Financial Data and Key Metrics Changes - The company reported a net revenue of $4 million in Q3 2025, a slight decrease from $4.1 million in Q2 2025, with total cartons sold dropping to 517,000 from 779,000 [34] - Gross profit was a loss of $1.1 million in Q3 2025, compared to a loss of $0.6 million in Q2 2025, reflecting lower volume and a transition to higher margin products [34] - The company ended the quarter with $4.8 million in cash and a $9.5 million receivable from an insurance recovery, increasing total assets to $32.4 million from $21.7 million at the end of 2024 [33] Business Line Data and Key Metrics Changes - The company is transitioning from a low-margin CMO business to higher-margin branded products, with shipments of newly branded VLN and partner VLN products totaling approximately 6,000 cartons year-to-date [30] - Natural style cigarettes contributed an additional 14,000 cartons to the total shipments, indicating a shift in product mix towards higher-margin offerings [30] Market Data and Key Metrics Changes - VLN and partner VLN products are now available in approximately 1,500 stores across 21 states, with authorization in about 40 states, which is crucial for expanding distribution [31] - The company expects to see rate of sale metrics in early 2026, which will provide insights into marketing effectiveness and consumer adoption [31] Company Strategy and Development Direction - The company aims to support the FDA's low nicotine mandate by positioning its VLN products as a solution for tobacco harm reduction, emphasizing the importance of both full nicotine and low nicotine offerings [22][26] - Future plans include licensing arrangements to allow other tobacco companies to adopt VLN products, thereby expanding market reach and supporting public health initiatives [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving EBITDA break-even by the second quarter of 2026, despite current challenges in sales metrics [39] - The company has successfully restructured its operations and is now focused on growth, with a well-funded balance sheet to support future initiatives [27][28] Other Important Information - The company has become debt-free and improved its balance sheet significantly, allowing for growth capital to be directed towards advancing VLN products in the market [27] - The management team has entered into customary employment agreements with key executives to support the company's growth trajectory [38] Q&A Session Summary Question: What are the plans for the $14 million in cash going forward? - The company plans to use the cash for operations, advancing VLN in the market, and initiating R&D and CapEx in early 2026 [36] Question: What is the current share equivalent of outstanding warrants? - There are just under 7 million shares outstanding, with a fully diluted basis of 23.7 million shares [37] Question: What is the impact of the Needham sales agreement on SG&A going forward? - The sales agent agreement will not change the current G&A level, as it is just formalizing terms for executive officers [37] Question: Is the company still targeting EBITDA break-even by the second quarter of 2026? - The company is still driving for that target and remains optimistic about achieving it [39]

Core Insights - 22nd Century Group, Inc. has launched VLN reduced nicotine content cigarettes at approximately 140 Circle K locations in Illinois, expanding its market presence as VLN is now authorized for sale in 45 states with 5 states pending [1][3] - The company aims to achieve distribution in all 50 states to demonstrate the feasibility of its VLN products and align with the FDA's low nicotine mandate published in January 2025 [4] - VLN cigarettes contain 95% less nicotine than traditional cigarettes, which has been shown in clinical studies to reduce smoking rates [5][9] Company Strategy - The CEO of 22nd Century Group expressed excitement about expanding VLN's presence and emphasized the importance of state authorizations and distribution partnerships [3] - The company is focused on increasing the availability of VLN products through new stores, chains, and geographical areas [3] Product Information - VLN and Partner VLN reduced nicotine content cigarettes are the first combusted tobacco products to comply with the FDA's proposed new Tobacco Product Standard for Nicotine Yield [5][10] - The proprietary non-GMO reduced nicotine tobacco plants developed by the company result in a product that contains 95% less nicotine than traditional tobacco [8]

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].