22nd Century (US:XXII)2019-08-09 00:40Financial Data and Key Metrics Changes - For Q2 2019, net sales revenue decreased by 15.9% to $5.8 million compared to the prior year period [46] - For the first half of 2019, net sales revenue decreased by 7.1% to $12.1 million [46] - The company experienced a gross loss on sales during both the second quarter and the first half, contrasting with a slight gross profit in the same periods last year [47] - Net losses for Q2 2019 were greater than the losses experienced in the comparable year-ago period, primarily due to a non-cash expense of $1.9 million related to a lawsuit settlement and an unrealized loss of $1.4 million on investment in Aurora Cannabis stock warrants [52] Business Line Data and Key Metrics Changes - The decrease in net sales revenue was principally driven by a decrease in production volume in the contract manufacturing business, in line with industry trends [46] - Research and development expenses decreased in both time periods, while expenses related to hemp cannabis increased, reflecting a shift in strategic priorities [49] Market Data and Key Metrics Changes - The legal hemp cannabis market in the US is estimated to be valued between $1 billion to $2 billion annually, with rapid growth expected due to the legalization of hemp products [29] - The hemp cannabis market is believed to be growing faster than the marijuana industry, with potential to surpass the combined value of medical and adult-use marijuana markets in the coming years [30] Company Strategy and Development Direction - The company aims to leverage its strong foundations in both tobacco and hemp cannabis to create future shareholder value [17] - The pursuit of reduced nicotine product standards and the approval of VLN branded products are central to the company's mission to reduce smoking harm and create shareholder value [25] - The company is actively engaged in building awareness of its proprietary very low nicotine content cigarettes and plans to bring these to market [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the FDA's movement towards adopting a reduced nicotine product standard, which is seen as critical for public health [18] - The company believes that its tobacco harm reduction efforts and the development of hemp cannabis products will create substantial value for shareholders [28] - Management highlighted the importance of executing the business plan to achieve positive cash flows and strengthen the company's position in both tobacco and hemp cannabis [54] Other Important Information - The company has made significant investments in research and development for hemp cannabis, including a new research lab and a growing facility in Oregon [34] - An exclusive worldwide multi-year agreement was signed with KeyGene NV to develop hemp cannabis plants with valuable cannabinoid profiles [35] Summary of Q&A Session - The Q&A session concluded without specific questions being addressed during the call, with listeners directed to contact the Investor Relations department for further inquiries [57][58]