22nd Century Group, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K to ensure information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework (2013) , our management concluded that our internal control over financial reporting was effective as of December 31, 2025. Our system of internal control over financial reporting was designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with accounting principles generally accepted in the United States. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting due to a permanent exemption for smaller reporting companies. Changes in Internal Controls over Financial Reporting There was no change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting. ​ Item 9B. Other Information. (a) ​ Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. ​ On March 23, 2026, we filed a Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of the State of Nevada designating 20,000 shares out of the authorized but unissued shares of preferred stock as Series B Convertible Preferred Stock with a stated value of $1,000 per share (the “Series B Certificate of Designation”). The Series B Certificate of Designation is attached as Exhibit 3.1.7 hereto. The following is a summary of the principal terms of the Series B Preferred Stock as set forth in the Series B Certificate of Designation. The summary below is not intended to be complete and is qualified in its entirety by reference to such exhibit which is incorporated herein by reference. 36 Dividends The holders of Series B Preferred Stock will be entitled to dividends when and as declared by the board of directors of the Company (the “Board”), from time to time, in its sole discretion, which dividends will be paid by the Company out of funds legally available therefor, payable, subject to the conditions and other terms of the Certificate of Designations, in cash, in securities of the Corporation or using assets as determined by the Board on the stated value of such Preferred Stock. Voting Rights The shares of Series B Preferred Stock have no voting rights, except to the extent required by applicable law. As long as any shares of Series B Preferred Stock are outstanding, the Company may not, without the approval of a majority of the then outstanding shares of Series B Preferred Stock (a) alter or change the powers, preferences or rights given to the Series B Preferred Stock, (b) alter or amend the Certificate of Incorporation or the bylaws of the Company in such a manner so as to materially adversely affect any rights given to the Series B Preferred Stock, (c) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined below) senior to, or otherwise pari passu with, the Series B Preferred Stock, (d) increase the number of authorized shares of Series B Preferred Stock, or (e) enter into any agreement to do any of the foregoing. Liquidation Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the then holders of the Series B Preferred Stock are entitled to receive out of the assets available for distribution to stockholders of the Company an amount equal to either (i) 100% of the stated value or (ii) the amount the holder would receive if the Series B Preferred Stock had been converted into Common Stock; in each instance, prior to and in preference to the Common Stock or any other series of preferred stock. Conversion The Series B Preferred Stock is convertible into Common Stock at any time at a fixed conversion price of $3.57, subject to adjustment for certain anti-dilution provisions set forth in the Series B Certificate of Designation, subject to a floor price equal to 20% of the Nasdaq minimum price on the date of the Securities Purchase Agreement ($0.714) (the “Series B Conversion Price”). The fixed conversion price has anti-dilution price protection for future dilutive issuances. The Company has the ability to reset the fixed conversion price (lower), subject to board approval. The Series B Preferred Stock is also convertible at any time at the Alternative Conversion Price, which is a 15% discount to the lowest daily VWAP in the prior 20 trading days, subject to the floor price. Conversion at the Option of the Holder The Series B Preferred Stock is convertible at the then-effective Series B Conversion Price (or the Alternative Conversion Price, at the holder’s election) at the option of the holder at any time and from time to time. Mandatory Conversion at the Option of the Company If, at any time from and after issuance, (i) the closing price of the Common Stock equals or exceeds 200% of the then fixed conversion price for 10 consecutive trading days and (ii) the daily dollar trading volume for the Common Stock exceeds $500,000 per day during such period, the Company may require the holders to convert the Series B Preferred Stock into Common Stock at the Series B Conversion Price. Beneficial Ownership Limitation The Series B Preferred Stock cannot be converted to Common Stock if the holder and its affiliates would beneficially own more than 4.99% (or 9.99% at the election of the holder) of the outstanding Common Stock. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us, provided that any increase in this limitation will not be effective until 61 days after such notice from the holder to us and such increase or decrease will apply only to the holder providing such notice. Preemptive Rights The Securities Purchase Agreement also provides that certain of the Investors in the Offering that fund at least $2,000,000 have a right of participation in future equity or equity-linked offerings by the Company in an amount equal to 50% of such subsequent financing for a period of 9 months after no shares of Series B Preferred Stock are outstanding. 37 Redemption At any time six (6) months after the issuance date, the Company may redeem all or a portion of the shares of Series B Preferred Stock outstanding by delivering notice at least 30 calendar days prior equal to 110% of the stated value per share of Series B Preferred Stock being redeemed. During the 30-day notice period, holders shall be permitted to convert their Series B Preferred Stock. Such redemption right may also be exercised in advance of a change in control of the Company. Negative Covenants As long as any Series B Preferred Stock is outstanding, unless the holders of more than 50% of the then outstanding shares of Series B Preferred Stock shall have otherwise given prior written consent, the Company cannot, subject to certain exceptions, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness (as defined in the Certificate of Designations) exceeding $100,000, with the exception of a working capital line of credit with a commercial bank or other similar financial institution up to $1,000,000. Term The Series B Preferred Stock is perpetual and has no stated maturity date. Trading Market There is no established trading market for any of the Series B Preferred Stock, and we do not expect a market to develop. We do not intend to apply for a listing for any of the Series B Preferred Stock on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Series B Preferred Stock will be limited. (b) Our directors and executive officers may purchase or sell shares of our common stock in the market from time to time, including pursuant to equity trading plans adopted in accordance with Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) and in compliance with guidelines specified by the Company. In accordance with Rule 10b5-1 and the Company’s insider trading policy, directors, officers and certain employees who, at such time, are not in possession of material non-public information about the Company are permitted to enter into written plans that pre-establish amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s common stock, including shares acquired pursuant to the Company’s equity plans (“Rule 10b5-1 Trading Plans”). Under a Rule 10b5-1 Trading Plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from them. No contracts, instructions or written plans for the sale or purchase of our securities were adopted , terminated or modified by our directors and executive officers during the three months ended December 31, 2025. ​ ​ Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspectio n ​ Not applicable. ​ PART III Item 10. Directors, Executive Officers and Corporate Governance. Directors Our Board of Directors represents the best interests of our stockholders by overseeing the business and affairs of the Company. Members of the Board participate in quarterly Board and Committee meetings, engage with senior management of the Company, review, provide input, approve the Company’s strategic plan and principal issues, and discuss feedback from stockholders and other stakeholders. Under the Company’s current Amended and Restated Articles of Incorporation, directors hold office for a term ending on the date of the third annual stockholders’ meeting following the Annual Meeting at which such director’s class was most recently elected until the earlier of their death, resignation, removal or until their successors have been duly elected and qualified. 38 Our Bylaws provide that the number of members of our Board of Directors may be changed from time to time by resolutions adopted by the Board of Directors. Our Board of Directors currently consists of four (4) members with no vacancies. The information below identifies and sets forth certain biographical and other information regarding our directors as of March 23, 2026. ​ ​ ​ ​ ​ Name Age Position/Office Held With the Company Director Since Independent Lawrence D. Firestone 67 Chairman, Chief Executive Officer 2023 No Andrew Arno 66 Lead Director 2023 Yes Lucille S. Salhany 79 Director 2022 Yes David Keys 69 Director 2025 Yes ​ Lawrence F irestone Mr. Firestone has served as Chief Executive Officer and Chairman of the Board since December 2023. Mr. Firestone brings over 40 years of enterprise, operations, and financial management experience in both public and private companies, including tenures as CEO, CFO and COO across multiple industry sectors. Mr. Firestone most recently served as Chief Financial Officer of Oakland Manager, a privately-held purveyor of cannabis with both retail and wholesale market penetration, and as Chairman of FirePower Technology, a privately held manufacturer of ATX power supplies for the IT and instrumentation markets. In the public company sector, Mr. Firestone has served as Chief Executive Officer of Eastside Distilling, Inc. (NASDAQ: EAST), Chief Executive Officer of Qualstar Corporation (NASDAQ: QBAK), Chief Financial Officer of Advanced Energy Industries (NASDAQ: AEIS), and Chief Financial Officer of Applied Films Corporation (NASDAQ: AFCO). He has served on numerous boards, including those of Eastside Distilling, Qualstar, CVD Equipment Corporation (NASDAQ: CVD), Amtech Systems, Inc. (NASDAQ: ASYS) and HyperSpace Communications, Inc. (NYSE: HYPR). Mr. Firestone received his Bachelor of Science in Business Administration with a concentration in Accounting from Slippery Rock University of Pennsylvania. Andy Arno Mr. Arno joined our Board of Directors in 2011 and has more than 30 years of experience handling a wide range of corporate and financial matters, primarily including work as an investment banker and strategic advisor to emerging growth companies. Mr. Arno currently serves as a managing member of Unterberg Legacy, LLC, a merchant bank and multi-family office, where he has served since 2023. He previously served, from 2015 to 2023, as vice chairman of Special Equities Group, LLC, a privately held investment banking firm affiliated with Dawson James Securities Inc. and previously affiliated with Bradley Woods & Co. Ltd. and Chardan Capital Markets LLC. From 2013 until 2015, Mr. Arno served as managing director of Emerging Growth Equities, an investment banking firm, and was previously president of LOMUSA Limited, an investment banking firm. Earlier in his career, Mr. Arno served as vice chairman and chief marketing officer of Unterberg Capital, LLC, an investment advisory firm that he co-founded. He was also vice chairman and head of the equity capital markets division of Merriman Capital LLC, an investment banking firm, and served on the board of the parent company, Merriman Holdings, Inc. Mr. Arno currently serves on the boards of Insight Molecular Diagnostic Inc. (IMDX), a precision diagnostics company, where he serves as chairman; SmithMicro Software, Inc. (SMSI), a software technology company; Catheter Precision, Inc. (VTAK), a medical device company; Independa, Inc., a privately held software company; and ComHear Inc., a privately held audio technology R&D company, where he serves as chairman. Mr. Arno received a Bachelor of Science degree from George Washington University. He is currently the Lead Independent Director, Chair of the Compensation Committee and a member of the Corporate Governance & Nominating Committee and Audit Committee. Lucille S. Salhany Ms. Salhany is currently President and CEO of her own consulting company, JHMedia, which she founded in 1997. She was also one of the founding partners of Echo Bridge Entertainment and CEO & President of LifeFX Networks, Inc. Prior to this, she served as Chairperson of the Twentieth Television division of Fox, and was appointed the first woman in history to head a major television network when she accepted the Chairmanship of Fox Broadcasting. After chairing Fox, Salhany accepted the post of Chief Executive Officer and President of United Paramount Network (UPN), launching and growing UPN to become the fifth major broadcast network. She also served on the Board of Directors for Echo Bridge Entertainment, Compaq / Hewlett-Packard, Fox, Inc., Avid Technologies, and American Media, Inc. Ms. Salhany was also a trustee of Emerson College and Lasell College, where she received Honorary Doctorates. She is currently Chair of the Corporate Governance & Nominating Committee and is a member of the Audit Committee and Compensation Committees of the Board. 39 David Keys Mr. Keys began his career with Deloitte serving in the audit group in the Las Vegas and New York City executive offices. David was the Executive Vice President, CFO and member of the executive committee of the Board of Directors of American Pacific Corporation, a chemical company that was publicly traded on The Nasdaq Stock Market for the entirety of the time he was a director and executive officer. Since 2004, Mr. Keys has been an independent financial and operations consultant. Mr. Keys currently serves as Chairman of the Audit Committee of SurgPays Inc (NASDAQ:SURG) since July 2019. Mr. Keys currently serves on the Board and is the Chair of the Audit Committee of ARCpoint Inc. (TSXV: ARC). He previously served on the Boards of Directors of AmFed Financial Inc., RSI International Systems, Inc. (NEX: RSY.H), Norwest Bank of Nevada and Wells Fargo Bank of Nevada. Mr. Keys also served on the Advisory Board of Directors of FM Global, a leading provider of property and casualty insurance. Mr. Keys is a Certified Public Accountant (CPA), Certified Valuation Analyst (CVA), Certified Management Accountant (CMA), Chartered Global Management Accountant (CGMA), Certified Information Technology Professional (CITP), Certified in Financial Forensics (CFF), and Certified in Financial Management (CFM). David was a member of the National Roster of Neutrals of the American Arbitration Association for over fifteen years. He received a Bachelor of Science in accounting from Oklahoma State University. He is currently Chair of the Audit Committee and is a member of the Corporate Governance & Nominating Committee and Compensation Committees of the Board. Executive Officers The information below identifies and sets forth certain biographical and other information regarding our executive officers as of March 23, 2026. ​ ​ ​ ​ Name Age Position/Office Held With the Company Lawrence D. Firestone 67 Chairman, Chief Executive Officer Daniel A. Otto 36 Chief Financial Officer Jonathan Staffeldt 44 General Counsel and Corporate Secretary Robert Manfredonia 61 Senior Vice President of Sales and Marketing Scott Marion 46 Vice President of Manufacturing Operations ​ Mr. Firestone’s biographical information is set forth above under “ Directors. ” Daniel A. Otto has served as the Company’s Chief Financial Officer since April 2024 and previously as the Company’s Corporate Controller since July 2022 where he is responsible for capital markets, investor relations, accounting, SEC external reporting, treasury, tax and other finance management functions. Prior to joining the Company, Mr. Otto served as a Senior Manager at Deloitte & Touche LLP providing audit and accounting advisory services to public companies, ranging from small to large cap issuers, for over ten years. Mr. Otto is also a certified public accountant. Mr. Otto received his Master’s in Business Administration and B.A. in Accounting from Niagara University. Jonathan Staffeldt has served as General Counsel of the Company since April 2024 and previously as Deputy General Counsel since January 2023. Prior to that, Mr. Staffeldt was Chief Legal Officer of GVB Biopharma, the former subsidiary of the Company that was acquired in May 2022, and served in that role since September 2019. Mr. Staffeldt was previously in private practice with significant experience in corporate, mergers and acquisitions, and litigation. Mr. Staffeldt received his B.S. in Accounting from the University of Southern California and his Juris Doctorate from the University of California Los Angeles. Robert Manfredonia has served as our Executive Vice President of Sales and Marketing since August 2024. Previously, Mr. Manfredonia served as Chief Executive Officer for Bonavita Beverage a privately-held service company providing business structure support, strategy development, national sales team coverage, wholesaler and corporate retail access with back of the house solutions. Prior he served as the President of Eastside Distilling Company Inc. (NASDAQ: EAST), where he was responsible for providing strategic leadership with establishing long-range goals, strategies, plans, and policies. Previously he held positions including Vice President of Corporate Retail for Roust, the second largest Global Vodka Producer and Western Regional Manager of Artisanal Brands for Molson Coors (NYSE: TAP). Mr. Manfredonia early in his career worked for Southern Glazer’s Wine and Spirits the largest wine and spirits distributor in the United States. Mr. Manfredonia proudly served in the United States Air Force as a Logistics Planner in Asia and Europe. 40 Scott Marion has served as our Vice President of Manufacturing Operations since February 2023. Previously, Mr. Marion served as head of Manufacturing and Supply Chain Finance at Reynolds American. Mr. Marion has over twenty years’ experience in the tobacco industry where he has held various management roles in finance working closely with manufacturing operations. He holds a Bachelor of Science Degree in Business Administration from High Point University and an MBA from Wake Forest University. ​ Family Relationships There are no family relationships among our directors and executive officers. Independent Directors Our Board of Directors has determined that David Keys, Lucille S. Salhany, and Andrew Arno are “independent” as defined by applicable Nasdaq Stock Market listing standards. Each director serving on the Audit Committee and the Compensation Committee of our Board also meets the more stringent independence requirements established by SEC and Nasdaq rules applicable to audit and compensation committees. Our Board has determined that no director or nominee has a relationship that would interfere with the exercise of independent judgment in carrying out their responsibilities as a director. There are no family relationships among our directors, nominees, or executive officers. The Board annually reviews all business and other relationships of directors and determines whether directors meet these categorical independence tests. Board Leadership Structure and the Role of the Board in Oversight of Risk Management Our Board of Directors has not adopted a policy requiring that the roles of Chief Executive Officer and chairperson of the Board be separate. Our Board reserves the right to assign the responsibilities of the Chief Executive Officer and chair position as determined by our Board to be in the best interest of our Company. In the circumstance where the responsibilities of the Chief Executive Officer and chair are vested in the same individual or in other circumstances when deemed appropriate, the Board will designate a Lead Independent Director from among the independent directors to preside at the meetings of non-employee director executive sessions. Currently, Lawrence D. Firestone serves as Board Chair and Chief Executive Officer, and Andrew Arno serves as the Lead Independent Director. Our Board reviews our leadership structure annually and retains the authority to modify this structure to best address our Company’s unique circumstances as and when appropriate. Our Board is actively involved in oversight of risks that could affect the Company. Our Board has assigned responsibility for addressing certain risks, and the steps management has taken to monitor, control and report such risk, to our Audit Committee, including risks relating to execution of our growth strategy, with appropriate reporting to the full Board. Our Board relies on our Compensation Committee to address significant risk exposures facing our Company with respect to compensation. Our Board receives reports by each committee chair regarding the applicable committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within the Company. Stockholder Communications with the Board Stockholders wishing to communicate with the Board of Directors or with an individual Board member concerning the Company may do so by writing to the Board or to the particular Board member care of the Corporate Secretary, 22nd Century Group, Inc. The envelope or subject line should indicate that it contains a stockholder communication. Meetings of Board of Directors Our Board held eight meetings throughout 2025. All directors attended at least 75% of meetings of the Board and Board committees on which they served in 2025. Executive Sessions of Independent Directors The independent directors hold regularly scheduled executive sessions of the Board and its committees no management directors or employees present. The independent directors met in executive session at most of the regularly scheduled Board and committee meetings held in 2025. 41 Standing Committees Our Board of Directors currently has three (3) standing committees: (i) an Audit Committee, (ii) a Compensation Committee, and (iii) a Corporate Governance and Nominating Committee. Members of these committees are elected annually by the Board. The charters of each committee are each available on the investor relations section of our website at www.xxiicentury.com. The Audit Committee oversees the Company’s financial reporting process and system of internal accounting controls, as well as appointment and oversight of the independent public accountants engaged to audit the Company’s financial statements. The Audit Committee also assists the Board in monitoring compliance with legal and regulatory requirements and oversees the Company’s policies with respect to risk assessment and management, including but not limited to cybersecurity risks. The Audit Committee is comprised solely of non-employee directors who satisfy current Nasdaq standards with respect to independence, financial expertise and experience. The Audit Committee is comprised of Mr. Keys, Ms. Salhany and Mr. Arno as Chair. Our Board of Directors has determined that Mr. Arno meets the SEC’s definition of “audit committee financial expert,” and that all members of the Audit Committee meet the financial literacy requirements of the Nasdaq Stock Market. No members of the Audit Committee serve on the audit committees of more than three public companies. The Audit Committee held four meetings during 2025. To ensure independence, the Audit Committee also meets separately with our independent public accountants apart from meetings with members of management. The Compensation Committee is comprised solely of directors who meet the current Nasdaq requirements for independence. The Compensation Committee is comprised of Mr. Arno, Mr. Keys and Ms. Salhany as Chair. The Compensation Committee establishes and regularly reviews our compensation and benefits philosophy and program in a manner consistent with corporate financial goals and objectives. The Compensation Committee also approves compensation arrangements for senior management, including annual incentive and long-term compensation; administers grants under our equity incentive plans; annually evaluates the performance of our Chief Executive Officer; and reviews leadership development and succession planning. The Compensation Committee held two meetings in 2025. The Corporate Governance and Nominating Committee is comprised solely of independent directors and is comprised of Mr. Arno, Ms. Salhany and Mr. Keys as Chair. The Corporate Governance and Nominating Committee develops and recommends to the Board corporate governance guidelines applicable to the Company; identifies, evaluates and recommends candidates for election to the Board; leads the Board in its annual review of the Board’s performance; and recommends Board members to serve on each committee of the Board. The Corporate Governance and Nominating Committee held one meeting in 2025. The guidelines and procedures for identifying and evaluating nominees for election to the Board are set forth in the charter of the Corporate Governance and Nominating Committee. In general, persons considered for nomination to the Board must have demonstrated outstanding achievement, integrity and judgment and such other skills and experience as will enhance the Board’s ability to serve the long−term interests of the Company and its stockholders. Candidates must also be willing and able to devote the necessary time for Board service. The Corporate Governance and Nominating Committee also considers diversity in terms of gender, ethnicity, age, and other attributes that could contribute to Board effectiveness, and assesses diversity in the course of the Committee’s annual evaluation of Board structure and composition. The Corporate Governance and Nominating Committee considers potential candidates recommended by current directors, company officers, employees and others, and will consider candidates recommended by stockholders for consideration as director nominees. Nominations of persons for election to the Board at the Annual Meeting may be made by any stockholder entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in our Bylaws. Such nominations by any stockholder shall be made pursuant to timely notice in writing to the Secretary. To be timely, a stockholder’s notice shall be delivered to the Secretary at our principal executive offices not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such Annual Meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such Annual Meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. Code of Business Conduct and Corporate Ethics Our Board of Directors has long maintained a Code of Ethics that applies to all our directors, officers, and employees. A copy of our Code of Ethics is available on our website at http://www.xxiicentury.com . We intend to satisfy any disclosure requirements pursuant to Item 5.05 of Form 8-K regarding any amendment to, or waiver from, certain provisions of the Code of Ethics by posting such information on our website. 42 Insider Trading Policy Our directors, executive officers, and employees are required to comply with the 22nd Century Group, Inc. Insider Trading Policy and may not engage in any transaction (such as short-selling) to hedge against the potential decline in value of any of our securities. Our Insider Trading policy also clearly sets forth the prohibition on trading based on material non-public information. Compensation of Directors Elements of 2025 Non-Employee Director Compensation Non-employee directors are compensated for their service on our Board as shown below. Directors who are employees of the Company receive no additional compensation for serving as directors. The Compensation Committee periodically reviews the compensation of our non-employee directors and considers market practices. The Board approved the following compensation for 2025 as follows: ​ ​ ​ 2025 Director Compensation (non-employee) Annual cash retainer: $ 20,000 Chair of Board or Lead Independent Director $ 20,000 Chair of Audit Committee $ 10,000 Chair of Compensation or Corporate Governance & Nominating Committee $ 5,000 Member of a Board Committee $ 5,000 Annual equity award value: ​ ​ Chair of Board or Lead Independent Director $ 60,000 Member of a Board Committee $ 35,000 ​ For fiscal 2026, compensation will consist of cash and equity-based awards, as set forth below: ​ ​ ​ ​ 2026 Director Compensation (non-employee) Annual cash retainer: $ 20,000 Chair of Board or Lead Independent Director $ 20,000 Chair of Audit Committee $ 10,000 Chair of Compensation or Corporate Governance & Nominating Committee $ 5,000 Member of a Board Committee $ 5,000 Annual equity award value: ​ ​ Chair of Board or Lead Independent Director $ 60,000 Member of a Board Committee $ 35,000 ​ Non-employee director equity-based awards will vest annually, and consist of a mix weighted as 75% non-qualifying stock options (NQSO’s) and 25% restricted stock units (RSU’s). Additionally, a one-time special award in November 2025 was granted of NQSOs and RSUs which vest in equal increments over three years. ​ 43 NON-EMPLOYEE DIRECTOR COMPENSATION FOR 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fees ​ ​ ​ ​ ​ ​ earned ​ Restricted ​ ​ ​ ​ or paid in Option Stock Unit All Other ​ ​ Name cash Awards (1) Awards (2) Compensation Total Andrew Arno $ 57,500 $ 80,001 $ 30,517 $ - $ 168,018 Lucille S. Salhany $ 35,000 $ 49,764 $ 18,970 $ - $ 103,734 David Keys (3) $ 20,000 $ 62,399 $ 19,808 $ - $ 102,207 Anthony Johnson (4) $ 17,500 $ - $ - $ - $ 17,500 ​ (1) Represents the grant date fair value computed in accordance with FASB ASC 718. The assumptions used for the option awards are set forth in Note 14 “Equity Based Compensation” of the Notes to the Financial Statements contained in Item 8 of this report. (2) The fair value of each restricted stock unit is based on the stock price of the Company’s common stock on the grant date of the award. (3) Mr. Keys was appointed as a director on July 14, 2025 and received pro rata compensation for service during 2025. (4) Former director. ​ Item 11. Executive Compensation. COMPENSATION DISCUSSION AND ANALYSIS This section contains a discussion of the material elements of compensation awarded to, earned by, or paid to our principal executive officer, our principal financial officer, and our other executive officers who were serving as executive officers of the Company on December 31, 2025. These individuals are identified in the Summary Compensation Table and other compensation tables that follow this section, and are referred to throughout this report as our “named executive officers.” Executive Summary and Overview of 2025 Compensation Our Company’s long-term success depends on our ability to fulfill the expectations of our customers and clients in a competitive environment and deliver value to stockholders. To achieve these goals, it is critical that we are able to attract, motivate, and retain highly talented individuals at all levels of the organization that are committed to our values and objectives. We strive to provide compensation that is (a) linked to stockholder value creation, (b) reflective of the overall performance of the Company and each individual executive, and (c) considerate of the competitive market levels of compensation needed to recruit, retain and motivate top executive talent, while remaining consistent with the other objectives. Compensation Philosophy and Objectives The Company’s executive compensation program is based on the same principles that guide us in establishing all of the Company’s compensation programs: ● Compensation fosters the long−term focus required for the Company’s success. In general, the compensation of Company executives includes longer−term incentives because they are in a greater position to influence longer−term results. ● Compensation reflects the level of job responsibility, individual performance, and Company performance. As employees progress to higher levels in the organization, an increasing proportion of their pay should be linked to Company performance and stockholder returns because those employees are more able to affect the Company’s results. ● Compensation reflects the value of the job in the marketplace. To attract and retain a highly skilled workforce, we must remain competitive with the pay of other premier employers who compete with us for talent. ● While compensation programs and individual pay levels will always reflect differences in job responsibilities, geographies and marketplace considerations, the overall structure of the compensation and benefit programs should be broadly similar and equitable across the organization. 44 Overview of Executive Compensation The Compensation Committee Our Compensation Committee has primary responsibility for, among other things, determining our compensation philosophy, evaluating the performance of our executive officers, setting the compensation and other benefits of our executive officers, and considering the outcome of the advisory votes of stockholders on executive compensation. To ensure alignment of compensation programs with the Company’s needs and goals, the Compensation Committee is informed by and responsive to the overall mission and strategies of the Company as determined by the full Board of Directors. As the strategic focus of the Company evolves, as for example toward commercialization of its products and profitability, the Compensation Committee has and will continue to adapt the Company’s compensation programs to meet these evolving needs. The Compensation Committee also evaluates risks and rewards associated with the Company’s overall compensation philosophy and structure. To the extent our compensation programs provide for incentive−based compensation, the Compensation Committee evaluates whether these programs are designed to pay for performance, and thus encourage only appropriate risk−taking. These programs are also subject to oversight of the Compensation Committee and various functional departments of the Company to ensure that our employees, including our executive officers, are not encouraged to take excessive or unnecessary risks in managing our business. Role of Executive Officers in Compensation Discussions The Compensation Committee meets with our Chief Executive Officer in order to obtain recommendations with respect to the Company’s compensation programs and practices for executives and other employees. Management discusses with the Compensation Committee the practices that have been put in place to identify and mitigate, as necessary, potential risks. The Chief Executive Officer annually reviews the performance of each executive officer, other than himself. The Chief Executive Officer’s performance is reviewed annually by the Compensation Committee. With support from market compensation data, performance reviews and other information, management makes recommendations to the Compensation Committee on the base salaries, bonus targets and equity compensation for the executive officers and other employees. The Compensation Committee takes management’s recommendations into consideration, but is not bound by management’s recommendations with respect to executive compensation. While management attends certain meetings of the Compensation Committee, the Compensation Committee also holds executive sessions not attended by any members of management or by non−independent directors. The Compensation Committee annually reviews and recommends for approval to the full Board all elements of compensation of the Chief Executive Officer, and reviews, counsels, and makes recommendations regarding the compensation elements of other senior executives. The Compensation Committee also approves equity awards to all employees and directors of the Company. Elements of Executive Compensation For 2025, the principal components of compensation for named executive officers were: (1) Base Salary, (2) Performance−Based Incentive Compensation, (3) Long−Term Equity Incentive Compensation, (4) Personal Benefits, and (5) Other Compensation. In determining the amount and relative allocation among each component of compensation for each named executive officer, the Compensation Committee considered, among other factors, each executive officer’s experience level and historical performance, compensation paid by companies comparable in size, data obtained from management’s recruitment activities, historical rates of executive compensation, Company revenues and financial outlook, and alignment with the Company’s overall compensation philosophy. Base Salary Base salaries are set at levels that the Compensation Committee deems to be sufficient to attract and retain highly talented executive officers capable of fulfilling the Company’s key objectives. Base salaries are also set with the goal of rewarding executive officers on a day−to−day basis for their time and services while encouraging them to strive for performance−based and long−term incentives. 45 The table below shows the base salary established by the Compensation Committee for each of our named executive officers for 2025 and 2026, and the percentage change compared to the prior fiscal year. Salary adjustments typically do not coincide with the beginning of the fiscal year, so the amounts shown below may differ from those shown in the 2025 Summary Compensation Table. ​ ​ ​ ​ ​ ​ ​ Percentage Increase ​ Percentage Increase ​ 2025 Over 2024 2026 Over 2025 Name Base Salary Base Salary Base Salary Base Salary Lawrence D. Firestone $425,000 0% $425,000 0% Chief Executive Officer ​ ​ ​ ​ Daniel A. Otto $315,000 0% $315,000 0% Chief Financial Officer ​ ​ ​ ​ Jonathan Staffeldt $315,000 0% $315,000 0% General Counsel ​ ​ ​ ​ Robert Manfredonia $275,000 0% $275,000 0% Executive Vice President Sales and Marketing ​ ​ ​ ​ Scott Marion $275,000 0% $275,000 0% Vice President Manufacturing Operations ​ ​ ​ ​ ​ Performance−Based Incentive Compensation Historically, the Compensation Committee has considered, and in some cases established, incentive bonus plans for other executive officers that align pay with performance. Because the Company has not in the Committee’s judgment achieved sufficient levels of revenues or profits, the Committee did not approve performance-based incentive compensation awards for named executive officers in 2024. During 2024, the Compensation Committee developed a new performance-based incentive compensation plan for our executive officers, which became effective initially for fiscal year 2025. The performance-based incentive compensation program for 2025 consists of (i) annual performance-based cash bonus opportunity and (ii) long-term equity incentive compensation consisting of equity awards. The Compensation Committee also developed a performance-based annual cash bonus plan for 2025. Cash bonus amounts awarded were determined based on (i) a percentage of each executive position’s base pay, (ii) Company performance, (iii) individual performance. Weighting of Company performance was 80% and individual performance was 20%. The cash bonus pool was based on achievement of key financial metrics for the fiscal year, funded as 25% of Adjusted EBITDA greater than $2.0 million, and up to 150% of target. Individual performance was tied to the achievement of quarterly initiatives, which was based on at least 5 measurable objectives defined for that position that were strategic for the Company in achieving its goals. In order to calculate EBITDA, the Company adjusts net (loss) income by adding back interest expense (income), provision (benefit) for income taxes, and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted by the Company for certain non-cash and/or non-operating expenses, including adding back equity-based employee compensation expense, restructuring and restructuring-related charges such as impairment, acquisition and transaction costs, and other unusual or infrequently occurring items, if applicable, such as inventory reserves and adjustments, gains or losses on disposal of property, plant and equipment, and gains or losses on investments. 46 For fiscal 2025, the Compensation Committee target bonus levels and achieved bonus amounts as follows: ​ ​ ​ ​ Name Target Bonus % of Base Salary Target Cash Bonus Achieved 2025 Cash Bonus (1) Lawrence D. Firestone 100% $425,000 $0 Chief Executive Officer ​ ​ ​ Daniel A. Otto 75% $236,250 $0 Chief Financial Officer ​ ​ ​ Jonathan Staffeldt 75% $236,250 $0 General Counsel ​ ​ ​ Robert Manfredonia 75% $206,250 $0 Executive Vice President Sales and Marketing ​ ​ ​ Scott Marion 75% $206,250 $0 Vice President Manufacturing Operations ​ ​ ​ ​ ​ ​ ​ (1) The Company's adjusted EBITDA loss for the year ended December 31, 2025 resulted in a $0 payout. ​ Long-Term Equity Incentive Program Compensation Our 2021 Omnibus Incentive Plan, as amended and restated, authorizes the Company to grant various types of equity awards, including stock options and restricted stock units, as incentives for management to increase stockholder value. Equity awards are granted to executive officers as long−term incentives in order to align executives’ performance with the interests of the Company’s stockholders. In addition, the multi-year nature of the vesting periods of such awards encourages executive retention. Our Compensation Committee has authority to determine eligible participants, the types of awards, and the terms and conditions of awards. Upon review of the Company’s financial performance for 2024, the Committee determined to forego issuance of long-term equity incentive awards for 2024. For 2025, the Compensation Committee developed a new long-term equity incentive program, whereby recipients’ equity awards are aligned to the prior fiscal years achieved cash bonus, with initial grants for fiscal 2025 being set as equal to the target cash bonus amounts. Equity awards are split as 75% in either non-qualifying stock options (NQSO’s) or incentive stock options (ISO’s) and 25% restricted stock units (RSU’s), and the number of shares to award was determined by taking the target cash bonus as the numerator divided by the 30-day average of closing stock price prior to grant as the denominator. All equity awards will vest in equal annual installments over a three-year period, subject to continued service with us. For fiscal 2025, the table below summarized the number of NQSO’s and RSU’s granted to our executives: ​ ​ ​ ​ Name ISO's (#) NQSO's (#) RSU's (#) Lawrence D. Firestone 13,365 261 4,542 Chief Executive Officer ​ ​ ​ Daniel A. Otto 7,430 146 2,526 Chief Financial Officer ​ ​ ​ Jonathan Staffeldt 7,430 146 2,526 General Counsel ​ ​ ​ Robert Manfredonia 6,486 127 2,205 Executive Vice President Sales and Marketing ​ ​ ​ Scott Marion 6,486 127 2,205 Vice President Manufacturing Operations ​ ​ ​ ​ 47 Retirement and Other Benefits As employees, the executives were eligible to participate in health and welfare benefits, as offered to our general workforce, designed to attract and retain a skilled workforce in a competitive marketplace. These benefits help ensure that the Company has a healthy and focused workforce through reliable and competitive health and other personal benefits. We do not maintain any pension or non-qualified deferred compensation plans, but we do sponsor a 401(k)-plan pursuant to which we make a safe harbor non-elective contribution of 3% of the employee’s annual compensation, subject to certain wage maximums, to provide employees with the opportunity to save for retirement on a tax deferred basis. These benefits were considered in relation to total compensation packages, but did not materially impact decisions regarding other elements of executive officer compensation. Compensation on Termination of Employment Each of our NEOs has an employment agreement that provides for severance in the event they are terminated without cause or they leave for good reason. We believe these agreements are important to attract and retain NEOs since many companies we compete with offer severance compensation. For additional information on compensation on termination of employment, see “Executive Compensation — Employment Agreements with Named Executive Officers” and “Executive Compensation — Compensation on Termination of Employment.” Policy on Hedging Transactions We prohibit our officers and directors from engaging in hedging transactions or arrangements designed to lock in the value of their company securities. This prevents our officers and directors from continuing to own company securities without having the full risks and rewards of ownership. Recoupment/Clawback Policies The Sarbanes-Oxley Act of 2002 subjects incentive compensation and stock sale profits of our CEO and CFO to forfeiture in the event of an accounting restatement resulting from any non-compliance, as a result of misconduct, with any financial reporting requirement under GAAP and SEC rules. On June 22, 2023 we adopted the 22nd Century Group, Inc. Compensation Recovery Policy in full compliance with Listing Rule 5608(a). Compensation Committee Interlocks and Insider Participation During the last fiscal year, no member of the Compensation Committee had a relationship with us that required disclosure under Item 404 of Regulation S-K. During the past fiscal year, none of our executive officers served as a member of the Board of Directors or Compensation Committee, or other committee serving an equivalent function, for any entity that has one (1) or more executive officers who served as members of our Board of Directors or our Compensation Committee. None of the members of our Compensation Committee is an officer or employee of our Company, nor have they ever been an officer or employee of our Company. Compensation Committee Report For the year ended December 31, 2025, the Compensation Committee reviewed and discussed the foregoing Compensation Discussion and Analysis with the Company’s management and Board of Directors. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included herein. Submitted by the members of the Compensation Committee David Keys, Chair Andrew Arno Lucille S. Salhany 48 ​ Executive Compensation SUMMARY COMPENSATION TABLE FOR 2025 The following table summarizes the compensation of our NEOs for 2025. The amounts reported for salary represent annual wages as reported to the internal revenue service reflective of any lawful withholdings or deductions, and therefore may differ from stated annual salary rates for the NEO’s. The amounts reported for stock awards may not represent the amounts that the NEOs will actually realize from the awards. Whether, and to what extent, a named executive officer realizes value will depend on our performance, stock price and continued employment. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Option ​ Stock ​ All Other ​ ​ Name and Principal Position Year ​ Salary ​ Bonus (1) ​ Awards (2) ​ Awards (3) ​ Compensation (4) ​ Total Lawrence D. Firestone 2025 $ 391,800 $ - $ 382,295 $ 145,197 $ 20,443 $ 939,735 Chief Executive Officer 2024 $ 411,219 $ - $ - $ - $ 15,460 $ 426,679 Daniel A. Otto 2025 $ 277,390 $ - $ 212,540 $ 80,738 $ 33,688 $ 604,356 Chief Financial Officer 2024 $ 279,412 $ 60,000 $ - $ - $ 30,570 $ 369,982 Jonathan Staffeldt 2025 $ 288,553 $ - $ 212,540 $ 80,738 $ 19,448 $ 601,279 General Counsel 2024 $ 294,048 $ 62,500 $ - $ - $ 17,393 $ 373,941 Robert Manfredonia 2025 $ 240,064 $ - $ 185,529 $ 70,495 $ 25,173 $ 521,261 Executive Vice President Sales and Marketing 2024 $ 104,007 $ - $ - $ - $ 5,035 $ 109,042 Scott Marion 2025 $ 241,788 $ - $ 185,529 $ 70,495 $ 35,594 $ 533,406 Vice President Manufacturing Operations 2024 $ 237,429 $ - $ - $ - $ 29,155 $ 266,584 ​ (1) Bonus amounts relate to amounts paid under retention agreements executed during July 2023 with the respective individuals. Remaining amounts owed under the retention agreements were terminated in April 2024. (2) Represents the grant date fair value computed in accordance with FASB ASC 718. The assumptions used for the option awards are set forth in Note 14 “Equity Based Compensation” of the Notes to the Financial Statements contained in Item 8 of this report. (3) The fair value of each restricted stock unit is based on the stock price of the Company’s common stock on the grant date of the award. (4) All Other Compensation consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employer ​ ​ ​ ​ ​ ​ ​ Contributions ​ ​ ​ ​ ​ ​ ​ to Company ​ All Other ​ ​ ​ Fringe ​ 401(k) ​ Compensation Name Year ​ Benefits * ​ Plan ​ Total Lawrence D. Firestone 2025 $ 9,943 $ 10,500 $ 20,443 Daniel A. Otto 2025 $ 24,238 $ 9,450 $ 33,688 Jonathan Staffeldt 2025 $ 9,998 $ 9,450 $ 19,448 Robert Manfredonia 2025 $ 18,827 $ 6,346 $ 25,173 Scott Marion 2025 $ 27,344 $ 8,250 $ 35,594 ​ *Includes Company paid premiums for health insurance, dental insurance, vision insurance, group-term life insurance, and long and short-term disability insurance. Certain executives had health insurance premiums over $10,000 (Daniel A. Otto - $18,634 and Scott Marions - $18,834). ​ ​ 49 GRANTS OF PLAN BASED AWARDS DURING 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grant Date ​ ​ ​ ​ ​ ​ Restricted ​ Stock ​ ​ ​ Fair Value ​ ​ ​ ​ ​ ​ Stock Unit ​ Option ​ Exercise ​ Restricted ​ ​ ​ ​ ​ ​ Awards: ​ Awards: ​ Price of ​ Stock Units, ​ ​ ​ ​ ​ ​ Number of ​ Number ​ Option ​ Stock Awards ​ ​ ​ ​ Date of Board ​ Shares of ​ of Shares ​ Awards ​ and Option Name ​ Grant Date ​ Action ​ Stock (#) ​ (#) ​ ($) ​ Awards ($) (3) Lawrence D. Firestone ​ 3/10/2025 ​ 3/10/2025 ​ 87 (1) ​ 261 (1) ​ 605 ​ $ 218,234 ​ ​ 11/5/2025 ​ 11/5/2025 ​ 4,455 (2) ​ 13,365 (2) ​ 19.05 ​ $ 309,257 Daniel A. Otto ​ 3/10/2025 ​ 3/10/2025 ​ 49 (1) ​ 146 (1) ​ 605 ​ $ 121,368 ​ ​ 11/5/2025 ​ 11/5/2025 ​ 2,477 (2) ​ 7,430 (2) ​ 19.05 ​ $ 171,911 Jonathan Staffeldt ​ 3/10/2025 ​ 3/10/2025 ​ 49 (1) ​ 146 (1) ​ 605 ​ $ 121,368 ​ ​ 11/5/2025 ​ 11/5/2025 ​ 2,477 (2) ​ 7,430 (2) ​ 19.05 ​ $ 171,911 Robert Manfredonia ​ 3/10/2025 ​ 3/10/2025 ​ 43 (1) ​ 127 (1) ​ 605 ​ $ 105,943 ​ ​ 11/5/2025 ​ 11/5/2025 ​ 2,162 (2) ​ 6,486 (2) ​ 19.05 ​ $ 150,081 Scott Marion ​ 3/10/2025 ​ 3/10/2025 ​ 43 (1) ​ 127 (1) ​ 605 ​ $ 105,943 ​ ​ 11/5/2025 ​ 11/5/2025 ​ 2,162 (2) ​ 6,486 (2) ​ 19.05 ​ $ 150,081 ​ (1) Represents RSUs and Stock Options which vest in equal increments over three years on March 10, 2026, 2027 and 2028, subject to continued service. (2) Represents RSUs and Stock Options which vest in equal increments over three years on November 5, 2026, 2027 and 2028, subject to continued service. (3) Represents the grant date fair value computed in accordance with FASB ASC 718. The assumptions used for the option awards are set forth in Note 14 “Equity Based Compensation” of the Notes to the Financial Statements contained in Item 8 of this report. The fair value of each restricted stock unit is based on the stock price of the Company’s common stock on the grant date of the award. ​ ​ OUTSTANDING EQUITY AWARDS AT FISCAL-YEAR END ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Option awards ​ Stock awards ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity ​ Equity Incentive ​ ​ ​ ​ ​ ​ ​ Equity ​ ​ ​ ​ ​ ​ Incentive ​ Plan Awards: ​ ​ ​ ​ ​ ​ ​ Incentive ​ ​ ​ ​ ​ ​ Plan Awards: ​ Market or ​ ​ ​ ​ ​ ​ ​ Plan Awards: ​ ​ ​ ​ ​ ​ Number of ​ Payout Value of ​ ​ Number of ​ Number of ​ ​ Number of ​ ​ ​ ​ ​ ​ Unearned ​ Unearned ​ ​ Securities ​ Securities ​ ​ Securities ​ ​ ​ ​ ​ ​ Shares, ​ Shares, ​ ​ Underlying ​ Underlying ​ ​ Underlying ​ ​ ​ ​ ​ ​ Restricted Stock ​ Restricted Stock ​ ​ Unexercised ​ Unexercised ​ ​ Unexercised ​ ​ ​ ​ ​ ​ Units or Other ​ Units or Other ​ ​ Options ​ Options ​ ​ Unearned ​ Option ​ Option ​ Rights That ​ Rights That ​ ​ Exercisable ​ Unexercisable ​ ​ Options ​ Exercise ​ Expiration ​ Have Not Vested ​ Have Not Vested Name ​ (#) ​ (#) ​ ​ (#) ​ Price ​ Date ​ (#) ​ ($) (3) Lawrence D. Firestone ​ — ​ — ​ ​ 261 (1) ​ ​ 605 ​ 3/8/2035 ​ 87 (1) ​ $ 1,005 ​ ​ — ​ — ​ ​ 13,365 (2) ​ ​ 19.05 ​ 11/3/2035 ​ 4,455 (2) ​ $ 51,455 Daniel A. Otto ​ — ​ — ​ ​ 146 (1) ​ ​ 605 ​ 3/8/2035 ​ 49 (1) ​ $ 566 ​ ​ — ​ — ​ ​ 7,430 (2) ​ ​ 19.05 ​ 11/3/2035 ​ 2,477 (2) ​ $ 28,609 Jonathan Staffeldt ​ — ​ — ​ ​ 146 (1) ​ ​ 605 ​ 3/8/2035 ​ 49 (1) ​ $ 566 ​ ​ — ​ — ​ ​ 7,430 (2) ​ ​ 19.05 ​ 11/3/2035 ​ 2,477 (2) ​ $ 28,609 Robert Manfredonia ​ — ​ — ​ ​ 127 (1) ​ ​ 605 ​ 3/8/2035 ​ 43 (1) ​ $ 497 ​ ​ — ​ — ​ ​ 6,486 (2) ​ ​ 19.05 ​ 11/3/2035 ​ 2,162 (2) ​ $ 24,971 Scott Marion ​ — ​ — ​ ​ 127 (1) ​ ​ 605 ​ 3/8/2035 ​ 43 (1) ​ $ 497 ​ ​ — ​ — ​ ​ 6,486 (2) ​ ​ 19.05 ​ 11/3/2035 ​ 2,162 (2) ​ $ 24,971 ​ (1) Represents RSUs and Stock Options which vest in equal annual increments over three years on March 10, 2026, 2027 and 2028, subject to continued service. (2) Represents RSUs and Stock Options which vest in equal annual increments over three years on November 5, 2026, 2027 and 2028, subject to continued service. (3) The amounts in this column are based on the closing stock price of the Company’s common stock on December 31, 2025. These amounts do not reflect the actual amounts that may be realized. ​ ​ ​ OPTION EXERCISES AND STOCK VESTED DURING 2025 ​ None of our NEOs had any equity awards that vested during 2025. 50 ​ Employment Agreements with Named Executive Officers On November 3, 2025, we entered into employment agreements with each of our NEOs with initial durations indicated in the table below, with automatic one-year renewal periods unless either party provides advance written notice of an intent not to renew. The Employment Agreements specify the titles and provide for base salaries at the current levels indicated in the table below. They also provide that the executive officers will be eligible to participate in annual cash incentive and long-term cash and equity incentive plans and programs, as well as other employee benefit plans, that are generally provided to the Company’s senior executives from time to time. The Employment Agreements also provide that, upon an involuntary termination of the executive officer’s employment by the Company without Cause (as defined in the Employment Agreements), or upon a resignation for Good Reason (as defined in the Employment Agreements) upon or within 24 months following a Change of Control (as defined in the Company’s 2021 Omnibus Incentive Plan or any successor incentive plan) (the “Change of Control Employment Period”), the executive officer will receive the severance payment indicated in the table below, as well as subsidized COBRA benefits for the continuation period indicated in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Severance Payment on Severance Payment on ​ ​ ​ ​ ​ Qualifying Termination Qualifying Termination ​ ​ ​ ​ Current Not During During COBRA ​ ​ Initial Base Change of Control Change of Control Continuation Executive Officer Title Term Salary Employment Period Employment Period Period Lawrence D. Firestone Chief Executive Officer 42 months $ 425,000 1.5x sum of base salary plus target bonus 2.5x sum of base salary plus greater of target bonus or prior year’s actual bonus 18 months Daniel A. Otto Chief Financial Officer 39 months $ 315,000 1.0x sum of base salary plus target bonus 1.5x sum of base salary plus greater of target bonus or prior year’s actual bonus 12 months Jonathan Staffeldt General Counsel 36 months $ 315,000 1.0x sum of base salary plus target bonus 1.5x sum of base salary plus greater of target bonus or prior year’s actual bonus 12 months Robert Manfredonia Executive Vice President Sales and Marketing 36 months $ 275,000 1.0x sum of base salary plus target bonus 1.5x sum of base salary plus greater of target bonus or prior year’s actual bonus 12 months Scott Marion Vice President Manufacturing Operations 39 months $ 275,000 1.0x sum of base salary plus target bonus 1.5x sum of base salary plus greater of target bonus or prior year’s actual bonus 12 months ​ “Cause” is defined generally in the Employment Agreements to include (a) a willful act or omission that is a material breach of any material obligation under the Employment Agreement or material written policy or procedure and failure to cure, (b) continued willful failure or refusal to substantially perform duties reasonably required, (c) an act of moral turpitude, dishonesty or fraud by, or criminal conviction (excluding non-felony convictions relating solely to vehicle and traffic offenses), (d) material misappropriation of Company property or (e) other willful misconduct that is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company. “Good Reason” is defined generally in the Employment Agreements to include (1) a breach by the Company or successor in the Change of Control of the Employment Agreement, (2) a reduction in base salary, percentage of base salary available as incentive compensation or bonus opportunity or benefits, in each case relative to those most favorable to the in effect at any time during the 180-day period prior to the Change of Control or, to the extent more favorable to the executive officer, those in effect at any time after the Change of Control, (3) the removal of the executive officer from, or failure to reelect or reappoint the executive to, any of the positions held with the Company on the date of the Change of Control or any other positions with the Company to which the executive officer has been elected, appointed or assigned, (4) a material adverse change, without the executive officer’s written consent, in the executive officer’s working conditions or status with the Company relative to the most favorable working conditions or status in effect during the 180-day period prior to the Change of Control or, to the extent more favorable to the executive officer, those in effect at any time after the Change of Control, (5) the relocation by more than 50 miles from the principal place of employment on the date 180 days prior to the Change of Control, (6) a requirement to travel 20% in excess of the average number of days per month the executive officer was required to travel during the 180-day period prior to the Change of Control, or (7) a failure to obtain an agreement from a successor in a Change of Control expressly to assume and agree to perform from and after the date of such assignment all of the terms, conditions and provisions imposed by the Employment Agreement. ​ Upon a qualifying termination, the executive officers will also receive accrued but unpaid benefits. Equity awards will be treated as provided in the applicable equity incentive plan and award agreements. The Employment Agreements also require the executive officers to comply with certain restrictive covenants. ​ 51 ​ Compensation on Termination of Employment The following table illustrates the additional compensation that we estimate would be payable to each of our NEOs on termination of employment under each of the circumstances described above, assuming the termination occurred on December 31, 2025. The amounts shown are estimates and do not necessarily reflect the actual amounts that these individuals would receive on termination of employment. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Early ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vesting ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of ​ Early ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fringe ​ Restricted ​ Vesting ​ ​ ​ ​ ​ Salary ​ ​ ​ ​ Fringe ​ Stock ​ of Stock ​ ​ ​ Name ​ ​ ​ Multiple ​ ​ ​ Salary ​ ​ ​ Benefits (1) ​ ​ ​ Units (2) ​ ​ ​ Options (3) ​ ​ ​ Total Termination by the Company Without Cause or by the Executive for Good Reason ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lawrence D. Firestone ​ 1.5x ​ $ 637,500 ​ $ 11,877 ​ $ 52,460 ​ $ - ​ $ 701,837 Daniel A. Otto ​ 1.0x ​ $ 315,000 ​ $ 21,382 ​ $ 29,175 ​ $ - ​ $ 363,557 Jonathan Staffeldt ​ 1.0x ​ $ 315,000 ​ $ 7,918 ​ $ 29,175 ​ $ - ​ $ 352,093 Robert Manfredonia ​ 1.0x ​ $ 275,000 ​ $ 16,944 ​ $ 25,468 ​ $ - ​ $ 317,412 Scott Marion ​ 1.0x ​ $ 275,000 ​ $ 24,545 ​ $ 25,468 ​ $ - ​ $ 325,013 Death or Disability ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lawrence D. Firestone ​ 1.5x ​ $ 637,500 ​ $ 11,877 ​ $ 52,460 ​ $ - ​ $ 701,837 Daniel A. Otto ​ 1.0x ​ $ 315,000 ​ $ 21,382 ​ $ 29,175 ​ $ - ​ $ 363,557 Jonathan Staffeldt ​ 1.0x ​ $ 315,000 ​ $ 7,918 ​ $ 29,175 ​ $ - ​ $ 352,093 Robert Manfredonia ​ 1.0x ​ $ 275,000 ​ $ 16,944 ​ $ 25,468 ​ $ - ​ $ 317,412 Scott Marion ​ 1.0x ​ $ 275,000 ​ $ 24,545 ​ $ 25,468 ​ $ - ​ $ 325,013 Change of Control with Triggering Event ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lawrence D. Firestone ​ 2.5x ​ $ 1,062,500 ​ $ 11,877 ​ $ 52,460 ​ $ - ​ $ 1,126,837 Daniel A. Otto ​ 1.5x ​ $ 472,500 ​ $ 21,382 ​ $ 29,175 ​ $ - ​ $ 523,057 Jonathan Staffeldt ​ 1.5x ​ $ 472,500 ​ $ 7,918 ​ $ 29,175 ​ $ - ​ $ 509,593 Robert Manfredonia ​ 1.5x ​ $ 412,500 ​ $ 16,944 ​ $ 25,468 ​ $ - ​ $ 454,912 Scott Marion ​ 1.5x ​ $ 412,500 ​ $ 24,545 ​ $ 25,468 ​ $ - ​ $ 462,513 ​ (1) Health insurance payments have been estimated based on current rates. (2) The dollar amount is calculated based on the closing share price on December 31, 2025. (3) As of December 31, 2025, the intrinsic value of the stock options was zero. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 52 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth information regarding the beneficial ownership of our common stock as of March 20, 2026, by: i. each person who, to our knowledge, owns more than 5% of our common stock; ii. each of our current directors and executive officers; and iii. all our current directors and executive officers as a group. Derivative securities exercisable or convertible into shares of our common stock within sixty (60) days of March 20, 2026, are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the person holding securities but are not deemed outstanding for computing the percentage of any other person. Beneficial ownership representing less than 1% is denoted with an asterisk (*). The address of named beneficial owners that are officers and/or directors of the Company is: c/o 22nd Century Group, Inc., 321 Farmington Road, Mocksville, North Carolina. 27028. The following table is based upon information supplied by officers and directors, and with respect to 5% or greater stockholders who are not officers or directors, information filed with the SEC. ​ ​ ​ ​ Number of ​ ​ Shares Percentage ​ Beneficially Beneficially Name of Beneficial Owner Owned Owned (1) 5% + Beneficial Stockholders: ​ ​ Anson Funds Management LP (2) 50,881 7.7% ​ ​ ​ Management and Directors: ​ ​ Lawrence D. Firestone (3) 31 * Daniel A. Otto (4) 17 * Jonathan Staffeldt (4) 17 * Robert Manfredonia (5) 14 * Scott Marion (5) 15 * Andrew Arno (6) 14 * Lucille S. Salhany (7) 9 * David Keys (8) 142 * All directors and executive officers as a group (8 persons) (3) - (8) 259 0.00001% ​ (1) Based on 662,023 shares of common stock issued and outstanding as of March 20, 2026. (2) Anson Funds Management LP (d/b/a Anson Funds), a Texas limited partnership, Anson Management GP LLC, a Texas limited liability company, Mr. Tony Moore, the principal of Anson Funds Management LP and Anson Management GP LLC, Anson Advisors Inc., an Ontario, Canada corporation, Mr. Amin Nathoo, a director of Anson Advisors Inc., and Mr. Moez Kassam, a director of Anson Advisors Inc.. Ownership relates to a private fund to which Anson Funds Management LP and Anson Advisors Inc. serve as co-investment advisors (the “Fund”). Anson Funds Management LP and Anson Advisors Inc. serve as co-investment advisors to the Fund and may direct the vote and disposition of the shares of Common Stock held by the Fund. As the general partner of Anson Funds Management LP, Anson Management GP LLC may direct the vote and disposition of the shares of Common Stock held by the Fund. As the principal of Anson Fund Management LP and Anson Management GP LLC, Mr. Moore may direct the vote and disposition of the shares of Common Stock held by the Fund. As directors of Anson Advisors Inc., Mr. Nathoo and Mr. Kassam may each direct the vote and disposition of the shares of Common Stock held by the Fund. Business address is 16000 Dallas Parkway, Suite 800, Dallas, Texas 75248 (3) Consists of (a) 87 shares of common stock issuable upon exercise of stock options and (b) 4,426 restricted stock units and 13,278 options to purchase common shares are not included in the number of beneficially owned shares because they do not vest within 60 days of March 20, 2026. (4) Consists of (a) 49 shares of common stock issuable upon exercise of stock options and (b) 2,461 restricted stock units and 7,381 options to purchase common shares are not included in the number of beneficially owned shares because they do not vest within 60 days of March 20, 2026. 53 (5) Consists of (a) 42 shares of common stock issuable upon exercise of stock options and (b) 2,148 restricted stock units and 6,444 options to purchase common shares are not included in the number of beneficially owned shares because they do not vest within 60 days of March 20, 2026. (6) Consists of (a) 37 shares of common stock issuable upon exercise of stock options and (b) 1,153 restricted stock units and 3,460 options to purchase common shares are not included in the number of beneficially owned shares because they do not vest within 60 days of March 20, 2026. (7) Consists of (a) 22 shares of common stock issuable upon exercise of stock options and (b) 734 restricted stock units and 2,202 options to purchase common shares are not included in the number of beneficially owned shares because they do not vest within 60 days of March 20, 2026. (8) Consists of (a) 424 shares of common stock issuable upon exercise of stock options and (b) 839 restricted stock units and 2,516 options to purchase common shares are not included in the number of beneficially owned shares because they do not vest within 60 days of March 20, 2026. ​ DELINQUENT SECTION 16(a) REPORTS Section 16(a) of the Exchange Act requires our directors, executive officers and stockholders holding more than 10% of our outstanding common stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock. Section 16(a) filers are required by Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on a review of the ownership reports filed with Securities and Exchange Commission during 2024, we believe that all Section 16(a) filing requirements were met on a timely basis, except for a late Form 3 and 4 filed by David Keys due to delays in obtaining EDGAR filing codes and a late Form 4 filed by Andy Arno. ​ ​ ​ Item 13. Certain Relationships and Related Transactions, and Director Independence. Our policy is to enter into transactions with related persons on terms that, on the whole, are no less favorable to us than those available from unaffiliated third parties. Our Board of Directors has adopted written policies and procedures regarding related person transactions. For purposes of these policies and procedures: ● A “related person” means any of our directors, executive officers, nominees for director, holder of 5% or more of our common stock or any of their immediate family members; and ● A “related person transaction” generally is a transaction (including any indebtedness or a guarantee of indebtedness) in which we were or are to be a participant and the amount involved exceeds $120,000 and in which a related person had or will have a direct or indirect material interest. Each of our executive officers, directors or nominees for director is required to disclose to our Audit Committee certain information relating to related person transactions for review, approval or ratification by our Audit Committee. In making a determination about approval or ratification of a related person transaction, our Audit Committee will consider the information provided regarding the related person transaction and whether consummation of the transaction is believed by the Audit Committee to be in our best interests. Our Audit Committee may take into account the effect of a director’s related person transaction on the director’s status as in independent member of our Board of Directors and eligibility to serve on committees of our Board under SEC rules and the listing standards of the Nasdaq Stock Market. Any related person transaction must be disclosed to our full Board of Directors. Except as set forth below, there were no related party transactions during 2025 and 2024. Beginning in the fourth quarter of 2024, the Company generated revenue from a related party contract manufacturing customer and during the years ended December 31, 2024 and December 31, 2025, private label cigarette revenue, net and corresponding contract asset from the related party were not material. The arrangement was terminated in April 2025. ​ ​ ​ 54 Item 14. Principal Accounting Fees and Services. On August 22, 2025, the Audit Committee of the Board of Directors approved the replacement of Freed Maxick P.C. (“Freed”) as our independent registered public accounting firm, due to the acquisition of certain assets of Freed by Withum Smith+Brown, PC (“Withum”). ​ The following table shows the fees billed to us for the audits and other services provided by for the fiscal years ended December 31, 2025 and 2024, respectively, by Withum (and prior to the acquisition, Freed). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Audit fees ​ $ 290,883 ​ $ 299,055 Audit-related fees ​ ​ — ​ ​ — Tax fees ​ ​ — ​ ​ — All other fees ​ ​ — ​ ​ — ​ ​ $ 290,883 ​ $ 299,055 ​ Audit Fees consist of the aggregate fees billed for professional services rendered for the audit of our consolidated annual financial statements and the quarterly reviews of financial statements and for any other services that are normally provided by our independent registered public accountants in connection with our statutory and regulatory filings or engagements. All of the services described above were pre-approved by our Audit Committee. The Committee concluded that the provision of these services by Withum would not affect their independence. Pre-Approval Policies and Procedures The Audit Committee, in accordance with its charter, must pre-approve all non-audit services provided by our independent registered public accountants. The Audit Committee generally pre-approves specified series in the defined categories of audit services, audit related services and tax services up to specified amounts. Pre-approval may also be given as part of our Audit Committee’s approval of the scope of the engagement of the independent registered public accountants or on an individual, explicit case-by-case basis before the independent auditor is engaged to provide each service. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 55 PART IV Item 15. Exhibits and Financial Statement Schedules. (a) (1) Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 100) F-1 Report of Independent Registered Public Accounting Firm (PCAOB ID 317) ​ F-3 ​ ​ ​ Consolidated Financial Statements: Consolidated Balance Sheets F-5 Consolidated Statements of Operations and Comprehensive Loss F-6 ​ ​ ​ Consolidated Statements of Changes in Shareholders’ Equity (Deficit) and Mezzanine Equity F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9–42 ​ (a) (2) Financial Statement Schedules Financial statement schedules have been omitted because they are not required. (b) Exhibits Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index below following the Financial Statements, which are incorporated herein by this reference. ​ ​ ​ ​ ​ ​ 56 ​ Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of 22nd Century Group, Inc. ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheet of 22 nd Century Group, Inc. and subsidiaries (the “Company”) as of December 31, 2025, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity (deficit) and mezzanine equity and cash flows for year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. ​ Other Matter ​ The financial statements of the Company as of and for the year ended December 31, 2024 were audited by Freed Maxick P.C., who joined WithumSmith+Brown, PC on August 1, 2025, and rendered their opinion on such statements on March 20, 2025. ​ Going Concern ​ The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, 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. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters ​ The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ F-1 Accounting and Valuation for the Modifications of the August 2025 Series A Convertible Preferred Stock Offering ​ Critical Audit Matter Description As discussed in Note 9 of the financial statements, during the year ended December 31, 2025, the Company entered a securities purchase agreement with investors to sell Series A Convertible Preferred Stock and warrants. Subsequent to the initial sale, the terms of both the Series A Convertible Preferred Stock and warrants were amended. As a result of the amendments, the Company determined that the fair value of the Series A Convertible Preferred Stock and warrants had increased and recorded a deemed dividend of approximately $4.7 million. We identified the evaluation of the Company’s accounting and valuation for modifications of the Series A Convertible Preferred Stock and warrants as a critical audit matter due to the complexity of the calculations required in determining the proper accounting treatment and fair value of the Series A Convertible Preferred Stock and warrants. This led to a high degree of auditor judgement, subjectivity, and effort in performing procedures to evaluate the reasonableness of management’s assumptions and calculations. Additionally, auditing these elements required the involvement of professionals with specialized skill and knowledge. ​ How the Critical Audit Matter Was Addressed in the Audit Addressing the critical audit matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedures we performed included: (i) obtaining and reading relevant amendment agreements for the Series A Convertible Preferred Stock and warrants, (ii) obtaining an understanding and evaluating of the design of controls over the financial reporting and equity transaction cycle, (iii) assessing management’s conclusions of the modifications under the relevant guidance, (iii) testing the accuracy and completeness of the inputs to the external valuation analysis to evaluate whether the conclusions reached were reasonable and consistent with our understanding, (iv) utilizing the knowledge, experience, and expertise of our internal valuation specialists to assess the reasonableness of the methodologies employed to value the fair value of the Series A Preferred Stock and warrants at the amendment date, and (v) assessing the completeness and accuracy of the financial statement disclosures. ​ /s/ WithumSmith+Brown, PC ​ We have served as the Company’s auditor since 2011. ​ Buffalo, New York March 26, 2026 ​ PCAOB ID Number 100 ​ ​ F-2 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of 22nd Century Group, Inc. ​ Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of 22nd Century Group, Inc. and subsidiaries (the Company) as of December 31, 2024, the related consolidated statements of operations, statements of comprehensive loss, changes in shareholders' equity and cash flows for the year ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. ​ Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, 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. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. ​ Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ Debt related accounting and classification Critical Audit Matter description As discussed in Note 12 of the financial statements, during the year ended December 31, 2024, the Company amended their debt via a series of letter agreements/amendments. For each agreement/amendment, the Company was required to evaluate troubled debt restructuring applicability and debt modification versus extinguishment analysis. None of these agreements/agreements met the criteria to qualify as an extinguishment. We identified the accounting for the various agreements/amendments as a critical audit matter. Auditing the accounting for these items was especially challenging due to the inherent complexity of the agreements/amendments. Auditing these elements required an increased level of audit effort, including the involvement of professionals with specialized skill and knowledge. ​ F-3 How the Critical Audit Matter was addressed in the Audit Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedure we performed include: Inspecting the underlying agreements/amendments and ensuring appropriate application of the relevant accounting literature to the terms of the amended Debentures. ​ Subordinated note settlement accounting, classification, and valuation Critical Audit Matter description As discussed in Note 12 of the financial statements, during the year ended December 31, 2024, the Company entered into a General Release and Settlement Agreement with Omnia Capital LP (Omnia). This agreement settled and extinguished all outstanding debt and interest owed to Omnia, via their subordinated note, as well as the put provision on the 2023 Omnia warrants. In return, Omnia received a combination of shares, pre-funded warrants, warrants, and cash. The warrants were recorded at fair value on the date of the settlement and are subsequently adjusted to fair value at the end of each reporting period. ​ We identified the accounting for the settlement as well as the valuations related to the warrants as a critical audit matter. Auditing the accounting for these items was especially challenging due to the inherent complexity of the agreements and the related valuation models. Auditing these elements required an increased level of audit effort, including the involvement of professionals with specialized skill and knowledge. ​ How the Critical Audit Matter was addressed in the Audit Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedures we performed include: Inspecting the underlying agreements and ensuring appropriate application of the relevant accounting literature to the terms of the settlement; evaluating the appropriateness of the fair value of the warrants; and utilizing personnel with specialized skill and knowledge in valuation to assist in assessing the fair value determined. ​ Warrants issued with equity raises and related deemed dividend valuation Critical Audit Matter description As discussed in Note 9 of the financial statements, during the year ended December 31, 2024, the Company entered into several warrant and common stock agreements with investors. Due to anti-dilution and down round provisions with their existing warrants, the agreements triggered these provisions multiple times. We identified the valuation for these deemed dividends to be a critical audit matter. Auditing these elements required an increased level of audit effort, including the involvement of professionals with specialized skill and knowledge. ​ How the Critical Audit Matter was addressed in the Audit Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedures we performed include: Inspecting the underlying agreements; evaluating the appropriateness of the fair value calculations of the warrants; and utilizing personnel with specialized skill and knowledge in valuation to assist in assessing the fair value determined. ​ ​ ​ /s/ Freed Maxick P.C. (F/K/A Freed Maxick CPAs, P.C.) ​ ​ We have served as the Company’s auditor since 2011. ​ ​ Buffalo, New York March 20, 2025 ​ ​ ​ ​ ​ F-4 ​ ​ ​ 22ND CENTURY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share and per-share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ASSETS ​ ​ ​ ​ Current assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 7,149 ​ $ 4,422 Accounts receivable, net ​ 3,594 ​ 1,698 Inventories ​ 4,326 ​ 2,015 Insurance recoveries ​ — ​ 768 GVB promissory note, net ​ — ​ 500 Prepaid expenses and other current assets ​ 2,562 ​ 1,068 Current assets of discontinued operations held for sale ​ — ​ 1,051 Total current assets ​ 17,631 ​ 11,522 Property, plant and equipment, net ​ 2,440 ​ 2,773 Operating lease right-of-use assets, net ​ 728 ​ 1,639 Intangible assets, net ​ 6,224 ​ 5,724 Other assets ​ ​ — ​ ​ 15 Total assets ​ $ 27,023 ​ $ 21,673 ​ ​ ​ ​ ​ LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ Notes and loans payable-current ​ $ 204 ​ $ 254 Current portion of long-term debt ​ ​ — ​ ​ 1,500 Operating lease obligations ​ 168 ​ 261 Accounts payable ​ 1,000 ​ 2,401 Accrued expenses and other current liabilities ​ 836 ​ 1,439 Accrued litigation ​ — ​ 768 Accrued excise taxes and fees ​ 3,343 ​ 2,038 Contract liabilities ​ ​ 1,721 ​ ​ 20 Current liabilities of discontinued operations held for sale ​ — ​ 1,281 Total current liabilities ​ 7,272 ​ 9,962 Long-term liabilities: ​ ​ ​ ​ Notes and loans payable ​ 504 ​ — Operating lease obligations ​ 601 ​ 1,437 Long-term debt ​ ​ — ​ ​ 5,165 Other long-term liabilities ​ ​ 154 ​ ​ 1,097 Total liabilities ​ ​ 8,531 ​ ​ 17,661 Commitments and contingencies (Note 11) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mezzanine equity: ​ ​ ​ ​ ​ ​ Series A convertible preferred shares, $ 0.00001 par value; 10,000,000 shares authorized, 9,650 shares issued and outstanding at December 31, 2025 and 0 at December 31, 2024, respectively ​ 2,734 ​ — Total mezzanine equity ​ 2,734 ​ — ​ ​ ​ ​ ​ ​ ​ Shareholders' equity: ​ ​ ​ ​ Common stock, $ .00001 par value, 500,000,000 shares authorized, 510,384 shares issued and outstanding at December 31, 2025 and 2,285 at December 31, 2024, respectively ​ ​ ​ ​ Common stock, par value ​ ​ — ​ ​ — Capital in excess of par value ​ 414,683 ​ 397,883 Accumulated deficit ​ ( 398,925 ) ​ ( 393,871 ) Total shareholders' equity ​ 15,758 ​ 4,012 Total liabilities, mezzanine equity and shareholders’ equity ​ $ 27,023 ​ $ 21,673 ​ See accompanying notes to consolidated financial statements. ​ ​ ​ F-5 ​ ​ 22ND CENTURY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (amounts in thousands, except share and per-share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ ​ ​ 2024 Revenues, net $ 17,587 ​ $ 24,382 Cost of goods sold ​ 10,186 ​ ​ 14,278 Excise taxes and fees on products 10,538 ​ 12,504 Gross loss ( 3,137 ) ​ ( 2,400 ) Operating expenses: ​ ​ ​ Sales, general and administrative 7,591 ​ 10,287 Research and development 688 ​ 1,133 Other operating expense, net 150 ​ 130 Total operating expenses 8,429 ​ 11,550 Operating loss from continuing operations ( 11,566 ) ​ ( 13,950 ) Other income (expense): ​ ​ ​ Other income (expense), net ( 207 ) ​ 507 Interest income 83 ​ 72 Interest expense ( 1,455 ) ​ ( 2,094 ) Total other income (expense), net ( 1,579 ) ​ ( 1,515 ) Loss from continuing operations before income taxes ( 13,145 ) ​ ​ ( 15,465 ) (Benefit) provision for income taxes ( 28 ) ​ 30 Net loss from continuing operations $ ( 13,117 ) ​ $ ( 15,495 ) ​ ​ ​ ​ ​ ​ Discontinued operations: ​ ​ ​ ​ ​ Income from discontinued operations before income taxes $ 8,063 ​ $ 331 Provision for income taxes ​ — ​ ​ — Income from discontinued operations $ 8,063 ​ $ 331 ​ ​ ​ ​ ​ ​ Net loss $ ( 5,054 ) ​ $ ( 15,164 ) Comprehensive loss $ ( 5,054 ) ​ $ ( 15,164 ) ​ ​ ​ ​ ​ ​ Net loss $ ( 5,054 ) ​ $ ( 15,164 ) Deemed dividends ​ ( 4,679 ) ​ ​ ( 10,303 ) Net loss available to common shareholders $ ( 9,733 ) ​ $ ( 25,467 ) ​ ​ ​ ​ ​ ​ Basic and diluted income (loss) per share: ​ ​ ​ ​ ​ Basic and diluted loss per common share from continuing operations $ ( 71.26 ) ​ $ ( 27,812.56 ) Basic and diluted income per common share from discontinued operations $ 43.81 ​ $ 594.83 Basic and diluted loss per common share from deemed dividends $ ( 25.42 ) ​ $ ( 18,493.32 ) Basic and diluted loss per common share $ ( 52.87 ) ​ $ ( 45,711.05 ) ​ ​ ​ ​ ​ ​ Weighted average shares outstanding - basic and diluted ​ 184,067 ​ ​ 557 ​ ​ ​ ​ ​ ​ ​ See accompanying notes to consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ F-6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 22ND CENTURY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) AND MEZZANINE EQUITY (amounts in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, 2025 and 2024 ​ ​ Shareholders' Equity ​ ​ Mezzanine Equity ​ ​ Common ​ Par Value ​ Capital in ​ ​ ​ ​ Shareholders' ​ ​ Preferred ​ ​ ​ ​ Shares ​ of Common ​ Excess of ​ Accumulated ​ Equity ​ ​ Shares ​ ​ ​ ​ ​ ​ Outstanding* ​ ​ ​ Shares* ​ ​ ​ Par Value* ​ ​ ​ Deficit ​ ​ ​ (Deficit) ​ ​ Outstanding ​ Amount Balance at January 1, 2024 204 ​ $ — ​ $ 370,297 ​ $ ( 378,707 ) ​ $ ( 8,410 ) ​ ​ — ​ $ — Stock issued in connection with RSU vesting, net of 1 share withheld for taxes 3 ​ — ​ ( 1 ) ​ — ​ ( 1 ) ​ ​ — ​ ​ — Stock issued in connection with licensing arrangement ​ 9 ​ — ​ 200 ​ — ​ 200 ​ ​ — ​ ​ — Stock issued in connection with warrant exercises, net of fees of $ 261 ​ 295 ​ — ​ 3,354 ​ — ​ 3,354 ​ ​ — ​ ​ — Stock issued in connection with Reg A Private Placement, net of issuance costs of $ 332 ​ 210 ​ ​ — ​ 5,208 ​ — ​ 5,208 ​ ​ — ​ ​ — Stock issued in connection with capital raises, net of issuance costs of $ 713 ​ 1,072 ​ ​ — ​ 9,879 ​ — ​ 9,879 ​ ​ — ​ ​ — Stock issued upon conversion of Senior Secured Credit Facility ​ 46 ​ ​ — ​ 3,084 ​ — ​ 3,084 ​ ​ — ​ ​ — Stock issued in connection with settled indebtedness ​ 50 ​ ​ — ​ ​ 1,617 ​ ​ — ​ ​ 1,617 ​ ​ — ​ ​ — Stock issued for extinguishment of Subordinated Note ​ 25 ​ ​ — ​ ​ 3,864 ​ ​ — ​ ​ 3,864 ​ ​ — ​ ​ — Reclass of conversion option ​ — ​ ​ — ​ ​ 1 ​ ​ — ​ ​ 1 ​ ​ — ​ ​ — Fractional shares issued for reverse stock split ​ 371 ​ — ​ — ​ — ​ — ​ ​ — ​ ​ — Equity-based compensation — ​ — ​ 380 ​ — ​ 380 ​ ​ — ​ ​ — Net loss — ​ — ​ — ​ ( 15,164 ) ​ ( 15,164 ) ​ ​ — ​ ​ — Balance at December 31, 2024 2,285 ​ $ — ​ $ 397,883 ​ $ ( 393,871 ) ​ $ 4,012 ​ ​ — ​ $ — Stock issued in connection with warrant exercises, net of fees of $ 363 ​ 19,973 ​ — ​ 5,075 ​ — ​ 5,075 ​ ​ — ​ ​ — Stock issued from alternative cashless warrant exercises ​ 447,555 ​ ​ — ​ — ​ — ​ — ​ ​ — ​ ​ — Stock issued in connection with the issuance of Series A Convertible Preferred Stock, net of fees of $ 757 ​ — ​ ​ — ​ 6,876 ​ — ​ 6,876 ​ ​ 10,650 ​ ​ 3,017 Stock issued upon conversion of preferred stock ​ 30,443 ​ ​ — ​ 283 ​ — ​ 283 ​ ​ ( 1,000 ) ​ ​ ( 283 ) Stock issued upon conversion of Senior Secured Credit Facility ​ 1,504 ​ ​ — ​ ​ 3,132 ​ — ​ 3,132 ​ ​ — ​ ​ — Conversion option remeasurement ​ — ​ ​ — ​ 283 ​ — ​ 283 ​ ​ — ​ ​ — Stock issued in connection with licensing arrangement ​ 139 ​ ​ — ​ ​ 230 ​ — ​ 230 ​ ​ — ​ ​ — Stock issued in connection with settled indebtedness ​ 744 ​ ​ — ​ ​ 500 ​ — ​ 500 ​ ​ — ​ ​ — Fractional shares issued for reverse stock split ​ 7,741 ​ ​ — ​ ​ — ​ — ​ — ​ ​ — ​ ​ — Equity-based compensation ​ — ​ — ​ 421 ​ — ​ 421 ​ ​ — ​ ​ — Net loss — ​ — ​ — ​ ( 5,054 ) ​ ( 5,054 ) ​ ​ — ​ ​ — Balance at December 31, 2025 510,384 ​ $ — ​ $ 414,683 ​ $ ( 398,925 ) ​ $ 15,758 ​ ​ 9,650 ​ $ 2,734 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ *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, 1 -for-23 reverse stock split on June 20, 2025 and 1 -for-15 on January 26, 2026. ​ See accompanying notes to consolidated financial statements. ​ F-7 ​ ​ ​ 22ND CENTURY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Cash flows from operating activities: ​ ​ ​ ​ Net loss ​ $ ( 5,054 ) ​ $ ( 15,164 ) Adjustments to reconcile net loss to cash used in operating activities: ​ ​ ​ ​ Impairment of long-lived assets - held for sale ​ ​ 293 ​ ​ — Impairment of long-lived assets ​ ​ 150 ​ ​ 68 Amortization and depreciation ​ 912 ​ 1,003 Amortization of right-of-use assets ​ 245 ​ 255 Other non-cash gains ​ ​ ( 32 ) ​ ​ ( 947 ) Provision for credit losses ​ ​ 388 ​ ​ 1 (Gain) loss on sale or disposal of property, plant, and equipment ​ ( 12 ) ​ 127 Debt related charges included in interest expense ​ ​ 1,586 ​ ​ 2,174 Equity-based compensation ​ 421 ​ 380 Change in fair value of warrant liabilities ​ ​ 207 ​ ​ ( 492 ) Change in fair value of derivative liability ​ ​ — ​ ​ ( 556 ) Deferred income taxes ​ ​ 7 ​ ​ 8 Change in inventory reserves ​ ​ ( 261 ) ​ ​ ( 4,374 ) Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ( 1,883 ) ​ ( 30 ) Inventories ​ ( 2,050 ) ​ 6,705 Prepaid expenses and other assets ​ ( 1,350 ) ​ 159 Accounts payable ​ ( 2,656 ) ​ ( 1,169 ) Accrued expenses and other current liabilities ​ ( 253 ) ​ ( 2,564 ) Accrued excise taxes and fees ​ 1,305 ​ ( 196 ) Contract liabilities ​ 1,701 ​ ( 714 ) Other liabilities ​ ​ ( 1,387 ) ​ 981 Net cash used in operating activities ​ ( 7,723 ) ​ ( 14,345 ) Cash flows from investing activities: ​ ​ ​ ​ Acquisition of patents, trademarks, and licenses ​ ( 814 ) ​ ( 20 ) Acquisition of property, plant and equipment ​ ( 61 ) ​ ( 141 ) Proceeds from the sale of property, plant and equipment ​ 770 ​ 22 Issuance of 2025 GVB promissory note ​ ( 500 ) ​ — Payments received from 2025 GVB promissory note ​ 100 ​ — Net cash used in investing activities ​ ( 505 ) ​ ( 139 ) Cash flows from financing activities: ​ ​ ​ ​ Payments on notes payable ​ ​ ( 1,202 ) ​ ​ ( 1,546 ) Proceeds from issuance of notes payable ​ ​ 1,655 ​ ​ 1,256 Payments of penalties from long-term debt ​ ​ ( 28 ) ​ ​ — Payments of long-term debt ​ ​ ( 4,308 ) ​ ​ ( 1,302 ) Net proceeds from warrant exercise ​ ​ 5,075 ​ ​ 3,354 Net proceeds from Series A convertible preferred stock ​ ​ 9,893 ​ ​ — Payments of deferred offering costs ​ ​ ( 130 ) ​ ​ — Proceeds from issuance of common stock ​ ​ — ​ ​ 16,132 Payment of common stock issuance costs ​ ​ — ​ ​ ( 1,045 ) Taxes paid related to net share settlement of RSUs ​ ​ — ​ ​ ( 1 ) Net cash provided by financing activities ​ 10,955 ​ 16,848 Net increase in cash and cash equivalents ​ 2,727 ​ 2,364 Cash and cash equivalents - beginning of year ​ 4,422 ​ 2,058 Cash and cash equivalents - end of year ​ $ 7,149 ​ $ 4,422 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ ​ ​ Net cash paid for: ​ ​ ​ ​ Cash paid during the period for interest ​ $ 241 ​ $ 722 Cash (received) paid during the period for income taxes ​ $ ( 35 ) ​ $ 22 Non-cash transactions: ​ ​ ​ ​ Capital expenditures incurred but not yet paid ​ $ 45 ​ $ 43 Deemed dividends ​ $ 4,679 ​ $ 10,303 Stock issued in connection with settled indebtedness ​ $ 500 ​ $ 1,617 Non-cash licensing arrangement ​ $ 309 ​ $ 250 Right-of-use assets and corresponding operating lease obligations ​ $ ( 666 ) ​ $ — Stock issued for extinguishment of Subordinated Note ​ $ — ​ $ 3,864 Payment of 2023 GVB promissory note ​ $ 500 ​ $ 1,500 Payment of debt issuance costs ​ $ — ​ $ 603 Equity conversion of Senior Secured Credit Facility ​ $ 3,132 ​ $ 3,084 Conversion option remeasurement ​ $ 283 ​ $ — ​ See accompanying notes to consolidated financial statements . F-8 ​ 22ND CENTURY GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2025 Amounts in thousands, except for share and per share data ​ NOTE 1. – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 22nd Century Group, Inc. (together with its consolidated subsidiaries, “22 nd Century Group” or the “Company”) is a Nevada corporation and its common stock is listed 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 proprietary new reduced nicotine tobacco products authorized as Modified Risk Tobacco Products by the FDA. Additionally, the Company provides contract manufacturing services for conventional combustible tobacco products for third-party brands. Basis of Presentation and Principles of Consolidation – The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of 22nd Century Group and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. As described in Note 2, on December 22, 2023, the Company divested substantially all of the assets of GVB Biopharma’s (“GVB”) business within its former hemp/cannabis segment. As a result of the divestiture of GVB, during the fourth quarter of 2023, the Company reorganized its business to become a single reportable segment: tobacco. The results of operations of the former hemp/cannabis segment are reported as discontinued operations in the Consolidated Statements of Operations and Comprehensive Loss for all periods presented and the related assets and liabilities associated with the discontinued operations are classified as held for sale in the Consolidated Balance Sheets as of December 31, 2024. The Consolidated Statements of Cash Flows includes cash flows related to the discontinued operations due to 22 nd Century’s (parent) centralized treasury and cash management processes, and, accordingly, cash flow amounts for discontinued operations are disclosed in Note 2 “Discontinued Operations and Divestitures.” All results and information in the Consolidated Financial Statements are presented as continuing operations and exclude the former hemp/cannabis segment unless otherwise noted specifically as discontinued operations. Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Liquidity and Capital Resources – These 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 $ 7,723 and $ 14,345 for the years ended December 31, 2025 and 2024, respectively, and an accumulated deficit of $ 398,925 and $ 393,871 as of December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company had cash and cash equivalents of $ 7,149 . 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 Consolidated Financial Statements are issued. ​ F-9 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, 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 Consolidated Financial Statements are issued. ​ The 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; unsuccessful commercialization strategy and launch plans for the Company’s products or market acceptance of the Company’s products; and protection of proprietary technology. ​ Reclassifications – The Company has revised the presentation and classification of the following in the Consolidated Balance Sheets to conform to current period presentation as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, 2024 ​ As originally ​ ​ ​ ​ ​ ​ ​ reported ​ ​ ​ Reclass ​ ​ ​ Revised Accrued expenses and other current liabilities $ 1,021 ​ $ 418 ​ $ 1,439 Accrued payroll $ 318 ​ $ ( 318 ) ​ $ — Contract liabilities $ — ​ $ 20 ​ $ 20 Deferred income $ 20 ​ $ ( 20 ) ​ $ — Other current liabilities $ 100 ​ $ ( 100 ) ​ $ — ​ ​ The Company has revised the presentation and classification of the following in the Consolidated Statements of Cash Flows as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, 2024 ​ As originally ​ ​ ​ ​ ​ ​ ​ reported ​ ​ ​ Reclass ​ ​ ​ Revised Accrued expenses and other current liabilities $ ( 475 ) ​ $ ( 2,089 ) ​ $ ( 2,564 ) Accrued payroll $ ( 565 ) ​ $ 565 ​ $ — Contract liabilities $ — ​ $ ( 714 ) ​ $ ( 714 ) Other liabilities $ ( 1,257 ) ​ $ 2,238 ​ $ 981 ​ ​ 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 ​ 3 December 17, 2024 ​ 1 -for-135 ​ 368 June 20, 2025 ​ 1 -for-23 ​ 7,741 January 26, 2026 ​ 1 -for-15 ​ 106,960 ​ All share and per share amounts, and exercise prices of stock options, and warrants in the Consolidated Financial Statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the reverse stock splits. F-10 Preferred Stock Authorized – The Company is authorized to issue “blank check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock. See Note 9 “Capital Raises and Warrants for Common Stock” for additional information on the Series A Convertible Preferred Stock issued during the year-ended December 31, 2025. Concentration of Credit Risk – Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in financial institutions. Although the cash accounts exceed the federally insured deposit amount, management does not anticipate nonperformance by the financial institutions. Management reviews the financial viability of these institutions on a periodic basis. Cash and Cash Equivalents – The Company considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents. There are no restrictions on the Company’s cash and cash equivalents. Trade Accounts Receivable and Provision for Current Expected Credit Losses – The Company provides credit, in the normal course of business, to its tobacco customers in the form of trade receivables. Credit is extended based on evaluation of a customer’s financial condition and collateral is not required. The Company maintains a provision for those trade receivables that it does not expect to collect. In accordance with Accounting Standards Codification (“ASC”) Topic 326, the Company accrues its estimated losses from uncollectable accounts receivable to the provision based upon recent historical experience, the length of time the receivable has been outstanding, other specific information as it becomes available, and reasonable and supportable forecasts not already reflected in the historical loss information. Provisions for current expected credit losses are charged to current operating expenses. Actual losses are charged against the provision when incurred. As of December 31, 2025 and 2024, the Company recorded a provision for credit losses against trade accounts receivable of $ 19 and $ 9 , respectively. ​ Inventories – Inventories are valued at the lower of historical cost or net realizable value. Cost is determined using an average cost method for tobacco leaf inventory by crop year and raw materials inventory. Standard cost is primarily used for finished goods inventory. Inventories are evaluated to determine whether any amounts are not recoverable based on slow moving or obsolete condition and are written off or reserved as appropriate. Property, Plant and Equipment – Plant and equipment are recorded at their acquisition cost and depreciated on a straight-line basis over their estimated useful lives. Leasehold improvements are depreciated on a straight-line basis over the term of the lease or the estimate useful life of the asset, whichever is shorter. Depreciation commences when the asset is placed in service. The following table shows estimated useful lives of property, plant and equipment: ​ ​ ​ Classification Estimated Useful Lives Leasehold improvements Shorter of 15 years or lease term Manufacturing equipment 5 to 15 years Laboratory equipment 5 years ​ Discontinued Operations - In determining whether a group of assets which has been disposed of (or is to be disposed of) should be presented as a discontinued operation, the Company analyzes whether the group of assets being disposed of represented a component of the entity; that is, whether it had historic operations and cash flows that were clearly distinguished (both operationally and for financial reporting purposes). In addition, the Company considers whether the disposal represents a strategic shift that has or will have a major effect on the Company’s operations and financial results. ​ The assets and liabilities of a discontinued operation held for sale, other than goodwill, are measured at the lower of carrying amount or fair value less cost to sell. The Company allocates interest to discontinued operations if the interest is directly attributable to the discontinued operations or is interest on debt that is required to be repaid as a result of the disposal transaction. ​ F-11 Intangible Assets – Definite lived intangible assets are recorded at cost and consist primarily of (1) expenditures incurred with third-parties related to the processing of patent claims and trademarks with government authorities, as well as costs to acquire patent rights from third-parties, (2) license fees paid for third-party intellectual property. The amounts capitalized relate to intellectual property that the Company owns or to which it has rights to use. The Company’s capitalized intellectual property costs are amortized using the straight-line method over the remaining statutory life of the patent assets in each of the Company’s patent families, which have estimated expiration dates ranging from 2026 to 2043. Periodic maintenance or renewal fees are expensed as incurred. Annual minimum license royalty fees are charged to expense. License fees paid for third-party intellectual property are amortized on a straight-line basis over the last to expire patents, which have expected expiration dates from 2028 through 2043. The Company believes that costs associated with becoming a signatory to the master settlement agreement (“MSA”), costs related to the acquisition of a predicate cigarette brand, and tobacco brand related trademarks have indefinite lives. At each reporting period, the Company evaluates whether the nature and use of the asset continue to support the indefinite-lived classification. Impairment of Long-Lived Assets – The Company reviews the carrying value of its long-lived assets at each reporting period to determine if impairment indicators are present in accordance with ASC 360- Property, plant, and equipment or ASC 350- Intangibles, Goodwill, and Other . Definite lived intangible assets subject to amortization are reviewed for strategic importance and commercialization opportunity prior to expiration. If it is determined that the asset no longer supports the Company’s strategic objectives and/or will not be commercially viable prior to expiration, the asset is impaired. In addition, the Company will assess the expected future undiscounted cash flows for its intellectual property based on consideration of future market and economic conditions, competition, federal and state regulations, and licensing opportunities. If the carrying value of such assets are not recoverable, the carrying value will be reduced to fair value and the difference is recorded as impairment. Indefinite-lived intangible asset carrying values are reviewed at least annually or more frequently if events or changes in circumstances indicate that it is more likely than not that an impairment exists. The Company first performs a qualitative assessment and considers its current strategic objectives, future market and economic conditions, competition, and federal and state regulations to determine if an impairment is more likely than not. If it is determined that an impairment is more likely than not, a quantitative assessment is performed to compare the asset carrying value to fair value. Leases – The Company determines if an arrangement is, or contains, a lease at inception and classifies it as operating or finance. The Company has operating and finance leases for office and manufacturing facilities, machinery and vehicles. Finance lease assets and corresponding liabilities are not material to the Consolidated Financial Statements. Any operating lease having a lease term greater than twelve months will be recognized on the Consolidated Balance Sheets as a right-of-use (“ROU”) asset with an associated lease obligation—all other leases are considered short-term in nature and will be expensed on a month-to-month basis. The ROU assets and lease obligations are recognized as of the commencement date at the net present value of the fixed minimum lease payments for the lease term. The lease term is determined based on the contractual conditions, including whether renewal options are reasonably certain to be exercised. The discount rate used is the interest rate implicit in the lease, if available, or the Company’s incremental borrowing rate which is determined using a base line rate plus an applicable spread. Refer to Note 6 “Right-of-Use Assets, Lease Obligations, and Other Leases” for additional information. Fair Value of Financial Instruments – FASB ASC 820 - Fair Value Measurements and Disclosures establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: ● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; ● Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and ● Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. ​ F-12 A financial asset’s or a financial liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Company estimates that the carrying amounts reported on the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, contract assets, promissory note receivable, accounts payable and accrued expenses, and notes and loans payable approximate their fair value due to the short-term nature of these items. Note 8 “Fair Value Measurements” contains additional information on assets and liabilities recorded at fair value in the Consolidated Financial Statements. Mezzanine Equity - Where ordinary or preferred shares are determined to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the Company, and upon such event, the shares would become redeemable at the option of the holder, such as when the Company has not obtained shareholder approval for certain provisions of the outstanding preferred shares, they are classified as "mezzanine equity" (temporary equity). The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future. The Company evaluates whether the contingent redemption provisions are probable of becoming redeemable to determine whether the carrying value of the redeemable convertible preferred shares are required to be remeasured to their respective redemption values. All instruments that are classified as mezzanine equity are evaluated for embedded derivative features by evaluating each feature against the nature of the host instrument (e.g., more equity-like or debt-like). Features identified as freestanding instruments or bifurcated embedded derivatives that are material are recognized separately as a derivative asset or liability in the Consolidated Financial Statements. Warrants - The Company accounts for common 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 own ordinary shares 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. Changes in subsequent measurement fair value are recorded in Other income (expense), net of the Company’s Consolidated Statements of Operations and Comprehensive Loss. 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 8 “Fair Value Measurements” and Note 9 “Capital Raises and Warrants for Common Stock”. ​ 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 shareholders and a corresponding increase to Capital in excess of par value resulting in no change to shareholders’ equity/deficit. See Note 9 “Capital Raises and Warrants for Common Stock.” ​ Debt Issued with Detachable Warrants - The Company considers guidance within ASC 470-20, Debt (ASC 470), ASC 480, and ASC 815 when accounting for the issuance of debt with detachable warrants. As described above under the caption “Warrants” , the Company classifies stock warrants as either equity instruments, derivative liabilities, or liabilities depending on the specific terms of the warrant agreement. In circumstances in which debt is issued with detachable warrants, the proceeds from the issuance of the debt are first allocated to the warrants at their full estimated fair value with a corresponding debt discount. The remaining proceeds, as further reduced by discounts (including those created by the bifurcation of embedded derivatives), is allocated to the debt. The Company accounts for debt as liabilities measured at amortized cost and amortizes the resulting debt discount from the allocation of proceeds, to interest expense using the effective interest method over the expected term of the debt instrument pursuant to ASC 835, Interest (ASC 835). ​ 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. ​ F-13 The Company previously accounted 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 was determined based on whether there is an increase or decrease in the fair value of the embedded conversion option. The fair value was 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 was 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 Consolidated Statements of Cash Flows. Note 12 “Debt” contains additional information on the Company’s debt issuance costs and discounts. ​ Gain/Loss on Debt Extinguishment – Gain or loss on debt extinguishment is generally recorded upon an extinguishment of a debt instrument. Gain or loss on extinguishment of debt is calculated as the difference between the reacquisition price and net carrying amount of the debt, which includes unamortized debt issuance costs. Gains and losses on debt extinguishment are included as a component of Interest expense in the Consolidated Statements of Operations and Comprehensive Loss. ​ 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 and during the years ended December 31, 2025 and 2024, private label cigarette revenue, net and corresponding contract asset from the related party were not material. The arrangement 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 16 “Revenue Recognition”. Research and Development – Research and development costs are expensed as incurred. Stock Based Compensation – The Company’s Omnibus Incentive Plan allows for various types of equity-based incentive awards. Stock based compensation expense is based on awards that are expected to vest over the requisite service periods and are based on the fair value of the award measured on the grant date. Vesting requirements vary for directors, officers, and employees. In general, time-based awards fully vest after one year for directors and vest in equal annual installments over a three-year period for officers and employees. Performance-based awards vest upon achievement of certain milestones. Forfeitures are accounted for when they occur. Income Taxes – The Company recognizes deferred tax assets and liabilities for any basis differences in its assets and liabilities between tax and U.S. GAAP reporting, and for operating loss and credit carryforwards. As a result of the Company’s history of cumulative net operating losses and the uncertainty of their future utilization, the Company has established a valuation allowance to fully offset its net deferred tax assets associated with definite lived assets as of December 31, 2025, and 2024. The Company’s federal and state tax returns for the years ended December 31, 2022 through December 31, 2024 are currently open to audit under the statutes of limitations. There are no pending audits as of December 31, 2025. Earnings (Loss) Per Common Share – Basic earnings (loss) per common share is computed using the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed assuming conversion of all potentially dilutive securities, using the treasury-stock method or the if-converted method, as applicable. Potential common shares outstanding are excluded from the computation if their effect is anti-dilutive. Refer to Note 15 “Earnings (Loss) Per Common Share” for additional information. F-14 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. The Company maintains general liability insurance policies for its 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 Consolidated Balance Sheets, with corresponding income that is offsetting to the casualty losses recorded in the 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 in accordance with ASC 450-30, Gain Contingencies. Business interruption insurance is treated as a gain contingency. Gain contingencies are recognized when earned and realized, which typically will occur at the time of final settlement or when cash is received. ​ Refer to Note 11 “Commitments and Contingencies”. ​ Recent Accounting Pronouncement(s) – ​ In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)-Improvements to Reportable Segment Disclosures . The ASU enhances disclosure of significant segment expenses by requiring disclosure of significant segment expenses regularly provided to the chief operating decision maker, extend certain annual disclosures to interim periods, and permits more than one measure of segment profit or loss to be reported under certain conditions. The amendments in ASU 2023-07 were adopted by the Company effective January 1, 2024 for the fiscal year-ended December 31, 2024 and interim reports beginning in fiscal year 2025. See Note 17 “Segment and Geographic Information.” ​ 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. The amendments in ASU 2023-09 were retrospectively adopted by the Company for the fiscal year-ended December 31, 2025. See Note 13 “Income Taxes.” ​ Accounting Guidance Not Yet Elected or Adopted ​ In November 2024, the FASB issued an accounting standards update, ASU 2024-03, which requires new tabular disclosures in the notes to consolidated financial statements, disaggregating certain cost and expense categories within relevant captions on the Consolidated Statements of Operations and Comprehensive Loss. The prescribed cost and expense categories requiring disaggregated disclosures include purchases of inventory, employee compensation, depreciation and intangible asset amortization, along with certain other expense disclosures already required by U.S. GAAP that would need to be integrated within the new tabular disaggregated expense disclosures. Additionally, the amendments also require the disclosure of total selling expenses and an entity's definition of those expenses. The amendments in ASU 2024-03 are effective for annual periods beginning after December 15, 2026, which for the Company would be the fiscal year ending December 31, 2027, and for subsequent interim periods. Early adoption is permitted and the amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact the new accounting standard will have on its expense disclosures in the notes to the consolidated financial statements. ​ F-15 In July 2025, the FASB issued an accounting standards update, ASU 2025-05, which creates a new optional practical expedient related to the estimation of future expected credit losses on accounts receivable. If elected, this expedient removes the requirement, when estimating expected credit losses, to consider changes in forecasted macroeconomic conditions, such as changes in unemployment rates or gross domestic product growth. Instead, companies electing the expedient may assume that current conditions as of the balance sheet date will not change for the remaining life of the asset. The amendments in ASU 2025-05 are effective for annual periods beginning after December 15, 2025, and interim periods within those annual periods, which for the Company would be the fiscal first quarter ending March 31, 2026. Early adoption is permitted and the amendments should be applied on a prospective basis. The Company is currently evaluating the impact the new accounting standard could have on its estimates for future expected credit losses if the Company chooses to elect the optional practical expedient. ​ 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 Discontinued Operations and Divestiture of GVB Hemp/Cannabis Business On November 20, 2023, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Specialty Acquisition Corporation, a Nevada corporation (the “Buyer”) pursuant to which the Company agreed to sell substantially all of its equity interests in its GVB hemp/cannabis business (the “Purchased Interests”) for a purchase price of $ 2,250 (the “Purchase Price”). On December 22, 2023, the Company and the Buyer entered into an Amendment to Equity Purchase Agreement (the “GVB Amendment”) pursuant to which the Company and the Buyer increased the Purchase Price to $ 3,100 (the “New Purchase Price”) which consisted of (i) a cash payment of $ 1,100 to the Company’s senior lender, on behalf of and at the direction of the Company and (ii) a 12 % secured promissory note issued by the Buyer 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 “2023 GVB Note”). The 2023 GVB Note was repaid in full to the senior lender (see Note 12 “Debt”). The parties previously agreed that the Company would retain any insurance proceeds received in connection with the fire at the Grass Valley manufacturing facility, if any (the “Insurance Proceeds”) and up to the first $ 2,000 of the Insurance Proceeds would be used to offset the Buyer’s portion of certain shared liabilities. Pursuant to the terms of the GVB Amendment, the Buyer will be entitled to offset its portion of certain shared contingent liabilities up to $ 1,000 ; provided that, the Insurance Proceeds exceed $ 5,000 . The Insurance Proceeds amounted to $ 9,500 (see Note 11 “Commitments and Contingencies”). ​ For disposal transactions, a component of an entity that is anticipated to be sold in the future is reported in discontinued operations after it meets the criteria for held-for-sale classification, and if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results. The Company evaluated the quantitative and qualitative factors related to the expected sale of the GVB hemp/cannabis business and exit from the hemp/cannabis space, and concluded that it met the held-for-sale criteria and that all other conditions for discontinued operations presentation were met on November 30, 2023. Property, plant and equipment are not depreciated, and intangibles assets are not amortized once classified as held-for-sale. ​ As a result, the operating results of the hemp/cannabis disposal group have been classified as discontinued operations in the Consolidated Statements of Operations and Comprehensive Loss for all periods presented and the assets and liabilities of the hemp/cannabis disposal group have been classified as assets and liabilities of discontinued operations in the Consolidated Balance Sheets at December 31, 2025 and 2024, respectively. ​ The assets and liabilities of a discontinued operation held for sale, other than goodwill, are measured at the lower of carrying amount or fair value less cost to sell. Following the provision for impairment charges recorded during the third quarter of 2023, the Company concluded the carrying value of assets and liabilities of the GVB hemp/cannabis business approximated fair value when deemed held for sale based on the purchase price consideration of $ 3,100 . ​ F-16 As of December 31, 2024, all assets and liabilities of the hemp/cannabis disposal group were presented as current in the Consolidated Balance Sheets as management believed the remaining disposal and exit from hemp/cannabis was deemed probable and will occur within one year. 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 Consolidated Balance Sheets as of December 31, 2025. The carrying amounts of the hemp/cannabis disposal group assets and liabilities that were classified as assets and liabilities of discontinued operations held for sale were as follows: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2025 ​ 2024 Property, plant and equipment, net $ — ​ $ 1,051 Current assets of discontinued operations held for sale $ — ​ $ 1,051 ​ ​ ​ ​ ​ ​ Accounts payable $ — ​ $ 1,210 Accrued expenses — ​ 71 Current liabilities of discontinued operations held for sale $ — ​ $ 1,281 ​ ​ ​ ​ ​ ​ Net liabilities $ — ​ $ ( 230 ) ​ Net income from discontinued operations for the years ended December 31, 2025 and 2024 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ ​ ​ 2024 Revenues, net $ — ​ $ — Cost of goods sold ​ — ​ ​ — Gross loss ​ — ​ ​ — Operating expenses: ​ ​ ​ ​ ​ Sales, general and administrative ​ 15 ​ ​ ( 365 ) Research and development ​ ( 402 ) ​ ​ 130 Other operating (income), net ​ ( 8,048 ) ​ ​ ( 386 ) Total operating (income) ​ ( 8,435 ) ​ ​ ( 621 ) Operating income from discontinued operations ​ 8,435 ​ ​ 621 Other income (expense): ​ ​ ​ ​ ​ Interest expense ​ ( 372 ) ​ ​ ( 290 ) Total other expense ​ ( 372 ) ​ ​ ( 290 ) Income from discontinued operations before income taxes ​ 8,063 ​ ​ 331 Provision (benefit) for income taxes ​ — ​ ​ — Income from discontinued operations $ 8,063 ​ $ 331 ​ During the years ended December 31, 2025 and 2024, the Company settled outstanding obligations which resulted in reversals of previously accrued liabilities of $ 526 and $ 1,561 , respectively. F-17 The Company allocates interest to discontinued operations if the interest is directly attributable to the discontinued operations or is interest on debt that is required to be repaid as a result of the disposal transaction. Interest expense included in discontinued operations reflects an estimate of interest expense related to the principal balance of debt that is required to be repaid with the proceeds from the sale of the GVB hemp/cannabis business. The components of discontinued operations “Other operating expenses, net” were as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ ​ ​ 2024 Professional services $ 771 ​ $ 496 (Gain) loss on sale or disposal of property, plant and equipment ​ ( 12 ) ​ ​ 65 Gain on release of lease obligations ​ — ​ ​ ( 947 ) Impairment charges related to Needle Rock Farms ​ 293 ​ ​ — Provision of credit loss for 2025 GVB promissory note ​ 400 ​ ​ — Dorchester proceeds ​ ( 9,500 ) ​ ​ — Other operating expense, net $ ( 8,048 ) ​ $ ( 386 ) ​ During the year ended December 31, 2025, Other operating expense, net was comprised of $ 400 provision for credit loss for the 2025 GVB promissory note (see Note 12 “Debt”), $ 293 of impairment charges related to the sale of Needle Rock Farms land property, offset by $ 9,500 gain related to the Dorchester insurance settlement (see Note 11 “Commitments and Contingencies"). Cash flow information from discontinued operations for the years ended December 31, 2025 and 2024 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ ​ ​ 2024 Cash provided by (used in) operating activities $ 8,508 ​ $ ( 1,459 ) Cash provided by investing activities $ 370 ​ $ 22 ​ ​ ​ ​ ​ ​ Depreciation and amortization $ - ​ $ - Capital expenditures $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOTE 3. – INVENTORIES Inventories at December 31, 2025 and 2024 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Raw materials ​ $ 4,213 ​ $ 1,616 Work in process ​ ​ — ​ ​ — Finished goods ​ 113 ​ ​ 399 ​ ​ $ 4,326 ​ $ 2,015 ​ As of December 31, 2025 and 2024, the Company’s proprietary reduced nicotine content tobacco leaf inventory was valued within raw materials at $ 2,334 and $ 200 , respectively. F-18 NOTE 4. – INTANGIBLE ASSETS, NET Our intangible assets at December 31, 2025 and 2024 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Accumulated ​ ​ ​ ​ Net Carrying December 31, 2025 ​ ​ ​ Carrying Amount ​ ​ ​ Amortization ​ Impairment ​ Amount Definite-lived: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Patent ​ $ 2,985 ​ $ ( 2,461 ) ​ $ ( 111 ) ​ $ 413 License fees ​ 5,331 ​ ​ ( 2,174 ) ​ ​ — ​ ​ 3,157 Total amortizing intangible assets ​ $ 8,316 ​ $ ( 4,635 ) ​ $ ( 111 ) ​ $ 3,570 Indefinite-lived: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Trademarks ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 102 MSA signatory costs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,202 License fee for predicate cigarette brand ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 350 Total indefinite-lived intangible assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,654 Total intangible assets, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 6,224 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Accumulated ​ ​ ​ Net Carrying December 31, 2024 ​ ​ ​ Carrying Amount ​ ​ ​ Amortization Impairment ​ Amount Definite-lived: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Patent ​ $ 2,948 ​ $ ( 2,268 ) ​ $ ( 68 ) ​ $ 612 License fees ​ 4,415 ​ ​ ( 1,990 ) ​ ​ — ​ ​ 2,425 Total amortizing intangible assets ​ $ 7,363 ​ $ ( 4,258 ) ​ $ ( 68 ) ​ $ 3,037 Indefinite-lived: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Trademarks ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 135 MSA signatory costs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,202 License fee for predicate cigarette brand ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 350 Total indefinite-lived intangible assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,687 Total intangible assets, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 5,724 ​ Aggregate intangible asset amortization expense comprises of the following: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ ​ ​ 2024 Cost of goods sold $ 10 ​ $ 10 Research and development 423 ​ 408 Total amortization expense $ 433 ​ $ 418 ​ During the years ended December 31, 2025 and 2024, the Company incurred impairment charges of $ 111 and $ 68 , respectively, related to patents that are no longer being pursued. In addition, the Company disposed of $ 39 of trademark costs due to change in strategy. The impairment charges are included in Other operating expenses, net on the Company’s Consolidated Statements of Operations and Comprehensive Loss. Estimated future intangible asset amortization expense based on the carrying value as of December 31, 2025 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2026 2027 ​ 2028 ​ 2029 ​ 2030 ​ Thereafter Amortization expense ​ $ 377 ​ $ 371 ​ $ 331 ​ $ 247 ​ $ 242 ​ $ 2,002 ​ ​ ​ F-19 ​ NOTE 5. – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net at December 31, 2025 and 2024 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Leasehold improvements ​ $ 238 ​ $ 238 Manufacturing equipment ​ ​ 7,259 ​ ​ 7,114 Laboratory equipment ​ ​ 326 ​ ​ 181 ​ ​ 7,823 ​ 7,533 Less: accumulated depreciation ​ ( 5,383 ) ​ ( 4,760 ) Property, plant and equipment, net ​ $ 2,440 ​ $ 2,773 ​ Depreciation expense was $ 479 and $ 585 for the years ended December 31, 2025 and 2024, respectively. ​ ​ ​ NOTE 6. – RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES The Company leases a manufacturing facility in Mocksville, North Carolina. On January 1, 2023, the Company signed a lease agreement for an inventory storage facility. The lease had an initial monthly base rent of $ 15 (escalating 3.0 % annually after the first year), an initial term of 36 months – with two twenty-four-month optional renewal options at the Company’s discretion. The Company did not renew its extension option and therefore the lease has ended as of December 31, 2025. On March 31, 2023, the Company extended the lease terms for its manufacturing facility and corporate headquarters in Mocksville, North Carolina. As a result of this lease modification, the Company re-measured the lease liability and adjusted the ROU asset on the modification dates, including reassessment of renewal options. The following table summarizes the Company’s discount rate and remaining lease terms as of December 31, 2025: ​ ​ ​ ​ ​ ​ Weighted average remaining lease term in years ​ ​ 3.8 ​ Weighted average discount rate ​ 9.0 % ​ Future minimum lease payments as of December 31, 2025 are as follows: ​ ​ ​ ​ ​ 2026 ​ $ 231 2027 ​ ​ 233 2028 ​ ​ 246 2029 ​ ​ 205 Total lease payments ​ 915 Less: imputed interest ​ ( 146 ) Present value of lease liabilities ​ ​ 769 Less: current portion of lease liabilities ​ ​ ( 168 ) Total long-term lease liabilities ​ $ 601 ​ Operating lease costs for the years ended December 31, 2025 and 2024, were $ 339 and $ 419 , respectively. Supplemental cash flow information for leases for fiscal years 2025 and 2024 is comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Cash paid for operating leases ​ $ 357 ​ $ 396 ROU assets released under operating leases ​ $ ( 666 ) ​ $ — ​ ​ F-20 NOTE 7. – NOTES AND LOANS PAYABLE The table below outlines our notes payable balances as of December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Insurance loans payable ​ $ 93 ​ $ 254 NCSU promissory note ​ ​ 615 ​ ​ — Total notes and loans payable ​ ​ 708 ​ ​ 254 Total current notes and loans payable ​ ​ ( 204 ) ​ ​ ( 254 ) Total long-term notes and loans payable ​ $ 504 ​ $ — ​ 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. During the second quarter of 2024, the Company renewed its 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 8.3 % annual percentage rate. NCSU promissory note On October 31, 2025, the Company entered into a note payable with NCSU in the amount of $ 632 at 7 % simple fee interest rate payable in equal installments over 60 months . The note payable was issued as settlement for all remaining outstanding obligations owed to NCSU related to license fees, annual royalties, and intellectual property and patent maintenance. ​ Estimated future principal payments to be made under the above notes and loans payable as of December 31, 2025 are as follows: ​ ​ ​ ​ ​ 2026 ​ $ 204 2027 ​ ​ 119 2028 ​ ​ 127 2029 ​ ​ 137 2030 ​ ​ 121 Total ​ $ 708 ​ ​ NOTE 8. – FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value on a Recurring Basis ​ 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 December 31, 2024, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value: ​ ​ F-21 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ ​ December 31, 2024 ​ ​ ​ ​ Level 1 ​ ​ ​ Level 2 ​ ​ ​ Level 3 ​ ​ ​ Total Liabilities ​ ​ ​ ​ ​ ​ ​ ​ Omnia 2024 Warrants ​ $ — ​ $ — ​ $ 1,023 ​ $ 1,023 Total liabilities ​ $ — ​ $ — ​ $ 1,023 ​ $ 1,023 ​ 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, 2024 ​ $ 1,350 Settlement and General Release ​ ​ ( 1,350 ) Initial measurement (Omnia 2024 warrants) ​ ​ 1,515 Fair value measurement adjustment ​ ​ ( 492 ) Fair value measurement at December 31, 2024 ​ $ 1,023 Fair value measurement adjustment ​ ​ 208 Omnia 2024 warrants put option exercise ​ ​ ( 1,231 ) Fair value measurement at December 31, 2025 ​ $ — ​ The Omnia warrants were measured at December 31, 2024 using a Monte Carlo valuation model with the following assumptions: ​ ​ ​ ​ ​ ​ December 31, ​ 2024 Risk-free interest rate per year 4.3 % Expected volatility per year 119.0 % Expected dividend yield — % Contractual expiration 4.3 years Exercise price $ 124,588.13 ​ Stock price $ 1,831.95 ​ ​ 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. The put option of the 2024 Omnia Warrants was fully exercised on September 29, 2025, in the amount of $ 1,231 and paid on October 2, 2025. See Note 12 “Debt” and Note 9 “Capital Raises and Warrants for Common Stock” for further details. ​ F-22 Derivative Liability ​ The following table sets forth a summary of the changes in fair value of the Company’s derivative related to the bifurcated conversion option on the Senior Secured Credit Facility debentures accounted for as liabilities (Level 3): ​ ​ ​ ​ ​ ​ Fair value measurement at January 1, 2024 ​ $ 557 Fair value measurement adjustment ​ ​ ( 557 ) Fair value measurement at December 31, 2024 ​ $ - ​ 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 years ended December 31, 2025 and 2024, the Company did not have any financial assets or liabilities measured at fair value on a nonrecurring basis. ​ ​ ​ ​ NOTE 9. – CAPITAL RAISES AND WARRANTS FOR COMMON STOCK The following table summarizes the Company’s warrant activity: ​ ​ ​ ​ Warrants outstanding at January 1, 2024 ​ 64 Issued ​ 75,559 Exercised ​ ( 968 ) Abandoned ​ ( 1 ) Warrants outstanding at December 31, 2024 ​ 74,654 Issued ​ 809,370 Exercised ​ ( 239,427 ) Anti-dilution adjustment ​ 94,578 Warrants outstanding at December 31, 2025 ​ 739,175 ​ The following table summarizes the Company’s outstanding warrants as of December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ # of warrants outstanding ​ Weighted average exercise price ​ Weighted average expiration date Amended October 2024 PIPE warrants (1) ​ 70,618 ​ $ N/A ​ July 15, 2030 August 2025 warrants (2) ​ 630,713 ​ $ 29.55 ​ August 27, 2030 August 2025 Placement Agent warrants (2) ​ 37,844 ​ $ 32.55 ​ August 27, 2030 ​ ​ 739,175 ​ ​ ​ ​ ​ (1) 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”). Accordingly, a Zero Exercise Price Exercise for the warrants will result in the issuance of two (2) shares for no additional consideration. ​ (2) 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. ​ ​ F-23 The incremental value of modifications to financial instruments, such as warrants or convertible preferred stock, is determined based on Monte-Carlo, Binomial Lattice, or Black-Scholes valuation models. Amounts recorded as Deemed dividends in determining Net loss available to common shareholders in the Statements of Operations and Comprehensive Loss are as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ 2024 Total deemed dividends $ 4,679 ​ $ 10,303 ​ ​ August 2025 Series A Convertible Preferred Stock Offering ​ On August 22, 2025, the Company and certain investors entered into a securities purchase agreement with respect to the offer and sale of $ 10,650 of shares of Series A Convertible Preferred Stock, stated value $ 1,000 per share (the “Series A Preferred Stock”), initially convertible into an aggregate of 324,201 shares of the Company’s common stock at an initial conversion price of $ 32.85 (subject to adjustment in certain circumstances with a floor price of $ 5.91 ) and warrants to purchase shares of Common Stock pursuant to a registered direct offering. The Investors purchased $ 10,650 of shares of Series A convertible preferred stock and warrants. The warrants are immediately exercisable at an exercise price of $ 1.97 per share of common stock and expire on the date that is five years after issuance. The net proceeds to the Company from the offering was $ 9,893 . In addition, the Company issued placement agent warrants to purchase an aggregate of 37,843 shares of common stock with substantially the same terms as the Warrants, except that the exercise price of the Placement Agent Warrants is $ 32.55 . Following the offering, 1,000 shares of Series A Preferred Stock were converted into 30,443 shares of common stock , with 9,650 shares remaining outstanding. ​ The shares of Series A Preferred Stock have no voting rights, except to the extent required by the applicable law and certain protective provisions. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the then holders of the Series A Preferred Stock are entitled to receive out of the assets available for distribution to stockholders of the Company an amount equal to either (i) 100 % of the stated value or (ii) the amount the holder would receive if the Series A Preferred Stock had been converted into common stock; in each instance, prior to and in preference to the common stock or any other series of preferred stock. The Series A Preferred Stock is convertible into common stock at any time at the floor conversion price of $ 5.91 . The Series A Preferred Stock is convertible at the then-effective Series A Conversion Price at the option of the holder at any time and from time to time. If, at any time from and after issuance, (i) the closing price of the common stock equals or exceeds 200 % of the then Conversion Price for 10 consecutive trading days and (ii) the daily dollar trading volume for the common stock exceeds $ 1,000,000 per day during such period, the Company may require the holders to convert the Series A Preferred Stock into Common Stock at the Series A Conversion Price. ​ On December 17, 2025, the Company entered into an Omnibus Amendment and Waiver (the “Amendment Agreement”) with the holders of the outstanding Series A Preferred Stock to amend Series A Preferred Stock, the warrants and certain placement agent warrants issued in connection with the August 2025 offering described above. Pursuant to the Amendment Agreement, the Company and the holders agreed to provide an alternative conversion feature to the Certificate of Designation whereby the Series A Preferred Stock can be converted at a conversion price equal to 85 % of the lowest VWAP in any of the twenty trading days preceding the conversion. Pursuant to the Amendment Agreement, the Company also agreed to provide certain anti-dilution adjustments to the exercise price of the warrants and placement agent warrants to provide protection against future dilutive issuances. See Note 18 “Subsequent Events.” ​ Following execution of the Amendment Agreement, the Company re-evaluated conclusions on classification and embedded features, resulting in no changes from the date of issuance of the Series A Preferred Stock, as further described below. The impacts of the Amendment Agreement are accounted for as an extinguishment, as the fair value of the instruments before and after modification increased by greater than 10 %, resulting in the incremental value being recorded within Capital in excess of par value as a deemed dividend of $ 4 ,679. ​ Subsequent to December 31, 2025, on March 24, 2026, in connection with an offering of newly issued Series B Convertible Preferred Stock, the Company redeemed all 9,650 shares of Series A Preferred Stock at par. See Note 18 “Subsequent Events.” ​ ​ F-24 Mezzanine Classification ​ ASC 480-10-S99-3A(2) of the SEC's Accounting Series Release No. 268 ("ASR 268") requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the control of the issuer. Preferred securities that are mandatorily redeemable are required to be classified by the issuer as liabilities whereas under ASR 268, a company should classify a preferred security whose redemption is contingent on an event not entirely in control of the issuer as mezzanine equity. The Series A convertible preferred stock is redeemable at the option of the holder if "shareholder approval" (as defined in the agreements) is not obtained, which is not solely within control of the Company, and accordingly, the Company determined that mezzanine treatment is appropriate for the Series A convertible preferred stock. The Series A convertible preferred stock was initially measured at the amount of total proceeds less any offering costs and proceeds allocated to the accompanying warrants based on relative fair value, and is presented as such in our Consolidated Balance Sheet as of December 31, 2025. Further, the Company evaluated all embedded features against an equity-like host and concluded none of the embedded features identified within the Series A convertible preferred stock require bifurcation as they are either deemed clearly and closely related or not net settleable as a result of a lack of an active market. ​ Series A convertible preferred stock transaction activity is summarized in the table below: ​ ​ ​ ​ ​ ​ ​ ​ Series A Convertible Preferred Stock Shares Weighted Average Conversion Price Common Shares Issued from Conversions January 1, 2025 ​ — ​ — 2025 Issuance ​ 10,650 ​ — 2025 Conversions ​ ( 1,000 ) $ 32.85 30,443 December 31, 2025 ​ 9,650 ​ 30,443 ​ April 2025 Warrant Inducement and Amendment On April 29, 2025, the Company commenced a warrant inducement offering with the holders of outstanding warrants to purchase 32,093 shares of common stock (the “Existing Warrants”), which are exercisable for an equal number of shares of common stock at an exercise price of $ 1,484.25 . 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 $ 272.25 . 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 19,970 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 94,579 October 2024 PIPE Warrants and October 2024 PIPE Placement Agent warrants. ​ F-25 October 2024 PIPE Offering ​ On October 23, 2024, the Company and certain investors entered into a securities purchase agreement relating to the issuance and sale of prefunded warrants to purchase shares of common stock of the Company and warrants to purchase shares of Common Stock pursuant to a private placement. The investors purchased approximately $ 3,039 of prefunded warrants and warrants, consisting of prefunded warrants to purchase an aggregate of 609 shares of common stock and warrants to purchase an aggregate of 914 shares of common stock, at a purchase price of $ 4,992 per prefunded warrant and accompanying warrant. The prefunded warrants are immediately exercisable upon issuance. The Company also issued an aggregate of 49 placement agent warrants. ​ The net proceeds to the Company from the offering, after deducting placement agent fees and the Company’s offering expenses, are approximately $ 2,909 . October 2024 Registered Direct Offering ​ On October 11, 2024, the Company and certain investors entered into a securities purchase agreement relating to the issuance and sale of shares of common stock of the Company pursuant to a registered direct offering and a private placement of warrants to purchase shares of common stock. The investors purchased approximately $ 2,140 of shares and warrants, consisting of an aggregate of 307 shares of common stock and warrants to purchase 613 shares of common stock, at a purchase price of $ 6,986.25 per share and accompanying warrant. The Company also issued an aggregate of 19 placement agent warrants. The net proceeds to the Company from the Offering, after deducting the placement agent fees and the Company’s offering expenses were $ 2,002 . ​ 2024 Warrant Inducement On September 29, 2024, the Company commenced a warrant inducement offering with the holders of outstanding warrants to purchase 110 shares of common stock, consisting of: (i) common stock purchase warrants to purchase 70 shares of common stock issued on or about November 29, 2023, and (ii) common stock purchase warrants to purchase 40 shares of common stock issued on or about April 9, 2024 ((i) and (ii) collectively, the “2024 Existing Warrants”). The net proceeds to the Company from the 2024 Warrant Inducement, after deducting placement agent fees and the Company’s offering expenses were $ 1,073 . In connection with the 2024 Warrant Inducement, the Company issued 219 new warrants. The Company also issued an aggregate of 7 placement agent warrants. ​ September 2024 Registered Direct Offering On September 27, 2024, the Company and certain investors entered into a securities purchase agreement relating to the issuance and sale of shares of common stock of the Company pursuant to a registered direct offering and a private placement of warrants to purchase shares of common stock. The investors purchased approximately $ 1,175 of shares and warrants, consisting of an aggregate of 111 shares of Common Stock and warrants to purchase 222 shares of common stock, at a purchase price of $ 30.78 per share and accompanying warrant. The Company also issued an aggregate of 7 placement agent warrants. The net proceeds to the Company from the Offering, after deducting placement agent fees and the Company’s offering expenses were $ 1,054 . ​ April 2024 Registered Direct Offering ​ On April 8, 2024, the Company and certain investors entered into a securities purchase agreement relating to the issuance and sale of shares of common stock (or pre-funded warrants in lieu of common stock) pursuant to a registered direct offering and a private placement of warrants to purchase shares of common stock. The investors purchased approximately $ 4,237 of shares and warrants, consisting of an aggregate of 40 shares of common stock, pre-funded warrants to purchase 3 shares of common stock and warrants to purchase 43 shares of common stock, at a purchase price of $ 99,670.50 per share and accompanying warrant. The Company also issued an aggregate of 3 placement agent warrants. ​ The net proceeds to the Company from the Offering, after deducting placement agent fees and the Company’s estimated offering expenses, were approximately $ 3,913 . ​ F-26 Other Equity Financings Pursuant to a Regulation A offering of Form 1-A, the Company entered into subscription agreements with certain accredited investors and high net worth individuals, pursuant to which the Company issued and sold to the investors 210 shares of its Common Stock, par value $ 0.0001 per share of the Company at a price of $ 26,547.75 per share for net proceeds to the Company of $ 5,208 , net of offering costs of $ 332 . The shares that were offered and sold above or at-the-market under Nasdaq rules and pursuant to the Company’s Form 1-A, initially filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended, on August 2, 2024 and qualified on August 13, 2024. ​ Private Placement of Warrants ​ During the third quarter of 2024, the Company and certain investors entered into warrant purchase agreements related to the private placement of 318 warrants to purchase an equal number of shares of common stock at a purchase price of $ 0.00001 per warrant. ​ Other Agreements During the second quarter of 2024, the Company settled an aggregate of $ 1,192 of outstanding indebtedness under various commercial agreements for an aggregate of 15 shares of common stock at an effective average price per share of $ 99,670.50 . ​ During the third quarter of 2024, the Company settled an aggregate of $ 525 of outstanding indebtedness under various commercial and licensing agreements for an aggregate of 38 shares of common stock at an effective average price per share of $ 13,810.35 . ​ ATM Offering On November 4, 2025, the Company established an at-the-market common equity offering program (“ATM Program”), through which it had the ability to offer and sell shares of common stock having an aggregate gross sales price of up to $ 25,000 . The Company will pay a 3.00 % sales commission based on the gross proceeds of the sales price per share of common stock sold. No proceeds were raised under the ATM Program in the year ended December 31, 2025. See Note 18 “Subsequent Events.” ​ ​ ​ ​ ​ ​ NOTE 10. – RETIREMENT PLAN The Company sponsors a defined contribution plan under Internal Revenue Code Section 401(k). The plan covers all employees who meet the minimum eligibility requirements. Under the 401(k) plan eligible employees are allowed to make voluntary deferred salary contribution to the plan, subject to statutory limits. The Company has elected to make Safe Harbor Non-Elective Contributions to the plan for eligible employees in the amount of three percent ( 3 %) of the employee’s compensation. Total employer contributions to the plan for the years ended December 31, 2025 and 2024 amounted to $ 140 and $ 152 , respectively. ​ ​ F-27 NOTE 11. – COMMITMENTS AND CONTINGENCIES License and growing agreements – The Company has entered into various license and tobacco growing agreements (the “Agreements”) with various counter parties in connection with the Company’s plant biotechnology 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 Consolidated Statements of Operations and Comprehensive Loss. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Future Commitments ​ Commitment Counter Party Commitment Type 2026 2027 2028 2029 ​ 2030 & After ​ Total ​ ​ ​ License Agreement ​ NCSU ​ Minimum annual royalty ​ $ 50 ​ $ 100 ​ $ 100 ​ $ 125 ​ $ 3,200 ​ $ 3,575 (1) Consulting Agreements ​ Various ​ Contract fee ​ ​ 252 ​ ​ 42 ​ ​ — ​ ​ — ​ ​ — ​ ​ 294 (2) ​ ​ ​ ​ ​ ​ $ 302 ​ $ 142 ​ $ 100 ​ $ 125 ​ $ 3,200 ​ $ 3,869 ​ ​ (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. (2) As a requirement for a modified risk tobacco product and a condition of the marketing authorization by the FDA, the Company engaged various consultants to conduct post-market studies and research. 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, a shareholder derivative claim was filed against the Company and certain current and former directors and officer in the United States District Court for the Eastern District of New York (Case No. 1:19 cv 00748) alleging breaches of fiduciary duty and other similar claims . On March 4, 2025, the parties entered into a Stipulation and Agreement of Settlement to fully resolve all claims that was finally approved on July 16, 2025. 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 Consolidated Balance Sheets during 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. ​ F-28       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 parties fully resolved the matter for $ 9,500 pursuant to a Settlement Agreement and Release executed on September 18, 2025. Payment was received on October 29, 2025. ​ KeyGene Dispute On April 11, 2024 the Company received a Request for Arbitration from Keygene N.V. 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. Trial date is set for October 27, 2026. 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. ​ ​ NOTE 12. – DEBT The Company had a senior secured credit facility (the “Senior Secured Credit Facility”), which consisted of debentures (the “Debenture”) and a subordinated promissory note (the “Subordinated Note”). The Subordinated Note was extinguished in April 2024 and the Senior Secure Credit Facility was repaid in full and terminated in September 2025, each described below. ​ F-29 Debt related to the Senior Secured Credit Facility as of December 31, 2025 and 2024 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Senior Secured Credit Facility $ — $ 7,690 Unamortized discount on loan and deferred debt issuance costs ​ ​ — ​ ​ ( 1,025 ) Total debt ​ $ — ​ $ 6,665 Current portion of long-term debt ​ ​ — ​ ​ ( 1,500 ) Total long-term debt ​ $ — ​ $ 5,165 ​ ​ 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 had a maturity date of March 3, 2026. ​ 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 were no further anti-dilution adjustments on such warrants. ​ 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 Consolidated Balance Sheets. No cash was exchanged as a result of executing the October 2023 Amendment. ​ F-30 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 “2023 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 2023 GVB Promissory Note was initially extended to December 31, 2024, and subsequently to March 31, 2025. As of March 31, 2025, the 2023 GVB Promissory Note was in default with respect to payment at maturity of the contractual term and accordingly an allowance for credit loss was initially recorded as of March 31, 2025 in the amount of $ 500 . ​ In connection with the September 18, 2025 full repayment of the debentures (as described below), the Company entered into a new 2025 GVB Promissory Note with GVB in the amount of $ 500 , payable in installments of $ 100 each on November 1, 2025, January 1, 2026 and February 1, 2026, with the remaining balance of $ 200 payable over a term of 31 monthly installments thereafter. The Company received the first payment on the 2025 GVB Promissory Note in the amount of $ 100 . As of December 31, 2025, the Company continues to maintain an allowance for credit loss against the 2025 GVB Promissory Note. ​ As part of the December 2023 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 9 “Capital Raises and Warrants for Common Stock”). ​ 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. ​ 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”). F-31 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 $ 2,083.8 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 1,504 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”). ​ 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 . ​ On September 18, 2025, the Company repaid in full all outstanding obligations under, and terminated, the Senior Secured Credit Facility, the Debentures, and the related security and collateral documents. In connection with the payoff and termination, the Company paid the outstanding principal, accrued and unpaid interest, and all other amounts then due and payable, totaling $ 3,790 in aggregate principal payments made between August 29, 2025 and September 18, 2025, from the proceeds of the August 2025 Series A convertible preferred stock offering (see Note 9 “Capital Raises and Warrants for Common Stock”). All liens and security interests securing the Debentures and related obligations were released. The Company also paid a prepayment penalty of $ 28 and recorded extinguishment charges of $ 416 . ​ 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. ​ F-32 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 is 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, as a component of Other Long-Term Liabilities on the Consolidated Balance Sheets. 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 $ 0.00001 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 8 “Fair Value Measurements”). The put option of the 2024 Omnia Warrants was fully exercised on September 29, 2025 in the amount of $ 1,231 and paid on October 2, 2025. ​ 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 year ended December 31, 2024, recorded in Interest expense in the Consolidated Statements of Operations and Comprehensive Loss. ​ ​ F-33 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 , were being amortized using the effective interest method over the term of the respective debt instrument, recorded as Interest expense in the Consolidated Statements 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 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ Total January 1, 2024 ​ $ 1,453 Amortization during the year ​ ​ ( 1,174 ) Extinguishment of debt ​ ​ 746 December 31, 2024 ​ ​ 1,025 Amortization during the period ​ ​ ( 495 ) Conversion option remeasurement ​ ​ 283 Amendment fees ​ ​ 250 Extinguishment of debt ​ ​ ( 1,063 ) December 31, 2025 ​ $ - ​ ​ ​ ​ ​ ​ ​ NOTE 13. – INCOME TAXES Pre-tax earnings from continuing operations consisted of the following for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Pre-tax income (loss) ​ ​ ​ ​ U.S. ​ $ ( 13,145 ) ​ $ ( 15,465 ) Outside the U.S. ​ — ​ — Total pre-tax (loss) earnings ​ $ ( 13,145 ) ​ $ ( 15,465 ) ​ The following is a summary of the components giving rise to the (benefit) provision for income taxes from continuing operations for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Federal provision: ​ ​ ​ ​ Current provision ​ $ — ​ $ — Deferred provision ​ ( 2,650 ) ​ ( 3,355 ) Change in valuation allowance ​ 2,657 ​ 3,363 Total federal income tax provision ​ ​ 7 ​ ​ 8 ​ ​ ​ ​ ​ ​ ​ State provision: ​ ​ ​ ​ Current provision ​ ​ ( 35 ) ​ 22 Deferred provision ​ ( 325 ) ​ 97 Change in valuation allowance ​ 325 ​ ( 97 ) Total state income tax (benefit) provision ​ ​ ( 35 ) ​ ​ 22 ​ ​ ​ ​ ​ ​ ​ Foreign provision: ​ ​ ​ ​ Current provision ​ ​ — ​ — Deferred provision ​ — ​ — Change in valuation allowance ​ — ​ — Total foreign income tax (benefit) provision ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ Total income tax (benefit) provision ​ $ ( 28 ) ​ $ 30 ​ F-34 The provision for income tax from continuing operations varies from that which would be expected based on applying the statutory federal rate to pre-tax book loss, including the effect of the change in the U.S. corporate income tax rates, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 U.S. federal statutory tax rate $ ( 2,760 ) ​ 21.0 % ​ $ ( 3,248 ) ​ 21.0 % State and local income taxes, net of federal income tax effect (a) ​ ( 28 ) ​ 0.2 ​ ​ 17 ​ ( 0.1 ) Foreign Tax Effects ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Canada ​ ​ — ​ — ​ ​ ​ — ​ — ​ Effect of changes in tax laws or rates enacted in current period ​ ​ — ​ — ​ ​ ​ — ​ — ​ Effect of cross-border tax laws ​ ​ — ​ — ​ ​ ​ — ​ — ​ Tax credits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development credit carryforward ​ — ​ — ​ ​ ( 230 ) ​ 1.5 Changes in valuation allowances ​ ​ 2,657 ​ ( 20.2 ) ​ ​ ​ 3,363 ​ ( 21.7 ) ​ Nontaxable or nondeductible items ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock based compensation (b) ​ 12 ​ ( 0.1 ) ​ ​ 812 ​ ( 5.3 ) GVB sale adjustments ​ ​ — ​ — ​ ​ ​ ( 615 ) ​ 4.0 ​ Other ​ ​ 105 ​ ( 0.8 ) ​ ​ ​ ( 80 ) ​ 0.5 ​ Changes in unrecognized tax benefits ​ ​ — ​ — ​ ​ ​ — ​ — ​ Other adjustments ​ ​ ( 14 ) ​ 0.1 ​ ​ ​ 11 ​ ( 0.1 ) ​ Effective tax rate (benefit) provision $ ( 28 ) ​ 0.2 % ​ $ 30 ​ ( 0.2 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (a) State benefits in Texas made up the majority (greater than 50 percent) of the tax effect in this category. (b) In 2025, incentive stock options not deductible. In 2024, forfeitures of $ 563 , cancellations of $ 45 , and shortfalls of $ 204 . ​ Individual components of deferred taxes consist of the following as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Deferred tax assets: ​ ​ ​ ​ Net operating loss carryforward ​ $ 62,743 ​ $ 59,605 Inventory ​ 615 ​ 990 Stock-based compensation ​ 89 ​ — Start-up expenditures ​ 102 ​ 124 Research and development credit carryforward ​ 1,654 ​ 1,654 Severance liability ​ — ​ 24 Allowance for credit losses ​ ​ 102 ​ ​ 2 Research and development costs ​ ​ 327 ​ ​ 1,827 Operating lease obligations ​ 187 ​ 400 Capital loss on investment ​ ​ 2,716 ​ ​ 2,622 Interest expense limitation ​ ​ 2,775 ​ ​ 2,259 Note payable and warrant liability ​ ​ — ​ ​ 373 Other ​ 141 ​ 314 ​ ​ $ 71,451 ​ $ 70,194 Deferred tax liabilities: ​ ​ ​ ​ Machinery and equipment ​ ( 334 ) ​ ( 334 ) Patents and trademarks ​ ( 124 ) ​ ( 149 ) Operating lease right-of-use assets ​ ( 177 ) ​ ( 386 ) Other intangible assets ​ ( 461 ) ​ ( 409 ) ​ ​ ( 1,096 ) ​ ( 1,278 ) Valuation allowance ​ ( 70,435 ) ​ ( 68,989 ) ​ ​ ​ ​ ​ ​ ​ Net deferred taxes ​ $ ( 80 ) ​ $ ( 73 ) ​ F-35 The Company has US federal net operating loss (“NOL”) carryforwards of approximately $ 228,923 as of December 31, 2025 that do not expire. The Company also accumulated US federal NOL carryforward of approximately $ 46,920 through December 31, 2017 and these NOL carryforwards begins to expire in 2030. In addition to the US federal NOL carryforward, the Company has state NOL carryforwards of approximately $ 104,844 in various jurisdictions in which it files that will begin to expire in 2031. As of December 31, 2025, the Company has a research and development credit carryforward of approximately $ 1,654 that begins to expire in 2030. The Company has a capital loss carryover of approximately $ 11,188 as of December 31, 2025, that begins to expire in 2026. Utilization of these carryforwards may be subject to an annual limitation in the case of equity ownership changes, as defined by law. Due to the uncertainty of the Company’s ability to generate sufficient taxable income in the future, the Company has recorded a valuation allowance to reduce the net deferred tax asset associated with the definite lived assets to zero. These carryforwards are included in the net deferred tax asset that has been fully offset by the valuation allowance. The valuation allowance increased for continuing operations by $ 2,982 and $ 3,305 for the years ended December 31, 2025 and 2024, respectively, and changed by ($ 1,537 ) and $ 922 due to tax attributes that were generated as a part of discontinued operations but remain on a prospective basis with continuing operations due to the Company filing a consolidated U.S. federal return for the years ended December 31, 2025 and 2024. ASC 740 provides guidance on the financial statement recognition and measurement for uncertain income tax positions that are taken or expected to be taken in a company’s income tax return. The Company has evaluated its tax positions and believes there are no uncertain tax positions as of December 31, 2025 and 2024. ​ The following tax payments and received refunds during the years ended December 31, 2025 and 2024, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 U.S. federal $ — $ — ​ ​ ​ ​ ​ ​ ​ State ​ ​ ​ ​ ​ ​ Texas ​ ​ ( 32 ) ​ ​ 7 Georgia ​ ( 7 ) ​ 7 Oregon ​ 2 ​ ( 2 ) New York ​ ​ — ​ ​ 10 California ​ ​ — ​ ​ 3 North Carolina ​ ​ — ​ ​ ( 4 ) Other ​ 2 ​ 1 State Subtotal ​ $ ( 35 ) ​ $ 22 ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ Other ​ — ​ — ​ ​ ​ ​ ​ ​ ​ Total cash paid or income taxes (net of refunds) ​ $ ( 35 ) ​ $ 22 ​ ​ The One Big Beautiful Bill Act ("OBBB") was signed into law on July 4, 2025. The OBBB makes changes to the U.S. corporate income tax, including immediate expensing of domestic research and development costs, with retroactive application beginning January 1, 2025; reinstating the option to claim 100% accelerated depreciation deductions on qualified property, with retroactive application beginning January 20, 2025; permanent reinstatement of the EBITDA-based limitation for the business interest deduction under IRC Section 163(j); and international tax provisions modifying global intangible low-taxed income ("GILTI"), foreign-derived intangible income ("FDII"), and base erosion and anti-abuse tax ("BEAT"). The impact of the OBBB on the Company is accelerating the expensing of the domestic research and development costs. F-36 NOTE 14. – EQUITY-BASED COMPENSATION Stock Compensation Plan On May 20, 2021, the shareholders of 22nd Century Group, Inc. (the “Company”) approved the 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”). The 2021 Plan allows for the granting of equity awards to eligible individuals over the life of the 2021 Plan, including any remaining shares under the Company’s 2014 Omnibus Incentive Plan pursuant to awards under the 2021 Plan. The 2021 Plan has a term of ten years and is administered by the Compensation Committee of the Company’s Board of Directors to determine the various types of incentive awards that may be granted to recipients under the 2021 Plan and the number of shares of common stock to underlie each such award under the 2021 Plan. As of December 31, 2025, the Company had available 3,772,848 shares remaining for future awards under the 2021 Plan. Compensation Expense The Company recognized the following compensation costs, net of actual forfeitures, related to RSUs and stock options: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ Sales, general, and administrative ​ $ 370 ​ $ 337 ​ Cost of goods sold ​ ​ 23 ​ ​ — ​ Research and development ​ 28 ​ 43 ​ Total equity-based compensation ​ $ 421 ​ $ 380 ​ ​ On December 31, 2024, the Company canceled all remaining unvested awards at that time which resulted in accelerated compensation expense of $ 117 . During the years ended December 31, 2025 and 2024, equity-based compensation expense reversals due to employee termination forfeitures amounted to $ 17 and $ 99 , respectively. Restricted Stock Units (“RSUs”) . We typically grant RSUs to employees and non-employee directors. The following table summarizes the changes in unvested RSUs from January 1, 2024 through December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ Unvested RSUs ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number of ​ Grant-date ​ ​ ​ ​ Shares ​ ​ ​ Fair Value ​ ​ ​ ​ $ per share Unvested at December 31, 2024 ​ — ​ $ — Granted ​ 24,365 ​ ​ 31.92 Forfeited ​ ( 31 ) ​ ​ 693.45 Unvested at December 31, 2025 ​ 24,334 ​ $ 31.12 ​ The fair value of RSUs related to employee grants that vested during the year ended December 31, 2024, was $ 9 , based on the stock price at the time of vesting. During the year ended December 31, 2024, there were 121 shares granted and immediately vested during the period for settled indebtedness for consulting and other services provided; in which the fair value at the time of vesting amounted to $ 125 . As of December 31, 2025, unrecognized compensation expense for new granted RSUs amounted to $ 642 which is expected to be recognized over a weighted average period of approximately 2.6 years. ​ F-37 Stock Options. Our outstanding stock options were valued using the Black-Scholes option-pricing model on the date of the award. A summary of all stock option activity from January 1, 2024 to December 31, 2025 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Weighted ​ Average ​ ​ ​ ​ ​ ​ ​ Average ​ Remaining ​ Aggregate ​ ​ Number of ​ Exercise ​ Contractual ​ Intrinsic ​ ​ ​ ​ Options ​ ​ ​ Price ​ ​ ​ Term ​ ​ ​ Value ​ ​ ​ ​ $ per share ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2024 — ​ $ — ​ ​ ​ Granted ​ 73,062 ​ ​ 31.91 ​ ​ ​ ​ ​ ​ Forfeited ​ ( 89 ) ​ ​ 693.45 ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2025 ​ 72,973 ​ $ 31.12 ​ 9.8 years ​ $ — Exercisable at December 31, 2025 ​ — ​ $ — ​ — years ​ $ — ​ 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. As of December 31, 2025, unrecognized compensation expense for new granted stock options amounted to $ 1,696 , 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 Grant date fair value ​ $ 28.14 ​ Risk-free interest rate (1) 3.88 % Expected dividend yield (2) — % Expected volatility (3) 119.71 % Expected term of stock options (4) 6.25 years ​ ​ ​ ​ (1) 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. (2) 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. (3) The expected volatility is based on historical volatility of the Company’s stock. (4) The expected term represents the period of time that options granted are expected to be outstanding based on vesting date and contractual term. ​ ​ F-38 NOTE 15. – EARNINGS (LOSS) PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings (loss) per common share for the years ended December 31, 2025 and 2024, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ (in thousands, except for per-share data) Net loss from continuing operations ​ $ ( 13,117 ) ​ $ ( 15,495 ) Net income from discontinued operations ​ ​ 8,063 ​ ​ 331 Net loss ​ ​ ( 5,054 ) ​ ​ ( 15,164 ) Deemed dividends ​ ​ ( 4,679 ) ​ ​ ( 10,303 ) Net loss available to common shareholders ​ $ ( 9,733 ) ​ $ ( 25,467 ) ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding - basic and diluted ​ ​ 184,067 ​ ​ 557 ​ ​ ​ ​ ​ ​ ​ Basic and diluted loss per common share from continuing operations ​ $ ( 71.26 ) ​ $ ( 27,812.56 ) Basic and diluted income per common share from discontinued operations ​ ​ 43.81 ​ ​ 594.83 Basic and diluted loss per common share from deemed dividends ​ ​ ( 25.42 ) ​ ​ ( 18,493.32 ) Basic and diluted loss per common share ​ $ ( 52.87 ) ​ $ ( 45,711.05 ) ​ ​ ​ ​ ​ ​ ​ Anti-dilutive shares are as follows as of December 31: ​ ​ ​ ​ ​ ​ Warrants (excluding pre-funded) ​ ​ 739,175 ​ ​ 74,628 Options ​ ​ 72,973 ​ ​ — Restricted stock units ​ ​ 24,334 ​ ​ — ​ ​ ​ 836,482 ​ ​ 74,628 ​ ​ NOTE 16. – 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 ® , or research cigarettes sold under the brand name SPECTRUM ® . The Company does not have significant intra-entity sales or transfers. 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 and allowances at December 31, 2025 and 2024. Consideration payable to the customer for royalties is recorded as an offset 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 99 % and 54 %, for the years ended December 31, 2025 and 2024, respectively. F-39 The following table presents net revenue by product line: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ 2024 Contract manufacturing ​ ​ ​ ​ ​ Cigarettes $ 12,897 ​ $ 14,219 Filtered cigars ​ 4,110 ​ ​ 9,427 Other tobacco products ​ 442 ​ ​ 756 Total contract manufacturing ​ 17,449 ​ ​ 24,402 VLN ® ​ 138 ​ ​ ( 20 ) Total product line revenues $ 17,587 ​ $ 24,382 ​ The following table presents net revenues by significant customers, which are defined as any customer who individually represents 10% or more of disaggregated product line net revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2025 ​ 2024 Customer A ​ 60.23 % ​ 46.11 % Customer B ​ 14.52 % ​ 14.00 % Customer C ​ 10.33 % ​ - ​ All other customers ​ 14.92 % ​ 39.89 % ​ 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 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 extended credit terms up to twenty-one ( 21 ) days after shipment. Deferred income relates to down payments received from customers in advance of satisfying a performance obligation. This deferred income is included within Contract liabilities on the Consolidated Balance Sheets. Total contract assets and liabilities are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Unbilled receivables $ 2,930 $ 1,298 Consideration payable to the customer ​ ( 1,388 ) ​ — Deferred income ​ ​ ( 333 ) ​ ​ ( 20 ) Net contract assets ​ $ 1,209 ​ $ 1,278 ​ During the year ended December 31, 2024, the Company recognized $ 726 of revenue that was included in the contract liability balance as of December 31, 2023. ​ F-40 NOTE 17. 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 years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ ​ ​ 2024 Consolidated net revenue $ 17,587 ​ $ 24,382 Less: ​ ​ ​ ​ ​ Cost of goods sold ​ 9,697 ​ ​ 13,759 Excise taxes ​ 10,538 ​ ​ 12,504 Selling, general and administration ​ 7,591 ​ ​ 10,213 Research and development ​ 265 ​ ​ 724 Depreciation and amortization ​ 911 ​ ​ 1,003 Other segment items (1) ​ 247 ​ ​ ( 420 ) Interest expense ​ 1,455 ​ ​ 2,094 Segment net loss from continuing operations $ ( 13,117 ) ​ $ ( 15,495 ) ​ ​ ​ ​ ​ ​ (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: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ ​ ​ 2024 Cost of goods sold $ 479 ​ $ 510 Selling, general and administration ​ — ​ ​ 75 Total depreciation from continuing operations $ 479 ​ $ 585 ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2025 ​ ​ ​ 2024 Cost of goods sold $ 10 ​ $ 10 Research and development ​ 423 ​ ​ 408 Total amortization from continuing operations $ 433 ​ $ 418 ​ F-41 Geographic Area Information ​ For the years ended December 31, 2025 and 2024, substantially all third-party sales of product are shipped to customers in the United States. Additionally, as of December 31, 2025 and 2024, all long-lived assets are physically located or domiciled in the United States. ​ NOTE 18. – SUBSEQUENT EVENTS ​ ATM Offering Subsequent to December 31, 2025, the Company sold 44,381 shares of common stock under the ATM Program for gross proceeds of $ 200 at a weighted average price of $ 4.51 . March 2026 Series B Convertible Preferred Stock Offering ​ On March 20, 2026, the Company and certain investors entered into a securities purchase agreement with respect to the offer and sale of $ 20,000 of shares of Series B Convertible Preferred Stock, stated value $ 1,000 per share (the “Series B Preferred Stock”), initially convertible into shares of the Company’s common stock at an initial conversion price of $ 3.57 (subject to adjustment in certain circumstances with a floor price of $ 0.714 ) and, alternatively, at a 15 % discount to the lowest daily volume-weighted average price (“VWAP”) during the prior 20 trading days (the “Alternative Conversion Price”) and warrants to purchase shares of Common Stock pursuant to a registered direct offering. The Company has the ability to reset the fixed conversion price (lower), subject to board approval and the floor price. Stockholder approval for the offering was obtained at the February 20, 2026 Special Meeting of the Stockholders. ​ At the initial closing, the investors purchased $16,000 of shares of Series B convertible preferred stock and warrants. The remaining $4,000 of shares of Series B Preferred Stock and warrants are expected to be purchased at a second closing. The investors may request the second closing at any time until the one-year anniversary of the initial closing date and we may require the second closing at any time until the one-year anniversary of the initial closing date by individual investor once less than 50% of such Investor’s Series B Preferred Stock purchased at the initial closing remains outstanding and certain equity conditions have been satisfied for at least 7 of the prior 10 trading days, including: (1) the Common Stock closes above 2.5 times the floor price and (2) the daily dollar trading volume of the Common Stock exceeds $500. The warrants are immediately exercisable at an exercise price of $3.57 per share of common stock and expire on the date that is five years after issuance. In addition, the Company issued placement agent warrants to purchase an aggregate of 187,816 shares of common stock with substantially the same terms as the Warrants, except that the exercise price of the Placement Agent Warrants is $3.927. ​ The Company used the net proceeds from the offering to repurchase at par all of the shares of outstanding Series A Convertible Preferred Stock issued in August 2025 in the amount of $9.65 million. The balance of the net proceeds from the offering was approximately $5,680, after deducting placement agent case fees but before any other offering expenses. ​ Following the offering, 130 shares of Series B Preferred Stock were converted into 33,929 shares of common stock, with 15,870 Series B Preferred Stock shares remaining outstanding. ​ ​ ​ Item 15(a)2 Financial Statement Schedules None ​ ​ F-42 ​ Item 15(b). Exhibits In reviewing the agreements included as exhibits to this report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company, its subsidiaries or other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and: · should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; · have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; · may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and · were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this report not misleading. Additional information about the Company may be found elsewhere in this report and the Company’s other public files, which are available without charge through the SEC’s website at http://www.sec.gov . 44 Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the year ended September 30, 2010 filed with the Commission on December 1, 2010). 3.1.1 Amendment to Certificate of Incorporation of the Company (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the Commission on March 4, 2014). 3.1.2 ​ Amendment to Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Commission on December 17, 2024). ​ ​ ​ 3.1.3 ​ Amendment to Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Commission on April 3, 2024). ​ ​ ​ 3.1.4 ​ Amendment to Certificate of Incorporation of the Company (incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement filed with the Commission on December 11, 2023). ​ ​ ​ 3.1.5 ​ 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). ​ ​ ​ 3.1.6 ​ Amendment to Certificate of Incorporation of the Company (incorporated by reference to 3.1 to Form 8-K filed with the Commission on January 22, 2026). ​ ​ ​ 3.1.7* ​ Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock ​ ​ ​ 3.2 Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Commission on January 30, 2014). 3.2.1 Amendment No. 1 to Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 of the Company’s Form 8-K filed with the Commission on April 28, 2015). 4.1* Description of Securities Registered Pursuant to Section 12 ​ ​ ​ 4.2 ​ Form of Warrant (Incorporated by reference from Exhibit 4.2 to the Company’s Form 8-K filed with the Commission on October 24, 2024). ​ 4.3 ​ Form of Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on August 25, 2025). ​ ​ ​ 4.4 ​ Form of Placement Agent Warrant (Incorporated by reference from Exhibit 4.2 to the Company’s Form 8-K filed with the Commission on August 25, 2025) ​ ​ ​ 4.5 ​ Form of Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on March 20, 2026) ​ ​ ​ 4.6 ​ Form of Placement Agent Warrant (Incorporated by reference from Exhibit 4.2 to the Company’s Form 8-K filed with the Commission on March 20, 2026) ​ ​ ​ 10.1†† License Agreement dated March 6, 2009 between North Carolina State University and 22nd Century Limited, LLC (incorporated by reference to Exhibit 10.21 to the Company’s Form S-1 registration statement filed with the Commission on August 26, 2011). 45 10.1.1 Amendment dated August 9, 2012 to License Agreement dated March 6, 2009 between North Carolina State University and 22nd Century Limited, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 20, 2012). 10.2 Letter Agreement between the Company and North Carolina State University dated November 22, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on November 23, 2011). 10.3† Amended and Restated 2021 Omnibus Incentive Plan (incorporated by reference from Appendix B to the Company’s definitive proxy statement filed June 10, 2025) 10.4† Form of Option Award Agreement under 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on May 21, 2021). 10.5† Form of Executive RSU Award Agreement under 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Commission on May 21, 2021). ​ ​ ​ 10.6† ​ Form of Director RSU Award Agreement under 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (incorporated by reference to exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Commission on May 21, 2021). ​ ​ ​ 10.7† ​ 22nd Century Group, Inc. 2014 Omnibus Incentive Plan, as amended and restated (incorporated by reference from Appendix A to the Company’s definitive proxy statement filed on March 22, 2019). ​ ​ ​ 10.8 ​ License Agreement with NCSU dated November 2, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on November 8, 2023) . ​ ​ ​ 10.9* ​ Master Services Agreement, Addendum #1, #2 and #3 with Smoker Friendly International, LLC dated January 1, 2025. ​ 10.10 ​ Master Services Agreement with Murphy Oil USA, Inc. dated June 23, 2025 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2025 filed with the Commission on August 14, 2025). ​ ​ ​ 10.11 ​ Form of Omnibus Amendment and Waiver (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on December 17, 2025) . ​ ​ ​ 10.12 ​ Sales Agreement, dated November 4, 2025, by and between 22nd Century Group, Inc. and Needham & Company, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on November 4, 2025) . ​ ​ ​ 10.13† ​ Form of Executive Employment Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Commission on November 4, 2025) . ​ ​ ​ 19.1 ​ ​ Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Company’s Form 10-K filed with the Commission on March 28, 2024) ​ ​ ​ 21.1* ​ Subsidiaries ​ ​ ​ 23.1* Consent of WithumSmith+Brown, PC ​ ​ ​ 46 23.2* ​ Consent of Freed Maxick P.C. 31.1* Section 302 Certification. 31.2* Section 302 Certification. 32.1* Written Statement of Principal Executive Officer and Chief Financial Officer pursuant to 18.U.S.C §1350. ​ ​ ​ 97.1 ​ Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the Company’s Form 10-K filed with the Commission on March 28, 2024) 101* Interactive data files formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements. 101.INS XBRL Instance Document* 101.SCH XBRL Taxonomy Extension Schema Document* 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document* 101.DEF XBRL Taxonomy Extension Definition Linkbase Document* 101.LAB XBRL Taxonomy Extension Label Linkbase Document* 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document* ​ ​ ​ Exhibit 104 ​ Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document* ​ * Filed herewith. † Management contract or compensatory plan, contract or arrangement. †† Certain portions of the exhibit have been omitted pursuant to a confidential treatment order. An unredacted copy of the exhibit has been filed separately with the United States Securities and Exchange Commission pursuant to the request for confidential treatment. ​ Item 16. Form 10-K Summary. None. ​ ​ ​ 47 ​ ​ SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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: March 26, 2026 By: /s/ Lawrence D. Firestone Lawrence D. Firestone Chief Executive Officer and Director (Principal Executive Officer) Date: March 26, 2026 By: /s/ Daniel Otto Daniel Otto Chief Financial Officer (Principal Accounting and Financial Officer) ​ Pursuant to the requirements of Section 13 or 15(d) 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. Date: March 26, 2026 By: /s/ Andrew Arno Andrew Arno Director ​ ​ ​ ​ ​ ​ ​ ​ nthony Date: March 26, 2026 By: /s/ David Keys David Keys Director ​ Date: March 26, 2026 By: /s/ Lucille S. Salhany Lucille S. Salhany Director ​ ​ ​ ​ 48