22nd Century Group expands VLN products with Smoker Friendly

MOCKSVILLE, N.C. - 22nd Century Group, Inc. (NASDAQ:XXII), a company specializing in tobacco products with reduced nicotine content, has announced a new agreement with Smoker Friendly to introduce Smoker Friendly branded Very Low Nicotine (VLN) cigarettes. The announcement comes as the company faces significant financial challenges, with InvestingPro data showing a concerning -51.87% gross profit margin and rapidly diminishing cash reserves. This partnership marks the first instance of a VLN partner brand and will include the roll-out of both gold and menthol SKU™s featuring the new VLN branding.

The collaboration expands on a decade-long relationship between the two companies and follows the recent addition of the Smoker Friendly Black Label style cigarette. The companies are in the process of obtaining state approvals and anticipate beginning shipments in the second quarter of 2025. With current revenue of $17.3 million and analysts forecasting sales growth, investors seeking deeper insights into 22nd Century Group’s financial outlook can access 15+ additional exclusive ProTips through InvestingPro.

Larry Firestone, CEO of 22nd Century, expressed enthusiasm about the partnership, stating that the introduction of Smoker Friendly VLN and the updated 22nd Century VLN products in Smoker Friendly stores is a key step in advancing VLN in the market. This strategic move comes as the company’s financial health score remains weak, with a concerning debt-to-equity ratio of 2.69. The staged rollout is contingent on state approvals, with an emphasis on monitoring the sales rate once VLN products are available on shelves.

Terry Gallagher, President and CEO of Smoker Friendly, also conveyed excitement about the expanded product portfolio, which will now include the VLN lineup under both the Smoker Friendly and 22nd Century brands, emphasizing the importance of this step for their partnership’s future.

Smoker Friendly, based in Boulder, Colorado, operates 344 stores in 13 states, offering a variety of tobacco products, cigar lounges, liquor stores, and fueling locations under different brand names. The company also manages the Smoker Friendly Authorized Dealer program, providing a private label tobacco portfolio and industry expertise to retailers.

22nd Century Group positions itself as a leader in nicotine harm reduction, with its flagship VLN® cigarettes containing 95% less nicotine than traditional cigarettes. The company’s proprietary tobacco blends and patented technologies enable the production of these reduced nicotine products at their 60,000 square foot facility in Mocksville, North Carolina.

This news is based on a press release statement and reflects the latest developments in the partnership between 22nd Century Group and Smoker Friendly, aiming to offer smokers alternatives to manage their nicotine intake.

In other recent news, 22nd Century Group, Inc. has announced a reset of the conversion price for its senior secured credit facility to $6.04 per share. This adjustment was made possible through an agreement with JGB Partners, LP, and other JGB entities, following approval from the company’s stockholders. The reset price is based on the average daily volume-weighted average prices for the five consecutive trading days preceding the reset date. Additionally, the company has implemented a 1-for-135 reverse stock split as part of its corporate restructuring efforts. This move aims to address a delisting notice from Nasdaq due to non-compliance with the minimum bid price requirement. The reverse stock split is intended to increase the trading price of its common stock by reducing the number of outstanding shares. Despite these changes, the percentage ownership and voting power of stockholders remain largely unchanged. The company plans to appeal Nasdaq’s delisting decision, although the outcome of this appeal remains uncertain.

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