22nd Century Group Reports Fourth Quarter and Full Year 2024 Financial Results

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Insights

22nd Century's Q4 2024 results reveal deteriorating financial metrics with revenue declining to $4.0 million from $5.9 million sequentially, alongside widening losses. Gross profit deteriorated to a loss of $1.3 million, with operating losses expanding to $4.1 million and net losses increasing to $4.2 million. The company closed 2024 with $3.3 million in net debt.

The performance breakdown across product lines shows broad weakness: cigarette revenues fell to $3.3 million from $4.1 million, filtered cigars dropped to $0.8 million from $1.7 million, and VLN® cigarettes posted negative revenue of $(0.1) million due to rebates and incentives.

While the cigarette carton volumes increased to 228 thousand from 156 thousand, the revenue decline indicates significant pricing pressure and an unfavorable product mix shift between domestic and export sales. The filtered cigar decline stems from the completion of terminated manufacturing agreements without immediate replacement revenue.

The company's 2025 strategy hinges on the relaunch of its VLN® reduced nicotine cigarettes and new partner brand arrangements, with Smoker Friendly being the first announced partner. A new five-year manufacturing agreement with Smoker Friendly covers 11 existing products and 8 new premium products, providing some revenue stability if executed successfully.

Management characterizes 2024 as a "challenging but transformative year" focused on turnaround efforts. Their claim that contract manufacturing begins 2025 with "profitable contracts" represents a critical pivot point that requires verification in upcoming quarters.

22nd Century's reduced nicotine VLN® cigarettes represent a unique position in the tobacco regulatory landscape. The company's announcement that VLN® complies with the FDA's proposed tobacco product standard for nicotine yield (maximum nicotine level of 0.7 mg/g) could become a significant competitive advantage if these regulations are enacted.

The company's strategy shift toward both branded and private label partner VLN® products signals a multifaceted approach to market penetration. The Smoker Friendly partnership, covering both manufacturing agreements and VLN® distribution, leverages an established retail network for its reduced nicotine products.

However, the $(0.1) million negative revenue for VLN® in Q4 raises concerns about the existing market reception. The rebates and marketing incentives for already-distributed product suggest the current VLN® iteration isn't gaining traction without significant promotional support.

The upcoming rebranding in Q2 2025 with "new logo, packaging and marketing plan" represents a tacit acknowledgment that the current product positioning isn't resonating with consumers. While reduced nicotine cigarettes offer harm reduction potential, consumer adoption remains the critical challenge.

The strategic pivot toward partner brands may prove prudent as it diversifies distribution channels and potentially splits marketing costs. If additional partner agreements materialize as suggested, this could create multiple avenues for VLN® technology adoption while spreading risk.

22nd Century's focus on compliance with potential FDA regulations could position the company advantageously if regulatory tailwinds develop, but near-term financial performance indicates the market hasn't yet embraced reduced nicotine products sufficiently to offset declining conventional tobacco revenue.

03/20/2025 - 06:00 AM

Launches 2025 Growth Strategy Leveraging Both Internal and External Brand Assets Across Multiple Categories

Announces First VLN^® Partner Brands with Smoker Friendly Ready for Shipment in Q2 2025, Additional Partner VLN^® Brands in Discussion

MOCKSVILLE, N.C., March 20, 2025 (GLOBE NEWSWIRE) -- 22nd Century Group, Inc. (Nasdaq: XXII), a tobacco products company that is leading the fight against nicotine dependence and believes smokers should have a choice about their nicotine consumption, today announced results for the fourth quarter and year-ended December 31, 2024, and provided an update on recent business highlights.

Fourth Quarter and Full Year 2024 Financial Results (compared to Third 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 business in late 2023.

Net revenues decreased sequentially to $4.0 million, compared to $5.9 million.
Gross profit (loss) was $(1.3) million, compared to $(0.6) million.
Operating loss increased to $4.1 million, compared to $3.4 million.
Net loss increased to $4.2 million, compared to $3.6 million.
Adjusted EBITDA loss was $3.9 million, from a loss of $3.2 million.
Ended fiscal 2024 with net debt of $3.3 million.

Recent Business Highlights

Launched new VLN^® branding, ready for shipment in the second quarter 2025, including a new logo, packaging and marketing plan.
Announced first VLN^® partner brand with Smoker Friendly, ready for shipment in the second quarter of 2025.
Progressed in securing additional VLN^® partner brands, working toward a new reduced nicotine content product category.
Signed a new five-year expanded license and manufacturing agreement with Smoker Friendly, covering 11 existing products and eight new premium products to be launched.
Announced compliance with the FDA’s proposed new tobacco product standard for nicotine yield, which cites VLN^® from 22nd Century as the only combustible cigarette on the market that currently meets the new standard of a maximum nicotine level of 0.7 mg/g in cigarettes.

“Our 2024 results demonstrate a challenging but transformative year as we worked our turnaround plan and reset almost all aspects of our business. We are starting 2025 with a new base focused on growth across all of our revenue lines. Our contract manufacturing business begins the year with profitable contracts, and we have begun the relaunch of our reduced nicotine VLN^® cigarette business that will encompass both our branded VLN^® products as well as private label partner VLN^® products,” said Larry Firestone, Chairman and CEO. “We are excited for 2025 as this is really a new start of 22nd Century Group, Inc., and are looking forward to shaping our future around our current strategy.”

Fourth Quarter 2024 - Discussion of Product Line Net Revenues

Cigarette net revenues were $3.3 million, decreased from $4.1 million in the third quarter of 2024 reflecting a shift in overall product mix and pricing between domestic and export sales. Q4 2024 cigarette carton volumes increased to 228 thousand compared to 156 thousand in the third quarter of 2024.
Filtered cigars net revenues decreased to $0.8 million, compared to $1.7 million in the immediately preceding quarter, reflecting lower volumes as the Company completed last time buy orders under terminated contract manufacturing agreements.
Cigarillo distribution net revenues were negligible in the fourth quarter compared to $0.2 million in the preceding quarter.
VLN^® cigarette net revenues were $(0.1) million in the fourth quarter, reflective of rebate and marketing incentives for product already in distribution. The Company has announced new branding for its VLN^® products, which will be ready for shipment in the second quarter 2025, as well as its first partner brand VLN^® products with its existing customer Smoker Friendly. Additional partner brand agreements are in progress as part of a relaunch of its VLN^® reduced nicotine content products.

Conference Call

22nd Century will host a live webcast today at 8:00 a.m. E.T. to discuss its fourth quarter and year-end 2024 financial results and business highlights. The live and archived webcast will be accessible in the Events section on 22nd Century’s Investor Relations website at https://ir.xxiicentury.com/events.

Summary Financial Results

(dollars in thousands, except per share data)

	Three Months Ended
	December 31,						Change
	2024			2023			$			%
Revenues, net	$	4,020		$	7,357			(3,337	)		(45.4	)
Gross profit (loss)	$	(1,254	)	$	(7,829	)		6,575			(84.0	)
Operating loss	$	(4,091	)	$	(14,232	)		10,141			(71.3	)
Net loss from continuing operations	$	(4,246	)	$	(22,068	)		17,822			(80.8	)
Basic and diluted loss per common share from continuing operations	$	(10.59	)	$	(1,413.40	)		1,403			(99.3	)
Adjusted EBITDA (a)	$	(3,888	)	$	(4,363	)		475			10.9

	Year Ended
	December 31,						Change
	2024			2023			$		%
Revenues, net	$	24,382		$	32,204		(7,822	)	(24.3	)
Gross profit (loss)	$	(2,400	)	$	(8,696	)	6,296		(72.4	)
Operating loss	$	(13,950	)	$	(44,931	)	30,981		(69.0	)
Net loss from continuing operations	$	(15,495	)	$	(54,686	)	39,191		(71.7	)
Basic and diluted loss per common share from continuing operations	$	(105.85	)	$	(5,776.63	)	5,671		(98.2	)
Adjusted EBITDA (a)	$	(13,136	)	$	(30,100	)	16,964		56.4
(a) Adjusted EBITDA is a non-GAAP financial measure. Please see “Notes Regarding Non-GAAP Financial Information” for additional information regarding our use of non-GAAP financial measures. Refer to Tables A at the end of this release for reconciliations of adjusted amounts to the closest corresponding GAAP financial measures.

Summary Product Line Results
(in thousands)

	Three Months Ended
	December 31,
	2024						2023				Change
	$			Cartons			$		Cartons		$			Cartons
Contract Manufacturing
Cigarettes		3,276			228			2,293		104		983			124
Filtered Cigars		833			112			4,826		715		(3,993	)		(603	)
Cigarillos		-			-			-		-		-			-
Total Contract Manufacturing		4,109			340			7,119		819		(3,010	)		(479	)
VLN^®		(89	)		(2	)		238		4		(327	)		(6	)
Total Product Line Revenues		4,020			338			7,357		823		(3,337	)		(485	)

	Year Ended
	December 31,
	2024					2023				Change
	$			Cartons		$		Cartons		$			Cartons
Contract Manufacturing
Cigarettes		14,219			644		14,027		745		192			(101	)
Filtered Cigars		9,427			1,361		17,240		2,652		(7,813	)		(1,291	)
Cigarillos		756			120		-		-		756			120
Total Contract Manufacturing		24,402			2,125		31,267		3,397		(6,865	)		(1,272	)
VLN^®		(20	)		-		937		18		(957	)		(18	)
Total Product Line Revenues		24,382			2,125		32,204		3,415		(7,822	)		(1,290	)

About 22nd Century Group, Inc.

22nd Century Group is the pioneering nicotine harm reduction company in the tobacco industry enabling smokers to take control of their nicotine consumption.

We created our flagship product, the VLN^® cigarette, to give traditional cigarette smokers an authentic and familiar alternative that helps them take control of their nicotine consumption. VLN^® cigarettes have 95% less nicotine than the traditional cigarette and have been proven to greatly reduce nicotine consumption. Instead of offering new ways of delivering nicotine to addicted smokers, we offer smokers the option to take control of their nicotine consumption and make informed and more productive choices, including the choice to avoid addictive levels of nicotine altogether.

Our wholly owned subsidiaries include a leading cigarette manufacturer that produces all VLN^® products and provides turnkey contract manufacturing for other tobacco brands both domestically and internationally. The 60,000 square foot facility in Mocksville, North Carolina has the capacity to produce more than 45 million cartons of combusted tobacco products annually with additional space for expansion.

Our proprietary reduced nicotine tobacco blends are 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. Our extensive patent portfolio has been developed to ensure we have the only low nicotine combustible cigarette in the United States and critical international markets. Our mission is to sell the last cigarette before the 22nd Century.

VLN^® and Helps You Smoke Less^® are registered trademarks of 22nd Century Limited LLC.

Learn more at xxiicentury.com, on X (formerly Twitter), on LinkedIn, and on YouTube.

Learn more about VLN^® at tryvln.com.

Cautionary Note Regarding Forward-Looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements, including but not limited to our full year business outlook. Forward-looking statements typically contain terms such as “anticipate,” “believe,” “consider,” “continue,” “could,” “estimate,” “expect,” “explore,” “foresee,” “goal,” “guidance,” “intend,” “likely,” “may,” “plan,” “potential,” “predict,” “preliminary,” “probable,” “project,” “promising,” “seek,” “should,” “will,” “would,” and similar expressions. Forward-looking statements include, but are not limited to, statements regarding (i) our cost reduction initiatives, (ii) our expectations regarding regulatory enforcement, including our ability to receive an exemption from new regulations, (iii) our financial and operating performance and (iv) our expectations for our business interruption insurance claim. Actual results might differ materially from those explicit or implicit in forward-looking statements. Important factors that could cause actual results to differ materially are set forth in “Risk Factors” in the Company’s Annual Report on Form 10-K filed on March 20, 2025. All information provided in this release is as of the date hereof, and the Company assumes no obligation to and does not intend to update these forward-looking statements, except as required by law.

Notes regarding Non-GAAP Financial Information

In addition to the Company’s reported results in accordance with generally accepted accounting principles in the United States of America (“GAAP”), the Company provides EBITDA and Adjusted EBITDA.

In order to calculate EBITDA, the Company adjusts net (loss) income by adding back interest expense (income), provision (benefit) for income taxes, and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted by the Company for certain non-cash and/or non-operating expenses, including adding back equity-based employee compensation expense, restructuring and restructuring-related charges such as impairment, acquisition and transaction costs, and other unusual or infrequently occurring items, if applicable, such as inventory reserves and adjustments, gains or losses on disposal of property, plant and equipment, and gains or losses on investments.

The Company believes that the presentation of EBITDA and Adjusted EBITDA are important financial measures that supplement discussion and analysis of its financial condition and results of operations and enhances an understanding of its operating performance. While management considers EBITDA and Adjusted EBITDA to be important, these financial performance measures should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP, such as operating (loss) income, net (loss) income and cash flows from operations. Adjusted EBITDA is susceptible to varying calculations and the Company’s measurement of Adjusted EBITDA may not be comparable to those of other companies.

Net total debt is calculated as total principal amount of debt outstanding less cash and cash equivalents. In addition to the performance measures identified above, we believe that net total debt provides a meaningful measure of liquidity and a useful basis for assessing our ability to fund our activities, including the financing of scheduled debt repayments.

Investor Relations & Media Contact
Matt Kreps
Investor Relations
22nd Century Group
mkreps@xxiicentury.com
214-597-8200

22nd CENTURY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(amounts in thousands, except share and per-share data)

	December 31,			December 31,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	4,422		$	2,058
Accounts receivable, net		1,698			1,671
Inventories		2,015			4,346
Insurance recoveries		768			3,768
GVB promissory note		500			2,000
Prepaid expenses and other current assets		1,068			1,180
Current assets of discontinued operations held for sale		1,051			1,254
Total current assets		11,522			16,277
Property, plant and equipment, net		2,773			3,393
Operating lease right-of-use assets, net		1,639			1,894
Intangible assets, net		5,724			5,924
Other assets		15			15
Total assets	$	21,673		$	27,503

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes and loans payable - current	$	254		$	543
Current portion of long-term debt		1,500			5,848
Operating lease obligations		261			231
Accounts payable		2,401			4,445
Accrued expenses		1,021			1,322
Accrued litigation		768			3,768
Accrued payroll		318			883
Accrued excise taxes and fees		2,038			2,234
Deferred income		20			726
Other current liabilities		100			1,849
Current liabilities of discontinued operations held for sale		1,281			3,185
Total current liabilities		9,962			25,034
Long-term liabilities:
Operating lease obligations		1,437			1,698
Long-term debt		5,165			8,058
Other long-term liabilities		1,097			1,123
Total liabilities		17,661			35,913
Shareholders' equity (deficit)
Preferred stock, $.00001 par value, 10,000,000 shares authorized
Common stock, $.00001 par value, 250,000,000 shares authorized
Capital stock issued and outstanding:
730,148 common shares (20,313 at December 31, 2023)
Common stock, par value		—			—
Capital in excess of par value		397,883			370,297
Accumulated deficit		(393,871	)		(378,707	)
Total shareholders' equity (deficit)		4,012			(8,410	)
Total liabilities and shareholders’ equity (deficit)	$	21,673		$	27,503

22nd CENTURY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(amounts in thousands, except share and per-share data)

	Year Ended
	December 31,
	2024			2023
Revenues, net	$	24,382		$	32,204
Cost of goods sold		14,278			24,891
Excise taxes and fees on products		12,504			16,009
Gross (loss) profit		(2,400	)		(8,696	)
Operating expenses:
Sales, general and administrative		10,287			31,064
Research and development		1,133			2,644
Other operating expense, net		130			2,527
Total operating expenses		11,550			36,235
Operating loss from continuing operations		(13,950	)		(44,931	)
Other income (expense):
Other income (expense), net		507			334
Loss on transfer of promissory note		—			(895	)
Interest income, net		72			219
Interest expense		(2,094	)		(9,366	)
Total other income (expense), net		(1,515	)		(9,708	)
Loss from continuing operations before income taxes		(15,465	)		(54,639	)
Provision for income taxes		30			47
Net loss from continuing operations	$	(15,495	)	$	(54,686	)

Discontinued operations:
Income (loss) from discontinued operations before income taxes	$	331		$	(85,634	)
Provision for income taxes		—			455
Net income (loss) from discontinued operations	$	331		$	(86,089	)

Net loss	$	(15,164	)	$	(140,775	)
Deemed dividends		(10,303	)		(9,992	)
Net loss available to common shareholders	$	(25,467	)	$	(150,767	)

Basic loss per share:
Basic loss per common share from continuing operations	$	(105.85	)	$	(5,776.63	)
Basic income (loss) per common share from discontinued operations	$	2.26		$	(9,093.89	)
Basic loss per common share from deemed dividends	$	(70.38	)	$	(1,055.47	)
Basic loss per common share	$	(173.97	)	$	(15,925.99	)

Diluted loss per share:
Diluted loss per common share from continuing operations	$	(105.85	)	$	(5,776.63	)
Diluted income (loss) per common share from discontinued operations	$	0.24		$	(9,093.89	)
Diluted loss per common share from deemed dividends	$	(70.38	)	$	(1,055.47	)
Diluted loss per common share	$	(175.99	)	$	(15,925.99	)

Weighted average shares outstanding:
Basic		146,392			9,467
Diluted		1,389,983			9,467

Table A – Reconciliations of Non-GAAP Measures
(dollars in thousands, except share and per-share data)

Below is a table containing information relating to the Company’s Net loss, EBITDA and Adjusted EBITDA for the three and nine month periods ended December 31, 2024 and 2023, including a reconciliation of these Non-GAAP measures for such periods.

	Quarter Ended
	December 31,
	Amounts in thousands ($000's)
	except share and per share data
	(UNAUDITED)
							$ Change
	2024			2023			fav / (unfav)¹
Net loss from continuing operations	$	(4,246	)	$	(22,068	)	$	17,822
Interest (income)/expense, net		221			6,769			(6,548	)
Provision (benefit) for income taxes		3			1			2
Amortization and depreciation		241			370			(129	)
EBITDA	$	(3,781	)	$	(14,928	)	$	11,147
Adjustments:
Restructuring and impairment		(111	)		1,871			(1,982	)
Inventory write-down		—			7,927			(7,927	)
Change in fair value of derivative liabilities		(75	)		557			(632	)
Change in fair value of warrant liabilities		(68	)		175			(243	)
Loss on transfer of promissory note		—			895			(895	)
Equity-based employee compensation expense		147			(860	)		1,007
Adjusted EBITDA	$	(3,888	)	$	(4,363	)	$	475

Adjusted EBITDA loss per common share	$	(9.70	)	$	(279.44	)	$	269.74
Weighted average common shares outstanding - basic and diluted		400,858			15,613

	Year Ended
	December 31,
	Amounts in thousands ($000's)
	except share and per share data
	(UNAUDITED)
							$ Change
	2024			2023			fav / (unfav)¹
Net loss from continuing operations	$	(15,495	)	$	(54,686	)	$	39,191
Interest (income)/expense, net		2,022			9,147			(7,125	)
Provision (benefit) for income taxes		30			47			(17	)
Amortization and depreciation		1,003			1,508			(505	)
EBITDA	$	(12,440	)	$	(43,984	)	$	31,544
Adjustments:
Restructuring and impairment		(459	)		2,415			(2,874	)
Inventory write-down		431			7,927			(7,496	)
Acquisition and transaction costs		—			223			(223	)
Change in fair value of derivative liabilities		(556	)		557			(1,113	)
Change in fair value of warrant liabilities		(492	)		(364	)		(128	)
Loss on transfer of promissory note		—			895			(895	)
Equity-based employee compensation expense		380			2,231			(1,851	)
Adjusted EBITDA	$	(13,136	)	$	(30,100	)	$	16,964

Adjusted EBITDA loss per common share	$	(0.09	)	$	(3.18	)	$	3.09
Weighted average common shares outstanding - basic and diluted		146,392			9,467

¹Fav = Favorable variance, which increases EBITDA and Adjusted EBITDA; Unfav = unfavorable variance, which reduces EBITDA and Adjusted EBITDA

Table B: Net Total Debt Reconciliation
(dollars in thousands)

	December 31,		December 31,
	2024		2023
Total debt	$	6,665	$	13,906
Add: debt discounts and deferred issuance costs included in total debt		1,025		1,453
Total principal amount of debt outstanding		7,690		15,359
Less: Cash and cash equivalents		4,422		2,058
Net total debt (Non-GAAP)	$	3,268	$	13,301

FAQ

What were XXII's Q4 2024 financial results?

Q4 2024 showed net revenues of $4.0 million, gross loss of $1.3 million, and net loss of $4.2 million, with cigarette revenues at $3.3 million.

When will XXII launch its new VLN® branded products?

The new VLN® branded products are scheduled for shipment in the second quarter of 2025.

What is the scope of XXII's new agreement with Smoker Friendly?

A five-year expanded license and manufacturing agreement covering 11 existing products and eight new premium products.

How many cigarette cartons did XXII sell in Q4 2024?

XXII sold 228,000 cigarette cartons in Q4 2024, up from 156,000 in Q3 2024.

What is XXII's current debt position?

The company ended fiscal 2024 with net debt of $3.3 million.

22nd Century Group Reports Fourth Quarter and Full Year 2024 Financial Results

Insights

FAQ

What were XXII's Q4 2024 financial results?

When will XXII launch its new VLN® branded products?

What is the scope of XXII's new agreement with Smoker Friendly?

How many cigarette cartons did XXII sell in Q4 2024?

What is XXII's current debt position?

NASDAQ:XXII

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22nd Century Group Reports Fourth Quarter and Full Year 2024 Financial Results

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Financial Analyst negative

Tobacco Industry Specialist negative

FAQ

What were XXII's Q4 2024 financial results?

When will XXII launch its new VLN® branded products?

What is the scope of XXII's new agreement with Smoker Friendly?

How many cigarette cartons did XXII sell in Q4 2024?

What is XXII's current debt position?

NASDAQ:XXII

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