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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, which casts substantial doubt regarding our ability to continue as a going concern.
−Removed: As of March 17, 2025, we had cash and cash equivalents of approximately $1.7 million and outstanding indebtedness under the Convertible Senior Secured Credit Facility of $4.6 million.
+Added: As of March 20, 2026, we had cash and cash equivalents of approximately $3.8 million.
Doubts about our ability to continue as a going concern have and could continue to negatively impact our relationships with our commercial partners and our employees.
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Without additional capital, we will be unable to continue our operations in the future.
−Removed: We may be unable to comply with the covenants in our convertible senior secured debentures.
−Removed: We have $4.6 million in outstanding convertible senior secured debentures as of March 17, 2025, that contain customary representations, warranties and covenants including among other things and subject to certain exceptions, covenants that restrict us 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.
−Removed: We are also required to maintain certain quarterly revenue targets.
−Removed: As a result of these covenants, our ability to respond to changes in business and economic conditions and engage in beneficial transactions, including to obtain additional financing as needed, may be restricted.
−Removed: Furthermore, our failure to comply with the covenants could result in a default under such agreements, which could permit the debt holders to accelerate our obligation to repay the debt.
−Removed: Although we have in the past received a waiver with respect to our compliance with such covenants, there is no assurance that we will be able to secure a similar waiver for the failure to comply with any future covenants.
−Removed: If any of our debt is accelerated, we likely would not have sufficient funds available to repay it.
−Removed: Substantially all of our assets, including intellectual property, are collateralized under the debentures.
−Removed: If such debt is accelerated, we could be required to liquidate our inventory, cease or curtail operations, or seek protection under applicable bankruptcy laws or similar state proceedings.
−Removed: Additionally, the senior secured debentures may be converted into shares of the Company’s common.
−Removed: If the senior secured debentures are converted into common stock in whole or in part, the existing stockholders could incur significant dilution in their relative percentage ownership.
−Removed: The prospect of this possible dilution may also negatively impact the price of our common stock.
Our competitors generally have greater financial resources and name recognition than we do, and they may therefore develop products or other technologies similar or superior to ours, or otherwise compete more successfully than we do.
We are competing with large tobacco companies and large pharmaceutical companies that have greater resources than us.
−Removed: The tobacco industry consists of major domestic and international companies, most of which have existing commercial relationships, as well as financial, technical, research and development, marketing, sales, manufacturing, scaling capacity, distribution, lobbying and other resources and name recognition substantially greater than ours.
+Added: The tobacco industry consists of major domestic and international companies, most of which have existing commercial relationships, as well as financial, technical, research and development, marketing, sales, manufacturing, scaling capacity, distribution, lobbying and other resources, brand and name recognition substantially greater than ours.
In addition, we expect new competitors will enter the markets for similar or novel tobacco products in the future and the nature and extent of this market entrance cannot be quantified at this time.
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However, a failure of our systems to function as intended, or penetration of our systems by outside parties intent on extracting or corrupting information or otherwise disrupting business processes, could interrupt our business and place us at a competitive disadvantage, result in a loss of revenue, assets or personal or other sensitive data, litigation and regulatory action, cause damage to our reputation and that of our brands and result in significant remediation and other costs.
+Added: In addition, we currently use some artificial intelligence (AI) solutions for certain sales, back office, administrative and other functions.
+Added: The use of AI by us and/or our business partners creates the additional risk for the potential loss or misuse of personal data or the dissemination of confidential information, either of which may result in significantly increased business and security costs, a damaged reputation, administrative penalties, or costs related to defending legal claims.
Any cybersecurity incident could cause substantial harm to our business and result in regulatory action, fines, and/or substantial costs.
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The insurance we maintain against natural disasters may not be adequate to cover our losses in any particular case, which would require us to expend significant resources to replace any destroyed assets, thereby materially and adversely affecting our financial condition and prospects.
−Removed: Other global incidents could have a similar effect of disrupting our business to the extent they reach and impact the areas in which we operate, the availability of inventory we need, the customers we serve, the partners on whom we rely for products or services or the employees who operate our businesses.
−Removed: For example, another pandemic or
−Removed: comparable heath concern could disrupt our supply chain for tobacco, as well as negatively impact employee productivity, including affecting the availability of employees reporting for work.
+Added: Other global incidents could have a similar effect of disrupting our business to the extent they reach and impact the areas in which we operate, the availability of inventory we need, the
+Added: customers we serve, the partners on whom we rely for products or services or the employees who operate our businesses.
+Added: For example, another pandemic or comparable heath concern could disrupt our supply chain for tobacco, as well as negatively impact employee productivity, including affecting the availability of employees reporting for work.
Any business interruption caused by such unforeseen events could have a material adverse impact on our business and operations.
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In addition, the exposure modification order that enables us to market our VLN ® cigarettes as MRTPs was granted for a period of five years, which is the maximum duration for a marketing granted order for such products under the Family Smoking Prevention & Tobacco Control Act (PUBLIC LAW 111–31—JUNE 22, 2009).
−Removed: Consequently, we will need to reapply to the FDA under a new MRTP application to extend the FDA’s exposure modification order beyond December 23, 2026.
+Added: Consequently during 2025, we have reapplied to the FDA to extend the FDA’s exposure modification order beyond December 23, 2026.
The MRTP authorization process is a complex, substantial and lengthy regulatory undertaking.
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Our inability to correctly estimate demand for future products could negatively harm our operating results and financial condition.
−Removed: The manufacturing and sale of tobacco products subjects us to significant governmental regulation and the failure to comply with such regulations could have a material adverse effect on our business and subject us to substantial fines or other regulatory actions.
+Added: The manufacturing and sale of tobacco products subjects us to significant government regulation and the failure to comply with such regulations could have a material adverse effect on our business and subject us to substantial fines or other regulatory actions.
Companies that manufacture and/or sell tobacco products face significant governmental regulation, especially in the United States pursuant to the Tobacco Control Act, including but not limited to efforts aimed at reducing the incidence of tobacco use, restricting marketing and advertising, imposing regulations on packaging, mandating warnings and disclosure of flavors or other ingredients, prohibiting the sale of tobacco products with certain flavors or other characteristics, requiring compliance with certain environmental standards, limiting or prohibiting the sale of tobacco products by certain retail establishments and the sale of tobacco products in certain packaging sizes, and seeking to hold retailers and distributors responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco smoke.
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The Tobacco Control Act also authorizes the FDA to promulgate regulations requiring that the methods used in, and the facilities and controls used for, the manufacture, preproduction design validation, packing, and storage of a tobacco product conform to current good manufacturing practice (CGMP), also known as tobacco product manufacturing practices (TPMP).
−Removed: On March 8, 2023, the FDA issued a proposed rule to promulgate such TRMP regulations.
−Removed: The proposed rule, if finalized, would establish requirements for manufacturers of finished and bulk tobacco products on the methods used in, and the facilities and controls used for, the manufacture, pre-production design validation, packing, and storage of tobacco product.
We cannot guarantee that our current manufacturing facility or any other manufacturing will successfully complete FDA and/or similar inspections, or that future TPMP regulations will not also negatively affect the cost or sustainability of our manufacturing facility.
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It is possible that our results of operations, cash flows, or financial position could be materially affected by an unfavorable outcome or settlement of litigation.
−Removed: Our production facility (NASCO) is integral to our tobacco business and adverse changes or developments affecting our facility may have an adverse impact on our business.
−Removed: Our production facility is integral to our tobacco business.
+Added: Our North Carolina manufacturing facility is integral to our tobacco business and adverse changes or developments affecting our facility may have an adverse impact on our business.
+Added: Our manufacturing facility in North Carolina is integral to our tobacco business.
Adverse changes or developments affecting this facility, including, but not limited to, disease or infestation of our raw materials , a fire, an explosion, a serious injury or fatality, a power failure, a natural disaster, an epidemic, pandemic or other public health crisis, or a material failure of our security infrastructure, could reduce or require us to entirely suspend operations.
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● protect or enhance margins through cost savings and price increases;
+Added: ● market our products appropriately to ensure consumer awareness.
The willingness of adult consumers to purchase premium consumer tobacco products, such as our RNC cigarettes, depends in part on economic conditions.
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If we do not succeed in our efforts to develop and commercialize innovative tobacco products or to obtain or maintain regulatory authorizations for the marketing or sale of products, including for the use of claims of reduced exposure, but one or more of our competitors does succeed, we may be at a competitive disadvantage, which could have an adverse effect on our ability to commercialize our products.
−Removed: An extended disruption at a facility or in service by a supplier, distributor or distribution chain service provider could have a material adverse effect on our business.
+Added: An extended disruption at our North Carolina manufacturing facility or in service by a supplier, distributor or distribution chain service provider could have a material adverse effect on our business.
We face risks inherent in reliance on one manufacturing facility and a small number of key suppliers, distributors and distribution chain service providers.
−Removed: A pandemic (including COVID-19), natural or man-made disaster or other disruption that affects the manufacturing operations, the operations of any key supplier, distributor or distribution chain service provider or any other disruption in the supply or distribution of goods or services (including a key supplier’s inability to comply with government regulations or unwillingness to supply goods or services to a tobacco company) could have a material adverse effect on our business.
+Added: A pandemic, natural or man-made disaster or other disruption that affects the manufacturing operations, the operations of any key supplier, distributor or distribution chain service provider or any other disruption in the supply or distribution of goods or services (including a key supplier’s inability to comply with government regulations or unwillingness to supply goods or services to a tobacco company) could have a material adverse effect on our business.
A ban on menthol or flavored tobacco products could have a material adverse impact on our business.
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If we were to prosecute a claim that a third party had illegally obtained and was using our trade secrets, it could be expensive and time consuming and the outcome could be unpredictable.
−Removed: In addition, courts outside the United States are sometimes less willing to protect trade secrets
−Removed: than courts in the United States.
+Added: In addition, courts outside the United States are sometimes less willing to protect trade secrets than courts in the United States.
Moreover, if our competitors independently develop equivalent knowledge, we would lack any contractual claim to this information, and our business could be harmed.
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Without protection for the intellectual property we license, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and harm our business prospects.
−Removed: Our worldwide exclusive licenses relating to tobacco from NCSU involve multiple patent families and trade secrets.
−Removed: The exclusive rights under the NCSU agreements expire on the date on which the last patent or registered plant variety covered by the subject license expires in the country or countries where such patents or registered plant varieties are in effect.
−Removed: The NCSU licenses relate predominately to issued patents, and our exclusive rights in the NCSU licenses are expected to expire in 2042.
If any of our license agreements or other intellectual property agreements are not effective at preventing others from competing with us and/or using our intellectual property, our business could be adversely affected.
8 unchanged sentences
● a decreased ability to issue additional common stock or obtain additional financing in the future.
−Removed: Recently, the Company received deficiency letters from the Nasdaq Listing Qualifications Department notifying the Company not been in compliance with certain Nasdaq trading rules.
+Added: Over the past two years, the Company has received deficiency letters from the Nasdaq Listing Qualifications Department notifying the Company not been in compliance with certain Nasdaq trading rules.
Although such deficiencies have been addressed and remedied, there can be no assurance of our ability to comply with such rules in the future.
−Removed: An active trading market for our common stock may not be sustained and you may not be able to resell your shares at or above the price at which you purchased them.
−Removed: An active trading market for our shares may not be sustained.
−Removed: In the absence of an active trading market for our common stock, shares of common stock may not be able to be resold at or above the purchase price of such shares.
−Removed: Although there can be no assurances, we expect that our common stock will continue to be listed on the NASDAQ.
−Removed: However, even if our common stock continues to be listed on the NASDAQ, there is no assurance that an active market for our common stock will continue in the foreseeable future.
−Removed: There also can be no assurance that we can maintain such listing on the NASDAQ.
If we are ever no longer listed on the NASDAQ or other national stock exchange in the future, then it would be more difficult to dispose of shares or to obtain accurate quotations as to the market value of our common stock compared to securities of companies whose shares are traded on national stock exchanges.
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● sales of our common stock by our executive officers, directors, or significant stockholders;
+Added: ● the announcement by us of a reverse stock split or other corporate transaction.
These and other external factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.
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Such lawsuits and any future related lawsuits could cause us to incur substantial costs defending the lawsuit and can also divert the time and attention of our management, which would have a negative adverse impact on our business.
−Removed: We are named defendant in certain litigation matters;
−Removed: if we are unable to resolve these matters favorably, then our business, operating results and financial condition may be adversely affected.
−Removed: We are currently involved in certain litigation matters.
−Removed: See "Item 3 – Legal Proceedings" included in this Annual Report on Form 10-K.
−Removed: We cannot at this time predict the outcome of these matters or any future litigations matters (whether related or unrelated) or reasonably determine the probability of a material adverse result or reasonably estimate range of potential exposure, if any, that these matters or any future matters might have on us, our business, our financial condition or our results of operations, although such effects, including the cost to defend, any judgements or indemnification obligations, among others, could be materially adverse to us.
−Removed: In addition, in the future, we may need to record litigation reserves with respect to these matters.
−Removed: Further, regardless of how these matters proceed, it could divert our management’s attention and other resources away from our business.
Future sales of our common stock will result in dilution to our common stockholders.
Sales of a substantial number of shares of our common stock in the public market may depress the prevailing market price for our common stock and could impair our ability to raise capital through the future sale of our equity securities.
−Removed: Additionally, as of March 17, 2025, we have outstanding 24,391,163 warrants to purchase an equal number of shares of common stock and $4.6 million in convertible promissory notes (convertible into 754,554 shares).
+Added: Additionally, as of March 23, 2026, we have outstanding 5,408,786 warrants to purchase an equal number of shares of common stock and 16.0 million in Series B convertible preferred stock (convertible into a maximum of 22,408,964 shares).
If any of the holders of outstanding warrants or notes exercise or convert them, as applicable, our common stockholders will incur dilution in their relative percentage ownership.
The prospect of this possible dilution may also impact the price of our common stock.
−Removed: We have a significant number of outstanding warrants with anti-dilution price protection.
+Added: We have a significant number of outstanding securities with anti-dilution price protection.
We have approximately 5,408,786 outstanding warrants with anti-dilution price protection.
The exercise price on these warrants will have the exercise price reduced in the event of any future offerings of securities at a lower price than the current exercise price (subject to limited exceptions) of $3.57.
−Removed: Such warrants may deter future investors and can result in further dilution to our investors.
+Added: In addition, our Series B Convertible Preferred Stock is convertible into common stock at any time at an initial conversion price of $3.57, which price is subject to adjustment for any future offerings of securities at a lower price than the current exercise price (subject to limited exceptions).
+Added: Such securities may deter future investors and can result in further dilution to our investors.
We do not expect to declare any dividends on our common stock in the foreseeable future.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.