22nd Century Group, Inc. (NYSE MKT:XXII) announced today that
the Company filed its second quarter 2015 report on Form 10-Q with
the U.S. Securities and Exchange Commission and will provide a
business update for investors on a conference call to be held
Wednesday, August 5th, at 10:00 AM (EasternTime).
Henry Sicignano III, President and Chief Executive Officer of
22nd Century Group, together with John T. Brodfuehrer, Chief
Financial Officer, will conduct the call. Interested parties are
invited to participate in the call by dialing: 800-289-0544 and
using Conference ID 8262329.
The conference call will consist of an overview of the
financials presented in the Company's second quarter 2015 Form 10-Q
and a discussion of business highlights and updates. Immediately
thereafter, there will be a question and answer segment open to all
callers.
While still not at full production capacity, in the second
quarter of 2015 the Company continued to grow revenues
substantially through sales of RED SUN premium cigarettes, contract
manufacturing of a third-party MSA cigarette brand, and continued
contract manufacturing of filtered cigars. The Company also
recorded initial sales of its proprietary “0.0mg nicotine”
cigarette, MAGIC, in Europe during the second quarter. Revenues
during the second quarter of 2015, in the amount of $2,307,000,
exceeded previously announced revenue expectations of $1,500,000
and were dramatically higher than revenues of $529,000 for the
entire year of 2014. The Company reported a net loss for the three
months ended June 30, 2015 of approximately $1.3 million (with
approximately $484,000 of such amount consisting of net non-cash
expenses, and income of $1,000,000 from a non-recurring litigation
settlement).
Going forward, the Company continues to expect to generate more
than $5 million in revenue for the year.
Business Highlights and
Updates
- We successfully obtained approval from
all 50 states to sell our RED SUN super-premium cigarette brand
across the country. Subsequently, through tradeshows, distributor
and retail partnerships, and targeted consumer marketing efforts,
we have continued to introduce and to grow our RED SUN brand in
select markets across the United States. Earlier this summer, 22nd
Century added a significant consumer-oriented component to our RED
SUN advertising efforts. In a campaign designed to convert
premium-brand smokers to RED SUN, we began employing
information-based consumer advertising to increase awareness of
both RED SUN and 22nd Century Group more broadly. Notably, the RED
SUN Brand Ambassador Program enables Company representatives to
work closely with owners and managers of independent smoke shops
and tobacconists to offer special in-store RED SUN gift
certificates to smokers of competitive brands in opinion leading
markets across the United States.
- We successfully launched MAGIC, the
world’s only “0.0mg nicotine” tobacco cigarette brand, in more than
900 state-licensed retail shops in Spain in April 2015. In June,
with pre-orders in hand for 150 tobacconists in the UK, the Company
intended to begin distribution of MAGIC cigarettes across England,
Wales, and Scotland. However, due to a required change in consumer
warning labels on the packs, this introduction was postponed until
the fall. Accordingly, this fall the Company intends to launch
Magic 0 and Magic 2 brand cigarettes in the UK, the Netherlands,
Italy, and France. We also continue to explore possibilities of
launching MAGIC in other areas of Europe and in Asia.
- Aiming to become the first company in
the world authorized by the FDA to market a reduced exposure
combustible cigarette, this quarter we dramatically increased work
on our submissions to the FDA for our modified risk cigarettes in
development. We trademarked a new brand to be included in FDA
submissions, designed proposed packaging and consumer
advertisements, began focus group testing, and engaged researchers
to conduct modeling required for our application to the FDA. We now
intend to submit to the FDA in the fall of 2015 a completed
application for our proprietary BRAND A very low nicotine tobacco
cigarettes. If sufficient funds are secured for additional exposure
studies, we intend to submit in 2016 an application to the FDA for
our BRAND B modified risk cigarettes in development. Compared to
all other cigarettes – made by any other tobacco company – we
believe BRAND B has the world’s lowest-tar-to-nicotine ratio.
- Through the granting of new patents and
the filing of new patent applications, we dramatically increased
our intellectual property portfolio this quarter. 22nd Century
currently owns or exclusively controls more than 185 issued patents
and more than an additional 54 pending patent applications around
the world. We believe the true value of our Company – based solely
on our extensive intellectual property portfolio and not even
considering the considerable value of the many other parts of our
business – is substantially greater than the value implied by our
current share price.
- We continue to move forward in our
efforts with respect to (i) contracting with a joint venture
partner to fund a Phase III clinical trial for X-22, our smoking
cessation product in development, and (ii) potential joint ventures
and other business opportunities in Asia for our unique tobaccos
and finished cigarettes. The Company remains optimistic that it
will be able to announce one or more business contracts with Asian
partners in 2015.
- We continued to increase the base of
third-party cigarette and filtered cigar contract manufacturing
business at our NASCO manufacturing facility in Mocksville, North
Carolina. Even as we have realized significant early success in
these efforts, our factory has substantial manufacturing capacity
above current production requirements. Going forward, we intend to
use this excess capacity to take on new manufacturing contracts
that will generate additional revenue for the Company while also
strengthening our relationships in the industry.
Second Quarter 2015 Financial
Summary
For the three and six months ended June 30, 2015, net revenues
were $2,307,000 and $2,923,000, respectively, as compared to
$16,000 and $464,000 for the three and six months ended June 30,
2014, respectively. As discussed above, revenues for the three and
six months ended June 30, 2015 were generated from the sales of
various cigarette and filtered cigar products manufactured at the
Company’s factory and from sales of MAGIC cigarettes in Europe. The
sales for the three months ended June 30, 2014 in the amount of
$16,000 were derived from the production of filtered cigars, and
the remainder of the revenue during the six months ended June 30,
2014 was generated from the sale of SPECTRUM research
cigarettes.
For the three and six months ended June 30, 2015, the Company
reported operating losses of $2.35 million and $6.47 million,
respectively, as compared to operating losses of $2.04 million and
$3.23 million, respectively, for the three and six months ended
June 30, 2014.
The Company’s net loss for the three months ended June 30, 2015
was $1.29 million or ($0.02) per share and $5.41 million or ($0.08)
per share for the six months ended June 30, 2015, as compared to a
net loss of $1.97 million or ($0.03) per share for the three months
ended June 30, 2014 and $7.28 million or ($0.13) per share for the
six months ended June 30, 2014. The Company’s losses decreased
$0.68 million and $1.87 million, respectively, for the three and
six months ended June 30, 2015, as compared to the three and six
months ended June 30, 2014. The decrease in the net loss for the
three months ended June 30, 2015 was primarily due to other income
of $1,000,000 from the litigation settlement offset by a decrease
in gross loss of approximately $296,000. The decrease in the net
loss for the six months ended June 30, 2015 was primarily a result
of a decrease in the warrant liability gain (loss) - net of
approximately $4,165,000 and the other income of $1,000,000 from
the litigation settlement, offset by a decrease in gross loss of
approximately $583,000 and an increase in operating expenses of
approximately $2,658,000 (approximately $1,805,000 of this increase
in operating expenses was the result of a non-cash increase in
stock based compensation expense).
Adjusted EBITDA (as described in the paragraph and tables below)
for the three months ended June 30, 2015 was a negative $1.8
million or ($0.03) per share and a negative $3.29 million or
($0.05) per share for the six months ended June 30, 2015, as
compared to Adjusted EBITDA of negative $0.85 million or ($0.01)
per share for the three months ended June 30, 2014 and negative
$2.04 million or ($0.04) per share for the six months ended June
30, 2014.
Below are tables containing information relating to the
Company’s Adjusted EBITDA for the three and six months ended June
30, 2015 and 2014, including a reconciliation of net loss to
Adjusted EBITDA for such periods.
Three Months Ended June
30, 2015
2014 % Change
Net loss $ (1,288,703 ) $ (1,965,815 ) -34 % Adjustments: Warrant
liability gain - net (112,620 ) (74,117 ) 52 % Amortization and
depreciation 188,332 124,344 51 % Loss on equity investment 40,834
- 100 % Interest expense 13,753 1,769 677 % Stock based
compensation 357,658 1,068,746 -67 % Settlement proceeds
(1,000,000 ) - 100 %
Adjusted EBITDA
$ (1,800,746 ) $ (845,073
) -113 %
Six Months Ended June
30,
2015 2014
% Change Net loss $
(5,405,442 ) $ (7,280,943 ) -26 % Adjustments: Warrant liability
(gain) loss - net (171,833 ) 3,993,153 -104 % Warrant amendment
inducement expense - 144,548 -100 % Amortization and depreciation
373,729 195,613 91 % Loss on equity investment 91,815 - 100 %
Interest expense 19,261 3,518 447 % Stock based compensation
2,798,863 994,049 182 % Settlement proceeds (1,000,000 ) - 100 %
Gain on the sale of machinery and equipment -
(85,621 ) -100 %
Adjusted EBITDA $
(3,293,607 ) $ (2,035,683 )
62 %
Adjusted EBITDA is a financial measure not prepared in
accordance with generally accepted accounting principles (“GAAP”).
In order to calculate Adjusted EBITDA, the Company adjusts the net
loss for certain non-cash and non-operating income and expense
items listed in the tables above in order to measure the Company’s
operating performance. The Company believes that Adjusted EBITDA is
an important measure that supplements discussions and analysis of
its operations and enhances an understanding of its operating
performance. While management considers Adjusted EBITDA to be
important, it should be considered in addition to, but not as a
substitute for or superior to, other measures of financial
performance prepared in accordance with GAAP, such as operating
loss, net loss and cash flows from operations. Adjusted EBITDA is
susceptible to varying calculations and the Company’s measurement
of Adjusted EBITDA may not be comparable to those of other
companies.
About 22nd Century Group, Inc.
22nd Century Group is a plant biotechnology company focused on
technology which allows it to increase or decrease the level of
nicotine in tobacco plants through genetic engineering and plant
breeding. The Company’s mission is to reduce the harm caused by
smoking. 22nd Century currently owns or exclusively controls more
than 185 issued patents and more than an additional 54 pending
patent applications around the world. The Company’s strong IP
position led to a licensing agreement with British American Tobacco
(“BAT”), the world’s second largest tobacco company. Visit
www.xxiicentury.com for more information.
Cautionary Note Regarding Forward-Looking Statements: This press
release contains forward-looking information, including all
statements that are not statements of historical fact regarding the
intent, belief or current expectations of 22nd Century Group, Inc.,
its directors or its officers with respect to the contents of this
press release, including but not limited to our future revenue
expectations. The words “may,” “would,” “will,” “expect,”
“estimate,” “anticipate,” “believe,” “intend” and similar
expressions and variations thereof are intended to identify
forward-looking statements. We cannot guarantee future results,
levels of activity or performance. You should not place undue
reliance on these forward-looking statements, which speak only as
of the date that they were made. These cautionary statements should
be considered with any written or oral forward-looking statements
that we may issue in the future. Except as required by applicable
law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform
these statements to reflect actual results, later events or
circumstances, or to reflect the occurrence of unanticipated
events. You should carefully review and consider the various
disclosures made by us in our annual report on Form 10-K for the
fiscal year ended December 31, 2014, filed on February 5, 2015,
including the section entitled “Risk Factors,” and our other
reports filed with the U.S. Securities and Exchange Commission
which attempt to advise interested parties of the risks and factors
that may affect our business, financial condition, results of
operation and cash flows. If one or more of these risks or
uncertainties materialize, or if the underlying assumptions prove
incorrect, our actual results may vary materially from those
expected or projected.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150804006580/en/
Investor Relations:IRTH CommunicationsAndrew Haag,
866-976-4784xxii@irthcommunications.comorRedington, Inc.Tom
Redington, 203-222-7399
22nd Century (AMEX:XXII)
Historical Stock Chart
From Mar 2024 to Apr 2024
22nd Century (AMEX:XXII)
Historical Stock Chart
From Apr 2023 to Apr 2024