Core Viewpoint - 22nd Century Group, Inc. is advancing the fight against smoking-related health harms through its VLN reduced nicotine content products, which have been authorized by the FDA as a Modified Risk Tobacco Product [1][4]. Group 1: Product and Market Impact - The VLN reduced nicotine content cigarettes have been shown to lower daily nicotine consumption by 40% over 12 weeks in a study with over 400 participants, indicating their potential to reduce smoking rates and increase quit attempts [2]. - Approximately 28.8 million smokers in the U.S. contribute to over $600 billion in annual healthcare costs related to tobacco harm, highlighting the significant market opportunity for VLN products [2]. - VLN cigarettes contain 95% less nicotine than conventional cigarettes, providing a non-addictive alternative for smokers [3][10]. Group 2: Regulatory and Strategic Developments - The FDA originally authorized VLN combustible cigarettes in December 2021 for a five-year period, with a renewal application filed for December 2026 [3]. - The company is expanding its range of VLN branded products and tobacco plant varieties to offer smokers more low-nicotine alternatives, aligning with the FDA's proposed guidelines for low nicotine [5]. - The renewal process is part of the company's ongoing research and development efforts to advance reduced nicotine content in tobacco and introduce additional VLN products [5]. Group 3: Company Vision and Leadership - The CEO of 22nd Century Group emphasized that the FDA's MRTP authorization for VLN cigarettes represents a forward-thinking approach to reducing smoking-related health harms, focusing on behavioral and social aspects of nicotine addiction [4]. - The company aims to empower smokers to take control of their nicotine consumption through its innovative VLN products, positioning itself as a leader in the tobacco harm reduction movement [8][9].

Summary of 22nd Century Group Conference Call Company Overview - **Company**: 22nd Century Group (Ticker: XXII) - **Industry**: Tobacco harm reduction - **Focus**: Pioneering nicotine harm reduction products, specifically VLN (Very Low Nicotine) branded products aimed at reducing nicotine addiction among smokers [1][2] Core Points and Arguments - **Transition Phase**: The company is moving from a debt-laden turnaround phase to a product launch and growth phase, indicating a positive shift in business strategy [2] - **Nicotine Epidemic**: The CEO highlighted a global nicotine epidemic, comparing its scale to the COVID pandemic, emphasizing the need for effective nicotine reduction solutions [2][4] - **Product Offering**: The VLN cigarette is presented as a solution to nicotine addiction, allowing smokers to reduce their nicotine intake while maintaining the smoking ritual [4][6] - **Target Market**: The company targets the 70% of the 28.8 million U.S. smokers who wish to quit, equating to approximately 20.5 million potential customers [5][8] - **Unique Selling Proposition**: Unlike traditional nicotine replacement therapies (NRTs), VLN products allow smokers to adjust their nicotine consumption without losing the smoking experience, which is crucial for habit change [6][8] Business Developments - **Inventory and Distribution**: Initial store inventories are being loaded, with some stores already reordering products. The company is also exploring cross-marketing opportunities [7][8] - **Financial Position**: The company is now debt-free and has received a $9.5 million insurance settlement, providing sufficient cash to sustain operations into 2026 [9][12] - **Growth Strategy**: The focus is on moving away from low-margin contract manufacturing operations to more profitable branded products [9] International Expansion - **South Korea Market**: Plans for a rollout in South Korea are currently on hold until the U.S. market is fully optimized [10] Marketing and Customer Acquisition - **Cost Efficiency**: Customer acquisition costs are low, primarily involving retail placement and minimal marketing expenses. The company is implementing promotional strategies to encourage product trials [13] Future Outlook - **Break-even Target**: The company aims to break even in the first half of 2026, with expectations of covering cash flow by that time [12] Additional Notes - **Website Functionality**: The company’s website (tryvln.com) is operational and provides updated information on product availability [11] - **CEO's Closing Remarks**: The CEO expressed optimism for the future and gratitude towards shareholders, indicating a positive outlook for 2026 [15]

Core Insights - 22nd Century Group, Inc. is a leader in the tobacco harm reduction movement, focusing on reducing nicotine addiction through innovative products [3][4]. Company Announcement - The CEO, Larry Firestone, will present at the Emerging Growth Virtual Investor Conference on December 10, 2025, at 3:55 PM Eastern Time [1]. Technology and Products - The company has developed proprietary non-GMO reduced nicotine tobacco plants that contain 95% less nicotine than traditional tobacco [4]. - The flagship product, VLN cigarette, is designed to provide traditional smokers with a familiar alternative while significantly reducing nicotine consumption [5]. - VLN cigarettes are the only low nicotine combustible cigarettes authorized by the FDA in the United States [6]. Investor Engagement - Investors can register for the conference online and submit questions in advance for consideration during the event [2]. - An archived webcast will be available for those unable to attend live [2]. Contact Information - Investor relations contact is Matt Kreps, reachable at investorrelations@xxiicentury.com or by phone at 214-597-8200 [8][9].

Core Insights - Emerging Growth Research released a quarterly update report on 22nd Century Group, highlighting a cash-rich balance sheet, full debt repayment, and a $9.5 million insurance settlement, along with a stabilized Contract Manufacturing Operations (CMO) [2][6] Financial Performance - 22nd Century Group fully repaid all remaining debt and settled a $9.5 million insurance-related legal case, resulting in a strengthened net cash position [6] - Q3 2025 revenue was $4.0 million, indicating stabilization after restructuring and the impact of a 2024 CMO price hike [6] - Gross profit declined to $(1.1) million due to increased excise taxes, despite improvements in per-unit margins [6] - Operating loss improved year-over-year to $(3.2) million as SG&A expenses were reduced [6] - Adjusted EBITDA remained stable at $(2.6) million compared to previous quarters [6] - Net cash increased to $14.0 million in Q3 2025, up from $(0.8) million in Q2 2025 [6] Strategic Outlook - Management is confident in achieving EBITDA breakeven by Q3 2026, driven by a higher-margin CMO mix and expansion of VLN® products [6] - The rollout of VLN® continues, with state registrations covering nearly all U.S. states and initial shipments underway [6]

Financial Data and Key Metrics Changes - The company reported a net revenue of $4 million in Q3 2025, a slight decrease from $4.1 million in Q2 2025, with total cartons sold dropping to 517,000 from 779,000 [34] - Gross profit was a loss of $1.1 million in Q3 2025, compared to a loss of $0.6 million in Q2 2025, reflecting lower volume and a transition to higher margin products [34] - The company ended the quarter with $4.8 million in cash and a $9.5 million receivable from an insurance recovery, increasing total assets to $32.4 million from $21.7 million at the end of 2024 [33] Business Line Data and Key Metrics Changes - The company is transitioning from a low-margin CMO business to higher-margin branded products, with shipments of newly branded VLN and partner VLN products totaling approximately 6,000 cartons year-to-date [30] - Natural style cigarettes contributed an additional 14,000 cartons to the total shipments, indicating a shift in product mix towards higher-margin offerings [30] Market Data and Key Metrics Changes - VLN and partner VLN products are now available in approximately 1,500 stores across 21 states, with authorization in about 40 states, which is crucial for expanding distribution [31] - The company expects to see rate of sale metrics in early 2026, which will provide insights into marketing effectiveness and consumer adoption [31] Company Strategy and Development Direction - The company aims to support the FDA's low nicotine mandate by positioning its VLN products as a solution for tobacco harm reduction, emphasizing the importance of both full nicotine and low nicotine offerings [22][26] - Future plans include licensing arrangements to allow other tobacco companies to adopt VLN products, thereby expanding market reach and supporting public health initiatives [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving EBITDA break-even by the second quarter of 2026, despite current challenges in sales metrics [39] - The company has successfully restructured its operations and is now focused on growth, with a well-funded balance sheet to support future initiatives [27][28] Other Important Information - The company has become debt-free and improved its balance sheet significantly, allowing for growth capital to be directed towards advancing VLN products in the market [27] - The management team has entered into customary employment agreements with key executives to support the company's growth trajectory [38] Q&A Session Summary Question: What are the plans for the $14 million in cash going forward? - The company plans to use the cash for operations, advancing VLN in the market, and initiating R&D and CapEx in early 2026 [36] Question: What is the current share equivalent of outstanding warrants? - There are just under 7 million shares outstanding, with a fully diluted basis of 23.7 million shares [37] Question: What is the impact of the Needham sales agreement on SG&A going forward? - The sales agent agreement will not change the current G&A level, as it is just formalizing terms for executive officers [37] Question: Is the company still targeting EBITDA break-even by the second quarter of 2026? - The company is still driving for that target and remains optimistic about achieving it [39]

Financial Performance - Net revenues for Q3 2025 were $4,011, a decrease of 32.5% from $5,946 in Q3 2024, primarily due to shifts in product mix [149]. - Gross profit for Q3 2025 was a loss of $1,059, compared to a loss of $588 in the prior year period, reflecting an increase of 80.1% in gross loss [150]. - Total operating expenses for Q3 2025 decreased to $2,153, down 22.8% from $2,789 in Q3 2024, driven by lower sales, general and administrative expenses [149]. - Operating loss from continuing operations for Q3 2025 was $3,212, a slight improvement from a loss of $3,377 in Q3 2024 [150]. - Net loss from continuing operations in Q3 2025 was $3,763, with a basic and diluted loss per share of $1.06, compared to a net loss of $3,585 and a loss per share of $848.84 in Q3 2024 [150]. - For the nine months ended September 30, 2025, net revenues were $14,050, a decrease of 31.0% from $20,361 in the same period of 2024 [151]. - Operating loss as a percentage of net revenues for Q3 2025 was 80.1%, compared to 56.8% in Q3 2024 [150]. - Total product line revenues for the nine months ended September 30, 2025, decreased to $14,050 million, a decline of $6,311 million compared to the prior year [153]. - Filtered cigars net revenues for the nine-month period ended September 30, 2025, decreased to $3,704 million, reflecting lower volumes and a shift towards higher margin products [153]. - Gross loss for the third quarter of 2025 was $(1,059) million, representing 26.4% of net revenues, compared to a gross loss of $(588) million or 9.9% in the prior year [154]. Cash Flow and Liquidity - The company had $4,846 in cash and cash equivalents as of September 30, 2025 [149]. - Cash and cash equivalents increased to $4,846 million as of September 30, 2025, compared to $4,422 million at December 31, 2024 [165]. - Working capital from continuing operations increased to $12,711 million as of September 30, 2025, up from $1,790 million at December 31, 2024, an increase of $10,921 million [166]. - The company incurred negative cash flow from operations of $(10,472) million for the nine months ended September 30, 2025, compared to $(9,947) million in the prior year [168]. - Cash provided by financing activities decreased to $10,746 million for the nine months ended September 30, 2025, down from $13,349 million in the prior year [171]. Expenses and Cost Management - Research and development expenses for Q3 2025 were $193, down 19.6% from $240 in the prior year period [150]. - SG&A expenses decreased by $698 million for the three months ended September 30, 2025, and by $2,048 million for the nine months ended September 30, 2025, primarily due to headcount reductions [155]. Business Outlook and Risks - The company expects to incur additional losses until it can generate significant revenue and profit in its tobacco business, raising substantial doubt about its ability to continue as a going concern [163]. - There have been no material changes to the information set forth in the Annual Report on Form 10-K for the year ended December 31, 2024, indicating stability in financial reporting [179]. - The company evaluates new accounting pronouncements to assess their potential impact on financial statements, ensuring compliance with accounting standards [180]. - There are no off-balance sheet arrangements as defined by Regulation S-K, indicating a straightforward financial structure [181]. - The company has not reported any material changes regarding market risk disclosures since the last annual report, suggesting consistent risk management practices [182]. Warrants and Shareholder Information - As of October 31, 2025, the company has 11,422,790 warrants outstanding, with the largest portion being 9,460,661 August 2025 warrants at an exercise price of $1.97, expiring on August 27, 2030 [176]. - The amended October 2024 PIPE warrants total 1,391,765, with no specified exercise price, expiring on July 15, 2030 [176]. - The company has implemented anti-dilution protection provisions for its warrants, allowing for cashless exercise options that could result in the issuance of two shares for no additional consideration [177]. Sales Performance - For the third quarter of 2025, cigarette volume increased to 345 cartons, reflecting additional CMO cigarette customers, while total cigarette sales decreased due to contractual price increases [153].

Stock Issuance and Sales - The Company plans to issue and sell up to an aggregate of $25.0 million of common stock through Needham & Company, LLC as the Sales Agent[2] - The issuance will be conducted under the effective Registration Statement filed with the SEC on March 10, 2023, which was declared effective on March 31, 2023[3] - The Company must comply with limitations on the number or dollar amount of shares sold, which includes the Maximum Amount defined in the agreement[2] - The Sales Agent will use commercially reasonable efforts to sell the Placement Shares at market prices prevailing at the time of sale[5] - Settlement for sales of Placement Shares will occur on the first Trading Day following the date of sale, with Net Proceeds calculated after deducting the Sales Agent's commission and other fees[8] - The Company is responsible for ensuring compliance with the limitations on the number or dollar amount of shares sold under this Agreement[12] - The Sales Agent will provide written confirmation of sales, including the number of shares sold and the average price, by the next Trading Day[5] - The Company may suspend sales if it possesses material non-public information, and no sales will occur during such periods[7] - The Company must ensure that the total gross sales proceeds do not exceed the Maximum Amount or the amount authorized by its board of directors[12] - The Sales Agent is not obligated to purchase Placement Shares on a principal basis unless otherwise agreed in a separate written agreement[5] Compliance and Regulatory Matters - The Company has filed a Registration Statement with the Commission, which has been declared effective prior to the issuance of any Placement Notice[13] - The aggregate market value of the outstanding voting and non-voting common equity held by non-affiliates was equal to or greater than $75 million within 60 days of the closing price[25] - The financial statements included in the Registration Statement present fairly the financial condition of the Company and its consolidated Subsidiaries in accordance with generally accepted accounting principles[26] - The Company has not received any notice from the Commission objecting to the use of the shelf registration statement form[13] - The Company and its Subsidiaries are duly organized and validly existing, with full power and authority to conduct their business[22] - The Placement Shares have been duly authorized and, when issued, will be validly issued, fully paid, and nonassessable[23] - The Company is not an "ineligible issuer" as defined in Rule 405 of the Rules and Regulations[19] - The Company has not distributed any offering material other than the Registration Statement and the Prospectus prior to the completion of the distribution of the Placement Shares[13] - The Company meets the requirements for the use of Form S-3 under the Act, including compliance with General Instruction I.B.1[25] Financial Condition and Operations - The Company has authorized, issued, and outstanding capital stock as set forth in its most recent Quarterly Report on Form 10-Q[23] - The Company has not experienced any Material Adverse Effect or material adverse change in its business or financial condition since the dates provided in the Registration Statement and the Prospectus[28] - There has been no change in the Company's capitalization or long-term indebtedness, except for routine stock option exercises and warrant exercises[28] - The Company and its Subsidiaries have not incurred any material liabilities or obligations outside the ordinary course of business[28] - The Common Stock is registered under Section 12(b) of the Exchange Act and is currently listed on the Exchange under the trading symbol "XXII"[42] Intellectual Property and Assets - The Company and its Subsidiaries own or have adequate rights to use all necessary Intellectual Property to conduct their business as currently conducted[43] - The Company and its Subsidiaries have good and marketable title to all properties and assets described in the Registration Statement and the Prospectus[37] - The Company and its Subsidiaries possess all necessary authorizations and licenses to conduct their business, with no pending proceedings that could materially affect these authorizations[47] Legal and Compliance Issues - The Company has filed all required tax returns and paid all taxes and assessments due, with no known tax deficiencies that could have a Material Adverse Effect[46] - There are no pending or threatened legal actions that could have a Material Adverse Effect on the Company or its Subsidiaries[32] - The Company is in compliance with the Sarbanes-Oxley Act and has made all required certifications regarding its financial reporting[50] - The Company's internal accounting controls are effective, with no material weaknesses identified since the last audited financial statements[52] - The Company has established effective disclosure controls and procedures, ensuring material information is communicated to its principal officers[53] - The Company complies with all applicable environmental laws and has received necessary permits for its operations[58] - The Company has policies in place to ensure compliance with privacy and data protection laws regarding customer data[64] - There are no material labor disputes affecting the Company or its Subsidiaries[62] Insurance and Liabilities - The Company maintains adequate insurance coverage for its business operations, including protection against theft and damage[48] - The Company has not incurred any liabilities related to broker's fees in connection with the execution of agreements[49] - The Company is not subject to any sanctions and has policies to ensure compliance with relevant sanctions laws[55] Reporting and Communication - The Company will provide electronic copies of the Registration Statement, Prospectus, and any amendments or supplements to the Sales Agent promptly and without charge[71] - The Company will comply with all requirements imposed by the Act and the Exchange Act to permit the sales of the Placement Shares[73] - The Company will maintain accurate books and records reflecting its assets and ensure internal accounting controls are in place[83] - The Company will not sell or offer any shares of Common Stock outside of the Placement Shares during specified periods[84] - The Company will use the Net Proceeds from the Placement Shares as outlined in the Prospectus under "Use of Proceeds"[83] - The Company will file all necessary statements and reports to maintain registration or qualification for the Placement Shares in applicable jurisdictions[75] - The Company will provide annual reports and quarterly financial information to its stockholders as required[77] - The Company will make an earning statement available to holders of its securities within 15 months after the end of the current fiscal quarter[78] Sales Agent Agreement - The Company will use commercially reasonable efforts to list the Placement Shares on the Exchange prior to the first Placement Notice[86] - The Company will promptly notify the Sales Agent of any information that would materially affect any required documents[87] - The Company will cooperate with reasonable due diligence reviews conducted by the Sales Agent, including providing information and access to senior corporate officers[88] - The Company agrees to file a prospectus supplement detailing the number of Placement Shares sold, Net Proceeds, and compensation to the Sales Agent[89] - The Company must deliver a certificate to the Sales Agent on Representation Dates, confirming the accuracy of the Registration Statement and Prospectus[91] - Comfort Letters from the Accountant must be provided to the Sales Agent within five Trading Days of each Representation Date[93] - If any Placement Shares remain unsold by the third anniversary of the initial effective date, the Company will file a new shelf registration statement[95] - The Company must notify the Sales Agent if it is no longer eligible to use Form S-3 and file a new prospectus supplement within two Business Days[96] - The Sales Agent's obligations are contingent upon the effectiveness of the Registration Statement and the absence of any stop orders or adverse changes[98] - The Company must ensure that all representations and warranties are true and correct, and all covenants are fulfilled[104] - The Sales Agent must receive required legal opinions and Comfort Letters on or before specified dates[106][107] - The Company must provide a certificate of its corporate documents and resolutions to the Sales Agent prior to the first Placement Notice[108] Indemnification and Termination - The Company will indemnify the Sales Agent against any losses, claims, liabilities, and expenses arising from untrue statements or omissions in the Registration Statement or Prospectus[116] - The Sales Agent will indemnify the Company for losses arising from untrue statements or omissions made in reliance on Sales Agent Information[117] - The Company agrees to reimburse the Sales Agent for reasonable legal and other expenses incurred in connection with claims or investigations[124] - The Sales Agent may terminate the Agreement if there is a Material Adverse Effect or if trading in the Company's securities is suspended[125] - The Company has the right to terminate the Agreement with 10 days' notice without liability to the Sales Agent[126] - The Company has agreed to pay the Sales Agent a commission of 3% on the aggregate gross proceeds from each sale of Placement Shares[157] - The Sales Agent has the right to terminate the Agreement with a 10-day prior notice without liability to any party, except for certain provisions that remain in effect[127] - The Agreement will remain in effect unless terminated by mutual agreement or under specified sections, ensuring certain provisions continue to apply[128] - The Company acknowledges that the Sales Agent is acting solely as an agent in the public offering of Placement Shares and does not assume any fiduciary responsibility[131] - The Company has consulted its own advisors and understands the terms, risks, and conditions of the transactions contemplated by the Agreement[131] - The Agreement constitutes the entire agreement between the parties and supersedes all prior agreements regarding the subject matter[137] - The Sales Agent may assign its rights and obligations under the Agreement to an affiliate without the Company's consent[135] - All share-related numbers in the Agreement will be adjusted for any stock splits or similar events affecting the Common Stock[136] - The Agreement is governed by the laws of the State of New York, and any disputes will be adjudicated in New York City[138][144] - The Company must provide written notice for any changes in address for notices under the Agreement[132] Additional Notes - The Company has not experienced any material adverse change in its business or financial condition since the date of the Prospectus[167] - The maximum amount of Placement Shares authorized for sale has been duly approved by the Company's board of directors[168] - The Company does not possess any material non-public information[168]

Core Insights - The company has achieved significant balance sheet improvement, becoming debt-free and receiving $9.5 million in non-dilutive cash from an insurance settlement [4][6][11] - The third quarter marks a strategic pivot towards a branded products strategy, with an increasing store count and new distribution agreements for VLN® products [2][4] - The company aims to lead the Tobacco Harm Reduction Movement by offering low nicotine products, aligning with FDA mandates [3][4] Financial Performance - Net revenues for Q3 2025 decreased slightly to $4.0 million from $4.1 million in Q2 2025, while gross profit showed a loss of $(1.1) million compared to $(0.6) million [6][12] - Operating expenses decreased to $2.2 million from $2.3 million, but operating loss increased to $3.2 million from $3.0 million [6][12] - Consolidated net income increased to $5.5 million, reflecting the $9.5 million insurance settlement, compared to a net loss of $3.4 million in the previous quarter [6][12] Product Line and Market Expansion - Cigarette net revenues were $2.5 million, down from $2.7 million, while VLN® cigarette revenues increased by $0.2 million due to initial stocking orders [7][12] - The company has expanded market access for VLN® and Partner VLN® brand launches, with state authorizations now including 45 states for 22nd Century VLN® and 38 states for Smoker Friendly VLN® [11][12] - The company is advancing plans for new product formats and international offerings, including a 100mm format for VLN® cigarettes [11][12] Balance Sheet and Cash Position - The company ended Q3 2025 with cash of $4.8 million and no outstanding debt, having extinguished $3.9 million of senior secured debt [6][12] - The recent insurance settlement has significantly improved the company's cash position, providing a solid foundation for future growth [4][6][12]

Core Insights - 22nd Century Group Inc. shares surged 39.07% to $2.10 after receiving a $9.5 million insurance settlement related to a business interruption claim from the November 2022 Grass Valley incident [1] Financial Position - CEO Larry Firestone stated that the settlement marks a transition for the company from a cleanup phase to a growth phase, enhancing its balance sheet with significant cash resources to support strategic execution [2] Product Focus - The company is dedicated to expanding its core business, particularly through its VLN product line, which aims to strengthen its position in tobacco harm reduction [2] - 22nd Century Group utilizes proprietary VLN tobacco, which contains 95% less nicotine than traditional tobacco, in its VLN and Partner VLN reduced-nicotine cigarettes [3] Regulatory Compliance - The VLN products are the first and only combusted tobacco products to comply with the FDA's proposed standard for nicotine yield in cigarettes [4] Earnings and Stock Performance - In the second quarter, the company reported a loss of $13.16 per share, significantly higher than the estimated loss of $6.21 per share [5] - The company is set to report third-quarter earnings on November 4 [5] - The stock has fluctuated between $1.43 and $394.02 over the past year, with a current market capitalization of $5.71 million [5] - At the close of trading on Tuesday, shares fell 0.66% to $1.51 [5] Stock Trends - Benzinga Edge Stock Rankings indicate that XXII is trending downward across all time frames [6]

Core Insights - 22nd Century Group, Inc. has received $9.5 million in cash from a settlement agreement with its insurer related to business interruption from the Grass Valley incident in November 2022 [1][2] - The settlement marks a transition for the company from a cleanup phase to a growth phase, providing meaningful cash resources to execute its strategy [2] - The company aims to expand its position in the tobacco harm reduction movement with its VLN products, which contain 95% less nicotine [2][4] Company Overview - 22nd Century Group is focused on pioneering the tobacco harm reduction movement, enabling smokers to control their nicotine consumption [3] - The company has developed proprietary non-GMO reduced nicotine tobacco plants using patented technologies, resulting in a product with 95% less nicotine than traditional tobacco [4] Product Information - The flagship product, VLNcigarette, is designed to provide traditional cigarette smokers with a familiar alternative that helps them manage their nicotine intake [5] - VLNcigarettes are the only low nicotine combustible cigarettes authorized by the FDA in the United States [6]