22Nd Century Group, Inc. (XXII) 10-Q Quarterly Report May 2022

— 22nd Century Group, Inc. (Nasdaq: XXII), a leading agricultural biotechnology company focused on tobacco harm reduction, reduced nicotine tobacco, and improving health and wellness through modern plant science, today reported results for the fourth quarter and full year ended December 31, 2021, and provided an update on recent business highlights. The Company will host a live audio webcast today at 10:00 a.m. ET.

“The past several months were incredible as 22nd Century transforms from a pure science and contract manufacturing company into a company selling branded VLN® cigarettes, licensing valuable biotechnology IP, and supplying highly specialized plant lines in large and dynamic global end markets,” said James A. Mish, chief executive officer of 22nd Century Group. “We secured our highly-anticipated FDA MRTP designation on December 23, and immediately moved to launch our VLN^® pilot program by the end of March. The first VLN^® cigarettes packaged with the FDA’s added claim of ‘Helps You Smoke Less’ rolled off our manufacturing lines in late January. Additionally, we have finalized our point-of-sale materials to educate adult smokers about how to use VLN^® to change their relationship with highly addictive nicotine cigarettes, and we have worked alongside Circle K to prepare for our first launch in more than 150 metro Chicago stores before rolling VLN^® out nationwide. Our mission is to get this product as quickly as possible into the hands of adult smokers, 70% of whom want to quit and are looking for new and innovative products to help them smoke less.

“We remain committed to making VLN^® products readily available to as broad a market as possible, including both U.S. and international markets,” Mish added. “We expect our first global market shipment and revenue to South Korea will commence by the end of March, and we are dedicated to exploring licensing of our VLN^® tobacco and IP as well as partnerships that can help expand the availability of VLN^® and reduced nicotine content products across all markets.”

“Rather than creating or sustaining nicotine addiction like every other product in the tobacco category, VLN^® is a combustible tobacco cigarette designed to help adult smokers smoke less, which makes it the most potentially disruptive product to hit the tobacco industry in decades,” said Michael Zercher, Chief Operating Officer. “With over 70% of adult smokers wanting to quit and 60% of adult smokers in our studies telling us they are likely to use VLN^®, we look forward to bringing VLN^® to market and doing our part to reduce the harm caused by smoking.”

Recent Key Financial and Business Highlights

Tobacco Franchise

●	Secured the world’s first and only MRTP designation for a combustible cigarette for VLN^® King and VLN^® Menthol King 95% reduced nicotine content cigarettes, announced December 23, 2021 by the FDA.

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FDA proactively added “Helps You Smoke Less” evidence-based headline claim to Company’s requested claims

●	Announced Circle K will be the VLN^® pilot launch partner, initially selling in more than 150 Chicago retail stores to optimize 22nd Century’s marketing mix ahead of full national launch.

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VLN^® will be positioned in the premium pricing segment of the cigarette market, with corresponding margins.

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State regulatory approval process is underway for tobacco sales authorizations.

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Advancing discussions with multiple additional retail trade partners to expand the regional and national sales reach of VLN^®.

●	The Company continued the international launch process for VLN^®, identifying South Korea as the initial launch market.

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First shipment expected by the end of March.

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The South Korean market includes a well-developed interest in alternative tobacco products, an ideal market in which to test VLN^®’s global appeal.

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Continuing launch process in additional markets in Asia and Europe with limited regulatory barriers while also leveraging VLN^®’s MRTP authorization toward seeking approval in additional markets with higher regulatory barriers.

●	Advancing discussions with tobacco and pharmaceutical companies toward licensing and strategic partnerships to scale VLN^®’s market penetration.

●	22nd Century Group continued its support of transformative public health policies to ban menthol in cigarettes and mandate reduced nicotine content in all tobacco products.

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The Company could have the only combustible menthol cigarette exempt from the FDA’s proposed menthol cigarette ban, providing a critical off-ramp to help current menthol smokers smoke less.

The following information was filed by 22Nd Century Group, Inc. (XXII) on Tuesday, March 1, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside 22Nd Century Group, Inc.'s 10-Q Quarterly Report:

Financial - Expense Highlight
Interest expense Interest expense decreased in 2022, as compared to the prior year period, primarily due to the reduction of our severance liability and lower note payable balances for our licenses which were fully paid off during the fourth quarter of 2021.

Financial - Income Highlight
Cash interest income for the three months ended March 31, 2022 decreased $102, as compared to the respective prior year period, primarily due to lower bond interest yields on our short-term investment securities.
Other - Other Highlight
Non-cash interest accretion for the three months ended March 31, 2022 increased $164, as compared to the respective prior year period, $42 related to a note receivable obtained from our Panacea investment conversion and $122 related to the accretion of our short-term investment securities.
Other - Other Highlight
30 Net cash provided by financing activities During the three months ended March 31, 2022, cash provided by financing activities decreased by $13,285 resulting from (i) the net proceeds of $11,782 resulting from the cash exercises of all outstanding warrants in the first quarter of 2021; (ii) increased note payable payments of $350; and (iii) net proceeds from stock option exercises of $1,259 in the prior year period.
Revenue - Geography Highlight
The increase in cash provided by investing activities of $17,307 was the result of an increase provided from transactions relating to our short-term investment account in the amount of $18,232.
Financial - Expense
This was partially offset by...Read more
Revenue - Product
The increase in revenue for...Read more
Other - Other
Net cash used in operating...Read more
Other - Other
Important factors that could cause...Read more
Financial - Expense
The cost of such growing...Read more
Revenue - Product
o We believe that the...Read more
Financial - Expense
Net loss The increase in...Read more
Other - Other
We also have an effective...Read more
Other - Other
Corporate Business: ? Dr. Calvin...Read more
Revenue - Product
o Advanced discussions with potential...Read more
Other - Other
Unrealized gain (loss) on investment...Read more
Other - Other
o We currently have the...Read more
Financial - Cash Flow
These increased cash inflows were...Read more
Other - Other
The primary driver for this...Read more
Financial - Shares
The warrants to purchase 81,164...Read more
Other - Other
Hops Franchise: ? Continued to...Read more
Other - Other
o VLN is now available...Read more
Revenue - Product
Our short-term investment securities, along...Read more
Other - Other
The increase in 2022 was...Read more
Other - Other
In tobacco, hemp/cannabis, and hop...Read more
Financial - Expense
Higher R&D expense for the...Read more
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Since 2011, we have provided...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

22Nd Century Group, Inc. provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Ticker: XXII
CIK: 1347858
Form Type: 10-Q Quarterly Report
Accession Number: 0001558370-22-007204
Submitted to the SEC: Thu May 05 2022 6:09:42 AM EST
Accepted by the SEC: Thu May 05 2022
Period: Thursday, March 31, 2022
Industry: Cigarettes

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22Nd Century Group, Inc. (XXII) SEC Filing 10-Q Quarterly Report for the period ending Thursday, March 31, 2022

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