Company: XXII
Filing Date: 2025-06-10
Form Type: DEF 14A
Source: 0001641172-25-014543
Chunk: 1

Company: 22nd Century Group, Inc.
Filing Date: 2025-06-10
Form: DEF 14A
Chunk 1
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 profitable company and reward our shareholders as we execute our growth plans.

The Market Dynamics

The combustible cigarette market is showing increasing friction around price, products, nicotine delivery systems, the FDA regulatory environment and more. We see an incredible focus on nicotine like never seen before, even as big tobacco remains under pressure to reduce the harms of smoking. The tobacco industry’s answer is to keep their consumers hooked on nicotine by transitioning them to alternative nicotine delivery systems, such as pouch (which come in all levels of nicotine concentration), heat not burn, vape, moist snuff and more.

In addition to perpetuating addiction and smoking harm, the industry is pressuring the consumer’s pocketbook with quarterly price increases that pit buying cigarettes against consumer staples.

We look at the market differently, and see the changing dynamics in Tier 1 of Big Tobacco as an opportunity.

Branded Business

22nd Century serves two main segments of the market: reduced nicotine premium products and tier 4 value focused CMO brands. Our main domestic brands are Smoker Friendly, Pinnacle and VLN.

Our Smoker Friendly and Pinnacle CMO brands offer consumers a value option at roughly 2/3 the price of a tier 1 brand, a price point that is much friendlier to the consumers’ wallet for those who want to continue to smoke a standard combustible cigarette.

On the premium side, the re-launch of our VLN branded products will serve consumers who wish to take control of their nicotine consumption, supporting a transition from needing to smoke multiple times a day to instead choosing when to smoke or even to smoke at all. This is predominantly a health and wellness play.

The balance of our CMO business is high volume, low margin, low mix business for domestic supply of filtered cigars and container orders of export cigarettes. This steady volume of business consumes our machine capacity and allows us to manage our above the line overhead costs while contributing to our gross profit.

Progress Toward Our Vision

Our growth will also come from wider distribution as a result of expanded domestic state approvals across our brands. Once approved within the state, we will be looking to add points of distribution and launch targeted marketing campaigns to drive rate of sale. As the Smoker Friendly, Pinnacle and VLN footprints grow throughout the US, our revenues and profits will follow.

In addition to widening our brand presence to a nationwide footprint, we are developing new products within the Smoker Friendly and Pinnacle brands which will expand the SKU count in stores.

We believe we are in a great position to build our company