# EDGAR Filing Document

**Accession Number:** 0001347858
**File Stem:** 0001558370-25-011464
**Filing Date:** 2025-8
**Character Count:** 275916
**Document Hash:** c64416a3f7e5e1199a230a7de830d39c
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001558370-25-011464.hdr.sgml**: 20250814

**ACCESSION NUMBER**: 0001558370-25-011464

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 84

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250814

**DATE AS OF CHANGE**: 20250814

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** 22nd Century Group, Inc.
- **CENTRAL INDEX KEY:** 0001347858
- **STANDARD INDUSTRIAL CLASSIFICATION:** CIGARETTES [2111]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 980468420
- **STATE OF INCORPORATION:** FL
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-36338
- **FILM NUMBER:** 251214134

**BUSINESS ADDRESS:**
- **STREET 1:** 8560 MAIN STREET
- **STREET 2:** SUITE 4
- **CITY:** WILLIAMSVILLE
- **STATE:** IN
- **ZIP:** 14221
- **BUSINESS PHONE:** (716) 270-1523

**MAIL ADDRESS:**
- **STREET 1:** 8560 MAIN STREET
- **STREET 2:** SUITE 4
- **CITY:** WILLIAMSVILLE
- **STATE:** IN
- **ZIP:** 14221

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Touchstone Mining LTD
- **DATE OF NAME CHANGE:** 20051222

?xml version='1.0' encoding='ASCII'? 22nd Century Group, Inc._June 30, 2025

[**Table of Contents**](#TOC)

------

**UNITED STATES**

**SECURITIES AND EXCHANGE**

**COMMISSION WASHINGTON, D.C. 20549**

**FORM 10-Q**

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

**For the Quarterly Period Ended June 30, 2025**

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

For the Transition Period From ________ to ________

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.) |

---

**321 Farmington Road Mocksville, North Carolina 27028** 

(Address of principal executive offices)

**(336) 940-3769**

*(Registrant's telephone number, including area code)*

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

---

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

---

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 ◻

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 ◻

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.

---

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

---

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 ☒

As of August 11, 2025, there were 3,670,426 shares of common stock issued and outstanding (including 156,554 shares held in abeyance).

------

[**Table of Contents**](#TOC)

**22nd CENTURY GROUP, INC.**

**INDEX**

---

| | | |
|:---|:---|:---|
|  |  | **Page**<br>**Number** |
| PART I. | FINANCIAL INFORMATION |  |
| Item 1. | Financial Statements |  |
|  | [Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (unaudited)](#CONSOLIDATEDBALANCESHEETS_217373) | 3 |
|  | [Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six](#COMPREHENSIVELOSS_708167)<br>[Months ended June 30, 2025 and 2024 (unaudited)](#COMPREHENSIVELOSS_708167) | 4 |
|  | [Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the Three and Six Months ended June 30, 2025 and 2024 (unaudited)](#SHAREHOLDERSEQUITY_260670) | 5 |
|  | [Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2025 and 2024 (unaudited)](#STATEMENTSOFCASHFLOWS_294918) | 7 |
|  | [Notes to Condensed Consolidated Financial Statements (unaudited)](#CONSOLIDATEDFINANCIALSTATEMENTS_371482) | 8 |
| [Item 2.](#ManagementsDiscussionandAnalysis_393667) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#ManagementsDiscussionandAnalysis_393667) | 33 |
| [Item 3.](#Item3MarketRisk) | [Quantitative and Qualitative Disclosures about Market Risk](#Item3MarketRisk) | 43 |
| [Item 4.](#Item4ControlsandProcedures_841288) | [Controls and Procedures](#Item4ControlsandProcedures_841288) | 43 |
| [PART II.](#PartIIOTHERINFORMATION_834652) | [OTHER INFORMATION](#PartIIOTHERINFORMATION_834652) | 45 |
| [Item 1.](#Item1LegalProceedings_212057) | [Legal Proceedings](#Item1LegalProceedings_212057) | 45 |
| [Item 1A.](#Item1ARiskFactors_382942) | [Risk Factors](#Item1ARiskFactors_382942) | 45 |
| [Item 2.](#Item2UnregisteredSalesofEquity_562976) | [Unregistered Sales of Equity Securities and Use of Proceeds](#Item2UnregisteredSalesofEquity_562976) | 45 |
| [Item 3.](#Item3DefaultUponSenior_595932) | [Default Upon Senior Securities](#Item3DefaultUponSenior_595932) | 45 |
| [Item 4.](#Item4MineSafetyDisclosures_828927) | [Mine Safety Disclosures](#Item4MineSafetyDisclosures_828927) | 45 |
| [Item 5.](#Item5OtherInformation_720442) | [Other Information](#Item5OtherInformation_720442) | 45 |
| [Item 6.](#Item6Exhibits_406983) | [Exhibits](#Item6Exhibits_406983) | 46 |
| [SIGNATURES](#SIGNATURES_981820) |  | 47 |

---

[**Table of Contents**](#TOC)

#### 22nd CENTURY GROUP, INC.

#### CONDENSED CONSOLIDATED BALANCE SHEETS
**(Unaudited)**

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

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2025** | **December 31,** <br>**2024** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;**Current assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $3083 | $4422 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 3540 | 1698 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 2503 | 2015 |
| &nbsp;&nbsp;&nbsp;&nbsp;Insurance recoveries |  | 768 |
| &nbsp;&nbsp;&nbsp;&nbsp;GVB promissory note, net |  | 500 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 2742 | 1068 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current assets of discontinued operations held for sale |  | 1051 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current assets** | 11868 | 11522 |
| &nbsp;&nbsp;Property, plant and equipment, net | 2568 | 2773 |
| &nbsp;&nbsp;Operating lease right-of-use assets, net | 1503 | 1639 |
| &nbsp;&nbsp;Intangible assets, net | 6429 | 5724 |
| &nbsp;&nbsp;Other assets | 15 | 15 |
| **Total assets** | $22383 | $21673 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| &nbsp;&nbsp;**Current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Notes and loans payable - current | $640 | $254 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current portion of long-term debt | 3216 | 1500 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease obligations | 284 | 261 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable  | 2887 | 2401 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 2277 | 1021 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued litigation |  | 768 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued payroll | 315 | 318 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued excise taxes and fees | 3856 | 2038 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income | 260 | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 1197 | 100 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current liabilities of discontinued operations held for sale | 459 | 1281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current liabilities** | 15391 | 9962 |
| &nbsp;&nbsp;**Long-term liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease obligations | 1288 | 1437 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt |  | 5165 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other long-term liabilities | 74 | 1097 |
| **Total liabilities** | 16753 | 17661 |
| **Commitments and contingencies (Note 12)** |  |  |
| **Shareholders' equity:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $.00001 par value, 10,000,000 shares authorized |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, $.00001 par value, 500,000,000 shares authorized |  |  |
| &nbsp;&nbsp;Capital stock issued and outstanding: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;458,650 common shares (31,727 at December 31, 2024) |  |  |
| &nbsp;&nbsp;Common stock, par value |  |  |
| &nbsp;&nbsp;Capital in excess of par value | 407236 | 397883 |
| &nbsp;&nbsp;Accumulated deficit | (401606) | (393871) |
| **Total shareholders' equity** | 5630 | 4012 |
| **Total liabilities and shareholders' equity** | $22383 | $21673 |

---

See accompanying notes to Condensed Consolidated Financial Statements.

[**Table of Contents**](#TOC)

**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** | **Three Months Ended** | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Revenues, net | $4083 | $7947 | $10039 | $14416 |
| Cost of goods sold | 2863 | 3869 | 5747 | 8082 |
| Excise taxes and fees on products | 1855 | 3508 | 5536 | 6893 |
| Gross (loss) profit | (635) | 570 | (1244) | (559) |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;Sales, general and administrative | 2119 | 2360 | 3918 | 5266 |
| &nbsp;&nbsp;Research and development | 227 | 250 | 390 | 675 |
| &nbsp;&nbsp;Other operating expense (income), net |  | 7 |  | (19) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 2346 | 2617 | 4308 | 5922 |
| Operating loss from continuing operations | (2981) | (2047) | (5552) | (6481) |
| Other income (expense): |  |  |  |  |
| &nbsp;&nbsp;Other income (expense), net | (12) | 339 | (174) | 339 |
| &nbsp;&nbsp;Interest income, net | 14 | 21 | 30 | 21 |
| &nbsp;&nbsp;Interest expense | (351) | (501) | (909) | (1517) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense), net | (349) | (141) | (1053) | (1157) |
| Loss from continuing operations before income taxes | (3330) | (2188) | (6605) | (7638) |
| (Benefit) provision for income taxes | (34) | 26 | (34) | 26 |
| Net loss from continuing operations | $(3296) | $(2214) | $(6571) | $(7664) |
| Discontinued operations: |  |  |  |  |
| (Loss) income from discontinued operations before income taxes | $(111) | $1102 | $(1164) | $813 |
| Provision for income taxes |  |  |  |  |
| (Loss) income from discontinued operations | $(111) | $1102 | $(1164) | $813 |
| Net loss | $(3407) | $(1112) | $(7735) | $(6851) |
| Comprehensive loss | $(3407) | $(1112) | $(7735) | $(6851) |
| Net loss | $(3407) | $(1112) | $(7735) | $(6851) |
| Deemed dividends |  | (445) |  | (4034) |
| Net loss available to common shareholders | $(3407) | $(1557) | $(7735) | $(10885) |
| Basic and diluted loss per common share from continuing operations | $(13.16) | $(843.98) | $(40.25) | $(4244.85) |
| Basic and diluted (loss) income per common share from discontinued operations | $(0.45) | $419.87 | $(7.13) | $450.46 |
| Basic and diluted loss per common share from deemed dividends | $— | $(169.61) | $— | $(2234.43) |
| Basic and diluted loss per common share | $(13.61) | $(593.72) | $(47.38) | $(6028.82) |
| Weighted average shares outstanding - basic and diluted | 250368 | 2624 | 163254 | 1805 |

---

See accompanying notes to Condensed Consolidated Financial Statements.

[**Table of Contents**](#TOC)

#### 22nd CENTURY GROUP, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(Unaudited)

**(amounts in thousands, except share data)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Six Months Ended June 30, 2025** | **Six Months Ended June 30, 2025** | **Six Months Ended June 30, 2025** | **Six Months Ended June 30, 2025** | **Six Months Ended June 30, 2025** |
|  | **Common**<br>**Shares**<br>**Outstanding\*** | **Par Value**<br>**of Common**<br>**Shares\*** | **Capital in**<br>**Excess of**<br>**Par Value\*** | <br>**Accumulated**<br>**Deficit** | **Total**<br>**Shareholders'**<br>**Equity** |
| **Balance at January 1, 2025** | **31727** | $**—** | $**397883** | $**(393871)** | $**4012** |
| Stock issued in connection with settled indebtedness | 2450 |  | 270 |  | 270 |
| Stock issued in connection with licensing arrangement | 2078 |  | 230 |  | 230 |
| Stock issued from alternative cashless warrant exercises | 60025 |  |  |  |  |
| Stock issued upon conversion of Senior Secured Credit Facility | 22549 |  | 3132 |  | 3132 |
| Conversion option remeasurement (Note 6) |  |  | 283 |  | 283 |
| Equity-based compensation |  |  | 26 |  | 26 |
| Net loss |  |  |  | (4328) | (4328) |
| **Balance at March 31, 2025** | **118829** | $**—** | $**401824** | $**(398199)** | $**3625** |
| Stock issued in connection with warrant exercises, net of fees of $363 | 76100 |  | 5075 |  | 5075 |
| Stock issued from alternative cashless warrant exercises | 297870 |  |  |  |  |
| Stock issued in connection with settled indebtedness | 8696 |  | 230 |  | 230 |
| Equity-based compensation |  |  | 107 |  | 107 |
| Fractional shares issued for reverse stock split | 113709 |  |  |  |  |
| Net loss |  |  |  | (3407) | (3407) |
| Shares held in abeyance | (156554) |  |  |  |  |
| **Balance at June 30, 2025** | **458650** | $**—** | $**407236** | $**(401606)** | $**5630** |
| \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. |

---

[**Table of Contents**](#TOC)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Six Months Ended June 30, 2024** | **Six Months Ended June 30, 2024** | **Six Months Ended June 30, 2024** | **Six Months Ended June 30, 2024** | **Six Months Ended June 30, 2024** |
|  | **Common**<br>**Shares**<br>**Outstanding\*** | **Par Value**<br>**of Common**<br>**Shares\*** | **Capital in**<br>**Excess of**<br>**Par Value\*** | <br>**Accumulated**<br>**Deficit** | **Total**<br>**Shareholders'**<br>**Equity (Deficit)** |
| **Balance at January 1, 2024** | **839** | $**—** | $**370297** | $**(378707)** | $**(8410)** |
| Stock issued in connection with RSU vesting, net of 1 share withheld for taxes | 4 |  | (1) |  | (1) |
| Stock issued in connection with licensing arrangement | 4 |  | 100 |  | 100 |
| Stock issued in connection with warrant exercises, net of fees of $176 | 246 |  | 2245 |  | 2245 |
| Equity-based compensation |  |  | 181 |  | 181 |
| Fractional shares issued for reverse stock split | 39 |  |  |  |  |
| Net loss |  |  |  | (5739) | (5739) |
| **Balance at March 31, 2024** | **1132** | $**—** | $**372822** | $**(384446)** | $**(11624)** |
| Stock issued in connection with warrant exercises | 86 |  |  |  |  |
| Stock issued for extinguishment of Subordinated Note | 371 |  | 3864 |  | 3864 |
| Stock issued in connection with capital raise, net of issuance costs of $324 <sup>1</sup> | 639 |  | 3913 |  | 3913 |
| Stock issued upon conversion of Senior Secured Credit Facility <sup>2</sup> | 510 |  | 2756 |  | 2756 |
| Stock issued in connection with settled indebtedness | 226 |  | 1192 |  | 1192 |
| Equity-based compensation |  |  | 56 |  | 56 |
| Net loss |  |  |  | (1112) | (1112) |
| **Balance at June 30, 2024** | **2964** | $**—** | $**384603** | $**(385558)** | $**(955)** |
| \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. | \*Giving retroactive effect to the 1-for-16 reverse stock split on April 2, 2024, 1-for-135 reverse stock split on December 17, 2024, and 1-for-23 reverse stock split on June 20, 2025. |
| <sup>(1)</sup> includes exercises of 41 shares of prefunded warrants in the period | <sup>(1)</sup> includes exercises of 41 shares of prefunded warrants in the period | <sup>(1)</sup> includes exercises of 41 shares of prefunded warrants in the period | <sup>(1)</sup> includes exercises of 41 shares of prefunded warrants in the period | <sup>(1)</sup> includes exercises of 41 shares of prefunded warrants in the period | <sup>(1)</sup> includes exercises of 41 shares of prefunded warrants in the period |
| <sup>(2)</sup> includes exercises of 316 shares of prefunded warrants in the period | <sup>(2)</sup> includes exercises of 316 shares of prefunded warrants in the period | <sup>(2)</sup> includes exercises of 316 shares of prefunded warrants in the period | <sup>(2)</sup> includes exercises of 316 shares of prefunded warrants in the period | <sup>(2)</sup> includes exercises of 316 shares of prefunded warrants in the period | <sup>(2)</sup> includes exercises of 316 shares of prefunded warrants in the period |

---

See accompanying notes to Condensed Consolidated Financial Statements.

[**Table of Contents**](#TOC)

#### 22nd CENTURY GROUP, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

**(amounts in thousands)**

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;Net loss | $(7735) | $(6851) |
| &nbsp;&nbsp;Adjustments to reconcile net loss to cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of long-lived assets - held for sale | 293 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization and depreciation | 459 | 514 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of right-of-use asset | 136 | 125 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other non-cash gains |  | (947) |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses | 509 | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on sale or disposal of property, plant, and equipment | (12) | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt related charges included in interest expense | 984 | 1674 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity-based compensation | 133 | 237 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liabilities | 174 | (324) |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of derivative liability |  | (459) |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in inventory reserves | (242) | 431 |
| &nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (1852) | (784) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | (246) | 1251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | (1674) | (548) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (266) | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 1056 | (437) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued payroll | (3) | (583) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued excise taxes and fees | 1818 | 276 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 14 | (641) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in operating activities** | (6454) | (6970) |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;Acquisition of patents, trademarks, and licenses | (59) |  |
| &nbsp;&nbsp;Acquisition of property, plant and equipment | (39) | (71) |
| &nbsp;&nbsp;Proceeds from the sale of property, plant and equipment | 770 | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by (used in) investing activities** | 672 | (49) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;Payments on notes payable | (638) | (924) |
| &nbsp;&nbsp;Proceeds from issuance of notes payable | 1023 | 1256 |
| &nbsp;&nbsp;Payments of long-term debt | (1017) | (249) |
| &nbsp;&nbsp;Net proceeds from warrant exercise | 5075 | 2245 |
| &nbsp;&nbsp;Proceeds from issuance of common stock |  | 4237 |
| &nbsp;&nbsp;Payment of common stock issuance costs |  | (324) |
| &nbsp;&nbsp;Taxes paid related to net share settlement of RSUs |  | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by financing activities** | 4443 | 6240 |
| **Net decrease in cash and cash equivalents** | (1339) | (779) |
| **Cash and cash equivalents - beginning of period** | 4422 | 2058 |
| **Cash and cash equivalents - end of period** | $3083 | $1279 |
| **Supplemental disclosures of cash flow information:** |  |  |
| Non-cash transactions: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures incurred but not yet paid | $633 | $25 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deemed dividends | $— | $4034 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock issued in connection with settled indebtedness | $500 | $1192 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-cash licensing arrangement | $230 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock issued for extinguishment of Subordinated Note | $— | $3864 |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment of GVB Promissory Note | $— | $1500 |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment of debt issuance costs | $— | $275 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity conversion of Senior Secured Credit Facility | $3132 | $2481 |
| &nbsp;&nbsp;&nbsp;&nbsp;Conversion option remeasurement | $283 | $— |

---

See accompanying notes to Condensed Consolidated Financial Statements.

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#### 22nd CENTURY GROUP, INC.

#### NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

#### June 30, 2025
(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, 2024.

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 fiscal year as a whole. 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 –*** These 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 $6,454 and $6,970 for the six months ended June 30, 2025 and 2024, respectively, and an accumulated deficit of $401,606 and $393,871 as of June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025, the Company had cash and cash equivalents of $3,083.

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.

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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.

***Other Significant Risks and Uncertainties*** - The Company is subject to a number of risks, including, but not limited to, the lack of available capital; future covenant non-compliance with respect to the Company's Senior Secured Credit Facility giving rise to an event of default; unsuccessful commercialization strategy and launch plans for the Company's products or market acceptance of the Company's products; risks inherent in litigation, including purported class actions; and protection of proprietary technology.

***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 |
| April 2, 2024 | 1-for-16 | 39 |
| December 17, 2024 | 1-for-135 | 5,514 |
| June 20, 2025 | 1-for-23 | 113,709 |

---

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.

***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.

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 and Note 10.

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."

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***Embedded Derivatives*** – The Company considers whether there are any embedded features in debt instruments that require bifurcation and separate accounting as derivative financial instruments pursuant to ASC 815. Embedded derivatives are initially and subsequently measured at fair value. With the exception of the embedded conversion option as described in Note 6 "Debt", the embedded derivatives associated with the Company's Senior Secured Credit Facility and Subordinated Note are not material.

The Company accounts for its convertible debt instrument, for which the conversion option is not bifurcated and accounted for separately as a derivative and is modified or exchanged in a transaction that is not accounted for as an extinguishment, the accounting is determined based on whether there is an increase or decrease in the fair value of the embedded conversion option. The fair value is calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange. An increase in fair value is recorded as a decrease to the carrying amount of the debt instrument with a corresponding increase to Capital in Excess of Par Value.

***Debt Issuance Costs and Discounts*** - Debt issuance costs and discounts associated with the issuance of debt by the Company are deferred and amortized over the term of the related debt. Debt issuance costs and discounts related to the Company's Senior Secured Credit Facility and Subordinated Note are recorded as a reduction of the carrying value of the related debt and are amortized to Interest expense using the effective interest method over the period from the date of issuance to the maturity date, whichever is earlier. The amortization of debt issuance costs and discounts are included in Debt related charges included in interest expense in the Condensed Consolidated Statements of Cash Flows. Note 6 "Debt" contains additional information on the Company's debt issuance costs and discounts.

***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 Raise and Warrant Exercises" 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 and six months ended June 30, 2025.

***Gain and Loss Contingencies*** – 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.

In accordance with ASC 450-30, Gain Contingencies, gain contingencies are recognized when earned and realized, which typically will occur at the time of final settlement or when cash is received. Insurance recoveries may be realized earlier than cash receipt if a claim and amount of reimbursement is acknowledged by the insurance company that payment is due and collection is probable.

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The Company maintains general liability insurance policies for its property and facilities. Under the terms of our insurance policies, in the case of loss to a property, the Company follows the guidance in ASC 610-30, *Other Income —Gains and Losses on Involuntary Conversions*, for the conversion of nonmonetary assets (the properties) to monetary assets (insurance recoveries). Under ASC 610-30, once the recovery is deemed probable the Company recognizes an asset for the insurance recovery receivable in the Condensed Consolidated Balance Sheets, with corresponding income that is offsetting to the casualty losses recorded in the Condensed Consolidated Statements of Operations and Comprehensive Loss. If the insurance recovery is less than the amount of the casualty charges recognized, the Company will recognize a loss whereas if the insurance recovery is greater than the amount of casualty loss recognized, the Company will only recognize a recovery up to the amount of the casualty loss and will account for the excess as a gain contingency. Business interruption insurance is treated as a gain contingency.

Refer to further discussion of all commitments and contingencies in Note 12.

***Related Party Transaction -*** A related party is generally defined as (i) any person that holds 10% or more of the Company's securities and their immediate families, (ii) the Company's management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company may conduct business with its related parties in the ordinary course of business.

Beginning in the fourth quarter of 2024, the Company generated revenue from a related party contract manufacturing customer. During the three and six month period ended June 30, 2025, private label cigarette revenue, net and corresponding contract asset from the related party were not material. The advisory board relationship of an employee of the Company and the related party customer was terminated in April 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 an 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.

***Recently Issued Accounting Pronouncements –***

In November 2023, the FASB issued ASU 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures*. The ASU requires additional disclosures regarding segment expenses and other items on an interim and annual basis. The amendments in ASU 2023-07 were adopted by the Company effective January 1, 2024. See Note 13 "Segment and Geographic Information."

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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures. The ASU requires additional quantitative and qualitative income tax disclosures to allow readers of the consolidated financial statements to assess how the Company's operations, related tax risks and tax planning affect its tax rate and prospects for future cash flows. For public business entities, the ASU is effective for annual periods beginning after December 15, 2024. The ASU did not have a material impact to the Condensed Consolidated Financial Statements.

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.

In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. The ASU clarifies the assessment of whether certain settlements of convertible debt instruments should be accounted for as an inducement conversion or extinguishment of convertible debt. The ASU is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, 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

*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 financial statements and related disclosures.

**NOTE 2. DISCONTINUED OPERATIONS AND DIVESTITURES**

As of June 30, 2025 and December 31, 2024, all assets and liabilities of the former hemp/cannabis business are presented as current in the Condensed Consolidated Balance Sheets. The carrying amounts of the former hemp/cannabis assets and liabilities that were classified as assets and liabilities of discontinued operations held for sale were as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2025** | **December 31,** <br>**2024** |
| Property, plant and equipment, net | $— | $1051 |
| &nbsp;&nbsp;Current assets of discontinued operations held for sale | $— | $1051 |
| Accounts payable  | $426 | $1210 |
| Accrued expenses | 33 | 71 |
| &nbsp;&nbsp;Current liabilities of discontinued operations held for sale | $459 | $1281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net liabilities | $(459) | $(230) |

---

[**Table of Contents**](#TOC)

Net (loss) income from discontinued operations for the six months ended June 30, 2025 and 2024 was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Revenues, net | $— | $— | $— | $— |
| Cost of goods sold |  |  |  |  |
| Gross loss |  |  |  |  |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;Sales, general and administrative | 7 | (387) | 14 | (320) |
| &nbsp;&nbsp;Research and development | (65) | 84 | (402) | 132 |
| &nbsp;&nbsp;Other operating expense, net | 137 | (865) | 1308 | (766) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses (income) | 79 | (1168) | 920 | (954) |
| Operating (loss) income from discontinued operations | (79) | 1168 | (920) | 954 |
| Other income (expense): |  |  |  |  |
| &nbsp;&nbsp;Interest expense | (32) | (66) | (244) | (141) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total other expense | (32) | (66) | (244) | (141) |
| (Loss) income from discontinued operations before income taxes | (111) | 1102 | (1164) | 813 |
| Provision (benefit) for income taxes |  |  |  |  |
| (Loss) income from discontinued operations | $(111) | $1102 | $(1164) | $813 |

---

During the three month periods ended June 30, 2025 and 2024, the Company settled outstanding obligations which resulted in reversals of previously accrued liabilities of $84 and $1,399, respectively. During the six month periods ended June 30, 2025 and 2024, the Company settled outstanding obligations which resulted in reversals of previously accrued liabilities of $421 and $1,551, respectively. Additionally, for the six month period ended June 30, 2025, Other operating expense, net was comprised of $500 provision for credit loss for the GVB promissory note (see Note 6 "Debt") and $293 of impairment charges related to the sale of Needle Rock Farms land property. On May 6, 2025, the Company closed the sale of the Needle Rock Farms land property and received cash proceeds of $770. Accordingly, there are no remaining assets held for sale on the Condensed Consolidated Balance Sheets as of June 30, 2025.

Cash flow information from discontinued operations for six month period ended June 30, 2025 and 2024 was as follows:

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** |
| Cash used in operating activities | $961 | $867 |
| Cash provided by investing activities | $770 | $22 |
| Depreciation and amortization | $- | $- |
| Capital expenditures | $- | $- |

---

[**Table of Contents**](#TOC)

#### NOTE 3. – INVENTORIES
Inventories at June 30, 2025 and December 31, 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2025** | **December 31,** <br>**2024** |
| Raw materials | $2332 | $1616 |
| Work in process | 14 |  |
| Finished goods | 157 | 399 |
|  | $2503 | $2015 |

---

**NOTE 4. – INTANGIBLE ASSETS, NET** 

*Intangible Assets, Net*

Our intangible assets, net at June 30, 2025 and December 31, 2024 consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
| **June 30, 2025** | **Gross**<br>**Carrying Amount** | **Accumulated**<br>**Amortization** | **Net Carrying**<br>**Amount** |
| &nbsp;&nbsp;***Definite-lived:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Patent | $2976 | $(2404) | $572 |
| &nbsp;&nbsp;&nbsp;&nbsp;License fees | 5306 | (2138) | 3168 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total amortizing intangible assets | $8282 | $(4542) | $3740 |
| &nbsp;&nbsp;***Indefinite-lived:*** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Trademarks |  |  | $137 |
| &nbsp;&nbsp;&nbsp;&nbsp;MSA signatory costs |  |  | 2202 |
| &nbsp;&nbsp;&nbsp;&nbsp;License fee for predicate cigarette brand |  |  | 350 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total indefinite-lived intangible assets |  |  | $2689 |
| &nbsp;&nbsp;Total intangible assets, net |  |  | $6429 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2024** | **Gross**<br>**Carrying Amount** | **Accumulated**<br>**Amortization** | <br>**Impairment** | **Net Carrying**<br>**Amount** |
| &nbsp;&nbsp;***Definite-lived:*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Patent | $2948 | $(2268) | $(68) | $612 |
| &nbsp;&nbsp;&nbsp;&nbsp;License fees | 4415 | (1990) | - | 2425 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total amortizing intangible assets | $7363 | $(4258) | $(68) | $3037 |
| &nbsp;&nbsp;***Indefinite-lived:*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Trademarks |  |  |  | $135 |
| &nbsp;&nbsp;&nbsp;&nbsp;MSA signatory costs |  |  |  | 2202 |
| &nbsp;&nbsp;&nbsp;&nbsp;License fee for predicate cigarette brand |  |  |  | 350 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total indefinite-lived intangible assets |  |  |  | $2687 |
| &nbsp;&nbsp;Total intangible assets, net |  |  |  | $5724 |

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[**Table of Contents**](#TOC)

Aggregate intangible asset amortization expense comprises of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Cost of goods sold | $2 | $2 | $5 | $5 |
| Research and development | 110 | 102 | 211 | 202 |
| &nbsp;&nbsp;Total amortization expense | $112 | $104 | $216 | $207 |

---

Estimated future intangible asset amortization expense based on the carrying value as of June 30, 2025 is as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Remainder for 2025** | **2026** | **2027** | **2028** | **2029** | **Thereafter** |
| Amortization expense | $226 | $428 | $419 | $362 | $263 | $2042 |

---

#### 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 nonfinancial assets or liabilities that are measured at fair value on a recurring basis.

The following table presents information about our liabilities measured at fair value at June 30, 2025 and December 31, 2024, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair Value** | **Fair Value** | **Fair Value** | **Fair Value** |
|  | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Liabilities** |  |  |  |  |
| &nbsp;&nbsp;Omnia 2024 warrants | $— | $— | $1197 | $1197 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | $— | $— | $1197 | $1197 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair Value** | **Fair Value** | **Fair Value** | **Fair Value** |
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Liabilities** |  |  |  |  |
| &nbsp;&nbsp;Omnia 2024 Warrants | $— | $— | $1023 | $1023 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | $— | $— | $1023 | $1023 |

---

[**Table of Contents**](#TOC)

*Warrants*

The following table sets forth a summary of the changes in fair value of the Company's common stock warrants accounted for as liabilities (Level 3):

---

| | |
|:---|:---|
| Fair value measurement at January 1, 2025 | $1023 |
| &nbsp;&nbsp;Fair value measurement adjustment | 162 |
| Fair value measurement at March 31, 2025 | $1185 |
| &nbsp;&nbsp;Fair value measurement adjustment | 12 |
| Fair value measurement at June 30, 2025 | $1197 |

---

The Omnia warrants were measured at June 30, 2025 and December 31, 2024 using a Monte Carlo valuation model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2025** | **December 31,** <br>**2024** |
| Risk-free interest rate per year | 4.1% | 4.3% |
| Expected volatility per year | 123.6% | 119.0% |
| Expected dividend yield | —% | —% |
| Contractual expiration | 3.8<br> years | 4.3<br> years |
| Exercise price | $8305.88 | $8305.88 |
| Stock price | $7.53 | $122.13 |

---

The warrants are measured at fair value using certain estimated factors which are classified within Level 3 of the valuation hierarchy. Significant unobservable inputs that are used in the fair value measurement of the Company's warrants include the volatility factor, anti-dilution provisions, 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 anti-dilution provision or put option would have resulted in a significantly higher or lower fair value measurement. The Omnia 2023 warrants were extinguished and the Omnia 2024 warrants were issued in April 2024. As of June 30, 2025, the Omnia 2024 warrants are classified as Other current liabilities on the Condensed Consolidated Balance Sheets.

**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 and six months ended June 30, 2025 and 2024, the Company did not have any financial assets or liabilities measured at fair value on a nonrecurring basis.

 **NOTE 6. DEBT**

The Company has a senior secured credit facility (the "Senior Secured Credit Facility"), which consists of Debentures (as defined below) and previously, a subordinated promissory note (the "Subordinated Note). The Debentures were issued at a 5% original issuance discount and are subject to a 5% exit payment. The Subordinated Note was extinguished in April 2024, as described below.

[**Table of Contents**](#TOC)

Debt related to the Senior Secured Credit Facility as of June 30, 2025 and December 31, 2024 consists of the following:

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| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2025** | **December 31,** <br>**2024** |
| Senior Secured Credit Facility | $3790 | $7690 |
| Unamortized discount on loan and deferred debt issuance costs | (574) | (1025) |
| &nbsp;&nbsp;Total debt | $3216 | $6665 |
| Current portion of long-term debt | (3216) | (1500) |
| &nbsp;&nbsp;Total long-term debt | $— | $5165 |

---

*Debentures*

On March 3, 2023, the Company entered into a Securities Purchase Agreement with each of the purchasers party thereto (collectively, the "Purchasers") and JGB Collateral, LLC, as collateral agent for the Purchasers (the "Agent") which pursuant to the agreement, the Company sold 5% original issuance discount senior secured debentures with an aggregate principal amount of $21,053. The Debentures bear interest at a rate of 7% per annum, payable monthly in arrears as of the last trading day of each month and on the maturity date. The Debentures mature on March 3, 2026. At the Company's election, subject to certain conditions, interest can be paid in cash, shares of the Company's common stock, or a combination thereof. The Debentures are subject to an exit payment equal to 5% of the original principal amount, or $1,053, payable on the maturity date or the date the Debentures are paid in full (the "Exit Payment"). The Company may at any time irrevocably elect to redeem all of the then outstanding principal amount of the Debentures for cash in an amount equal to the entire outstanding principal balance, including accrued and unpaid interest, the Exit Payment and a prepayment premium in an amount equal to 3% of the outstanding principal balance as of the prepayment date (collectively, the "Prepayment Amount"). Upon the entry into a definitive agreement that would effect a change in control (as defined in the Debentures) of the Company, the Agent may require the Company to prepay the outstanding principal balance in an amount equal to the Prepayment Amount. At its option, the holder of a Debenture may require the Company to redeem 2% of the original principal amount of the Debentures per calendar month which amount may at the Company's election, subject to certain exceptions, be paid in cash, shares of the Company's common stock, or a combination thereof.

The Company's obligations under the Debentures can be accelerated upon the occurrence of certain customary events of default. In the event of a default and acceleration of the Company's obligations, the Company would be required to pay the Prepayment Amount, liquidated damages and other amounts owing in respect thereof through the date of acceleration.

The Debentures contain customary representations, warranties and covenants including among other things and subject to certain exceptions, covenants that restrict the Company from incurring additional indebtedness, creating or permitting liens on assets, making or holding any investments, repaying outstanding indebtedness, paying dividends or distributions and entering into transactions with affiliates. Substantially all of the company's assets, including intellectual property, are collateralized and at risk if Debenture obligation is not satisfied. In addition, the Company was required to maintain at least $7,500 on its balance sheet as restricted cash in a separate account and has financial covenants to maintain certain quarterly revenue targets.

In connection with the sale of the Debentures, the Company issued warrants to purchase up to 7 shares of common stock for an exercise price of $950,130 per share (the "JGB Warrants"), which had an initial fair value of $4,475 net of issuance costs of $139. On June 22, 2023, as a result of the June 19, 2023 offering, the Company's outstanding JGB warrants to purchase up to 7 shares of the Company's common stock for an exercise price of $950,130 per share were automatically adjusted to be $637,295 exercise price for up to 11 shares of common stock. There are no further anti-dilution adjustments on such warrants.

[**Table of Contents**](#TOC)

On October 16, 2023, the Company entered into a Waiver and Amendment Agreement (the "October Amendment") with each of the subsidiaries of the Company executing the Debentures, the Holders and the Agent, pursuant to which, among other things, (a) the Holders waived an event of default under Section 7(d) of the Debentures which required the Company to achieve revenue of at least $18,500 for the quarter ended September 30, 2023 (the "waiver"), (b) the parties agreed to amend Schedule E of the Debentures to reduce the Revenue Target (as such term is defined in the Debentures), for the quarter ended December 31, 2023, to $15,500, and (c) the Company agreed to release to the Purchasers the $7,500 that the Company was required to maintain in a separate account (the "Escrow Funds") which Escrow Funds were applied to, and reduce, the outstanding principal amount of the Debentures on a dollar-for-dollar basis.

As additional consideration for the waiver, the Company agreed to assign, transfer and convey to the Agent, the Company's entire right, title and interest in and to (i) the Promissory Note made by J&N Real Estate Company, L.L.C. ("J&N") payable to the Company in the principal amount of $3,800 and (ii) the Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated June 30, 2021, between J&N, as borrower, for the benefit of the Company, as lender (collectively, the "Pledged Indebtedness"). Upon assignment of the Pledged Indebtedness, the Company recognized the $2,600 of consideration in exchange to be applied as a $2,000 reduction of the Put Price (as defined below), $600 reduction of the outstanding principal amount of Debentures and $895 loss on sale of financial asset.

In connection with the waiver, the Company and Holders agreed to exercise the outstanding put provision to redeem 4 warrants for an aggregate put price equal to $2,500 (the "Put Price"), which was concurrently reduced by $2,000, as described above, with the remaining $500 payable by the Company on the Maturity Date recorded as Other long-term liabilities on the Condensed Consolidated Balance Sheets. No cash was exchanged as a result of executing the October 2023 Amendment.

Subsequently, on December 22, 2023, the Company, the Holders and the Agent entered into an Amendment Agreement (the "December 2023 Amendment") pursuant to which the Holders and the Agent consented to the Purchase Agreement, as amended by the GVB Amendment. In consideration of the Holders and the Agents' consent, the Company agreed to (i) pay to the Agent, a cash payment of $2,200 to reduce the outstanding principal of the Debentures (which includes the cash portion of the New Purchase Price paid directly to Agent by Buyer which consists of a cash payment of $1,100 and an additional $1,100 paid by the Company), (ii) a 12% secured promissory note issued to the Company's senior lender, on behalf of and at the direction of the Company, in an aggregate principal amount of $2,000 (the "GVB Promissory Note"), (iii) assign the GVB Insurance Proceeds to the Agent until the outstanding aggregate principal amount of the Debentures, plus accrued and unpaid interest, has been repaid in full; provided that the first $1,000 of Insurance Proceeds in excess of $5,000 shall be applied as stated in the agreement, and (iv) post-closing enter into a deed in lieu of foreclosure agreement with respect to 224 acres of real property in Delta County, Colorado commonly known as Needle Rock Farms, resulting in a non-monetary exchange yielding additional debt reduction of $1,000.

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

As part of the December amendment, the Company, the Holders and the Agent also agreed to amend the Debentures to (i) allow the Holders to voluntarily convert the Debentures, in whole or in part, into shares of the Company's common stock ("Voluntary Conversion Option") on the earlier of (i) June 30, 2024 and (ii) the public announcement of a Fundamental Transaction at a conversion price equal to the lower of (x) $46,575.00 per share (reverse split adjusted) and (y) the closing sale price of the Company's common stock on June 29, 2024 (the "Conversion Price"), and (ii) include a mandatory prepayment of the outstanding principal of the Debentures in an amount equal to 20% of the net cash proceeds of any issuance by the Company of any of its stock, or other Equity Interests (as defined in the Debentures) or the incurrence or issuance of any indebtedness. During the second quarter of 2025, the Company made principal payments in the amount of $1,017 as 20% of the net cash proceeds of the issuance of common stock (see Note 10 "Capital Raise and Warrant Exercise").

Additional terms of the December 2023 Amendment include a financial covenant holiday through the third quarter of 2024 and revised certain covenants thereafter to reflect the sale of the Purchased Interests, including lowering the Company's quarterly revenue targets. As of June 30, 2025, the Company was in compliance with these financial covenants.

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On April 8, 2024, the Company, the Holders and the Agent entered into that certain Letter Agreement to modify the terms of the Amendment Agreement, the JGB SPA and the Debentures, as amended ("April 2024 Amendment").

Under the terms of the Letter Agreement, the Holders are permitted to convert their debt to common stock at anytime and the Conversion Price (as defined in the Debentures) at which the Holders may convert the principal amount of their Debentures to the Company's common stock is reduced to $6,644.70 per share in accordance with applicable Nasdaq rules through the conversion option reset date on June 28, 2024. The principal amount of the Debentures converted shall be applied to the Monthly Allowance (as defined in the Debentures) for that month, and any excess shall be applied to the Monthly Allowances for the succeeding months. The conversions will be a dollar for dollar reduction of the remaining outstanding obligation owed to the Holders. The Agent and Holders have also agreed to daily limits on trading volume and minimum conversion amounts. The Holders converted $428 of debt in exchange for 65 shares of common stock during the quarter-ended June 30, 2024.

On May 10, 2024, the Company, the Holders and the Agent entered into that certain May 2024 Exchange Agreement and May 2024 Letter Agreement to modify the terms of the Amendment Agreement, the Securities Purchase Agreement and the Debentures, as amended ("May 2024 Amendment").

Under the terms of the May 2024 Amendment, the Company and Holders have agreed the Company shall incur an aggregate amendment charge to the undersigned holders equal to $275, which shall be added to the principal balance of the Debentures. Under the terms of the May 2024 Exchange Agreement, the Company and Holders exchanged an aggregate of $2,328 in principal, fees and expenses owed under the Debentures for 128 shares of common stock and 289 immediately exercisable pre-funded warrants to purchase shares of common stock at an exercise price of $.00001 (at an effective per share price of $5,247.45). All pre-funded warrants were subsequently exercised during the quarter-ended June 30, 2024.

On August 27, 2024, the Company, the Holders and the Agent entered into that certain August 2024 Letter Agreement to modify the terms of the Amendment Agreement, the JGB SPA, and the Debentures, as amended ("August 2024 Amendment").

Under the terms of the August 2024 Agreement, each Holder agreed that it shall not exercise its Holder Redemption Right (as defined in the Debentures) for more than 50% of its Monthly Allowance (as defined in the Debentures) through and including July 2025. Further, the provisions in Section 3(c)(i) of the Debentures requiring 20% of any equity issuances to be paid to the Holders shall be suspended through December 31, 2024. In consideration for the amendments set forth in the August 2024 Amendment, the Company paid an amendment fee of $746, which was added to the aggregate principal amount of the Debentures. JGB subsequently issued a conversion notice for 142 shares of common stock equal to principal reduction of $328.

On October 10, 2024, the Company, the Holders and the Agent entered into that certain October 2024 Letter Agreement to modify the terms of the Amendment Agreement, the JGB SPA, and the Debentures, as amended ("October 2024 Amendment").

Under the terms of the October 2024 Amendment, the Company will be able to reset the Conversion Price (as defined in the Debentures) currently in effect, at the discretion of the Board of Directors and on a one time basis, to an amount equal to the average of the daily VWAPs for each of the five (5) consecutive Nasdaq trading days immediately preceding the date on which the Conversion Price shall be reset. The reset Conversion Price shall in no event be greater than the Conversion Price in effect on the date of the Letter Agreement, which is $2,315.71.

On January 13, 2025, the Board of Directors approved the reset of the Conversion Price to $138.92 per share. The change in conversion price resulted in an increase in fair value to the embedded conversion option, resulting in an increase in debt discount of $283 and a corresponding increase in capital in excess of par value. The Holders exercised conversion notices in the amount of $3,132 in January 2025 and the Company issued 22,549 shares of common stock.

On May 22, 2025, the Company, the Holders and the Agent entered into that certain May 2025 Letter Agreement to modify the terms of the Amendment Agreement, the JGB SPA, and the Debentures, as amended ("May 2025 Amendment").

[**Table of Contents**](#TOC)

Under the terms of the May 2025 Amendment, the Company will be able to reset the Conversion Price (as defined in the Debentures) currently in effect, at the discretion of the Board of Directors and on a one time basis, to an amount equal to the average of the daily VWAPs for each of the five (5) consecutive Nasdaq trading days immediately preceding the date on which the Conversion Price shall be reset. The reset Conversion Price shall in no event be greater than the Conversion Price in effect on the date of the Letter Agreement, which is $138.92.

In accordance with ASC 470-60 Troubled Debt Restructurings by Debtors and ASC 470-50, Debt Modifications and Extinguishment, the Company performed an assessment of whether the related transaction was deemed to be a troubled debt restructuring, and if no, whether the transaction was deemed modification of existing debt, or an extinguishment of existing debt and new debt.

The October 2023 Amendment, April 2024 Amendment, May 2024 Amendment, August 2024 Amendment, January 2025 Amendment, and May 2025 Amendment were concluded to be a modification, and not an extinguishment, based on an analysis of the present value of future cash flows. A new effective interest rate was determined, and the debt continued to be amortized. The December 2023 Amendment was concluded to be an extinguishment, due to the addition of a substantive conversion option.

The Company analyzed the conversion feature of the December 2023 Amendment for derivative accounting consideration under ASC 815-15 and determined that the embedded conversion features should be classified as a bifurcated derivative because the exercise price of these convertible notes are subject to a variable conversion rate. The Company has determined that the conversion feature is not considered to be solely indexed to the Company's own stock and is therefore not afforded equity treatment. In accordance with ASC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability at fair value in the amount of $557 as of March 31, 2024, respectively as a component of Other Long-Term Liabilities on the Consolidated Balance Sheet. Subsequently, during the year-ended December 31, 2024, the derivative liability related to the debentures and embedded conversion option was reclassified from Other Long-Term Liabilities to Capital in Excess of Par, based on the Company's reassessment of the classification and conclusion the derivative met the 'fixed for fixed' criteria in ASC 815.

*Subordinated Note*

On March 3, 2023, the Company executed a Subordinated Promissory Note (the "Subordinated Note") with a principal amount of $2,865 in favor of Omnia Ventures, LP ("Omnia").

In connection with the Subordinated Note, the Company issued to Omnia, warrants to purchase up to 1 share of the Company's common stock (the "2023 Omnia Warrants"). The 2023 Omnia Warrants were exercisable for seven years from September 3, 2023, at an exercise price of $637,295 per share, subject, with certain exceptions, to adjustments in the event of stock splits, dividends, subsequent dilutive offerings and certain fundamental transactions.

On April 29, 2024, the Company entered into a General Release and Settlement Agreement (the "Omnia Agreement") with Omnia Capital LP ("Omnia"). The Omnia Agreement settled and extinguished all outstanding debt and interest owed to Omnia under the Subordinated Note and the put provision contained in the 2023 Omnia Warrants, amounting to a total of approximately $5,228, for (i) a cash payment of $249; (ii) 371 shares of common stock and 371 immediately exercisable pre-funded warrants to purchase shares of common stock at an exercise price of $0.0001 that are exercisable until May 1, 2029 (at an effective per share price of $6,644) and (iii) 148 immediately exercisable warrants to purchase an equal number of shares of common stock at an exercise price of $6,644 until May 1, 2029 (the "2024 Omnia Warrants"). The 2024 Omnia Warrants contain a put provision that permits the holder to require the Company to redeem the 2024 Omnia Warrants, no earlier than May 1, 2025, for a purchase price equal to $8,306 per warrant, and had an initial fair value of $1,515 (see Note 5). Subject to limited exceptions, a holder of pre-funded warrants and 2024 Omnia Warrants will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 19.99% of the number of shares of our common stock outstanding immediately after giving effect to such exercise. As part of the Omnia Agreement, the parties agreed to terminate and cancel the Old Note and the 2023 Omnia Warrants and released all debts, claims or other obligations against each other occurring prior to the date of the Omnia Agreement. The total cash and non-cash consideration amounted to $5,628, resulting in extinguishment charges of $400 for the three months ended June 30, 2024, recorded in Interest expense in the Statement of Operations and Comprehensive Loss.

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*Contractual Maturities*

As of June 30, 2025, contractual maturities under the Senior Secured Credit Facility for the remainder of 2025 and through maturity, excluding any discounts or premiums, were to be paid in 2026 of $3,790.

Additionally, at its option, JGB may require the Company to redeem 2% of the original principal amount of the Debentures, as amended to be no more than 50% or $210 per calendar month through July 2025 and $421 per calendar month thereafter which amount may at the Company's election, subject to certain exceptions, be paid in cash, shares of the Company's common stock, or a combination thereof. JGB has not elected the monthly redemption feature during the three- or six-month period ended June 30, 2025. If the redemption feature is elected, as of June 30, 2025, contractual maturities under the senior secured credit Facility for the remainder of 2025 are $2,104, and for 2026 are $1,686.

*Debt Issuance Costs*

The fair values of the warrants at issuance of $5,791, together with the Debentures original issuance discount of $1,053, Debentures exit payment of $1,053, and third-party debt issuance costs of $801, are being amortized using the effective interest method over the term of the respective debt instrument, recorded as Interest expense in the Condensed Consolidated Statement of Operations and Comprehensive Loss. The components and activity of unamortized discount and deferred debt issuance costs related to the Senior Secured Credit Facility and Subordinated Note is as follows:

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| | |
|:---|:---|
|  | **Total** |
| January 1, 2025 | $1025 |
| &nbsp;&nbsp;Amortization during the period | (161) |
| &nbsp;&nbsp;Conversion option remeasurement | 283 |
| &nbsp;&nbsp;Partial extinguishment of debt | (518) |
| March 31, 2025 | $629 |
| &nbsp;&nbsp;Amortization during the period | (176) |
| &nbsp;&nbsp;Amendment fee | 250 |
| &nbsp;&nbsp;Partial extinguishment of debt | (129) |
| June 30, 2025 | $574 |

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**NOTE 7. – NOTES & LOANS PAYABLE**

The table below outlines our notes and loans payable balances as of June 30, 2025 and December 31, 2024:

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| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2025** | **December 31,** <br>**2024** |
| Insurance loans payable | $640 | $254 |
| &nbsp;&nbsp;Total current notes and loans payable | $640 | $254 |

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*Insurance loans payable*

During the second quarter of 2025, the Company renewed its Director and Officer ("D&O"), property and general liability insurances for a one-year policy premium totaling $1,023. The Company paid $205 as a premium down payment and financed the remaining $818 of policy premiums over nine months at a 6.6% annual percentage rate.

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During the second quarter of 2024, the Company renewed its Director and Officer ("D&O") insurance for a one-year policy premium totaling $866. The Company paid $147 as a premium down payment and financed the remaining $719 of policy premiums over ten months at a 8.3% annual percentage rate. The Company also has other insurance loans payable related to property and general liability across the Company.

Estimated future principal payments to be made under the above notes and loans payable as of June 30, 2025 are as follows:

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| | |
|:---|:---|
| 2025 | $547 |
| 2026 | 93 |
| Total | $640 |

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**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<sup>®</sup>, or research cigarettes sold under the brand name SPECTRUM<sup>®</sup>.

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 to customers and is recognized net of cash discounts, sales returns and allowances. There was no allowance for discounts or returns at June 30, 2025 and December 31, 2024. Consideration payable to the customer is recorded net 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 and 66% for the three months ended June 30, 2025 and June 30, 2024 respectively. Revenue recognized from Tobacco products transferred to customers over time represented substantially all net revenue and 67% for the six months ended June 30, 2025 and June 30, 2024 respectively.

The following table presents net revenue by product line:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Contract Manufacturing  |  |  |  |  |
| &nbsp;&nbsp;Cigarettes | $2715 | $4107 | $7729 | $6867 |
| &nbsp;&nbsp;Filtered Cigars | 1319 | 3303 | 2422 | 6927 |
| &nbsp;&nbsp;Cigarillos | 94 | 552 | 88 | 552 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Contract Manufacturing | 4128 | 7962 | 10239 | 14346 |
| &nbsp;&nbsp;VLN® | (45) | (15) | (200) | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Product Line Revenues | $4083 | $7947 | $10039 | $14416 |

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

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| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** |
| Customer A | 48.71% | 34.37% |
| Customer B | 14.51% | \* |
| Customer C | 16.64% | \* |
| Customer D | 13.67% | 20.93% |
| All other customers | 6.47% | 44.70% |

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| | | |
|:---|:---|:---|
|  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** |
| Customer A | 66.03% | 36.25% |
| Customer B | 10.62% | \* |
| All other customers | 23.35% | 63.75% |

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*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 (contract liabilities) relates to down payments received from customers in advance of satisfying a performance obligation and is included as Deferred income on the Condensed Consolidated Balance Sheets.

Total contract assets and contract liabilities are as follows:

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| | | |
|:---|:---|:---|
|  | **June 30,** <br>**2025** | **December 31,** <br>**2024** |
| Unbilled receivables | $3265 | $1298 |
| Consideration payable to the customer | (1639) |  |
| Deferred income | (260) | (20) |
| &nbsp;&nbsp;Net contract assets | $1366 | $1278 |

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During the six months ended June 30, 2025 and 2024, the Company recognized $0 and $726 of revenue that was included in the contract liability balance as of December 31, 2024 and 2023.

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#### NOTE 9 – 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 (RSU's), among other awards to employees, non-employee directors, consultants, and service providers. As of June 30, 2025, the Company had available 5,204,262 shares remaining for future awards under its Omnibus Incentive Plans.

*Compensation Expense –* The Company recognized the following compensation costs, net of actual forfeitures, related to restricted stock units ("RSUs") and stock options:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Sales, general, and administrative | $84 | $36 | $108 | $176 |
| Cost of goods sold | 17 |  | 17 |  |
| Research and development | 6 | 20 | 8 | 61 |
| &nbsp;&nbsp;Total equity based compensation | $107 | $56 | $133 | $237 |

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*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, 2025 through June 30, 2025.

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| | | |
|:---|:---|:---|
|  | **Unvested RSUs** | **Unvested RSUs** |
|  | <br>**Number of**<br>**Shares** | **Weighted**<br>**Average**<br>**Grant-date**<br>**Fair Value** |
|  |  | **$ per share** |
| Unvested at January 1, 2025 |  | $— |
| &nbsp;&nbsp;Granted | 6946 | 46.23 |
| Unvested at March 31, 2025 | 6946 | $46.23 |
| Unvested at June 30, 2025 | 6946 | $46.23 |

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As of June 30, 2025, unrecognized compensation expense for RSUs amounted to $284 which is expected to be recognized over a weighted average period of approximately 2.6 years.

*Stock Options –* Our outstanding stock options were valued using the Black-Scholes option-pricing model on the date of the award. A summary of the status of stock options activity since January 1, 2025 and at June 30, 2025 is as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | <br>**Number of**<br>**Options** | <br>**Weighted**<br>**Average**<br>**Exercise**<br>**Price** | **Weighted**<br>**Average**<br>**Remaining**<br>**Contractual**<br>**Term** | <br>**Aggregate**<br>**Intrinsic**<br>**Value** |
|  |  | **$ per share** |  |  |
| Outstanding at January 1, 2025 |  | $— |  | $— |
| Granted | 20822 | 46.23 |  |  |
| Outstanding at March 31, 2025 | 20822 | $46.23 | 10.0<br> years | $— |
| Outstanding at June 30, 2025 | 20822 | $46.23 | 9.7<br> years | $— |
| Exercisable at June 30, 2025 |  | $— | —<br> years | $— |

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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.

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As of June 30, 2025, unrecognized compensation expense for stock options amounted to $743 which is expected to be recognized over a weighted average period of approximately 2.6 years.

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

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| | |
|:---|:---|
|  | **2025** |
| Grant date fair value | $40.32  |
| Risk-free interest rate <sup>(1)</sup> | 4.07% |
| Expected dividend yield <sup>(2)</sup> | —% |
| Expected volatility <sup>(3)</sup> | 114.32% |
| Expected term of stock options <sup>(4)</sup> | 6.44<br> years |
| <sup>(1)</sup> 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. | <sup>(1)</sup> 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. |
| <sup>(2)</sup> 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. | <sup>(2)</sup> 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. |
| <sup>(3)</sup> The expected volatility is based on historical volatility of the Company's stock. | <sup>(3)</sup> The expected volatility is based on historical volatility of the Company's stock. |
| <sup>(4)</sup> The expected term represents the period of time that options granted are expected to be outstanding based on vesting date and contractual term. | <sup>(4)</sup> The expected term represents the period of time that options granted are expected to be outstanding based on vesting date and contractual term. |

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#### NOTE 10. – CAPITAL RAISES AND WARRANTS FOR COMMON STOCK
The following tables summarize the Company's warrant activity:

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| | |
|:---|:---|
| Warrants outstanding at January 1, 2025 | 1119795 |
| &nbsp;&nbsp;Exercised | (80022) |
| Warrants outstanding at March 31, 2025 | 1039773 |
| &nbsp;&nbsp;Issued | 2112260 |
| &nbsp;&nbsp;Anti-dilution adjustment | 1418677 |
| &nbsp;&nbsp;Exercised | (99243) |
| Warrants outstanding at June 30, 2025 | 4471467 |

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[**Table of Contents**](#TOC)

The following tables summarizes the Company's outstanding warrants as of June 30, 2025:

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| | | | |
|:---|:---|:---|:---|
|  | # of warrants outstanding | Current exercise price <sup>(1)</sup> | Expiration date |
| July 2022 RDO warrants | 1 | $1527660 | July 25, 2027 |
| Senior Secured Credit Facility - JGB | 7 | $637295 | September 3, 2028 |
| July 19, 2023 RDO warrants | 9 | $18.15 | July 20, 2028 |
| October 2023 CMPO warrants | 4 | $18.15 | October 19, 2028 |
| 2023 Inducement warrants | 1 | $18.15 | February 15, 2029 |
| April 2024 RDO Placement Agent warrants | 331 | $18.15 | April 8, 2029 |
| Omnia Pre-Funded Warrants | 371 | $0.00001 | Not applicable |
| Omnia warrants | 148 | $8314.000 | May 1, 2029 |
| September 2024 Reg A+ warrants <sup>(2)</sup> | 29786 | $18.15 | December 6, 2029 |
| September 2024 RDO warrants <sup>(2)</sup> | 27344 | $18.15 | December 6, 2029 |
| September 2024 RDO Placement Agent warrants <sup>(2)</sup> | 881 | $18.15 | December 6, 2029 |
| September 2024 Inducement warrants <sup>(2)</sup> | 36781 | $18.15 | December 6, 2029 |
| September 2024 Inducement Placement Agent warrants <sup>(2)</sup> | 868 | $18.15 | December 6, 2029 |
| October 2024 RDO <sup>(2)</sup> | 82060 | $18.15 | December 6, 2029 |
| October 2024 RDO Placement Agent Warrants <sup>(2)</sup> | 3895 | $18.15 | December 6, 2029 |
| Amended October 2024 PIPE Warrants <sup>(3)</sup> | 2429746 | $17.25 | July 15, 2030 |
| Amended October 2024 PIPE Placement Agent Warrants <sup>(3)</sup> | 141014 | $17.25 | July 15, 2030 |
| April 2025 Inducement Warrants <sup>(3)</sup> | 1718220 | $17.25 | July 15, 2030 |
|  | 4471467 |  |  |
| <sup>(1)</sup> Warrant price adjusted as a result of anti-dilution or ratchet provisions. | <sup>(1)</sup> Warrant price adjusted as a result of anti-dilution or ratchet provisions. | <sup>(1)</sup> Warrant price adjusted as a result of anti-dilution or ratchet provisions. | <sup>(1)</sup> Warrant price adjusted as a result of anti-dilution or ratchet provisions. |
| <sup>(2)</sup> 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) 0.75 (a "Zero Exercise Price Exercise"). A Zero Exercise Price Exercise for the warrants will result in the issuance of three quarters (0.75) shares for no additional consideration. | <sup>(2)</sup> 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) 0.75 (a "Zero Exercise Price Exercise"). A Zero Exercise Price Exercise for the warrants will result in the issuance of three quarters (0.75) shares for no additional consideration. | <sup>(2)</sup> 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) 0.75 (a "Zero Exercise Price Exercise"). A Zero Exercise Price Exercise for the warrants will result in the issuance of three quarters (0.75) shares for no additional consideration. | <sup>(2)</sup> 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) 0.75 (a "Zero Exercise Price Exercise"). A Zero Exercise Price Exercise for the warrants will result in the issuance of three quarters (0.75) shares for no additional consideration. |
| <sup>(3)</sup> 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"). A Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. | <sup>(3)</sup> 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"). A Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. | <sup>(3)</sup> 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"). A Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. | <sup>(3)</sup> 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"). A Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. |

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The incremental value of modifications to warrants as a result of down-round ratchet provisions in outstanding warrants from the issuance of equity in a subsequent financing 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 Statement of Operations and Comprehensive Loss during the three and six months ended June 30, 2024, total deemed dividends were $445 and $4,034.

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*April 2025 Warrant Inducement & Amendment*

On April 29, 2025, the Company commenced a warrant inducement offering with the holders of outstanding warrants to purchase 481,395 shares of common stock (the "Existing Warrants"), which are exercisable for an equal number of shares of common stock at an exercise price of $98.95. 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 $18.15. 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 299,543 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 1,418,677 October 2024 PIPE Warrants and October 2024 PIPE Placement Agent warrants.

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**NOTE 11. – LOSS PER COMMON SHARE**

The following table sets forth the computation of basic and diluted loss per common share for the three and six months ended June 30, 2025 and 2024, respectively. Outstanding warrants, options and RSUs were excluded from the calculation of diluted EPS as the effect was antidilutive to consolidated net loss. 371 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 and six months ended June 30, 2025 and 2024.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
|  | **(in thousands, except for per-share data)** | **(in thousands, except for per-share data)** | **(in thousands, except for per-share data)** | **(in thousands, except for per-share data)** |
| Net loss from continuing operations | $(3296) | $(2214) | $(6571) | $(7664) |
| Net (loss) income from discontinued operations | (111) | 1102 | (1164) | 813 |
| Net loss | (3407) | (1112) | (7735) | (6851) |
| Deemed dividends |  | (445) |  | (4034) |
| Net loss available to common shareholders | $(3407) | $(1557) | $(7735) | $(10885) |
| Basic and diluted loss per common share from continuing operations | $(13.16) | $(843.98) | $(40.25) | $(4244.85) |
| Basic and diluted (loss) income per common share from discontinued operations | (0.45) | 419.87 | (7.13) | 450.46 |
| Basic and diluted loss per common share from deemed dividends |  | (169.61) |  | (2234.43) |
| Basic and diluted loss per common share | $(13.61) | $(593.72) | $(47.38) | $(6028.82) |
| Anti-dilutive shares are as follows as of June 30: |  |  |  |  |
| Warrants (excluding pre-funded) | 4471096 | 1420727 | 4471096 | 1420727 |
| Options | 20822 | 4 | 20822 | 4 |
| Restricted stock units | 6946 | 5 | 6946 | 5 |
|  | 4498864 | 1420736 | 4498864 | 1420736 |

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#### NOTE 12. - COMMITMENTS AND CONTINGENCIES
***License agreements and sponsored research*** *–* The Company has entered into various consulting and license growing agreements (the "Agreements") with various counter parties in connection with the Company's business relating to tobacco. The schedule below summarizes the Company's commitments, both financial and other, associated with each Agreement. Costs incurred under the Agreements are generally recorded as research and development expenses on the Company's Condensed Consolidated Statements of Operations and Comprehensive Loss.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | **Future Commitments** | **Future Commitments** | **Future Commitments** | **Future Commitments** | **Future Commitments** | **Future Commitments** |  |
| **Commitment** | **Counter Party** | **Commitment Type** | **2025** | **2026** | **2027** | **2028** | **2029 & After** | **Total** |  |
| License Agreement | NCSU | Minimum annual royalty | $50 | $50 | $100 | $150 | $3425 | $3775 | (1) |
| License Agreement | NCSU | Contract fee | 250 |  |  |  |  | 250 | (2) |
| Consulting Agreements | Various | Contract fee | 226 | 146 |  |  |  | 372 | (3) |
|  |  |  | $526 | $196 | $100 | $150 | $3425 | $4397 |  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) On November 1, 2023, the Company entered into a license agreement with NCSU for an exclusive sublicensable right and license under specific patent rights and plant variety rights for the field of use in specific licensed territories. Additional milestone fees could be required pending achievement of events pursuant to the agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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.

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***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.

*Shareholder Derivative Cases*

On February 6, 2019, Melvyn Klein, a resident of Nassau County New York, filed a shareholder derivative claim against the Company, the Company's then Chief Executive Officer, Henry Sicignano III, the Company's Chief Financial Officer, John T. Brodfuehrer, and each member of the Company's Board of Directors in the United States District Court for the Eastern District of New York entitled: Melvyn Klein, derivatively on behalf of 22nd Century Group v. Henry Sicignano, III, Richard M. Sanders, Joseph Alexander Dunn, Nora B. Sullivan, James W. Cornell, John T. Brodfuehrer and 22nd Century Group, Inc., Case No. 1:19 cv 00748. Mr. Klein brings this action derivatively alleging that (i) the director defendants supposedly breached their fiduciary duties for allegedly allowing the Company to make false statements; (ii) the director defendants supposedly wasted corporate assets to defend this lawsuit and the other related lawsuits; (iii) the defendants allegedly violated Section 10(b) of the Securities Exchange Act and Rule 10b 5 promulgated thereunder for allegedly approving or allowing false statements regarding the Company to be made; and (iv) the director defendants allegedly violated Section 14(a) of the Securities Exchange Act and Rule 14a 9 promulgated thereunder for allegedly approving or allowing false statements regarding the Company to be made in the Company's proxy statement. Numerous other shareholder derivative cases were subsequently filed and consolidated into the main action.

On March 4, 2025, the parties entered into a Stipulation and Agreement of Settlement to fully resolve all claims, which was preliminarily approved by the Court on April 7, 2025. On July 16, 2025, the Court granted a motion for approval of the settlement and entered an Order and Final Judgment. As part of the settlement, the Company agreed to certain corporate governance reforms as part of the settlement. The settlement also includes an amount of $768 related to plaintiffs' attorney and legal fees that is fully covered and paid by the Company's insurance. Accordingly, the Company has released its accrual for litigation settlement and corresponding indemnification receivable on the Condensed Consolidated Balance Sheets as of June 30, 2025.

*Insurance Litigation*

In November 2022, there was a fire at the Company's Grass Valley manufacturing facility in Oregon, which resulted in a total loss of the facility. The Company submitted an insurance claim with Dorchester Insurance Company, Ltd. ("Dorchester") for casualty loss and business interruption coverage which was acknowledged on November 23, 2022. Dorchester funded $5,000 of casualty loss insurance but has failed to issue any payments in connection with the Company's business interruption claim.

On July 19, 2023, the Company filed a Complaint against Dorchester in the United States District Court for the District of Oregon, Pendleton Division, Case No. 2:23-cv-01057-HL. The Company is seeking full recovery of its business interruption claim under the policy plus additional damages resulting from Dorchester's continued delay in issuing coverage payments. Discovery is complete. The trial date is November 4, 2025.

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*KeyGene Dispute* On April 11, 2024 the Company received a Request for Arbitration from Keygene N.V. ("Keygene") in connection with the Company's termination of various framework collaborative research agreements. The parties fully resolved the matter pursuant to a Settlement Agreement and Mutual Release executed on April 25, 2025.

*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.

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. 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.

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**NOTE 13. 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 Consolidated Statements of Operations and Comprehensive 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 Consolidated Balance Sheets is 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 and six months ended June 30, 2025 and 2024:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Consolidated net revenue | $4083 | $7947 | $10039 | $14416 |
| Less: |  |  |  |  |
| &nbsp;&nbsp;Cost of goods sold | 2739 | 3743 | 5499 | 7812 |
| &nbsp;&nbsp;Excise taxes | 1855 | 3508 | 5536 | 6893 |
| &nbsp;&nbsp;Selling, general and administration | 2119 | 2340 | 3918 | 5224 |
| &nbsp;&nbsp;Research and development | 117 | 149 | 178 | 473 |
| &nbsp;&nbsp;Depreciation and amortization | 234 | 248 | 459 | 514 |
| &nbsp;&nbsp;Other segment items <sup>(1)</sup> | (36) | (328) | 111 | (353) |
| &nbsp;&nbsp;Interest expense | 351 | 501 | 909 | 1517 |
| Segment net loss from continuing operations | $(3296) | $(2214) | $(6571) | $(7664) |
| (1) Other segment items include: other operating expenses, other (income) expense, interest income, and provision for income taxes. | (1) Other segment items include: other operating expenses, other (income) expense, interest income, and provision for income taxes. | (1) Other segment items include: other operating expenses, other (income) expense, interest income, and provision for income taxes. | (1) Other segment items include: other operating expenses, other (income) expense, interest income, and provision for income taxes. | (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:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| &nbsp;&nbsp;Cost of goods sold | $122 | $123 | $243 | $265 |
| &nbsp;&nbsp;Selling, general and administration |  | 21 |  | 42 |
| Total depreciation from continuing operations | $122 | $144 | $243 | $307 |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | **June 30,**  | **June 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| &nbsp;&nbsp;Cost of goods sold | $2 | $2 | $5 | $5 |
| &nbsp;&nbsp;Research and development | 110 | 102 | 211 | 202 |
| Total amortization from continuing operations | $112 | $104 | $216 | $207 |

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*Geographic Area Information*

For the three and six months ended June 30, 2025 and 2024, substantially all third-party sales of product are shipped to customers in the United States. Additionally, as of June 30, 2025 and December 31, 2024, all long-lived assets are physically located or domiciled in the United States.

#### 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. In addition, dollars are in thousands, except per share data or unless otherwise specified.*

*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, 2024, 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.*

*On April 2, 2024, we implemented a 1-for-16 reverse stock split, on December 17, 2024, we implemented a 1-for-135 reverse stock split, and on June 20, 2025, we implemented a 1-for-23 reverse stock split. All historical share and per-share amounts reflected throughout this section have been adjusted to reflect the reverse stock splits. The par value per share of our common stock was not affected.* 

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#### Forward Looking Statements
Except for historical information, all of the statements, expectations, and assumptions contained in this section 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 expectations regarding our debt obligations, (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 and warrants. 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 its both own products and contract manufacturing operations ("CMO"), which consist primarily of branded filtered cigars and conventional cigarettes.

**Financial Overview** 

● Net revenues for the second quarter of 2025 were $4,083, a decrease of 48.6% from $7,947 in the prior year period reflecting shifts in product mix.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Second quarter 2025 cartons sold of 779 compared to 719 in the comparable prior year period.

● Gross profit for the second quarter of 2025 was a loss of $635 compared to a profit of $570 in the prior year period.

● Total operating expenses for the second quarter of 2025 decreased to $2,346 compared to $2,617 in the prior year quarter driven by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Sales, general and administrative expenses decreased to $2,119 compared to $2,360 in the prior year period, primarily driven by lower insurance and legal costs, lower headcount (compensation and benefits), offset by higher strategic consulting expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Research development expenses decreased to $227, compared to $250 in the prior year period, mainly driven by lower headcount (compensation and benefits costs).

● Operating loss from continuing operations for the second quarter 2025 was $2,981, compared to a loss of $2,047 in the prior year period, primarily as a result of decreased revenue and margin from research cigarettes shipped in the prior year period offset by lower operating expenses.

● Net loss from continuing operations in the second quarter of 2025 was $3,296 and basic and diluted loss from continuing operations per common share was $13.16 compared with net loss from continuing operations in the second quarter of 2024 of $2,214, and basic and diluted net loss from continuing operations per common share of $843.98.

● As of June 30, 2025, the Company had $3,083 in cash and cash equivalents.

[**Table of Contents**](#TOC)

**Our Financial Results**

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | |
|  | | | <br>**Change** |
|  | **June 30**<br>**2025** | **June 30**<br>**2024** | $**%** |
| Revenues, net | $4083 | $7947 | (48.6) |
| Cost of goods sold | 2863 | 3869 | (26.0) |
| Excise taxes and fees on products | 1855 | 3508 | (47.1) |
| &nbsp;&nbsp;Gross (loss) profit | (635) | 570 | (211.4) |
| *Gross (loss) profit as a % of revenues, net* | (15.6)% | 7.2% |  |
| Operating expenses: |  |  |  |
| Sales, general and administrative ("SG&A") | 2119 | 2360 | (10.2) |
| *SG&A as a % of revenues, net* | 51.9% | 29.7% |  |
| Research and development ("R&D") | 227 | 250 | (9.2) |
| *R&D as a % of revenues, net* | 5.6% | 3.2% |  |
| Other operating expense, net ("OOE") | - | 7 | NM |
| &nbsp;&nbsp;Total operating expenses | 2346 | 2617 | (10.4) |
| &nbsp;&nbsp;Operating loss from continuing operations | (2981) | (2047) | 45.6 |
| *Operating loss as a % of revenues, net* | (73.0)% | (25.8)% |  |
| Other income (expense): |  |  |  |
| Other income (expense), net | (12) | 339 | (103.5) |
| Interest income, net | 14 | 21 | (33.3) |
| Interest expense | (351) | (501) | (29.9) |
| &nbsp;&nbsp;Total other income (expense), net | (349) | (141) | 147.5 |
| &nbsp;&nbsp;Loss from continuing operations before income taxes | (3330) | (2188) | 52.2 |
| (Benefit) provision for income taxes | (34) | 26 | (230.8) |
| &nbsp;&nbsp;Net loss from continuing operations | $(3296) | $(2214) | 48.9 |
| *Net loss as a % of revenues, net* | (80.7)% | (27.9)% |  |
| Net loss per common share from continuing operations (basic and diluted) | $(13.16) | $(843.98) | (98.4) |
| NM - calculated change not meaningful |  |  |  |

---

[**Table of Contents**](#TOC)

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| | | | |
|:---|:---|:---|:---|
|  | **Six Months Ended**  | **Six Months Ended**  | |
|  | | | <br>**Change** |
|  | **June 30**<br>**2025** | **June 30**<br>**2024** | $**%** |
| Revenues, net | $10039 | $14416 | (30.4) |
| Cost of goods sold | 5747 | 8082 | (28.9) |
| Excise taxes and fees on products | 5536 | 6893 | (19.7) |
| &nbsp;&nbsp;Gross (loss) profit | (1244) | (559) | 122.5 |
| *Gross (loss) profit as a % of revenues, net* | (12.4)% | (3.9)% |  |
| Operating expenses: |  |  |  |
| Sales, general and administrative ("SG&A") | 3918 | 5266 | (25.6) |
| *SG&A as a % of revenues, net* | 39.0% | 36.5% |  |
| Research and development ("R&D") | 390 | 675 | (42.2) |
| *R&D as a % of revenues, net* | 3.9% | 4.7% |  |
| Other operating income, net ("OOE") | - | (19) | NM |
| &nbsp;&nbsp;Total operating expenses | 4308 | 5922 | (27.3) |
| &nbsp;&nbsp;Operating loss from continuing operations | (5552) | (6481) | (14.3) |
| *Operating loss as a % of revenues, net* | (55.3)% | (45.0)% |  |
| Other income (expense): |  |  |  |
| Other income (expense), net | (174) | 339 | (151.3) |
| Interest income, net | 30 | 21 | 42.9 |
| Interest expense | (909) | (1517) | (40.1) |
| &nbsp;&nbsp;Total other income (expense), net | (1053) | (1157) | (9.0) |
| &nbsp;&nbsp;Loss from continuing operations before income taxes | (6605) | (7638) | (13.5) |
| (Benefit) provision for income taxes | (34) | 26 | (230.8) |
| &nbsp;&nbsp;Net loss from continuing operations | (6571) | (7664) | (14.3) |
| *Net loss as a % of revenues, net* | (65.5)% | (53.2)% |  |
| Net loss per common share from continuing operations (basic and diluted) | $(40.25) | $(4244.85) | (99.1) |
| NM - calculated change not meaningful |  |  |  |

---

***Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024***

#### Product line revenue, net

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Three Months Ended**  |
|  | **June 30,**  | **June 30,**  | |
|  | **2025** | **2024** | <br>**Change** |
|  | $**Cartons** | $**Cartons** | $**Cartons** |
| Contract Manufacturing  |  |  |  |
| &nbsp;&nbsp;Cigarettes | 594 | 169 | 425 |
| &nbsp;&nbsp;Filtered Cigars | 172 | 459 | (287) |
| &nbsp;&nbsp;Cigarillos | 14 | 91 | (77) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Contract Manufacturing | 780 | 719 | 61 |
| &nbsp;&nbsp;VLN® | (1) | 0 | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Product Line Revenues | 779 | 719 | 60 |

---

[**Table of Contents**](#TOC)

---

| | | | |
|:---|:---|:---|:---|
|  | **Six Months Ended**  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30,**  | **June 30,**  | |
|  | **2025** | **2024** | <br>**Change** |
|  | $**Cartons** | $**Cartons** | $**Cartons** |
| Contract Manufacturing  |  |  |  |
| &nbsp;&nbsp;Cigarettes | 1025 | 260 | 765 |
| &nbsp;&nbsp;Filtered Cigars | 331 | 995 | (664) |
| &nbsp;&nbsp;Cigarillos | 14 | 91 | (77) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Contract Manufacturing | 1370 | 1346 | 24 |
| &nbsp;&nbsp;VLN® | (3) | 2 | (5) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Product Line Revenues | 1367 | 1348 | 19 |

---

For the second quarter and six months ended June 30, 2025, total product line revenues decreased to $4,083 and $10,039, respectively, compared to the prior year periods.

● For the second quarter of 2025, cigarette volumes increased to 594 cartons reflecting additional CMO cigarette customers, including new export volume, as compared to the prior year period. The decrease in sales dollars is a result of a contractual increase in consideration payable due to the customer effective April 1, 2025. Additionally, in prior year periods under legacy contracts, similar pricing arrangements were recorded within cost of goods sold. During April 2024, the Company also benefitted from a one-time Spectrum® research cigarette order which provided a $889 benefit to the prior year period.

For the six months of 2025, cigarette sales benefitted from new customer contracts with our largest CMO customer effective January 1, 2025, including the initial impact of accounting for revenue accruals recorded as over-time revenue recognition, offset by pricing arrangements recorded as consideration payable to the customer recognized within revenue. In prior year periods under legacy contracts, similar pricing arrangements were recorded within cost of goods sold.

● For the second quarter and six months of 2025, filtered cigars net revenues decreased to $1,319 and $2,422, respectively, from the prior comparable periods, reflecting lower volumes as the Company implemented repricing of customer contracts and shifts its product mix into higher margin branded cigarettes and VLN® cigarettes.

● Cigarillo distribution net revenues for the second quarter and six months of 2025 declined compared to the prior year due to initial stocking orders in April 2024 to be sold through its distributors.

● VLN® cigarette net revenues reflect return accruals for product previously sold that will be exchanged, as initial shipments begin to schedule for the rebranded product and partner VLN® products to be launched in the third quarter of 2025.

[**Table of Contents**](#TOC)

#### Gross (loss) profit

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Six Months Ended**  | **Six Months Ended**  |
|  | **June 30**<br>**2025** | **June 30**<br>**2024** | **June 30**<br>**2025** | **June 30**<br>**2024** |
| Gross (loss) profit | $(635) | $570 | $(1244) | $(559) |
| &nbsp;&nbsp;Percent of Revenues, net | (15.6)% | 7.2% | (12.4)% | (3.9)% |

---

Gross (loss) profit for the second quarter and six months of 2025 declined as compared to the prior year comparable period, primarily driven by the decrease in overall volume, and shift in product mix. Additionally, during April 2024, the Company also benefitted from a one-time Spectrum® research cigarette order which provided an approximate $750 benefit to the prior year period.

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

---

| | | |
|:---|:---|:---|
|  | **Changes From Prior Year** | **Changes From Prior Year** |
|  | **Three Months Ended**  | **Six Months Ended**  |
| Compensation and benefits (a) | $(27) | $(433) |
| Strategic consulting (b) | 175 | (23) |
| Legal (c) | (93) | (393) |
| Insurance (d) | (106) | (370) |
| Other expenses (e)  | (190) | (129) |
| &nbsp;&nbsp;Net decrease in SG&A expenses | $(241) | $(1348) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Compensation and benefits expense decreased for the three and six months ended June 30, 2025 compared to the prior year period due to a reduction of headcount.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Increases of strategic consulting for the three months ended June 30, 2025, compared to the prior year period was due to increased spending related to investor relations and public company expenses.

Decreases of strategic consulting for the six months ended June 30, 2025, compared to the prior year period was due to reduced consulting expenses related to post-market studies offset by increased investor relations and public company expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Legal expenses decreased for the three and six months ended June 30, 2025 compared to 2024 mainly due to an increase in regulatory legal expense in the prior year period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Decreases for the three and six months ended June 30, 2025 compared to the prior years periods were due to lower insurance premiums.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Decreases in other expenses for the three and six month periods ended June 30, 2025 compared to 2024, was driven primarily by decreased sales and marketing expense, depreciation expense, repair and maintenance expense and technology expense.

[**Table of Contents**](#TOC)

#### Research and development ("R&D") expense

---

| | | |
|:---|:---|:---|
|  | **Changes From Prior Year** | **Changes From Prior Year** |
|  | **Three Months Ended**  | **Six Months Ended**  |
| Compensation and benefits (a) | $(50) | $(134) |
| Contract, IP and other expenses (b) | 27 | (151) |
| &nbsp;&nbsp;Net decrease in R&D expenses | $(23) | $(285) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Decreased compensation and benefits for the three and six months ended June 30, 2025 are mainly related to the decrease in headcount in the current year periods compared to the prior year periods.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Increases in Contract, IP and other expenses for the three months period ended June 30, 2025, compared to the prior year period were due to higher amortization expense from our NCSU contract and additional testing costs.

Decreases in Contract, IP and other expenses for the six months ended June 30, 2025 compared to the prior year period relate to decreases from tobacco growing and sponsored research agreements that were not recurring in the current year periods.

*Other income (expense)*

---

| | | |
|:---|:---|:---|
|  | **Changes From Prior Year** | **Changes From Prior Year** |
|  | **Three Months Ended**  | **Six Months Ended**  |
| Other income (expense), net (a) | $(351) | $(513) |
| Interest income, net | (7) | 9 |
| Interest expense (b)  | 150 | 608 |
| &nbsp;&nbsp;Net (decrease) increase in other expense | $(208) | $104 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Other income (expense), net decreased for the three and six months ended June 30, 2025, 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 prior year periods.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Decreases in interest expense was a result of ongoing repayment and elimination of debt obligations on our balance sheet. For the three months ended June 30, 2025 compared to the prior year period, cash interest decreased $102, non-cash interest amortization increased $9 including $129 of extinguishment charges recognized from the Senior Secured Credit Facility (of these totals, interest that was allocated to discontinued operations decreased by $28), and other interest charges of $54, offset by a loss that occurred in the prior year period of $541 as a result of change in fair value of conversion option derivative liability. Additionally, interest expense decreased $301 from the Subordinated Note, which was a $400 loss on extinguished prior to maturity in April 2024.

For the six months ended June 30, 2025 compared to the prior year period, cash interest decreased $202, non-cash interest amortization increased $610 including $129 of extinguishment charges recognized from the Senior Secured Credit Facility (of these totals, interest that was allocated to discontinued operations decreased by $109), and other interest charges of $65, offset by a loss that occurred in the prior year period of $459 as a result of change in fair value of conversion option derivative liability. Additionally, interest expense decreased $1,030 from the Subordinated Note, which was a $400 loss on extinguished prior to maturity in April 2024.

[**Table of Contents**](#TOC)

***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 $6,454 for the six months ended June 30, 2025 and an accumulated deficit of $401,606 as of June 30, 2025. As of June 30, 2025, we had cash and cash equivalents of $3,083 and working capital deficit from continuing operations of ($3,064) (compared to working capital from continuing operations of $1,790 at December 31, 2024). 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.

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 June 30, 2025 and December 31, 2024 are set forth below:

---

| | | |
|:---|:---|:---|
|  | **June 30**<br>**2025** | **December 31**<br>**2024** |
| Cash and cash equivalents | $3083 | $4422 |
| Working capital | $(3064) | $1790 |

---

#### Working Capital
As of June 30, 2025, we had working capital deficit from continuing operations, excluding assets and liabilities held for sale, of approximately ($3,064) compared to working capital of approximately $1,790 at December 31, 2024 a decrease of $4,854. This decrease in working capital was primarily due to an increase in net current liabilities of $6,251 reflecting the reclassification of the convertible senior secured credit facility and the 2024 Omnia warrant liability to current, as the maturity date is within twelve months of the balance sheet date, offset by an increase of $1,397 in net current assets. Cash and cash equivalents decreased by $1,339 and the remaining net current assets increased by $2,736. As a result of the working capital balance, management has taken a number of steps to improve liquidity. Refer below to "Cash demands on operations."

[**Table of Contents**](#TOC)

*Summary of Cash Flows*

---

| | | | |
|:---|:---|:---|:---|
|  | **Six Months Ended**  | **Six Months Ended**  | |
|  | **June 30,**  | **June 30,**  | <br>**Change** |
|  | **2025** | **2024** | **$** |
| Cash provided by (used in): |  |  |  |
| &nbsp;&nbsp;Operating activities | $(6454) | $(6970) | 516 |
| &nbsp;&nbsp;Investing activities | 672 | (49) | 721 |
| &nbsp;&nbsp;Financing activities | 4443 | 6240 | (1797) |
| Net change in cash and cash equivalents | $(1339) | $(779) |  |

---

*Net cash used in operating activities*

Cash used in operating activities decreased $516 from $6,970 in 2024 to $6,454 in 2025. The primary driver for this change was lower net loss of $884, an increase of $1,111 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 $289 for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

*Net cash provided by (used in) investing activities*

Cash provided by investing activities amounted to $672 the six months ended June 30, 2025, as compared to cash used in investing activities of $49 for the six months ended June 30, 2024. The increase in cash provided by investing activities of $721 was the result of an increase of $748 of proceeds from the sale of property, plant and equipment primarily from the sale of Needlerock farms and an increase of cash outflows of $27 related to the acquisitions of patents, trademarks, licenses and property, plant and equipment.

*Net cash (used in) provided by financing activities*

During the six months ended June 30, 2025, cash provided by financing activities decreased by $1,797 from $6,240 in the prior year period to $4,443, resulting from decreases in net proceeds from common stock issuances of $3,913, increases of payments of long-term debt of $768, decreases of proceeds from issuance of notes payable of $233, offset by increases in cash inflows from net proceeds from warrant exercises of $2,830 and a decrease of cash outflows from taxes paid related to net share settlement of RSUs of $1 and a decrease in payments on notes payable of $286.

*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.

In April 2025, we received net proceeds of $5,075 from the inducement and exercise of 76,100 existing warrants for shares of common stock and issuance of 76,100 warrants to purchase common stock. The additional tranche of 184,008 existing warrants for shares of common stock was not exercised and has expired under the terms of the inducement.

As of June 30, 2025, the remaining principal balance under our Senior Secured Credit Facility is $3,790. The Debentures under the Senior Secured Credit Facility allow the Holders to voluntarily convert the Debentures, in whole or in part, into shares of the Company's common stock and the conversion option price in effect is $138.92. During the first quarter of 2025, the Holders converted $3,132 of principal balance in exchange for 22,549 shares of common stock. During the second quarter of 2025, the Company repaid $1,017 of principal balance contractually required with the proceeds of the warrant inducement transaction.

[**Table of Contents**](#TOC)

Additionally, at its option, JGB may require the Company to redeem 2% of the original principal amount of the Debentures, as amended to be no more than 50% or $210 per calendar month through July 2025 and $421 per calendar month thereafter which amount may at the Company's election, subject to certain exceptions, be paid in cash, shares of the Company's common stock, or a combination thereof. JGB did not elect the monthly redemption feature during the three month period ended June 30, 2025. If the redemption feature is elected, as of June 30, 2025, contractual maturities under the senior secured credit Facility for the remainder of 2025 is $2,104, and for 2026 is $1,686.

*Outstanding Warrants*

As of August 11, 2025, we had the following warrants outstanding:

---

| | | | |
|:---|:---|:---|:---|
|  | # of warrants outstanding | Current exercise price <sup>(1)</sup> | Expiration date |
| July 2022 RDO warrants | 1 | $1527660 | July 25, 2027 |
| Senior Secured Credit Facility - JGB | 7 | $637295 | September 3, 2028 |
| July 19, 2023 RDO warrants | 9 | $18.15 | July 20, 2028 |
| October 2023 CMPO warrants | 4 | $18.15 | October 19, 2028 |
| 2023 Inducement warrants | 1 | $18.15 | February 15, 2029 |
| April 2024 RDO Placement Agent warrants | 331 | $18.15 | April 8, 2029 |
| Omnia Pre-Funded Warrants | 371 | $0.00001 | Not applicable |
| Omnia warrants | 148 | $8314.000 | May 1, 2029 |
| September 2024 Reg A+ warrants <sup>(2)</sup> | 18834 | $18.15 | December 6, 2029 |
| September 2024 RDO warrants <sup>(2)</sup> | 7741 | $18.15 | December 6, 2029 |
| September 2024 RDO Placement Agent warrants <sup>(2)</sup> | 881 | $18.15 | December 6, 2029 |
| September 2024 Inducement warrants <sup>(2)</sup> | 15391 | $18.15 | December 6, 2029 |
| September 2024 Inducement Placement Agent warrants <sup>(2)</sup> | 868 | $18.15 | December 6, 2029 |
| October 2024 RDO <sup>(2)</sup> | 42578 | $18.15 | December 6, 2029 |
| October 2024 RDO Placement Agent Warrants <sup>(2)</sup> | 3895 | $18.15 | December 6, 2029 |
| Amended October 2024 PIPE Warrants <sup>(3)</sup> | 2080914 | $17.25 | July 15, 2030 |
| Amended October 2024 PIPE Placement Agent Warrants <sup>(3)</sup> | 108696 | $17.25 | July 15, 2030 |
| April 2025 Inducement Warrants <sup>(3)</sup> | 599345 | $17.25 | July 15, 2030 |
|  | 2880015 |  |  |
| <sup>(1)</sup> Warrant price adjusted as a result of anti-dilution or ratchet provisions. | <sup>(1)</sup> Warrant price adjusted as a result of anti-dilution or ratchet provisions. | <sup>(1)</sup> Warrant price adjusted as a result of anti-dilution or ratchet provisions. | <sup>(1)</sup> Warrant price adjusted as a result of anti-dilution or ratchet provisions. |
| <sup>(2)</sup> 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) 0.75 (a "Zero Exercise Price Exercise"). A Zero Exercise Price Exercise for the warrants will result in the issuance of three quarters (0.75) shares for no additional consideration. | <sup>(2)</sup> 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) 0.75 (a "Zero Exercise Price Exercise"). A Zero Exercise Price Exercise for the warrants will result in the issuance of three quarters (0.75) shares for no additional consideration. | <sup>(2)</sup> 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) 0.75 (a "Zero Exercise Price Exercise"). A Zero Exercise Price Exercise for the warrants will result in the issuance of three quarters (0.75) shares for no additional consideration. | <sup>(2)</sup> 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) 0.75 (a "Zero Exercise Price Exercise"). A Zero Exercise Price Exercise for the warrants will result in the issuance of three quarters (0.75) shares for no additional consideration. |
| <sup>(3)</sup> 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"). A Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. | <sup>(3)</sup> 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"). A Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. | <sup>(3)</sup> 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"). A Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. | <sup>(3)</sup> 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"). A Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. |

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#### 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, 2024.

**Impact of Recently Issued Accounting Standards**

In the normal course of business, we evaluate all new accounting pronouncements issued by the FASB, SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Condensed Consolidated Financial Statements. See Note 1 "Nature of Business and Summary of Significant Accounting Policies" of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information about these recently issued accounting standards and their potential impact on our financial condition or results of operations.

#### 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, 2024.

#### Item 4. Controls and Procedures
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(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.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Changes in Internal Control over Financial Reporting:** 

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2025 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.

#### 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, 2024, as filed with the SEC on March 20, 2025.

#### Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None

#### Item 3. Default Upon Senior Securities.
None

#### Item 4. Mine Safety Disclosures
None

#### Item 5. Other Information
During the three months ended June 30, 2025, 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 3.1](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001347858/000164117225014543/formdef14a.htm) | [Form of Certificate of Amendment to Restated Articles of Incorporation (incorporated by reference from Appendix A to the Company's definitive proxy statement filed June 10, 2025)](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001347858/000164117225014543/formdef14a.htm) |
| [Exhibit 3.2](https://www.sec.gov/Archives/edgar/data/0001347858/000164117225015296/ex3-1.htm) | [Certificate of Amendment to Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 from the Company's Form 8-K filed on June 16, 2025)](https://www.sec.gov/Archives/edgar/data/0001347858/000164117225015296/ex3-1.htm) |
| [Exhibit 10.1](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001347858/000164117225014543/formdef14a.htm) | [Amended and Restated 2021 Omnibus Incentive Plan (incorporated by reference from Appendix B to the Company's definitive proxy statement filed June 10, 2025)](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001347858/000164117225014543/formdef14a.htm) |
| [Exhibit 10.2](xxii-20250630xex10d2.htm) | [Master Services Agreement with Murphy Oil USA, Inc. dated June 23, 2025 (filed herewith)](xxii-20250630xex10d2.htm) |
| [Exhibit 31.1](xxii-20250630xex31d1.htm) | [Section 302 Certification - Chief Executive Officer](xxii-20250630xex31d1.htm) |
| [Exhibit 31.2](xxii-20250630xex31d2.htm) | [Section 302 Certification - Chief Financial Officer](xxii-20250630xex31d2.htm) |
| [Exhibit 32.1](xxii-20250630xex32d1.htm) | [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.](xxii-20250630xex32d1.htm) |
| 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)<br>|

---

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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: August 14, 2025 | /s/ Lawrence D. Firestone |
|  | Lawrence D. Firestone |
|  | Chief Executive Officer |
|  | (Principal Executive Officer and Authorized Officer) |
| Date: August 14, 2025 | /s/ Daniel A. Otto |
|  | Daniel A. Otto |
|  | Chief Financial Officer |
|  | (Principal Accounting and Financial Officer) |

---

## Exhibit 10.2

**Exhibit 10.2**

**[REDACTED] = Pursuant to Item 601(b)(10) of Regulation S-K, portions of this exhibit have been omitted as the registrant has determined certain confidential information contained in this document, marked by brackets, is (i) not material and (ii) would be competitively harmful if publicly disclosed.**

**MASTER SERVICES AGREEMENT**

This Master Services Agreement (hereinafter the "Agreement") is made and entered into as of June 19, 2025 (the "Effective Date"), by and between NASCO PRODUCTS, LLC, a Delaware limited liability company, having its principal place of business at 321 Farmington Road, Mocksville, North Carolina 27028 ("Nasco"); 22<sup>ND</sup> CENTURY GROUP, INC., a Nevada Corporation ("22<sup>nd</sup> Group"); 22<sup>nd</sup> CENTURY LIMITED, LLC, a Delaware limited liability company ("22<sup>nd</sup> Limited" and together with 22<sup>nd</sup> Group and Nasco, the "Supplier") and MURPHY OIL USA, INC., a Delaware corporation, having its principal place of business at 200 Peach Street, El Dorado, Arkansas 71730 ("Murphy"). As used herein, the term "party" shall mean either Supplier or Murphy and the term "parties" shall mean Supplier and Murphy.

**RECITALS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.22<sup>nd</sup> Century is the exclusive owner in the United States of America of the PINNACLE<sup>®</sup> trademark as described in <u>Exhibit A</u> (the "Trademark"), and is a licensee of certain predicate tobacco blends for use in tobacco cigarettes and cigarillos, and is permitted to license such blends for re-sale by Murphy (the "Predicates").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.Supplier is the manufacturer of multiple tobacco products including cigarettes, very low nicotine cigarettes, filtered cigars and moist snuff products as set forth on <u>Exhibit B</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.Supplier is a Participating Manufacturer under the MSA and will make all required payments under the MSA for the products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.Supplier is currently developing other tobacco products including premium cut pipe tobacco and heat not burn products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.22<sup>nd</sup> Limited is an affiliate of Supplier and the exclusive owner in the United States of America of the VLN<sup>®</sup> trademark (the "VLN Trademark").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.22<sup>nd</sup> Century is the recipient of (i) a Modified Risk Grant Order (the "MRTP Order") from the FDA dated December 23, 2021 for the VLN<sup>®</sup> King and VLN<sup>®</sup> Menthol King cigarettes (the "VLN Products"), and (ii) a Marketing Granted Order (the "PMTA Order") from the FDA in connection with a Premarket Tobacco Product Application for the VLN Products which authorizes the marketing and introduction of the VLN Products into interstate commerce. The MRTP Order, the PMTA Order and other proprietary technology and information required to manufacture and market the VLN Products are defined as the "VLN Assets").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G.22<sup>nd</sup> Century has distribution networks setup throughout the United States for tobacco products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H.Murphy wishes to engage Supplier as the exclusive supplier in the Territory (as herein defined) of the Products as identified in any addendums attached hereto (such identified products to be the "Products" as used herein), some or all of which bearing the Trademark, and in certain cases license formulas for the Predicates, or the VLN Assets, and

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Supplier wishes to accept such engagement, all subject to the terms and conditions of this Agreement, including the Exhibits hereto <u>and Addendums which will be added for each Product selected by Murphy or new service type selected by Murphy</u>.

NOW, THEREFORE, in consideration of the mutual premises of this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound do hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **DEFINITIONS**

Except as otherwise specifically required by the context, the following terms shall have the respective meanings hereinafter set forth in this Section 1.

"Affiliate" shall mean a person who directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, another person. Solely for purposes of this definition, the terms "owns," "is owned" and "ownership" mean ownership of any equity interest, or the equivalent thereof, of fifty percent (50%) or more, and the term "person" means an individual, partnership, committee, association, corporation or any other organization or group of persons.

"Designated Wholesaler" shall mean those tobacco wholesalers who are authorized by Murphy to purchase the Product from Supplier and are listed on <u>Exhibit C</u>, which list may be amended from time to time by Murphy.

"Field of Use" shall mean physically printed promotional materials, point-of-sale displays, and digital advertisements on Murphy's "Murphy Drive Rewards" app, or any affiliate's app, for Products that are for Murphy's, or any affiliate's, retail sale of the Product in the Territory and that are in full compliance with all applicable government laws, rules, requirements and regulations, including without limitation the MSA and any health warning display requirements and plan approvals.

"MSA" shall mean the Master Settlement Agreement dated November 23, 1998.

"Territory" shall mean the geographic territory comprised of the United States of America (including its territories and possessions).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **APPOINTMENT; EXCLUSIVITY**. During the Term of this Agreement, Murphy appoints Supplier as its exclusive supplier of the Products in the Territory, for distribution and sale in the Territory.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **SUPPLY OF THE PRODUCT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1.<u>General.</u> During the Term of this Agreement, Supplier shall be the exclusive supplier of the Products, which Products shall be manufactured to specifications according to each applicable Addendum, in a quantity, at a price, and over a period of time as

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hereinafter set forth.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.<u>Quality Product.</u> Supplier shall diligently and continuously use its reasonable best efforts to maintain the quality and specifications of each of the Product varieties set forth on applicable Addendums in conformity with the samples previously approved by Murphy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3.<u>Supply.</u> Subject to the terms and conditions hereof, Supplier shall continuously supply the Products during the Term of this Agreement and shall make them available for purchase by the Designated Wholesalers, except to the extent that Supplier is prohibited from doing so by any law, rule, regulation, court order or notice from or other action taken by any governmental agency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **PRODUCT DESCRIPTION AND QUALITY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.<u>Product Types</u>. The Product shall be the varieties of tobacco Products more specifically described in Addendums to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.<u>Product Specifications</u>. The Product shall at all times be supplied by Supplier in accordance with the specifications mutually agreed by the parties and as set forth on an addendum specific to each Product type. These specifications have been furnished in sufficient detail to permit the application of Murphy's quality control program to verify that the Product is of a consistent quality. Supplier shall provide Murphy with copies of all filings made in connection with MSA registration, if applicable, or any other governmental reports made in connection with or related to the Products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.<u>Product Packaging</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Supplier shall be responsible for ensuring that the Product's packaging and labeling shall be in conformity with all applicable trademark, copyright and similar intellectual property laws and regulations in effect in the Territory.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Supplier shall be responsible for ensuring that the Product's packaging and labeling shall be in conformity with all other applicable laws and regulations in effect in the Territory, including, but not limited to the Family Smoking Prevention and Tobacco Control Act of 2009. Supplier shall cause the Product to be packaged and labeled in accordance with Murphy's written instructions with respect thereto and the specifications for each variety of the Product set forth on each applicable addendum, and such other additional specifications as shall be mutually agreed by Supplier and Murphy in writing from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **PINNACLE TRADEMARK LICENSE**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.<u>Use of Pinnacle</u><sup>®</sup> <u>Trademark</u>; During the Term of this Agreement and subject to the terms and conditions set forth in this Agreement, Supplier hereby grants Murphy a non-exclusive and non-transferable license to use the Trademark in the Field of Use and Territory in connection with the sale of the Products.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.<u>Limitations</u>. Murphy may not sublicense the rights provided in Section 5.1 to any third party. Murphy shall not use the Trademark outside the Field of Use. Murphy shall not use the Trademark outside the Territory. Murphy shall not use the Trademark in connection with goods or services other than Products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.<u>General Quality Standards</u>. The quality of all promotional or advertising materials related to Products and/or the Trademark shall be of a high standard in the industry and shall be in full conformity of all applicable laws, rules, requirements and regulations. Murphy agrees to strictly comply, and maintain compliance, with use requirements and rights of approval of Supplier, made known to Murphy prior to signing of this Agreement, in respect to any and all promotional or advertising materials related to Products and/or the Trademark and any and all usage of the Trademark. Supplier reserves the right to develop standards, use requirements and rights of approval in respect to any and all promotional or advertising materials related to Products and/or the Trademark and any and all usage of the Trademark.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4.<u>Approval</u>. All use of the Trademark by Murphy must be pre-approved in writing by Supplier. In addition, any and all use of the Trademark by Murphy shall be subject to Supplier's trademark usage policy once developed, and as may be adopted or amended from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5.<u>Regulatory Requirements</u>. All use of the Trademark by Murphy must be in full accordance with any and all health warning display requirements and plan approvals now or hereafter required or in effect in the Territory, including without limitation an approved rotational health warning plan and any and all requirements of the MSA as communicated to Murphy by Supplier.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6.<u>Maintaining Goodwill</u>. Murphy agrees that Murphy shall not materially misuse the Trademark, take any action that would bring the Trademark into public disrepute, or take any action that would reasonably be expected to destroy or materially diminish 22<sup>nd</sup> Century's ownership, value or goodwill in the Trademark

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7.<u>Benefit</u>. Murphy's use of the Trademark will inure to the sole benefit of the owner of the Trademark listed on <u>EXHIBIT A</u>. Murphy agrees not to adopt, use or register any corporate name, trade name, domain name, trademark, service mark, certification mark or other designation similar to, or containing in whole or in part, the Trademark. All rights in the Trademark other than those specifically granted herein are reserved by Supplier

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8.<u>Markings</u>. Murphy agrees to place on all material in connection with which the Trademark is used such legends, markings and notices as Supplier may request to protect the interests of Supplier in the Trademark. As set forth above, any use of the Trademark shall be submitted to Supplier for its prior written approval in each instance. Without limiting the foregoing, Murphy shall add the appropriate trademark symbol or designation (i.e., "TM" or "®") as directed by Supplier.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.9.<u>Compliance with Laws</u>. Without limiting any other provision of this Agreement, no party shall undertake, nor cause nor permit to be undertaken, any activity with

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regard to the Trademark which is illegal under or in violation of any laws, decrees, requirements, rules or regulations in effect in the United States and shall comply with all government laws, decrees, rules, requirements and regulations with regard to the Trademark. Each party will comply with all applicable regional, federal, state and local government laws, statutes, ordinances, rules, requirements, norms and regulations regarding the sales, advertisement, marketing and distribution of the Products under this Agreement, including without limitation all sales tax requirements, and shall take all reasonable steps to cause any and all entities associated or connected with the distribution and/or sale of Products, including without limitation the Designated Wholesaler and all Product retailers, to also comply with such laws, rules, requirements, norms and regulations, including without limitation all licensing and excise tax requirements. Supplier shall be responsible for filing any applicable warning rotational plan required by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10.<u>Term</u>. The Trademark license granted in Section 5.1 shall commence and end in accordance with Sections 5.11, 8, 9, and 10.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11.<u>Termination of Trademark Rights</u>. The parties agree that, except as contemplated by Section 10, immediately following the expiration or termination of this Agreement, all rights of Murphy to use the Trademark shall cease and (i) the license to the Trademark granted to Murphy shall immediately terminate, cease and automatically revert to Supplier; (ii) Murphy shall immediately cease using the Trademark and any items making it appear that Murphy is affiliated or associated with Supplier; and (iii) Murphy shall immediately deliver to Supplier or its designee all items, including without limitation all unused promotional and advertising material, within Murphy's possession or control that bear the Trademark. Murphy shall not, during the Term hereof or after the expiration of this Agreement, pursue any trademark, trade name or copyright registration of the Trademark in the Territory without Supplier's prior written consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **OBLIGATIONS OF MURPHY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1During the Term of this Agreement, Murphy:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)(i) shall not purchase or procure Products listed in an attached Addendum from any source other than Supplier for distribution in the Territory, and (ii) shall not authorize and/or permit any other person or entity other than Supplier to make, manufacture, offer and/or sell the Products in the Territory; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)agrees to be bound by all provisions of (i) the MSA with regard to any cigarette Products produced by Supplier and (ii) this Agreement and all Exhibits hereto. However, for the sake of clarity, the Parties do not intend through this agreement to make Murphy USA a Tobacco Product Manufacturer or Participating Manufacturer under the MSA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2The Products shall be sold and distributed only in the Territory unless product is designated to be for export and bears all the markings as required by the Tobacco Tax and Trade Bureau or any other governmental entity having jurisdiction over the Products.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **PRICE AND PRICE CHANGES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.<u>List Price.</u> Except as otherwise provided herein, the List Price which Supplier charges Designated Wholesalers for the Products during each calendar year shall be set forth on the Addendum applicable to each Product. Notwithstanding the foregoing, Supplier may change the List Price at any time for (i) amounts due or to be due for tax increases, MSA/FDA payments, industry wide surcharges any other governmental and/or regulatory amounts which are assessed against Supplier after the date of this Agreement and (ii) increases in raw materials required to manufacture and package the Products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.<u>Invoicing/Payment Terms.</u> All invoices shall be billed by Supplier to the Designated Wholesaler at the List Price in response to purchase orders confirmed and accepted by Supplier from Designated Wholesalers. All invoices are payable in accordance with Supplier's then current standard terms of payment. Any failure to comply with Supplier's then current standard terms shall, with respect to all future shipments, relieve Supplier of its obligation to deliver the Product to a bonded warehouse in response to purchase orders received by Supplier from the noncomplying Designated Wholesalers. Supplier may refuse to sell Products to any Designated Wholesaler that does not comply with the provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3.<u>Shipment and Delivery.</u> All purchase orders shall be submitted directly to Supplier by each Designated Wholesaler and all shipments of the Products shall be direct from Supplier to Designated Wholesalers as agreed to between those parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4.<u>Returns.</u> Each Designated Wholesaler shall have the duty to inspect all Products at the time of pickup of such Products from the bonded warehouse designated by Supplier and if any such Products are determined by the Designated Wholesaler and Supplier to be damaged by Supplier prior to shipment of such Products or by the shipping company after the shipping company picked up the Products from Supplier for delivery to the bonded warehouse selected by Supplier, then the Designated Wholesaler must report such matter in writing to Supplier by the next business day immediately following the pickup of such Products from the bonded warehouse designated by Supplier. If the Designated Wholesaler has reported such damage to Supplier in writing in a timely manner, then Supplier shall accept the return of such damaged Products (limited to warehouse or shipment damages only) which are approved in writing in advance by Supplier. Supplier shall provide a credit to the Designated Wholesaler for all pre-approved returns of damaged Product at the lower of: (i) the invoiced List Price; or (ii) the List Price in effect on the date the returned Product is received by Supplier. All amounts due for damaged Product returns to Supplier that have been paid for in full by the Designated Wholesaler to Supplier shall be reflected in a credit memo to the Designated Wholesaler within thirty (30) days of the date such damaged Product is received by Supplier.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5.<u>Breach of Payment Obligation by Designated Wholesaler.</u> The Parties agree that Supplier shall have the right, at the sole option of Supplier, to refuse to sell the Products to any Designated Wholesaler if such Designated Wholesaler fails to pay Supplier in accordance with the provisions of this Agreement and such failure remains unremedied for ten (10) days after it shall have received written notice thereof from Supplier.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.** **TERM**

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The Term of this Agreement shall commence on the date hereof and shall end on the later of (i) the date which is five (5) years after the Effective Date or (ii) the date on which there are no Addendums currently in effect, provided that the Term will be automatically extended by five (5) year terms on such anniversary and each anniversary thereafter unless written notice is given by either Party at least ninety (90) days period to the end of such applicable anniversary, or (ii) if this Agreement is terminated earlier pursuant to the termination provisions in the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.** **TERMINATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.This Agreement may be terminated, or Supplier may refuse to sell Products to any Designated Wholesaler, as the case may be, prior to the expiration of the Term hereof, if and when any of the following events occur:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) <u>Breach of Agreement by Murphy or Supplier.</u> Supplier or Murphy may terminate this Agreement upon the occurrence of a material breach of any agreement, covenant, representation, warranty or undertaking contained in this Agreement by the other party, if the matter remains unremedied for thirty (30) days after the defaulting party shall have received written notice thereof from the aggrieved party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) <u>Bankruptcy or Cessation of Business.</u> Supplier shall have the right, but not the obligation, to refuse to sell Products to any Designated Wholesaler upon such Designated Wholesaler's cessation of business, election to dissolve, dissolution, insolvency, failure in business, commission of an act of bankruptcy, general assignment for the benefit of creditors, filing of any petition in bankruptcy or for relief under the provisions of the bankruptcy laws, or in the event of non-payment in full in a timely manner of any amounts owed to Supplier by any such Designated Wholesaler. Supplier also shall have the right, but not the obligation, to terminate this Agreement in the event of Murphy's material cessation from the sale of cigarettes or tobacco products, complete cessation of business, election to dissolve, dissolution, insolvency, failure in business, commission of an act of bankruptcy, general assignment for the benefit of creditors, filing of any petition in bankruptcy or for relief under the provisions of the bankruptcy laws, or in the event of non-payment of any amounts owed to Supplier by Murphy, any Affiliate of Murphy and/or any Designated Wholesaler; provided, however, that Murphy shall not be deemed to be in breach of this Section 9.1 in the event Murphy elects to dissolve or actually dissolves after Murphy has completed any assignment of this Agreement as permitted under Section 20. Murphy also shall have the right, but not the obligation, to immediately terminate this Agreement upon written notice in the event of Supplier's cessation of business, election to dissolve, dissolution, insolvency, failure in business, commission of an act of bankruptcy, general assignment for the benefit of creditors, filing of any petition in bankruptcy or for relief under the provisions of the bankruptcy laws, violation or likely violation of law (to be determined in Murphy's

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sole discretion), or where the sale of the Product becomes restricted or otherwise unlawful. If Murphy terminates the Agreement for Breach as described in Section 9, Supplier shall refund to Murphy any amounts paid for products that relate to the subject of the breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.<u>Termination for Convenience</u>. Murphy may terminate this Agreement for any reason upon written notice to Supplier. If Murphy gives notice of termination under Subsection 9.2. and Supplier is not in breach of this Agreement, Murphy will pay all authorized fees and expenses due hereunder as of the effective date of termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.<u>Addendums</u>. All Addendums to this Agreement shall terminate concurrently with the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.** **RIGHTS AND OBLIGATIONS ON TERMINATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1.<u>Intentionally Omitted</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2.<u>Reversion of Right.</u> Except as contemplated by Section 10.3 hereof, immediately upon the effective date of termination of this Agreement, for whatever reason, all the trademark rights granted to Murphy hereunder shall cease and revert to Supplier. Murphy will be deemed to have automatically assigned to Supplier, all trademark rights, goodwill, and other rights in or to the Trademark. Murphy shall upon the termination of this Agreement execute any instruments reasonably requested by Supplier to accomplish or confirm the foregoing. Any such assignment shall be only for the consideration of the mutual covenants and considerations of this Agreement. In addition, upon and after such termination of this Agreement for whatever reason, Murphy will forthwith refrain from further use of the Trademark or of any name which is confusingly similar to the Trademark.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3.<u>Windup Obligations.</u> During the six-month period immediately following the effective date of the termination of this Agreement, or such additional period to which Supplier and Murphy shall agree in writing (hereinafter the "Windup Period"), the parties shall observe the following with regard to Products intended for sale at Murphy retail locations (and excluding Products intended for sale through non-Murphy retail locations pursuant to a Sales Agent addendum or otherwise):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Supplier shall not be required to perform any further production of the Product, except that Supplier agrees that it shall turn all work-in process into finished Product and to complete any unfinished production runs as long as Supplier receives payment guarantees in advance from all applicable Designated Wholesalers or Murphy for all such Products that will result from such work-in-progress and unfinished production runs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)As soon as practicable following the effective date of termination, Supplier shall provide to Murphy a schedule of all Product in its inventory (whether on hand or in transit) broken down by variety, which inventory schedule shall include all Product to be finished pursuant to Section 10.3(a) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Murphy shall use its best efforts during the Windup Period to cause the

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Designated Wholesalers to purchase, at the then current List Price, all inventory of the Product set forth on Supplier's aforementioned inventory schedule, with Supplier having no obligation to complete any work-in-progress and/or finish and unfinished production runs unless and until Supplier receives payment guarantees in advance from all applicable Designated Wholesalers or Murphy for all such Products that will result from such work-in-progress and unfinished production runs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)All purchases of the Product during the Windup Period shall be effected in accordance with the applicable provisions of this Agreement, including, without limitation, Section 7 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.<u>Payments by Murphy.</u> Within thirty (30) days following Murphy's receipt of Supplier's invoice, which invoice shall be sent following the end of the Windup Period, Murphy shall (except as set forth below) pay Supplier for the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All inventory of Product at the then current List Price less all inventory sold during the Windup Period (and following receipt of payment Supplier shall ship all such Product in accordance with Murphy's written instructions); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any remaining raw materials or packaging materials unique to the Product at Supplier's out of pocket cost, as the case may be, (and following receipt of payment Supplier shall ship, or cause to be shipped, all such materials to Murphy).

If Murphy fails to pay Supplier's invoice within such thirty (30) day period, then as Supplier's sole remedy, Supplier shall be entitled to sell and dispose of all such inventory and packaging materials to any person at such prices and terms as Supplier in its sole discretion shall determine, with Murphy having the continued right to use the Trademark during such period of time until all such items with any Trademark have been sold by Murphy or the Designated Wholesalers under this provision of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.** **INSURANCE**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.<u>Scope and Limits</u>. Supplier will procure and maintain insurance coverage according to the requirements detailed below throughout the term of this Agreement. Supplier will procure all insurance coverage from insurance carriers with a rating of at least A-VIII in the most recent edition of the A.M. Best Key Rating Guide (Property & Casualty) or its successor publication. For general liability coverage, Supplier will maintain coverage according to the requirements detailed below throughout the term of this Agreement and for the five-year period following its completion of the services:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Workers' compensation insurance in accordance with applicable state and federal laws and employers' liability insurance that covers all employees involved with the delivery or Product under this Agreement with limits of at least $1,000,000, endorsed to provide coverage for an alternate employer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Commercial general liability insurance with limits of at least $1,000,000 for

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each occurrence for bodily injury or property damage and with annual general aggregates of at least $2,000,000 for products-completed operations and for general aggregate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Comprehensive automobile liability insurance, including contractual liability to cover all owned, hired, and non-owned automobiles, with a combined single limit of not less than $1,000,000 for each occurrence for bodily injury or property damage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Excess or umbrella liability insurance with a combined single limit of not less than $10,000,000 for each occurrence and $10,000,000 in the aggregate for bodily injury or property damage covering excess of the required employers' liability, commercial general liability, and comprehensive automobile liability insurance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)Upon request, Supplier shall provide Murphy with certificates of insurance that establish that Supplier has insurance coverage that satisfies the requirements of this agreement. Supplier's insurance coverage required under this agreement will: (i) for commercial general liability and upon request, name Murphy as an additional insured and (ii) for commercial general liability, waive all rights of subrogation against Murphy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.** **INDEMNIFICATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1.<u>Supplier</u>. Supplier will indemnify Murphy, its directors, officers, agents, employees, and Affiliates and hold them harmless from and against any and all claims, actions, damages, liability, and expense, including reasonable attorney's fees, in connection with: (i) loss of life, personal injury, or damage to any property arising from or in connection with this Agreement (including the services and Products provided under this Agreement), occasioned wholly or in part by any act or omission of Supplier, or its agents, employees, subcontractors, or Supplier; (ii) a violation or alleged violation of law by Supplier, its agents, employees, subcontractors; (iii) any breach of warranty or failure to satisfy any obligation by Supplier set forth in this Agreement; (iv) the unauthorized use of or infringement of any trademark, service mark, copyright, patent, process, method, device, or other proprietary right arising from Murphy's use of any of the services or Products provided under this Agreement; and (v) any claims alleging design defect or other products liability claim not arising from the actions of Murphy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2.<u>Murphy</u>. Murphy will indemnify Supplier, its directors, officers, agents, employees, and Affiliates and hold them harmless from and against any and all claims, actions, damages, liability, and expense, including reasonable attorney's fees, in connection with: (i) loss of life, personal injury, or damage to any property arising from or in connection with this Agreement occasioned wholly or in part by any act or omission of Murphy, or its agents, employees, or subcontractors; (ii) a violation or alleged violation of law by Murphy, its agents, employees, or subcontractors; and (iii) any breach of warranty or failure to satisfy any obligation by Murphy set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.3.<u>Conditions</u>. Each Party's indemnity obligation under Section 12.1 and 12.2 of this Agreement is conditioned upon: (i) the indemnified Party promptly notifying the indemnifying Party in writing of any actual or threatened claim; (ii) the indemnified Party giving the indemnifying Party sole control of the defense of any actual or threatened claim and any related settlement negotiations; and (iii) the indemnified Party cooperating and, at the indemnifying

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Party's request and expense, assisting in the defense of any actual or threatened claim. The indemnifying Party will not enter into a settlement agreement that obligates in any way the indemnified Party or that has a material adverse effect on the indemnified Party without the indemnified Party's express written consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.** **MANUFACTURER WARRANTY**

Supplier expressly represents and warrants to Murphy that the Product when picked up by the transportation company for delivery to the designated bonded warehouses selected by Supplier in the Territory, shall (1) be of merchantable quality and free from imperfection and defects in and of the Product, (2) shall fully comply at all times with the Product specifications described in Section 4.2, and (3) comply with all laws, rules, and regulations relating to the sale of the products. Claims for Product not complying with the above warranty must be submitted by Murphy within two (2) months from the date of receipt at a Murphy retail location of the non-complying Product. At Murphy's option, Supplier will promptly replace non-complying Products or issue a refund for such non-complying Products. Except as provided in this Agreement. SUPPLIER MAKES NO ADDITIONAL REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED BY LAW, AND ANY SUCH REPRESENTATIONS OR WARRANTIES ARE HEREWITH EXCLUDED AND DISCLAIMED. The aforementioned representations and warranties shall apply only within the Territory.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14.** **COMPLIANCE WITH REGULATIONS, CONSENT ORDERS**

Supplier and Murphy do expressly represent and warrant that in connection with the storage, shipment, packaging, labeling, marketing, advertising, promotion and sale of the Product, it shall comply with all applicable U.S. municipal, county, state and federal laws, rules, regulations and applicable taxes in the Territory, and with any applicable consent orders and voluntary programs of the U.S. cigarette industry, including, but not limited to the FDCA. Supplier shall be responsible for the payments under the MSA with respect to the Products and shall pay the taxes specified in subsection II (2) of the MSA on the Products. Supplier shall be responsible for full compliance with FDCA and other applicable statutes and regulations with respect to manufacturing, reporting, labeling, and packaging of the Products. Supplier shall indemnify, defend and hold Murphy harmless from and against any and all fines, costs penalties and suits arising out of Supplier's breach of this paragraph 14; provided, however, that Supplier shall not be obligated to indemnify, defend and/or hold Murphy harmless from and against any and all fines, costs penalties and suits arising out of Supplier's breach of this paragraph 14 if such breach by Supplier was caused by the delay or failure of Murphy and/or any third-party, including but not limited to any Designated Wholesaler, to provide Supplier with any required information and/or payments. Murphy agrees to use its best efforts to encourage each Designated Wholesaler to promptly provide Supplier with all information requested by Supplier to enable Supplier to fully and timely comply with all provisions of the MSA and any and all MSA related compliance statutes and regulations in effect within the Territory.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15.** **CONFIDENTIAL AND PROPRIETARY INFORMATION**

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Each party agrees that information concerning the other party's business (including that of all Affiliates) is Confidential and Proprietary Information and each party agrees that it will not permit the duplication or disclosure of any Confidential and Proprietary Information to any person (other than employees or contractors of the other party who must have such information for the performance of its obligations hereunder) unless such duplication, use or disclosure is specifically authorized by the other party in writing. The term "Confidential and Proprietary Information" is not meant to include: (i) any information which is in the public domain other than as a consequence of the receiving party's breach; (ii) information that was known or otherwise available to the receiving party prior to the disclosure by the disclosing party; (iii) information disclosed by a third party to the receiving party after the disclosure by disclosing party, if such third party's disclosure does not violate any obligation of the third party to disclosing party; or (iv) information which disclosing party authorizes in writing for release. Notwithstanding the foregoing, either party may disclose Confidential and Proprietary Information as may be required by compulsory order of a court, or other administrative body or governmental body having appropriate jurisdiction. Neither Party will use any name, trade name, trademark, or other designation of the other Party in advertising, publicity, promotional, or marketing materials, or any other activity, including announcements about this Agreement, without the express written consent of the other Party in each instance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16.** **CHANGE OF CONTROL**.

In the event of a Change of Control of Murphy, including any merger, acquisition, sale, or transfer of a controlling interest in Murphy or its assets (the "Change of Control Event"), Murphy shall provide Supplier with prior written notice of the Change of Control Event no less than thirty (30) days before its effective date. Upon such Change of Control Event, Murphy shall ensure that this Agreement, and all obligations and rights herein, are assigned to and assumed by the acquiring party or successor entity as a condition of the transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**17.** **INDEPENDENT CONTRACTOR**

For all purposes under this Agreement, Supplier, and Murphy shall be and act as independent contractors, and under no circumstances shall the contractual relationship between the parties be deemed or construed as one of agency, partnership, joint venture, employment or otherwise than the relationship of independent contractors as stated above, nor does either party have any authority whatsoever or in any event to act on behalf of or bind or commit the other in any manner whatsoever, except as hereinbefore provided. Each party hereto shall be solely responsible for the conduct of its employees in connection with such employees' performance of each party's obligations hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18.** **FORCE MAJEURE**

No party hereto shall be liable for any failure to comply with any of the terms or provisions of this Agreement to the extent any such failure is caused directly or indirectly by Acts of God, fire, flood, strike, union or other labor problems, war (whether or not declared), riots, insurrection, sabotage, changes in applicable law, government restrictions imposed subsequent to the date hereof or other acts or causes beyond the control of or without fault on the part of such party; provided, however, that the provisions of this Section 18 shall not apply to the

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payment of money in a timely manner. Upon the occurrence of any event of the type referred to in this Section 18, the party affected thereby shall give prompt written notice thereof to the other party hereto, together with a description of such event and the duration for which such party expects its ability to comply with the provisions of this Agreement to be affected thereby. The party affected shall thereafter devote its reasonable best efforts to remedy, to the extent possible, the conditions (except in the case of strikes or other labor problems) giving rise to such event and to resume performance of its obligations hereunder as promptly as possible.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19.** **SURVIVING PROVISIONS**

The provisions of Sections 5.4, 10, 11, 12, 13, 14, 15, 19 and 21 hereof shall survive the expiration or termination of this Agreement by either party for any reason.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**20.** **ASSIGNMENT**

This Agreement and the rights granted hereunder are personal to the respective parties and shall not in any manner whatsoever be assigned, sublicensed (except in the case of Supplier, which may assign any and all of its rights and obligations under this Agreement to any other Affiliate of Supplier that is qualified to manufacture the Products), subcontracted, or divided by any party without the prior written consent of the other parties, which consent shall not be unreasonably withheld or delayed; provided, however, that (i) Supplier shall have the right to assign this Agreement to any person or entity that purchases or otherwise acquires all or substantially all of its assets or voting securities without the prior written consent of any other party and (ii) Murphy shall have the right to assign this Agreement to any person or entity that purchases or otherwise acquires all or substantially all of its assets or voting securities without the prior written consent of Supplier. This Agreement and the provisions hereof shall be binding at all times upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns. There are no third-party beneficiaries under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**21.** **MISCELLANEOUS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.1.<u>Notices.</u> Any notice required or desired to be given hereunder for any reason, including but not limited to a notice which relates to the termination of this Agreement, a breach of this Agreement or to a claim for indemnification, in all cases shall be in writing and sent by certified mail, return receipt requested, postage pre-paid, or by personal delivery, facsimile with electronic confirmed receipt, or overnight courier service, addressed to the parties as follows:

**NASCO Products, LLC**

[**REDACTED**]

------

---

| |
|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With a copy to: |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General Counsel |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[**REDACTED**] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**MURPHY** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Murphy Oil USA, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[**REDACTED**] |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With a copy to: |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Murphy Oil USA, Inc. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[**REDACTED**] |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.2.<u>Entire Agreement.</u> This Agreement and the Exhibits and Addendums hereto constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof, superseding any prior written or oral agreements among them. No warranties, representations, understandings, inducements, promises, guarantees, agreements or conditions, express or implied, not expressly contained herein, have been made or shall be enforceable by either party concerning the subject matter hereof or any relationship between the parties. No provision of this Agreement may be changed or modified, in part or in whole, except by written agreement signed by Supplier and Murphy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.3.<u>Governing Law. Venue.</u> This Agreement is made in the State of Delaware, and all matters pertaining to its execution. interpretation and performance shall be governed by the laws of the State of Delaware. without regard to its principles of conflict of law. Supplier irrevocably submits to the personal jurisdiction of the federal and state courts located in or serving the State of Delaware for any judicial actions in connection with this Agreement and waives any objection it may have to either the jurisdiction of or venue in such courts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.4.<u>Severability.</u> The invalidity of any portion of this Agreement shall not affect the validity of the remainder of this Agreement, provided, however, that such invalidity does not frustrate the purposes of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.5.<u>Limitation of Liability</u>. TO THE EXTENT PERMITTED BY LAW, NEITHER PARTY WILL BE LIABLE TO THE OTHER OR ANY THIRD PARTY FOR LOST PROFITS, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, SPECIAL, EXEMPLARY, OR INDIRECT DAMAGES OF ANY KIND, EVEN IF THAT PARTY HAD BEEN ADVISED OF THESE TYPES OF DAMAGES IN ADVANCE OR IF THESE TYPES OF DAMAGES WERE FORESEEABLE. TO THE EXTENT PERMITTED BY LAW, THE TOTAL, CUMULATIVE LIABILITY OF EACH PARTY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE SERVICES PROVIDED UNDER THIS AGREEMENT, WHETHER BASED ON CONTRACT, IN TORT, OR ON ANY OTHER LEGAL OR EQUITABLE

------

THEORY, WILL BE LIMITED TO THE TOTAL AMOUNT PAID BY MURPHY USA DURING THE TERM OF THIS AGREEMENT. THE LIMITATIONS ON AND EXCLUSIONS OF LIABILITY IN SECTION 21.5 OF THIS AGREEMENT WILL NOT APPLY TO DAMAGES THAT ARISE FROM EITHER PARTY'S OBLIGATIONS UNDER SECTIONS 12 AND 15 OF THIS AGREEMENT. THE LIMITATIONS ON AND EXCLUSIONS OF LIABILITY IN SECTION 21.5 OF THIS AGREEMENT ALSO WILL NOT APPLY TO ANY LOSSES COVERED BY THE INSURANCE THAT IS REQUIRED UNDER SECTION 11 OF THIS AGREEMENT OR THAT IS OTHERWISE AVAILABLE TO SUPPLIER.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.6.<u>Counterparts.</u> This Agreement may be executed by the parties hereto in separate counterparts which together shall constitute one and the same instrument.

------

**IN WITNESS WHEREOF,** the parties have caused this Agreement to be executed and do each hereby warrant and represent that their respective signatory whose signature appears below has been and is on the date of this Agreement duly authorized by all necessary and appropriate corporate action to execute this Agreement.

---

| |
|:---|
| **NASCO PRODUCTS, LLC** |
| By:  |
| Name: Scott Marion |
| Title: Manager |
| Date: |
| **22**<sup>ND</sup> **CENTURY GROUP, INC.** |
| By:  |
| Name: Lawrence Firestone |
| Title: Chief Executive Officer |
| Date: |
| **22**<sup>ND</sup> **CENTURY LIMITED, LLC** |
| By:  |
| Name: Lawrence Firestone |
| Title: Manager |
| Date: |
| **MURPHY OIL USA, INC.** |
| By:  |
| Name: |
| Title: |
| Date: |

---

------

**[REDACTED] = Pursuant to Item 601(b)(10) of Regulation S-K, portions of this exhibit have been omitted as the registrant has determined certain confidential information contained in this document, marked by brackets, is (i) not material and (ii) would be competitively harmful if publicly disclosed.**

**Addendum #1 to Master Services Agreement**

**CIGARETTES**

This Addendum #1 to the Master Services Agreement ("Addendum #1") dated June 19, 2025, (the "Effective Date") supplements the Master Services Agreement dated June 19, 2025 (the "Agreement") by and between NASCO PRODUCTS, LLC, a Delaware limited liability company ("Nasco"); 22<sup>ND</sup> CENTURY GROUP, INC., a Nevada corporation ("22<sup>nd</sup> Century"), 22<sup>nd</sup> CENTURY LIMITED, LLC, a Delaware limited liability company ("22<sup>nd</sup> Limited" and together with Nasco and 22<sup>nd</sup> Century, the "Supplier"), MURPHY OIL USA, INC., a Delaware corporation. As used herein, the term "party" shall mean either Supplier or Murphy and the term "parties" shall mean Supplier and Murphy.

**Recitals**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.The Parties wish to modify and supplement the terms of the Agreement as set forth herein. Addendum #1 does not otherwise modify or supersede the provisions of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.Nasco, 22<sup>nd</sup> Century Limited and Murphy previously entered into that certain Supply Agreement dated March 15, 2022 for the manufacture of Pinnacle<sup>®</sup> cigarettes (the "Original Supply Agreement")

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.Murphy wishes to terminate the Original Supply Agreement and engage Supplier as the exclusive manufacturer of the cigarette products as set forth specifically on <u>Exhibit A</u> (the "Cigarette Products") using the Pinnacle<sup>®</sup> Trademark, and certain Predicates licensed by Supplier, subject to the terms of the Agreement and this Addendum #1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.Unless otherwise specified, capitalized terms in this Addendum #1 have the same meaning as defined in the Agreement, and those definitions are incorporated by reference.

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth in this Addendum #1 and the Agreement, the Parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **MASTER SERVICES AGREEMENT**.

The terms of the Agreement, which are incorporated by reference into this Addendum #1 as though set forth in full, remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **TERMINATION OF ORIGINAL SUPPLY AGREEMENT**. The parties hereby mutually consent to terminate the Original Supply Agreement effective as of the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **APPOINTMENT**.

Murphy appoints Supplier as its exclusive supplier of the Cigarette Products in the United States.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **PRODUCTS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Product Types and Specifications</u>. The Cigarette Products subject to this Addendum #1 are set forth on <u>Exhibit A</u> along with the applicable specifications. Each Product shall be manufactured using a Predicate mutually agreed between the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Packaging</u>. Packaging shall include individual packages containing twenty (20) cigarettes, individual cartons containing ten (10) packages and shipping cases containing thirty (30) cartons ("6M Cases"). All artwork and mechanicals necessary to print the packaging labels and cartons for the Cigarette Product shall be approved by Murphy and provided by Murphy to Supplier.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **LIST PRICE.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Initial List Price</u>. Except as otherwise provided herein, the price which Supplier charges Designated Wholesalers for the Cigarette Products during each calendar year (the "List Price") shall be initially set as shown on <u>Exhibit B</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Cost Based Price Increases</u>. At any time after the Effective Date of this Agreement, in the event of any increase in (i) the production costs paid by Supplier for the raw materials used in the manufacturing and licensing of the Cigarette Products (including, but not limited to, tobacco, cigarette components and packaging materials) or (ii) license royalties, taxes, fees, or other governmental and/or regulatory assessments (including but not limited to MSA/FDA payments and FET), Supplier may increase the List Prices effective immediately, provided that Supplier notifies Murphy and/or Murphy's Designated Wholesalers of such increase in writing and documents such actual increases to Murphy and/or Murphy's Designated Wholesalers, upon request ("Cost Based Price Increases").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Market Based Price Increases</u>. In addition to any Cost Based Price Increases, Manufacturer may increase the List Price by up to $**[REDACTED]** per carton per year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **MURPHY REBATE**.

Murphy shall be paid a rebate per carton of Cigarette Products (the "Murphy Rebate") sold to the Designated Wholesalers *for sale in Murphy owned or licensed retail locations only* as set forth on <u>Exhibit B</u>. The Murphy Rebate shall be included in the List Price, and paid to Murphy within **[REDACTED]** days following the end of each calendar month during the Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **TERM**.

The Term of the Addendum #1 shall commence on the Effective Date and end (i) five (5) years from the Effective Date, provided that the Term will be automatically extended by five (5) year terms on such anniversary and each anniversary thereafter unless written notice is given by either Party at least ninety (90) days period to the end of such applicable anniversary, or (ii) if this Agreement is terminated earlier pursuant to the termination provisions in the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.** **REPRESENTATIONS AND WARRANTIES**.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Supplier</u>. Supplier represents and warrants that Predicates provided by Supplier for the manufacturing of the Cigarette Products hold "grandfathered status" and are exempt from premarket review from the Food and Drug Administration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.** **MISCELLANEOUS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Governing Law</u>. This Addendum #1 shall be governed by, and construed in accordance with, the laws of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Counterparts</u>. This Addendum #1 may be executed in any number of counterparts, all of which shall constitute one and the same agreement, and any party hereto may execute this Amendment by signing and delivering one or more counterparts.

[SIGNATURE PAGE FOLLOWS]

------

The Parties have executed this Addendum #1 as of the Effective Date.

---

| |
|:---|
| **NASCO PRODUCTS, LLC** |
| By:  |
| Name: Scott Marion |
| Title: Manager |
| Date: |
| **22**<sup>ND</sup> **CENTURY GROUP, INC.** |
| By:  |
| Name: Lawrence Firestone |
| Title: Chief Executive Officer |
| Date: |
| **22**<sup>ND</sup> **CENTURY LIMITED, LLC** |
| By: |
| Name: Lawrence Firestone |
| Title: Manager |
| Date: |
| **MURPHY OIL USA, INC.** |
| By:  |
| Name: |
| Title: |
| Date: |

---

------

**[REDACTED] = Pursuant to Item 601(b)(10) of Regulation S-K, portions of this exhibit have been omitted as the registrant has determined certain confidential information contained in this document, marked by brackets, is (i) not material and (ii) would be competitively harmful if publicly disclosed.**

**Addendum #2 to Master Services Agreement**

**MOIST SNUFF**

This Addendum #2 to the Master Services Agreement ("Addendum #2") dated June 19, 2025, (the "Effective Date") supplements the Master Service Agreement dated June 19, 2025 (the "Agreement") by and between NASCO PRODUCTS, LLC, a Delaware limited liability company ("Supplier"); 22<sup>ND</sup> CENTURY GROUP, INC., a Nevada corporation ("22<sup>nd</sup> Century") and MURPHY OIL USA, INC., a Delaware ("Murphy" and together with Supplier and 22<sup>nd</sup> Century, the "Parties").

**Recitals**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.**WHEREAS**, the Parties wish to modify and supplement the terms of the Agreement as set forth herein. Addendum #2 does not otherwise modify or supersede the provisions of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.**WHEREAS**, Murphy wishes to engage Supplier as the exclusive supplier of the the moist snuff products set forth on <u>Exhibit A</u> (the "MST Products") using the Pinnacle<sup>®</sup> Trademark.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. **WHEREAS**, Supplier has concurrently engaged a contract manufacturer to manufacture the MST Products bearing the Pinnacle<sup>®</sup> Trademark and using a proprietary formula provided by the contract manufacturer all pursuant to that certain Private Label Manufacturing Agreement dated the same date hereof (the "Contract Manufacturing Agreement").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.Unless otherwise specified, capitalized terms in this Addendum #2 have the same meaning as defined in the Agreement, and those definitions are incorporated by reference.

**NOW, THEREFORE**, in consideration of the mutual promises and agreements set forth in this Addendum #2 and the Agreement, the Parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **MASTER SERVICES AGREEMENT**.

The terms of the Agreement, which are incorporated by reference into this Addendum #2 as though set forth in full, remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **APPOINTMENT**.

Murphy appoints Supplier as its exclusive supplier of the MST Products in the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **PRODUCTS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Product Types and Specifications</u>. The MST Products subject to this Addendum #2 are set forth on <u>Exhibit A</u> along with the applicable specifications.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Specifications</u>. Each MST Product shall be manufactured using confidential design parameters, ingredients, and other specifications ("Product Specifications") on file with Supplier and approved by Murphy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **LIST PRICE.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Initial List Price</u>. Except as otherwise provided herein, the price which Supplier charges Designated Wholesalers for the MST Products during each calendar year (the "List Price") shall be initially set as shown on <u>Exhibit B</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Cost Based Price Increases</u>. At any time after the Effective Date of this Agreement, in the event of any increase in the costs paid by Supplier to the manufacturer, Supplier may increase the List Prices effective immediately, provided that Supplier notifies Murphy of such increase in writing and documents such actual increases to Murphy and/or Murphy's Designated Wholesalers upon request ("Cost Based Price Increases").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Market Based Price Increases</u>. In addition to any Cost Based Price Increases, Manufacturer may increase the List Price by up to $**[REDACTED]** per puck per year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **ORDERING PROCEDURES**<u>.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Forecasts</u>. Murphy shall provide Supplier with six (6) month rolling forecasts on a monthly cadence, solely for MST Products to be sold through Murphy retail outlets, to assist Supplier in scheduling the MST Products for manufacturing. Murphy acknowledges and agrees it shall be responsible for full payment of orders placed by Supplier to the manufacturer which were made in order to meet the forecasts provided by Murphy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Product Obsolescence</u>. Murphy shall make Supplier whole for any returns of MST Products by a Designated Wholesaler regardless of whether the products degrade, expire, or otherwise become unsaleable

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **TERM; TERMINATION**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Term</u>. The Term of the Addendum #2 shall commence on the Effective Date and end (i) five (5) years from the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Termination</u>. This Addendum #2 will automatically terminate if the Contract Manufacturing Agreement is terminated and Supplier is unable to enter into a contract manufacturing agreement with an alternative manufacturer within 120 days.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **MISCELLANEOUS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Governing Law</u>. This Addendum #2 shall be governed by, and construed in accordance with, the laws of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Counterparts</u>. This Addendum #2 may be executed in any number of counterparts, all of which shall constitute one and the same agreement, and any party hereto may execute this Amendment by signing and delivering one or more counterparts.

------

[SIGNATURE PAGE FOLLOWS]

------

The Parties have executed this Addendum #1 as of the Effective Date.

---

| |
|:---|
| **NASCO PRODUCTS, LLC** |
| By:  |
| Name: Scott Marion |
| Title: Manager |
| Date: |
| **22**<sup>ND</sup> **CENTURY GROUP, INC.** |
| By:  |
| Name: Lawrence Firestone |
| Title: Chief Executive Officer |
| Date: |
| **MURPHY OIL USA, INC.** |
| By:  |
| Name: |
| Title: |
| Date: |

---

------

**[REDACTED] = Pursuant to Item 601(b)(10) of Regulation S-K, portions of this exhibit have been omitted as the registrant has determined certain confidential information contained in this document, marked by brackets, is (i) not material and (ii) would be competitively harmful if publicly disclosed.**

**Addendum #3 to Supply Agreement**

**Pinnacle VLN**

This Addendum #3 to the Supply Agreement ("**Addendum**") dated June 19, 2025 (the "**Effective Date**") supplements the Master Services Agreement dated June 19, 2025, as amended (the "**Agreement**") by and between NASCO PRODUCTS, LLC, a Delaware limited liability company ("**Supplier**"); 22<sup>ND</sup> CENTURY GROUP, INC., a Nevada corporation ("**22**<sup>nd</sup> **Century Group**"), 22<sup>nd</sup> CENTURY LIMITED, LLC a North Carolina limited liability company ("**22**<sup>nd</sup> **Century Limited**"), and MURPHY OIL USA, INC., a Delaware corporation ("**Murphy**" and together with Supplier, 22<sup>nd</sup> Century Limited and 22<sup>nd</sup> Century Group (defined below), the "**Parties**").

**Recitals**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.**The Parties wish to modify and supplement the terms of the Agreement as set forth herein. The Addendum does not otherwise modify or supersede the provisions of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.**Unless otherwise specified, capitalized terms in this Addendum have the same meaning as defined in the Agreement, and those definitions are incorporated by reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.**22<sup>nd</sup> Century Group is the recipient of a Modified Risk Grant Order (the "**MRTP Order**") from the FDA dated December 23, 2021 for the VLN® King and VLN® Menthol King cigarettes (the "**VLN Products**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.**22<sup>nd</sup> Century Group is also the recipient of a Marketing Granted Order (the "**PMTA Order**") from the FDA in connection with a Premarket Tobacco Product Application for the VLN Products (previously identified as Moonlight but now authorized under the VLN brand name) which authorizes the marketing and introduction of the VLN Products into interstate commerce.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E.**22<sup>nd</sup> Century Group has ongoing reporting obligations to the FDA required by the PMTA Order and MRTP Order.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F.**22<sup>nd</sup> Century Limited is the owner of the VLN® trademark (together with the MRTP Order, the PMTA Order and other proprietary technology and information required to manufacture and market the VLN Products, the "**VLN Assets**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**G.**22<sup>nd</sup> Century Limited is also the owner of the Pinnacle® trademark, and Murphy has licensed the Pinnacle trademark in connection with the production of Pinnacle® cigarettes by Supplier for Murphy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**H.**Murphy wishes to license the VLN Assets on a non-exclusive basis and engage Supplier as the exclusive manufacturer of a Pinnacle® branded VLN® cigarette based on the VLN Assets and using the Pinnacle® Trademark (the "**Pinnacle VLN Products**") subject to the terms of the Agreement and this Addendum.

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth in this Addendum and the Agreement, the Parties agree as follows:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **SUPPLY AGREEMENT**. The terms of the Agreement, which are incorporated by reference into this Addendum as though set forth in full, remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **APPOINTMENT**. Murphy appoints Supplier as its exclusive supplier of the Pinnacle VLN Products in the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **PINNACLE VLN PRODUCTS**<u>.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Product Styles</u>. The Pinnacle VLN Products subject to this Addendum are set forth on <u>Exhibit A</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Packaging</u>. Packaging shall include individual packages containing twenty (20) cigarettes, individual cartons containing ten (10) packages and shipping cases containing thirty (30) cartons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>Product</u>. For the sake of clarity, the Pinnacle VLN Products shall be considered "Products" pursuant to the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **MANUFACTURER PRICE**. Except as otherwise provided herein, the price which Supplier charges Designated Wholesalers for the Pinnacle VLN Products during each calendar year (the "List Price") shall be initially set as shown on <u>Exhibit B</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Cost Based Price Increases</u>. At any time after the Effective Date of this Agreement, in the event of any increase in (i) the production costs paid by Supplier for the raw materials used in the manufacturing and licensing of the Pinnacle VLN Products (including, but not limited to, tobacco, cigarette components and packaging materials) or (ii) taxes, fees, or other governmental and/or regulatory assessments (including but not limited to MSA/FDA payments and FET), Supplier may increase the List Prices effective immediately, provided that Supplier notifies Murphy and/or Murphy's Designated Wholesalers of such increase in writing and documents such actual increases to Murphy and/or Murphy's Designated Wholesalers ("Cost Based Price Increases").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Market Based Price Increases</u>. In addition to any Cost Based Price Increases, Supplier may increase the List Price by up to $**[REDACTED]** per carton per year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **MARKETING AND ADVERTISING** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Marketing Plan</u>. 22nd Century Group shall propose a marketing plan on an annual basis for the in-store advertising and digital marketing related to the Pinnacle VLN Products, subject to approval by Murphy (the "**Marketing Plan**"). The Parties shall confer periodically throughout each year to discuss mutually agreeable changes to the Marketing Plan.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Funding</u>. The Marketing Plan shall be funded by the amounts set forth in <u>Exhibit B</u> (the "**Marketing Support**"). Any portion of the Marketing Support not spent shall be retained by 22nd Century Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **LICENSE OF VLN ASSETS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Grant of License</u>. Subject to the terms and conditions of this Agreement, 22nd Century Group hereby grants to Murphy a non-exclusive, non-transferable, non-sublicenseable royalty-free license to use the VLN Assets, solely for the purpose of marketing and selling the Pinnacle VLN Products within the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Licensed Rights</u>. The license granted herein includes the following rights:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. <u>VLN® Trademark</u>. The right to use the VLN® trademark in connection with the Pinnacle VLN Products, subject to the conditions set forth in Section 6.c. (Trademark Usage Requirements).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. <u>Other VLN Assets</u>. The right to utilize any other proprietary technology, know-how, data, and information included in the VLN Assets that is reasonably necessary to market and sell the Pinnacle VLN Products in compliance with applicable regulatory requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. <u>Trademark Usage Requirements</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Murphy shall comply with all quality control standards, branding guidelines, and marketing requirements provided by 22nd Century Group in connection with the VLN® trademark.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Murphy shall not modify or alter the VLN® trademark or use it in a manner inconsistent with the MRTP Order, PMTA Order, or this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. All uses of the VLN® trademark by Murphy shall inure to the benefit of 22nd Century Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. <u>Ownership and Reservation of Rights</u>. Murphy acknowledges that 22nd Century Group retains all right, title, and interest in and to the VLN Assets, including the VLN® trademark, and that nothing in this Agreement shall be construed as transferring ownership of the VLN Assets to Murphy. 22nd Century Group reserves the right to grant additional licenses to the VLN Assets to third parties at its sole discretion, including within the same territories in which Murphy operates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. <u>Restrictions on Use</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Murphy shall not use the VLN Assets for any purpose other than as expressly permitted under this Agreement.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Murphy shall not sublicense, assign, or otherwise transfer any rights granted under this Section without the prior written consent of 22nd Century Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. Murphy shall not reverse-engineer, decompile, or otherwise attempt to replicate or derive the proprietary blend, formulations, or technology associated with the VLN Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. <u>Termination of License</u>. The license granted herein shall automatically terminate upon the termination or expiration of this Addendum. Upon termination, Murphy shall immediately cease all use of the VLN Assets, including the VLN® trademark, and shall return or destroy all materials and information related to the VLN Assets as directed by 22nd Century Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. <u>Regulatory Compliance</u>. Murphy acknowledges that its use of the VLN Assets is subject to compliance with all applicable laws, regulations, and regulatory orders, including the PMTA Order and MRTP Order. Murphy shall cooperate with 22nd Century Group in providing any data, reports, or information necessary for regulatory filings or compliance related to the VLN Assets including but limited to reporting information set forth in <u>Exhibit C</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **TERM**. The Term of the Addendum shall commence on the Effective Date and end five (5) years from the Effective Date, provided that the Term will be automatically extended by five (5) year terms on such anniversary and each anniversary thereafter unless written notice is given by either Party at least ninety (90) days period to the end of such applicable anniversary, or (ii) if this Agreement is terminated earlier pursuant to the termination provisions in the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.** **CUSTOMIZATION COSTS**. Any costs incurred to modify the specification of the Pinnacle VLN Products pursuant to a request from Murphy shall be borne by Murphy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.** **[INTENTIONALLY OMITTED]**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.** **MURPHY COVENANTS AND OTHER AGREEMENTS**. Murphy agrees to comply with the rules and reporting obligations as they relate to the marketing and sale of the Pinnacle VLN Products under the PMTA Order, MRTP Order any renewal applications as more particularly described on <u>Exhibit C</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.** **REPRESENTATIONS AND WARRANTIES.** Each Party represents and warrants to the others as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Authority and Capacity</u>. Each party represents and warrants that it has full power and authority to enter into this Addendum #3 and to carry out its obligations hereunder. The execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate or organizational action of such party.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Corporate Ownership of Assets</u>. Each party represents and warrants that it has good, valid, and marketable title to, or a valid license or right to use, all assets, intellectual property, technology, facilities, and equipment necessary to perform its obligations under this Addendum, free and clear of any liens, claims, or encumbrances that would impair its ability to perform. Each party further represents and warrants that the execution, delivery, and performance of this Addendum do not and will not violate or result in the breach of any agreement, obligation, or restriction related to such assets. In the case of intellectual property, each party represents and warrants that it has all necessary rights, registrations, or approvals required for the use, licensing, and commercialization of such assets in accordance with this Addendum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. <u>Compliance with Laws</u>. Each Party represents and warrants that it shall comply with all applicable federal, state, and local laws, rules, and regulations, including but not limited to the Family Smoking Prevention and Tobacco Control Act and all orders and requirements imposed by the FDA, including the PMTA Order and MRTP Order governing the VLN Products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. <u>FDA Orders</u>. Each Party acknowledges that it has received copies of the MRTP Order and PMTA Order, has reviewed them, and understands the regulatory requirements therein. Each Party agrees to abide by and cooperate in fulfilling the obligations set forth in these orders as applicable to its respective role under this Addendum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. <u>Product Compliance</u>. Supplier represents and warrants that all Pinnacle VLN Products manufactured pursuant to this Addendum #3 will be produced in compliance with the specifications provided by Murphy and in accordance with applicable FDA regulations and industry standards.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. <u>Marketing and Advertising Compliance</u>. Murphy represents and warrants that it shall only use marketing claims explicitly authorized by the MRTP Order and that it shall not engage in any advertising or promotional activities that violate FDA rules or applicable laws regarding the VLN Products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.** **MISCELLANEOUS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Governing Law</u>. This Addendum shall be governed by, and construed in accordance with, the laws of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Counterparts</u>. This Addendum may be executed in any number of counterparts, all of which shall constitute one and the same agreement, and any party hereto may execute this Amendment by signing and delivering one or more counterparts.

------

The parties have executed this Addendum as of the Effective Date.

---

| |
|:---|
| **NASCO PRODUCTS, LLC** |
| By:  |
| Name: Scott Marion |
| Title: Manager |
| Date: |
| **22**<sup>ND</sup> **CENTURY GROUP, INC.** |
| By:  |
| Name: Lawrence Firestone |
| Title: Chief Executive Officer |
| Date: |
| **22**<sup>ND</sup> **CENTURY LIMITED, LLC** |
| By:  |
| Name: Lawrence Firestone |
| Title: Manager |
| Date: |
| **MURPHY OIL USA, INC.** |
| By:  |
| Name: |
| Title: |
| Date: |

---

------

**[REDACTED] = Pursuant to Item 601(b)(10) of Regulation S-K, portions of this exhibit have been omitted as the registrant has determined certain confidential information contained in this document, marked by brackets, is (i) not material and (ii) would be competitively harmful if publicly disclosed.**

**Addendum #4 to Master Services Agreement**

**Merchandising Payments**

This Addendum #4 to the Master Services Agreement ("Addendum") dated June 19, 2025 (the "Effective Date") supplements the Master Services Agreement dated June 19, 2025 (the "Agreement") by and between NASCO PRODUCTS, LLC, a Delaware limited liability company ("Nasco"); 22<sup>ND</sup> CENTURY GROUP, INC., a Nevada corporation ("22<sup>nd</sup> Century"), 22<sup>nd</sup> CENTURY LIMITED, LLC, a Delaware limited liability company ("22<sup>nd</sup> Limited" and together with Nasco and 22<sup>nd</sup> Century, the "Supplier"), MURPHY OIL USA, INC., a Delaware corporation. As used herein, the term "party" shall mean either Supplier or Murphy and the term "parties" shall mean Supplier and Murphy.

**Recitals**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.**The Parties wish to modify and supplement the terms of the Agreement as set forth herein. The Addendum does not otherwise modify or supersede the provisions of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.**Unless otherwise specified, capitalized terms in this Addendum have the same meaning as defined in the Agreement, and those definitions are incorporated by reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.**The Parties have previously entered into a Master Services Agreement and several addendums whereby 22<sup>nd</sup> Century and Nasco license and manufacture Pinnacle<sup>®</sup> branded tobacco products ("Products") for Murphy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.**Murphy and/or its affiliates sell the Pinnacle<sup>®</sup> branded tobacco products produced by Nasco in Murphy owned retail stores throughout the United States ("**Murphy Stores**"), and Supplier seek to expand distribution and sales of the products to retail stores other than Murphy Stores in the United States.

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth in this Addendum and the Agreement, the Parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **MASTER SERVICES AGREEMENT**. The terms of the Agreement, which are incorporated by reference into this Addendum as though set forth in full, remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **MURPHY PRODUCTS**<u>.</u> The Pinnacle<sup>®</sup> branded tobacco products subject to this Addendum #4 are set forth in <u>Exhibit A</u> (the "**Covered Products**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **SCOPE OF SERVICES.** 22<sup>nd</sup> Century shall perform the sales and marketing services as set forth in <u>Exhibit B</u> (the "**Services**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **LIST PRICE**. Except as otherwise provided herein, the price which 22<sup>nd</sup> Century charges Designated Wholesalers for the Covered Products during each calendar year (the "List Price") shall be initially set as shown on <u>Exhibit C</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **MURPHY COMPENSATION**. Murphy shall be paid a merchandising payment per carton on Covered Products (the "**Murphy Payment**") sold to the Designated Wholesalers as

------

set forth on <u>Exhibit C</u>. The Murphy Payment shall be included in the List Price, and paid to Murphy within **[REDACTED]** days following the end of each calendar month during the Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **MARKETING AND ADVERTISING** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Marketing Plan</u>. 22nd Century shall propose a marketing plan on an annual basis for the in-store advertising and digital marketing related to the Covered Products, except for any Covered Product that is incorporated into another marketing plan between the Parties (the "Marketing Plan"). The Parties shall confer periodically throughout each year to discuss mutually agreeable changes to the Marketing Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Funding</u>. The Marketing Plan shall be funded by the amounts set forth in <u>Exhibit C</u> (the "Marketing Support"). Any portion of the Marketing Support not spent shall be retained by 22nd Century.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **TERM**. The Term of the Addendum shall commence on the Effective Date and end five (5) years from the Effective Date, provided that the Term will be automatically extended by five (5) year terms on such anniversary and each anniversary thereafter unless written notice is given by either Party at least ninety (90) days period to the end of such applicable anniversary, or (ii) if this Agreement is terminated earlier pursuant to the termination provisions in the Agreement. Notwithstanding the foregoing, 22<sup>nd</sup> Century shall agree to continued renewals of this Addendum so long as the Agreement, Addendum #1 (Cigarettes) and Addendum #3 (Pinnacle VLN) continue to be in effect via their initial terms or renewals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.** **REPRESENTATIONS AND WARRANTIES.** Each Party represents and warrants to the others as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Authority and Capacity</u>. Each party represents and warrants that it has full power and authority to enter into this Addendum #4 and to carry out its obligations hereunder. The execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate or organizational action of such party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Corporate Ownership of Assets</u>. Each party represents and warrants that it has good, valid, and marketable title to, or a valid license or right to use, all assets, intellectual property, technology, facilities, and equipment necessary to perform its obligatiolns under this Addendum, free and clear of any liens, claims, or encumbrances that would impair its ability to perform. Each party further represents and warrants that the execution, delivery, and performance of this Addendum do not and will not violate or result in the breach of any agreement, obligation, or restriction related to such assets. In the case of intellectual property, each party represents and warrants that it has all necessary rights, registrations, or approvals required for the use, licensing, and commercialization of such assets in accordance with this Addendum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. <u>Compliance with Laws</u>. Each Party represents and warrants that it shall comply with all applicable federal, state, and local laws, rules, and

------

regulations, including but not limited to the Family Smoking Prevention and Tobacco Control Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.** **MISCELLANEOUS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Governing Law</u>. This Addendum shall be governed by, and construed in accordance with, the laws of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Counterparts</u>. This Addendum may be executed in any number of counterparts, all of which shall constitute one and the same agreement, and any party hereto may execute this Addendum by signing and delivering one or more counterparts.

------

The parties have executed this Addendum as of the Effective Date.

---

| |
|:---|
| **NASCO PRODUCTS, LLC** |
| By:  |
| Name: Scott Marion |
| Title: Manager |
| Date: |
| **22**<sup>ND</sup> **CENTURY GROUP, INC.** |
| By:  |
| Name: Lawrence Firestone |
| Title: Chief Executive Officer |
| Date: |
| **22**<sup>ND</sup> **CENTURY LIMITED, LLC** |
| By:  |
| Name: Lawrence Firestone |
| Title: Manager |
| Date: |
| **MURPHY OIL USA, INC.** |
| By:  |
| Name: |
| Title: |
| Date: |

---

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## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATIONS**

**I, Lawrence D. Firestone, Chief Executive Officer of 22nd CENTURY GROUP, INC., certify that:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;I have reviewed this quarterly report on Form 10-Q of 22nd CENTURY GROUP, INC.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15 (f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;&nbsp;&nbsp; Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.&nbsp;&nbsp;&nbsp;&nbsp;Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: | August 14, 2025 |
|  | /s/ Lawrence D. Firestone |
|  | Lawrence D. Firestone |
|  | Chief Executive Officer and Director |
|  | (Principal Executive Officer) |

---

------

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATIONS**

**I, Daniel A. Otto, Chief Financial Officer of 22nd CENTURY GROUP, INC., certify that:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;I have reviewed this quarterly report on Form 10-Q of 22nd CENTURY GROUP, INC.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15 (f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;&nbsp;&nbsp;Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.&nbsp;&nbsp;&nbsp;&nbsp;Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | |
|:---|:---|
| Date: | August 14, 2025 |
|  | /s/ Daniel A. Otto |
|  | Daniel A. Otto |
|  | Chief Financial Officer |
|  | (Principal Accounting and Financial Officer) |

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## Exhibit 32.1

**Exhibit 32.1**

**Written Statement of the Principal Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350**

Solely for the purposes of complying with 18 U.S.C. §1350, I, the undersigned Chief Executive Officer of 22nd CENTURY GROUP, INC. (the "Company"), and I, the undersigned Chief Financial Officer of the Company, hereby certify, to the best of my knowledge, that the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2025 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certification is being furnished solely to accompany this Report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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| | |
|:---|:---|
| Date: | August 14, 2025 |
|  | /s/ Lawrence D. Firestone |
|  | Lawrence D. Firestone |
|  | Chief Executive Officer and Director |
| Date: | August 14, 2025 |
|  | /s/ Daniel A. Otto |
|  | Daniel A. Otto |
|  | Chief Financial Officer |

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