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What changed in 22nd Century Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of 22nd Century Group, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+208 added−202 removedSource: 10-K (2026-03-26) vs 10-K (2025-03-20)

Top changes in 22nd Century Group, Inc.'s 2025 10-K

208 paragraphs added · 202 removed · 129 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn addition to existing business relationships with multiple tobacco products companies, we will continue to expand the number of brands and products in our contract manufacturing operations (CMO) portfolio. Research & Development (R&D) & Intellectual Property (IP) Since our inception, most of our research and development (R&D) efforts have been outsourced to highly qualified groups in their respective fields.
Biggest changeResearch & Development (R&D) & Intellectual Property (IP) Since our inception, most of our research and development (R&D) efforts have been outsourced to highly qualified groups in their respective fields. Since 1998, we have had multiple R&D agreements with North Carolina State University (NCSU) and others resulting in exclusive worldwide licenses to various patented technologies.
Before an MRTP can be introduced or delivered into interstate commerce in the United States, the FDA must issue a either a “risk modification order” or “exposure modification order” pursuant to the Tobacco Control Act.
Before an MRTP can be introduced or delivered into interstate commerce in the United States, the FDA must issue either a “risk modification order” or “exposure modification order” pursuant to the Tobacco Control Act.
These discoveries were instrumental in our formulation of experimental variable-nicotine tobacco products, millions of which were manufactured and furnished for independent clinical trials funded NIDA and the National Cancer Institute (NCI). The results of those trials showed that having a reduced nicotine cigarette option available could substantially affect behaviors and choices among smokers, which charted our course going forward.
These discoveries were instrumental in our formulation of experimental variable-nicotine tobacco products, millions of which were manufactured and furnished for independent clinical trials funded by NIDA and the National Cancer Institute (NCI). The results of those trials showed that having a reduced nicotine cigarette option available could substantially affect behaviors and choices among smokers, which charted our course going forward.
Item 1. Business. Overview 22nd Century Group is a tobacco products company that enables cigarette smokers to take control of their consumption of nicotine, the addictive drug in cigarettes. We manufacture and distribute the only combustible tobacco products containing minimally or non-addictive levels of nicotine that are authorized by the US Food and Drug Administration (FDA) for retail purchase.
Item 1. Business. Overview 22nd Century Group, Inc. is a tobacco products company that enables cigarette smokers to take control of their consumption of nicotine, the addictive drug in cigarettes. We manufacture and distribute the only combustible tobacco products containing minimally or non-addictive levels of nicotine that are authorized by the US Food and Drug Administration (FDA) for retail purchase.
In addition, we began assembling studies and data in support of a Premarket Tobacco Product Application (PMTA), a submission authorized under the 2009 Tobacco Control Act, for potential commercialization of consumer tobacco products based on our proprietary low nicotine tobacco. The PMTA for marketing of our SPECTRUM ® cigarettes was submitted to the FDA on December 4, 2018.
In addition, we began assembling studies and data in support of a Premarket Tobacco Product Application (PMTA), a submission authorized under the 2009 Tobacco Control Act, for potential commercialization of consumer tobacco products based on our proprietary low nicotine tobacco. The PMTA for marketing of our SPECTRUM ® cigarettes was submitted to the FDA in December of 2018.
These filings are also accessible on the SEC’s website at www.sec.gov . We do not incorporate the information on our website into this Annual Report on Form 10-K and our web site address is included as an inactive textual reference only. ​
These filings are also accessible on the SEC’s website at www.sec.gov . We do not incorporate the information on our website into this Annual Report on Form 10-K and our web site address is included as an inactive textual reference only. ​ 11
Premarket Tobacco Product Application (PMTA) Under the 2009 Tobacco Control Act, a PMTA must be submitted to the FDA for any new tobacco product seeking a marketing order to enable commercialization of the product in the United States.
Premarket Tobacco Product Application (PMTA) Under the Tobacco Control Act, a PMTA must be submitted to the FDA for any new tobacco product seeking a marketing order to enable commercialization of the product in the United States.
FDA Regulation of Tobacco Products The Family Smoking Prevention and Tobacco Control Act of 2009 (“Tobacco Control Act”) granted the FDA authority over the regulation of all tobacco products in the United States.
Government Regulation FDA Regulation of Tobacco Products The Family Smoking Prevention and Tobacco Control Act of 2009 (“Tobacco Control Act”) granted the FDA authority over the regulation of all tobacco products in the United States.
Government Regulation Tobacco Master Settlement Agreement The Master Settlement Agreement (MSA) is an accord reached in November 1998 between the State Attorneys General of 46 states, five U.S. territories, the District of Columbia and the four largest tobacco companies in the United States concerning the advertising, marketing and promotion of tobacco products.
Tobacco Master Settlement Agreement The Master Settlement Agreement (MSA) is an accord reached in November 1998 between the State Attorneys General of 46 states, five U.S. territories, the District of Columbia and the four largest tobacco companies in the United States concerning the advertising, marketing and promotion of tobacco products.
We submitted a PMTA to the FDA on December 5, 2018, for proposed marketing of our proprietary RNC cigarettes, and, on December 17, 2019, the FDA issued a marketing order authorizing commercialization.
We submitted a PMTA to the FDA in December 2018 for proposed marketing of our proprietary RNC cigarettes, and, on December 17, 2019, the FDA issued a marketing order authorizing commercialization.
Human Capital Resources As of December 31, 2024, we had 56 employees. All employees are located in the United States. Our human capital resource objectives are designed to attract, and retain, highly motivated and well-qualified employees. We believe that we offer a competitive compensation package and have also worked diligently to provide a flexible and safe work environment.
Human Capital Resources As of December 31, 2025, we had 32 employees. All employees are located in the United States. Our human capital resource objectives are designed to attract, and retain, highly motivated and well-qualified employees. We believe that we offer a competitive compensation package and have also worked diligently to provide a flexible and safe work environment.
Modified Risk Tobacco Products (MRTP) The 2009 Tobacco Control Act grants the FDA authority to regulate the labeling and marketing of so-called Modified Risk Tobacco Products (MRTP), which include, among other things, tobacco products that may reduce harm or the risk of tobacco-related disease or reduce or eliminate exposure to a substance.
Modified Risk Tobacco Products (MRTP) The Tobacco Control Act grants the FDA authority to regulate the labeling and marketing of Modified Risk Tobacco Products (MRTP), which include, among other things, tobacco products that may reduce harm or the risk of tobacco-related disease or reduce or eliminate exposure to a substance.
Instead of offering new ways of delivering the nicotine drug to addicted smokers, we offer smokers the option to make their own informed and more productive choices, including the choice to avoid addictive levels of nicotine altogether and help adult smokers smoke less.
Instead of offering new ways of delivering the nicotine drug to addicted smokers, we offer smokers the option to make their own informed and health conscious productive choices, including the choice to avoid addictive levels of nicotine altogether and help adult smokers smoke less.
All of this is supported by recently redesigned VLN ® packaging with a vibrant, modern look to drive an emotional consumer connection with adult smokers. With the VLN ® concept validated, our unswerving focus now is upon rate-of-sale of our exclusively positioned products and profitable growth.
All of this is supported by recently redesigned VLN ® product packaging, including partner brands with a vibrant, modern look to drive an emotional consumer connection with adult smokers. With the VLN ® concept now validated, our focus is upon rate-of-sale of our exclusively positioned products and profitable growth.
We have developed specific programs across our business units for ensuring high standards of environmental compliance, including, standard operating practices and procedures at our manufacturing facility as well at our research and development centers.
We have developed specific programs across our business units to ensure high standards of environmental compliance, including, standard operating practices and procedures at our manufacturing facility as well at our research and development centers.
We believe that our manufacturing facility complies with all federal, state, and local environmental regulations, including the Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act. 11 Table of Contents Lastly, in addition, any new products introduced by us are subject to a comprehensive environmental assessment by an independent third-party expert, including an assessment of how such products may create environmental risks.
We believe that our manufacturing facility complies with all federal, state, and local environmental regulations, including the Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act. 10 Any new tobacco products introduced by us are subject to a comprehensive environmental assessment by an independent third-party expert, including an assessment of how such products may create environmental risks.
The authorized products are based on our proprietary RNC tobacco blends made possible by comprehensive and patented technologies that regulate nicotine biosynthesis activities in the tobacco plant, resulting in full flavor and high yield with 95% less nicotine.
The authorized products are based on our proprietary RNC tobacco blends made possible by comprehensive and patented technologies that regulate nicotine biosynthesis activities in the tobacco plant, resulting in full flavor non-genetically modified organism (GMO) tobacco strains and high yield with 95% less nicotine.
Although some activity has occurred on state and local levels with respect to scrutiny of menthol and flavored tobacco products, the FDA proposal remains unresolved. For example, states like California introduced their own menthol and flavor bans. Environmental Regulations We are subject to a variety of federal, state and local environmental laws and regulations.
Although some activity has occurred on state and local levels with respect to scrutiny of menthol and flavored tobacco products, the FDA proposal remains unresolved. For example, states like California introduced their own menthol and flavor bans.
Our manufacturing operations are vertically integrated, allowing us to control production priorities and maintain the required high quality of our products, including our MRTP-designated VLN ® cigarettes.
Our manufacturing operations are vertically integrated, allowing us to control production priorities and maintain the required high quality of our products, including our VLN ® cigarettes which have the only MRTP-designation from the FDA.
As a participating manufacturer under the MSA, we are released from claims by the Settling States for smoking-related health costs and contribute actively toward the goal of reducing cigarette smoking among youth and raising public awareness about smoking and the tobacco industry.
As a participating manufacturer under the MSA, we are released from claims by the Settling States for smoking-related health costs and contribute actively toward the goal of reducing cigarette smoking among youth and raising public awareness about smoking and the tobacco industry. Excise Taxes Tobacco products are subject to substantial excise taxes in the U.S. and other countries.
For FDA to grant such an order, the PMTA must enable the FDA to determine, among other things, that permitting the marketing of the proposed new tobacco product would be appropriate for the protection of the public health (APPH), and that the product manufacturing, processing, and labeling of the product otherwise conform to the requirements of the Food, Drug and Cosmetics Act.
For the FDA to grant such an order, the PMTA must enable the FDA to determine, among other things, that permitting the marketing of the proposed new tobacco product would be appropriate for the protection of the public health (APPH), and that the product manufacturing, processing, and labeling of the product otherwise conform to the requirements of the Food, Drug and Cosmetics Act. 8 A marketing order may include restrictions on the sale and distribution of the product, including restrictions on the access to, and the advertising and promotion of, the tobacco product, and requirements for record-keeping and post-market reporting.
This bonded and temperature conditioned space further supports growth of our VLN ® branded products and provides additional distribution opportunities for customers. Sales, Distribution, and Growth Our pilot VLN ® cigarette retail programs during 2022-23 proved the viability and potential of RNC tobacco products, and the appeal to consumers of having a choice in their nicotine consumption.
Sales, Distribution, and Growth Our pilot VLN ® cigarette retail programs during 2022-23 proved the viability and potential of RNC tobacco products, and the appeal to consumers of having a choice in their nicotine consumption.
The FDA referenced abundant scientific evidence and clinical studies in support of the proposal, including many furnished by 22nd Century, and noted the current commercial availability of low nicotine content cigarettes such as those currently produced by 22nd Century. The period for public comment on the proposed rule closes on September 15, 2025.
The FDA referenced abundant scientific evidence and clinical studies in support of the proposal, including many furnished by us, and noted the current commercial availability of low nicotine content cigarettes such as those currently produced by us. We submitted a response in support of the FDA in public comment letter in September 2025.
This model of contracting with public-sector researchers has enabled us to control R&D costs while achieving our desired results, including obtaining exclusive intellectual property rights relating to our outsourced R&D. 7 Table of Contents Pre-Commercialization R&D Founded as a biotechnology research company, our activities were initially centered on continued development of genetic transformation options for control of nicotine levels in the tobacco plant.
This model of contracting with public-sector researchers has enabled us to control R&D costs while staying at the forefront of low nicotine tobacco technology. Pre-Commercialization R&D Founded as a biotechnology research company, our activities were initially centered on continued development of genetic transformation options for control of nicotine levels in the tobacco plant.
The FDA has further authority to restrict marketing and advertising, impose regulations on packaging, mandate warnings and disclosure of flavors or other ingredients, prohibit the sale of tobacco products with certain flavors or other characteristics, limit or prohibit the sale of tobacco products by certain retail establishments and the sale of tobacco products in certain packaging sizes, and seek to hold retailers and distributors responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco smoke. 9 Table of Contents The Tobacco Control Act requires manufacturers of tobacco products to, among, other things, provide FDA with a list of ingredients added to tobacco products in the manufacturing process and register any establishment engaged in the manufacture, preparation, or processing of a tobacco product.
The FDA has further authority to restrict marketing and advertising, impose regulations on packaging, mandate warnings and disclosure of flavors or other ingredients, prohibit the sale of tobacco products with certain flavors or other characteristics, limit or prohibit the sale of tobacco products by certain retail establishments and the sale of tobacco products in certain packaging sizes, and seek to hold retailers and distributors responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco smoke.
After the merger, we succeeded to the business of 22nd Century Limited, LLC as our sole line of business. 22nd Century Limited, LLC was originally formed as a New York limited liability company on February 20, 1998 as 21st Century Limited, LLC and subsequently merged with a newly-formed Delaware limited liability company, 22nd Century Limited, LLC, on November 29, 1999. 12 Table of Contents We are a Nevada corporation, and our corporate headquarters is located at 321 Farmington Road, Mocksville, North Carolina 27028.
After the merger, we succeeded to the business of 22nd Century Limited, LLC as our sole line of business. 22nd Century Limited, LLC was originally formed as a New York limited liability company on February 20, 1998 as 21st Century Limited, LLC and subsequently merged with a newly-formed Delaware limited liability company, 22nd Century Limited, LLC, on November 29, 1999.
Shortly after, based on further studies and data provided, we received FDA granting orders authorizing our marketing of VLN ® cigarettes as Modified Risk Tobacco Products.
Our R&D Today We received a marketing order from the FDA on December 17, 2019, authorizing commercialization of our RNC cigarettes. Shortly after, based on further studies and data provided, we received FDA granting orders authorizing our marketing of VLN ® cigarettes as Modified Risk Tobacco Products.
We expect to develop new versions of our RNC cigarettes utilizing these cutting-edge technologies for future commercialization in the U.S. and globally, including the coveted “American blend” of cigarettes in low nicotine form featuring a mix of bright, burley, and oriental proprietary RNC tobacco varieties. 8 Table of Contents Intellectual Property Our intellectual property enables us to alter the level of nicotine and other nicotinic alkaloids in tobacco plants through genetic engineering and modern plant breeding.
We expect to develop new versions of our RNC cigarettes utilizing these cutting-edge technologies for future commercialization in the U.S. and globally, including an “American blend” of cigarettes in low nicotine form featuring a mix of bright, burley, and oriental proprietary RNC tobacco varieties.
At the same time, we are leveraging our CMO relationships for cross-sale of brand families to increase distribution and points-of-sale for each of us. As a category, we expect RNC tobacco to be no less disruptive than the zero- and low-proof spirits segment, which has gone from a dubious notion to a multi-billion-dollar market in only a few years.
As a category, we expect RNC tobacco to be no less disruptive than the zero- and low-proof spirits segment, which has gone from a dubious notion to a multi-billion-dollar market in only a few years.
In 2014, we entered into sponsored research and license agreements with NCSU for exclusive worldwide rights to bioengineering technologies for achieving low nicotine content in tobacco without having the plant strains regulated as genetically modified organisms (“GMOs”).
In 2014, we entered into sponsored research and license agreements with NCSU for exclusive worldwide rights to bioengineering technologies for achieving low nicotine content in tobacco without having the plant strains regulated as GMOs. We subsequently entered into a separate license agreement with the University of Kentucky to license other next-generation very low nicotine content non-GMO tobacco plant lines.
The FDA must also find that the applicant has demonstrated that the magnitude of overall reductions in exposure to the substance specified in the application is substantial and that the product as used exposes consumers overall to lower levels of harmful substances. 10 Table of Contents On May 13, 2019, we submitted to the FDA an MRTP application, seeking FDA authorization to market our reduced nicotine combustible cigarettes with reduced exposure claims.
The FDA must also find that the applicant has demonstrated that the magnitude of overall reductions in exposure to the substance specified in the application is substantial and that the product as used exposes consumers overall to lower levels of harmful substances.
The motivation to provide tobacco users with lower nicotine options has only increased with the FDA’s recent January 2025 Notice of Proposed Rulemaking that would mandate substantially reduced nicotine content in all combusted tobacco products sold in the US.
The motivation to provide tobacco users with lower nicotine options has only increased with the FDA’s January 2025 Notice of Proposed Rulemaking that, if approved, would mandate substantially reduced nicotine content in all combusted tobacco products sold in the US. 6 Our sales and distribution expansion strategy is being executed with a route-to-market plan allowing maximum impact for retail development and account depth.
In the application, we requested authorization from the FDA to market our reduced nicotine tobacco cigarettes with certain product labeling claims under the brand name of VLN ® . On December 23, 2021, we secured the first ever MRTP designation for a combustible cigarette for VLN ® King and VLN ® Menthol King 95% reduced nicotine content cigarettes.
On May 13, 2019, we submitted to the FDA an MRTP application, seeking FDA authorization to market our reduced nicotine combustible cigarettes with reduced exposure claims. In the application, we requested authorization from the FDA to market our reduced nicotine tobacco cigarettes with certain product labeling claims under the brand name of VLN ® .
We continue to pursue improvements in our ability to control nicotine biosynthesis in tobacco, including gene editing techniques that provide for greater crop yields and disease resistance. Our original GMO tobacco strains have been replaced with fully non-GMO engineered low nicotine varieties, which expands accessibility to international markets where GMO agricultural products are disfavored or banned.
Our original GMO tobacco strains have been replaced with fully non-GMO engineered low nicotine varieties, which expands accessibility to international markets where GMO agricultural products are disfavored or banned. We have successfully applied our non-GMO bioengineering techniques to increasingly diverse tobacco lines, including bright, burley, and oriental tobaccos.
The Tobacco Control Act granted FDA the authority to require the reduction of nicotine to any level other than zero or require reduction of other compouns in tobacco and cigarette smoke.
The FDA requires any manufacturers of new tobacco products to undergo premarket review and obtain premarket authorization prior to commercialization, and to comply with post-authorization monitoring and reporting requirements. The Tobacco Control Act granted FDA the authority to require the reduction of nicotine to any level other than zero or require reduction of other compounds in tobacco and cigarette smoke.
These contracts prohibit the transfer of our proprietary tobaccos, seeds and plant materials to any other party. We purchase conventional tobacco destined for contract manufacturing operations through third parties. In 2023, we leased additional warehouse space in Winston-Salem, North Carolina.
Tobacco Sources of Raw Materials We obtain our reduced nicotine tobacco leaf from third party-growers, in multiple states in the United States who are under direct contracts with us. These contracts prohibit the transfer of our proprietary tobaccos, seeds and plant materials to any other party. We purchase conventional tobacco destined for contract manufacturing operations through third parties.
Federal, state and local cigarette excise taxes have increased substantially over the past two decades. Tax increases have an adverse impact on sales of tobacco products. Competition Although our products are not approved as smoking cessation aids, we believe that our RNC tobacco cigarettes may compete with FDA-approved smoking cessation aids.
Federal, state and local cigarette excise taxes have increased substantially over the past two decades. Tax increases have an adverse impact on sales of tobacco products. Environmental Regulations We are subject to a variety of federal, state and local environmental laws and regulations.
Since 1998, we have had multiple R&D agreements with North Carolina State University (NCSU) and others resulting in exclusive worldwide licenses to various patented technologies. We have utilized the same model employed by many public-sector research organizations, in which we obtain an exclusive option or license agreement to any invention arising out of our funded research.
We have utilized the same model employed by many public-sector research organizations, in which we obtain an exclusive option or license agreement to any invention arising out of our funded research. In each case, we fund and control all patent filings as the exclusive licensee.
On January 15, 2025, the FDA issued a notice of proposed rulemaking (NPRM) that would establish a maximum nicotine level of 0.7 mg/g in cigarettes and certain other combusted tobacco products.
Any action by the FDA to remove our products from the U.S. market, including the termination or non-renewal of the exposure modification orders for our VLN ® cigarettes would have a material adverse impact on our business. 9 Proposed Mandate Limiting Nicotine Content in Cigarettes On January 15, 2025, the FDA issued a notice of proposed rulemaking (NPRM) that would establish a maximum nicotine level of 0.7 mg/g in cigarettes and certain other combusted tobacco products.
As we enter 2025, we have implemented a marketing approach that leverages our numerous contract manufacturing relationships together with cross branding strategies for integrative volume growth and enhanced retail access.
Beginning in 2025, we implemented a new marketing and distribution approach. We created a VLN ® version of popular cigarette brands that we already manufacture for existing clients and offer for sale through their extensive distribution channels. This strategic pivot leverages our numerous contract manufacturing relationships together with cross branding strategies for integrative volume growth and enhanced retail access.
We plan to employ consistent marketing collateral combined with a comprehensive digital market campaign, targeting adult smokers to drive point purchase direction with connectivity through age-gated social media platforms and an interactive website for adult smokers.
Our initial focus is in the convenience store segment, which accounts for the overwhelming share of tobacco revenue, with other channels to follow. We plan to deploy a comprehensive digital marketing campaign, targeting adult smokers to drive point purchase direction with connectivity through age-gated social media platforms and interactive websites for adult smokers.
We will build our singular House of Brands by strategic increments, with time-to-market and profitability as our measures of success. Our goal is to release what we see as the enormous untapped value of a disruptive product alternative capable of fulfilling unmet demand within a nearly $12 billion market segment.
Our goal is to release what we see as the enormous untapped value of a disruptive product alternative capable of fulfilling unmet demand within a nearly $58 billion market segment that includes adult smokers who have already declared the need or want to change their smoking habit.
Maintaining a familiar combustible product format, VLN ® products replicate the conventional cigarette smoking experience, encompassing sensory and experiential elements such as taste, scent, smell, and the familiar “hand-to-mouth” behavior.
Maintaining a familiar combustible product format, VLN ® products present the conventional cigarette smoking experience, encompassing sensory and experiential elements such as enjoyment, taste, scent, smell, and the familiar “hand-to-mouth” behavior. 5 Our approach is not to continue making and selling VLN ® cigarettes as a novel idea, but to build an entire RNC category of products, including tiers of proprietary and partner or “flanker” brands that we manufacture and distribute.
With high-speed manufacturing capabilities, we continue to attract additional contract manufacturing business, including third-party filtered cigar brands and MSA-compliant cigarette brands, to absorb our manufacturing overhead and help keep our unit cost profile low. 6 Table of Contents Tobacco Sources of Raw Materials We obtain our reduced nicotine tobacco leaf from third party-growers, primarily in multiple states in the United States who are under direct contracts with us.
We also operate as a turnkey contract manufacturing facility for partnership brands both domestically and internationally. With high-speed manufacturing capabilities, we continue to attract additional contract manufacturing business, including third-party filtered cigar brands and MSA-compliant cigarette brands, to absorb our manufacturing overhead and help keep our unit cost profile low.
We forecast entering national distribution in 2025, with an eye eventually toward more than 270,000 domestic tobacco retail outlets and a substantial share of the estimated $12 billion non-Tier 1 US tobacco market. 5 Table of Contents A New and Disruptive Category Our VLN ® cigarettes are currently available in a large number of top reatilers in US markets and present a groundbreaking alternative with 95% less nicotine content than conventional cigarettes.
A New and Disruptive Category Our VLN ® cigarettes are currently available in a number of top retailers in US markets and present a groundbreaking alternative with 95% less nicotine content than conventional cigarettes.
We intend to submit comments and to be prominent and active in support of the proposed rule. Proposed Regulation of Menthol Cigarettes In April 2022, the FDA announced proposed product standards to prohibit menthol as a characterizing flavor in cigarettes) and prohibit all characterizing flavors (other than tobacco) in cigars.
The complete submission is available online at https://downloads.regulations.gov/FDA-2024-N-5471-4171/attachment_1.pdf . The period for public comment on the proposed rule closed on September 15, 2025. Proposed Regulation of Menthol Cigarettes In April 2022, the FDA announced proposed product standards to prohibit menthol as a characterizing flavor in cigarettes) and prohibit all characterizing flavors (other than tobacco) in cigars.
The PEA concluded that the marketing orders would have no significant impact and that environmental impact statements would not be required. Excise Taxes Tobacco products are subject to substantial excise taxes in the U.S. and other countries.
The PEA concluded that the marketing orders would have no significant impact and that environmental impact statements would not be required. Competition Although our products are not approved as smoking cessation aids, we believe that our RNC tobacco cigarettes may compete with FDA-approved smoking cessation aids.
Our telephone number is (336) 940-3769. Our internet address is www.xxiicentury.com.
We are a Nevada corporation, and our corporate headquarters is located at 321 Farmington Road, Mocksville, North Carolina 27028. Our telephone number is (336) 940-3769. Our internet address is www.xxiicentury.com.
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Our approach is not to continue making and selling VLN ® cigarettes as a novel idea, but to build an entire Reduced Nicotine Content Category of products, including tiers of proprietary and partner or “flanker” brands that we manufacture and distribute. We expect this “House of Brands” to drive retail shelf visibility, consumer recognition, and overall volume expansion.
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We will continue to expand national distribution in 2026, with an eye toward the approximately 270,000 domestic tobacco retail outlets and a meaningful share of those adult consumers in the estimated $58 billion combustible cigarette marketing in the U.S. that want to smoke less.
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We also operate as a turnkey contract manufacturing facility for many partnership brands both domestically and internationally.
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We expect this “House of Brands” to drive retail shelf visibility, consumer recognition, and overall volume expansion. At the same time, we are leveraging our contract manufacturing operations (CMO) relationships for cross-sale of brand families to increase distribution and points-of-sale for each of us.
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Our sales and distribution strategy will be executed with a disciplined route-to-market plan allowing maximum impact for retail development and account depth. We expect our initial focus to be in the convenience store segment, which accounts for the overwhelming share of tobacco revenue, with other channels to follow.
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We plan to build our House of Brands in strategic increments, with time-to-market and profitability as our measures of success.
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In addition to continued focus on VLN ® and the Low Nicotine Category, we have renewed our focus on utilizing our tobacco assets and expertise to attract additional tobacco business to help fund our portfolio growth.
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We have authority to market our VLN ® cigarettes as MRTPs for a period of five years, which is the maximum duration for a marketing granted order for such products under the Family Smoking Prevention & Tobacco Control Act.
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In each case, we fund and control all patent filings as the exclusive licensee.
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During 2025, we reapplied to the FDA to extend the FDA’s exposure modification order beyond December 23, 2026. 7 We continue to pursue improvements in our ability to control nicotine biosynthesis in tobacco, including gene editing techniques that provide for greater crop yields and disease resistance.
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We subsequently entered into a separate license agreement with the University of Kentucky to license other next-generation very low nicotine content non-GMO tobacco plant lines.
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Intellectual Property Our intellectual property enables us to alter the level of nicotine and other nicotinic alkaloids in tobacco plants through genetic engineering and modern plant breeding.
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Beginning in 2018, we also began to extend our R&D activities into the field of hemp (i.e., cannabis). We increased staff at our Rockville, Maryland laboratory facility for this purpose and entered into sponsored and collaborative research agreements with several institutions and consultants for bioengineering of the hemp plant.
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The Tobacco Control Act requires manufacturers of tobacco products to, among, other things, provide the FDA with a list of ingredients added to tobacco products in the manufacturing process and register any establishment engaged in the manufacture, preparation, or processing of a tobacco product.
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In 2022, 22nd Century acquired GVB Biopharma, an industrial scale processor of hemp-based derivatives for commercial applications, which itself was engaged in research and development related to its products and processes. In December 2023, the Company divested its GVB subsidiary, terminated all hemp-related research, distribution and consulting agreements, and ceased all R&D activities related to hemp.
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On December 23, 2021, we secured the first ever MRTP designation for a combustible cigarette for VLN ® King and VLN ® Menthol King 95% reduced nicotine content cigarettes.
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For more information regarding the GVB divestiture, please refer to Note 2, “Discontinued Operations and Divestiture,” in the Notes to Consolidated Financial Statements, which can be found in Item 15 of this report.
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In issuing its granting orders for our VLN ® products, the FDA observed that “the data on these products show they can help addicted adult smokers transition away from highly addictive combusted cigarettes.” Independent scientific research has consistently affirmed the effectiveness of our VLN ® products.
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In February 2024, we relocated our laboratory activities from Rockville, Maryland to our Mocksville, NC manufacturing facility in order to reduce fixed costs and take advantage of proximity to the factory and NCSU. Our R&D Today We received a marketing order from the FDA on December 17, 2019, authorizing commercialization of our RNC cigarettes.
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Most recently, a 2024 marketplace research study using our 95% less nicotine Spectrum research cigarettes, conducted among 438 randomized trial subjects, concluded that more than 40% of low nicotine cigarette users changed their smoking habits dramatically and reduced their consumption over the 12-week period.
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We have successfully applied our non-GMO bioengineering techniques to increasingly diverse tobacco lines, including bright, burley, and oriental tobaccos.
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We have authority to market our VLN ® cigarettes as MRTPs for a period of five years, which is the maximum duration for a marketing granted order for such products under the Tobacco Control Act. During 2025, we reapplied to the FDA to extend the FDA’s exposure modification order beyond December 23, 2026.
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Among its authorities, the FDA requires that manufacturers of tobacco products first introduced or modified after February 15, 2007, undergo premarket review and obtain premarket authorization prior to commercialization, and to comply with post-authorization monitoring and reporting requirements.
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A marketing order may include restrictions on the sale and distribution of the product, including restrictions on the access to, and the advertising and promotion of, the tobacco product, and requirements for record-keeping and post market reporting.
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In issuing its granting orders for our VLN ® products, the FDA observed that “the data on these products show they can help addicted adult smokers transition away from highly addictive combusted cigarettes.” Proposed Mandate Limiting Nicotine Content in Cigarettes On July 28, 2017, the FDA issued an advanced notice of proposed rulemaking (ANPRM) announcing its intention to institute a rule requiring that all combustible cigarettes sold in the United States contain only minimally or non-addictive levels of nicotine, as part pf the FDA’s Comprehensive Plan for Tobacco and Nicotine Regulation. 22nd Century submitted public comments endorsing the proposed rule with citations to clinical studies on the health benefits of RNC tobacco products in curbing nicotine consumption and tobacco-related harms.
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We submitted further data in support of the technical feasibility of the rule and recommended that the mandated minimally or non-addictive level of nicotine be set at no more than 0.7 milligrams per gram (mg/g) of tobacco dry weight, which the World Health Organization (WHO) identified as the potential threshold to make cigarettes minimally or non-addictive.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

42 edited+12 added−25 removed109 unchanged
Biggest changeIt is possible that our results of operations, cash flows, or financial position could be materially affected by an unfavorable outcome or settlement of litigation. Our production facility (NASCO) is integral to our tobacco business and adverse changes or developments affecting our facility may have an adverse impact on our business. Our production facility is integral to our tobacco business.
Biggest changeWe anticipate that new cases will continue to be filed. The FCTC encourages litigation against tobacco product manufacturers. It is possible that our results of operations, cash flows, or financial position could be materially affected by an unfavorable outcome or settlement of litigation.
Our common stock may become the target of a “ short squeeze. ” In recent years, the securities of several companies have increasingly experienced significant and extreme volatility in stock price due to short sellers of common stock and buy-and-hold decisions of longer investors, resulting in what is sometimes described as a “short squeeze.” Short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.
Our common stock may become the target of a “short squeeze.” In recent years, the securities of several companies have increasingly experienced significant and extreme volatility in stock price due to short sellers of common stock and buy-and-hold decisions of longer investors, resulting in what is sometimes described as a “short squeeze.” Short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.
Any significant change in tobacco leaf prices or taxes, quality and quantity could affect our profitability and our business. We may distribute and sell our products outside of the U.S., which subjects us to other regulatory risks. We may seek governmental authorizations required to market our RNC tobacco cigarettes and our other products in other countries.
Any significant change in tobacco leaf prices or taxes, quality and quantity could affect our profitability and our business. 17 We may distribute and sell our products outside of the U.S., which subjects us to other regulatory risks. We may seek governmental authorizations required to market our RNC tobacco cigarettes and our other products in other countries.
Other global incidents could have a similar effect of disrupting our business to the extent they reach and impact the areas in which we operate, the availability of inventory we need, the customers we serve, the partners on whom we rely for products or services or the employees who operate our businesses.
Other global incidents could have a similar effect of disrupting our business to the extent they reach and impact the areas in which we operate, the availability of inventory we need, the 13 customers we serve, the partners on whom we rely for products or services or the employees who operate our businesses.
A pandemic (including COVID-19), natural or man-made disaster or other disruption that affects the manufacturing operations, the operations of any key supplier, distributor or distribution chain service provider or any other disruption in the supply or distribution of goods or services (including a key supplier’s inability to comply with government regulations or unwillingness to supply goods or services to a tobacco company) could have a material adverse effect on our business.
A pandemic, natural or man-made disaster or other disruption that affects the manufacturing operations, the operations of any key supplier, distributor or distribution chain service provider or any other disruption in the supply or distribution of goods or services (including a key supplier’s inability to comply with government regulations or unwillingness to supply goods or services to a tobacco company) could have a material adverse effect on our business.
Our inability to correctly estimate demand for future products could negatively harm our operating results and financial condition. The manufacturing and sale of tobacco products subjects us to significant governmental regulation and the failure to comply with such regulations could have a material adverse effect on our business and subject us to substantial fines or other regulatory actions.
Our inability to correctly estimate demand for future products could negatively harm our operating results and financial condition. The manufacturing and sale of tobacco products subjects us to significant government regulation and the failure to comply with such regulations could have a material adverse effect on our business and subject us to substantial fines or other regulatory actions.
If these proposed rules are finalized and implemented, if new rules are proposed or if additional states or governments pass laws similar to the State of California, we could be negatively impacted through decreased sales, a requirement to remove non-compliant tobacco products from the marketplace, associated interruptions in manufacturing or business disruptions. ​ 21 Table of Contents Risks Related to Intellectual Property We may be unable to adequately protect our intellectual property, products and potential products, and if we cannot obtain adequate protection of our intellectual property.
If these proposed rules are finalized and implemented, if new rules are proposed or if additional states or governments pass laws similar to the State of California, we could be negatively impacted through decreased sales, a requirement to remove non-compliant tobacco products from the marketplace, associated interruptions in manufacturing or business disruptions. ​ Risks Related to Intellectual Property We may be unable to adequately protect our intellectual property, products and potential products, and if we cannot obtain adequate protection of our intellectual property.
An extended disruption at a facility or in service by a supplier, distributor or distribution chain service provider could have a material adverse effect on our business. We face risks inherent in reliance on one manufacturing facility and a small number of key suppliers, distributors and distribution chain service providers.
An extended disruption at our North Carolina manufacturing facility or in service by a supplier, distributor or distribution chain service provider could have a material adverse effect on our business. We face risks inherent in reliance on one manufacturing facility and a small number of key suppliers, distributors and distribution chain service providers.
We may be a target of a short squeeze, and investors may lose a significant portion or all of their investment if they purchase our shares at a rate that is significantly disconnected from our underlying value. 26 Table of Contents ​ Anti-takeover provisions contained in our articles of incorporation and bylaws, as well as provisions of Nevada law, could impair a takeover attempt.
We may be a target of a short squeeze, and investors may lose a significant portion or all of their investment if they purchase our shares at a rate that is significantly disconnected from our underlying value. Anti-takeover provisions contained in our articles of incorporation and bylaws, as well as provisions of Nevada law, could impair a takeover attempt.
Such warrants may deter future investors and can result in further dilution to our investors. ​ We do not expect to declare any dividends on our common stock in the foreseeable future. We have not paid cash dividends to date on our common stock.
Such securities may deter future investors and can result in further dilution to our investors. We do not expect to declare any dividends on our common stock in the foreseeable future. We have not paid cash dividends to date on our common stock.
If we were to prosecute a claim that a third party had illegally obtained and was using our trade secrets, it could be expensive and time consuming and the outcome could be unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets 22 Table of Contents than courts in the United States.
If we were to prosecute a claim that a third party had illegally obtained and was using our trade secrets, it could be expensive and time consuming and the outcome could be unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets than courts in the United States.
For example, another pandemic or 15 Table of Contents comparable heath concern could disrupt our supply chain for tobacco, as well as negatively impact employee productivity, including affecting the availability of employees reporting for work.
For example, another pandemic or comparable heath concern could disrupt our supply chain for tobacco, as well as negatively impact employee productivity, including affecting the availability of employees reporting for work.
The commercial success of our RNC tobacco cigarettes will depend on a number of factors, including, but not limited to our ability to: ● achieve, maintain and grow market identify of, acceptance of, and demand for, such products; ● successfully create consumer awareness of such products; ● achieve the necessary rate of sale to keep products within distribution at retail; ● market the product with the phrase “ Helps You Smoke Less ” and any other required warnings or statements; ● maintain, manage or scale the necessary sales, marketing, manufacturing and other capabilities and infrastructure that are required to successfully commercialize such products; ● grow or otherwise maintain an adequate supply of RNC tobacco; ● maintain and extend intellectual property protection for such products; ● comply with applicable legal and regulatory requirements, including FDA and MSA regulations or requirements with respect to product advertising and our obligations in connection with our PMTAs and MRTPs; ● competitively price our products; ● compete with other similar products or new technologies (if any); ● obtain cost-effective distribution outlets; and 16 Table of Contents ● effectively sell our products into established markets where there is substantial market dominance by large tobacco enterprises.
The commercial success of our RNC tobacco cigarettes will depend on a number of factors, including, but not limited to our ability to: ● achieve, maintain and grow market identify of, acceptance of, and demand for, such products; ● successfully create consumer awareness of such products; ● achieve the necessary rate of sale to keep products within distribution at retail; ● market the product with the phrase “ Helps You Smoke Less ” and any other required warnings or statements; ● maintain, manage or scale the necessary sales, marketing, manufacturing and other capabilities and infrastructure that are required to successfully commercialize such products; ● grow or otherwise maintain an adequate supply of RNC tobacco; ● maintain and extend intellectual property protection for such products; ● comply with applicable legal and regulatory requirements, including FDA and MSA regulations or requirements with respect to product advertising and our obligations in connection with our PMTAs and MRTPs; ● competitively price our products; ● compete with other similar products or new technologies (if any); ● obtain cost-effective distribution outlets; and ● effectively sell our products into established markets where there is substantial market dominance by large tobacco enterprises. 14 If we are unsuccessful in commercializing our RNC tobacco cigarettes, our financial results, business and future prospects would be materially adversely effected.
Our competitors may render our technologies obsolete by advances in existing technological approaches or the development of new or different approaches, potentially eliminating the advantages that we believe we derive from our research approach and proprietary technologies. 14 Table of Contents Our competitors may: ● develop and market similar or new products that are less expensive, safer, or otherwise more appealing than our products; ● develop similar or new technologies and products that render our products obsolete; ● operate larger research and development programs or have substantially greater financial resources than we do; ● have greater success in recruiting skilled technical and scientific workers from the limited pool of available talent; ● more effectively negotiate third-party licenses and strategic relationships; ● commercialize competing products before we or our partners can launch our products; ● be more effective in marketing and creating brand awareness of their products that we are; ● develop tobacco with superior traits to ours; ● initiate or withstand substantial price competition more successfully than we can; and/or ● take advantage of acquisition or other opportunities more readily than we can.
Our competitors may: ● develop and market similar or new products that are less expensive, safer, or otherwise more appealing than our products; ● develop similar or new technologies and products that render our products obsolete; ● operate larger research and development programs or have substantially greater financial resources than we do; ● have greater success in recruiting skilled technical and scientific workers from the limited pool of available talent; ● more effectively negotiate third-party licenses and strategic relationships; ● commercialize competing products before we or our partners can launch our products; ● be more effective in marketing and creating brand awareness of their products that we are; ● develop tobacco with superior traits to ours; ● initiate or withstand substantial price competition more successfully than we can; and/or ● take advantage of acquisition or other opportunities more readily than we can.
The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our common stock: ● general economic conditions, including adverse changes in the global financial markets; ● equity sales by us of our common stock or securities convertible into common stock to fund our operations. ● actual and anticipated fluctuations in our quarterly financial and operating results; ● developments or disputes concerning our intellectual property or other proprietary rights; ● introduction of technological innovations or new commercial products by us or our competitors; ● issues in manufacturing or distributing our products or potential products; ● market acceptance of our products or potential products; ● FDA or other United States or foreign regulatory actions affecting us or our industry; ● litigation or public concern about the safety of our products or potential products; ● negative press or publicity regarding us or our common stock; ● the announcement of litigation against us or the results of on-going litigation; ● additions or departures of key personnel; ● third-party sales of large blocks of our common stock or third party short-selling activity; ● third-party articles regarding us or our securities; ● pending or future shareholder litigation; ● sales of our common stock by our executive officers, directors, or significant stockholders; and These and other external factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.
The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our common stock: ● general economic conditions, including adverse changes in the global financial markets; ● equity sales by us of our common stock or securities convertible into common stock to fund our operations. ● actual and anticipated fluctuations in our quarterly financial and operating results; ● developments or disputes concerning our intellectual property or other proprietary rights; ● introduction of technological innovations or new commercial products by us or our competitors; ● issues in manufacturing or distributing our products or potential products; ● market acceptance of our products or potential products; ● FDA or other United States or foreign regulatory actions affecting us or our industry; ● litigation or public concern about the safety of our products or potential products; ● negative press or publicity regarding us or our common stock; ● the announcement of litigation against us or the results of on-going litigation; ● additions or departures of key personnel; ● third-party sales of large blocks of our common stock or third party short-selling activity; ● third-party articles regarding us or our securities; ● pending or future shareholder litigation; ● sales of our common stock by our executive officers, directors, or significant stockholders; and 22 ● the announcement by us of a reverse stock split or other corporate transaction.
If Nasdaq delists our common stock from trading on its exchange, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our common stock; ● reduced liquidity with respect to our securities; ● a determination that shares of our common stock are “penny stock” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional common stock or obtain additional financing in the future. 24 Table of Contents Recently, the Company received deficiency letters from the Nasdaq Listing Qualifications Department notifying the Company not been in compliance with certain Nasdaq trading rules.
If Nasdaq delists our common stock from trading on its exchange, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our common stock; ● reduced liquidity with respect to our securities; ● a determination that shares of our common stock are “penny stock” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional common stock or obtain additional financing in the future.
The tobacco industry consists of major domestic and international companies, most of which have existing commercial relationships, as well as financial, technical, research and development, marketing, sales, manufacturing, scaling capacity, distribution, lobbying and other resources and name recognition substantially greater than ours.
We are competing with large tobacco companies and large pharmaceutical companies that have greater resources than us. The tobacco industry consists of major domestic and international companies, most of which have existing commercial relationships, as well as financial, technical, research and development, marketing, sales, manufacturing, scaling capacity, distribution, lobbying and other resources, brand and name recognition substantially greater than ours.
Our corporate governance documents presently include the following provisions: ● providing for a “staggered” board of directors in which only one-third (1/3) of the directors can be elected in any year; ● authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend, and other rights superior to our common stock; and ● limiting the liability of, and providing indemnifications to, our directors and officers.
Our corporate governance documents presently include the following provisions: ● providing for a “staggered” board of directors in which only one-third (1/3) of the directors can be elected in any year; ● authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend, and other rights superior to our common stock; and ● limiting the liability of, and providing indemnifications to, our directors and officers. 23 These provisions, alone or together, could delay hostile takeovers and changes in control of our Company or changes in our management.
If a third-party claims that we infringe on its patents or other proprietary rights, we could face a number of issues that could seriously harm our competitive position, including: ● infringement claims that, with or without merit, can be costly and time consuming to litigate, can delay regulatory authorization processes, and can divert management’s attention from our core business strategy; ● substantial damages for past infringement which we may have to pay if a court determines that our products or technologies infringe upon a competitor’s patent or other proprietary rights; ● a court order prohibiting us from commercializing our potential products or technologies unless the holder licenses the patent or other proprietary rights to us, which such holder is not required to do; ● if a license is available from a holder, we may have to pay substantial royalties or grant cross licenses to our patents or other proprietary rights; and ● redesigning our process so that it does not infringe the third-party intellectual property, which may not be possible, or which may require substantial time and expense including delays in bringing our potential products to market.
In addition, because patent applications are published up to 18 months after their filing, and because patent applications can take several years to issue, there may be currently pending third-party patent applications and freedom-to-operate issues that are unknown to us, which may later result in issued patents. 20 If a third-party claims that we infringe on its patents or other proprietary rights, we could face a number of issues that could seriously harm our competitive position, including: ● infringement claims that, with or without merit, can be costly and time consuming to litigate, can delay regulatory authorization processes, and can divert management’s attention from our core business strategy; ● substantial damages for past infringement which we may have to pay if a court determines that our products or technologies infringe upon a competitor’s patent or other proprietary rights; ● a court order prohibiting us from commercializing our potential products or technologies unless the holder licenses the patent or other proprietary rights to us, which such holder is not required to do; ● if a license is available from a holder, we may have to pay substantial royalties or grant cross licenses to our patents or other proprietary rights; and ● redesigning our process so that it does not infringe the third-party intellectual property, which may not be possible, or which may require substantial time and expense including delays in bringing our potential products to market.
Companies that manufacture and/or sell tobacco products face significant governmental regulation, especially in the United States pursuant to the Tobacco Control Act, including but not limited to efforts aimed at reducing the incidence of tobacco use, restricting marketing and advertising, imposing regulations on packaging, mandating warnings and disclosure of flavors or other ingredients, prohibiting the sale of tobacco products with certain flavors or other characteristics, requiring compliance with certain environmental standards, limiting or prohibiting the sale of tobacco products by certain retail establishments and the sale of tobacco products in certain packaging sizes, and seeking to hold retailers and distributors responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco smoke. 17 Table of Contents The Tobacco Control Act requires manufacturers of tobacco products to, among other things, provide the FDA with a list of ingredients added to tobacco products in the manufacturing process and register any establishment engaged in the manufacture, preparation, or processing of a tobacco product.
Companies that manufacture and/or sell tobacco products face significant governmental regulation, especially in the United States pursuant to the Tobacco Control Act, including but not limited to efforts aimed at reducing the incidence of tobacco use, restricting marketing and advertising, imposing regulations on packaging, mandating warnings and disclosure of flavors or other ingredients, prohibiting the sale of tobacco products with certain flavors or other characteristics, requiring compliance with certain environmental standards, limiting or prohibiting the sale of tobacco products by certain retail establishments and the sale of tobacco products in certain packaging sizes, and seeking to hold retailers and distributors responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco smoke.
In addition, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to U.S. patents will be issued.
In addition, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to U.S. patents will be issued. Furthermore, if these patent applications issue, some foreign countries provide significantly less effective patent enforcement than in the United States.
A significant failure of our site security measures and other facility requirements, including failure to comply with applicable regulatory requirements, could have an impact on our ability to continue operating under our facility licenses and our prospects of renewing our licenses, and could also result in a suspension or revocation of these licenses.
A significant failure of our site security measures and other facility requirements, including failure to comply with applicable regulatory requirements, could have an impact on our ability to continue operating under our facility licenses and our prospects of renewing our licenses, and could also result in a suspension or revocation of these licenses. 16 The loss of a significant customer for whom we manufacture tobacco products could have an adverse impact on our results of operation.
Consequently, we will need to reapply to the FDA under a new MRTP application to extend the FDA’s exposure modification order beyond December 23, 2026. The MRTP authorization process is a complex, substantial and lengthy regulatory undertaking.
Consequently during 2025, we have reapplied to the FDA to extend the FDA’s exposure modification order beyond December 23, 2026. The MRTP authorization process is a complex, substantial and lengthy regulatory undertaking.
We need additional funding to execute our business plan and to continue operations and service our outstanding obligations. We continue to seek and evaluate opportunities to raise additional funds through the issuance of our securities, asset sales, and through arrangements with strategic partners.
We continue to seek and evaluate opportunities to raise additional funds through the issuance of our securities, asset sales, and through arrangements with strategic partners.
Without protection for the intellectual property we license, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business prospects. Our worldwide exclusive licenses relating to tobacco from NCSU involve multiple patent families and trade secrets.
Without protection for the intellectual property we license, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business prospects.
To be successful, we must: ● anticipate and respond to new and evolving adult consumer preferences; ● develop, manufacture, market and distribute new and innovative products that appeal to adult consumers (including, where appropriate, through arrangements with, or investments in, third parties); ● improve productivity; and ● protect or enhance margins through cost savings and price increases. 20 Table of Contents The willingness of adult consumers to purchase premium consumer tobacco products, such as our RNC cigarettes, depends in part on economic conditions.
To be successful, we must: ● anticipate and respond to new and evolving adult consumer preferences; ● develop, manufacture, market and distribute new and innovative products that appeal to adult consumers (including, where appropriate, through arrangements with, or investments in, third parties); ● improve productivity; ● protect or enhance margins through cost savings and price increases; and ● market our products appropriately to ensure consumer awareness.
If one of such competitors develops a cigarette that is safe for human consumption, a safer alternative for nicotine that is widely accepted, superior low nicotine tobacco or otherwise develops a superior quitting method, it could render our RNC tobacco and cigarettes obsolete, which would have a material adverse impact on our business and operations and our ability to achieve profitability.
If one of such competitors develops a cigarette that is safe for human consumption, a safer alternative for nicotine that is widely accepted, superior low nicotine tobacco or otherwise develops a superior quitting method, it could render our RNC tobacco and cigarettes obsolete, which would have a material adverse impact on our business and operations and our ability to achieve profitability. 12 Our competitors may render our technologies obsolete by advances in existing technological approaches or the development of new or different approaches, potentially eliminating the advantages that we believe we derive from our research approach and proprietary technologies.
The Tobacco Control Act also authorizes the FDA to promulgate regulations requiring that the methods used in, and the facilities and controls used for, the manufacture, preproduction design validation, packing, and storage of a tobacco product conform to current good manufacturing practice (CGMP), also known as tobacco product manufacturing practices (TPMP).
The Tobacco Control Act also authorizes the FDA to promulgate regulations requiring that the methods used in, and the facilities and controls used for, the manufacture, preproduction design validation, packing, and storage of a tobacco product conform to current good manufacturing practice (CGMP), also known as tobacco product manufacturing practices (TPMP). 15 We cannot guarantee that our current manufacturing facility or any other manufacturing will successfully complete FDA and/or similar inspections, or that future TPMP regulations will not also negatively affect the cost or sustainability of our manufacturing facility.
The exercise price on these warrants will have the exercise price reduced in the event of any future offerings of securities at a lower price than the current exercise price (subject to limited exceptions) of $4.3021.
We have approximately 5,408,786 outstanding warrants with anti-dilution price protection. The exercise price on these warrants will have the exercise price reduced in the event of any future offerings of securities at a lower price than the current exercise price (subject to limited exceptions) of $3.57.
Increases in cigarette taxes are expected to continue to have an adverse impact on sales of cigarettes resulting in (i) lower consumption levels, (ii) a shift in sales from manufactured cigarettes to other tobacco products or to lower-price cigarette categories, (iii) a shift from local sales to legal cross-border purchases of lower price products, and (iv) illicit products such as contraband and counterfeit. 19 Table of Contents Government mandated prices or taxes, production control programs, shifts in crops driven by economic conditions, climatic or adverse weather patterns may increase the cost or reduce the quality and/or supply of the tobacco and other agricultural products used to manufacture our products.
Increases in cigarette taxes are expected to continue to have an adverse impact on sales of cigarettes resulting in (i) lower consumption levels, (ii) a shift in sales from manufactured cigarettes to other tobacco products or to lower-price cigarette categories, (iii) a shift from local sales to legal cross-border purchases of lower price products, and (iv) illicit products such as contraband and counterfeit.
In periods of economic uncertainty, adult consumers may purchase more discount brands and/or, in the case of tobacco products, consider lower-priced tobacco products, which could have a material adverse effect on the business and profitability.
In periods of economic uncertainty, adult consumers may purchase more discount brands and/or, in the case of tobacco products, consider lower-priced tobacco products, which could have a material adverse effect on the business and profitability. 18 We may be unsuccessful in developing and commercializing adjacent products or processes, including innovative tobacco products that may reduce the health risks associated with certain other tobacco products and that appeal to adult tobacco consumers.
Our competitors generally have greater financial resources and name recognition than we do, and they may therefore develop products or other technologies similar or superior to ours, or otherwise compete more successfully than we do. We are competing with large tobacco companies and large pharmaceutical companies that have greater resources than us.
Without additional capital, we will be unable to continue our operations in the future. Our competitors generally have greater financial resources and name recognition than we do, and they may therefore develop products or other technologies similar or superior to ours, or otherwise compete more successfully than we do.
If we are unsuccessful in commercializing our RNC tobacco cigarettes, our financial results, business and future prospects would be materially adversely effected. We may be unable to renew our MRTP Application for our VLN ® cigarettes. The FDA has broad authority over the regulation of tobacco products.
We may be unable to renew our MRTP Application for our VLN ® cigarettes. The FDA has broad authority over the regulation of tobacco products.
An unfavorable outcome or settlement of pending tobacco related litigation could encourage the commencement of additional litigation. The variability in pleadings, together with the actual experience of management in litigating claims, demonstrates that the monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome.
The variability in pleadings, together with the actual experience of management in litigating claims, demonstrates that the monetary relief that may be specified in a lawsuit bears little relevance to the ultimate outcome. Damages claimed in some tobacco-related litigations are significant and, in certain cases, range into the billions of dollars.
Our commercial success will depend, in part, on obtaining and maintaining intellectual property protection for our technologies, products, and potential products. We will only be able to protect our technologies, products, and potential products from unauthorized use by third parties to the extent that valid and enforceable patents cover them, or to the extent that other market exclusionary rights apply.
We will only be able to protect our technologies, products, and potential products from unauthorized use by third parties to the extent that valid and enforceable patents cover them, or to the extent that other market exclusionary rights apply. 19 Patent positions can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved.
Legal proceedings covering a wide range of matters related to tobacco use are pending or threatened in various U.S. and foreign jurisdictions.
Legal proceedings covering a wide range of matters related to tobacco use are pending or threatened in various U.S. and foreign jurisdictions. Various types of claims are raised in these proceedings, including product liability, consumer protection, antitrust, tax, contraband shipments, patent infringement, employment matters, claims for contribution, and claims of competitors and distributors.
Such lawsuits and any future related lawsuits could cause us to incur substantial costs defending the lawsuit and can also divert the time and attention of our management, which would have a negative adverse impact on our business. 25 Table of Contents We are named defendant in certain litigation matters; if we are unable to resolve these matters favorably, then our business, operating results and financial condition may be adversely affected.
Such lawsuits and any future related lawsuits could cause us to incur substantial costs defending the lawsuit and can also divert the time and attention of our management, which would have a negative adverse impact on our business. Future sales of our common stock will result in dilution to our common stockholders.
As of March 17, 2025, we had cash and cash equivalents of approximately $1.7 million and outstanding indebtedness under the Convertible Senior Secured Credit Facility of $4.6 million. Doubts about our ability to continue as a going concern have and could continue to negatively impact our relationships with our commercial partners and our employees.
As of March 20, 2026, we had cash and cash equivalents of approximately $3.8 million. Doubts about our ability to continue as a going concern have and could continue to negatively impact our relationships with our commercial partners and our employees. We need additional funding to execute our business plan and to continue operations and service our outstanding obligations.
Risks Related to Ownership of Our Common Stock Nasdaq may delist our common stock from trading on its exchange which could limit investors’ ability to make transactions in our common stock and subject us to additional trading restrictions. Our common stock is currently listed on the Nasdaq Capital Market (“NASDAQ”).
If any of our license agreements or other intellectual property agreements are not effective at preventing others from competing with us and/or using our intellectual property, our business could be adversely affected. 21 Risks Related to Ownership of Our Common Stock Nasdaq may delist our common stock from trading on its exchange which could limit investors’ ability to make transactions in our common stock and subject us to additional trading restrictions.
The prospect of this possible dilution may also impact the price of our common stock. We have a significant number of outstanding warrants with anti-dilution price protection. We have approximately 24,387,570 outstanding warrants with anti-dilution price protection.
If any of the holders of outstanding warrants or notes exercise or convert them, as applicable, our common stockholders will incur dilution in their relative percentage ownership. The prospect of this possible dilution may also impact the price of our common stock. We have a significant number of outstanding securities with anti-dilution price protection.
Furthermore, if these patent applications issue, some foreign countries provide significantly less effective patent enforcement than in the United States. 23 Table of Contents The status of patents involves complex legal and factual questions and the breadth of claims allowed is uncertain.
The status of patents involves complex legal and factual questions and the breadth of claims allowed is uncertain.
Although such deficiencies have been addressed and remedied, there can be no assurance of our ability to comply with such rules in the future. An active trading market for our common stock may not be sustained and you may not be able to resell your shares at or above the price at which you purchased them.
Over the past two years, the Company has received deficiency letters from the Nasdaq Listing Qualifications Department notifying the Company not been in compliance with certain Nasdaq trading rules. Although such deficiencies have been addressed and remedied, there can be no assurance of our ability to comply with such rules in the future.
Removed
Without additional capital, we will be unable to continue our operations in the future. ​ We may be unable to comply with the covenants in our convertible senior secured debentures.
Added
In addition, we currently use some artificial intelligence (AI) solutions for certain sales, back office, administrative and other functions.
Removed
We have $4.6 million in outstanding convertible senior secured debentures as of March 17, 2025, that contain customary representations, warranties and covenants including among other things and subject to certain exceptions, covenants that restrict us from incurring additional indebtedness, creating or permitting liens on assets, making or holding any investments, repaying outstanding indebtedness, paying dividends or distributions and entering into transactions with affiliates.
Added
The use of AI by us and/or our business partners creates the additional risk for the potential loss or misuse of personal data or the dissemination of confidential information, either of which may result in significantly increased business and security costs, a damaged reputation, administrative penalties, or costs related to defending legal claims.
Removed
We are also required to maintain certain quarterly revenue targets. ​ 13 Table of Contents As a result of these covenants, our ability to respond to changes in business and economic conditions and engage in beneficial transactions, including to obtain additional financing as needed, may be restricted.
Added
The Tobacco Control Act requires manufacturers of tobacco products to, among other things, provide the FDA with a list of ingredients added to tobacco products in the manufacturing process and register any establishment engaged in the manufacture, preparation, or processing of a tobacco product.
Removed
Furthermore, our failure to comply with the covenants could result in a default under such agreements, which could permit the debt holders to accelerate our obligation to repay the debt.
Added
Litigation is subject to uncertainty, and it is possible that there could be adverse developments in pending cases. An unfavorable outcome or settlement of pending tobacco related litigation could encourage the commencement of additional litigation.
Removed
Although we have in the past received a waiver with respect to our compliance with such covenants, there is no assurance that we will be able to secure a similar waiver for the failure to comply with any future covenants. If any of our debt is accelerated, we likely would not have sufficient funds available to repay it.
Added
Our North Carolina manufacturing facility is integral to our tobacco business and adverse changes or developments affecting our facility may have an adverse impact on our business. Our manufacturing facility in North Carolina is integral to our tobacco business.
Removed
Substantially all of our assets, including intellectual property, are collateralized under the debentures. If such debt is accelerated, we could be required to liquidate our inventory, cease or curtail operations, or seek protection under applicable bankruptcy laws or similar state proceedings. ​ Additionally, the senior secured debentures may be converted into shares of the Company’s common.
Added
Government mandated prices or taxes, production control programs, shifts in crops driven by economic conditions, climatic or adverse weather patterns may increase the cost or reduce the quality and/or supply of the tobacco and other agricultural products used to manufacture our products.
Removed
If the senior secured debentures are converted into common stock in whole or in part, the existing stockholders could incur significant dilution in their relative percentage ownership. The prospect of this possible dilution may also negatively impact the price of our common stock.
Added
The willingness of adult consumers to purchase premium consumer tobacco products, such as our RNC cigarettes, depends in part on economic conditions.
Removed
On March 8, 2023, the FDA issued a proposed rule to promulgate such TRMP regulations. The proposed rule, if finalized, would establish requirements for manufacturers of finished and bulk tobacco products on the methods used in, and the facilities and controls used for, the manufacture, pre-production design validation, packing, and storage of tobacco product.
Added
Our commercial success will depend, in part, on obtaining and maintaining intellectual property protection for our technologies, products, and potential products.
Removed
We cannot guarantee that our current manufacturing facility or any other manufacturing will successfully complete FDA and/or similar inspections, or that future TPMP regulations will not also negatively affect the cost or sustainability of our manufacturing facility.
Added
Our common stock is currently listed on the Nasdaq Capital Market (“NASDAQ”).
Removed
Various types of claims are raised in these proceedings, including product liability, consumer protection, antitrust, tax, contraband shipments, patent infringement, employment matters, claims for contribution, and claims of competitors and distributors. 18 Table of Contents Litigation is subject to uncertainty, and it is possible that there could be adverse developments in pending cases.
Added
These and other external factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.
Removed
Damages claimed in some tobacco-related litigations are significant and, in certain cases, range into the billions of dollars. We anticipate that new cases will continue to be filed. The FCTC encourages litigation against tobacco product manufacturers.
Added
Additionally, as of March 23, 2026, we have outstanding 5,408,786 warrants to purchase an equal number of shares of common stock and 16.0 million in Series B convertible preferred stock (convertible into a maximum of 22,408,964 shares).
Removed
The loss of a significant customer for whom we manufacture tobacco products could have an adverse impact on our results of operation.
Added
In addition, our Series B Convertible Preferred Stock is convertible into common stock at any time at an initial conversion price of $3.57, which price is subject to adjustment for any future offerings of securities at a lower price than the current exercise price (subject to limited exceptions).
Removed
We may be unsuccessful in developing and commercializing adjacent products or processes, including innovative tobacco products that may reduce the health risks associated with certain other tobacco products and that appeal to adult tobacco consumers.
Removed
Patent positions can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved.
Removed
In addition, because patent applications are published up to 18 months after their filing, and because patent applications can take several years to issue, there may be currently pending third-party patent applications and freedom-to-operate issues that are unknown to us, which may later result in issued patents.
Removed
The exclusive rights under the NCSU agreements expire on the date on which the last patent or registered plant variety covered by the subject license expires in the country or countries where such patents or registered plant varieties are in effect.
Removed
The NCSU licenses relate predominately to issued patents, and our exclusive rights in the NCSU licenses are expected to expire in 2042. If any of our license agreements or other intellectual property agreements are not effective at preventing others from competing with us and/or using our intellectual property, our business could be adversely affected.
Removed
An active trading market for our shares may not be sustained. In the absence of an active trading market for our common stock, shares of common stock may not be able to be resold at or above the purchase price of such shares.
Removed
Although there can be no assurances, we expect that our common stock will continue to be listed on the NASDAQ. However, even if our common stock continues to be listed on the NASDAQ, there is no assurance that an active market for our common stock will continue in the foreseeable future.
Removed
There also can be no assurance that we can maintain such listing on the NASDAQ.
Removed
We are currently involved in certain litigation matters. See "Item 3 – Legal Proceedings" included in this Annual Report on Form 10-K.
Removed
We cannot at this time predict the outcome of these matters or any future litigations matters (whether related or unrelated) or reasonably determine the probability of a material adverse result or reasonably estimate range of potential exposure, if any, that these matters or any future matters might have on us, our business, our financial condition or our results of operations, although such effects, including the cost to defend, any judgements or indemnification obligations, among others, could be materially adverse to us.
Removed
In addition, in the future, we may need to record litigation reserves with respect to these matters. Further, regardless of how these matters proceed, it could divert our management’s attention and other resources away from our business. ​ Future sales of our common stock will result in dilution to our common stockholders.
Removed
Additionally, as of March 17, 2025, we have outstanding 24,391,163 warrants to purchase an equal number of shares of common stock and $4.6 million in convertible promissory notes (convertible into 754,554 shares). If any of the holders of outstanding warrants or notes exercise or convert them, as applicable, our common stockholders will incur dilution in their relative percentage ownership.
Removed
These provisions, alone or together, could delay hostile takeovers and changes in control of our Company or changes in our management.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+1 added−1 removed9 unchanged
Biggest changeThe Company engages a third-party service provider specializing in information technology, which assists with the periodic assessment and testing of the Company’s policies, standards, processes and practices that are designed to address cybersecurity threats and incidents.
Biggest changeEducation and Awareness : The Company provides regular, mandatory training for personnel regarding cybersecurity threats as a means to equip the Company’s personnel with effective tools to address cybersecurity threats, and to communicate the Company’s evolving information security policies, standards, processes and practices. 24 The Company engages a third-party service provider specializing in information technology, which assists with the periodic assessment and testing of the Company’s policies, standards, processes and practices that are designed to address cybersecurity threats and incidents.
Risk Management and Strategy As one of the critical elements of the Company’s overall ERM approach, the Company’s cybersecurity program is focused on the following key areas: 27 Table of Contents Collaborative Approach : The Company has implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner.
Risk Management and Strategy As one of the critical elements of the Company’s overall ERM approach, the Company’s cybersecurity program is focused on the following key areas: Collaborative Approach : The Company has implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner.
For more information on our cybersecurity related risks, see Item 1A Risk Factors in this Annual Report on Form 10-K. ​ ​ 28 Table of Contents
For more information on our cybersecurity related risks, see Item 1A Risk Factors in this Annual Report on Form 10-K. ​
As applicable, the Audit Committee also receives prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed. ​ Senior management, in coordination with the Company’s third-party service provider specializing in information technology, works collaboratively across the Company to implement a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with the Company’s incident response and recovery plans.
Senior management, in coordination with the Company’s third-party service provider specializing in information technology, works collaboratively across the Company to implement a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with the Company’s incident response and recovery plans.
Removed
Education and Awareness : The Company provides regular, mandatory training for personnel regarding cybersecurity threats as a means to equip the Company’s personnel with effective tools to address cybersecurity threats, and to communicate the Company’s evolving information security policies, standards, processes and practices.
Added
As applicable, the Audit Committee also receives prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−1 removed1 unchanged
Biggest changeItem 2. Properties. As of December 31, 2024, we operated four tobacco facilities located in Mocksville, North Carolina and surrounding areas. These locations are comprised of one leased manufacturing facility (which is also our principal executive office and headquarters) and three leased inventory storage facilities.
Biggest changeItem 2. Properties. As of December 31, 2025, we operated two tobacco facilities located in Mocksville, North Carolina and surrounding areas. These locations are comprised of one leased manufacturing facility (which is also our principal executive office and headquarters) and one leased inventory storage facility.
Removed
We continuously review our anticipated requirements for facilities and, on the basis of that review, may from time to time acquire additional facilities, expand or dispose of existing facilities. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+5 added−1 removed2 unchanged
Biggest changeItem 3. Legal Proceedings. See Note 11 - Commitments and Contingencies – Litigation - to our consolidated financial statements included in this Annual Report for information concerning our on-going litigation.
Biggest changeItem 3. Legal Proceedings. See Note 11 - Commitments and Contingencies – Litigation - to our consolidated financial statements included in this Annual Report for information concerning our ongoing litigation.
Removed
Mine Safety Disclosures. Not applicable ​ PART II
Added
Mine Safety Disclosures. Not applicable ​ PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Added
Our common stock is listed on the Nasdaq Capital Market under the symbol “XXII.” As of March 23, 2026, there were approximately 136 holders of record of our common stock based on the records of our transfer agent.
Added
However, because many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, we believe there are considerably more beneficial holders of our common stock than record holders. 25 Dividend Policy We have not previously and do not plan to declare or pay any dividends on our common stock.
Added
Our current policy is to retain all funds and any earnings for use in the operation, debt reduction and expansion of our business. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs.
Added
Shares authorized for issuance under equity compensation plans The following table summarizes the number of shares of common stock to be issued upon exercise of outstanding options and vesting of restricted stock units under the amended and restated 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (the “Plan”), the weighted-average exercise price of such stock options, and the number of securities available to be issued under the Plan as of December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ ​ ​ ​ ​ ​ remaining available for ​ ​ Number of securities to ​ ​ ​ ​ issuance under equity ​ ​ be issued upon exercise ​ ​ Weighted average ​ compensation plans ​ ​ of outstanding options, ​ ​ exercise price of ​ (excluding securities ​ ​ and restricted stock units ​ ​ outstanding options ​ reflected in column (a)) ​ ​ (a) ​ ​ (b) ​ (c) Equity compensation plans approved by security holders 97,307 (1) ​ $ 31.12 3,772,848 ​ Equity compensation plans not approved by security holders — ​ ​ N/A — ​ Total 97,307 ​ ​ — 3,772,848 (2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Consists of 72,973 stock options and 24,334 restricted stock units. ​ ​ ​ ​ ​ ​ ​ ​ ​ (2) Consists of shares available for award under the Plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Item 6. [Reserved] ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

0 edited+22 added−4 removed0 unchanged
Removed
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is listed on the Nasdaq Capital Market under the symbol “XXII.” As of March 17, 2025, there were approximately 136 holders of record of our common stock based on the records of our transfer agent.
Added
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. ​ On March 23, 2026, we filed a Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of the State of Nevada designating 20,000 shares out of the authorized but unissued shares of preferred stock as Series B Convertible Preferred Stock with a stated value of $1,000 per share (the “Series B Certificate of Designation”).
Removed
However, because many of our shares of common stock are held by brokers and other institutions on behalf of shareholders, we believe there are considerably more beneficial holders of our common stock than record holders. Dividend Policy We have not previously and do not plan to declare or pay any dividends on our common stock.
Added
The Series B Certificate of Designation is attached as Exhibit 3.1.7 hereto. The following is a summary of the principal terms of the Series B Preferred Stock as set forth in the Series B Certificate of Designation.
Removed
Our current policy is to retain all funds and any earnings for use in the operation, debt reduction and expansion of our business. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs.
Added
The summary below is not intended to be complete and is qualified in its entirety by reference to such exhibit which is incorporated herein by reference. 36 Dividends The holders of Series B Preferred Stock will be entitled to dividends when and as declared by the board of directors of the Company (the “Board”), from time to time, in its sole discretion, which dividends will be paid by the Company out of funds legally available therefor, payable, subject to the conditions and other terms of the Certificate of Designations, in cash, in securities of the Corporation or using assets as determined by the Board on the stated value of such Preferred Stock.
Removed
Issuer Purchases of Equity Securities None. 29 Table of Contents Shares authorized for issuance under equity compensation plans The following table summarizes the number of shares of common stock to be issued upon exercise of outstanding options and vesting of restricted stock units under the amended and restated 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (the “Plan”) and our prior 2014 Equity Incentive Plan, the weighted-average exercise price of such stock options, and the number of securities available to be issued under the Plan as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ ​ ​ ​ ​ ​ remaining available for ​ ​ Number of securities to ​ ​ ​ ​ issuance under equity ​ ​ be issued upon exercise ​ ​ Weighted average ​ compensation plans ​ ​ of outstanding options, ​ ​ exercise price of ​ (excluding securities ​ ​ and restricted stock units ​ ​ outstanding options ​ reflected in column (a)) ​ ​ (a) ​ ​ (b) ​ (c) Equity compensation plans approved by security holders — ​ ​ $ — 5,336,670 ​ Equity compensation plans not approved by security holders — ​ ​ N/A — ​ Total — ​ ​ — 5,336,670 (1) (1) Consists of shares available for award under the Plan. ​ ​ Item 6. [Reserved] ​
Added
Voting Rights The shares of Series B Preferred Stock have no voting rights, except to the extent required by applicable law.
Added
As long as any shares of Series B Preferred Stock are outstanding, the Company may not, without the approval of a majority of the then outstanding shares of Series B Preferred Stock (a) alter or change the powers, preferences or rights given to the Series B Preferred Stock, (b) alter or amend the Certificate of Incorporation or the bylaws of the Company in such a manner so as to materially adversely affect any rights given to the Series B Preferred Stock, (c) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined below) senior to, or otherwise pari passu with, the Series B Preferred Stock, (d) increase the number of authorized shares of Series B Preferred Stock, or (e) enter into any agreement to do any of the foregoing.
Added
Liquidation Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the then holders of the Series B Preferred Stock are entitled to receive out of the assets available for distribution to stockholders of the Company an amount equal to either (i) 100% of the stated value or (ii) the amount the holder would receive if the Series B Preferred Stock had been converted into Common Stock; in each instance, prior to and in preference to the Common Stock or any other series of preferred stock.
Added
Conversion The Series B Preferred Stock is convertible into Common Stock at any time at a fixed conversion price of $3.57, subject to adjustment for certain anti-dilution provisions set forth in the Series B Certificate of Designation, subject to a floor price equal to 20% of the Nasdaq minimum price on the date of the Securities Purchase Agreement ($0.714) (the “Series B Conversion Price”).
Added
The fixed conversion price has anti-dilution price protection for future dilutive issuances. The Company has the ability to reset the fixed conversion price (lower), subject to board approval.
Added
The Series B Preferred Stock is also convertible at any time at the Alternative Conversion Price, which is a 15% discount to the lowest daily VWAP in the prior 20 trading days, subject to the floor price.
Added
Conversion at the Option of the Holder The Series B Preferred Stock is convertible at the then-effective Series B Conversion Price (or the Alternative Conversion Price, at the holder’s election) at the option of the holder at any time and from time to time.
Added
Mandatory Conversion at the Option of the Company If, at any time from and after issuance, (i) the closing price of the Common Stock equals or exceeds 200% of the then fixed conversion price for 10 consecutive trading days and (ii) the daily dollar trading volume for the Common Stock exceeds $500,000 per day during such period, the Company may require the holders to convert the Series B Preferred Stock into Common Stock at the Series B Conversion Price.
Added
Beneficial Ownership Limitation The Series B Preferred Stock cannot be converted to Common Stock if the holder and its affiliates would beneficially own more than 4.99% (or 9.99% at the election of the holder) of the outstanding Common Stock.
Added
However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us, provided that any increase in this limitation will not be effective until 61 days after such notice from the holder to us and such increase or decrease will apply only to the holder providing such notice.
Added
Preemptive Rights The Securities Purchase Agreement also provides that certain of the Investors in the Offering that fund at least $2,000,000 have a right of participation in future equity or equity-linked offerings by the Company in an amount equal to 50% of such subsequent financing for a period of 9 months after no shares of Series B Preferred Stock are outstanding. 37 Redemption At any time six (6) months after the issuance date, the Company may redeem all or a portion of the shares of Series B Preferred Stock outstanding by delivering notice at least 30 calendar days prior equal to 110% of the stated value per share of Series B Preferred Stock being redeemed.
Added
During the 30-day notice period, holders shall be permitted to convert their Series B Preferred Stock. Such redemption right may also be exercised in advance of a change in control of the Company.
Added
Negative Covenants As long as any Series B Preferred Stock is outstanding, unless the holders of more than 50% of the then outstanding shares of Series B Preferred Stock shall have otherwise given prior written consent, the Company cannot, subject to certain exceptions, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness (as defined in the Certificate of Designations) exceeding $100,000, with the exception of a working capital line of credit with a commercial bank or other similar financial institution up to $1,000,000.
Added
Term The Series B Preferred Stock is perpetual and has no stated maturity date. Trading Market There is no established trading market for any of the Series B Preferred Stock, and we do not expect a market to develop.
Added
We do not intend to apply for a listing for any of the Series B Preferred Stock on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Series B Preferred Stock will be limited.
Added
(b) Our directors and executive officers may purchase or sell shares of our common stock in the market from time to time, including pursuant to equity trading plans adopted in accordance with Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) and in compliance with guidelines specified by the Company.
Added
In accordance with Rule 10b5-1 and the Company’s insider trading policy, directors, officers and certain employees who, at such time, are not in possession of material non-public information about the Company are permitted to enter into written plans that pre-establish amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s common stock, including shares acquired pursuant to the Company’s equity plans (“Rule 10b5-1 Trading Plans”).
Added
Under a Rule 10b5-1 Trading Plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from them.
Added
No contracts, instructions or written plans for the sale or purchase of our securities were adopted, terminated or modified by our directors and executive officers during the three months ended December 31, 2025. ​ ​ Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspectio n ​ Not applicable. ​ PART III

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

33 edited+28 added−26 removed12 unchanged
Biggest changeThe Company has the only FDA-authorized combustible cigarette able to meet the proposed stringent reduced nicotine content product standard. ● Continued agreements with national-scale C-store distribution partners to support state-wide or multi-state availability of VLN ® at hundreds of stores within our target markets. ● Announced plans for new VLN product branding and marketing initiatives designed to drive greater customer engagement, as well as the development of partner VLN brands to be sold alongside proprietary VLN products. ● Announced the first VLN partner brand with Smoker Friendly, to begin shipments in the second quarter 2025. ● Restructured contract manufacturing business operations to deliver improved efficiency and exited or renegotiated underpriced contracts in favor of improved customer agreements. ● Signed a new license and manufacturing agreement with Smoker Friendly, one of the largest independent cigarette retailers in the United States, covering 11 brands currently sold in the Smoker Friendly network of retail stores and dealers in the U.S., plus another eight new premium brands to be launched and establishing a framework for other planned future products to be added. ● Expanded the Pinnacle private label brand to add distribution of cigarillo products to its existing Pinnacle cigarette products currently sold as a private label brand in a top-5 U.S. gas station convenience store chain. ● Executed two significant new export customer contracts to drive additional revenue and improve our margin profile, including an expected substantial increase in our overall CMO production unit volumes.
Biggest changeThe Company has the only FDA-authorized combustible cigarette able to meet the proposed stringent reduced nicotine content product standard. ● The Company filed its submission of public comment in support of the FDA proposed “Tobacco Product Standard for Nicotine Yield of Cigarettes and Certain Other Combusted Tobacco Products,” in September 2025. ● Continued agreements with national-scale C-store distribution partners to support state-wide or multi-state availability of VLN ® and partner VLN ® at hundreds of stores within our target markets. ● Began shipments of its new VLN ® product branding and launched marketing initiatives designed to drive greater customer engagement, as well as the development of partner VLN ® brands to be sold alongside proprietary VLN ® products. ● Restructured contract manufacturing business operations to deliver improved efficiency and exited or renegotiated underpriced contracts in favor of improved customer agreements. ● Signed a new license and manufacturing agreement with Smoker Friendly, one of the largest independent cigarette retailers in the United States, covering 11 brands currently sold in the Smoker Friendly network of retail stores and dealers in the U.S., plus another eight new premium brands to be launched and establishing a framework for other planned future products to be added. ● Expanded the Pinnacle private label brand to add distribution of moist snuff other tobacco products to its existing Pinnacle cigarette products currently sold as a private label brand in a top-5 U.S. gas station convenience store chain. ● Exited 2025 with a significantly strengthened balance sheet, including the elimination of debt and improved liquidity, providing flexibility to execute our strategy. ​ Financial Overview – Fourth Quarter and Full Year 2025 Results ● Net revenues for the fourth quarter of 2025 were $3,537, a decrease of 12.0% from $4,020 in 2024, primarily driven by a decrease in cigarettes and filtered cigars sales offset by an increase other tobacco products. o Fourth quarter 2025 total cartons sold of 248 compared to 338 in the comparable prior year period. ● Net revenues for the full year 2025 were $17,587, a decrease of 27.9% from $24,382 in 2024. ● Gross loss for the fourth quarter of 2025 improved to a loss of $834 compared to loss of $1,254 in the prior year period. ● Gross loss for the full year 2025 was a loss of $3,137, compared to a loss of $2,400 in 2024. ● Total operating expenses for the fourth quarter 2025 decreased 30.6% to $1,969 compared to $2,837 in the prior year quarter driven by: o Sales, general and administrative expenses decreased to $1,825, driven primarily by decreases in strategic consulting, legal, and other public company expenses. o Research and development expenses decreased to $105, driven by a decrease in contract and IP related costs. o Other operating expense, net was $39 compared to $147 in the prior year period, driven by an increase in non-recurring charges in 2024. ● Operating loss for the fourth quarter 2025 was $2,803, compared to a loss of $4,091 in the prior year period.
Impairment, if any, is based on the excess of the carrying value over the fair value of these assets. ​ For our indefinite-lived intangible assets, we performed a qualitative evaluation and considered factors such as current and future sales projections, strategic objectives, future market and economic conditions, competition, and federal and state regulations.
Impairment, if any, is based on the excess of the carrying value over the fair value of these assets. 34 For our indefinite-lived intangible assets, we performed a qualitative evaluation and considered factors such as current and future sales projections, strategic objectives, future market and economic conditions, competition, and federal and state regulations.
Given our projected operating requirements and existing cash and cash equivalents, there is substantial doubt about our ability to continue as a going concern through one year following the date that the Consolidated Financial Statements herein are issued.
Given our projected operating requirements and existing cash and cash equivalents, there is substantial doubt about our ability to continue as a going concern through one year following the date that the Consolidated Financial Statements included herein are issued.
Additionally, interest expense decreased $278 from the Subordinated Note, which was extinguished prior to maturity in April 2024 and resulted in a loss on extinguishment of $400. ​ Liquidity and Capital Resources We have incurred significant losses and negative cash flows from operations since inception and expect to incur additional losses until such time that we can generate significant revenue and profit in our tobacco business.
Additionally, interest expense decreased $1,430 from the Subordinated Note, which was due to a $400 loss on extinguishment prior to maturity in April 2024. ​ Liquidity and Capital Resources We have incurred significant losses and negative cash flows from operations since inception and expect to incur additional losses until such time that we can generate significant revenue and profit in our tobacco business.
Changes in estimates or assumptions could result in a material adjustment to the consolidated financial statements. ​ 38 Table of Contents We have identified several critical accounting estimates.
Changes in estimates or assumptions could result in a material adjustment to the consolidated financial statements. We have identified several critical accounting estimates.
Evaluation of long-lived assets for impairment ​ When impairment indicators exist, we determine if the carrying value of the long-lived asset(s) including, but not limited to, PP&E, right-of-use lease assets, and definite-lived intangible asset(s) exceeds the related undiscounted future cash flows.
We determined as of December 1, 2025 it is more likely than not that that the assets are not impaired. Evaluation of long-lived assets for impairment When impairment indicators exist, we determine if the carrying value of the long-lived asset(s) including, but not limited to, PP&E, right-of-use lease assets, and definite-lived intangible asset(s) exceeds the related undiscounted future cash flows.
When it is determined that the useful life of an asset (asset group) is shorter than the originally estimated life, and there are sufficient cash flows to support the carrying value of the asset (asset group), we accelerate the rate of depreciation/amortization in order to fully depreciate/amortize the asset over its shorter useful life. 39 Table of Contents ​ Estimation of the cash flows and useful lives of long-lived assets and definite-lived intangible assets requires significant management judgment.
When it is determined that the useful life of an asset (asset group) is shorter than the originally estimated life, and there are sufficient cash flows to support the carrying value of the asset (asset group), we accelerate the rate of depreciation/amortization in order to fully depreciate/amortize the asset over its shorter useful life.
Refer to Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements contained in Item 15 of this report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations. ​ Critical Accounting Estimates ​ Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
Refer to Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements contained in Item 15 of this report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations.
Additionally, if our demand forecasts for specific products is greater than actual demand and we fail to reduce manufacturing output accordingly, we could be required to record additional inventory write-down or expense a greater amount of overhead costs, which would negatively impact our gross profit and net income. ​ Valuation of Long-Lived Assets We make assumptions in establishing the carrying value, fair value and, if applicable, the estimated lives of our intangible and other long-lived assets.
Additionally, if our demand forecasts for specific products is greater than actual demand and we fail to reduce manufacturing output accordingly, we could be required to record additional inventory write-down or expense a greater amount of overhead costs, which would negatively impact our gross profit and net income.
We had negative cash flow from operations of $14,345 for the year ended December 31, 2024 and an accumulated deficit of $393,871 as of December 31, 2024.
We had negative cash flow from operations of $7,723 for the year ended December 31, 2025 and an accumulated deficit of $398,925 as of December 31, 2025.
Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Inventories Inventories are measured on a first-in, first-out basis at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Unforeseen changes, such as the loss of one or more significant customers, technology obsolescence, or significant manufacturing disruption, among other factors, could substantially alter the assumptions regarding the ability to realize the return of our investment in long-lived assets, definite-lived intangible assets or their estimated useful lives. ​ For our long-lived assets, we determined that no impairment indicators occurred during 2024. ​ Detachable Warrants ​ Warrants issued pursuant to debt or equity offerings that the Company may be required to redeem through payment of cash or other assets outside its control are classified as liabilities and therefore measured at fair value.
Unforeseen changes, such as the loss of one or more significant customers, technology obsolescence, or significant manufacturing disruption, among other factors, could substantially alter the assumptions regarding the ability to realize the return of our investment in long-lived assets, definite-lived intangible assets or their estimated useful lives. For our long-lived assets, we determined that no impairment indicators occurred during 2025.
Net cash (used in) provided by investing activities Cash used in investing activities amounted to $139 in 2024 as compared to cash provided by investing activities of $16,816 in 2023.
Net cash used in investing activities Cash used in investing activities amounted to $505 in 2025 as compared to $139 in 2024.
For further information regarding the application of these and other accounting policies, see Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements contained in Item 15 of this report. ​ Inventories ​ Inventories are measured on a first-in, first-out basis at the lower of cost or net realizable value.
This listing is not a comprehensive list of all of our accounting policies. For further information regarding the application of these and other accounting policies, see Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements contained in Item 15 of this report.
Intangible assets determined to have an indefinite useful life are not amortized. Instead, these assets are evaluated for impairment on an annual basis on December 1, the measurement date, and whenever events or business conditions change that could indicate that the asset is impaired.
Instead, these assets are evaluated for impairment on an annual basis on December 1, the measurement date, and whenever events or business conditions change that could indicate that the asset is impaired. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable.
We perform an annual impairment review of our indefinite-lived intangible assets on December 1, the measurement date, unless events occur that trigger the need for an interim impairment review. We have the option to first assess qualitative factors in determining whether it is more-likely-than-not that an indefinite-lived intangible asset is impaired.
We have the option to first assess qualitative factors in determining whether it is more-likely-than-not that an indefinite-lived intangible asset is impaired.
Cash demands on operations We have financed our operations to date primarily through the issuance of equity securities, proceeds from the exercise of warrants to purchase common stock and sale of debt instruments with various institutions, accredited investors, high net worth individuals and creditors. ​ In January and February 2024, we received net proceeds of $2,245 from the inducement and exercise of 6,081 warrants for shares of common stock and issuance of 12,160 warrants to purchase common stock.
Cash demands on operations We have financed our operations to date primarily through the issuance of equity securities, proceeds from the exercise of warrants to purchase common stock and sale of debt instruments. ​ In April 2025, we received net proceeds of $5,075 from the inducement and exercise of 5,074 existing warrants for shares of common stock and issuance of an additional 5,074 warrants to purchase common stock.
Refer below to “Cash demands on operations.” Summary of Cash Flow ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ December 31, ​ Change ​ 2024 2023 ​ $ Cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ (14,345) ​ $ (54,987) ​ 40,642 Investing activities ​ (139) 16,816 ​ (16,955) Financing activities ​ 16,848 37,209 ​ (20,361) Net change in cash and cash equivalents ​ $ 2,364 $ (962) ​ ​ ​ Net cash used in operating activities Cash used in operations decreased $40,642 from $54,987 in 2023 to $14,345 in 2024.
Summary of Cash Flow ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ December 31, ​ Change ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ $ Cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ (7,723) ​ $ (14,345) ​ 6,622 Investing activities ​ (505) (139) ​ (366) Financing activities ​ 10,955 16,848 ​ (5,893) Net change in cash and cash equivalents ​ $ 2,727 $ 2,364 ​ ​ ​ Net cash used in operating activities Cash used in operations decreased $6,622 from $14,345 in 2024 to $7,723 in 2025.
Operating loss for the full year 2024 was $13,950, compared to a loss of $44,931 in the prior year. ● Net loss in the fourth quarter of 2024 was $4,246 representing a net loss per share of $10.59 compared with net loss in the fourth quarter of 2023 of $22,068, representing a net loss per share of $1,413.40.
Operating loss for the full year 2025 was $11,566, compared to a loss of $13,950 in 2024. ● Net loss in the fourth quarter of 2025 was $2,783 representing a net loss per share of $5.89 compared with net loss in the fourth quarter of 2024 of $4,246, representing a net loss per share of $3,257.47.
As of December 31, 2024, we had cash and cash equivalents of $4,422, indebtedness under the Convertible Senior Secured Credit Facility of $7,690 and working capital from continuing operations of $1,790 (compared to working capital deficit from continuing operations of ($6,826) at December 31, 2023).
As of December 31, 2025, we had cash and cash equivalents of $7,149 and working capital from continuing operations of $10,359 (compared to working capital from continuing operations of $1,790 at December 31, 2024).
Net loss for the full 31 Table of Contents year 2024 was $15,495, representing a net loss per share of $105.85 compared with net loss for the full year 2023 of $54,686, representing a net loss per share of $5,776.63. ● As of December 31, 2024, we had $4,422 in cash and cash equivalents. ​ Our Financial Results The following table presents selected financial information derived from our Consolidated Financial Statements, contained in Item 15 of this report, for the periods presented (dollars in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31 ​ ​ December 31 ​ ​ Change ​ 2024 ​ 2023 ​ ​ $ ​ % Revenues, net ​ $ 24,382 ​ ​ $ 32,204 ​ ​ (7,822) ​ (24.3) Cost of goods sold ​ ​ 14,278 ​ ​ ​ 24,891 ​ ​ (10,613) ​ (42.6) Excise taxes and fees on products ​ ​ 12,504 ​ ​ ​ 16,009 ​ ​ (3,505) ​ (21.9) Gross (loss) profit ​ ​ (2,400) ​ ​ ​ (8,696) ​ ​ 6,296 ​ (72.4) Gross (loss) profit as a % of revenues, net ​ ​ (9.8) % ​ ​ (27.0) % ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales, general and administrative ("SG&A") ​ ​ 10,287 ​ ​ ​ 31,064 ​ ​ (20,777) ​ (66.9) SG&A as a % of revenues, net ​ ​ 42.2 % ​ ​ 96.5 % ​ ​ ​ ​ Research and development ("R&D") ​ ​ 1,133 ​ ​ ​ 2,644 ​ ​ (1,511) ​ (57.1) R&D as a % of revenues, net ​ ​ 4.6 % ​ ​ 8.2 % ​ ​ ​ ​ Other operating expense, net ("OOE") ​ ​ 130 ​ ​ ​ 2,527 ​ ​ (2,397) ​ (94.9) Total operating expenses ​ ​ 11,550 ​ ​ ​ 36,235 ​ ​ (24,685) ​ (68.1) Operating loss from continuing operations ​ ​ (13,950) ​ ​ ​ (44,931) ​ ​ 30,981 ​ (69.0) Operating loss as a % of revenues, net ​ ​ (57.2) % ​ ​ (139.5) % ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss on transfer of promissory note ​ ​ - ​ ​ ​ (895) ​ ​ 895 ​ NM Other income (expense), net ​ ​ 507 ​ ​ ​ 334 ​ ​ 173 ​ 51.8 Interest income, net ​ ​ 72 ​ ​ ​ 219 ​ ​ (147) ​ (67.1) Interest expense ​ ​ (2,094) ​ ​ ​ (9,366) ​ ​ 7,272 ​ (77.6) Total other income (expense), net ​ ​ (1,515) ​ ​ ​ (9,708) ​ ​ 8,193 ​ (84.4) Loss before income taxes ​ ​ (15,465) ​ ​ ​ (54,639) ​ ​ 39,174 ​ (71.7) Provision for income taxes ​ ​ 30 ​ ​ ​ 47 ​ ​ (17) ​ (36.2) Net loss from continuing operations ​ ​ (15,495) ​ ​ ​ (54,686) ​ ​ 39,191 ​ (71.7) Net loss as a % of revenues, net ​ ​ (63.6) % ​ ​ (169.8) % ​ ​ ​ ​ Net loss per common share from continuing operations (basic and diluted) ​ $ (105.85) ​ ​ $ (5,776.63) ​ ​ 5,670.78 ​ (98.2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 32 Table of Contents 2024 Compared with 2023 Revenue - Sale of products, net ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31 ​ December 31 ​ 2024 2023 Revenues, net ​ $ 24,382 ​ $ 32,204 Cartons sold ​ ​ 2,125 ​ ​ 3,415 ​ Tobacco revenue was $24,382, a decrease of 24.3% from $32,204 in the prior year, primarily driven by a decrease in volumes of filtered cigars and export cigarettes, offset by increases in cigarettes and new sales in 2024 for cigarillos. ​ ​ Gross (loss) profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31 ​ December 31 ​ 2024 ​ 2023 Gross (loss) profit ​ $ (2,400) ​ ​ $ (8,696) ​ Percent of Revenues, net ​ ​ (9.8) % ​ ​ (27.0) % ​ The decrease in gross loss and gross loss as a percent of revenues, net for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily driven by implementation of cost cut initiatives, efficiency, and the shift in product mix offset by lower sales volume.
Net loss for the full year 2025 was $13,117, representing a net loss per share of $71.26 compared with net loss for the full year 2024 of $15,495, representing a net loss per share of $27,812.56. ● As of December 31, 2025, we had $7,149 in cash and cash equivalents. ​ 27 Our Financial Results The following table presents selected financial information derived from our Consolidated Financial Statements, contained in Item 15 of this report, for the periods presented (dollars in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31 ​ ​ December 31 ​ ​ Change ​ ​ ​ ​ 2025 ​ ​ ​ ​ 2024 ​ ​ $ ​ % Revenues, net ​ $ 17,587 ​ ​ $ 24,382 ​ ​ (6,795) ​ (27.9) Cost of goods sold ​ ​ 10,186 ​ ​ ​ 14,278 ​ ​ (4,092) ​ (28.7) Excise taxes and fees on products ​ ​ 10,538 ​ ​ ​ 12,504 ​ ​ (1,966) ​ (15.7) Gross loss ​ ​ (3,137) ​ ​ ​ (2,400) ​ ​ (737) ​ 30.7 Gross loss as a % of revenues, net ​ ​ (17.8) % ​ ​ (9.8) % ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales, general and administrative ("SG&A") ​ ​ 7,591 ​ ​ ​ 10,287 ​ ​ (2,696) ​ (26.2) SG&A as a % of revenues, net ​ ​ 43.2 % ​ ​ 42.2 % ​ ​ ​ ​ Research and development ("R&D") ​ ​ 688 ​ ​ ​ 1,133 ​ ​ (445) ​ (39.3) R&D as a % of revenues, net ​ ​ 3.9 % ​ ​ 4.6 % ​ ​ ​ ​ Other operating expense, net ("OOE") ​ ​ 150 ​ ​ ​ 130 ​ ​ 20 ​ 15.4 Total operating expenses ​ ​ 8,429 ​ ​ ​ 11,550 ​ ​ (3,121) ​ (27.0) Operating loss from continuing operations ​ ​ (11,566) ​ ​ ​ (13,950) ​ ​ 2,384 ​ (17.1) Operating loss as a % of revenues, net ​ ​ (65.8) % ​ ​ (57.2) % ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense), net ​ ​ (207) ​ ​ ​ 507 ​ ​ (714) ​ (140.8) Interest income ​ ​ 83 ​ ​ ​ 72 ​ ​ 11 ​ 15.3 Interest expense ​ ​ (1,455) ​ ​ ​ (2,094) ​ ​ 639 ​ (30.5) Total other income (expense), net ​ ​ (1,579) ​ ​ ​ (1,515) ​ ​ (64) ​ 4.2 Loss from continuing operations before income taxes ​ ​ (13,145) ​ ​ ​ (15,465) ​ ​ 2,320 ​ (15.0) (Benefit) provision for income taxes ​ ​ (28) ​ ​ ​ 30 ​ ​ (58) ​ (193.3) Net loss from continuing operations ​ ​ (13,117) ​ ​ ​ (15,495) ​ ​ 2,378 ​ (15.3) Net loss as a % of revenues, net ​ ​ (74.6) % ​ ​ (63.6) % ​ ​ ​ ​ Net loss per common share from continuing operations (basic and diluted) ​ $ (71.26) ​ ​ $ (27,812.56) ​ ​ 27,741.30 ​ (99.7) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 28 2025 Compared with 2024 Product line revenue, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ ​ ​ ​ 2025 ​ 2024 ​ Change ​ ​ $ Cartons ​ $ Cartons ​ $ Cartons Contract manufacturing ​ ​ ​ ​ ​ ​ ​ ​ ​ Cigarettes ​ 12,897 1,525 ​ 14,219 644 ​ (1,322) 881 Filtered cigars ​ 4,110 549 ​ 9,427 1,361 ​ (5,317) (812) Other tobacco products ​ 442 54 ​ 756 120 ​ (314) (66) Total contract manufacturing ​ 17,449 2,128 ​ 24,402 2,125 ​ (6,953) 3 VLN ® ​ 138 4 ​ (20) - ​ 158 4 Total product line revenues ​ 17,587 2,132 ​ 24,382 2,125 ​ (6,795) 7 ​ For the year ended December 31, 2025, total product line revenue was $17,587, a decrease of 27.9% from $24,382 in the prior year. ● Cigarette volume increased to 1,525 cartons in 2025, including products sold for export, as compared to the prior year.
This increase in working capital was primarily due to a decrease in current liabilities of $13,168 offset by a decrease of $4,552 in current assets. Cash and cash equivalents increased by $2,364 and the remaining net current assets decreased by $6,916. As a result of the working capital balance, management has taken a number of steps to improve liquidity.
This increase in working capital was primarily due to an increase in net current assets of $7,160 and a decrease in current liabilities of $1,409. Cash and cash equivalents increased by $2,727 and the remaining net current assets increased by $4,381.
Sales, general and administrative expense ​ ​ ​ ​ ​ Changes From Prior Year Compensation and benefits (a) ​ $ (8,098) Sales and marketing (b) ​ ​ (2,456) Strategic consulting (b) ​ ​ (6,569) Other expenses (c) ​ ​ (3,654) Net decrease in SG&A expenses ​ $ (20,777) ​ ​ ​ (a) Compensation and benefits and equity compensation expense decreased for the year ended December 31, 2024 compared to the prior year due to a reduction of headcount as part of our cost cut initiatives.
Gross margin improvements in cigarettes began in the fourth quarter 2025, which demonstrates the steady shift in product mix to higher margin cigarette products. 29 Sales, general and administrative expense ​ ​ ​ ​ ​ ​ ​ ​ Changes From Prior Year Compensation and benefits (a) ​ $ (408) Strategic consulting (b) ​ ​ (873) Legal (c) ​ ​ (627) Insurance (d) ​ ​ (439) Other expenses (e) ​ ​ (349) Net decrease in SG&A expenses ​ $ (2,696) ​ (a) Compensation and benefits decreased for the year ended December 31, 2025 compared to the prior year due to a reduction of headcount as part of our cost cutting initiatives.
The primary driver for this decrease was lower consolidated net loss of $125,611 due to our cost savings initiatives implemented in 2024, a decrease of $89,876 related to net adjustments to reconcile net loss to cash primarily due to a loss on disposal of the hemp cannabis business that occurred in the prior year of $58,521, and a decrease in cash used for working capital components related to operations in the amount of $4,907 for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
The primary driver for this decrease was lower consolidated net loss of $10,110, an increase of $6,257 related to net adjustments to reconcile net loss to cash, and an increase in cash used for working capital components related to operations in the amount of $9,745 for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
In September 2024 we received net proceeds of $1,054 from the issuance of 38,041 shares of common stock and 76,348 warrants to purchase common stock in a registered direct offering.
In August 2025, we received net proceeds of $9,893 from the issuance of new shares of Series A convertible preferred stock and issuance of 668,554 warrants to purchase common stock.
The sensitivity of the fair value calculation to these methods, assumptions, and estimates included could create materially different results under different conditions or using different assumptions. ​ Off-Balance Sheet Arrangement We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K. ​ Item 7A.
The key assumptions used in the model are the expected future volatility in the price of the Company’s shares and the expected life of the warrants. Off-Balance Sheet Arrangement We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K. ​ ​ Item 7A.
On December 17, 2024, we implemented a 1-for-135 reverse stock split, on March 28, 2024, we implemented a 1-for-16 reverse stock split, and on July 5, 2023, we implemented a 1-for-15 reverse stock split of our common stock. All historical share and per-share amounts reflected throughout this section have been adjusted to reflect the reverse stock splits.
All historical share and per-share amounts reflected throughout this section have been adjusted to reflect prior reverse stock splits.
Management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern through one year following the date that the Consolidated Financial Statements are issued. 35 Table of Contents Our cash and cash equivalents, and working capital as of December 31, 2024, and 2023, are set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31 ​ December 31 ​ 2024 2023 Cash and cash equivalents ​ $ 4,422 ​ $ 2,058 Working capital ​ $ 1,790 $ (6,826) ​ Working Capital As of December 31, 2024, we had working capital, excluding assets and liabilities held for sale, of approximately $1,790 compared to working capital deficit of approximately ($6,826) as of December 31, 2023, an improvement of $8,616.
Our cash and cash equivalents, and working capital as of December 31, 2025 and 2024, are set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31 ​ December 31 ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Cash and cash equivalents ​ $ 7,149 ​ $ 4,422 Working capital ​ $ 10,359 $ 1,790 ​ 31 Working Capital As of December 31, 2025, we had working capital from continuing operations, excluding assets and liabilities held for sale, of approximately $10,359 compared to working capital of approximately $1,790 as of December 31, 2024, an improvement of $8,569.
Additionally, the warrant contains cashless and/or alternative cashless exercise features. ​ (4) Reflects the number of warrants and exercise price assuming stockholder approval is obtained. ​ ​ Impact of Recently Issued Accounting Standards In the normal course of business, we evaluate all new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”), SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Consolidated Financial Statements.
Accordingly, a Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. ​ (2) The warrants contain anti-dilution protection provisions relating to subsequent equity sales of shares of the Company’s common stock or common stock equivalents at an effective price per share lower than the then effective exercise price of such warrants. ​ ​ 33 ​ Impact of Recently Issued Accounting Standards In the normal course of business, we evaluate all new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”), SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Consolidated Financial Statements.
Events could occur that would materially affect our estimates and assumptions.
Estimation of the cash flows and useful lives of long-lived assets and definite-lived intangible assets requires significant management judgment. Events could occur that would materially affect our estimates and assumptions.
The Company uses a Monte Carlo valuation model to estimate fair value at each issuance and period-end date.
Detachable Warrants Warrants issued pursuant to debt or equity offerings that the Company may be required to redeem through payment of cash or other assets outside its control are classified as liabilities and therefore measured at fair value. The Company uses a Monte Carlo valuation model to estimate fair value at each issuance and period-end date.
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable. ​ Evaluation of indefinite-lived intangible assets for impairment ​ Our indefinite-lived intangible assets include the MSA, cigarette brand predicate and trademarks.
Evaluation of indefinite-lived intangible assets for impairment Our indefinite-lived intangible assets include the MSA, cigarette brand predicate and trademarks. We perform an annual impairment review of our indefinite-lived intangible assets on December 1, the measurement date, unless events occur that trigger the need for an interim impairment review.
These decreased cash inflows were partially offset by a decrease in cash outflows of $5,456 related to the acquisitions of patents, trademarks and property, plant and equipment and (ii) $254 from the acquisition of RXP in the prior year. 36 Table of Contents Net cash provided by financing activities During the year ended December 31, 2024, cash provided by financing activities decreased by $20,361, from $37,209 in the prior year, to $16,848, resulting from decreases in (i) net proceeds of $16,048 from issuance of long-term debt, (ii) proceeds of $6,016 from issuance of detachable warrants, (iii) net proceeds of $10,335 from the issuance of common stock (iv) proceeds from issuance of notes payable of $1,104 offset by an increase in net proceeds from warrant exercise of $309.
Net cash provided by financing activities During the year ended December 31, 2025, cash provided by financing activities decreased by $5,893, from $16,848 in 2024, to $10,955 in 2025, resulting from decreases in net proceeds from common stock issuances of $15,087, increases in payments of long-term debt of $3,034 and payments of deferred offering costs of $130 offset by increases in cash inflows from net proceeds from Series A convertible preferred stock of $9,893, warrant exercises of $1,721, issuance of notes payable of $399 and decreases of cash outflows from taxes paid related to net share settlement of RSUs of $1 and in payments on notes payable of $344.
Removed
The par value per share of our common stock was not affected. ​ ($ in thousands, except per share data or unless otherwise specified) Executive Overview ● On December 23, 2021, the FDA issued modified risk orders for our reduced nicotine cigarettes, VLN ® King and VLN ® Menthol King, authorizing the Company to market VLN ® cigarettes with the claim, “95% less nicotine”, to clarify the purpose of the brand, the FDA also required the use of the claim, “Helps You Smoke Less.” ● Subsequently commenced pilot market sales of VLN® King and VLN® Menthol King 95% reduced nicotine content cigarettes in Chicago during the first quarter of 2022, then expanded sales and distribution channels from 2022 - 2024 to more than 5,100 stores across 26 states. ● Executed on restructuring plans that commenced in the fourth quarter of 2023 for a turnaround in the business, including cost reductions and efforts to reposition the company’s business to focus on its VLN assets and CMO business, inclusive of: 30 Table of Contents o In December 2023, the Company completed the sale of substantially all of the GVB hemp/cannabis business (referred to as the “GVB Divestiture”) to Specialty Acquisition Corporation, exiting the hemp/cannabis market and focusing fully on the Company’s tobacco operations. o Decreased consolidated liabilities from December 31, 2023 to December 31,2024 by $18,251 through payment, equity exchange and other means, including $8,124 reduction in long-term debt. ​ Tobacco Business Highlights ● Poised to benefit from the January 2025 proposed FDA rule mandating reduced nicotine content in all combustible cigarette products, if advanced.
Added
The par value per share of our common stock was not affected. ​ All figures reported below reflect continuing operations, excluding discontinued operations related to the sale and exit of the Company’s hemp/cannabis business in late 2023, except as noted. ​ Dollars are in thousands, except per share data or unless otherwise specified. ​ 26 Overview ​ The Company remains dedicated to being the leader of the tobacco harm reduction movement through science-based innovation, regulatory alignment, and responsible commercialization of reduced nicotine content combustibles.
Removed
Those contracts and production setup commenced in April 2024, with initial shipments during the fourth quarter. ​ Financial Overview – Fourth Quarter and Full Year 2024 Results ● Net revenues for the fourth quarter of 2024 were $4,020, a decrease of 45.4% from $7,357 in 2023, primarily driven by a decrease in volumes of filtered cigars. o Fourth quarter 2024 cartons sold of 338 compared to 823 in the comparable prior year period. ● Net revenues for the full year 2024 were $24,382, a decrease of 24.3% from $32,204 in 2023. ● Gross profit (loss) for the fourth quarter of 2024 was a loss of $1,254 compared to loss of $7,829 in the prior year period. ● Gross profit (loss) for the full year 2024 was a loss of $2,400, compared to a loss of $8,696 in 2023. ● Total operating expenses for the fourth quarter 2024 decreased 56% to $2,837 compared to $6,403 in the prior year quarter driven by: o Sales, general and administrative expenses decreased to $2,471, driven primarily by a decrease in strategic consulting, insurance expenses, and other public company expenses due to our cost savings initiatives. o Research and development expenses decreased to $219, driven by a decrease in contract and IP related costs. o Other operating expense, net was $147 compared to $1,905 in the prior year period, primarily reflecting restructuring costs of $1,871, including impairment and legal charges that occurred in 2023. ​ ● Operating loss for the fourth quarter 2024 was $4,091, compared to a loss of $14,232 in the prior year period.
Added
Our mission is to provide adult smokers with alternatives in the form factor that they are comfortable with, cigarettes, that significantly reduce nicotine exposure, supporting the potential for reduced dependence while preserving consumer choice. ​ Tobacco Operations Highlights ​ ● Poised to benefit from the January 2025 proposed FDA rule mandating reduced nicotine content in all combustible cigarette products, if advanced.
Removed
Additionally, the improvement in gross loss and gross loss as a percent of revenues, net is due to the prior year period reserve for excess, obsolete or expired leaf inventory of $7,720 recorded during the fourth quarter of 2023.
Added
Cigarette sales net revenues decreased from 2024 due to pricing arrangements recorded as consideration payable to the customer recognized within revenue, which in 2024 was recorded within cost of goods sold.
Removed
(b) Decreases of strategic consulting, sales and marketing and travel and entertainment for the year ended December 31, 2024 compared to the prior year were due to reduced spending as part of our cost cut initiatives. ​ (c) Other expenses decreased for the year ended December 31, 2024 compared to the prior year ended December 31, 2023 mainly due to decreases in insurance of $1,483, public company expenses of $1,407, legal expenses of $617, travel and entertainment of $615, technology expenses $329 and depreciation expense of $78 which were partially offset by an allocation to our hemp cannabis business that occurred in the prior year. ​ 33 Table of Contents Research and development expense ​ ​ ​ ​ ​ Changes From Prior Year Compensation and benefits (a) ​ $ (475) Contract, IP and other expenses (b) ​ ​ (1,036) Net decrease in R&D expenses ​ $ (1,511) ​ (a) Decreased compensation and benefits primarily relate to the decrease in headcount in 2024 compared to the prior year.
Added
During April 2024, the Company also benefitted from a one-time Spectrum ® research cigarette order which provided a $889 benefit in 2024. ● Filtered cigars net revenues decreased $5,317 reflecting lower volumes as the Company implemented repricing of customer contracts and shifts in its product mix into higher margin branded cigarettes, including natural styles, and VLN ® cigarettes. ● Other tobacco products include new moist snuff sales of $387 in 2025 compared to none in the prior year.
Removed
(b) Contract, IP and other expenses decreased for the year ended December 31, 2024 compared to the prior year primarily due to a decrease in contract costs of $500 and IP related consulting and expenses of $503 due to our cost cutting initiatives. ​ Other operating expenses (income), net ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2024 2023 Restructuring costs: ​ ​ ​ ​ ​ ​ Impairment of intangible assets ​ $ — ​ $ 1,375 Impairment of fixed assets ​ ​ — ​ ​ 56 Professional services ​ ​ — ​ ​ 763 Severance ​ ​ — ​ ​ 221 Total Restructuring costs (a) ​ ​ — ​ ​ 2,415 ​ ​ ​ ​ ​ ​ ​ Acquisition and transaction costs (b) ​ ​ — ​ ​ 223 Impairment of intangible assets ​ ​ 68 ​ ​ — Loss (gain) on sale or disposal of property, plant and equipment ​ ​ 62 ​ ​ (111) Total other operating expense, net ​ $ 130 ​ $ 2,527 ​ (a) During the second half of 2023, the Company undertook various restructuring activities in an effort to better align its internal organizational structure and costs with its strategy, as well as preserve liquidity.
Added
A decrease in cigarillo sales of $661 occurred in 2025 due to initial stocking orders in 2024. ● VLN ® cigarette net revenues reflect VLN ® and partner VLN ® shipments for initial stocking orders offset by return accruals for product previously sold that will be returned or exchanged. ​ Gross loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31 ​ December 31 ​ ​ ​ ​ 2025 ​ 2024 Gross loss ​ $ (3,137) ​ ​ $ (2,400) ​ Percent of Revenues, net ​ ​ (17.8) % ​ ​ (9.8) % ​ The increase in gross loss and gross loss as a percent of revenues, net for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily driven by the shift in product mix during 2025, with cigarettes inclusive of products sold for export representing higher volume as compared to filtered cigars in the prior year comparable period.
Removed
As a result, the Company incurred $2,415 in restructuring costs for the year ended December 31, 2023, which included costs related to employee termination, professional services and consulting, and long-lived asset impairment. ​ (b) Acquisition and transaction costs primarily relate to professional fees incurred in connection with potential capital markets transactions in the prior year. ​ ​ Refer to Note 18, “Other operating expenses (income), net,” of the Notes to Consolidated Financial Statements contained in Item 15 of this report for additional information regarding these charges. ​ 34 Table of Contents Other income (expense), net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended Loss on transfer of promissory note (a) ​ $ 895 Other income (expense), net (b) ​ ​ 173 Interest income, net ​ ​ (147) Interest expense (c) ​ ​ 7,272 Net decrease in other expense ​ $ 8,193 ​ (a) During 2023 and in connection with the Senior Secured Credit Facility October 2023 Amendment, the Company assigned $3,800 PLSH promissory note less unamortized discount of $305, and corresponding pay down of indebtedness on outstanding principal of $600 and redemption of the related warrant liability of $2,000 resulting in loss on sale of financial asset of $895. ​ (b) Other income (expense), net primarily reflects the change in fair value of warrant liability. ​ (c) Interest expense decreased for 2024, as compared to the prior year 2023 as a result of ongoing repayment and elimination of debt obligations on our balance sheet.
Added
Domestic cigarette excise taxes included amounts payable under the Master Settlement Agreement (“MSA), whereas filtered cigar volume has no comparable excise tax.
Removed
Cash interest decreased $454 and non-cash interest amortization decreased $723 recognized from the Senior Secured Credit Facility (of these totals, interest that was allocated to discontinued operations decreased by $82), and additional decreases of $1,113 as a result of change in fair value of conversion option derivative liability and other interest charges of $28.
Added
(b) Decreases of strategic consulting for the year ended December 31, 2025 compared to the prior year were due to reduced spending of $482 for investor and public relations and $391 in other consulting related to MRTP post-market studies. ​ (c) Legal expenses decreased for the year ended December 31, 2025 compared to the prior year period due to decreased regulatory and corporate legal expense.
Removed
Additionally, these amounts are offset by $5,158 for extinguishment of debt in the prior year period.
Added
(d) Insurance expense decreased for the year ended December 31, 2025 compared to the prior year period due to lower insurance premiums.
Removed
The decrease in cash provided by investing activities of $16,955 was primarily the result of (i) a decrease in net proceeds from short-term investments of $18,239; (ii) $3,500 of property, plant, and equipment casualty loss insurance proceeds collected in the prior year; (iii) $665 from proceeds from the sale of discontinued operations in the prior year and (iv) a decrease in the proceeds from the sale of property, plant and equipment of $261.
Added
(e) Other expenses decreased for the year ended December 31, 2025 compared to the prior year ended December 31, 2024 mainly due to decreases in public company expenses of $149, sales and marketing expenses of $134, supplies, repairs and maintenance expenses of $121, technology expenses of $55, depreciation expense of $75, offset by increased travel and entertainment of $60, facilities expense of $25 and other expenses mainly related to state registration fees of $100.
Removed
These cash inflows were offset by decreases in cash outflows of note payable payments of $4,035, payments of long-term debt of $8,398, and taxes paid related to net share settlement of RSUs of $419.
Added
Research and development expense ​ ​ ​ ​ Changes From Prior Year Compensation and benefits (a) $ (85) Contract, IP and other expenses (b) ​ (360) Net decrease in R&D expenses $ (445) ​ (a) Decreased compensation and benefits primarily relate to the decrease in headcount in 2025 compared to the prior year.
Removed
In April 2024, we received net proceeds of $3,913 from the issuance of 13,741 shares of common stock, 926 pre-funded warrants and 14,667 warrants to purchase common stock in a registered direct offering.
Added
(b) Contract, IP and other expenses decreased for the year ended December 31, 2025 compared to the prior year primarily due to a decrease in contract and royalty costs of $276 and IP related consulting and expenses of $84 due to our cost cutting initiatives.
Removed
In August and September 2024, we received net proceeds of $5,208 from the issuance of 72,000 shares of common stock pursuant to a Regulation A offering, and in separate private placements, issued 109,600 warrant to purchase common stock.
Added
Other operating expenses, net ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Impairment of intangible assets ​ $ 150 ​ $ 68 Loss on sale or disposal of property, plant and equipment ​ ​ — ​ ​ 62 Total other operating expense, net ​ $ 150 ​ $ 130 ​ Other operating expenses, net increased $20 due to increased impairment charges of $82 for patents and disposal of trademarks that we are no longer pursuing for the year ended December 31, 2025 compared to the prior year period, offset by a loss of $62 in 2024 for the sale of property, plant and equipment. ​ 30 Other income (expense), net ​ ​ ​ ​ ​ ​ Changes From Prior Year Other income (expense), net (a) ​ $ (714) Interest income ​ ​ 11 Interest expense (b) ​ ​ 639 Net (decrease) increase in other expense ​ $ (64) ​ (a) Other income (expense), net decreased for the year ended December 31, 2025, compared to the prior year, due to a loss resulting from change in fair value of the Omnia warrant liabilities that did not occur in 2024. ​ (b) For the year ended December 31, 2025 compared to the prior year period, cash interest decreased $443, non-cash interest amortization increased $842 due to $1,091 of extinguishment charges recognized from the Senior Secured Credit Facility (of these totals, interest that was allocated to discontinued operations increased by $88), and other interest charges decreased by $76, offset by a gain that occurred in the prior year period of $556 as a result of change in fair value of conversion option derivative liability.
Removed
Also, in September 2024 we received net proceeds of $1,073 from the inducement and exercise of 37,624 warrants for shares of common stock and issuance of 75,248 warrants to purchase common stock.
Added
Management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern through one year following the date that the Consolidated Financial Statements are issued.
Removed
In October 2024 we received net proceeds of $2,002 from the issuance of 105,679 shares of common stock and 211,358 warrants to purchase common stock in a registered direct offering.
Added
The increase in cash used in investing activities of $366 was primarily the result decreases of cash outflows of $714 related to the acquisitions of patents, trademarks and property, plant and equipment and $500 from the issuance of the 2025 GVB promissory note.
Removed
Also, in October 2024 we received net proceeds of $2,909 from the issuance of 210,036 prefunded warrants to purchase shares of common stock and 315,055 warrants to purchase common stock in a private placement offering. ​ Convertible Senior Secured Credit Facility ​ As of December 31, 2024, the remaining principal balance under our Senior Secured Credit Facility is $7,690 of which $1,500 remains current with corresponding non-operating pledged assets.
Added
These cash outflows were offset by cash inflows of $748 of proceeds from the sale of property, plant and equipment primarily from the sale of Needlerock farms in 2025 and $100 payments received from the 2025 GVB promissory note.
Removed
The Debentures under the Senior Secured Credit Facility allow the Holders to voluntarily convert the Debentures, in whole or in part, into shares of the Company’s common stock and the conversion option price in effect as of January 13, 2025 is $6.04.
Added
The proceeds were used to fully repay the remaining principal balance of the Senior Secured Credit Facility. ​ Additionally, in September 2025, the Company settled its outstanding litigation with its insurer related to the November 2022 fire at the Company’s Grass Valley manufacturing facility in Oregon.
Removed
The Holders exercised conversion notices in the amount of $3,132 in January 2025 and the Company issued 518,600 shares of common stock.
Added
Under the terms of the settlement, the insurer paid the Company an aggregate amount of $9,500 in cash. ​ 32 We entered into a sales agreement (the “Sales Agreement”) with Needham & Company, LLC (the “Sales Agent”) which permits us to sell up to $25,000 of our common stock from time to time at prevailing market prices.
Removed
The remaining principal balance of the Debentures is $4,558, as of March 17, 2025 following the conversion of which the Company and Holders have $1,500 of non-operating assets pledged for repayment. ​ 37 Table of Contents Outstanding Warrants ​ As of March 17, 2025, we had the following warrants outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ # of warrants outstanding ​ Issue date exercise price ​ Current exercise price (1) ​ Expiration date July 2022 RDO warrants ​ 32 ​ $ 66,420.00 ​ $ 66,420.00 ​ July 25, 2027 Senior Secured Credit Facility - JGB ​ 154 ​ $ 41,310.00 ​ $ 27,708.00 ​ September 3, 2028 July 19, 2023 RDO warrants (3) ​ 209 ​ $ 5,227.20 ​ $ 4.3021 ​ July 20, 2028 October 2023 CMPO warrants (3) ​ 93 ​ $ 1,134.00 ​ $ 4.3021 ​ October 19, 2028 2023 Inducement warrants (3) ​ 19 ​ $ 464.40 ​ $ 4.3021 ​ February 15, 2029 April 2024 RDO Placement Agent warrants (3) ​ 7,611 ​ $ 361.125 ​ $ 4.3021 ​ April 8, 2029 September 2024 Reg A+ warrants (3) ​ 2,497,630 ​ $ 135.00 ​ $ 4.3021 ​ December 6, 2029 September 2024 RDO warrants (3) ​ 2,341,905 ​ $ 135.00 ​ $ 4.3021 ​ December 6, 2029 September 2024 RDO Placement Agent warrants (3) ​ 87,216 ​ $ 168.75 ​ $ 4.3021 ​ December 6, 2029 September 2024 Inducement warrants (3) ​ 2,220,465 ​ $ 135.00 ​ $ 4.3021 ​ December 6, 2029 September 2024 Inducement Placement Agent warrants (3) ​ 85,960 ​ $ 168.75 ​ $ 4.3021 ​ December 6, 2029 Omnia Pre-Funded Warrants ​ 8,519 ​ $ 0.00001 ​ $ 0.00001 ​ Not applicable Omnia warrants ​ 3,408 ​ $ 361.125 ​ $ 361.125 ​ May 1, 2029 October 2024 RDO (3) ​ 6,359,501 ​ $ 135.00 ​ $ 4.3021 ​ December 6, 2029 October 2024 RDO Placement Agent Warrants (3) ​ 241,445 ​ $ 168.75 ​ $ 4.3021 ​ December 6, 2029 October 2024 PIPE Warrants (3) ​ 9,886,421 (4) ​ $ 135.00 ​ $ 4.3021 (4) ​ (2) ​ October 2024 PIPE Placement Agent Warrants (3) ​ 659,095 (4) ​ $ 168.75 ​ $ 4.3021 (4) ​ (2) ​ ​ ​ 24,399,683 ​ ​ ​ ​ ​ ​ ​ ​ (1) Warrant price adjusted as a result of anti-dilution or ratchet provisions.
Added
During the three months ended December 31, 2025, we sold no shares under the Sales Agreement.
Removed
(2) Expiration date is 5-years following shareholder approval date.
Added
Subsequent to December 31, 2025, the Company sold 44,381 shares of common stock under the ATM Program for gross proceeds of $200 at a weighted average price of $4.51. ​ March 2026 Series B Convertible Preferred Stock Offering ​ On March 20, 2026, we and certain investors entered into a securities purchase agreement with respect to the offer and sale of $20,000 of shares of Series B Convertible Preferred Stock, stated value $1,000 per share (the “Series B Preferred Stock”), initially convertible into shares of common stock at an initial conversion price of $3.57 (subject to adjustment in certain circumstances with a floor price of $0.714) and, alternatively, at a 15% discount to the lowest daily volume-weighted average price (“VWAP”) during the prior 20 trading days (the “Alternative Conversion Price”) and warrants to purchase shares of Common Stock pursuant to a registered direct offering.
Removed
(3) The exercise prices of the warrants are subject to appropriate adjustment as a result of anti-dilution or ratchet protection provisions relating to subsequent equity sales of shares of the Company’s common stock or common stock equivalents at an effective price per share lower than the then effective exercise price of such warrants.
Added
The Company has the ability to reset the fixed conversion price (lower), subject to board approval and the floor price. Stockholder approval for the offering was obtained at the February 20, 2026 Special Meeting of the Stockholders. ​ At the initial closing, the investors purchased $16,000 of shares of Series B convertible preferred stock and warrants.
Removed
This listing is not a comprehensive list of all of our accounting policies.
Added
The remaining $4,000 of shares of Series B Preferred Stock and warrants are expected to be purchased at a second closing.
Removed
We determined as of December 1, 2024, it is more likely than not that that the assets are not impaired.
Added
The investors may request the second closing at any time until the one-year anniversary of the initial closing date and we may require the second closing at any time until the one-year anniversary of the initial closing date by individual investor once less than 50% of such Investor’s Series B Preferred Stock purchased at the initial closing remains outstanding and certain equity conditions have been satisfied for at least 7 of the prior 10 trading days, including: (1) the Common Stock closes above 2.5 times the floor price and (2) the daily dollar trading volume of the Common Stock exceeds $500.
Removed
The key assumptions used in the model are the expected future volatility in the price of the Company’s shares and the expected life of the warrants. ​ Embedded Derivatives – Conversion Option ​ Our December Amendment to the Senior Secured Credit Facility contained an embedded derivative conversion option.
Added
The warrants are immediately exercisable at an exercise price of $3.57 per share of common stock and expire on the date that is five years after issuance.
Removed
The Company evaluates each debt agreement to determine whether any embedded features require bifurcation from the debt host in accordance with ASC 815, Derivatives and Hedging ("ASC 815"). If the embedded feature requires bifurcation from its debt host, the Company will account for it as either a derivative liability or as a derivative in equity.

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