22nd Century (US:XXII)2025-11-04 12:31Financial Performance - Net revenues for Q3 2025 were $4,011, a decrease of 32.5% from $5,946 in Q3 2024, primarily due to shifts in product mix [149]. - Gross profit for Q3 2025 was a loss of $1,059, compared to a loss of $588 in the prior year period, reflecting an increase of 80.1% in gross loss [150]. - Total operating expenses for Q3 2025 decreased to $2,153, down 22.8% from $2,789 in Q3 2024, driven by lower sales, general and administrative expenses [149]. - Operating loss from continuing operations for Q3 2025 was $3,212, a slight improvement from a loss of $3,377 in Q3 2024 [150]. - Net loss from continuing operations in Q3 2025 was $3,763, with a basic and diluted loss per share of $1.06, compared to a net loss of $3,585 and a loss per share of $848.84 in Q3 2024 [150]. - For the nine months ended September 30, 2025, net revenues were $14,050, a decrease of 31.0% from $20,361 in the same period of 2024 [151]. - Operating loss as a percentage of net revenues for Q3 2025 was 80.1%, compared to 56.8% in Q3 2024 [150]. - Total product line revenues for the nine months ended September 30, 2025, decreased to $14,050 million, a decline of $6,311 million compared to the prior year [153]. - Filtered cigars net revenues for the nine-month period ended September 30, 2025, decreased to $3,704 million, reflecting lower volumes and a shift towards higher margin products [153]. - Gross loss for the third quarter of 2025 was $(1,059) million, representing 26.4% of net revenues, compared to a gross loss of $(588) million or 9.9% in the prior year [154]. Cash Flow and Liquidity - The company had $4,846 in cash and cash equivalents as of September 30, 2025 [149]. - Cash and cash equivalents increased to $4,846 million as of September 30, 2025, compared to $4,422 million at December 31, 2024 [165]. - Working capital from continuing operations increased to $12,711 million as of September 30, 2025, up from $1,790 million at December 31, 2024, an increase of $10,921 million [166]. - The company incurred negative cash flow from operations of $(10,472) million for the nine months ended September 30, 2025, compared to $(9,947) million in the prior year [168]. - Cash provided by financing activities decreased to $10,746 million for the nine months ended September 30, 2025, down from $13,349 million in the prior year [171]. Expenses and Cost Management - Research and development expenses for Q3 2025 were $193, down 19.6% from $240 in the prior year period [150]. - SG&A expenses decreased by $698 million for the three months ended September 30, 2025, and by $2,048 million for the nine months ended September 30, 2025, primarily due to headcount reductions [155]. Business Outlook and Risks - The company expects to incur additional losses until it can generate significant revenue and profit in its tobacco business, raising substantial doubt about its ability to continue as a going concern [163]. - There have been no material changes to the information set forth in the Annual Report on Form 10-K for the year ended December 31, 2024, indicating stability in financial reporting [179]. - The company evaluates new accounting pronouncements to assess their potential impact on financial statements, ensuring compliance with accounting standards [180]. - There are no off-balance sheet arrangements as defined by Regulation S-K, indicating a straightforward financial structure [181]. - The company has not reported any material changes regarding market risk disclosures since the last annual report, suggesting consistent risk management practices [182]. Warrants and Shareholder Information - As of October 31, 2025, the company has 11,422,790 warrants outstanding, with the largest portion being 9,460,661 August 2025 warrants at an exercise price of $1.97, expiring on August 27, 2030 [176]. - The amended October 2024 PIPE warrants total 1,391,765, with no specified exercise price, expiring on July 15, 2030 [176]. - The company has implemented anti-dilution protection provisions for its warrants, allowing for cashless exercise options that could result in the issuance of two shares for no additional consideration [177]. Sales Performance - For the third quarter of 2025, cigarette volume increased to 345 cartons, reflecting additional CMO cigarette customers, while total cigarette sales decreased due to contractual price increases [153].