high quality, or if we introduce new products or enter into new business ventures that are not favorably received by our customers and end users, we will risk diluting our brand identities and decreasing their attractiveness to existing and potential customers.

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Moreover, in order to attract and retain customers and to promote and maintain our brand equity in response to competitive pressures, we may have to increase substantially our financial commitment to creating and maintaining a distinct brand loyalty among our customers. If we incur significant expenses in an attempt to promote and maintain our brands, our business, results of operations and financial condition could be adversely affected.

We expect that new products and/or brands we develop will expose us to risks that may be difficult to identify until such products and/or brands are commercially available.

We are currently developing, and in the future will continue to develop, new products and brands, the risks of which will be difficult to ascertain until these products and/or brands are commercially available. For example, we are developing new formulations, packaging and distribution channels. Any negative events or results that may arise as we develop new products or brands may adversely affect our business, financial condition and results of operations.

If we are unable to manage our anticipated future growth, our business and results of operations could suffer materially.

Our operating results depend to a large extent on our ability to successfully manage our anticipated growth. To manage our anticipated growth, we believe we must effectively, among other things:

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If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities or develop new products, and we may fail to satisfy product requirements, maintain product quality, execute our business plan or respond to competitive pressures, any of which could have a material adverse effect on our business, results of operations and financial condition.

We are subject to significant product liability litigation.

The tobacco industry has experienced, and continues to experience, significant product liability litigation. Most tobacco liability lawsuits have been brought against manufacturers and sellers of cigarettes by individual plaintiffs, often participating on a class-action basis, for injuries allegedly caused by cigarette smoking or by exposure to cigarette smoke. However, several lawsuits have also been brought against manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. In addition to the risks to our business, results of operations and financial condition resulting from adverse results in any such action, ongoing litigation may divert managements attention and resources, which could have an impact on our business and operations. We cannot predict with certainty the outcome of these claims and there can be no assurance that we will not sustain losses in connection with such lawsuits and that such losses will not have a material adverse effect on our business, results of operations and financial condition.

As a result of their relative novelty, electronic cigarette and vaporizer product manufacturers and sellers have only recently become subject to litigation. We may see increasing litigation over e-products or the regulation of our products, as the regulatory regimes surrounding these products develop.

As a result, we may face substantial costs due to increased product liability litigation relating to new regulations or other potential defects associated with e-products we sell, which could have a material adverse effect on our business, results of operations and financial condition.

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Sales of conventional tobacco cigarettes have been declining, which could have a material adverse effect on our business.

The overall U.S. market for conventional tobacco cigarettes has generally been declining in terms of volume of sales, as a result of restrictions on advertising and promotions, funding of smoking prevention campaigns, increases in regulation and excise taxes, a decline in the social acceptability of smoking, and other factors, and such sales are expected to continue to decline. While the sales of electronic cigarettes have been increasing over the last several years, the electronic cigarette market is only developing and is a fraction of the size of the conventional tobacco cigarette market. A continual decline in cigarette sales may adversely affect the growth of the electronic cigarette market, which could have a material adverse effect on our business, results of operations and financial condition.

Our patents and our ability to enforce them.

We have a portfolio of issued U.S., Chinese and Chineseinternational patents, however we cannot provide any assurances that our patents will not be challenged and if challenged, will be upheld and deemed valid. Furthermore our efforts to enforce our patent may be costly and there can be no assurances that should we seek to prosecute and enforce our patents, that we will be victorious and even if we are victorious, we cannot provide assurances that our efforts would result in damages, licensing fees or removing the infringing products from the market. Moreover, if we are not able to retain counsel on a contingency basis, we may be unable to pursue prosecution of the infringers of our patents.

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We may not be able to adequately protect our intellectual property rights in China or elsewhere, which could harm our business and competitive position.

We believe that patents, trademarks, trade secrets and other intellectual property we use and are developing are important to sustaining and growing our business. We utilize third party manufacturers to manufacture our products in China, where the validity, enforceability and scope of protection available under intellectual property laws are uncertain and still evolving. Implementation and enforcement of Chinese intellectual property-related laws have historically been deficient, ineffective and hampered by corruption and local protectionism. Accordingly, we may not be able to adequately protect our intellectual property in China, which could have a material adverse effect on our business, results of operations and financial condition. Furthermore, policing unauthorized use of our intellectual property in China and elsewhere is difficult and expensive, and we may need to resort to litigation to enforce or defend our intellectual property or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation and an adverse determination in any such litigation, if any, could result in substantial costs and diversion of resources and management attention, which could harm our business and competitive position.

Third parties may claim that we infringe their intellectual property and trademark rights.

Competitors in our markets may claim that we infringe their proprietary rights. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against us or the payment of damages.

Adverse publicity associated with our products or ingredients, or those of similar companies, could adversely affect our sales and revenue.

Adverse publicity concerning any actual or purported failure by us to comply with applicable laws and regulations regarding any aspect of our business could have an adverse effect on our public perception. This, in turn, could negatively affect our ability to obtain financing, endorsers and attract distributors or retailers for our products, which would have a material adverse effect on our ability to generate sales and revenue.

Our distributors and customers perception of the safety and quality of our products or even similar products distributed by others can be significantly influenced by national media attention, publicized scientific research or findings, product liability claims and other publicity concerning our products or similar products distributed by others. Adverse publicity, whether or not accurate, that associates consumption of our products or any similar products with illness or other adverse effects, will likely diminish the publics perception of our products. Claims that any products are ineffective, inappropriately labeled or have inaccurate instructions as to their use, could have a material adverse effect on the market demand for our products, including reducing our sales and revenue.

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We rely on our CEO and may experience difficulty in attracting and hiring qualified new personnel in some areas of our business.

The loss of our CEO or any of our key employees could adversely affect our business. As a member of the tobacco industry, we may experience difficulty in identifying and hiring qualified executives and other personnel in some areas of our business. This difficulty is primarily attributable to the health and social issues associated with the tobacco industry. The loss of services of any key employees or our inability to attract, hire and retain personnel with requisite skills could restrict our ability to develop new products, enhance existing products in a timely manner, sell products or manage our business effectively. We do not carry any key man insurance that would provide us with proceeds in the event of the death or disability of Mr. Frija, our President, Chief Executive Officer, principal financial officer and principal accounting officer, and the sole member of our General Partner. These factors could have a material adverse effect on our business, results of operations and financial condition.

We may not be successful in maintaining the consumer brand recognition and loyalty of our products.

We compete in a market that relies on innovation and the ability to react to evolving consumer preferences. The smoke accessories industry in particular is subject to changing consumer trends, demands and preferences. Therefore, products once favored may over time become disfavored by consumers or no longer perceived as the best option. Consumers in the market have demonstrated a high degree of brand loyalty, but producers must continue to adapt their products in order to maintain their status among these customers as the market evolves. Trends within the industry change often and our failure to anticipate, identify or react to changes in these trends could, among other things, lead to reduced demand for our products. Factors that may affect consumer perception of our products include health trends and attention to health concerns associated with vaping, price-sensitivity in the presence of competitors products or substitute products and trends in favor of new products that are currently being researched and produced by participants in our industry.

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We are subject to significant product liability litigation.

The tobacco industry has experienced, and continues to experience, significant product liability litigation. Most tobacco liability lawsuits have been brought against manufacturers and sellers of cigarettes by individual plaintiffs, often participating on a class-action basis, for injuries allegedly caused by cigarette smoking or by exposure to cigarette smoke. However, several lawsuits have also been brought against manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. In addition to the risks to our business, results of operations and financial condition resulting from adverse results in any such action, ongoing litigation may divert managements attention and resources, which could have an impact on our business and operations. We cannot predict with certainty the outcome of these claims and there can be no assurance that we will not sustain losses in connection with such lawsuits and that such losses will not have a material adverse effect on our business, results of operations and financial condition.

As a result of their relative novelty, electronic cigarette and vaporizer product manufacturers and sellers have only recently become subject to litigation. We may see increasing litigation over e-products or the regulation of our products, as the regulatory regimes surrounding these products develop.

As a result, we may face substantial costs due to increased product liability litigation relating to new regulations or other potential defects associated with e-products we sell, which could have a material adverse effect on our business, results of operations and financial condition.

If we are the subject of future product defect or liability suits, our business will likely fail.

In the course of our planned operations, we may become subject to legal actions based on a claim that our products are defective in workmanship or have caused personal or other injuries. We currently maintain liability insurance, but such coverage may not be adequate to cover all potential claims. Moreover, even if we are able to maintain sufficient insurance coverage in the future, any successful claim could significantly harm our business, financial condition and results of operations.

If we experience product recalls, we may incur significant and unexpected costs and our business reputation could be adversely affected.

We may be exposed to product recalls and adverse public relations if our products are alleged to cause illness or injury, or if we are alleged to have violated governmental regulations. A product recall could result in substantial and unexpected expenditures that could exceed our product recall insurance coverage limits and harm to our reputation, which could have a material adverse effect on our business, results of operations and financial condition. In addition, a product recall may require significant management time and attention and may adversely impact on the value of our brands. Product recalls may lead to greater scrutiny by federal or state regulatory agencies and increased litigation, which could have a material adverse effect on our business, results of operations and financial condition.

Product exchanges, returns and warranty claims may adversely affect our business.

If we are unable to maintain an acceptable degree of quality control of our products we will incur costs associated with the exchange and return of our products as well as servicing our customers for warranty claims. Any of the foregoing on a significant scale may have a material adverse effect on our business, results of operations and financial condition.

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We rely significantly on the efforts of third party agents to generate sales of our products.

We rely significantly on the efforts of independent distributors to purchase and distribute our products to wholesalers and retailers. No single distributor currently accounts for a material percentage of our sales and we believe that should any of these relationships terminate we would be able to find suitable replacements and do so on a timely basis. However, any loss of distributors or our ability to timely replace any given distributor could have a material adverse effect on our business, financial condition and results of operations.

We rely, in part, on the efforts of independent salespersons who sell our products to distributors and major retailers and Internet sales affiliates to generate sales of products. No single independent salesperson or Internet affiliate currently accounts for a material percentage of our sales and we believe that should any of these relationships terminate we would be able to find suitable replacements and do so on a timely basis. However, any loss of independent sales persons or Internet sales affiliates or our ability to timely replace any one of them could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to establish sustainable relationships with large retailers or national chains.

We believe the best way to develop brand and product recognition and increase sales volume is to establish relationships with large retailers and national chains. We currently do not have any established relationships with large retailers and or national chains and we cannot provide any assurances that we will be successful in our efforts to establish such relationships and or if we would be able to pay the costs associated with establishing such national accounts. Our inability to develop and sustain relationships with large retailers and national chains will impede our ability to develop brand and product recognition and increase sales volume and, ultimately, require us to pursue and rely on local and more fragmented sales channels, which will have a material adverse effect on our business, results of operations and financial condition.

We may not be able to adapt to trends in our industry.

We may not be able to adapt as the electronic cigarette industry and customer demand evolves, whether attributable to regulatory constraints or requirements, a lack of financial resources or our failure to respond in a timely and/or effective manner to new technologies, customer preferences, changing market conditions or new developments in our industry. Any of the failures to adapt for the reasons cited herein or otherwise could make our products obsolete and would have a material adverse effect on our business, financial condition and results of operations.

We depend on third party manufacturers for our products.

We depend on third party manufacturers for our electronic cigarettes, vaporizers and accessories. Our customers associate certain characteristics of our products including the weight, feel, draw, unique flavor, packaging and other attributes of our products to the brands we market, distribute and sell. Any interruption in supply and/or consistency of our products may adversely impact our ability to deliver our products to our wholesalers, distributors and customers and otherwise harm our relationships and reputation with customers, and have a materially adverse effect on our business, results of operations and financial condition.

Although we believe that several alternative sources for the components, chemical constituents and manufacturing services necessary for the production of our products are available, any failure to obtain any of the foregoing would have a material adverse effect on our business, results of operations and financial condition.

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We rely on Chinese manufacturers to produce our products.

Our manufacturers are based in China. Certain Chinese factories and the products they export have been the source of safety concerns and recalls, which is generally attributed to lax regulatory, quality control and safety standards. Should Chinese factories continue to draw public criticism for exporting unsafe products, whether those products relate to our products or not we may be adversely affected by the stigma associated with Chinese production, which could have a material adverse effect on our business, results of operations and financial condition.

Changes in U.S. and foreign government administrative policy, including the imposition of or increases in tariffs and changes to existing trade agreements, could have a material adverse effect on us.

As a result of changes to U.S. and foreign government administrative policy, there may be changes to existing trade agreements, greater restrictions on free trade generally, the imposition of or significant increases in tariffs on goods imported into the U.S., including tariffs on products manufactured in China, Canada, or Mexico, and adverse responses by foreign governments to U.S. trade policies, among other possible changes. The U.S. administration has implemented or increased tariffs, and announced it intends to implement or increase additional tariffs, and it reremains unclear what the U.S. administration or foreign governments will or will not do with respect to tariffs or trade agreements and policies. A trade war, other governmental action related to tariffs or trade agreements, changes in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently develop and sell products, and any resulting negative sentiments toward the U.S. as a result of such changes, could have a material adverse effect on our business, financial condition, results of operations and financial condition.

We may face competition from foreign importers who do not comply with government regulation.

We may face competition from foreign sellers of electronic cigarettes that may illegally ship their products into the United States for direct delivery to customers. These market participants will not have the added cost and expense of complying with U.S. regulations and taxes and as a result will be able to offer their product at a more competitive price than us and potentially capture market share. Moreover, should we be unable to sell certain of our products during any regulatory approval process we have no assurances that we will be able to recapture those customers that we lost to our foreign domiciled competitors during any blackout periods, during which we are not permitted to sell our products. This competitive disadvantage may have a material adverse effect on our business, results of operations and our financial condition.

Our results of operations could be adversely affected by currency exchange rates and currency devaluations.

Our functional currency is the U.S. dollar; substantially all of our purchases and sales are currently generated in U.S. dollars. However, our manufacturers and suppliers are located in China. Fluctuations in exchange rates between our respective currencies could result in higher production and supply costs to us which would have a material adverse effect on our results of operations if we are not willing or able to pass those costs on to our customers.

We depend on our General Partner and its managers, Messrs. Frija and Pan..

Our performance is directly correlated to the performance of our General Partner. Due in part to our size, the loss of the services of Messrs. Frija and Pan would have a material adverse effect on us, including on a short term basis, and until a replacement coulr, which is managed be found, the continuity of our operations.

We do not carry any key man insurance that would provide us with proceeds in the event of the death or disability of any of our principalsy its sole member, Mr. Frija.

Rights of limited partners are significantly different than rights of shareholders of a corporation.

We are organized as a limited partnership. Members of limited partnerships, also known as limited partners, have different rights than shareholders of a corporation. Due to our structure as a limited partnership, your rights as a stakeholder are governed by our partnership agreement. For example, limited partnunlike a corporation for which stockholders do notare able to elect pmembersons to our  of its board of directors, we do not have a board of directors. We are managed by our General Partner and our General Partner is managed by its sole member, Mr. Frija. Our General Partner has limited call rights to our securities; please read carefully our partnership agreement, which governs the relationship between us and our unitholders.

Our General Partner, Soleil Capital Management LLC, is solely responsible for our operations.

The currentWe are managers ofd by our General Partner are Kevin Frija, who is our current executive officer, Chairman,. Our General Partner does not have and a director, and Greg Pan, who is a director. Through the General Partner, Messrs. Frija and Pan manage all  operating agreement. Pursuant to Delaware law, in the absence of ouran operations and activities. Ong agreement, our General Partners limit is managed liability company agreement establishes a board of directors that will be responsible for the oversight of our business and operations. Our Generby its members. Kevin Frija, who is our Chief Executive Officer, President, principal Partners boardfinancial of directors will be elected inficer, principal accordance with its limited liability company agreement, where Mr. Frija (or, following his wunting officer and a significant unithdrawal, death or disability, any successor founolder designated by him), will have , is the power to appoint and remove the directorssole member of our General Partner. FollowingThrough the withdrawal, death or disability ofGeneral Partner, Mr. Frija (and any successor founder), the power to appoint and remove the directors oPan manages all of our General Partner will revert to the members of our General Partner who holoperations and a majority in interest in our General Partnerctivities. Our common unitholders do not elect our General Partner or its board of directomembers and, unlike the holders of common stock in a corporation, will have only limited voting rights on matters affecting our business and therefore limited ability to influence decisions regarding our business. Furthermore, if our common unit holders are dissatisfied with the performance of our General Partner, they will have little ability to remove our General Partner.

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Our ability to retain our management is critical to our success and our ability to grow depends on our ability to attract additional key personnel.

Our success depends on our ability to attract and retain managers, executive officers and qualified personnel. We anticipate that it will be necessary for us to attract and retain key personnel in order to develop our business and pursue our growth strategy. The market for qualified managers is extremely competitive and as such our inability to attract and retain key personnel would adversely affect in the short term, our continuity of operations and in the long term our profitability.

The control of our General Partner may be transferred to a third party without common unitholder consent.

Our General Partner may transfer its General Partner interest to a third party in a merger or consolidation without the consent of our common unitholders. Furthermore, at any time, the members of our General Partner may sell or transfer all or part of their limited liability company interests in our General Partner without the approval of the common unitholders, subject to certain restrictions as described elsewhere in this annual report. A new general partner and/or owner could have different business objectives and/or philosophies then our current business objectives and/or philosophies, employ individuals who are less experienced in our current business, be unsuccessful in identifying new opportunities in our current area of business or have a track record that is not as successful as VPR Brands track record. If any of the foregoing were to occur, we could experience difficulty in operating our business, and the value of our business, our results of operations and our financial condition could materially suffer.

We have hired and will need to hire additional qualified accounting and administrative personnel in order to remediate material weaknesses in our internal control over financial accounting, and we will need to expend additional resources and efforts to establish and maintain the effectiveness of our internal control over financial reporting and our disclosure controls and procedures.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Sarbanes-Oxley Act of 2002, as amended (the Sarbanes-Oxley Act). Our management is required to evaluate and disclose its assessment of the effectiveness of our internal control over financial reporting as of each year-end, including disclosing any material weakness in our internal control over financial reporting. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As a result of its assessment, management has determined that there were material weaknesses due to the lack of segregation of duties and sufficient internal controls (including technology-based general controls) that encompass our Company as a whole with respect to entity and transactions level controls in order to ensure complete documentation of complex and non-routine transactions and adequate financial reporting. If we continue to experience material weaknesses in our internal controls or fail to maintain or implement required new or improved controls, such circumstances could cause us to fail to meet our periodic reporting obligations or result in material misstatements in our financial statements, or adversely affect the results of periodic management evaluations and, if required, annual auditor attestation reports. Due to these material weaknesses, management concluded that, as of December 31, 20245, our internal control over financial reporting was not effective. Management also concluded that our disclosure controls and procedures were not effective as of December 31, 20245. Although the number of employees has grown as a result of the hiring of additional accounting and information technology staff, we cannot assure you that we will have sufficient resources to resolve these material weaknesses. These weaknesses have the potential to adversely impact our financial reporting process and our financial reports. We will need to hire additional qualified accounting and administrative personnel in order to resolve these material weaknesses.

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We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the Sarbanes-Oxley Act) and and if we fail to continue to comply, our business could be harmed, and the price of our securities could decline.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of internal control over financial reporting, and for certain issuers an attestation of this assessment by the issuers independent registered public accounting firm. The standards that must be met for management to assess the internal control over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely basis. In the event that our Chief Executive Officer or principal financial officer determines that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our securities will be affected; however, we believe that there is a risk that investor confidence and the market value of our securities may be negatively affected.

We are subject to cyber-security risks, including those related to customer, employee, vendor or other company data and including in connection with integration of acquired businesses and operations.

We use information technologies to securely manage operations and various business functions. We rely on various technologies, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities, including reporting on our business and interacting with customers, vendors and employees. In addition, we collect and store certain data, including proprietary business information, and may have access to confidential or personal information that is subject to privacy and security laws, regulations and customer-imposed controls. Our systems are subject to repeated attempts by third parties to access information or to disrupt our systems. Despite our security design and controls, and those of our third-party providers, we may become subject to system damage, disruptions or shutdowns due to any number of causes, including cyber-attacks, breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, service providers, natural disasters or other catastrophic events. It is possible for such vulnerabilities to remain undetected for an extended period. We may face other challenges and risks as we upgrade and standardize our information technology systems as part of our integration of acquired businesses and operations. We have contingency plans in place to prevent or mitigate the impact of these events, however, these events could result in operational disruptions or the misappropriation of sensitive data, and depending on their nature and scope, could lead to the compromise of confidential information, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions and exposure to liability. Such disruptions or misappropriations and the resulting repercussions, including reputational damage and legal claims or proceedings, may adversely affect our results of operations, cash flows and financial condition, and the trading price of our common stock.

This risk is enhanced in certain jurisdictions with stringent data privacy laws. For example, California recently adopted tthe California Consumer Privacy Act of 2018 (CCPA), which provides newcertain data privacy rights for consumers and newcertain operational requirements for businesses. The CCPA includes a statutory damages framework and private rights of action against businesses that fail to comply with certain CCPA terms or implement reasonable security procedures and practices to prevent data breaches. The CCPA went into effect in January 2020.

The business that we conduct outside the U.S. may be adversely affected by international risk and uncertainties.

Although our operations are based in the United States, we conduct business outside of the United States and expect to continue to do so in the future. Any business that we conduct outside of the United States is subject to additional risks that may have a material adverse effect on our ability to continue conducting business in certain international markets, including, without limitation:

These factors or any combination of these factors may adversely affect our revenue or our overall financial performance.

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RISKS RELATED TO REGULATION AND MARKET

Our business is primarily involved in the sales of products that contain nicotine and/or CBDhemp-derived cannabinoids, which faces significantare subject to rapidly evolving, regulation and actionsfederal enforcement that may have a material adverse effect on our business.

Our current business is primarily involved ioperations depend on the sale of ENDS and products that contain nicotine and/oring hemp-derived cannabinoids (such as CBD). The general market in which our products are sold is industry faces significant governmentalextreme regulation and private sector actions, including efforts aimed at reducingory scrutiny from the FDA, the incidence of use in minors DOJ and efforts seeking to hold the importers, makersvarious state and sellers of these products responsible for alleged adverse health effects associated with the use of, in particular, inhalable, vaporizlocal agencies.

The FDA has established e-liquid solutions containa string nicotine derived from tobacco. More broadly, new regulatory acent premarket authorizations by the FDA and other federal, state or local governments or agencies framework. While we have an impact the consumer acceptability of  submitted PMTAs for access to oour products, including regulations promulgated by the FDA which will require us to file PMTA(s) for any of our products that are identified as Deemed Tobacco Products by has historically issued Marketing Denial Orders (MDOs) for the FDA that we intend to market and sell after May 2020. Additionally, on January 2vast majority of flavored ENDS products. On March 9, 20206, the FDA issued an enforcement ponew draft guidance, Flavored ENDS Premarket Applicy effectively banning the sale of flavored cartridge-basations Considerations Related to Youth Risk, which reinforces a heightened e-cigarettes marketed primarilvidentiary by large manufacturers in the United States without priorurden for non-tobacco flavors. To obtain authorization from the FDA, which policyor flavored products, went into effect in February 2020. According to the FDA, it is expected that must now demonstrate not only adult benefit but also the new policy will have minimal impact on small manufacturersefficacy of advanced Device Access Restrictions (DARs), such as vape shops, that sell non-cartridge based productsbiometric age-gating or geofencing. We believcannot guarantee that any ban on flavored e-cigarettes, or similar enforcement action byour technology will meet these new standards or that the FDA, would have a signific will grant Marketing Grant material adved Orderse impact on the (MGOs) for our products, which would, in turn, have a material adverse impacortfolio.

Furthermore, following the establishment on our ovf the Federall business.

Additional regulatory challenges may coml Multi-Agency Task Force in future months and years, including the FDAs publication of new2025, enforcement against unauthorized product standards or additional rule making that may impact vape shops or osparticularly flavored disposableshas accelerated. The task force has ther small manufacturers, limit adult consumer choices, delay or preve authority to seek permanent the lainjunch of new or modified risk tobacco products otions, seizures, and civil money penalties. If our products with claims of reduced risk, require the recall or otherare deemed unauthorized, we may be forced to removal of certain productse them from the marketplace, restrict communications inclu immediately, leading marketing, advertising, and educationto a total campaigns regarding thloss of revenue for those product category to adult consumers, restrict the ability to differentiatelines.

Our CBD and hemp-derived products, create a competitive advantage or disadvantage for certain companies, impose addit lines face an existential risk due to evolving federal regulation.

The Continuing Appropriations and Extensional manufacturing, labeling or packaging requires Act, 2026, signed into law in late 2025, fundaments, interrupt manufacturally redefines hemp by moving or otherwise significantly increase the cost of doto a Total THC standard (including Delta-8, Delta-10, and THCA) and imposing business, or rea strict or prevent the usecap of 0.4 milligrams of specifitotal THC per container for finished consumer products in certain locations or the sale.

This law is set to take full effect on November 12, 2026. We anticipate that many of products by certain retail establishments. Any ofour current hemp-derived offerings will exceed these actions may also have a material adverse effect on our business. Each of our products are also subject to intense competition and changes in adult consumer preferenceslimits and become classified as Schedule I controlled substances under the CSA. The transition to this new standard may require us to discontinue up to 10% of our hemp-related product portfolio by late 2026, which cwould have a significant material adverse effeimpact on our businessresults of operations and financial condition.

Many of our products contain nicotine, which is considered to be a highly addictive substance.

Many of our products contain nicotine, a chemical found in cigarettes, e-cigarettes, certain other vapor products and other tobacco products, which is considered to be highly addictive. The Family Smoking Prevention and Tobacco Control Act empowers the FDA to regulate the amount of nicotine found in vapor products, but may not require the reduction of nicotine yields of a vapor product to zero. Any FDA regulation may require us to reformulate, recall and or discontinue certain of the products we may sell from time to time, which may have a material adverse effect on our ability to market our products and have a material adverse effect on our business, financial condition, results of operations, cash flows and or future prospects.

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Significant increases in state and local regulation of our products have been proposed or enacted and are likely to continue to be proposed or enacted in numerous jurisdictions.

There has been increasing activity on the state and local levels with respect to scrutiny of e-products. State and local governmental bodies across the U.S. have indicated e-products may become subject to new laws and regulations at the state and local levels. Further, some states and cities, have enacted regulations that require obtaining a tobacco retail license in order to sell electronic cigarettes and vaporizer products. Many states and some cities have passed laws restricting the sale of electronic cigarettes and vaporizer products to minors. If one or more states from which we generate or anticipate generating significant sales of e-products bring actions to prevent us from selling our e-products unless we obtain certain licenses, approvals or permits, and if we are not able to obtain the necessary licenses, approvals or permits for financial reasons or otherwise and/or any such license, approval or permit is determined to be overly burdensome to us, then we may be required to cease sales and distribution of our products to those states, which could have a material adverse effect on our business, results of operations and financial condition.

Certain states and cities have already restricted the use of electronic cigarettes and vaporizer products in smoke-free venues. Additional city, state or federal regulators, municipalities, local governments and private industry may enact rules and regulations restricting the use of electronic cigarettes and vaporizer products in those same places where cigarettes cannot be smoked. Because of these restrictions, our customers may reduce or otherwise cease using our e-products, which could have a material adverse effect on our business, results of operations and financial condition.

There is uncertaintysignificant regulated to the federal regulation of e-products. Increasedory burden and enforcement risk regulatory compliance burdens could have a materied to federal adoverse impacight onf our business development efforts.

Since their introduction, there has been significant uncertainty regarding whether, how electronic nicotine and when tobacco regulations would apply to certain of ovapor products.

Our products, such asincluding e-cigarettes, e-liquids, and vaporizers, and other related products. Based on a decision in December 2010 by the U.S. Court of Appeals for the D.C. Circuit (re subject to the Tobacco Control Act. While the 2010 Sottera decision), the FDA is initially permitted the FDA to regulate electronic cigarettes containing totobacco-derived nicotine as tobacco products under the Tobacco Control Act.

Effective August 8, 2016, FDAs regu, March 2022 legislatory authority under the Tobacco Control Act wasion extepanded to all remaininghis authority tobacco products,  including: (i) certain new products (such as electronic cigarettes, vaporizers and e-liquids) and their components or parts (such as tanks, coils and batteries); (ii) cigars and e nicotine from any source, including syntheir components or parts (such as cigar tobacco); (iii) pipe tobacco; (iv) hookah products; or (v) any other tobacco product newly deemed by FDA. These deeming regulations apply totic nicotine. Consequently, all products made or derived from tobacco intended for human our nicotine-consumption but excludtaining accessories of tproducts are Deemed Tobacco pProducts (such as lighters).

The deeming regulations require us to (i)subject to FDA register with the FDA and report product andration, ingredient lisreportings; (ii) , and premarket newly deemed products only after FDA review and approval; (iii) only make dauthorization requirect and implied claims of reduced risk if ments.

Furthe FDA approves after finding that scientific evidencermore, we are now supports the claim and that marketingbject to the product will benefit public health as a whole; (iv) refrain from distributing free samples; (v) implement minimum age and identification restrictionsPACT Act, which was amended to apply to prevent sales to individuals under age 18; (vi) develop an approved warning plan and include prescribed health warnings on packaging and adelectronic nicotine delivertisements; and (vii) refrain from selling ty systems. The products in vending machines, unless the machine is located in a facility that never admits youth. Newly-deemed tobacco products are also subject to the otherPACT Act requires us to comply with complex requirements of the Tobacco Control Act, such as that they not be adulterated or misbranded. The FDA could ingistration, labeling, and tax collection rules. Because the future promulgate good manufacturing practU.S. Postal Service regulations for these and our othergenerally products, which could have a material adverse impact on our ability andhibits the mailing of the cost to manufacture our se products.

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The anticipated costs of complying with future FDA regulations will be dependent on the rules issued by the FDA, the timing and clarity of any new rules or guidance documents accompanying these rules, the reliability and simplicity (or complexity) of the electronic systems utilized by FDA for information and reports to be submitted, to consumers, our distribution channels are constrained and the details required by FDA foour such information and reports with respect to each regulated product (which have yet to be issued by FDA). hipping costs have increased.

Failure to comply with existing or new FDA regulatorythese evolving requirements could result in significant financial penalties and could have a material adverse effect on our business, results of opincluding the federations, financial condition and ability to market and sell our products. Compliance and related costs could be substantial and could significantly increase the costs of operating in our NewGen and cigar and pipe tobacco product markets.

In addition, failure to comply with the Tl minimum age of 21 for all tobacco Control Act and with FDA regulatory requirements salescould result in litigation, criminal convictions or ssignificant financial penalties and could impair our ability to market and sell our electronic and vaporizer products. At present, we are not able to predict whether the Tobacco Control Act will impact , criminal convictions, or the forced removal of our products to a greater degree than competitors in from the industry, thus affecting our competitive position.

Furthermore, neither tmarket. The Prevent All Cigarette Trafficking Act nor the Federal Cigarette Labeling and Advertisianticipated costs of maintaining Act currently apply to NewGen products. There may, in thecompliance with these and future, also be increased FDA regulation of additives in smokeless products and internet sales of NewGen products. The application of either or both of these federal laws, s, such as potential good manufacturing practice stand of any new laws or regulations which may be adopted in the future, to NewGen products or such additives could result in additionalards, could significantly increase our operating expenses and require us to change harm our advertising and labeling, and methods of marketing and distribucompetitive position of our products,.

Bans any of which could have a material adverse effect on our business,d heightened results of operations gulatory stand financial condition.

Recent bans on the sales ofards for flavored e-cigarettes directly impact thelimit our markets in which we may sell our products, access and may have a material adverse impact on our business.

On January 2, 2020, tThe FDA issued an enforcement policy effectively banning the sale ofmarket for flavored cartridge-based e-cigarettes marketed primarily by large manufacturers in the United States without prior authorization from the FDA, which policy went into effect in February 2020. In addition, seveENDS is subject to aggressive federal, state, and local governments have temporarily or permanently bannedrestrictions. While the sale of flavored e-cigarettes as of the date of hereof, although some bans have been temporarily halted by judicially imposed injunctions. For example, effective January 1, 2025, the state of California prohibits retailers from selling flFDA initiated an enforcement policy against flavored tobacco products, including e-cigarettes and vapes. Other states and municipalities are considering implementing similar restrictions, and some cities have implemecartridges in 2020, regulatory pressure has since inted more restrictive measures than their state counterparts, sunsified. On March as San Francisco, which in June 2019, approved a ban on 9, 2026, the sale of flavored nicotine products, including vaping liqFDA issued new draft guids and menthol cigarettes. Any ban on the sale of flance, Flavored e-cigarettes directly limits the mENDS Premarkets in which we may sell our products. In the event the prevalence of such bans increases across the United States, our business, results of operations and financial condition will be materially harmed.

There is uncertainty r Applications Considerations Related to the regulation of flavored e-cigarette liquid and vaporization products and certain other consumption accessories, including the possibility that all flavored e-cigarette liquid and vaporization products may be recalled or removed from the market entirely. Any increased regulatory compliance burdens will have a material adverse impact on our operations and futureYouth Risk, which reinforces a heightened evidentiary business development efrden forts.

There has been increasing activity on the federal, state, and local levels with respect to scrutiny of any non-tobacco flavored e-cigarette liquid and vaporizer prproducts, including the FDAs recently announced enforcement policy regarding flavored cartridge-based e-cigarette products, and there is uncertainty regarding whether and in what circumstances federal, state, or local regulatory. To maintain or obtain marketing authorities will seek to develop and/or enforce regulations relativzation, we must now demonstrate to other products used for the vaporizationhe efficacy of nicotine. Federal, state, and local governmental bodies across the United States have indicated that flavored e-cigarette liquid, vaporizationadvanced DARs, such as biometric age-gating, to products and certain other consumptionevent youth accessories may become subject to new laws and regulations at the state and local levels. In addition to initiatives taken by the FDA at the federal level, there are 29 states with specific laws around how to package vaping. We cannot guarantee that our products. In addition, certain states have temporarily banned the sale of flavored e-cigarettes. Many states, provinces, and some cities have passed laws restricting the sale of e-cigarettes and certain ot will meet these new technical standards or receive MGOs.

Further nicotine vaporizer products.

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Changes to tmore, following the application of existing laws and regulations, and/or the implem2025 establishmentation of any new laws or regulations that may be adopted in the future, at a federal, state, or local level, directly or indirectly implicating flavored e-cigarette liquid and products used the Federal Multi-Agency Task Force, enfor the vaporization of nicotine would materially limit our ability to sell such products, result in additional compliance expenses, and require us to change our labeling and methods of distribution, any of which would have a material adverse effect on our business, results of operations and financial condition.

The regulation of tobacco cement against unauthorized flavored products by the FDA in the United States and the issuance of Deeming Regparticulations may materially adversely affect our business.

The Deeming Regulations issued by the FDA in May 2016 require any e-liquid, e-cigarettes, and other vaping products considered to be Deemed Tobacco Products that were not commercially marketed rly disposableshas accelerated. This task force has of the grandfathering date of February 15, 2007, authority to obtain premarket approval by the FDA before any new e-liquid or other vaping products can be marketed in the United States. However, any Deemed Tobacco Products such as certain products from our seek permanent injunctions and product lines that were on the market in the United States prior to August 8, 2016 have a grace period to continue to market such products, ending on May 12, 2020 whereby a premarket application, likely though the PMTA pathway, must be completed and filed with the FDA. Upon submission of a PMTA, products would then be able to be marketed pending the FDAs review of the submission. Without obtaining marketing authorization by the FDA priseizures, which could lead to an immediate loss of revenue for to May 12, 2020 or having submitted a PMTA by such date, non-authorized hose products would be required to be removed from the market in the United States until such authoriza lines.

State-level restriction could be obtained, although such products may s also continue to be sold if a PMTA is pending as of the May 12, 2020 deadline.

As ofexpand. For example, the dState of this Annual Report on Form 10-K, we are not preparing to submit PMTAs for certain of our traditional nicotine electronic cigarette and vapor products, including, but not limitCalifornias ban on flavored to menthol and/or toobacco products. We are evaluating the potential investment and returns associated with filing additional PMTAs for our products which we expect to cost at least $750,000 per sku application, which cost may vary bas, which became effective in 2025, has already restricted on several factors including the selection of contract research organizations to assist with the application process, as well as variable costs associated with scientific, market perceptionur access to one of the largest U.S. markets. As more states and climunical studies that may be required in connection with each PMTA. If we do not submit a PMTA for any our products considered to be Deemed Tobacco Products prior to the lapse of the grace period or if any PMTA submitted is denied, we will be required to cease the marketing and diipalities adopt similar or more restribution of such our products, which, in turn, would have a material adverse effect on our business, results of operations and financial condition. Furthermore, there can be no assurance that if we were to complete a PMTA for any of the affected ourctive measures, our ability to sell our flavored products, that any application would portfolio will be approved by the FDA.materially harmed.

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Possible yet unanticipated cChanges in federal and state law could cause any of our current products, containing, particularly the November 2026 Total THC standard, could cause our hemp-derived CBD oilproducts to be iclassified as illegal, or could otherwise prohibit, limit or restrict any of our products containing CBD controlled substances.

We distribute certain products containing hemp-derived CBD, and we currently intend to develop and launch additional products containing hemp-derived CBD in the future. Until 2014, when 7 U.S. Cocannabinoids and provide 5940 became federal law as part of the Agricultural Act of 2014 (the 2014 Farm Act), products containing oils derived from hemp, nothardware for use withstanding a minimal or non-existing THC content, were classified as Schedule I illegal drugs. The 2014 Farm Act expired on September 30, 2018, and was thereafter replaced by the Agricultural Improvement Act of 2018 on December 20, 2018 (t such products. While the 2018 Farm Act), which amended var previous sections of the U.S. Code, thereby removing hemp, defined as cannabis ly legalized hemp with less than 0.3% THC, from Schedule 1 status underDelta-9 THC, the Controlled Substances Act, and legaliziinuing the cultivAppropriations and sale of industrial-hemp at the federal level, subject to compliance with certain federal requireExtensions Act, 2026, has fundaments and state law, amongst otherally altered things. More specifically, industrial hemp is defined as the plant Cannabis sativa L. s framework. Effective November 12, 2026, federal law will apply a Total THC stand any part of such plant, whether groward (including or not, with a dDelta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis. The hemp oil we u8, Delta-10, and THCA) and impose comports with this definition of less than 0.3% THC. THC is the psychoactive componenta strict cap of plants in the cannabis fa0.4 mily generally identified as marihuana or marijuana. There is no assurance that the 2018 Farm Act will not be repealed or amended such that our products coligrams of total THC per containing hemp-derived CBD would oncer.

We again be deemed illegal under federal law.

The 2018 Farm Act delegnticipates the authority to the states to regulate and limit the producat a significant portion of hemp andour current hemp -derived products within their territories. Althougortfolio, which many states have adopted laws and regulations that allow for the production and saley comprise up to 10% of hemp andour hemp deriv-related products under certain circumstanceofferings, currently Idaho, Mississippi and South Dakota have not adopted laws and regulations permittwill exceed by the 2018 Farm Act. No assurance can be given that such state laws may not be implemented, repealed or amended such that our products containing hemp-derived CBD would be deemed legal in those states that have not adopted reguse new limits. Unless this legislations pursuant to the 2018 Farm Act, or illegal u is amenderd, the laws of one or more states now permitting such prse products, which in turn would render such intended products illegal in those states under federal law even if the federal law is unchanged. In the event of either repeal of federal or of  will be reclassified as Schedule I controlled substate laws and regulations, or of amendments theretonces under that are adverse to our intended products, we may be restricted or limited with respect to those products that we may sell ore CSA. Such a reclassification would require us to distribute, which could adversely impact our intended buscontinue these product liness plan with respect to such in, potended products.

Additiontially, the FDA has indicated its view that certain types of products containing CBD may not be permissible under the FDCA. The FDAs position is related to its approval leading to criminal prosecution or a forced cessation of Epidiolex, a marijuana-derived prescripcertain operation medicine to be available in the United States. The s, which would have a material adverse impactive ingredient in Epidiolex is CBD. On December 20, 2018, after the passage on our results of the 2018 Farm Bill, the FDA then-Commissioner Scott Gottlieb issued a statement in which he reiterated the FDAs posoperations and financial condition that, among other things, the FDA requires a cannabis product (hemp-derived or otherwise) that is marketed with a claim of therapeutic benefit, or with any other disease claim, to be approve.

Furthermore, we are affected by the FDA for its intended use before it may be introduclaws related into interstate commerce and that the FDCA prohibits introducing into interstate commerce food products containing added CBD, and to cannabis and marijuana. Because marketing products contijuana remaining CBD as a dietary supplement, regardless of whether theSchedule I controlled substances are hemp- underived. We do not believe that any of our products fall within the FDAs regulatory authority reiterated by the FDA Commissioner in December 2018, as federal law, any perception that we have not, and do not intend to are involved in the market any of our products with a claim of therapeutic benefit ijuana industryor with any other diseathe use claim. However, should any regulatory action, including action taken by the FDA, and/or legal proceeding alleging violations ofof our hardware with such laws could have a material adverse effect on our business, financial condition and results of operations.

If our hemp oil products are found to violate federal law or if there is substancescould result in negative press from being in a hemp or cannabis-related, the loss of business, we could be criminally prosecuted partners, or forced to suspend or cease operaederal enforcement actions.

Although we sell vaporizers that are for use with medical marijuana, we do not sell the medical marijuana component. We do sell products with hemp oil as an ingredient. There is a misconception that that hemp and marijuana are the same thing. This perception drives much of the regulation of hemp products. Although hemp and marijuana are both part of the cannabis family, they differ in cultivation, function, and application. Despite the use of marijuana becoming more widely legalized, it is viewed by many regulators and many others as an ilOur supply of hemp-derived cannabinoids and the market for our hardware depend on complex state and federal laws, which face an existential shift in late 2026.

Hemp-derived CBD can only be legally product. Hemp, on the other hand, is used and transported in a variety of other way states that include clothing, skin products, pet products, dietary supplements (the use of CBD oil), comply with federal stand thousands of other applications. Hemp may be legalards. While we currently sold, however the inabilitypurchase all of many to understand the difference between hemp and marijuana often causes burdensome regulation and confusion among potential customers. Therefore, we may be affected by laws related to cannabour hemp-derived CBD from licensed growers and processors, the legal landscape is and marijuana, even though our products are not the direct targets ofshifting due to these laws.

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Cannabis is currently a Schedule I controlled substance under the Controlled Substance Continuing Appropriations and Extensions Act (CSA) and is, therefore, illegal under , 2026. Effective November 12, 2026, federal law. Even in those states in which the use of cannabis has been legalized pursuant to state law, its use, possession and/or cultivation remains a violation will transition to a Total THC standard with a strict limit of federal law. A Schedule I0.4 milligrams per controlled substance ainer.

This defined as one that has no currently accepted medical use in the United States, a lackfederal change may render many of safety for use under medical our and our supervision and a high potential for abuse. The U.S. Department of Justice (the DOJ) describepliers products illegal as Schedule I controlled substances as the most dangerous drugs of all the drug schedu, regardles with potentially severe psychological or physical dependence. If the federal government decides to enforce the CSA in the states, persons that are charged with distributing, possessing with intent to distribute or growing cannabis could be subject to fines and/or terms of imprisonms of their status under previous state laws or the 2018 Farm Act. If our current, the maximum being life imprisonment and a $50 million fine.

Currently, 25 states and Washington, D.C. have legalized recreational use  suppliers are unable to re-for adults 21 years and older, while 38 states have legal medical marijuanamulate their programs. An additional 11 states permicesses to meet the use of products containing CBD and small amounts of tetrahydrocannabinol (new Total THC). Such state and territorial laws are in conflict with the federal CSA, which makes cannabis use and possession illegal at the federal level.

However, cannabis, as m caps, or if raw ingredientioned above, is a schedule-I controlled substance and is ils become legally under federal law. Even in those states in which the use of cannabis has been legalized, its production and use remains a violavailable, our business operation of federal law. Ssince federal law criminalizinluding the ussale of our cannabis preempts state laws that legalizvape hardware its use, strict enforcement of federal laws regarding marijuana that would apply to the sale and distribution of our hemp oil products cntended for use with these substanceswould result in criminal charges brought against usbe materially and would likely result in our inability to proceed with our business plan.

In additionadversely impacted. Furthermore, any negative press resulting from anyreduction incorrect perception that we have entered into the the number of states marijuana space could result in a loss of current or future business. It could also adversely affect the publics perception of us and lead to relucintaining qualifying laws under this new federal stance by new parties to do business with us or to own our common stock. We cannot assure you that additional business partners, including but not limited to financial institutions and customers, will not attempt to end or curtail their relationships with us. Any such negative press or cessation of business could have a material adverse effect on odard could restrict our ability to distribute products across state lines.

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Our business, financial condition, and results of operations.

Our product candidates are not approved by the FDA or other regulatory authority, and we face risks of unforeseen medic and financial problems, and up to acondition complete ban on the sale of our product candidates.

The efficaculd be adversely and safety of pharmaceutical products is established through a process of clinical testffected by increasing under FDA oversight. Our products have not gone through this process because we believe thatexcise taxes and the topical products, we sell are not subjectcomplex requirements to this process. However, ifcollect an individual were to use one of our products in an improper manner, we cannot predict the potential medical harm to that individual. If such an event were to occur, the FDA or similar regulatory agency might impose ad remit sales and excise taxes.

The sale of ENDS, complete ban on the sale or use of our products.

Sources of hemp-derived CBD depend upon legality of cultivation, procesonents, and related hardware is increasing, marketing and sales of products derived from those plants unly subject to federal, state law.

Hemp-derived CBD can only be legally produced in states that have laws and regulations that allow for such production and that comply with the 2018 Farm Act, apart from stat, and local excise taxes similar to those laws legalizing and regulating medical and recreaevied against conventional cannabis or marijuana, which remains illegal under federal law and regulationigarettes. We purchase allAs of our hemp-derived CBD from licensed growers and processors inMarch 2026, more than 32 states where such production is legal. As described in and the preceding risk factor, in the evenDistrict of repeal or amendment of laws and regulations which are now favorable to the cannabis/hemp industry inColumbia had implemented such stattaxes, we would be required to locate new suppliers in states with laws and regulations that qualify under the 2018 Farm Act. If we were to be unsuccessful in arranging new sources of supply of our raw ingredients, or if our raw ingredients were to become legally unavailable, our intended business plan with respect to such products could be adversely impacted.

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Because our distributors may only sell and ship and we expect this number to continue to increase. These taxes significantly increase the cost of our products containing hemp-derived CBD in states that have adopted laws and regulations qualifying under tto the 2018 Farm Act, a reduction in the number of states having suconsumer, which qualifying laws and regulations could limit, restrict or otherwise preclude the sale of intended products containing hemp-derived CBD.

The interstate shipment of hemp-derived CBD from one stmay reduce demand and have a mate to another is legrial only where both states have laws and regulations that allow for the production and saleadverse effect on our results of such products and that qualify under operations.

Furthe 2018 Farm Act. Therefrmore, the marketing and sale of our intended products containing hemp-derived CBD is limited by such factors PACT Act now applies to ENDS and is restricted to such states. Although we believe we may lawfully sell any of our finished related vapor products, including those containmposing CBD, in a majority of states, a repeal or adverse amendment of laws andstrict regulations that are now favorable to the distributiistration, markereporting, and sale of finished products we intend to sell could significantly limit, restrict or prevent us from generating revenuetax compliance obligations. We are related to our products that contain hemp-derivquired CBD. Any such repeal or adverse amendment of now favorable laws and regulations could haveto establish an adverse impact on our business plan with respect to such products.

Our business, results of operations and financial condition could be adversely affecd maintain sophisticated if we are taxed like othersystems tobacco products or if we are required to track, collect, and remit salesthese tax on certain of oures for both internet sales.

Presently the sale of e-products is generally not subject to federal, state and local excise taxes like tand traditional sales. The sale of conventional cigarettes or otherrequirement tobacco products, all of which generally have high tax rates and have faced significant increases in the amount comply with these diverse and of taxesten collected on their sales. In recent years, however, snflicting state and local governments have taken actions to move towards imposing excise taxes on e-products. Certain localititax lawsincluding the obligation to remit sales impose excise taxes on electronic cigarettes and/or liquid vapor. Other  in jurisdictions are contemplating similar legislationlike New York, Hawaii, and other restrictions on electronic cigarettes. ANorth Carolinaincreases of March 2025, more than 32 and the Dur administrict of Columbia tax vape products. This represenative costs a significant change since 2015, when only three states and Washington, D.C. had a vape tax.

Should federal, state and local governments and or other taxing authorities begin or continue to impose excind may require us to increase our prices. Any failure to accurately track or remit these taxes similar to those levied against conventional cigarettes and tobacco products on e-products, it may have a material adverse effect on the demand f could result in significant financial penalties, litigation, or these products, as consumers may be unwilling to pa loss of our ability the increased costs, which in turn could have a material adverse effect on our business, results of operations and financial condo sell products in certain jurisdictions.

Addition.

Weally, may be unable to establish the sysny jurisdictions are contems and processes needed to track and submit the excise and sales taxes we collect through Iplating or have implementernet sales, which would limit our ability to market our products through our websitd legislation that categorizes which would have a material adverse effect on our business, results of operations and financial condition. States such as New York, Hawaii, Rhode Island and North Carolina have begun collecting salescannabis vape hardware and lighters as subject to tobacco or nicotine-related excise taxes on Internet sales where companies have us. Continued independent contractorcreases in those stax rates to solicit sales from residentsor the expansion of that state. The requirement to collect, track and remit sales taxes based on independent affiliate sales may require uax categories to increaslude our prices, which may affect demand for ourhardware products or converswill likely reduceharm our net profit margin, either of which would have a material adverse effect on our business, results of operations and finans and overall financial condition.

We may have a difficult time obtaining the various insurances that are desired to operate our business in the CBD industry, which may expose us to additional risk and financial liability.

Insurance that is otherwise readily available, such as general liability, and directors and officers insurance, may become more difficult for us to find, and more expensive, due to our recent launch of certain products containing hemp-derived CBD. There are no guaAdditionally, the Continuing Appropriations and Extensions Act, 2026, which imposes a strict 0.4 mg Total THC cap per container effective November 12, 2026, has caused many insurantees that we will be ablece carriers to re-evaluate their exposure to the hemp industry. If our hemp-derived products are deemed to exceed these new federal limits, they may be classified as Schedule I controlled substances, which could lead to find such inthe immediate cancellation of our insurance policies or the denial of claims. There are no guarantees that we will be able to maintain affordable insurances in the future, or that the cost will be affordable to us. If we are forced to go without such insurances, it may prevent us from entering into certain  retail agreements or certain business sectors, it may inhibit our growth, and may expose us to additional risk and financial liabilities.

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RISKS RELATING TO OUR COMMON UNITS

Trading on the OTC Markets is volatile and sporadic, which could depress the market price of our common units.

Our common units are quoted on the OTCQB tier of the OTC Markets. Trading in securities quoted on the OTC Markets is often thin and characterized by wide fluctuations in trading prices, due to many factors, some of which may have little to do with our operations or business prospects. This volatility could depress the market price of our common units for reasons unrelated to operating performance. Moreover, the OTC Markets is not a stock exchange, and trading of securities on the OTC Markets is often more sporadic than the trading of securities listed on a quotation system like Nasdaq Capital Market or a stock exchange like the NYSE American.

Our stock price is likely to be highly volatile because of several factors, including a limited public float.

The market price of our common units has been volatile in the past and the market price of our common units is likely to be highly volatile in the future. You may not be able to resell our common units following periods of volatility because of the markets adverse reaction to volatility.

Other factors that could cause such volatility may include, among other things:

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Any of these factors could have a significant and adverse impact on the market price of our common units and/or warrants. In addition, the stock market in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common units and/or warrants, regardless of our actual operating performance.

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Our common units are a penny stock under SEC rules. It may be more difficult to resell securities classified as penny stock.

Our common units is a penny stock under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price below $5.00). Unless we successfully list our common units on a national securities exchange, or attain and maintain a per-unit price above $5.00, these rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as established customers or accredited investors. For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customers account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchasers written agreement to the transaction.

Legal remedies available to an investor in penny stocks may include the following:

These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common units and may affect your ability to resell our common units.

Many brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments.

For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if ever, our common units will no longer be classified as a penny stock in the future.

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Our directors and officersmanagement controls a substantial number of our common units, decreasing your influence on unitholder decisions.

Our officers and directorsmanagement, including Mr. Frija, own 37,742,63127,361,271 units, or approximately 41.129.8% of our outstanding common units. As a resulMr. Frija serves as our Chief Executive Officer, President, ourprincipal financial and accounting officers and directoris the sole member of our General Partner. As as a  result, our management as a group could have a significant influence in delaying, deferring or preventing any potential change in control of our company; they will be able to strongly influence the actions of our board of directorsGeneral Partner even if they were to cease being directors or officers of our company and can effectively control the outcome of actions brought to our unitholders for approval. Such a high level of ownership may adversely affect the exercise of your voting and other unitholder rights.

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Units eligible for future sale may adversely affect the market.

From time to time, certain of our unitholders may be eligible to sell all or some of their common units by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate unitholders may sell freely after six months, subject only to the current public information requirement. Affiliates may sell after six months, subject to the Rule 144 volume, manner of sale (for equity securities), current public information, and notice requirements. Of the 91,746,806 common units outstanding as of March 31, 20256, approximately 46,276,75888,573 units are tradable without restriction. Given the limited trading of our common units, resale of even a small number of our common units pursuant to Rule 144 or an effective registration statement may adversely affect the market price of our common units.

Provisions of our partnership agreement, as amended, may delay or prevent a takeover which may not be in the best interests of our unitholders.

Provisions of our partnership agreement may be deemed to have anti-takeover effects. Pursuant to Section 5.6 of the partnership agreement, the General Partner of the Company may, without the approval of our limited partners, issue additional securities for any partnership purpose at any time and from time to time for such consideration and on such terms and conditions as the General Partner shall determine in its sole discretion, all without the approval of any limited partners, and that each additional interest authorized to be issued by the Company may be issued in one or more classes, or one of more series of any such classes, with such designations, preferences, rights, powers and duties as shall be fixed by the General Partner in its sole discretion. Pursuant to Section 13.1 of the partnership agreement, the General Partner may, without the approval of any partner, any unitholder or any other person, amend any provision of the partnership agreement to reflect any amendment expressly permitted in the partnership agreement to be made by the General Partner acting along, therefore including the creation of a new class of Company securities with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common units.

We do not expect to pay dividends in the foreseeable future.

We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their common units, and unitholders may be unable to sell their units on favorable terms. We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our common units.