Financial Data and Key Metrics Changes - Net sales revenues for the year ended December 31, 2018, were $26,426,000, a 59.2% increase from $16,600,000 in 2017, marking the highest annual net sales revenue in the company's history [12][13] - Gross profit on product sales for 2018 was $899,000, a positive change of $1,607,000 from a gross loss of $708,000 in 2017, primarily due to increased factory utilization [14] - Net loss for 2018 was $7,967,000, or a negative $0.06 per share, compared to a net loss of $13,029,000, or a negative $0.13 per share in 2017, reflecting a decrease in net loss of 38.9% [16] - Adjusted EBITDA for 2018 was a negative $19,489,000, worsening from a negative $11,411,000 in 2017, primarily due to increased operating expenses [20] - Cash position at December 31, 2018, was $56.4 million, sufficient to cover normal monthly operating expenses of approximately $850,000 for several years [21] Business Line Data and Key Metrics Changes - The increase in net sales revenue was primarily attributed to additional revenue from contract manufacturing of cigarettes and filtered cigars [13] - Operating expenses for 2018 were $20,388,000, an increase of 90.5% from $10,703,000 in 2017, largely due to expenses related to the Modified Risk Tobacco Product (MRTP) application with the FDA [15] Market Data and Key Metrics Changes - The company is actively engaged in the hemp cannabis market, which has seen significant legislative changes, including the 2018 Farm Bill that legalized hemp [33][34] - The FDA's plan to reduce nicotine content in cigarettes is expected to complement the company's MRTP initiative, which seeks to commercialize very low nicotine content cigarettes [29][31] Company Strategy and Development Direction - The company aims to advance its MRTP application for very low nicotine content cigarettes while simultaneously increasing investment in hemp cannabis research and development [37][49] - The strategic vision includes forming partnerships and alliances to enhance its biotechnology efforts in the hemp cannabis industry [38][41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the FDA's commitment to nicotine reduction and the progress of the MRTP application, noting more than 20 conversations with the FDA in recent months [30][46] - The company believes it is well-positioned to capitalize on opportunities in the hemp cannabis market, with a strong cash position and ongoing research initiatives [49] Other Important Information - The company is facing frivolous class action lawsuits, which management believes are without merit and intends to defend vigorously [42][44] - The company has a unique competitive advantage in producing very low nicotine tobacco, which is distinct from other low nicotine products in the market [72] Q&A Session Summary Question: Can you provide clarity on expenses for 2019? - Management indicated that expenses related to the MRTP application would decrease significantly, with an anticipated $1.5 million in additional expenses for the application [52][56] Question: What are the top priorities for the company moving forward? - The top priorities include advancing the MRTP and PMTA applications and building out the hemp franchise [57][58] Question: How does the company plan to address the potential delays in the MRTP timeline? - Management expressed confidence in the cash position, stating there is more than four years of cash available, and noted that the MRTP process is progressing smoothly [65][66] Question: What is the competitive landscape in the hemp business? - Management acknowledged that while there are competitors, the company believes it has a significant head start in developing unique hemp strains with zero THC [95][96]

FORM 10-K x Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the fiscal year ended December 31, 2018 or ¨ Transitional Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 001-36338 22nd Century Group, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction (IRS Employer of incorporation) Identification No.) Nevada 98-0468420 85 ...