22nd Century Group, Inc. Q4 FY2025 earnings call

• 2025 was a transition year from restructuring to growth. Closed legacy issues, unprofitable contracts and product lines, reduced manufacturing overhead, paid off debt. Launched new brands and products, secured retail outlets, and saw initial sales of VLN products.
• In 2025, VLN combustible cigarette products were in 1,636 retail outlets in 23 states, with growth expected as more retail partners are secured.
• The company's proprietary low nicotine technology targets adult smokers wanting to smoke less. VLN products have science backing, with examples of smokers cutting smoking habit by two-thirds in 12 weeks.
• In December 2025, filed MRTP renewal application with FDA and plans to expand PMTA and MRTP filings. The FDA's low nicotine proposed rule in January 2025 cited 22nd Century's products and science.
• In 2026, focus is on growth, adding distribution points in Northeast, Mid-Atlantic, and California. Launching Pinnacle Pure product. Adding headcount to support product launches and marketing initiatives.

In the fourth quarter of 2025, net revenue was approximately $3.6 million, compared with $4 million in the third quarter. Total cartons shipped during the fourth quarter were approximately 248,000, compared with 517,000 cartons in the third quarter. For the full year of 2025, net revenues were approximately $17.6 million, compared with $24.4 million in 2024. Gross profit for the fourth quarter improved sequentially with a gross loss of approximately $0.8 million, compared with a $1.1 million gross loss in the third quarter 2025. Operating loss for the fourth quarter was $2.8 million compared with $3.2 million in the third quarter. Net loss from continuing operations for the fourth quarter was approximately $2.8 million compared with $3.8 million in the third quarter. Adjusted EBITDA for the fourth quarter was $2.4 million compared with $2.9 million in the third quarter of 2025. For the full year 2025, net loss from continuing operations was approximately $13.1 million, improved from $15.5 million in 2024. Ended the year with approximately $7.1 million in cash and cash equivalents and zero long-term debt. Inventory position increased to approximately 4.3 million in the fourth quarter of 2025 from 2 million at the end of the third quarter.

• Revenue will remain consistent in the first quarter of 2026 and then begin growing sequentially, nearing the timing of added points of distribution.
• Anticipate restocking shipments of VLN and partner VLN to commence later in the second quarter of 2026.
• Estimate increasing current store count by more than double by the end of 2026.
• Recently closed an additional round of financing to provide over $10 million in cash on the balance sheet to support 2026 plans.

• Forward - looking statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated.
• Regulatory environment poses risks, such as the outcome of FDA's low nicotine proposed rule and international regulatory challenges.
• Competition from big tobacco companies pushing addictive products like pouches and vapes, which could impact market share.