22nd Century (US:XXII)2020-08-06 11:30Financial Performance - Net sales revenue increased by 11% to $6.4 million in Q2 2020, compared to $5.8 million in Q2 2019[120]. - Gross profit improved to $201, compared to a gross loss of $86 in Q2 2019, with a gross margin of 3.1%[127]. - Operating loss improved by approximately $276,000 in Q2 2020[120]. - Sales of contract manufactured filtered cigars increased by approximately $800,000, driven by higher unit sales and price increases[126]. - Net loss for the quarter ended June 30, 2020, was $5,057 million, a reduction of 37.1% from a net loss of $8,042 million in the prior year, representing (78.6)% of product sales[140]. Research and Development - Research and development expenses decreased by 42.8% to $957,000 in Q2 2020, down from $1.7 million in Q2 2019[128]. - The company completed research field trials validating new non-GMO methodologies for reducing nicotine in tobacco plants[124]. - The company has sequenced over 250 additional hemp/cannabis plant lines to enhance its bioinformatics platform[125]. - Research and Development (R&D) expenses for the quarter ended June 30, 2020, were $4 million, a decrease of 98.6% from $313 million in the same quarter of 2019, representing only 0.1% of product sales[129][130]. Expenses and Costs - Cost of goods sold as a percentage of product sales improved to 96.9% in Q2 2020 from 101.5% in Q2 2019[127]. - Sales, General and Administrative (SG&A) expenses increased to $3,501 million for the quarter ended June 30, 2020, up 35.4% from $2,586 million in the prior year, accounting for 54.4% of product sales[131]. - Impairment of intangible assets recorded a one-time expense of $146 million for the quarter ended June 30, 2020, representing 2.3% of product sales[132]. - Depreciation expense increased to $157 million for the quarter ended June 30, 2020, a 6.9% increase from $147 million in the same quarter of 2019, representing 2.4% of product sales[133]. - Amortization expense decreased to $189 million for the quarter ended June 30, 2020, down 15.1% from $223 million in the prior year, representing 2.9% of product sales[134]. Investment and Cash Flow - Interest income, net, increased to $462 million for the quarter ended June 30, 2020, up 89.9% from $243 million in the same quarter of 2019, representing 7.2% of product sales[137][138]. - Other comprehensive income for the quarter ended June 30, 2020, was $238 million, a significant increase of 1264.3% from $17 million in the same quarter of 2019, representing 3.7% of product sales[141][143]. - Cash and cash equivalents at the end of the period were $844 million, compared to $875 million at the end of the previous year[144]. - Cash provided by investing activities increased by $765, primarily due to an increase in net cash from short-term investments[149]. - Cash provided by financing activities was $1,653 million, resulting from a note payable issuance of $2,195 million[150]. Management and Corporate Actions - The company appointed James A. Mish as the new CEO and John Franzino as the new CFO in June 2020[120]. - The company has filed a new S-3 shelf registration with the SEC to provide flexibility for future capital raising opportunities[147]. Liquidity and Economic Factors - As of June 30, 2020, working capital decreased to approximately $29,974 from $36,962 at December 31, 2019, a decrease of $6,765[145]. - Net cash used in operating activities for the six months ended June 30, 2020, was $11,473, an increase of $2,729 compared to the same period in 2019[148]. - The company believes it has sufficient liquidity to fund regular business activities for the foreseeable future[146]. - Inflation did not have a material effect on operating results for the six months ended June 30, 2020, and 2019[152].