22nd Century (US:XXII)2024-03-28 11:46Financial Performance - Net revenues for the fourth quarter of 2023 were $7,357, a decrease of 26.1% from $9,951 in 2022, primarily driven by a decrease in volumes of filtered cigars[213]. - Net revenues for the full year 2023 were $32,204, a decrease of 20.5% from $40,501 in 2022, with total cartons sold decreasing from 5,782 to 3,459[215]. - Gross profit for the fourth quarter of 2023 was a loss of $7,829 compared to a gross loss of $44 in the prior year period, and for the full year 2023, it was a loss of $8,696 compared to a gross profit of $1,847 in 2022[213]. - Operating loss for the fourth quarter 2023 was $14,232, compared to a loss of $10,216 in the prior year period, with a full year operating loss of $44,931 compared to a loss of $33,635 in the prior year[213]. - Net loss in the fourth quarter of 2023 was $22,068, representing a net loss per share of $0.66, compared to a net loss of $11,114 and a net loss per share of $0.77 in the fourth quarter of 2022[213]. Business Strategy and Operations - The company completed the sale of substantially all of the GVB hemp/cannabis business on December 22, 2023, focusing fully on tobacco operations[210]. - The company launched sales of VLN® cigarettes in over 5,000 locations across 26 states by year-end 2023, targeting markets with large adult smoker populations[209]. - The company appointed Larry Firestone as Chairman and CEO in November 2023, announcing plans for a business turnaround including cost reductions[209]. - The company is poised to benefit from regulatory changes, including a proposed FDA menthol cigarette ban, which could position VLN® Menthol King as the only combustible menthol cigarette on the market[209]. Cash Flow and Liquidity - The company reported negative cash flow from operations of $54,987 for the year ended December 31, 2023, compared to $51,714 in 2022, an increase of $3,273[230][231]. - As of December 31, 2023, the company had cash and cash equivalents of $2,058, down from $2,205 in 2022, and working capital decreased to ($6,826) from $22,079[228][229]. - The company had an accumulated deficit of $378,707 as of December 31, 2023[226]. - The company is evaluating strategies to reduce expenses and pursue financing options to address liquidity concerns[227]. Financing Activities - Cash provided by financing activities increased by $6,389 to $37,209 for the year ended December 31, 2023, primarily from long-term debt issuance[234]. - The company sold senior secured debentures with an aggregate principal amount of $21,053, bearing interest at 7% per annum, maturing on March 3, 2026[238]. - The company executed a Subordinated Promissory Note with a principal amount of $2,865, which accrues interest at a rate of 26.5% per annum, maturing on May 1, 2024[241][243]. - The company completed a securities offering in July 2023, raising approximately $3,000, resulting in the issuance of 778,634 shares and 1,557,268 warrants, with net proceeds of about $2,722[251]. - In the July 19, 2023 offering, the Company raised approximately $11,700, issuing 4,373,219 shares and 8,746,438 warrants, with net proceeds of around $10,742[252]. - The October 2023 public offering generated gross proceeds of approximately $5,250, with 7,600,000 shares and 20,000,000 warrants sold at an exercise price of $0.525[253][255]. - As of October 2023, the exercise price of 11,799,654 previously outstanding warrants was adjusted from $2.42 to $0.525 per share[255]. - The Company initiated a warrant inducement offering on November 28, 2023, involving 31,779,654 existing warrants, with new warrants issued at a reduced exercise price of $0.2010[257][258]. - The Company issued 57,299,308 Inducement Warrants at an exercise price of $0.1765, generating gross proceeds of approximately $5,757 from the exercise of existing warrants[258]. - As of March 25, 2024, the Company had 60,889,644 outstanding warrants with various exercise prices, including 2,700,000 at $0.1765 and 57,299,308 at $0.1765[259]. Impairments and Adjustments - The Company recognized an impairment of $1,375 related to certain definite-lived intangible assets due to obsolescence or abandonment during Q4 2023[272]. - The Company adjusted the exercise price of certain warrants multiple times throughout 2023, reflecting changes in market conditions and offering terms[250][255]. - The Company has no off-balance sheet arrangements as defined by Regulation S-K[275].