22nd Century Group, Inc. (NASDAQ:XXII) Q4 2023 Earnings Conference Call March 28, 2024 8:00 AM ET Company Participants Matt Kreps - IR Hugh Kinsman - CFO Larry Firestone - CEO Conference Call Participants Remington Smith - Alliance Global Partners Jim McIlree - Dawson James Operator Welcome to the 22nd Century Group Fourth Quarter 2023 Conference Call and Webcast. [Operator Instructions] It is now my pleasure to turn the floor over to Matt Kreps, Investor Relations for 22nd Century Group. Please begin. Matt ...

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report under Section 13 or 15(d) of the Securities Table of Contents UNITED STATES Exchange Act of 1934 For the fiscal year ended December 31, 2023 or ☐ Transition 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 Nevada 98-0468420 of incorporation) Identi ...

[Fourth Quarter 2023 Earnings Release](index=1&type=section&id=Fourth%20Quarter%202023%20Earnings%20Release) [Executive Summary & Business Outlook](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Outlook) CEO Larry Firestone outlines the company's rapid turnaround, targeting breakeven by Q1 2025 through reduced cash burn, contract manufacturing growth, and VLN® brand investment - Cash use significantly reduced from approximately **$15 million per quarter** in 2023 to less than **$4 million** projected for Q1 2024[2](index=2&type=chunk) - Primary short-term focuses include profitably growing contract manufacturing to cover operating expenses and investing in VLN® brand growth through increased sales and awareness[3](index=3&type=chunk) - The company aims to achieve breakeven by the **first quarter of 2025** through successful strategy execution[3](index=3&type=chunk) [Recent Business & Corporate Highlights](index=1&type=section&id=Recent%20Business%20%26%20Corporate%20Highlights) The company strategically exited hemp/cannabis to focus on tobacco harm reduction, expanded VLN® retail presence, reorganized contract manufacturing, appointed a new CEO, and announced a reverse stock split for Nasdaq compliance [Strategic & Operational Updates](index=1&type=section&id=Strategic%20%26%20Operational%20Updates) The company exited hemp/cannabis to focus on tobacco harm reduction and contract manufacturing, expanding VLN® retail presence to over 5,100 stores with renewed marketing efforts - Exited hemp/cannabis operations to fully focus on tobacco harm reduction and contract manufacturing[6](index=6&type=chunk) - VLN® retail presence expanded to over **5,100 stores** across **26 states**, up from approximately **1,100 stores** as of June 30, 2023[7](index=7&type=chunk) - Refocusing VLN® sales and marketing efforts to drive awareness and sales of its unique, FDA MRTP authorized harm reduction product[7](index=7&type=chunk) - Reorganized tobacco contract manufacturing to improve margins and operating performance, actively seeking additional opportunities[7](index=7&type=chunk) [Corporate Governance & Actions](index=1&type=section&id=Corporate%20Governance%20%26%20Actions) Larry Firestone was appointed Chairman and CEO in November 2023, a new board compensation program aims to save over **$1 million** annually, and a 1-for-16 reverse stock split was announced for Nasdaq compliance - Larry Firestone appointed Chairman and CEO on **November 29, 2023**[7](index=7&type=chunk) - Reduced board compensation program targets over **$1 million** in annual cost savings starting in 2024[7](index=7&type=chunk) - A **1-for-16 reverse stock split** effective **April 2, 2024**, aims to regain Nasdaq minimum bid price compliance[8](index=8&type=chunk) [Fourth Quarter & Full Year 2023 Financial Performance](index=1&type=section&id=Fourth%20Quarter%20%26%20Full%20Year%202023%20Financial%20Performance) Q4 2023 net revenues from continuing operations decreased to **$7.4 million**, with a **$(7.8) million** gross loss due to a **$(7.9) million** inventory write-down, while Adjusted EBITDA loss improved to **$(3.2) million** from **$(10.0) million** YoY [Statement of Operations Analysis](index=1&type=section&id=Statement%20of%20Operations%20Analysis) Q4 2023 revenue from continuing operations declined to **$7.4 million**, resulting in a **$(7.8) million** gross loss due to a **$(7.9) million** inventory write-down, with net loss at **$(22.1) million** Q4 2023 vs Q4 2022 Key Financials (Continuing Operations) | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Net Revenues | $7.4M | $10.0M | | Gross Profit (Loss) | $(7.8)M | $(0.1)M | | Operating Expenses | $6.4M | $10.2M | | Operating Loss | $(14.2)M | $(10.2)M | | Net Loss | $(22.1)M | $(11.1)M | | Net Loss per Share | $(0.66) | $(0.77) | - Q4 2023 gross profit included a one-time **$(7.9) million** charge for inventory write-down adjustments[7](index=7&type=chunk) [Balance Sheet and Liquidity Analysis](index=3&type=section&id=Balance%20Sheet%20and%20Liquidity%20Analysis) As of December 31, 2023, cash and cash equivalents were **$2.1 million**, total assets decreased to **$27.5 million** from **$114.7 million** due to divestitures, resulting in a **$(8.4) million** shareholders' deficit, with an additional **$2.3 million** raised subsequently Balance Sheet Summary (as of Dec 31, in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,058 | $2,205 | | Total assets | $27,503 | $114,651 | | Total liabilities | $35,914 | $18,676 | | Total shareholders' equity (deficit) | $(8,410) | $95,975 | - Held **$2.1 million** in cash and cash equivalents as of **December 31, 2023**[9](index=9&type=chunk) - Subsequently secured an additional **$2.3 million** in gross proceeds via a warrant exchange program and excess inventory sales[9](index=9&type=chunk) [Non-GAAP Financial Measures (EBITDA & Adjusted EBITDA)](index=1&type=section&id=Non-GAAP%20Financial%20Measures%20(EBITDA%20%26%20Adjusted%20EBITDA)) Q4 2023 Adjusted EBITDA loss improved to **$(3.2) million** from **$(10.0) million** YoY, driven by cost reductions despite a **$(14.9) million** EBITDA, with full-year Adjusted EBITDA loss at **$(30.7) million** Q4 EBITDA & Adjusted EBITDA Reconciliation (in thousands) | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Net loss from continuing operations | $(22,068) | $(11,114) | | EBITDA | $(14,928) | $(10,803) | | Inventory write-down | $7,927 | $0 | | Restructuring and impairment | $1,871 | $35 | | **Adjusted EBITDA** | **$(3,200)** | **$(9,900)** | - Adjusted EBITDA loss per share improved to **$(0.10)** in Q4 2023 from **$(0.69)** in Q4 2022[15](index=15&type=chunk)[21](index=21&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents the detailed, unaudited Condensed Consolidated Balance Sheets, Statements of Operations, and Non-GAAP reconciliations for 22nd Century Group, Inc [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of December 31, 2023, the balance sheet shows total assets of **$27.5 million** and total liabilities of **$35.9 million**, resulting in a **$(8.4) million** shareholders' deficit, primarily due to discontinued operations divestiture Condensed Consolidated Balance Sheets (in thousands) | | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **ASSETS** | | | | Total current assets | $16,277 | $44,605 | | Total assets | $27,503 | $114,651 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Total current liabilities | $25,034 | $13,018 | | Total liabilities | $35,914 | $18,676 | | Total shareholders' equity (deficit) | $(8,410) | $95,975 | | Total liabilities and shareholders' equity (deficit) | $27,503 | $114,651 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q4 2023, net revenues were **$7.4 million** with a net loss from continuing operations of **$(22.1) million**, while full-year 2023 net revenues were **$32.2 million** with a total net loss of **$(140.8) million** Condensed Consolidated Statements of Operations (in thousands) | | Three Months Ended Dec 31, 2023 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Revenues, net | $7,357 | $32,204 | | Gross (loss) profit | $(7,829) | $(8,696) | | Operating loss from continuing operations | $(14,232) | $(44,931) | | Net loss from continuing operations | $(22,068) | $(54,686) | | Net loss | $(29,332) | $(140,775) | | Basic and diluted loss per common share | $(1.15) | $(7.28) | [Reconciliation of Non-GAAP Measures](index=7&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section details the reconciliation from GAAP Net Loss to Non-GAAP EBITDA and Adjusted EBITDA for Q4 and full year 2023 and 2022, showing Q4 2023 Adjusted EBITDA loss of **$(3.2) million** after adjustments Full Year EBITDA & Adjusted EBITDA Reconciliation (in thousands) | Metric | Year Ended 2023 | Year Ended 2022 | | :--- | :--- | :--- | | Net loss from continuing operations | $(54,686) | $(36,553) | | EBITDA | $(43,984) | $(35,498) | | Inventory write-down | $7,927 | $0 | | Restructuring and impairment | $2,415 | $35 | | **Adjusted EBITDA** | **$(30,657)** | **$(30,029)** | - EBITDA is defined as net income adjusted for interest, taxes, depreciation, and amortization, while Adjusted EBITDA further excludes non-cash and non-operating expenses such as stock compensation and restructuring charges[23](index=23&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) 22nd Century Group is an agricultural biotechnology company focused on tobacco harm reduction with the first and only FDA MRTP authorization for a combustible cigarette - 22nd Century Group focuses on tobacco harm reduction using proprietary reduced nicotine content (RNC) tobacco plants and cigarettes[11](index=11&type=chunk) - Received the first and only FDA Modified Risk Tobacco Product (MRTP) authorization for a combustible cigarette in **December 2021**[11](index=11&type=chunk) - A conference call was hosted at **8:00 a.m. E.T.** on the release day to discuss financial results and business highlights[10](index=10&type=chunk)

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 September 30, 2023 ☐ 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. (State or other jurisdiction (IRS Employer of incorporation) Identific ...

22nd Century Group, Inc. (NASDAQ:XXII) Q2 2023 Earnings Conference Call August 14, 2023 8:00 AM ET Company Participants Matt Kreps - IR Hugh Kinsman - CFO John Miller - Interim CEO Conference Call Participants Vivien Azer - TD Cowen Jim McIlree - Dawson James Operator Good morning, ladies and gentlemen, and welcome to the 22nd Century Group Second Quarter 2023 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Matt Kreps. Please go ahead, sir. Matt Kreps Tha ...

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, 2023 ☐ 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) (State or other juri ...

Financial Data and Key Metrics Changes - Net sales increased 144% quarter-over-quarter to $22 million, reflecting the addition of GVB revenue [48] - Gross profit is projected to improve significantly in Q2 2023 due to a higher margin product mix and the return of production capabilities [49] - Revenue guidance for fiscal year 2023 is set at $105 million to $110 million, representing a 69% to 77% increase from $62 million in 2022 [13][53] Business Line Data and Key Metrics Changes - Tobacco revenue for Q1 remained relatively unchanged at $8.9 million, with gross profit slightly decreasing to $18,000 due to a reallocation towards higher margin products [50] - Hemp/cannabis revenue grew 85% to $13 million from $7 million, driven by strong customer demand for bulk ingredient products [51] - The company reported record cannabinoid ingredient volumes, delivering over 68,000 kilograms in Q1, four times the amount delivered in the same quarter last year [39] Market Data and Key Metrics Changes - The VLN rollout is occurring at twice the speed of a typical tobacco product rollout, with plans to expand from 500 stores to 5,000 [16][20] - The company has secured major national-scale distribution agreements, enabling rapid placement of VLN into thousands of stores across multiple states [14][20] - The hemp/cannabis business is positioned as a market leader in North America, with a focus on expanding sales and distribution capabilities [37] Company Strategy and Development Direction - The company aims to achieve cash positive operations in 2024, focusing on growth in both tobacco and hemp/cannabis business units [7][15] - Strategic initiatives include cost-cutting measures and a focus on high-margin products, with a commitment to not solely rely on cost reductions for success [8][15] - The company is enhancing consumer marketing strategies to drive awareness and acceptance of VLN, positioning it as a solution for smokers [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue targets and highlighted the importance of business interruption insurance in improving financial results [9][52] - The company anticipates significant margin expansion in the second half of 2023 due to restored production capacity and new distribution agreements [13][49] - Management emphasized the importance of federal regulations and potential market opportunities arising from reduced nicotine content mandates [34] Other Important Information - The company received $5 million in insurance proceeds from the Grass Valley fire in Q1, with additional proceeds of approximately $8 million expected in Q2 [52] - The company is actively pursuing international market opportunities, with tests planned in Switzerland and Japan [30][31] Q&A Session Summary Question: Impact of shelf resets on VLN revenue generation - Management confirmed that VLN is included in retailer merchandising plans and is positioned to meet the needs of smokers [55] Question: Revenue growth expectations from tobacco - Approximately 60% to 70% of the expected revenue increase is driven by VLN, with the remainder from Pinnacle growth [57] Question: Timing and ramping of contracts with Old Pal and Cookies - Shipments from these contracts are expected to start in Q3, with significant ramp-up anticipated in Q4 and continuing into 2024 [60] Question: Price positioning of Pinnacle amidst down trading in U.S. cigarettes - Pinnacle is positioned competitively, similar to Lucky Strike, to attract consumers [63] Question: Update on VLN launch in priority states - The company is on track with plans for Arizona, New Mexico, and Utah, focusing on retailer demand and schematic changes [65] Question: Menthol market mix and marketing strategy - The company is monitoring menthol market dynamics and positioning VLN as a solution for menthol smokers [69] Question: Gross margin expectations for 2023 and 2024 - Expected gross margins for hemp could reach 20% to 30% by 2024, while tobacco margins are projected to expand significantly as VLN sales ramp up [82]

Revenue Performance - Net revenues for Q1 2023 were $21,962, an increase of 142.8% from $9,045 in Q1 2022, driven primarily by hemp/cannabis revenue of $13,035 due to the acquisition of GVB[167] - Revenue from tobacco-related products for Q1 2023 was $8,927, a decrease of 1.3% from $9,045 in Q1 2022, reflecting a planned reallocation in production resources[171] Profitability and Loss - Gross profit for Q1 2023 was a loss of $1,177 compared to a profit of $309 in the prior year period, with gross profit margin declining to (5.4)% from 3.4%[167] - Operating loss for Q1 2023 was $17,823, compared to a loss of $8,146 in the prior year period, representing an increase of 118.8%[167] - Net loss for Q1 2023 was $18,182, with a net loss per share of $0.08, compared to a net loss of $8,918 and a net loss per share of $0.05 in Q1 2022[167] Operating Expenses - Total operating expenses for Q1 2023 increased to $16,646, up 96.9% from $8,455 in Q1 2022, primarily due to increased SG&A expenses driven by the acquisition of GVB[167] - R&D expenses increased by $376 million, a 33% rise compared to 2022, driven by higher compensation and benefits for additional personnel[179] - Other operating expenses totaled $898 million for the three months ended March 31, 2023, significantly up from $52 million in the same period of 2022[180] Cash and Investments - Cash, cash equivalents, and short-term investments as of March 31, 2023, totaled $16,227, with an additional $7,500 in restricted cash[171] - Cash and cash equivalents rose to $10,952 million as of March 31, 2023, compared to $3,020 million at December 31, 2022[185] - Net cash used in operating activities increased to $17,500 million in Q1 2023, up from $7,928 million in Q1 2022, primarily due to a higher net loss[189] - Cash provided by investing activities was $14,723 million for Q1 2023, compared to $8,772 million in Q1 2022, reflecting a $5,951 million increase[190] - Cash provided by financing activities increased by $18,805 million in Q1 2023, driven by proceeds from long-term debt issuance[191] Financing Activities - The company entered into a new Senior Secured Credit Facility, issuing $21,053 million in debentures with a 7% interest rate, maturing on March 3, 2026[194] - The company executed a Subordinated Promissory Note with a principal amount of $2,865 million, maturing on May 1, 2024, with interest accruing at 26.5% per annum[197] - The company plans to raise up to $50,000 million through an ATM Offering for general corporate purposes, including business expansion and R&D[199] Insurance and Claims - The company received $5,000 in casualty loss insurance recoveries from the Grass Valley fire during Q1 2023, with additional claims expected[171] - The company anticipates approximately $2,258 in business interruption insurance claims to offset margin losses due to increased raw material costs[173] Accounting and Risk Management - The Company uses a Monte Carlo valuation model to estimate the fair value of detachable warrants, with key assumptions including expected future volatility and expected life of the warrants[207] - There have been no material changes to the market risk information disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[210] - The Company does not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K[209] - The Company evaluates new accounting pronouncements to assess their potential impact on financial statements[208] New Services - The company launched a new CDMO+D service offering for the hemp/cannabis sector in Q1 2023, enhancing its capabilities in ingredient supply and manufacturing[167]

X 22ND CENTURY GROUP FOURTH QUARTER AND FULL YEAR EARNINGS PRESENTATION MARCH 9, 2023 Nasdaq XXII SURGEON GENERAL'S WARNING: Ciparette HELPS YOU SMOKE LESS VLN® is deliberately different from all other traditional cigarettes, because VLN® is the only cigarette authorized by the FDA that Helps You Smoke Less. CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS | --- | |----------------------------------------------------------------------------------------------------| | | | This presentation contains forward-look ...

22nd Century Group, Inc. (NASDAQ:XXII) Q4 2022 Earnings Conference Call March 9, 2023 10:00 AM ET Corporate Participants Matt Kreps - Investor Relations Jim Mish - Chief Executive Officer John Miller - President, Tobacco Business Hugh Kinsman - Chief Financial Officer Conference Call Participants Aaron Grey - Alliance Global Partners Vivien Azer - TD Cowen Alex Fuhrman - Craig-Hallum Capital Group Brian Wright - ROTH MKM Jim McIlree - Dawson James Operator Good day, ladies and gentlemen, and welcome to the ...