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Here are 1-3 brief analogies to describe 22nd Century (XXII):

• Bayer Crop Science for hemp and cannabis genetics.
• Impossible Foods for cigarettes.

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• VLN® Reduced Nicotine Content (RNC) Tobacco Cigarettes: These are conventional-looking cigarettes containing tobacco engineered to have approximately 95% less nicotine than traditional brands.
• Hemp/Cannabis Biomass and Genetics: The company develops and licenses proprietary hemp and cannabis plant varieties with specific cannabinoid profiles for various applications.

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22nd Century Group, Inc. (symbol: XXII) primarily sells its flagship product, VLN® Reduced Nicotine Content (RNC) cigarettes, to adult consumers. While these products are distributed through wholesale channels and retailers, the ultimate and primary customers for the company's significant revenue stream are individuals.

Based on the intended use and marketing of VLN® cigarettes, the company serves up to three main categories of individual customers:

• Adult smokers seeking to reduce nicotine exposure: This category includes current adult smokers who wish to significantly lower their nicotine intake without immediately ceasing the act of smoking traditional combustible cigarettes. They are looking for a product that allows them to continue smoking but with substantially less nicotine.
• Adult smokers interested in a Modified Risk Tobacco Product (MRTP): These are adult smokers who are aware of and specifically seek out tobacco products that have received a Modified Risk Tobacco Product authorization from the U.S. Food and Drug Administration (FDA). VLN® is the first and only combustible cigarette to receive such authorization, appealing to smokers looking for products with a recognized modified risk claim.
• Adult smokers considering cessation or transitioning from traditional cigarettes: This category encompasses adult smokers who are in the process of reducing their smoking habit, contemplating quitting, or seeking a transitional product to aid in moving away from conventional high-nicotine cigarettes. VLN® can serve as an intermediate step in a harm reduction or cessation strategy.

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Lawrence D. Firestone, Chairman and Chief Executive Officer

R. Hugh Kinsman, Chief Financial Officer

Jonathan Staffeldt, General Counsel & Secretary

Robert Manfredonia, Executive Vice President of Sales

Kimberly Farr, Director of Science & Technology

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The key risks to 22nd Century Group's business (XXII) are primarily centered on its financial viability, dependence on regulatory outcomes for its reduced-nicotine tobacco products, and the challenges of product commercialization and market acceptance.

1. Financial Viability and Going Concern: 22nd Century Group has a history of significant operating losses and negative cash flows, leading to substantial doubt about its ability to continue as a going concern. The company has consistently incurred net losses, such as a $3.757 million net loss in Q3 2024 and a $19.3 million net loss in Q3 2023, while experiencing declining revenues. This financial instability is reflected in its negative EBIT margins and high debt relative to equity, prompting the company to explore strategic options to address its financial position.
2. Regulatory Dependence and Commercialization of Reduced Nicotine Content (RNC) Tobacco Products: The company's business model is heavily reliant on the commercial success of its VLN® reduced nicotine content tobacco products, which have received Modified Risk Tobacco Product (MRTP) authorization from the FDA. However, there is a risk that 22nd Century Group may be unsuccessful in commercializing these products, particularly if broad FDA adoption and enforcement of a very low nicotine mandate do not materialize or are delayed. Sustained industry opposition or regulatory shifts could limit licensing demand and slow the adoption of their low-nicotine tobacco technology, thereby hindering the recurring revenue streams necessary for improved net margins. The manufacturing and sale of tobacco products also subject the company to significant governmental regulation, and non-compliance could lead to substantial fines or adverse regulatory actions.
3. Product Development, Market Acceptance, and Competition: A significant risk lies in the possibility that 22nd Century Group's research and development processes may not consistently produce marketable products, leading to a loss of investment. Furthermore, the company faces intense competition from larger tobacco companies that generally possess greater financial resources and name recognition. These competitors may develop similar or superior products, or otherwise compete more effectively. The commercialization of VLN products is still in its early stages, and if the rate of sale or distribution expansion disappoints, fixed manufacturing costs could continue to contribute to gross profit losses and negative EBITDA.

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The most significant clear emerging threat to 22nd Century Group (XXII) is the rapid advancement and commercialization of precision fermentation for cannabinoid production. This biotechnology, pursued by numerous companies, involves engineering microorganisms (like yeast or bacteria) to produce various cannabinoids (e.g., CBD, CBG, THC, and rare cannabinoids) in bioreactors. If this technology scales efficiently and becomes cost-effective, it could fundamentally disrupt the plant-based cultivation and extraction model that underlies a significant portion of 22nd Century Group's cannabis and hemp research and product development. Precision fermentation offers potential advantages in terms of purity, consistency, scalability, and potentially lower production costs, thereby potentially diminishing the competitive advantage of 22nd Century Group's plant genetics and agricultural biotechnology focus in the cannabinoid market.

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22nd Century Group (XXII) focuses on reduced nicotine content tobacco products and contract manufacturing for conventional combustible tobacco products.

Addressable Markets:

• Reduced Nicotine Content (RNC) Tobacco Products (e.g., VLN® cigarettes):
  • The global Reduced Risk Products (RRPs) market, which includes alternatives to conventional combustible tobacco, is expected to grow from USD 29.2 billion in 2024 to USD 71.2 billion by 2035.
  • The global market for alternative tobacco and smoking cessation products was valued at USD 26.30 billion in 2022. North America held the largest revenue share in this market in 2022.
  • The global low tar cigarettes market was estimated at approximately USD 25 billion in 2023 and is forecasted to reach around USD 35 billion by 2032. The Asia Pacific region's market size for low tar cigarettes was estimated at approximately USD 10 billion in 2023, projected to reach about USD 14 billion by 2032. Europe's market size for low tar cigarettes was estimated at USD 4 billion in 2023, with a forecasted value of USD 5 billion by 2032.
• Contract Manufacturing Services for Conventional Combustible Tobacco Products:
  • The global tobacco products market, which encompasses conventional combustible tobacco products, was valued at USD 1,018.57 billion in 2024 and is projected to grow to USD 1,260.59 billion by 2032.

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Expected Drivers of Future Revenue Growth for 22nd Century Group (XXII)

Over the next 2-3 years, 22nd Century Group (XXII) anticipates several key drivers for future revenue growth:

1. Expansion and Relaunch of VLN® Reduced Nicotine Content (RNC) Cigarettes: The company's proprietary VLN® products, which have received FDA Modified Risk Tobacco Product (MRTP) authorization, are a core focus for growth. 22nd Century is actively expanding the distribution of its branded VLN® products and has launched new partner-branded VLN® products in collaboration with partners like Smoker Friendly. They are also developing new VLN® product formats, such as a 100mm prototype, and have filed for new product authorizations across all 50 states.
2. Growth in Higher-Margin Contract Manufacturing (CMO) Services: 22nd Century Group is strategically reallocating its production resources at its NASCO facilities. The company is shifting away from lower-margin filtered cigars towards higher-margin conventional cigarette products within its contract manufacturing business. This shift in product mix, along with securing new CMO contracts, is expected to enhance revenue and gross margins.
3. Strategic Partnerships and Distribution Expansion: Collaborations with major customers and partners, such as the expanded licensing and manufacturing agreement with Smoker Friendly, are crucial for broadening 22nd Century's product portfolio and extending its reach into established distribution networks. These partnerships facilitate the introduction of both reduced nicotine content products and new premium conventional products, aiming to increase brand loyalty and customer base.
4. Potential FDA Mandates for Reduced Nicotine Content in Cigarettes: While a longer-term prospect, the U.S. Food and Drug Administration's (FDA) proposed rule to mandate very low nicotine content in all combustible cigarettes represents a significant "game-changing opportunity" for 22nd Century Group. Given the company's leading position and proprietary technology in very low nicotine tobacco, such a mandate would significantly expand the addressable market for their VLN® products, positioning them favorably within the industry.

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Share Issuance

• 22nd Century Group initiated an "at-the-market" (ATM) equity program in November 2025, allowing for the offering and sale of up to $25 million of its common stock. The net proceeds are intended for general corporate purposes, including expansion and acceleration of its VLN® reduced nicotine content tobacco cigarettes, research and development, and intellectual property procurement.
• In October 2023, the company priced a public offering to raise approximately $5.25 million, which included 10 million shares of common stock and warrants to purchase up to 20 million shares. The warrants had an exercise price of $0.525 per share and a five-year expiry.
• In August 2024, 22nd Century Group raised an additional $1.68 million through a Regulation A offering, priced at $0.57 per share, and a private placement of common warrants. These funds were intended to support the scaling of its contract manufacturing business and the expansion of its FDA-authorized VLN® product line.

Inbound Investments

• In September 2025, 22nd Century Group secured $9.5 million in non-dilutive cash proceeds from the settlement of an insurance claim related to a business interruption incident at its Grass Valley facility in November 2022. This influx of cash was noted to improve the balance sheet and provide growth capital.

Outbound Investments

• In 2022, 22nd Century Group acquired GVB Biopharma, an industrial-scale processor of hemp-based derivatives. However, the company divested its GVB subsidiary in December 2023, ceasing all hemp-related research, distribution, and consulting agreements.
• The company's most recent acquisition was a merger/acquisition with RX Pharmatech on January 19, 2023.

Capital Expenditures

• 22nd Century Group's capital expenditures were $0.14 million in fiscal year 2024, $4.66 million in 2023, $3.66 million in 2022, $0.75 million in 2021, and $0.05 million in 2020.
• The proceeds from the November 2025 ATM equity program are intended for general corporate purposes, which include the expansion and acceleration of VLN product lines, research and development, and intellectual property procurement.