xxii

September 23, 2024

22nd Century Announces New Branded Products Order with Customer for Southeast Asia

VLN® is available in over 5,000 stores across 26 states

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‍Hello Everyone,

We have a new profile that we want you to put on your radar for tomorrow’s session.

They announced some explosive news this morning that sent it moving double digits on strong interest.

Pull up XXII immediately.

2nd Century Group, Inc. (Nasdaq: XXII) is a next-generation plant biotechnology company, focused on improving human health through plant science. Using their breakthrough, patent-protected IP to control nicotine biosynthesis in the tobacco plant, they have developed the first market-ready, reduced nicotine content (RNC) tobacco plants and cigarettes containing 95% less nicotine. They received the first and only FDA MRTP authorization for a combustible cigarette in December 2021. The sole function of their cigarettes is to make it easier to reduce the number of cigarettes smoked.

In tobacco, 22nd Century employs a unique and innovative platform of modern plant breeding technologies, including genetic engineering, gene-editing, and molecular breeding, to deliver healthier solutions for pressing issues. They create new, proprietary plants with select alkaloid, terpenoid, and flavonoid profiles, improved yields, and valuable agronomic traits for the life science and consumer products industries.

Rather than fight that trend, they’ve done something better by developing a product line that gives choices back to the consumer and, at the same time, pioneers a movement that is reshaping the tobacco industry. XXII isn’t saying that all of a sudden, nicotine is good. Far from it. But they are serving up a product option, its innovative VLN® (Very Low Nicotine) cigarettes, that can do more than appease those wanting nicotine- they’re developing a whole new category that could also serve investor appetites craving innovative and revolutionary growth stock companies.

Its innovative VLN® cigarettes empower smokers to reduce nicotine consumption without sacrificing the smoking experience they know. That difference is a competitive advantage. And it’s not just another nicotine delivery system; it’s giving smokers the ability to make informed decisions about their nicotine intake. The value driver in its mission to create market and shareholder value is the FDA-approved VLN® cigarette, which contains 95% less nicotine than traditional cigarettes.

Currently, VLN® is available in over 5,000 stores across 26 states, but that could be just the start.

22nd Century has announced ambitious plans to extend distribution to over 270,000 retail outlets nationwide. And no stopping there. International expansion is also on its agenda, with established partnerships in markets like South Korea, that where the demand for harm-reduction products is growing. And the infrastructure for growth is in place. XXII’s supply chain includes a stockpile of low-nicotine tobacco ready to meet demand and has the additional capacity to manufacture up to 1.4 million cartons of VLN® cigarettes—enough to generate up to $85 million in revenue. In other words, XXII isn’t just poised for success; they have the infrastructure in place to meet the increasing consumer demand for their products.

22nd Century Announces New Branded Products Order with Customer for Southeast Asia

New Customer for 22nd Century’s Internally Owned Moonlight Brand Could Increase Factory Volumes by More Than 30% When Fully Scaled, Improve Gross Profit Profile

Mocksville, North Carolina–(Newsfile Corp. – September 23, 2024) – 22nd Century Group, Inc. (NASDAQ: XXII), a tobacco products company that is leading the fight against nicotine and believes smokers should have a choice about their nicotine consumption, today announced a new customer agreement to supply its Moonlight branded cigarettes to the Southeast Asia marketplace. The first shipment is expected in the fourth quarter of 2024, with the opportunity to significantly expand volumes as the customer launches in key markets throughout 2025.

“This new customer represents an exciting opportunity to deploy one of our underutilized in-house brand assets to drive new growth opportunities, expanding our presence in a market with a widespread smoking culture in Southeast Asia,” said Larry Firestone, Chairman and CEO. “At scale, we believe this contract represents an opportunity to grow our manufacturing volumes by more than 30% over the next 15 months.”

“We have additional brands and assets that we can deploy into these or other markets in the U.S. and around the world,” added Firestone. “We are currently discussing similar opportunities with customers interested in deploying those brands and predicates, as well as customers interested in offering a reduced nicotine content product under their own branding, helping us to build a new category around our innovative VLN® products.”

22nd Century owns a number of brands which among others include Pinnacle, Moonlight, Magic and Ranger, in addition to its VLN® 95% reduced nicotine content branded cigarettes, the only combustible cigarette authorized by the U.S. Food and Drug Administration specifically designed to reduce smoking rates. The Company recently announced the launch of its VLN® branded products into the South Korean market, and expansion strategy in the U.S., which is expected to include flanker brands for additional reduced nicotine content products intended to help adult smokers to smoke less.

22nd Century Updates Strategic Growth Initiatives for VLN

PUBLISHED

SEP 11, 2024 7:55AM EDT

Low nicotine tobacco stock on hand can supply up to $85.0 million worth ofVLN® revenue and positive cash flow

Plans announced for VLN® targeted distribution and expansion to reach over 270,000 retail outlets, expanded international activity, and flankerVLN® brands with existing CMO private label customers

Mocksville, North Carolina–(Newsfile Corp. – September 11, 2024) – 22nd Century Group, Inc. (NASDAQ: XXII), a tobacco products company that is leading the fight against nicotine and believes smokers should have a choice about their nicotine consumption, today announced plans to expand distribution of its VLN® 95% reduced nicotine content smoking products.

Based on recent consumer point-of-sale data on VLN® sales, the Company is now moving to expand its sales and marketing operations to all available retail outlets in the US as well as growing its distributions worldwide. The Company’s VLN® brand currently has a distribution of approximately 5,100 stores across 26 states, with a total available market of more than 270,000 retail outlets nationwide.

“Smokers are continuing to buy VLN® cigarettes, with greater sales than previously understood in many of the pilot locations established in 2023,” said Larry Firestone, Chairman and CEO. “Our low nicotine message is being heard, and our newly hired sales and marketing team has formulated a comprehensive revitalization plan that we believe will activate VLN® in the market. We will incorporate consumer engagement strategies based on what we learned in the original launch and expand our distribution to help place VLN® within the reach of more smokers looking to take control of their nicotine consumption.”

The Company’s global distribution plans include sales of VLN® products internationally through partners handling all distribution, sales and marketing efforts, using the model of its renewed distribution agreement with a South Korean partner previously announced. In addition, the Company plans to launch flanker brands based on its proprietary 95% less nicotine tobacco through existing CMO private label relationships, both domestically and internationally, to build a harm reduction category and drive awareness of how reduced nicotine content cigarettes can help smokers to smoke less.

“To meet increased demand, we are poised to benefit from an immense financial advantage in the form of our raw material inventory,” added Firestone. “In addition to finished goods on hand, we have sufficient fully paid-for low nicotine tobacco stock for the manufacture of up to 1.4 million cartons of VLN® and flanker brand cigarettes. Monetizing these assets, together with our planned flanker brand initiatives, gives us the potential to realize up to $85 million in VLN® revenue alone and positive cash flow before future tobacco crops even need to be harvested and processed. Moving this existing inventory to the market is our number one priority and our team is laser focused on this objective.”

22nd Century Group Reports Second Quarter 2024 Financial Results

PUBLISHED

AUG 13, 2024 6:00AM EDT

Path to Cash Positive Operations in Q1 2025; Continued Fiscal Discipline with 2Q24 Financial Results; Reduced Net Debt by ~$6.3 Million Year-to-Date

Mocksville, North Carolina–(Newsfile Corp. – August 13, 2024) – 22nd Century Group, Inc. (NASDAQ: XXII) today announced results for the second quarter ended June 30, 2024, and provided an update on recent business highlights.

Second Quarter 2024 Financial Results (compared to First Quarter 2024, except as noted)

All figures reported below reflect continuing operations, excluding discontinued operations related to the sale and exit of the Company’s hemp/cannabis franchise in late 2023.

Net revenues increased sequentially by 22.8% to $7.9 million, compared to $6.5 million.
Gross profit was $0.6 million, compared to $(1.1) million.
Operating loss declined 53.8% to $2.0 million, compared to $4.4 million.
Net loss decreased 61.4% to $2.2 million, compared to $5.5 million.
Basic and diluted EPS improved to $(0.30), compared to $($1.72).
Adjusted EBITDA declined to a loss of $2.6 million, from a loss of $3.5 million.

“The second quarter financial results demonstrate our ongoing progress in the rapid transformation of 22nd Century’s operations, including improved revenues based on many new CMO opportunities, positive gross profit, and significantly reduced operating expenses for our Company,” said Larry Firestone, Chairman and CEO. “Our revenue growth from new contract volumes we have secured will continue to ramp in the latter half of fiscal 2024 as we work to achieve cash positive operations by the first quarter of 2025. Additionally, our emphasis on debt reduction and improvements to the balance sheet have allowed us to focus our cash resources on operating the business.”

Second Quarter 2024 – Discussion of Product Line Net Revenues

Cigarette net revenues, including export volume, increased to $4.1 million or 8% compared to $3.8 million in the prior year comparable period on neutral volume increases. Q2 2024 cigarette sales benefitted from strong summer seasonal demand with key customers, price increases that took effect in April 2024 and a one-time Spectrum® research cigarette order which provided a $0.9 million boost.
Filtered cigars net revenues decreased to $3.3 million, compared to $3.9 million in the prior year comparable period, reflecting lower volumes as the Company continues to transition away from low or negative margin manufacturing agreements, in favor of higher margin cigarette manufacturing agreements. Additionally, price increases for certain customers took effect in April 2024.
Cigarillo distribution net revenues amounted to $0.6 million, reflective of the expanded Pinnacle branded product offerings launched in Q2 2024 with a top-five national convenience store chain.
VLN® cigarette net revenues were negligible in the second quarter, a decrease from the comparable prior year period which benefited from stocking orders with major c-stores. While the Company has secured broad distribution of its VLN® products, the sell-through has not yet materialized. The Company is making changes to rebrand and relaunch its VLN® products, which will be discussed further on the conference call noted below.

NEWS

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MANAGEMENT TEAM

Larry Firestone

Chief Executive Officer

Mr. Firestone brings over 40 years of enterprise, operations, and financial management experience in both public and private companies, including tenures as CEO, CFO and COO across multiple industry sectors. Mr. Firestone most recently served as Chief Financial Officer of Oakland Manager, a privately-held purveyor of cannabis with both retail and wholesale market penetration, and as Chairman of FirePower Technology, a privately held manufacturer of ATX power supplies for the IT and instrumentation markets. In the public company sector, Mr. Firestone has served as Chief Executive Officer of Eastside Distilling, Inc. (NASDAQ: EAST), Chief Executive Officer of Qualstar Corporation (NASDAQ: QBAK), Chief Financial Officer of Advanced Energy Industries (NASDAQ: AEIS), and Chief Financial Officer of Applied Films Corporation (NASDAQ: AFCO). He has served on numerous boards, including those of Eastside Distilling, Qualstar, CVD Equipment Corporation (NASDAQ: CVD), Amtech Systems, Inc. (NASDAQ: ASYS) and HyperSpace Communications, Inc. (NYSE: HYPR). Mr. Firestone received his Bachelor of Science in Business Administration with a concentration in Accounting from Slippery Rock University of Pennsylvania.

Robert Manfredonia

Executive Vice President of Sales and Marketing

Mr. Manfredonia brings 30 years of experience in regulated consumer products sales and marketing experience in the adult beverage space both wholesaler and direct brands across the spirits, wine and beer categories. His experience brings a deep knowledge and comprehensive capabilities to expedite distribution, accelerate volume growth and build brand enterprise value. Along with large entities, he has developed start-up brands with channel segment strategic planning and development, tactical coordination and implementation, account programming, shelf standards and retail execution disciplines, with a particular interest in corporate retail channel development for new to market, early stage and mid-sized brands. He previously served as Senior Vice President of Retail Corporate Accounts for Bonavita Beverage Group since 2019, and in the same role at Eastside Distilling from 2015-2019. Prior to entering the beverage business with Miller Brewing Company in 1999, he was a chain manager at Southern Glazer’s Wine and Spirits and proudly served in the United States Air Force.

Scott Marion

Vice President of Operations

Scott joined 22nd Century Group in February 2023 as the VP of Operations. Prior to joining 22nd Century Group Scott was the head Manufacturing and Supply Chain Finance at Reynolds American – the United States 2nd largest tobacco company. Scott has over twenty years’ experience in the tobacco industry where he has held various management roles in finance working closely with manufacturing operations. Scott brings a unique blend of manufacturing and supply chain leadership grounded in lean manufacturing coupled with an understanding of the financial metrics driving the organization. He holds a Bachelor of Science Degree in Business Administration from High Point University and an MBA from Wake Forest University.

Dan Otto

Chief Financial Officer

Daniel Otto was appointed our Chief Financial Officer in April 2024. He previously served as the Company’s Corporate Controller since July 2022 where he was responsible for accounting, SEC external reporting, treasury, tax and other finance management functions. Prior to joining the Company, Mr. Otto served as a Senior Manager at Deloitte & Touche LLP providing audit and accounting advisory services to public companies, ranging from small to large cap issuers, for over ten years. Mr. Otto is also a certified public accountant and received his Master’s in Business Administration and B.A. in Accounting from Niagara University.

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