22nd Century Group (NASDAQ: XXII) posts Q1 2026 loss and flags going concern risk

Rhea-AI Filing Summary

22nd Century Group, Inc. reported a first‑quarter 2026 net loss of $3.3 million, compared with a $4.3 million loss a year earlier. Revenue from tobacco products fell to $4.1 million from $6.0 million, mainly due to lower contract manufacturing volumes, while gross margin remained negative.

Operating expenses increased to $2.4 million, widening the operating loss from continuing operations to $3.0 million. The company closed a $16.0 million Series B convertible preferred stock and warrant financing, using $9.7 million to redeem Series A preferred. Despite ending the quarter with $9.5 million in cash and higher working capital, management states there is substantial doubt about the company’s ability to continue as a going concern without additional capital or major cost reductions.

Positive

• None.

Negative

• Going concern risk: Management discloses substantial doubt about the company’s ability to continue as a going concern, with a cumulative deficit of $402.2 million and operating cash outflow of $3.1 million in Q1 2026.
• Deteriorating top line and profitability: Net revenue declined 31.1% year over year to $4.1 million, gross margin remained negative, and operating loss from continuing operations increased to 74% of revenue.

Insights

Equity & credit analyst

Revenue is shrinking, losses continue, and going‑concern risk is explicit.

22nd Century Group saw Q1 2026 revenue drop 31.1% to $4.1M while posting a gross loss and an operating loss of $3.0M. SG&A and R&D both increased, pushing operating loss as a share of revenue to 74%.

Liquidity improved short term: cash rose to $9.5M and working capital to $13.2M, helped by $16.0M of Series B preferred proceeds and an ATM program. However, much of that cash refinanced capital structure, including a $9.65M redemption of Series A preferred.

The filing explicitly states substantial doubt about the ability to continue as a going concern given ongoing operating cash burn of $3.1M in the quarter and a cumulative deficit of $402.2M. Future outcomes hinge on successful cost reductions and access to new equity or strategic funding under the disclosed preferred and warrant structures.

Key Figures

Net revenue: $4.105M Net loss: $3.261M Operating loss from continuing ops: $3.039M +5 more

8 metrics

Net revenue $4.105M Three months ended March 31, 2026; down from $5.956M in 2025

Net loss $3.261M Three months ended March 31, 2026

Operating loss from continuing ops $3.039M Three months ended March 31, 2026; 74.0% of revenue

Cash and cash equivalents $9.545M As of March 31, 2026

Operating cash outflow $3.103M Net cash used in operating activities, Q1 2026

Series B preferred raised $16.0M Initial closing of March 2026 Series B Convertible Preferred Stock

Redemption of Series A preferred $9.650M Par value repurchase funded from Series B proceeds

Accumulated deficit $402.186M As of March 31, 2026

Key Terms

going concern, Series B Convertible Preferred Stock, Alternative Conversion Price, Master Settlement Agreement (MSA), +2 more

6 terms

going concern financial

"there is substantial doubt about the Company’s ability to continue as a going concern through one year"

A going concern is a business that is expected to continue its operations and meet its obligations for the foreseeable future, rather than shutting down or selling off assets. This assumption matters to investors because it indicates stability and ongoing profitability, making the business a more reliable investment. Think of it as believing a restaurant will stay open and serve customers, rather than closing down suddenly.

Series B Convertible Preferred Stock financial

"offer and sale of $20,000 of shares of Series B Convertible Preferred Stock, stated value $1,000 per share"

Series B convertible preferred stock is a class of shares sold during a later-stage private financing that combines features of a loan and common stock: it usually pays priority dividends or has a priority claim if the company is sold, and it can be converted into common shares under predefined rules. Investors care because these shares affect ownership stakes and payout order—like having a reserved place in line and a ticket that can turn into regular ownership—so they influence potential returns and dilution for other shareholders.

Alternative Conversion Price financial

"alternatively, at a 15% discount to the lowest daily volume-weighted average price during the prior 20 trading days (the “Alternative Conversion Price”)"

Master Settlement Agreement (MSA) regulatory

"The Company is a subsequent participating manufacturer under the Master Settlement Agreement ("MSA")"

Modified Risk Tobacco Product (MRTP) regulatory

"a reduced nicotine combustible cigarette authorized by the FDA as a Modified Risk Tobacco Product"

A modified risk tobacco product (MRTP) is a tobacco or nicotine product that a regulator has reviewed and allowed to be marketed with claims that it reduces harm or exposure compared with conventional tobacco. Think of it like an official safety rating for a product — it changes what can be said in advertising, how it can be labeled, and how consumers perceive it. For investors, MRTP status can alter sales potential, competitive position, regulatory risk, and legal exposure, making it a material factor in valuation and strategy.

mezzanine equity financial

"they are classified as "mezzanine equity" (temporary equity)"

Mezzanine equity is a layer of financing that sits between bank loans and full ownership, combining elements of borrowed money and equity. It often gives lenders higher potential returns in exchange for taking more risk, sometimes with the option to convert into ownership or receive extra payments; think of it as a middle seat that pays more because it’s less secure than front-row debt. Investors watch it because it affects a company’s debt risk, potential dilution of ownership, and expected returns.

10-Q Quarterly Reports: What Changes Quarter to Quarter →

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UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION WASHINGTON, D.C. 20549

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FORM 10-Q

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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the Quarterly Period Ended March 31, 2026

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☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the Transition Period From ________ to ________

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Commission File Number: 001-36338​

22nd Century Group, Inc.

(Exact name of registrant as specified in its charter)

​

Nevada	​ ​ ​	98-0468420
(State or other jurisdiction	​	(IRS Employer
of incorporation)	​	Identification No.)

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321 Farmington Road Mocksville, North Carolina 27028

(Address of principal executive offices)

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(336) 940-3769

(Registrant’s telephone number, including area code)

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Securities registered under Section 12(b) of the Act:

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Title of each class	​ ​ ​	Ticker symbol	​ ​ ​	Name of Exchange on Which Registered
Common Stock, $0.00001 par value		XXII		NASDAQ Capital Market

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ⌧  No  ◻

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ⌧  No  ◻

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐ No  ☒

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As of May 1, 2026, there were 4,455,649 shares of common stock issued and outstanding.

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Table of Contents

22nd CENTURY GROUP, INC.

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INDEX

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		​ ​
		Page Number
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
​	Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (unaudited)	3
​
​	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months ended March 31, 2026 and 2025 (unaudited)	4
​
​	Condensed Consolidated Statements of Convertible Preferred Stock, Shareholders’ Equity and Mezzanine Equity for the Three Months ended March 31, 2026 and 2025 (unaudited)	5
​
​	Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2026 and 2025 (unaudited)	6
​
​	Notes to Condensed Consolidated Financial Statements (unaudited)	7
​
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
​	​	​
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Default Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
SIGNATURES		36

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22nd CENTURY GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(amounts in thousands, except share and per-share data)

​

​	​	​	​	​	​	​
​	​	March 31,		​	December 31,
​	​ ​ ​	2026		​ ​ ​	2025
ASSETS		​	​		​	​
Current assets:		​	​		​	​
Cash and cash equivalents	​	$	9,545	​	$	7,149
Accounts receivable, net	​		4,779	​		3,594
Inventories	​		4,346	​		4,326
Prepaid expenses and other current assets	​		2,400	​		2,562
Total current assets	​		21,070	​		17,631
Property, plant and equipment, net	​		2,366	​		2,440
Operating lease right-of-use assets, net	​		688	​		728
Intangible assets, net	​		6,137	​		6,224
Other assets	​		49	​		—
Total assets	​	$	30,310	​	$	27,023
​	​		​	​		​
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY	​		​	​		​
Current liabilities:	​		​	​		​
Notes and loans payable-current	​	$	113	​	$	204
Operating lease obligations	​		172	​		168
Accounts payable	​		1,025	​		1,000
Accrued expenses and other current liabilities	​		1,135	​		836
Accrued excise taxes and fees	​		3,525	​		3,343
Contract liabilities	​		1,936	​		1,721
Total current liabilities	​		7,906	​		7,272
Long-term liabilities:	​		​	​		​
Notes and loans payable	​		475	​		504
Operating lease obligations	​		556	​		601
Other long-term liabilities	​	​	155	​	​	154
Total liabilities	​	​	9,092	​	​	8,531
Commitments and contingencies (Note 12)	​		​	​		​
​	​	​	​	​	​	​
Mezzanine equity:	​	​	​	​	​	​
Series A convertible preferred shares, $0.00001 par value; 10,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2026 and 9,650 at December 31, 2025, respectively	​		—	​		2,734
Total mezzanine equity	​		—	​		2,734
​	​	​	​	​	​	​
Shareholders' equity:	​		​	​		​
Series B convertible preferred shares, $0.00001 par value; 10,000,000 shares authorized, 15,770 shares issued and outstanding at March 31, 2026 and 0 at December 31, 2025, respectively	​	​	—	​	​	—
Common stock, $.00001 par value, 500,000,000 shares authorized, 769,788 shares issued and outstanding at March 31, 2026 and 510,384 at December 31, 2025, respectively	​		—	​		—
Capital in excess of par value	​		423,404	​		414,683
Accumulated deficit	​		(402,186)	​		(398,925)
Total shareholders' equity	​		21,218	​		15,758
Total liabilities, mezzanine equity and shareholders’ equity	​	$	30,310	​	$	27,023

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See accompanying notes to Condensed Consolidated Financial Statements.

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22nd CENTURY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(amounts in thousands, except share and per-share data)

​

​	​	​	​	​	​
​	Three Months Ended
​	March 31,
​	2026		​ ​ ​	2025
Revenues, net	$	4,105	​	$	5,956
Cost of goods sold	​	1,925	​	​	2,884
Excise taxes and fees on products		2,816	​		3,681
Gross loss		(636)	​		(609)
Operating expenses:		​	​		​
Sales, general and administrative		2,118	​		1,799
Research and development		285	​		162
Total operating expenses		2,403	​		1,961
Operating loss from continuing operations		(3,039)	​		(2,570)
Other income (expense):		​	​		​
Other expense		—	​		(162)
Interest income		31	​		16
Interest expense		(11)	​		(558)
Total other income (expense), net		20	​		(704)
Loss from continuing operations before income taxes		(3,019)	​	​	(3,274)
(Benefit) provision for income taxes		—	​		—
Net loss from continuing operations	$	(3,019)	​	$	(3,274)
​	​	​	​	​	​
Discontinued operations:	​	​	​	​	​
Loss from discontinued operations before income taxes	$	(242)	​	$	(1,054)
Provision for income taxes	​	—	​	​	—
Net loss from discontinued operations	$	(242)	​	$	(1,054)
​	​	​	​	​	​
Net loss	$	(3,261)	​	$	(4,328)
Comprehensive loss	$	(3,261)	​	$	(4,328)
​	​	​	​	​	​
Net loss	$	(3,261)	​	$	(4,328)
Deemed dividends	​	(589)	​	​	—
Dividend for redemption of Series A Convertible Preferred Stock	​	(6,916)	​	​	—
Net loss available to common shareholders	$	(10,766)	​	$	(4,328)
​	​	​	​	​	​
Basic and diluted loss per share:	​	​	​	​	​
Basic and diluted loss per common share from continuing operations	$	(5.07)	​	$	(634.25)
Basic and diluted loss per common share from discontinued operations	$	(0.41)	​	$	(204.18)
Basic and diluted loss available to common shareholders per common share	$	(18.08)	​	$	(838.43)
​	​	​	​	​	​
Weighted average shares outstanding - basic and diluted	​	595,344	​	​	5,162
​	​	​	​	​	​

​

See accompanying notes to Condensed Consolidated Financial Statements.

​

4

Table of Contents

​

​

22nd CENTURY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, SHAREHOLDERS’ EQUITY AND

MEZZANINE EQUITY

(Unaudited)

(amounts in thousands, except share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended March 31, 2026

​

​

Shareholders' Equity

​

​

Mezzanine Equity

​

​

Convertible

​

​

​

​

​

​

​

​

​

Capital in

​

​

​

​

Total

​

​

Preferred

​

​

​

​

Preferred Shares

​

​

​

​

Common Shares

​

​

​

​

Excess of

​

Accumulated

​

Shareholders’

​

​

Shares

​

​

​

​ ​ ​

Outstanding

​ ​ ​

Par Value

​ ​ ​

Outstanding*

​ ​ ​

Par Value*

​ ​ ​

Par Value*

​ ​ ​

Deficit

​ ​ ​

Equity

​

​

Outstanding

​

Amount

Balance at January 1, 2026

—

​

$

—

510,384

​

$

—

$

414,683

​

$

(398,925)

​

$

15,758

​

​

9,650

​

$

2,734

Stock issued in connection with ATM, net of fees of $136

​

—

​

​

—

​

44,381

​

​

—

​

​

64

​

​

—

​

​

64

​

​

—

​

​

—

Reclassification of 9,650 shares of Mezzanine Equity Series A Convertible Preferred Stock

​

9,650

​

​

—

​

—

​

​

—

​

​

2,734

​

​

—

​

​

2,734

​

​

(9,650)

​

​

(2,734)

Redemption of Series A Convertible Preferred Stock (see Note 10)

​

(9,650)

​

​

—

​

—

​

​

—

​

​

(9,650)

​

​

—

​

​

(9,650)

​

​

—

​

​

—

Issuance of Series B Convertible Preferred Stock, net of fees of $725

​

16,000

​

​

—

​

—

​

​

—

​

​

15,275

​

​

—

​

​

15,275

​

​

—

​

​

—

Stock issued upon conversion of Series B convertible preferred stock-Q1

​

(230)

​

​

—

​

90,945

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock issued in connection with marketing arrangement

​

—

​

​

—

​

16,820

​

​

—

​

​

60

​

​

—

​

​

60

​

​

—

​

​

—

Stock issued in connection with RSU vesting

​

—

​

​

—

​

298

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Equity-based compensation

—

​

​

—

—

​

—

​

238

​

​

—

​

238

​

​

—

​

—

Fractional shares issued for reverse stock split

—

​

​

—

106,960

​

—

​

—

​

​

—

​

—

​

​

—

​

—

Net loss

—

​

​

—

—

​

—

​

—

​

​

(3,261)

​

(3,261)

​

​

—

​

—

Balance at March 31, 2026

​

15,770

​

$

—

769,788

​

$

—

$

423,404

​

$

(402,186)

​

$

21,218

​

​

—

​

$

—

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

*Giving retroactive effect to the 1-for-15 on January 26, 2026.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended March 31, 2025

​

​

Shareholders' Equity

​

​

Mezzanine Equity

​

​

Convertible

​

​

​

​

​

​

​

​

​

Capital in

​

​

​

​

Total

​

​

Preferred

​

​

​

​

Preferred Shares

​

​

​

​

Common Shares

​

​

​

​

Excess of

​

Accumulated

​

Shareholders’

​

​

Shares

​

​

​

​ ​ ​

Outstanding

​ ​ ​

Par Value*

​ ​ ​

Outstanding*

​ ​ ​

Par Value*

​ ​ ​

Par Value*

​ ​ ​

Deficit

​ ​ ​

Equity

​

​

Outstanding

​

Amount

Balance at January 1, 2025

—

​

$

—

2,285

​

$

—

$

397,883

$

(393,871)

​

$

4,012

​

​

—

​

$

—

Stock issued in connection with settled indebtedness

​

—

​

​

—

​

164

​

​

—

​

​

270

​

​

—

​

​

270

​

​

—

​

​

—

Stock issued in connection with licensing arrangement

​

—

​

​

—

​

139

​

​

—

​

​

230

​

​

—

​

​

230

​

​

—

​

​

—

Stock issued from alternative cashless warrant exercises

​

—

​

​

—

​

4,009

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Stock issued upon conversion of Senior Secured Credit Facility

​

—

​

​

—

​

1,504

​

​

—

​

​

3,132

​

​

—

​

​

3,132

​

​

—

​

​

—

Conversion option remeasurement

​

—

​

​

—

​

—

​

​

—

​

​

283

​

​

—

​

​

283

​

​

—

​

​

—

Equity-based compensation

—

​

—

—

​

—

​

26

​

—

​

26

​

​

—

​

—

Net loss

—

​

—

—

​

—

​

—

​

(4,328)

​

(4,328)

​

​

—

​

—

Balance at March 31, 2025

​

—

​

$

—

8,101

​

$

—

$

401,824

$

(398,199)

​

$

3,625

​

​

—

​

$

—

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

*Giving retroactive effect to the 1-for-23 reverse stock split on June 20, 2025 and 1-for-15 on January 26, 2026.

​

See accompanying notes to Condensed Consolidated Financial Statements.

5

Table of Contents

22nd CENTURY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(amounts in thousands)

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​ ​ ​	2026		​ ​ ​	2025
Cash flows from operating activities:		​	​		​	​
Net loss	​	$	(3,261)	​	$	(4,328)
Adjustments to reconcile net loss to cash used in operating activities:	​		​	​		​
Impairment of long-lived assets	​	​	—	​	​	293
Amortization and depreciation	​		206	​		224
Amortization of right-of-use assets	​		40	​		67
Provision for credit losses	​	​	5	​	​	513
Debt related charges included in interest expense	​	​	—	​	​	680
Equity-based compensation	​		238	​		26
Change in fair value of warrant liabilities	​	​	—	​	​	162
Change in inventory reserves	​	​	15	​	​	(28)
Changes in operating assets and liabilities:	​		​	​		​
Accounts receivable	​		(1,191)	​		(2,638)
Inventories	​		(35)	​		(512)
Prepaid expenses and other assets	​		225	​		(491)
Accounts payable	​		28	​		355
Accrued expenses and other current liabilities	​		307	​		956
Accrued excise taxes and fees	​		182	​		1,811
Contract liabilities	​		215	​		59
Other liabilities	​	​	(77)	​		(125)
Net cash used in operating activities	​		(3,103)	​		(2,976)
Cash flows from investing activities:	​		​	​		​
Acquisition of patents, trademarks, and licenses	​		(7)	​		(49)
Acquisition of property, plant and equipment	​		(40)	​		(10)
Net cash used in investing activities	​		(47)	​		(59)
Cash flows from financing activities:	​		​	​		​
Payments on notes payable	​	​	(120)	​	​	(254)
Proceeds from issuance of common stock related to the ATM	​	​	200	​	​	—
Payment of common stock issuance costs related to the ATM	​	​	(136)	​	​	—
Principal payments on finance leases	​	​	(4)	​	​	—
Redemption of Series A at par value	​	​	(9,650)	​	​	—
Net proceeds from Series B convertible preferred stock	​	​	15,256	​	​	—
Net cash provided by (used in) financing activities	​		5,546	​		(254)
Net increase (decrease) in cash and cash equivalents	​		2,396	​		(3,289)
Cash and cash equivalents - beginning of period	​		7,149	​		4,422
Cash and cash equivalents - end of period	​	$	9,545	​	$	1,133
​	​	​	​	​	​	​
Supplemental disclosures of cash flow information:	​		​	​		​
Non-cash transactions:	​		​	​		​
Capital expenditures incurred but not yet paid	​	$	—	​	$	445
Deemed dividends	​	$	589	​	$	—
Stock issued in connection with settled indebtedness	​	$	—	​	$	270
Non-cash licensing arrangement	​	$	—	​	$	230
Equity conversion of Senior Secured Credit Facility	​	$	—	​	$	3,132
Conversion option remeasurement	​	$	—	​	$	283
Finance lease assets and lease obligations	​	$	52	​	$	—
Stock issued in connection with marketing arrangement	​	$	60	​	$	—
Equity issuance costs accrued but not yet paid	​	$	19	​	$	—

​

​

​

See accompanying notes to Condensed Consolidated Financial Statements.

​

6

Table of Contents

​

22nd CENTURY GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2026

(Unaudited)

Amounts in thousands, except for share and per-share data

NOTE 1. - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation – 22nd Century Group, Inc. (together with its consolidated subsidiaries, “22nd Century Group” or the “Company”) is a Nevada corporation publicly traded on the NASDAQ Capital Market under the symbol “XXII.” 22nd Century Group is a tobacco products company with sales and distribution of the Company’s own branded tobacco products and contract manufacturing services for third-party brands. The Company’s flagship product is a reduced nicotine combustible cigarette authorized by the FDA as a Modified Risk Tobacco Product.

The accompanying Condensed Consolidated Financial Statements are presented in accordance with the rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC") and do not include all of the disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in the Company’s Annual Report on Form 10-K. Accordingly, these Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented. The results for interim periods are not necessarily indicative of results or trends that may be expected for the entire fiscal year. The Condensed Consolidated Financial Statements were prepared using U.S. GAAP, which require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, certain components of equity, sales, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ materially from these estimates.

Liquidity and Capital Resources – The Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred significant losses and negative cash flows from operations since inception and expects to incur additional losses until such time that it can generate significant revenue and profit in its tobacco business. The Company had negative cash flow from operations of $3,103 and $2,976 for the three months ended March 31, 2026 and 2025, respectively, and an accumulated deficit of $402,186 and $398,925 as of March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026, the Company had cash and cash equivalents of $9,545.

Given the Company’s projected operating requirements and its existing cash and cash equivalents, there is substantial doubt about the Company’s ability to continue as a going concern through one year following the date that the Condensed Consolidated Financial Statements are issued.

In response to these conditions, management continues to evaluate different strategies for reducing expenses, as well as pursuing financing strategies which include raising additional funds through the issuance of debt or equity securities, asset sales, and through arrangements with strategic partners. If capital is not available to the Company when, and in the amounts needed, it could be required to liquidate inventory, cease or curtail operations, or seek protection under applicable bankruptcy laws or similar state proceedings. There can be no assurance that the Company will be able to raise the capital it needs to continue operations. Management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern through one year following the date that the Condensed Consolidated Financial Statements are issued.

The Condensed Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

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Table of Contents

Other Significant Risks and Uncertainties - The Company is subject to a number of risks, including, but not limited to, the lack of available capital; unsuccessful commercialization strategy and launch plans for the Company’s products or market acceptance of the Company’s products; and protection of proprietary technology.

Reclassifications – The Company has revised the presentation and classification of the following in the Condensed Consolidated Statements of Cash Flows as follows:

​

​	​	​	​	​	​	​	​	​
​	Three Months Ended
​	March 31, 2025
​	As originally		​	​	​	​	​	​
​	reported		​ ​ ​	Reclass		​ ​ ​	Revised
Accrued expenses and other current liabilities	$	1,067	​	$	(111)	​	$	956
Accrued payroll	$	(111)	​	$	111	​	$	—
Contract liabilities	$	—	​	$	59	​	$	59
Other liabilities	$	(66)	​	$	(59)	​	$	(125)

​

Reverse Stock Split – In order to regain compliance with Nasdaq's continued listing requirements, the Company effected the following reverse stock splits:

​

​	​	​	​	​
​	​	​	​	Round up of
Date	​	Split	​	fractional shares
June 20, 2025	​	1-for-23	​	7,741
January 26, 2026	​	1-for-15	​	106,960

​

All share and per share amounts, and exercise prices of stock options, and warrants in the Condensed Consolidated Financial Statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the reverse stock splits.

Mezzanine Equity - Where ordinary or preferred shares are determined to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the Company, and upon such event, the shares would become redeemable at the option of the holder, such as when the Company has not obtained shareholder approval for certain provisions of the outstanding preferred shares, they are classified as "mezzanine equity" (temporary equity). The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future. The Company evaluates whether the contingent redemption provisions are probable of becoming redeemable to determine whether the carrying value of the redeemable convertible preferred shares are required to be remeasured to their respective redemption values. All instruments that are classified as mezzanine equity are evaluated for embedded derivative features by evaluating each feature against the nature of the host instrument (e.g., more equity-like or debt-like). Features identified as freestanding instruments or bifurcated embedded derivatives that are material are recognized separately as a derivative asset or liability in the Condensed Consolidated Financial Statements.

Warrants - The Company accounts for stock warrants as either equity instruments, derivative liabilities, or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815) depending on the specific terms of the warrant agreement. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. 

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Table of Contents

Warrants that the Company may be required to redeem through payment of cash or other assets outside its control are classified as liabilities pursuant to ASC 480 and are initially and subsequently measured at their estimated fair values. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of Capital in excess of par value at the time of issuance. For additional discussion on warrants, see Note 5 “Fair Value Measurements” and Note 10 “Capital Raises and Warrants for Common Stock.”

Deemed dividends associated with down round provisions (commonly referred to as “ratchets”) represent the economic transfer of value to holders of equity-classified freestanding financial instruments when these provisions are triggered. These deemed dividends are presented as a reduction in net income or an increase in net loss available to common stockholders and a corresponding increase to Capital in excess of par value resulting in no change to stockholders’ equity/deficit. See Note 10 “Capital Raises and Warrants for Common Stock.”

Offering Costs - In connection with equity offerings, the Company incurs and capitalizes certain direct, incremental legal, professional, accounting and other third-party costs. Such costs are offset against the gross proceeds of each equity offering and recorded as a component of Capital in excess of par in the Condensed Consolidated Balance Sheets upon the consummation of the offering. Additionally, the Company also applies the guidance in ASC 815-40-55-50 in connection with an offering, such as an inducement of outstanding warrants, whereby if the modification or exchange of a free-standing equity classified written call option increases the fair value, the Company records the incremental fair value as an equity issuance cost. See Note 10 “Capital Raises and Warrant For Common Stock” for further discussion of net proceeds associated with equity offerings.

Impairment of Long-Lived Assets - The Company reviews all long-lived assets to be held and used for recoverability, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the ability to recover the carrying value of the assets from the expected future cash flows (undiscounted and without interest expense) of the related operations. If these cash flows are less than the carrying value of such assets, an impairment loss for the difference between the estimated fair value and carrying value is recorded. The Company determined that there were no impairment indicators for continuing operations during the three months ended March 31, 2026 and 2025.

Revenue Recognition – The Company recognizes revenue when it satisfies a performance obligation by transferring control of the product to a customer. For additional discussion on revenue recognition, refer to Note 8 “Revenue Recognition”.

Income Taxes - For interim income tax reporting, due to a full valuation allowance on net deferred tax assets, no income tax expense or benefit is recorded unless it is related to certain state, local, or franchise taxes, or unusual or infrequently occurring items. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur.

The Company and its subsidiaries file a consolidated U.S. federal income tax return. State tax returns are filed on a combined or separate basis depending on the applicable laws in the jurisdictions where the tax returns are filed.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU is intended to improve disclosures about a public business entity’s expense and provide more detailed information to investors about the types of expenses in commonly presented expense captions. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its Condensed Consolidated Financial Statements and related disclosures.

Accounting Guidance Not Yet Elected or Adopted

We consider the applicability and impact of all ASUs. If the ASU is not listed above, it was determined that the ASU was either not applicable or would have an immaterial impact on our Condensed Consolidated Financial Statements and related disclosures.

​

9

Table of Contents

​

NOTE 2. - DISCONTINUED OPERATIONS AND DIVESTITURES

Net loss from discontinued operations for the three months ended March 31, 2026 and 2025 was as follows:

​

​	​	​	​	​	​
​	Three Months Ended
​	March 31,
​	2026		​ ​ ​	2025
Revenues, net	$	—	​	$	—
Cost of goods sold	​	—	​	​	—
Gross loss	​	—	​	​	—
Operating expenses:	​	​	​	​	​
Sales, general and administrative	​	—	​	​	8
Research and development	​	—	​	​	(337)
Other operating expense, net	​	242	​	​	1,172
Total operating expenses, net	​	242	​	​	843
Operating expenses from discontinued operations	​	(242)	​	​	(843)
Other expense:	​	​	​	​	​
Interest expense	​	—	​	​	(211)
Total other expense	​	—	​	​	(211)
Loss from discontinued operations before income taxes	​	(242)	​	​	(1,054)
Provision (benefit) for income taxes	​	—	​	​	—
Loss from discontinued operations	$	(242)	​	$	(1,054)

​

During the three-month period ended March 31, 2025, the Company settled outstanding obligations which resulted in reversals of previously accrued liabilities of $337.

Effective June 24, 2024, GVB Biopharma (“GVB”), the Company’s former subsidiary, made a scheduled principal and interest payment against the Company’s prior outstanding indebtedness to JGB under the former Senior Secured Credit Facility, reducing the Company’s total outstanding principal indebtedness with JGB by $1,500. The remaining $500 payable by GVB under the 2023 GVB Promissory Note was initially extended to December 31, 2024, and subsequently to March 31, 2025.  As of March 31, 2025, the 2023 GVB Promissory Note was in default with respect to payment at maturity of the contractual term and accordingly an allowance for credit loss was initially recorded as of March 31, 2025 in the amount of $500.  

​

In connection with the September 18, 2025 full repayment of the Senior Secured Credit Facility, the Company entered into a new 2025 GVB Promissory Note with GVB in the amount of $500, payable in installments of $100 each on November 1, 2025, January 1, 2026 and February 1, 2026, with the remaining balance of $200 payable over a term of 31 monthly installments thereafter. The Company received the first payment on the 2025 GVB Promissory Note in the amount of $100. All subsequent scheduled payments remain outstanding, triggering the 2025 GVB Promissory Note default provisions and accrual of penalty interest. As of March 31, 2026, the Company continues to maintain a full allowance for credit loss against the 2025 GVB Promissory Note.

10

Table of Contents

​

Cash flow information from discontinued operations for the three months ended March 31, 2026 and 2025 was as follows:

​

​	​	​	​	​	​
​	Three Months Ended
​	March 31,
​	2026		​ ​ ​	2025
Cash (used in) provided by operating activities	$	(242)	​	$	1,185
Cash provided by investing activities	$	-	​	$	-
​	​	​	​	​	​
Depreciation and amortization	$	-	​	$	-
Capital expenditures	$	-	​	$	-

​

​

​

NOTE 3. – INVENTORIES

Inventories at March 31, 2026 and December 31, 2025 consisted of the following:

​	​	​	​	​	​	​
​	​ ​ ​	March 31,		​ ​ ​	December 31,
​	​ ​ ​	2026		​ ​ ​	2025
Raw materials	​	$	4,269	​	$	4,213
Work in process	​	​	—	​	​	—
Finished goods	​		77	​	​	113
​	​	$	4,346	​	$	4,326

​

As of March 31, 2026 and December 31, 2025, leaf inventory was valued within raw materials at $2,627 and $2,334, respectively.

​

​

​

​

NOTE 4. – INTANGIBLE ASSETS, NET 

Intangible Assets, Net

Our intangible assets, net at March 31, 2026 and December 31, 2025 consisted of the following:

​

​	​	​	​	​	​	​	​	​	​
​	​	Gross		​	Accumulated		​		Net Carrying
March 31, 2026	​ ​ ​	Carrying Amount		​ ​ ​	Amortization		​		Amount
Definite-lived:	​	​	​	​	​	​	​	​	​
Patent	​	$	2,146	​	$	(1,745)	​	$	401
License fees	​		5,331	​	​	(2,251)	​	​	3,080
Total amortizing intangible assets	​	$	7,477	​	$	(3,996)	​	$	3,481
Indefinite-lived:	​		​	​	​	​	​	​	​
Trademarks	​	​	​	​	​	​	​	$	104
MSA signatory costs	​	​	​	​	​	​	​	​	2,202
License fee for predicate cigarette brand	​	​	​	​	​	​	​	​	350
Total indefinite-lived intangible assets	​	​	​	​	​	​	​	$	2,656
Total intangible assets, net	​	​	​	​	​	​	​	$	6,137

​

​

11

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gross

​

Accumulated

​

​

​

Net Carrying

December 31, 2025

​ ​ ​

Carrying Amount

​ ​ ​

Amortization

Impairment

​

Amount

Definite-lived:

​

​

​

​

​

​

​

​

​

​

​

​

Patent

​

$

2,985

​

$

(2,461)

​

$

(111)

​

$

413

License fees

​

5,331

​

​

(2,174)

​

​

—

​

​

3,157

Total amortizing intangible assets

​

$

8,316

​

$

(4,635)

​

$

(111)

​

$

3,570

Indefinite-lived:

​

​

​

​

​

​

​

​

​

​

​

Trademarks

​

​

​

​

​

​

​

​

​

​

$

102

MSA signatory costs

​

​

​

​

​

​

​

​

​

​

​

2,202

License fee for predicate cigarette brand

​

​

​

​

​

​

​

​

​

​

​

350

Total indefinite-lived intangible assets

​

​

​

​

​

​

​

​

​

​

$

2,654

Total intangible assets, net

​

​

​

​

​

​

​

​

​

​

$

6,224

​

During the three months ended March 31, 2026, the Company had disposal costs of $843 related to expired patents that had a net carrying value of $0 at the time of disposal.

Aggregate intangible asset amortization expense comprises of the following:

​

​	​	​	​	​	​
​	Three Months Ended
​	March 31,
​	2026		​ ​ ​	2025
Cost of goods sold	$	2	​	$	3
Research and development		91	​		100
Total amortization expense	$	93	​	$	103

​

Estimated future intangible asset amortization expense based on the carrying value as of March 31, 2026 is as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2026

2027

​

2028

​

2029

​

2030

​

Thereafter

Amortization expense

​

$

280

​

$

370

​

$

334

​

$

240

​

$

236

​

$

2,021

​

​

​

​

​

NOTE 5. - FAIR VALUE MEASUREMENTS

Fair value measurement standards apply to certain financial assets and liabilities that are measured at fair value on a recurring basis (each reporting period). The Company does not have any non-financial assets or liabilities that are measured at fair value on a recurring basis.

Warrants

​

During 2024, the Company issued the Omnia 2024 warrants to its former subordinated lender in connection with the extinguishment of amounts outstanding under the former Omnia subordinated note. The Omnia 2024 contained a put provision and were previously measured at fair value, resulting in changes in warrant liability fair value being recorded as Other operating expense, net. For the three months ended March 31, 2025, the Company recorded $162 loss on change in fair value of warrant liability. The Omnia 2024 warrants were subsequently exercised on September 29, 2025.

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​

The Omnia 2024 warrants were measured at fair value using certain estimated factors which are classified within Level 3 of the valuation hierarchy. Significant unobservable inputs that were used in the fair value measurement of the Company’s warrants include the volatility factor and contingent put option. Significant increases or decreases in the volatility factor would have resulted in a significantly higher or lower fair value measurement. Additionally, a change in probability regarding the put option would have resulted in a significantly higher or lower fair value measurement.

​

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

​

Fair value standards also apply to certain assets and liabilities that are measured at fair value on a nonrecurring basis. During the three months ended March 31, 2026 and 2025, the Company did not have any financial assets or liabilities measured at fair value on a non-recurring basis.

​

​

​

​

​

​

​

​

NOTE 6. – EQUITY-BASED COMPENSATION

The Company maintains certain stock-based compensation plans that were approved by the Company’s shareholders and are administered by the Compensation Committee of the Company’s Board of Directors. The stock-based compensation plans provide for the granting of stock options, time and performance based restricted stock units (“RSUs”), among other awards to employees and non-employee directors. As of March 31, 2026, the Company had available 3,772,848 shares remaining for future awards under its Omnibus Incentive Plan.

Compensation Expense – The Company recognized the following compensation costs, net of actual forfeitures, related to RSUs and stock options:

​

​	​	​	​	​	​	​	​
​	​	Three Months Ended					​
​	​	March 31,					​
​	​ ​ ​	2026		​ ​ ​	2025		​
Sales, general, and administrative	​	$	213	​	$	24	​
Cost of goods sold	​	​	7	​	​	—	​
Research and development	​		18	​		2	​
Total equity-based compensation	​	$	238	​	$	26	​

​

Restricted Stock Units – We typically grant RSUs to employees and non-employee directors. The following table summarizes the changes in unvested RSUs from January 1, 2026 through March 31, 2026.

​

​	​	​	​	​	​
​	​	Unvested RSUs
​	​	​	​	Weighted
​	​	​	​	Average
​	​	Number of	​	Grant-date
​	​ ​ ​	Shares	​ ​ ​	Fair Value
​	​	​	​	$ per share
Unvested at January 1, 2026		24,334	​	$	31.12
Vested	​	(298)	​	​	367.65
Unvested at March 31, 2026	​	24,036	​	$	26.93

​

The fair value of RSUs that vested during the three months ended March 31, 2026 was approximately $1, based on the stock price at the time of vesting. As of March 31, 2026, unrecognized compensation expense for RSUs amounted to $578 which is expected to be recognized over a weighted average period of approximately 2.4 years.

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Stock Options – Our outstanding stock options were valued using the Black-Scholes option-pricing model on the date of the award. The following table summarizes the status and activity of stock options from January 1, 2026 through March 31, 2026.

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	Weighted		​	​	​
​	​	​	​	Weighted		​	Average		​	​	​
​	​	​	​	Average		​	Remaining		​	Aggregate
​	​	Number of	​	Exercise		​	Contractual		​	Intrinsic
​	​ ​ ​	Options	​ ​ ​	Price		​ ​ ​	Term		​ ​ ​	Value
​	​	​	​	$ per share		​	​	​	​	​	​
Outstanding at January 1, 2026		72,973	​	$	31.17		​			$	—
Outstanding at March 31, 2026		72,973	​	$	31.17		9.6	years		$	—
Exercisable at March 31, 2026		893	​	$	377.09		9.2	years		$	—

​

The intrinsic value of a stock option is the amount by which the current market value or the market value upon exercise of the underlying stock exceeds the exercise price of the option.

As of March 31, 2026, unrecognized compensation expense for stock options amounted to $1,522, which is expected to be recognized over a weighted average period of approximately 2.4 years.

The weighted average of fair value assumptions used in the Black-Scholes option-pricing model for such grants were as follows:

​

​	​	​	​
​	​ ​ ​	2025
Grant date fair value	​	$28.14	​
Risk-free interest rate (1)		3.88	%
Expected dividend yield (2)		—	%
Expected volatility (3)		119.71	%
Expected term of stock options (4)		6.25	years
​	​	​	​
(1) The risk-free interest rate is based on the period matching the expected term of the stock options based on the U.S. Treasury yield curve in effect on the grant date.
(2) The expected dividend yield is assumed as zero. The Company has never paid cash dividends nor does it anticipate paying dividends in the foreseeable future.
(3) The expected volatility is based on historical volatility of the Company’s stock.
(4) The expected term represents the period of time that options granted are expected to be outstanding based on vesting date and contractual term.

​

14

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​

NOTE 7. – NOTES AND LOANS PAYABLE

The table below outlines our notes and loans payable balances as of March 31, 2026 and December 31, 2025:

​

​	​	​	​	​	​	​
​	​	March 31,		​	December 31,
​	​ ​ ​	2026		​ ​ ​	2025
Insurance loans payable	​	$	—	​	$	93
NCSU promissory note	​	​	588	​	​	615
Total notes and loans payable	​	​	588	​	​	708
Total current notes and loans payable	​	​	(113)	​	​	(204)
Total long-term notes and loans payable	​	$	475	​	$	504

​

NCSU Promissory Note

On October 31, 2025, the Company entered into a note payable with NCSU in the amount of $632 at 7% simple fee interest rate payable in equal installments over 60 months. The note payable was issued as settlement for all remaining outstanding obligations owed to NCSU related to license fees, annual royalties, and intellectual property and patent maintenance.

Estimated future principal payments to be made under the above notes and loans payable as of March 31, 2026 are as follows:

​	​	​	​
2026	​	$	84
2027	​	​	119
2028	​	​	127
2029	​	​	137
2030	​	​	121
Total	​	$	588

​

​

​

NOTE 8. – REVENUE RECOGNITION

The Company’s revenues are derived primarily from contract manufacturing organization (“CMO”) customer contracts that consist of obligations to manufacture the customers’ branded filtered cigars and cigarettes. Additional revenues are generated from sale of the Company’s proprietary low nicotine content cigarettes, sold under the brand name VLN^®, or research cigarettes sold under the brand name SPECTRUM^®. The Company does not have significant intra-entity sales or transfers.

The Company recognizes revenue when it satisfies a performance obligation by transferring control of the product to a customer. For certain CMO contracts, the performance obligation is satisfied over time as the Company determines, due to contract restrictions, it does not have an alternative use of the product and it has an enforceable right to payment as the product is manufactured. The Company recognizes revenue under those contracts at the unit price stated in the contract based on the units manufactured for each customer and is recognized net of cash discounts, rebates, royalties, and sales returns and allowances. There was no allowance for discounts or returns as of March 31, 2026 and December 31, 2025. Consideration payable to the customer for royalties is recorded as an offset of the transaction price with a corresponding contract liability.

Disaggregation of Revenue

The Company’s net revenue is derived from customers located primarily in the United States and is disaggregated by the timing of revenue. Revenue recognized from tobacco products transferred to customers over time represented substantially all net revenue for the three months ended March 31, 2026 and 2025.

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The following table presents net revenue by product line:

​

​	​	​	​	​	​
​	Three Months Ended
​	March 31,
​	2026		​	2025
Contract manufacturing	​	​	​	​	​
Cigarettes	$	2,846	​	$	5,013
Filtered cigars	​	873	​	​	1,103
Other tobacco products	​	389	​	​	(5)
Total contract manufacturing	​	4,108	​	​	6,111
VLN®	​	(3)	​	​	(155)
Total product line revenues	$	4,105	​	$	5,956

​

The following table presents net revenues by significant customers, which are defined as any customer who individually represents 10% or more of disaggregated product line net revenues:

​

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​ ​ ​	2026		​	2025
Customer A	​	60.12	%	​	76.96	%
Customer B	​	22.71	%	​	-	​
Customer C	​	11.90	%	​	-	​
All other customers	​	5.27	%	​	23.04	%

​

Contract Assets and Liabilities

Unbilled receivables (contract assets) represent revenues recognized for performance obligations that have been satisfied but have not been billed. These receivables are included as Accounts receivable, net on the Condensed Consolidated Balance Sheets. Customer payment terms vary depending on the terms of each customer contract, but payment is generally due prior to product shipment or within credit terms up to 30 days after shipment. Deferred income relates to down payments received from customers in advance of satisfying a performance obligation and is included as Contract liabilities on the Condensed Consolidated Balance Sheets.

Total contract assets and contract liabilities are as follows:

​

​	​	​	​	​	​	​
​	​	March 31,		​	December 31,
​	​ ​ ​	2026		​ ​ ​	2025
Unbilled receivables		$	3,786		$	2,930
Consideration payable to the customer		​	(1,906)		​	(1,388)
Deferred income	​	​	(30)	​	​	(333)
Net contract assets	​	$	1,850	​	$	1,209

​

During the three months ended March 31, 2026 and 2025, the Company recognized $242 and $0 of revenue that was included in the deferred income contract liability balance as of December 31, 2025 and 2024, respectively.

​

​

​

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NOTE 9. - SEGMENT AND GEOGRAPHIC INFORMATION

​

The Company has organized its business as a single reportable segment (“Reporting Segment”), tobacco, as it operates and derives all revenues from its tobacco operations and products. This segment structure reflects the financial information and reports used by the Company’s management, specifically its Chief Operating Decision Maker (“CODM”), to make decisions regarding the Company’s business, including resource allocations and performance assessments. The Company’s Chief Executive Officer serves as the CODM. The accounting policies of the Reporting Segment are the same as those described in the summary of significant accounting policies. See Note 1 for additional information about the Company's business and significant accounting policies.

Consolidated net income (loss) from continuing operations, as presented on the Company's Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) is a metric utilized by the CODM to assess the Reporting Segment's performance and allocate resources. Total consolidated assets, excluding assets held for sale, as presented on the Company's Condensed Consolidated Balance Sheets are used to measure the Reporting Segment's assets.

The CODM uses Consolidated net income (loss) from continuing operations to evaluate profitability generated from segment assets in determining the strategic decisions of the Company with respect to utilizing its assets. Consolidated net income (loss) from continuing operations is also used to monitor budget versus actual results.

The following table presents revenues and significant segment expenses from continuing operations for the three months ended March 31, 2026 and 2025:

​

​	​	​	​	​	​
​	Three Months Ended
​	March 31,
​	2026		​ ​ ​	2025
Consolidated net revenue	$	4,105	​	$	5,956
Less:	​	​	​	​	​
Cost of goods sold	​	1,814	​	​	2,761
Excise taxes	​	2,816	​	​	3,681
Selling, general and administration	​	2,118	​	​	1,799
Research and development	​	190	​	​	61
Depreciation and amortization	​	206	​	​	224
Other segment items (1)	​	(31)	​	​	146
Interest expense	​	11	​	​	558
Segment net loss from continuing operations	$	(3,019)	​	$	(3,274)
​	​	​	​	​	​
(1) Other segment items include: other operating expenses, other (income) expense, interest income, and provision for income taxes.

​

The Company recognized the following depreciation and amortization costs from continuing operations:

​

​	​	​	​	​	​
​	Three Months Ended
​	March 31,
​	2026		​ ​ ​	2025
Cost of goods sold	$	109	​	$	121
Selling, general and administration	​	—	​	​	—
Research and development	​	4	​	​	—
Total depreciation from continuing operations	$	113	​	$	121

​

17

Table of Contents

​	​	​	​	​	​
​	Three Months Ended
​	March 31,
​	2026		​ ​ ​	2025
Cost of goods sold	$	2	​	$	3
Research and development	​	91	​	​	100
Total amortization from continuing operations	$	93	​	$	103

​

Geographic Area Information

For the three months ended March 31, 2026 and 2025, substantially all third-party sales of product are shipped to customers in the United States. Additionally, as of March 31, 2026 and December 31, 2025, all long-lived assets are physically located or domiciled in the United States.

​

NOTE 10. – CAPITAL RAISES AND WARRANTS FOR COMMON STOCK

The following table summarizes the Company’s warrant activity from January 1, 2026 through March 31, 2026:

​

​	​	​
Warrants outstanding at January 1, 2026	​	739,175
Issued	​	4,669,611
Warrants outstanding at March 31, 2026	​	5,408,786

​

The following table summarizes the Company’s outstanding warrants as of March 31, 2026:

​

​	​	​	​	​	​	​	​
​	​	# of warrants outstanding	​	Weighted average exercise price		​	Weighted average expiration date
Amended October 2024 PIPE warrants (1)	​	70,618	​	$	N/A	​	July 15, 2030
August 2025 warrants (2)	​	630,713	​	$	3.57	​	August 27, 2030
August 2025 Placement Agent warrants (2)	​	37,844	​	$	3.57	​	August 27, 2030
March 2026 warrants (2)	​	4,481,795	​	$	3.57	​	March 24, 2031
March 2026 Placement Agent warrants (2)	​	187,816	​	$	3.927	​	March 24, 2031
​	​	5,408,786	​	​	​	​	​
(1) The warrants contain anti-dilution protection provisions relating to subsequent equity sales of shares of the Company’s common stock or common stock equivalents at an effective price per share lower than the then effective exercise price of such warrants. Additionally, the warrants allow the holder of such warrants to also effect an alternative form of cashless exercise on or after the initial exercise date whereby the aggregate number of shares of common stock issuable in such alternative form of cashless exercise pursuant to any given notice of exercise shall equal the product of (x) the aggregate number of shares of common stock that would be issuable upon exercise of the warrant in accordance with the terms of the warrant if such exercise were by means of a cash exercise rather than a cashless exercise and (y) 2.0 (a “Zero Exercise Price Exercise”). Accordingly, a Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. ​
(2) The warrants contain anti-dilution protection provisions relating to subsequent equity sales of shares of the Company’s common stock or common stock equivalents at an effective price per share lower than the then effective exercise price of such warrants. ​

​

18

Table of Contents

The incremental value of modifications to financial instruments, such as warrants or convertible preferred stock, is determined based on Monte-Carlo and Black-Scholes valuation models. Amounts recorded as Deemed dividends in determining Net loss available to common shareholders in the Condensed Consolidated Statements of Operations and Comprehensive Loss are as follows:

​

​	​	​	​	​	​
​	Three Months Ended
​	March 31,
​	2026		​	2025
Total deemed dividends	$	589	​	$	-

​

March 2026 Series B Convertible Preferred Stock Offering

​

On March 20, 2026, the Company and certain investors entered into a securities purchase agreement with respect to the offer and sale of $20,000 of shares of Series B Convertible Preferred Stock, stated value $1,000 per share (the “Series B Preferred Stock”), initially convertible into shares of the Company’s common stock at an initial conversion price of $3.57 (subject to adjustment in certain circumstances with a floor price of $0.714) and, alternatively, at a 15% discount to the lowest daily volume-weighted average price (“VWAP”) during the prior 20 trading days (the “Alternative Conversion Price”) and warrants to purchase shares of Common Stock pursuant to a registered direct offering. The Company has the ability to reset the fixed conversion price (lower), subject to board approval and the floor price. Stockholder approval for the offering was obtained at the February 20, 2026 Special Meeting of the Stockholders.

​

At the initial closing, the investors purchased $16,000 of shares of Series B convertible preferred stock and warrants. The remaining $4,000 of shares of Series B Preferred Stock and warrants are expected to be purchased at a second closing. The investors may request the second closing at any time until the one-year anniversary of the initial closing date and we may require the second closing at any time until the one-year anniversary of the initial closing date by individual investor once less than 50% of such Investor’s Series B Preferred Stock purchased at the initial closing remains outstanding and certain equity conditions have been satisfied for at least 7 of the prior 10 trading days, including: (1) the Common Stock closes above 2.5 times the floor price and (2) the daily dollar trading volume of the Common Stock exceeds $500. The warrants are immediately exercisable at an exercise price of $3.57 per share of common stock and expire on the date that is five years after issuance. In addition, the Company issued placement agent warrants to purchase an aggregate of 187,816 shares of common stock with substantially the same terms as the Warrants, except that the exercise price of the Placement Agent Warrants is $3.927.

​

The Company used the net proceeds from the offering to repurchase at par all of the shares of outstanding Series A Convertible Preferred Stock issued in August 2025 in the amount of $9,650.  The balance of the net proceeds from the offering was approximately $5,680, after deducting placement agent case fees but before any other offering expenses.  

​

August 2025 Series A Convertible Preferred Stock Offering

On August 22, 2025, the Company and certain investors entered into a securities purchase agreement with respect to the offer and sale of $10,650 of shares of Series A Convertible Preferred Stock, stated value $1,000 per share (the “Series A Preferred Stock”), initially convertible into an aggregate of 324,201 shares of the Company’s common stock at an initial conversion price of $32.85 (subject to adjustment in certain circumstances with a floor price of $5.91) and warrants to purchase shares of Common Stock pursuant to a registered direct offering. The Investors purchased $10,650 of shares of Series A convertible preferred stock and warrants. The warrants are immediately exercisable at an exercise price of $1.97 per share of common stock and expire on the date that is five years after issuance. The net proceeds to the Company from the offering was $9,893. In addition, the Company issued placement agent warrants to purchase an aggregate of 37,843 shares of common stock with substantially the same terms as the Warrants, except that the exercise price of the Placement Agent Warrants is $32.55. Following the offering, 1,000 shares of Series A Preferred Stock were converted into 30,443 shares of common stock.

​

On December 17, 2025, the Company entered into an Omnibus Amendment and Waiver (the “Amendment Agreement”) with the holders of the outstanding Series A Preferred Stock to amend Series A Preferred Stock, the warrants and certain placement agent warrants issued in connection with the August 2025 offering described above.

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Pursuant to the Amendment Agreement, the Company and the holders agreed to provide an alternative conversion feature to the Certificate of Designation whereby the Series A Preferred Stock can be converted at a conversion price equal to 85% of the lowest VWAP in any of the twenty trading days preceding the conversion.  Pursuant to the Amendment Agreement, the Company also agreed to provide certain anti-dilution adjustments to the exercise price of the warrants and placement agent warrants to provide protection against future dilutive issuances.

​

Following execution of the Amendment Agreement, the Company re-evaluated conclusions on classification and embedded features, resulting in no changes from the date of issuance of the Series A Preferred Stock, as further described below.  The impacts of the Amendment Agreement are accounted for as an extinguishment, as the fair value of the instruments before and after modification increased by greater than 10%, resulting in the incremental value being recorded within Capital in excess of par value as a deemed dividend of $4,679 recorded in the period ended December 31, 2025.

​

Subsequent to December 31, 2025, stockholder approval for the provisions of the Amendment Agreement was obtained at the February 20, 2026 Special Meeting of the Stockholders.  

​

On March 24, 2026, in connection with an offering of newly issued Series B Convertible Preferred Stock, the Company redeemed all 9,650 shares of Series A Convertible Preferred Stock at par in the amount of $9,650.  The Company evaluated the redemption to determine whether it is treated as an exchange transaction, assessing qualitative factors, to conclude whether the accounting would be a modification or extinguishment.  The Company believes the changes in fixed conversion price and floor price of the Series B Convertible Preferred Stock are so significant that the accounting should be an extinguishment of the Series A Convertible Preferred and issuance of new Series B Convertible Preferred Stock. Therefore, in accordance with ASC 260-10-S99-2, the Company recorded a reduction of Capital in excess of par value of $2,734 to extinguish the carrying value of the Series A Convertible Preferred and a dividend to the holders of the Series A Convertible Preferred shares of $6,916, which is a deduction in net income (loss) to arrive at income (loss) available to common stockholders (see Note 11 “Loss Per Common Share”).

Mezzanine Classification

ASC 480-10-S99-3A(2) of the SEC's Accounting Series Release No. 268 ("ASR 268") requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the control of the issuer. Preferred securities that are mandatorily redeemable are required to be classified by the issuer as liabilities whereas under ASR 268, a company should classify a preferred security whose redemption is contingent on an event not entirely in control of the issuer as mezzanine equity. The Series A convertible preferred stock is redeemable at the option of the holder if "shareholder approval" (as defined in the agreements) is not obtained, which is not solely within control of the Company, and accordingly, the Company determined that mezzanine treatment is appropriate for the Series A convertible preferred stock. The Series A convertible preferred stock was initially measured at the amount of total proceeds less any offering costs and proceeds allocated to the accompanying warrants based on relative fair value, and was previously presented as such in the Condensed Consolidated Balance Sheet. Following stockholder approval at the February 20, 2026 Special Meeting of the Stockholders, the Company reclassified the carrying value of the Series A convertible preferred stock from mezzanine equity to permanent equity in accordance with ASC 480-10-S99-3A.

Further, upon issuance the Company evaluated all embedded features against an equity-like host and concluded none of the embedded features identified within the Series A and the newly issued Series B convertible preferred stock that may require bifurcation as they are either deemed clearly and closely related or not net settleable as a result of a lack of an active market.

​

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Table of Contents

Convertible preferred stock transaction activity is summarized in the table below:

​

​	​	​	​	​	​	​	​
​	​	Convertible Preferred Stock Shares	​	Weighted Average Conversion Price		​	Common Shares Issued from Conversions
Convertible preferred stock outstanding at January 1, 2026	​	9,650	​	​	​	​	​
Redemption of Series A Convertible Preferred Stock	​	(9,650)	​	​	​	​	​
Issuance of Series B Convertible Preferred Stock	​	16,000	​	​	​	​	​
Conversion of Series B Convertible Preferred Stock	​	(230)	​	$	2.53	​	90,945
Convertible preferred stock outstanding at March 31, 2026	​	15,770	​	​	​	​	​

​

See Note 13 “Subsequent Events” for additional convertible preferred stock activity subsequent to March 31, 2026.

April 2025 Warrant Inducement and Amendment

On April 29, 2025, the Company commenced a warrant inducement offering with the holders of outstanding warrants to purchase 32,093 shares of common stock (the “Existing Warrants”), which are exercisable for an equal number of shares of common stock at an exercise price of $1,484.25. The Company offered the holders of the Existing Warrants an inducement period whereby the Company agreed to issue new warrants (the “Inducement Warrants”) to purchase up to a number of shares of common stock equal to 100% of the number of shares of common stock issued pursuant to the exercise by the holders of the Existing Warrants, for cash, at a reduced exercise price equal to $272.25. Each holder agreed to exercise 60% of their Existing Warrants immediately (the “Initial Exercise”) and will exercise the remaining 40% within 30 calendar days following the Effectiveness Date (as defined in the agreements), provided that the Company’s stock price at such time equals or exceeds 90% of the Nasdaq Minimum Price on that date (the “Additional Exercise”).

The net proceeds to the Company from the Initial Exercise, after deducting placement agent fees and the Company’s offering expenses were $5,075. In connection with the Initial Exercise, the Company issued 19,970 Inducement Warrants. Of the aggregate net proceeds, the Company was obligated under the Debentures of the convertible senior secured credit facility to repay outstanding debt in the amount of $1,017. The Company also measured the fair value of the Existing Warrants before and after the modification to decrease the cash exercise price, and concluded there was no incremental fair value to be recorded as issuance costs due to the alternative cashless exercise features of the warrants.

Additionally, on April 29, 2025, the Company entered into amendments with the holders of the outstanding warrants issued on October 24, 2024, which adjusted the provisions of the warrants regarding recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock. The anti-dilution adjustment resulted in the issuance of an additional 94,579 October 2024 PIPE Warrants and October 2024 PIPE Placement Agent warrants.

ATM Offering

On November 4, 2025, the Company established an at-the-market common equity offering program (“ATM Program”), through which it had the ability to offer and sell shares of common stock having an aggregate gross sales price of up to $25,000, which program was reduced to a maximum of $1,840 on April 10, 2026.. The Company will pay a 3.00% sales commission based on the gross proceeds of the sales price per share of common stock sold and incurred initial offering costs of $130, deducted from gross proceeds. The following table shows the number of shares sold under the ATM Program:

​

21

Table of Contents

​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​ ​ ​	2026
Number of common shares issued	​	​	44,381
Weighted average sale price per share	​	$	4.51
Gross proceeds	​	$	200
Net proceeds	​	$	64

​

​

NOTE 11. – LOSS PER COMMON SHARE

The following table sets forth the computation of basic and diluted loss per common share for the three months ended March 31, 2026 and 2025, respectively. Outstanding warrants, options and RSUs were excluded from the calculation of diluted earnings per share as the effect was antidilutive to consolidated net loss. 25 pre-funded warrants are included in weighted average common shares outstanding – basic and diluted for purposes of calculating loss per common share for the three months ended March 31, 2025.

​

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,
​	​ ​ ​	2026		​ ​ ​	2025
​	​	(in thousands, except for per-share data)
Net loss from continuing operations	​	$	(3,019)	​	$	(3,274)
Net loss from discontinued operations	​	​	(242)	​	​	(1,054)
Net loss	​	​	(3,261)	​	​	(4,328)
Deemed dividends	​	​	(589)	​	​	—
Dividend for redemption of Series A Convertible Preferred Stock	​	​	(6,916)	​	​	—
Net loss available to common shareholders	​	$	(10,766)	​	$	(4,328)
​	​	​	​	​	​	​
Weighted average common shares outstanding - basic and diluted	​	​	595,344	​	​	5,162
​	​	​	​	​	​	​
Basic and diluted loss per common share from continuing operations	​	$	(5.07)	​	$	(634.25)
Basic and diluted loss per common share from discontinued operations	​	$	(0.41)	​	$	(204.18)
Basic and diluted loss available to common shareholders per common share	​	$	(18.08)	​	$	(838.43)
​	​	​	​	​	​	​
Anti-dilutive shares are as follows as of March 31:	​	​	​	​	​	​
Warrants (excluding pre-funded)	​	​	5,408,786	​	​	69,293
Options	​	​	72,973	​	​	1,395
Restricted stock units	​	​	24,036	​	​	473
​	​	​	5,505,795	​	​	71,161

​

​

​

​

22

Table of Contents

NOTE 12. - COMMITMENTS AND CONTINGENCIES

License agreements and consulting agreements – The Company has entered into various consulting and license research agreements with various counter parties in connection with the Company’s business objects. The schedule below summarizes the Company’s commitments, both financial and other, associated with each Agreement. Costs incurred under the license agreements are recorded as an offset to revenue and costs incurred for the consulting agreements are recorded as sales, general and administrative expenses on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Future Commitments

​

Commitment

Counter Party

Commitment Type

2026

2027

2028

2029

​

2030 & After

​

Total

​ ​ ​

License Agreement

​

NCSU

​

Minimum annual royalty

​

$

75

​

$

100

​

$

125

​

$

150

​

$

3,050

​

$

3,500

(1)

Testing Services Agreement

​

NCSU

​

Contract fee

​

​

35

​

​

—

​

​

—

​

​

—

​

​

—

​

​

35

(2)

Consulting Agreements

​

Various

​

Contract fee

​

​

189

​

​

42

​

​

—

​

​

—

​

​

—

​

​

231

(3)

​

​

​

​

​

​

$

299

​

$

142

​

$

125

​

$

150

​

$

3,050

​

$

3,766

​

​

(1) The minimum annual royalty fee is credited against running royalties on sales of licensed products. The Company is also responsible for reimbursing NCSU for actual third-party patent costs incurred, including capitalized patent costs and patent maintenance costs. These costs vary from year to year and the Company has certain rights to direct the activities that result in these costs.

(2) On January 1, 2026, the Company engaged NCSU to perform field testing of low alkaloid tobacco lines.

(3) As a requirement for a modified risk tobacco product and condition of the marketing authorization by the FDA, the Company engaged various consulting firms to conduct post-market studies and research.

Litigation - The Company is subject to litigation arising from time to time in the ordinary course of its business. The Company does not expect that the ultimate resolution of any pending legal actions will have a material effect on its consolidated results of operations, financial position, or cash flows. However, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, which the Company currently believes to be immaterial, will not become material in the future. In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. As a litigation or regulatory matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. If, at the time of evaluation, the loss contingency related to a litigation or regulatory matter is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable. When a loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Company will establish an accrued liability with respect to such loss contingency and record a corresponding amount of related expenses. The Company will then continue to monitor the matter for further developments that could affect the amount of any such accrued liability. 

Cookies Retail Products Dispute

On October 23, 2024, Cookies Retail Products, LLC (“CRP”) filed a complaint against the Company, a subsidiary of the Company (“PTB”), Cookies Creative Consulting & Promotions, Inc. (“CCC”), Cookies SF, LLC (“CSF”), GMLC WLNS, LLC (“GMLC”) and other defendants, Case No. 24STCV27828, Superior Court of California, County of Los Angeles.

The complaint alleges three counts against all defendants: Count I for Breach of Contract related to a Settlement Agreement entered into between CRP, Paul Rock, CSF, GMLC, CCC and PTB (the “Settlement Agreement”), and a Purchase Agreement entered into between PTB and CRP (the “Purchase Agreement”); Count II for Fraud – False Promise related to the Settlement Agreement and Purchase Agreement; and Count III for Violation of Penal Code Section 496 related to the Purchase Agreement and a Licensing and Distribution Agreement between GMLC, CCC and PTB. CRP is seeking monetary damages.

23

Table of Contents

CRP filed a first amended complaint on March 12, 2025, restating the same three counts. The Company filed a Special Motion to Strike the first amended complaint on March 27, 2025. At an April 28, 2025 hearing, the Court granted the Company’s Special Motion to Strike as to Count II and Count III in CRP’s first amended complaint, leaving only Count I. CRP will not have an opportunity to amend its complaint to replead Count II or Count III. On May 15, 2025, the Court also denied an application that had been filed by CRP for a right to attach order and writ of attachment against PTB.

The Company subsequently filed a Motion for Summary Adjudication seeking the dismissal of CRP’s remaining Count I. The Court issued a ruling denying the Company’s motion on March 6, 2026.

The Court also continued the trial date to October 27, 2026. Discovery is ongoing.

Employee Dispute

On November 19, 2024, a former employee of the Company filed a complaint against the Company, two subsidiaries of the Company, and numerous other former subsidiaries of the Company that were part of the hemp/cannabis division that was divested in December 2023. The complaint was filed in the Circuit Court of the State of Oregon, County of Multnomah, Case No. 24CV55110.

The complaint alleges three counts against all defendants: Count I for Premises Liability; Count II for Personal Injury – Employer Liability Law, and Count III for Negligence/Negligence Per Se, all related to the November 2022 fire at the Company’s Grass Valley manufacturing facility in Oregon. The former employee is seeking monetary damages.

The Company has moved to dismiss all counts of the complaint directed to the Company and its subsidiaries. In the event the counts are not dismissed, the Company believes it has substantial defenses to the claims and intends to defend itself vigorously. Discovery in ongoing.

​

​

​

​

​

NOTE 13. - SUBSEQUENT EVENTS

​

Series B Convertible Preferred

​

Subsequent to March 31, 2026, the holders of Series B convertible preferred stock converted 4,895 shares at a weighted average conversion price of $1.38 for 3,544,625 shares of common stock through May 1, 2026.

​

​

​

​

​

​

​

​

​

​

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

For purposes of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), references to the “Company,” “we,” “us” or “our” refer to the operations of 22nd Century Group, Inc. and its direct and indirect subsidiaries for the periods described herein.

24

Table of Contents

The following MD&A should be read in conjunction with, our audited consolidated financial statements, the accompanying notes and the MD&A included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as well as our Condensed Consolidated Financial Statements and the accompanying notes included in Item 1 of this Form 10-Q. Note references are to the notes to consolidated financial statements included in Item 1 of this Form 10-Q.

All historical share and per-share amounts reflected throughout this section have been adjusted to reflect prior reverse stock splits. The par value per share of our common stock was not affected.

​

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, except as noted.

​

Dollars are in thousands, except per share data or unless otherwise specified.

​

Forward Looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained herein are forward-looking statements. 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 ability to continue as a going concern, (ii) our ability to become profitable, (iii) our ability to remain listed on NASDAQ (iv) our financial and operating performance, (v) our strategic alternatives, including our cost savings initiatives, (vi) our expectations regarding regulatory enforcement (vii) our products, and (viii) the volatility of our common stock. 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 our Annual Report on Form 10-K filed on March 20, 2025. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as otherwise required by law. All information provided in this quarterly report is as of the date hereof, and we assume no obligation to and do not intend to update these forward-looking statements, except as required by law.

Our Business

22nd Century Group, Inc. (NASDAQ: XXII) is a tobacco products company focused on tobacco harm reduction by offering tobacco products with 95% less nicotine, designed to improve health and wellness by giving smokers a choice to control their nicotine consumption.  Backed by comprehensive and extensively patented technologies that regulate nicotine biosynthesis activities in the tobacco plant, the Company has pioneered development of high-yield, proprietary reduced nicotine content (RNC) tobacco plants and clinically validated RNC cigarette products. The Company received the first and only FDA Modified Risk Tobacco Product (MRTP) authorization for a combustible cigarette in December 2021. The Company is a subsequent participating manufacturer under the Master Settlement Agreement ("MSA") and vertically integrated for the production of both its own products and contract manufacturing operations ("CMO"), which consist primarily of branded filtered cigars and conventional cigarettes.

​

Financial Overview

● Net revenues for the first quarter of 2026 were $4,105, a decrease of 31.1% from $5,956 in the prior year period, primarily reflecting shifts in product mix.

o First quarter 2026 cartons sold of 275 compared to 476 in the comparable prior year period, primarily due to our strategic shift away from high volume and low priced CMO export customers. .

● Gross loss for the first quarter of 2026 was a loss of $636 compared to a loss of $609 in the prior year period.

● Total operating expenses for the first quarter of 2026 increased to $2,403 compared to $1,961 in the prior year quarter driven by:

o Sales, general and administrative expenses increased to $2,118 compared to $1,799 in the prior year period, primarily driven by higher compensation and benefits, other and legal expenses offset by lower strategic consulting and insurance costs.

25

Table of Contents

o Research development expenses increased to $285, compared to $162 in the prior year period, mainly driven by higher testing costs and compensation and benefits.

● Operating loss from continuing operations for the first quarter 2026 was $3,039, compared to a loss of $2,570 in the prior year period, primarily as a result of decreased revenue and volume.

● Net loss from continuing operations in the first quarter of 2026 was $3,019 and basic and diluted loss from continuing operations per common share was $5.07 compared with net loss from continuing operations in the first quarter of 2025 of $3,274, and basic and diluted net loss from continuing operations per common share of $634.25.

● As of March 31, 2026, the Company had $9,545 in cash and cash equivalents.

​

​

Our Financial Results

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

​

​

​

​

​

March 31

​

​

March 31

​

​

Change

​

​ ​ ​

2026

​ ​ ​

​

2025

​

​

$

​

%

Revenues, net

​

$

4,105

​

​

$

5,956

​

​

(1,851)

​

(31.1)

Cost of goods sold

​

​

1,925

​

​

​

2,884

​

​

(959)

​

(33.3)

Excise taxes and fees on products

​

​

2,816

​

​

​

3,681

​

​

(865)

​

(23.5)

Gross loss

​

​

(636)

​

​

​

(609)

​

​

(27)

​

4.4

Gross loss as a % of revenues, net

​

​

(15.5)

%

​

​

(10.2)

%

​

​

​

​

Operating expenses:

​

​

​

​

​

​

​

​

​

​

​

​

Sales, general and administrative ("SG&A")

​

​

2,118

​

​

​

1,799

​

​

319

​

17.7

SG&A as a % of revenues, net

​

​

51.6

%

​

​

30.2

%

​

​

​

​

Research and development ("R&D")

​

​

285

​

​

​

162

​

​

123

​

75.9

R&D as a % of revenues, net

​

​

7.0

%

​

​

2.7

%

​

​

​

​

Total operating expenses

​

​

2,403

​

​

​

1,961

​

​

442

​

22.5

Operating loss from continuing operations

​

​

(3,039)

​

​

​

(2,570)

​

​

(469)

​

18.2

Operating loss as a % of revenues, net

​

​

(74.0)

%

​

​

(43.1)

%

​

​

​

​

Other income (expense):

​

​

​

​

​

​

​

​

​

​

​

​

Other expense

​

​

-

​

​

​

(162)

​

​

162

​

(100.0)

Interest income

​

​

31

​

​

​

16

​

​

15

​

93.8

Interest expense

​

​

(11)

​

​

​

(558)

​

​

547

​

(98.0)

Total other income (expense), net

​

​

20

​

​

​

(704)

​

​

724

​

(102.8)

Loss from continuing operations before income taxes

​

​

(3,019)

​

​

​

(3,274)

​

​

255

​

(7.8)

(Benefit) provision for income taxes

​

​

-

​

​

​

-

​

​

-

​

-

Net loss from continuing operations

​

​

(3,019)

​

​

​

(3,274)

​

​

255

​

(7.8)

Net loss as a % of revenues, net

​

​

(73.5)

%

​

​

(55.0)

%

​

​

​

​

Net loss per common share from continuing operations (basic and diluted)

​

$

(5.07)

​

​

$

(634.25)

​

​

629.18

​

(99.2)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

26

Table of Contents

Product line revenue, net

​

​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31,					​	​	​
​	​	2026		​	2025		​	Change
​	​	$	Cartons	​	$	Cartons	​	$	Cartons
Contract manufacturing	​	​	​	​	​	​	​	​	​
Cigarettes	​	2,846	118	​	5,013	319	​	(2,167)	(201)
Filtered cigars	​	873	113	​	1,103	159	​	(230)	(46)
Other tobacco products	​	389	44	​	(5)	-	​	394	44
Total contract manufacturing	​	4,108	275	​	6,111	478	​	(2,003)	(203)
VLN®	​	(3)	-	​	(155)	(2)	​	152	2
Total product line revenues	​	4,105	275	​	5,956	476	​	(1,851)	(200)

​

For the first quarter and three months ended March 31, 2026, total product line revenues decreased to $4,105 from $5,956, respectively, compared to the prior year period, as follows:

​

● For the first quarter of 2026, cigarette volume decreased to 118 cartons due to our strategic shift away from high volume and low priced CMO export customers as compared to the prior year period, which accounted for 252 cartons, and lower on-hand finished good inventory of 48 cartons.

​

● For the first quarter of 2026, filtered cigars net revenues decreased to $873 from the prior comparable period, reflecting lower volumes as the Company implemented repricing of customer contracts and shifts its product mix into higher margin branded cigarettes, including natural styles, and VLN^®  cigarettes.

​

● Other tobacco products include new moist snuff sales of $389 in 2026 compared to none in the prior year.

​

● VLN^® cigarette net revenues reflect minimal VLN^® and partner VLN^® reorder activity following initial stocking orders in the fourth quarter of 2025, offset by return accruals for product previously sold that will be returned or exchanged.

​

27

Table of Contents

​

Gross (loss) profit

​

​	​	​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	March 31			​	March 31
​	​ ​ ​	2026			​	2025
Gross loss	​	$	(636)	​	​	$	(609)	​
Percent of Revenues, net	​	​	(15.5)	%	​	​	(10.2)	%

​

Gross loss for the three-month period ended March 31, 2026 remained consistent as compared to the prior year comparable period, benefitting from manufacturing overhead cost savings initiatives implemented by management in 2025, offset by decreased volume as compared to the prior year comparable period.

​

Sales, general and administrative (“SG&A”) expense

​	​	​	​
​	​ ​ ​	Changes From Prior Year
​	​	Three Months Ended
Compensation and benefits (a)	​	$	323
Strategic consulting (b)	​	​	(199)
Legal (c)	​	​	52
Insurance (d)	​	​	(24)
Other expenses (e)	​	​	167
Net increase in SG&A expenses	​	$	319

​

(a) Compensation and benefits expense increased for the three months ended March 31, 2026, compared to the prior year period due to an increase in headcount and equity compensation expenses.

(b) Strategic consulting costs decreased for the three months ended March 31, 2026, compared to the prior year period was due to decreased spending related to investor relations and consulting for post-market studies.

(c) Legal expenses increased for the three months ended March 31, 2026 compared to 2025 mainly due to additional legal spend related to regulatory matters compared to the prior year period.

(d) Insurance costs decreased for the three months ended March 31, 2026 compared to the prior year period due to lower insurance premiums.

(e) Increases in other expenses for the three months ended March 31, 2026, compared to the prior year period were due to increased public company expenses of $124 mainly related to the special shareholder meeting held on February 20, 2026, $36 of facilities expenses due to the movement of inventory into a new storage facility, $42 of other expenses primarily related to state filing fees, and $14 for travel and entertainment expenses. These increases were partially offset by a decrease in technology expenses of $49.

​

28

Table of Contents

Research and development (“R&D”) expense

​	​	​
​	Changes From Prior Year
​	Three Months Ended
Compensation and benefits (a)	$	72
Contract, IP and other expenses (b)	​	51
Net increase in R&D expenses	$	123

​

(a) Increased compensation and benefits for the first quarter of 2026 are mainly related to an increase in headcount and equity compensation expenses in the current year period compared to the prior year period.

(b) Increased Contract, IP and other expenses for the three months ended March 31, 2026, compared to the prior year period relate to testing costs for new product development.

Other income (expense)

​	​	​	​
​	​	Changes From Prior Year
​	​ ​ ​	Three Months Ended
Other expense (a)	​	$	162
Interest income	​	​	15
Interest expense (b)	​	​	547
Net decrease in other expense	​	$	724

​

​

(a) Other expense decreased for the three months ended March 31, 2026, compared to the same prior year period, due to a loss resulting from change in fair value of the Omnia 2024 warrant liabilities that did not occur in the current year period.

​

(b) Decreases in interest expense was a result of repayment of debt obligations on our balance sheet. For the three months ended March 31, 2026 compared to the prior year period, cash interest decreased $86, non-cash interest amortization decreased $680 due to repayment of the Senior Secured Credit Facility (of these totals, interest that was allocated to discontinued operations decreased by $211), and other interest charges increased by $8.

​

​

Liquidity and Capital Resources

We have incurred significant losses and negative cash flows from operations since inception and expect to incur additional losses until such time that we can generate significant revenue and profit in our tobacco business. We had negative cash flow from operations of $3,103 for the three months ended March 31, 2026 and an accumulated deficit of $402,186 as of March 31, 2026. As of March 31, 2026, we had cash and cash equivalents of $9,545 and working capital from continuing operations of $13,164 (compared to working capital from continuing operations of $10,359 at December 31, 2025). Given our projected operating requirements and existing cash and cash equivalents, there is substantial doubt about our ability to continue as a going concern through one year following the date that the Condensed Consolidated Financial Statements herein are issued.

29

Table of Contents

In response to these conditions, management is currently evaluating different strategies for reducing expenses, as well as pursuing financing strategies which include raising additional funds through the issuance of securities, asset sales, and through arrangements with strategic partners. If capital is not available to the Company when, and in the amounts needed, it could be required to liquidate inventory or assets, cease or curtail operations, seek to negotiate new business deals with our business partners or seek protection under applicable bankruptcy laws or similar state proceedings. There can be no assurance that the Company will be able to raise the capital it needs to continue operations. Accordingly, there is substantial doubt regarding our ability to continue in operations. Management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern through one year following the date that the Condensed Consolidated Financial Statements are issued.

Our cash and cash equivalents and working capital from continuing operations as of March 31, 2026 and December 31, 2025 are set forth below:

​

​	​	​	​	​	​	​
​	​	March 31		​	December 31
​	​ ​ ​	2026		​ ​ ​	2025
Cash and cash equivalents	​	$	9,545	​	$	7,149
Working capital	​	$	13,164		$	10,359

​

Working Capital

As of March 31, 2026, we had working capital from continuing operations of approximately $13,164 compared to working capital of approximately $10,359 at December 31, 2025, an increase of $2,805. This increase in working capital was primarily due to an increase in net current assets of $3,439 due to proceeds received related to the ATM and Series B convertible preferred stock, offset by an increase in net current liabilities of $634. Cash and cash equivalents increased by $2,396 and the remaining net current assets increased by $1,043. Management continues to take further steps to improve liquidity more. Refer below to “Cash demands on operations.”

Summary of Cash Flows

​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	​
​	​	March 31,					​	Change
​	​ ​ ​	2026		​ ​ ​	2025		​	$
Cash provided by (used in):	​	​	​	​	​	​	​	​
Operating activities	​	$	(3,103)	​	$	(2,976)	​	(127)
Investing activities	​		(47)			(59)	​	12
Financing activities	​		5,546			(254)	​	5,800
Net change in cash and cash equivalents	​	$	2,396		$	(3,289)	​	​

​

Net cash used in operating activities

Cash used in operating activities increased $127 from $2,976 in 2025 to $3,103 in 2026. The primary driver for this change was lower net loss of $1,067, a decrease of $1,433 related to net adjustments to reconcile net loss to cash, and a decrease in cash used for working capital components related to operations in the amount of $239 for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

Net cash used in investing activities

Cash used in investing activities amounted to $47 for the three months ended March 31, 2026, as compared to cash used in investing activities of $59 for the three months ended March 31, 2025. The decrease in cash provided by investing activities of $12 was the result of an overall decrease of cash outflows related to the acquisitions of patents, trademarks, licenses and property, plant and equipment.

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Net cash provided by (used in) financing activities

During the three months ended March 31, 2026, cash provided by financing activities increased by $5,800 from cash used in financing activities of $254 in the prior year period to cash provided by financing activities of $5,546, resulting from increases in net proceeds from Series B convertible preferred stock issuances of $15,256, net proceeds from issuance of common stock related to the ATM of $64, decreases of cash outflows from payments on notes payable of $134 offset by cash outflows from the redemption of Series A at par value of $9,650 and from principal payments for finance leases of $4.

Cash demands on operations

We have financed our operations to date primarily through the issuance of equity securities, proceeds from the exercise of warrants to purchase common stock and sale of debt instruments with various institutions, accredited investors, high net worth individuals and creditors.

​

We entered into a sales agreement (the “Sales Agreement”) with Needham & Company, LLC (the “Sales Agent”) which permits us to sell up to $25,000 of our common stock from time to time at prevailing market prices, which program was reduced to a maximum of $1,840 on April 10, 2026. During the three months ended March 31, 2026, the Company sold 44,381 shares of common stock under the ATM Program for gross proceeds of $200 at a weighted average price of $4.51. The Company paid fees to the Sales Agent in the amount of $6.

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March 2026 Series B Convertible Preferred Stock Offering

​

On March 20, 2026, we and certain investors entered into a securities purchase agreement with respect to the offer and sale of $20,000 of shares of Series B Convertible Preferred Stock, stated value $1,000 per share (the “Series B Preferred Stock”), initially convertible into shares of common stock at an initial conversion price of $3.57 (subject to adjustment in certain circumstances with a floor price of $0.714) and, alternatively, at a 15% discount to the lowest daily volume-weighted average price (“VWAP”) during the prior 20 trading days (the “Alternative Conversion Price”) and warrants to purchase shares of Common Stock pursuant to a registered direct offering. The Company has the ability to reset the fixed conversion price (lower), subject to board approval and the floor price. Stockholder approval for the offering was obtained at the February 20, 2026 Special Meeting of the Stockholders.

​

At the initial closing, the investors purchased $16,000 of shares of Series B convertible preferred stock and warrants. The remaining $4,000 of shares of Series B Preferred Stock and warrants are expected to be purchased at a second closing. The investors may request the second closing at any time until the one-year anniversary of the initial closing date and we may require the second closing at any time until the one-year anniversary of the initial closing date by individual investor once less than 50% of such Investor’s Series B Preferred Stock purchased at the initial closing remains outstanding and certain equity conditions have been satisfied for at least 7 of the prior 10 trading days, including: (1) the Common Stock closes above 2.5 times the floor price and (2) the daily dollar trading volume of the Common Stock exceeds $500. The warrants are immediately exercisable at an exercise price of $3.57 per share of common stock and expire on the date that is five years after issuance. In addition, the Company issued placement agent warrants to purchase an aggregate of 187,816 shares of common stock with substantially the same terms as the Warrants, except that the exercise price of the Placement Agent Warrants is $3.927.

​

We used the net proceeds from the offering to repurchase at par all of the shares of outstanding Series A Convertible Preferred Stock issued in August 2025 in the amount of $9,650. The balance of the net proceeds from the offering was approximately $5,680, after deducting placement agent case fees but before any other offering expenses.  

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As of May 1, 2026, convertible preferred stock transaction activity is summarized in the table below:

​

​	​	​	​	​	​	​	​
​	​	Convertible Preferred Stock Shares	​	Weighted Average Conversion Price		​	Common Shares Issued from Conversions
Convertible preferred stock outstanding at January 1, 2026	​	9,650	​	​	​	​	​
Redemption of Series A Convertible Preferred Stock	​	(9,650)	​	​	​	​	​
Issuance of Series B Convertible Preferred Stock	​	16,000	​	​	​	​	​
Conversion of Series B Convertible Preferred Stock	​	(230)	​	$	2.53	​	90,945
Convertible preferred stock outstanding at March 31, 2026	​	15,770	​	​	​	​	​
Conversion of Series B Convertible Preferred Stock	​	(4,895)	​	$	1.38	​	3,544,625
Convertible preferred stock outstanding at May 1, 2026	​	10,875	​	​	​	​	​

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Outstanding Warrants

​

As of May 1, 2026, we had the following warrants outstanding:

​

​	​	​	​	​	​	​	​
​	​	# of warrants outstanding	​	Weighted average exercise price		​	Weighted average expiration date
August 2025 warrants (1)	​	630,713	​	$	3.57	​	August 27, 2030
August 2025 Placement Agent warrants (1)	​	37,844	​	$	3.57	​	August 27, 2030
March 2026 warrants (1)	​	4,481,795	​	$	3.57	​	March 24, 2031
March 2026 Placement Agent warrants (1)	​	187,816	​	$	3.927	​	March 24, 2031
​	​	5,338,168	​	​	​	​	​
(1) The warrants contain anti-dilution protection provisions relating to subsequent equity sales of shares of the Company’s common stock or common stock equivalents at an effective price per share lower than the then effective exercise price of such warrants. ​

​

​

Critical Accounting Policies and Estimates

​

The preparation of our Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. Our estimates, assumptions and judgments are based on historical experience and various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amount of assets and liabilities that are not readily apparent from other sources. Making estimates, assumptions and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control. Management believes the estimates, assumptions and judgments employed and resulting balances reported in the Condensed Consolidated Financial Statements are reasonable; however, actual results could differ materially.

​

There have been no material changes to the information set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.

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Off-Balance Sheet Arrangements

​

We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K.

​

​

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to the information set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.

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Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures:

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Securities Exchange Act of 1934 (“Exchange Act”) reports are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our chief executive officer and chief financial officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Exchange Act Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this quarterly report, have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Form 10-Q to ensure information required to be disclosed is recorded, processed, summarized and reported within the time period specified by SEC rules, based on their evaluation of these controls and procedures as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.

(b) Changes in Internal Control over Financial Reporting:

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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​

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 12 - Commitments and Contingencies – Litigation - to our Condensed Consolidated Financial Statements included in this Quarterly Report for information concerning our on-going litigation. In addition to the lawsuits described in Note 12, from time to time we may be involved in claims arising in the ordinary course of business. To our knowledge other than the cases described in Note 12 to our Condensed Consolidated Financial Statements, no material legal proceedings, governmental actions, investigations or claims are currently pending against us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business and financial condition.

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Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 26, 2026.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

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Item 3. Default Upon Senior Securities.

None

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Item 4. Mine Safety Disclosures

None

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Item 5. Other Information

During the three months ended March 31, 2026, there were no modifications, adoptions or terminations by any directors or officers to any contract, instruction or written plan for the purchase or sale of securities of the Company that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or non-Rule 10b5-1 trading agreements.

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Item 6. Exhibits

​

Exhibit 31.1			Section 302 Certification - Chief Executive Officer
Exhibit 31.2			Section 302 Certification - Chief Financial Officer
Exhibit 32.1			Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			Inline XBRL Instance Document
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
​			​
Exhibit 104			Cover Page Interactive Data File (formatted as Inline XBRL) ​ ​
​	​

​

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​

SIGNATURES

​

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:

​

​

	22nd CENTURY GROUP, INC.
Date: May 7, 2026	/s/ Lawrence D. Firestone
	Lawrence D. Firestone
	Chief Executive Officer
	(Principal Executive Officer and Authorized Officer)
Date: May 7, 2026	/s/ Daniel A. Otto
	Daniel A. Otto
	Chief Financial Officer
	(Principal Accounting and Financial Officer)

​

​

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36

FAQ

How did 22nd Century Group (XXII) perform financially in Q1 2026?

22nd Century Group reported Q1 2026 net revenue of $4.1 million and a net loss of $3.3 million. Revenue fell from $5.96 million a year earlier as contract manufacturing volumes declined, while operating expenses increased, keeping the business unprofitable.

What is the going concern status of 22nd Century Group in the latest 10-Q?

The company states there is substantial doubt about its ability to continue as a going concern. Persistent losses, negative operating cash flow of $3.1 million, and an accumulated deficit of $402.2 million mean continued operations depend on raising additional capital and cutting costs.

How much cash and working capital does 22nd Century Group (XXII) have?

As of March 31, 2026, the company held $9.5 million in cash and cash equivalents and working capital of about $13.2 million. These balances improved from year-end 2025, mainly due to new preferred equity financing and smaller ATM equity sales.

What financing transactions did 22nd Century Group complete in Q1 2026?

In March 2026, the company issued $16.0 million of Series B Convertible Preferred Stock with warrants and modest ATM equity sales. Net proceeds funded a $9.65 million redemption of Series A preferred, leaving approximately $5.7 million in net new cash before other offering expenses.

How are 22nd Century Group’s revenues by product line trending?

Q1 2026 contract manufacturing revenue declined to $4.1 million from $6.1 million, driven by lower cigarette and filtered cigar volumes. VLN-branded revenues remained small and negative after adjustments, so overall product line revenues decreased significantly year over year.

What is the scale of 22nd Century Group’s outstanding preferred stock and warrants?

At March 31, 2026, the company had 15,770 Series B preferred shares outstanding, initially convertible at $3.57 per share with an alternative VWAP-based price. It also had about 5.4 million warrants outstanding with exercise prices mainly around $3.57 per share.