Summary of 22nd Century Group (XXII) Conference Call - August 20, 2025 Company Overview - **Company Name**: 22nd Century Group Inc. - **Ticker Symbol**: XXII - **Industry**: Tobacco, specifically focused on nicotine harm reduction - **Market Position**: Leader in the tobacco harm reduction movement since 1998, aligned with FDA's low nicotine mandate [1][2][3] Key Industry Insights - **Tobacco Market Size**: - Global market: $1.1 trillion in annual sales, with $873 billion from cigarette sales [4] - U.S. market: $109 billion in annual sales, with $83 billion from cigarette sales [4] - **Smoker Statistics**: - 1.1 billion smokers globally, with 28.8 million in the U.S. [4] - 8 million annual deaths globally due to smoking-related health conditions [4] - U.S. smoking-related deaths: approximately 480,000 annually [4] - **Market Growth**: U.S. tobacco industry projected to grow to $180 billion by 2030, representing an 8.15% CAGR [5] Core Company Strategies - **Product Focus**: - Emphasis on low nicotine (VLN) products, which are positioned to compete with traditional combustible cigarettes and other nicotine delivery systems [11][12] - Development of a diverse portfolio including VLN cigarettes, moist snuff, and other tobacco products [26] - **Regulatory Alignment**: - Fully compliant with FDA's proposed rule for low nicotine content (0.7 mg/g), which is expected to significantly reduce nicotine addiction [14][42] - **Research and Development**: - Ongoing research into non-GMO low nicotine tobacco and its potential to lower harmful nitrosamines [16][30] - Independent studies showing that 40% of participants reduced their smoking habits using VLN products [17] Financial Strategy and Performance - **Shift in Business Model**: - Transitioning away from high-volume, low-margin contract manufacturing to focus on branded products [25][31] - Anticipated lower revenues in the short term as the company prioritizes gross profit and margins [25] - **Future Financial Goals**: - Targeting cash flow breakeven by 2026 [48] - Maintaining operating expenses around $2 million per quarter [31] Market Launch and Distribution - **Product Launch**: - VLN products are set to launch in 2,000 retail outlets across 30 states, with plans for nationwide distribution [27][39] - Marketing strategies include extensive consumer communication and in-store promotions [22] - **Retail Partnerships**: - Engaging with major retailers for broader distribution once state approvals are secured [39][28] Additional Insights - **Public Health Concerns**: - Addressing issues of nicotine addiction and the impact of smoking on public health, particularly among youth [6][8] - **Industry Dynamics**: - The company positions itself as a leader in the transition towards reduced nicotine products, similar to the shift from leaded to unleaded gasoline [47] - **Government Support**: - No direct government funding anticipated; the company relies on independent research to validate its products [37][38] Conclusion - **Outlook**: - The company is optimistic about its future, focusing on growth in the VLN segment and aligning with regulatory changes to capture market share [32][50]

Core Viewpoint - 22nd Century Group, Inc. is leading the tobacco harm reduction movement with its VLN products, which are designed to significantly reduce nicotine consumption and help smokers manage their addiction [1][14]. Group 1: Product Development and Market Adoption - The company has successfully launched VLN cigarettes, which contain 95% less nicotine than traditional cigarettes, and have been proven to reduce nicotine consumption [14][15]. - Early adoption of VLN products has been seen with partner brands Smoker Friendly and Pinnacle, with initial stocking orders shipped in August 2025 [2][7]. - The company is expanding its product offerings to include 100mm cigarettes and international versions tailored to consumer preferences [9]. Group 2: Regulatory Landscape - The FDA has proposed a new Tobacco Product Standard for Nicotine Yield, setting a maximum nicotine content of 0.7mg/g, which is supported by clinical documentation and real-world testing of VLN products [4][5]. - The proposed regulation has garnered strong support from public health advocates, emphasizing the importance of reducing nicotine levels in tobacco products [6]. Group 3: Research and Development - Ongoing research is investigating the link between non-GMO low nicotine tobacco genetics and lower levels of harmful Tobacco-Specific Nitrosamines (TSNAs), which are potent carcinogens [11]. - The company is committed to expanding its intellectual property portfolio in low nicotine genetics, enhancing its leadership in tobacco harm reduction [12]. Group 4: Future Outlook - The company aims to continue its mission of providing low nicotine technology and products that can improve public health and potentially save lives [13].

Core Viewpoint - 22nd Century Group, Inc. is leading the nicotine harm reduction movement in the tobacco industry, focusing on providing smokers with alternatives to manage their nicotine consumption effectively [3][4]. Group 1: Company Overview - 22nd Century Group, Inc. has been at the forefront of combating the harms of smoking due to nicotine addiction for 27 years [1]. - The company is set to present at the Emerging Growth Virtual Investor Conference on August 20, 2025, at 1:10 PM Eastern Time [1]. - The flagship product, VLN cigarettes, contains 95% less nicotine than traditional cigarettes, allowing smokers to significantly reduce their nicotine intake [4]. Group 2: Product Details - VLN cigarettes are designed to provide an authentic smoking experience while enabling smokers to take control of their nicotine consumption [4]. - The company utilizes proprietary non-GMO reduced nicotine tobacco blends, supported by patented technologies that regulate nicotine biosynthesis in tobacco plants [5]. - The extensive patent portfolio ensures that 22nd Century Group holds the only low nicotine combustible cigarette in the United States and key international markets [5].

Financial Data and Key Metrics Changes - Net revenue for Q2 2025 was $4 million, a decrease from $6 million in Q1 2025, with total cartons sold increasing to 779,000 from 478,000 in the previous quarter [33] - Gross margin remained consistent at a loss of $600,000, with total operating expenses rising to $2.3 million from $2 million in the previous quarter [34] - Net loss from continuing operations was approximately $3.3 million, consistent with Q1 2025, while adjusted EBITDA was a loss of $2.6 million compared to a loss of $2.3 million in Q1 2025 [35] Business Line Data and Key Metrics Changes - The company is shifting focus from low-margin CMO business to high-margin branded products, which is expected to improve gross margins despite a potential decline in top-line revenue in the near term [23][31] - The introduction of VLN products is anticipated to drive revenue growth and gross margin expansion, although initial financial results may not reflect this until Q3 2025 [31] Market Data and Key Metrics Changes - The company has begun shipping Pinnacle VLN products in August 2025, with initial stocking orders exceeding 3,000 cartons, indicating a positive market entry for the new product line [32] - The FDA's proposed low nicotine mandate is expected to create a competitive environment for VLN products, positioning the company favorably against traditional combustible cigarettes [24][28] Company Strategy and Development Direction - The company aims to lead the tobacco harm reduction movement by leveraging its proprietary low nicotine tobacco technology, which is compliant with the FDA's new standards [25][26] - A strategic shift towards higher-margin products is underway, with plans to phase out low-margin CMO products to enhance profitability [23][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in achieving profitability due to delays in launching high-margin products, projecting a timeline into 2026 for breakeven on EBITDA [32] - The company is optimistic about the market potential for VLN products, emphasizing the importance of scaling and rate of sale as key metrics for future success [49] Other Important Information - The company is actively pursuing a lawsuit against Dorchester Insurance Company for $9 million in business interruption insurance, with a trial date set for November 2025 [35] - The company has reduced debt by approximately $1 million and improved working capital by tightening inventory [33] Q&A Session Summary Question: When might the company achieve breakeven on a quarterly basis for EBITDA? - Management indicated that they are looking at the first half of 2026, with a focus on the timing of branded product launches and sales rates to determine if breakeven can be achieved in Q1 or Q2 [41] Question: Is the current cash position sufficient to reach breakeven, or will additional share issuance be necessary? - Management noted that while the current cash of $3 million is being managed carefully, there may be a need for additional fundraising, though it would be less than previous amounts [42][43] Question: What are the plans regarding the outstanding debt rolling over in March 2026? - Management is in discussions with creditors about paying off the debt and plans to allocate part of any new fundraising towards extinguishing it [44] Question: Is there a chance that the MRTP for VLN would not be renewed? - Management expressed confidence that the MRTP would be renewed, given compliance with the FDA's recent mandates [45]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From ________ to ________ Commission File Number: 001-36338 22nd Century Group, Inc. (Exact name of registrant as specified in its charter) Nevada 98-0468420 (S ...

Financial Performance - Net revenues for Q2 2025 decreased to $4.1 million, down 48.6% from $7.9 million in Q2 2024[11] - Total product line revenues for the first half of 2025 were $10.0 million, down 30.4% from $14.4 million in the same period of 2024[11] - Total revenues for Q2 2025 were $4,083, a decrease of 48.6% compared to $7,947 in Q2 2024[27] - Gross loss for Q2 2025 was $635, compared to a gross profit of $570 in Q2 2024, indicating a shift in profitability[27] - Net loss from continuing operations for Q2 2025 was $3,296, compared to a net loss of $2,214 in Q2 2024, reflecting a worsening financial position[27] - Adjusted EBITDA for Q2 2025 was $(2,640), slightly worse than $(2,589) in Q2 2024[29] Operating Loss and Debt Management - Operating loss increased to $3.0 million, compared to $2.6 million in the previous quarter, reflecting a 45.6% increase[6] - Adjusted EBITDA loss was $2.6 million, compared to a loss of $2.3 million in the previous quarter[6] - Operating loss from continuing operations for the first half of 2025 was $5,552, an improvement from a loss of $6,481 in the same period of 2024[27] - The company reduced total debt by $1.0 million, bringing total debt to $3.8 million[6] - Net total debt (Non-GAAP) as of June 30, 2025, was $707, significantly reduced from $3,268 at the end of 2024[30] Product Development and Market Expansion - VLN® product state authorizations expanded significantly, with 44 states for VLN® products and 30 states for partner VLN® products[6] - The company announced the launch of Pinnacle VLN® products in almost 1,000 stores across 12 states, with sales expected to begin on September 1, 2025[6] - The company is advancing a 100mm VLN® reduced nicotine content cigarette prototype, targeting FDA submission in Q4 2025[6] Asset and Liability Management - Total current assets increased to $11,868 as of June 30, 2025, up from $11,522 at the end of 2024[26] - Total liabilities decreased to $16,753 as of June 30, 2025, down from $17,661 at the end of 2024[26] - Cash and cash equivalents decreased to $3,083 as of June 30, 2025, from $4,422 at the end of 2024[26] Strategic Focus - The company is focusing on profitable growth with its branded products leading the way, supported by increased distribution and partner brands[3]

Core Insights - 22nd Century Group, Inc. is expanding its VLN product line with new partner brands and increased state authorizations, positioning itself as a leader in tobacco harm reduction [1][3][2] - The company reported a decrease in net revenues for Q2 2025, with a focus on profitable growth through its branded products [5][9] Business Highlights - The company commenced shipments of Pinnacle VLN products to nearly 1,000 locations, with additional locations expected [1][5] - State authorizations for VLN products have significantly increased, with 44 states now allowing sales of VLN products and 30 states for partner VLN products [5][10] - The company is working on developing additional tobacco products to cater to users seeking lower nicotine options [3][10] Financial Performance - Net revenues for Q2 2025 were $4.1 million, down 48.6% from $7.9 million in Q2 2024 [9] - Operating loss increased to $3.0 million compared to $2.6 million in the previous quarter, while net loss remained stable at $3.3 million [5][9] - Adjusted EBITDA loss was $2.6 million, slightly worse than the loss of $2.3 million in the previous quarter [5][9] Product Line Developments - Cigarette net revenues decreased to $2.7 million from $5.0 million in Q1 2025, despite an increase in carton volumes to 594 thousand [10] - Filtered cigar net revenues increased to $1.3 million, reflecting stabilized volume from new contracts [10] - The company announced new branding for its VLN products and two new partner brand VLN product families, with initial shipments expected in Q3 2025 [10][12] Balance Sheet Overview - Total debt was approximately $3.9 million at the end of Q2 2025, with net debt reduced to $0.7 million [7][9] - Cash reserves stood at approximately $3.1 million, down from $4.4 million at the end of 2024 [7][25]

Core Viewpoint - 22nd Century Group, Inc. is set to discuss its second quarter results for 2025 during a webcast on August 14, 2025, highlighting its ongoing efforts in nicotine harm reduction and the introduction of its VLN® cigarette product [1][2]. Company Overview - 22nd Century Group is a leader in the nicotine harm reduction movement within the tobacco industry, focusing on enabling smokers to manage their nicotine consumption [4]. - The company has developed the VLN® cigarette, which contains 95% less nicotine than traditional cigarettes, providing smokers with a familiar alternative to help reduce their nicotine intake [5]. Product Details - The VLN® cigarette is designed to allow consumers to make informed choices regarding their nicotine consumption, potentially avoiding addictive levels altogether [5]. - The proprietary reduced nicotine tobacco blends are created using patented technologies that regulate nicotine biosynthesis in tobacco plants, ensuring full flavor and high yield while maintaining low nicotine levels [6]. Webcast Information - The webcast will feature Larry Firestone, CEO, and Dan Otto, CFO, who will review financial results and discuss the company's progress and plans for 2025 [2][3]. - The live and archived webcast will be available on the company's Investor Relations website [3].

Core Insights - 22nd Century Group, Inc. has launched its new Pinnacle VLN® Gold and Pinnacle VLN® Menthol reduced nicotine content cigarettes, with initial shipments supporting a sales launch on September 1, 2025, at nearly 1,000 locations across 12 states for a top-5 U.S. convenience store chain [1][2] - The Pinnacle VLN® products represent a significant innovation in the tobacco industry, offering a 95% reduction in nicotine compared to traditional cigarettes, aligning with the FDA's proposed low nicotine mandate [2][4] - The company aims to expand the reach of its VLN® products to promote harm reduction in smoking habits, backed by extensive clinical research [4][6] Product Details - VLN® products utilize proprietary tobacco that has 95% reduced nicotine content, making them the first combusted tobacco products compliant with the FDA's proposed new Tobacco Product Standard for Nicotine Yield [3][7] - The VLN® cigarette is designed to provide traditional smokers with a familiar alternative that allows them to control their nicotine consumption [6][7] - The company holds a comprehensive patent portfolio, ensuring it remains the only provider of low nicotine combustible cigarettes in the U.S. and critical international markets [7] Market Strategy - The launch of Pinnacle VLN® products is expected to enhance brand loyalty among customers of the convenience store chain, reinforcing the company's position in the tobacco harm reduction movement [2][4] - The company plans to continue adding more states and locations for Pinnacle VLN® products, along with re-ordering inventory through the distributor [2]

Core Viewpoint - 22nd Century Group, Inc. is the only tobacco company authorized by the FDA to produce reduced nicotine content combustible cigarettes, specifically their VLN products, which align with the proposed FDA standard for nicotine yield [1][4]. Group 1: Public Health Impact - Smoking in the U.S. results in over 480,000 deaths and costs more than $600 billion annually, significantly reducing life expectancy by 10 years [2]. - The proposed FDA standard aims to limit nicotine in combusted tobacco products to less than 0.7mg per gram, addressing public health issues related to nicotine addiction [2][9]. Group 2: Industry Position and Product Offering - 22nd Century Group's VLN products contain 95% less nicotine than traditional cigarettes, providing smokers with a familiar alternative that allows for better control over nicotine consumption [6][7]. - The company has developed proprietary non-GMO reduced nicotine tobacco blends through patented technologies, ensuring they hold a unique position in the market with the only low nicotine combustible cigarette in the U.S. and key international markets [7]. Group 3: Support from Medical Community - The American Academy of Family Physicians, representing over 128,300 family physicians, supports the FDA's proposed nicotine yield standard, emphasizing its importance in combating tobacco dependence [3][9].