Business Description

first warned of the dangers of cigarette smoking in 1964, the debate over tobacco health harm has been largely dominated by two powerful voices: Big Tobacco and the US Government. After decades of litigation, lobbying and lawmaking, the major tobacco producers still decide the nicotine levels contained in the tobacco products consumed by smokers. In addition, despite prominent and omnipresent government warnings that “Nicotine is an Addictive Chemical,” sales of tobacco products containing addictive levels of nicotine continue unabated, including even delivery of smoke-free nicotine in pure form. 22nd Century believes it is time for the individual tobacco user to decide for themselves how much nicotine they choose to consume. If a consumer chooses to smoke tobacco without nicotine addiction, we offer that alternative. Transition to Growth We received Modified Risk Tobacco Product (MRTP) granted orders from the FDA for marketing and sale of our revolutionary RNC cigarettes in December 2021, the first and only such orders ever awarded for a combusted tobacco product. The authorized products are based on our proprietary RNC tobacco blends made possible by comprehensive and patented technologies that regulate nicotine biosynthesis activities in the tobacco plant, resulting in full flavor non-genetically modified organism (GMO) tobacco strains and high yield with 95% less nicotine. We designed a pilot program to study retailer and consumer reaction to the RNC concept and our VLN ® cigarettes in selected retail outlets during 2022. We commissioned a comprehensive market study to evaluate the results, including participants’ smoking behaviors and history, awareness and purchase of VLN ® cigarettes, attitudes and perceptions, and responses to messaging. The program was expanded in 2023, progressing state by state and region by region to a store footprint spanning more than 5,000 stores in 26 states. Based on extensive consumer feedback and point-of-sale data, we made significant enhancements to nearly every aspect of the consumer and retailer VLN ® experience, including improved and revitalized branding, packaging, and messaging. Beginning in 2025, we implemented a new marketing and distribution approach. We created a VLN ® version of popular cigarette brands that we already manufacture for existing clients and offer for sale through their extensive distribution channels. This strategic pivot leverages our numerous contract manufacturing relationships together with cross branding strategies for integrative volume growth and enhanced retail access. We will continue to expand national distribution in 2026, with an eye toward the approximately 270,000 domestic tobacco retail outlets and a meaningful share of those adult consumers in the estimated $58 billion combustible cigarette marketing in the U.S. that want to smoke less. A New and Disruptive Category Our VLN ® cigarettes are currently available in a number of top retailers in US markets and present a groundbreaking alternative with 95% less nicotine content than conventional cigarettes. Maintaining a familiar combustible product format, VLN ® products present the conventional cigarette smoking experience, encompassing sensory and experiential elements such as enjoyment, taste, scent, smell, and the familiar “hand-to-mouth” behavior. 5 Our approach is not to continue making and selling VLN ® cigarettes as a novel idea, but to build an entire RNC category of products, including tiers of proprietary and partner or “flanker” brands that we manufacture and distribute. We expect this “House of Brands” to drive retail shelf visibility, consumer recognition, and overall volume expansion. At the same time, we are leveraging our contract manufacturing operations (CMO) relationships for cross-sale of brand families to increase distribution and points-of-sale for each of us. As a category, we expect RNC tobacco to be no less disruptive than the zero- and low-proof spirits segment, which has gone from a dubious notion to a multi-billion-dollar market in only a few years. Rather than attempting to compete against traditional adult beverages, the low-proof spirits category breaks the paradigm by offering individuals the option to participate in a personal routine or social ritual without the alcohol intake, either on occasion or as a lifestyle commitment, for whatever reasons they choose. Moreover, this choice is provided at an above-premium price point with high margin delivery.…