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, 2024. 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, 2024 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting. ​ Item 9B. Other Information. 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 41 Table of Contents 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, 2024. ​ ​ Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspectio n ​ Not applicable. ​ ​ PART III Item 10 . Directors, Executive Officers and Corporate Governance. Information concerning our executive officers, directors and corporate governance is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to its 2025 Annual Meeting of Stockholders. 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. ​ ​ Item 11. Executive Compensation. Information is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to its 2025 Annual Meeting of Stockholders. ​ Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Information is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to its 2025 Annual Meeting of Stockholders. ​ Item 13. Certain Relationships and Related Transactions, and Director Independence. Information is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to its 2025 Annual Meeting of Stockholders. ​ ​ Item 14. Principal Accounting Fees and Services. Information is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Form 10-K with respect to its 2025 Annual Meeting of Stockholders. ​ ​ ​ 42 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules. (a) (1) Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 317 ) F-1 Consolidated Financial Statements: Consolidated Balance Sheets F-4 Consolidated Statements of Operations F-5 ​ ​ ​ Consolidated Statements of Comprehensive Loss ​ F-6 Consolidated Statements of Changes in Shareholders’ Equity F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9–51 ​ (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. ​ ​ ​ ​ ​ ​ 43 Table of Contents ​ 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 sheets of 22nd Century Group, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, statements of comprehensive loss, changes in shareholders' equity and cash flows for each of the two years in the period 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 2023, and the results of its operations and its cash flows for the years 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 audits 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 audits, 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 audits 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 audits 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 audits 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. ​ F-1 Table of Contents 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. ​ ​ 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. ​ ​ F-2 Table of Contents 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-3 Table of Contents ​ ​ ​ 22nd CENTURY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share and per-share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 ASSETS ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 4,422 ​ $ 2,058 Accounts receivable, net ​ 1,698 ​ 1,671 Inventories ​ 2,015 ​ 4,346 Insurance recoveries ​ 768 ​ 3,768 GVB promissory note ​ 500 ​ 2,000 Prepaid expenses and other current assets ​ 1,068 ​ 1,180 Current assets of discontinued operations held for sale ​ 1,051 ​ 1,254 Total current assets ​ 11,522 ​ 16,277 Property, plant and equipment, net ​ 2,773 ​ 3,393 Operating lease right-of-use assets, net ​ 1,639 ​ 1,894 Intangible assets, net ​ 5,724 ​ 5,924 Other assets ​ ​ 15 ​ ​ 15 Total assets ​ $ 21,673 ​ $ 27,503 ​ ​ ​ LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) ​ ​ Current liabilities: ​ ​ Notes and loans payable - current ​ $ 254 ​ $ 543 Current portion of long-term debt ​ ​ 1,500 ​ ​ 5,848 Operating lease obligations ​ 261 ​ 231 Accounts payable ​ 2,401 ​ 4,445 Accrued expenses ​ 1,021 ​ 1,322 Accrued litigation ​ 768 ​ 3,768 Accrued payroll ​ 318 ​ 883 Accrued excise taxes and fees ​ 2,038 ​ 2,234 Deferred income ​ ​ 20 ​ ​ 726 Other current liabilities ​ 100 ​ 1,849 Current liabilities of discontinued operations held for sale ​ 1,281 ​ 3,185 Total current liabilities ​ 9,962 ​ 25,034 Long-term liabilities: ​ ​ Operating lease obligations ​ 1,437 ​ 1,698 Long-term debt ​ ​ 5,165 ​ ​ 8,058 Other long-term liabilities ​ ​ 1,097 ​ ​ 1,123 Total liabilities ​ ​ 17,661 ​ ​ 35,913 Commitments and contingencies (Note 11) ​ ​ ​ ​ Shareholders' equity (deficit): ​ ​ Preferred stock, $ .00001 par value, 10,000,000 shares authorized ​ ​ Common stock, $ .00001 par value, 250,000,000 shares authorized ​ ​ Capital stock issued and outstanding: ​ ​ 730,148 common shares ( 20,313 at December 31, 2023) ​ ​ ​ ​ Common stock, par value ​ ​ — ​ ​ — Capital in excess of par value ​ 397,883 ​ 370,297 Accumulated deficit ​ ( 393,871 ) ​ ( 378,707 ) Total shareholders' equity (deficit) ​ 4,012 ​ ( 8,410 ) Total liabilities and shareholders’ equity (deficit) ​ $ 21,673 ​ $ 27,503 ​ See accompanying notes to consolidated financial statements. ​ ​ ​ ​ ​ ​ F-4 Table of Contents 22nd CENTURY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, except per-share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 2023 Revenues, net $ 24,382 ​ $ 32,204 Cost of goods sold ​ 14,278 ​ ​ 24,891 Excise taxes and fees on products 12,504 ​ 16,009 Gross (loss) profit ( 2,400 ) ​ ( 8,696 ) Operating expenses: ​ ​ ​ Sales, general and administrative 10,287 ​ 31,064 Research and development 1,133 ​ 2,644 Other operating expense, net 130 ​ 2,527 Total operating expenses 11,550 ​ 36,235 Operating loss from continuing operations ( 13,950 ) ​ ( 44,931 ) Other income (expense): ​ ​ ​ Other income (expense), net 507 ​ 334 Loss on transfer of promissory note — ​ ( 895 ) Interest income, net 72 ​ 219 Interest expense ( 2,094 ) ​ ( 9,366 ) Total other income (expense), net ( 1,515 ) ​ ( 9,708 ) Loss from continuing operations before income taxes ( 15,465 ) ​ ​ ( 54,639 ) Provision for income taxes 30 ​ 47 Net loss from continuing operations $ ( 15,495 ) ​ $ ( 54,686 ) ​ ​ ​ ​ ​ ​ Discontinued operations: ​ ​ ​ ​ ​ Income (loss) from discontinued operations before income taxes $ 331 ​ $ ( 85,634 ) Provision for income taxes ​ — ​ ​ 455 Net income (loss) from discontinued operations $ 331 ​ $ ( 86,089 ) ​ ​ ​ ​ ​ ​ Net loss $ ( 15,164 ) ​ $ ( 140,775 ) Deemed dividends ​ ( 10,303 ) ​ ​ ( 9,992 ) Net loss available to common shareholders $ ( 25,467 ) ​ $ ( 150,767 ) ​ ​ ​ ​ ​ ​ Basic loss per share: ​ ​ ​ ​ ​ Basic loss per common share from continuing operations $ ( 105.85 ) ​ $ ( 5,776.63 ) Basic income (loss) per common share from discontinued operations $ 2.26 ​ $ ( 9,093.89 ) Basic loss per common share from deemed dividends $ ( 70.38 ) ​ $ ( 1,055.47 ) Basic loss per common share $ ( 173.97 ) ​ $ ( 15,925.99 ) ​ ​ ​ ​ ​ ​ Diluted loss per share: ​ ​ ​ ​ ​ Diluted loss per common share from continuing operations $ ( 105.85 ) ​ $ ( 5,776.63 ) Diluted income (loss) per common share from discontinued operations $ 0.24 ​ $ ( 9,093.89 ) Diluted loss per common share from deemed dividends $ ( 70.38 ) ​ $ ( 1,055.47 ) Diluted loss per common share $ ( 175.99 ) ​ $ ( 15,925.99 ) ​ ​ ​ ​ ​ ​ Weighted average shares outstanding: ​ ​ ​ ​ ​ Basic ​ 146,392 ​ ​ 9,467 Diluted ​ 1,389,983 ​ ​ 9,467 ​ ​ ​ ​ ​ ​ ​ See accompanying notes to consolidated financial statements. ​ F-5 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 22nd CENTURY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 2023 Net loss $ ( 15,164 ) ​ $ ( 140,775 ) Other comprehensive income: ​ ​ ​ Unrealized gain on short-term investment securities — ​ 71 Foreign currency translation — ​ ( 1 ) Reclassification of realized losses to net loss — ​ 41 Other comprehensive income ​ — ​ ​ 111 Comprehensive loss $ ( 15,164 ) ​ $ ( 140,664 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See accompanying notes to consolidated financial statements. ​ F-6 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 22nd CENTURY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (amounts in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, 2024 and 2023 ​ ​ Common ​ Par Value ​ Capital in ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ of Common ​ Excess of ​ Comprehensive ​ Accumulated ​ Shareholders' ​ Outstanding Shares Par Value Income (Loss) Deficit Equity Balance at January 1, 2023 6,389 ​ $ — ​ $ 333,900 ​ $ ( 111 ) ​ $ ( 237,814 ) ​ $ 95,975 Stock issued in connection with RSU vesting, net of shares withheld for taxes 58 ​ — ​ ( 419 ) ​ ​ — ​ — ​ ( 419 ) Stock issued in connection with acquisition ​ 15 ​ — ​ 503 ​ ​ — ​ — ​ 503 Stock issued in connection with ATM, net of fees of $ 178 ​ 144 ​ — ​ 2,563 ​ ​ — ​ — ​ 2,563 Stock issued in connection with licensing arrangement ​ 155 ​ ​ — ​ 3,570 ​ ​ — ​ — ​ 3,570 Stock issued in connection with capital raises, net of issuance costs of $ 2,279 ​ 6,646 ​ ​ — ​ 22,880 ​ ​ — ​ — ​ 22,880 Stock issued in connection with warrant exercises, net of fees of $ 292 ​ 6,875 ​ ​ — ​ 3,044 ​ ​ — ​ — ​ 3,044 Equity detachable warrants ​ — ​ ​ — ​ ​ 1,577 ​ ​ — ​ ​ — ​ ​ 1,577 Adoption of ASU 2016-13 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 118 ) ​ ​ ( 118 ) Fractional shares issued for reverse stock split ​ 31 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Equity-based compensation ​ — ​ — ​ 2,679 ​ ​ — ​ — ​ 2,679 Other comprehensive income — ​ — ​ — ​ ​ 111 ​ — ​ 111 Net loss — ​ — ​ — ​ ​ — ​ ( 140,775 ) ​ ( 140,775 ) Balance at December 31, 2023 20,313 ​ $ — ​ $ 370,297 ​ $ — ​ $ ( 378,707 ) ​ $ ( 8,410 ) Stock issued in connection with RSU vesting, net of 3 shares withheld for taxes 29 ​ — ​ ( 1 ) ​ ​ — ​ — ​ ( 1 ) Stock issued in connection with licensing arrangement ​ 2,679 ​ — ​ 200 ​ ​ — ​ — ​ 200 Stock issued in connection with warrant exercises, net of fees of $ 261 ​ 362,762 ​ — ​ 3,354 ​ ​ — ​ — ​ 3,354 Stock issued in connection with Reg A Private Placement, net of issuance costs of $ 332 ​ 72,002 ​ ​ — ​ 5,208 ​ ​ — ​ — ​ 5,208 Stock issued in connection with capital raises, net of issuance costs of $ 713 ​ 105,502 ​ ​ — ​ 9,879 ​ ​ — ​ — ​ 9,879 Stock issued upon conversion of Senior Secured Credit Facility ​ 14,928 ​ ​ — ​ 3,084 ​ ​ — ​ — ​ 3,084 Stock issued in connection with settled indebtedness ​ 15,720 ​ ​ — ​ ​ 1,617 ​ ​ — ​ — ​ 1,617 Stock issued for extinguishment of Subordinated Note (1) ​ 8,519 ​ ​ — ​ ​ 3,864 ​ ​ — ​ — ​ 3,864 Reclass of conversion option ​ — ​ ​ — ​ ​ 1 ​ ​ — ​ — ​ 1 Fractional shares issued for reverse stock split ​ 127,694 ​ ​ — ​ ​ — ​ ​ — ​ — ​ — Equity-based compensation ​ — ​ — ​ 380 ​ ​ — ​ — ​ 380 Net loss — ​ — ​ — ​ ​ — ​ ( 15,164 ) ​ ( 15,164 ) Balance at December 31, 2024 730,148 ​ $ — ​ $ 397,883 ​ $ — ​ $ ( 393,871 ) ​ $ 4,012 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ *Giving retroactive effect to the 1-for-15 reverse stock split on July 5, 2023, 1-for-16 reverse stock split on April 2, 2024 and 1-for-135 reverse stock split on December 17, 2024. (1) Excludes 8,519 of pre-funded warrants ​ See accompanying notes to consolidated financial statements. ​ F-7 Table of Contents ​ ​ ​ 22nd CENTURY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2024 2023 Cash flows from operating activities: ​ ​ Net loss ​ $ ( 15,164 ) ​ $ ( 140,775 ) Adjustments to reconcile net loss to cash used in operating activities: ​ ​ Impairment of goodwill and long-lived assets ​ ​ 68 ​ ​ 3,297 Amortization and depreciation ​ 1,003 ​ 3,951 Amortization of right-of-use asset ​ 255 ​ 908 Other non-cash gains ​ ​ ( 947 ) ​ ​ ( 15 ) Provision for credit losses ​ ​ 1 ​ ​ 1,024 Loss on sale or disposal of machinery and equipment ​ 127 ​ 73 Debt related charges included in interest expense ​ ​ 2,174 ​ ​ 8,006 Equity-based compensation ​ 380 ​ 2,679 Gain on change of contingent consideration ​ — ​ ( 1,138 ) Change in fair value of warrant liabilities ​ ​ ( 492 ) ​ ​ ( 364 ) Change in fair value of derivative liability ​ ​ ( 556 ) ​ ​ 557 Loss on disposal of discontinued operations ​ ​ — ​ ​ 58,521 Loss on transfer of promissory note ​ ​ — ​ ​ 895 Deferred income taxes ​ ​ 8 ​ ​ 434 Change in inventory reserves ​ ​ ( 4,374 ) ​ ​ 8,695 Changes in operating assets and liabilities, net of acquisition: ​ ​ ​ Accounts receivable ​ ( 30 ) ​ ( 18 ) Inventories ​ 6,705 ​ ( 5,925 ) Prepaid expenses and other assets ​ 159 ​ 451 Accounts payable ​ ( 1,169 ) ​ 4,752 Accrued expenses ​ ( 475 ) ​ 681 Accrued payroll ​ ( 565 ) ​ ( 2,153 ) Accrued excise taxes and fees ​ ( 196 ) ​ 811 Other liabilities ​ ​ ( 1,257 ) ​ ( 334 ) Net cash used in operating activities ​ ( 14,345 ) ​ ( 54,987 ) Cash flows from investing activities: ​ ​ ​ Acquisition of patents, trademarks, and licenses ​ ( 20 ) ​ ( 961 ) Acquisition of property, plant and equipment ​ ( 141 ) ​ ( 4,656 ) Proceeds from the sale of property, plant and equipment ​ 22 ​ 283 Acquisition, net of cash acquired ​ ​ — ​ ​ ( 254 ) Proceeds from sale of discontinued operations ​ ​ — ​ ​ 665 Property, plant and equipment insurance proceeds ​ ​ — ​ ​ 3,500 Sales and maturities of short-term investment securities ​ — ​ 21,714 Purchase of short-term investment securities ​ — ​ ( 3,475 ) Net cash (used in) provided by investing activities ​ ( 139 ) ​ 16,816 Cash flows from financing activities: ​ ​ ​ Payments on notes payable ​ ​ ( 1,546 ) ​ ​ ( 5,581 ) Proceeds from issuance of notes payable ​ ​ 1,256 ​ ​ 2,360 Payments of long-term debt ​ ​ ( 1,302 ) ​ ​ ( 9,700 ) Proceeds from issuance of long-term debt ​ ​ — ​ ​ 16,849 Payment of debt issuance costs ​ ​ — ​ ​ ( 801 ) Proceeds from issuance of detachable warrants ​ ​ — ​ ​ 6,016 Net proceeds from warrant exercise ​ ​ 3,354 ​ ​ 3,044 Proceeds from issuance of common stock related to the ATM ​ ​ — ​ ​ 2,741 Payment of common stock issuance costs related to the ATM ​ ​ — ​ ​ ( 178 ) Proceeds from issuance of common stock ​ ​ 16,132 ​ ​ 25,158 Payment of common stock issuance costs ​ ​ ( 1,045 ) ​ ​ ( 2,279 ) Taxes paid related to net share settlement of RSUs ​ ​ ( 1 ) ​ ​ ( 420 ) Net cash provided by financing activities ​ 16,848 ​ 37,209 Net increase (decrease) in cash, cash equivalents and restricted cash ​ 2,364 ​ ( 962 ) Cash and cash equivalents - beginning of period ​ 2,058 ​ 3,020 Cash and cash equivalents - end of period ​ $ 4,422 ​ $ 2,058 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ Net cash paid for: ​ ​ Cash paid during the period for interest ​ $ 722 ​ $ 1,313 Cash paid during the period for income taxes ​ $ 22 ​ $ 40 Non-cash transactions: ​ ​ Capital expenditures incurred but not yet paid ​ $ 43 ​ $ 118 Right-of-use assets and corresponding operating lease obligations ​ $ — ​ $ 5,166 Deemed dividends ​ $ 10,303 ​ $ 9,992 Stock issued in connection with settled indebtedness ​ $ 1,617 ​ $ — Non-cash consideration RXP acquisition ​ $ — ​ $ 1,641 Non-cash licensing arrangement ​ $ 250 ​ $ 3,500 Stock issued for extinguishment of Subordinated Note ​ $ 3,864 ​ $ — Payment of GVB Promissory Note ​ $ 1,500 ​ $ 2,600 Insurance/litigation gross up ​ $ — ​ $ 3,768 Non-cash proceeds from sale of discontinued operations ​ $ — ​ $ 2,000 Payment of debt issuance costs ​ $ 603 ​ $ — Equity conversion of Senior Secured Credit Facility ​ $ 3,084 ​ $ — ​ See accompanying notes to consolidated financial statements . F-8 Table of Contents ​ 22nd CENTURY GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2024 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 publicly traded Nevada corporation 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 22 nd 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 and strategic shift away from hemp/cannabis, the Company has realigned its corporate and management reporting structure to focus solely on its tobacco business. As a result, 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 and 2023, respectively. 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 $ 14,345 and $ 54,987 for the years ended December 31, 2024 and 2023, respectively, and an accumulated deficit of $ 393,871 and $ 378,707 as of December 31, 2024 and December 31, 2023, respectively. As of December 31, 2024, the Company had cash and cash equivalents of $ 4,422 . 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 Table of Contents 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; future covenant non-compliance with respect to the Company’s Senior Secured Credit Facility giving rise to an event of default; inability to identify or consummate any strategic initiatives and transactions; unsuccessful commercialization strategy and launch plans for the Company’s products or market acceptance of the Company’s products; risks inherent in litigation, including purported class actions; and protection of proprietary technology. ​ Reverse Stock Split – In order to regain compliance with Nasdaq's continued listing requirements, the Company effected the following reverse stock splits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Round up of Date ​ Split ​ fractional shares July 5, 2023 ​ 1 -for-15 ​ 31 April 2, 2024 ​ 1 -for-16 ​ 876 December 17, 2024 ​ 1 -for-135 ​ 126,818 ​ 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. 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. 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. However, the Company has elected to classify money market mutual funds related to its short-term investment portfolio as short-term investment securities. 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 F-10 Table of Contents charged against the provision when incurred. As of December 31, 2024, and 2023, the Company recorded a provision for credit losses of $ 9 and $ 8 , 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 Office furniture, fixtures and equipment 3 to 10 years Laboratory equipment 5 years ​ Acquisitions - The Company accounts for acquisitions under the acquisition method of accounting for business combinations. Results of operations of acquired companies are included in the Company’s results of operations as of the respective acquisition dates. The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. 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. ​ Contingent Consideration - Contingent consideration arising from a business acquisition is included as part of the purchase price and is recorded at fair value as of the acquisition date. Subsequent to the acquisition date, the Company remeasures contingent consideration arrangements at fair value at each reporting period until the contingency is resolved. The changes in fair value are recognized within Other operating expenses (income), net in the Company’s Consolidated Statement of Operations and Comprehensive Loss. Changes in fair values reflect new information about the likelihood of the payment of the contingent consideration and the passage of time. See Note 3 “Business Acquisitions” for the contingent consideration arising from the acquisition of RX Pharmatech Ltd. ​ F-11 Table of Contents Goodwill - Goodwill represents the excess of cost over the fair value of identifiable net assets of a business acquired and is assigned to one or more reporting units. The Company tests its reporting unit’s goodwill for impairment at least annually as of the measurement date year and between annual tests if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. The Company concluded an interim impairment trigger event occurred and tested its goodwill for impairment during the quarter ended September 30, 2023 and concluded that goodwill impairment existed. No goodwill remained as of December 31, 2023. See Note 2 “Discontinued Operations and Divestitures” for additional information. 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 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. F-12 Table of Contents 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. ​ 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. 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 stockholders and a corresponding increase to Capital in excess of par value resulting in no change to stockholders’ 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). ​ F-13 Table of Contents Embedded Derivatives - The Company considers whether there are any embedded features in debt instruments that require bifurcation and separate accounting as derivative financial instruments pursuant to ASC 815. Embedded derivatives are initially and subsequently measured at fair value. With the exception of the bifurcated embedded conversion option as described in Note 12 “Debt”, the embedded derivatives associated with the Company’s Senior Secured Credit Facility and Subordinated Note are not material. ​ 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. ​ Transfers of Financial Assets – The Company accounts for transfers of financial assets as sales when it has surrendered control over the related assets. Whether control has been relinquished requires, among other things, an evaluation of relevant legal considerations and an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred. Gains and losses resulting from transfers reported as sales are included as a component of Other income (expense) in the Consolidated Statement of Operations and Comprehensive Loss. ​ 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 Statement 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 recorded $ 154 of revenue , net and corresponding contract asset with a related party contract manufacturing customer for the sale of private label cigarettes. The customer relationship is conducted at arm’s length. 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 carry-forwards. F-14 Table of Contents 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, 2024, and December 31, 2023. The Company’s federal and state tax returns for the years ended December 31, 2021 through December 31, 2023 are currently open to audit under the statutes of limitations. The Company is currently under federal examination for tax year 2021. There are no other pending audits as of December 31, 2024. 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. 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”. ​ F-15 Table of Contents Severance charges - From time to time, the Company evaluates its resources and optimizes its business plan to align to changing needs of executing on its strategy. These actions may result in voluntary or involuntary employee termination benefits. Voluntary termination benefits are accrued when an employee accepts the related offer. Involuntary termination benefits are accrued upon the commitment to a termination plan and the benefit arrangement is communicated to affected employees, or when liabilities are determined to be probable and estimable, depending on the existence of a substantive plan for severance or termination. The following table summarizes the change in accrued severance liabilities, presented within Other current liabilities on the Consolidated Balance Sheets: ​ ​ ​ ​ Balance at January 1, 2023 $ 634 Accruals ​ 790 Reversal from settlement ​ ( 168 ) Cash payments ​ ( 870 ) Balance at January 1, 2024 $ 386 Accruals ​ 26 Cash payments ​ ( 289 ) Settlement in common stock ​ ( 23 ) Balance at December 31, 2024 $ 100 ​ The following table summarizes the classification of severance charges on the Condensed Consolidated Statements of Operations and Comprehensive Loss: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 2023 Sales, general, and administrative $ 26 ​ $ 401 Other operating expense (income), net — ​ 221 Total severance charges $ 26 ​ $ 622 ​ Recent Accounting Pronouncement(s) – ​ The Company adopted ASU 2016-13, or ASC 326 Financial Instruments-Credit Losses , effective January 1, 2023 under a modified retrospective approach. Under the current expected credit losses (“CECL”) model, the Company immediately recognizes an estimate of credit losses expected to occur over the life of the financial asset at the time the financial asset is originated or acquired. Estimated credit losses are determined by taking into consideration historical loss conditions, current conditions and reasonable and supportable forecasts. Changes to the expected lifetime credit losses are recognized each period. The new guidance applies to the Company’s trade receivables and contract asset balances. Due to the nature of business operations and contracts with customers, the Company has historically not experienced significant bad debt expense or write-offs and as a result, the adoption of ASC 326 did not have a material impact to the Company’s Consolidated Financial Statements. In connection with the adoption of ASC 326, the Company recorded a provision for credit losses of $ 118 with an offsetting cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2023. 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.” ​ F-16 Table of Contents Accounting Guidance Not Yet Elected or Adopted ​ In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)-Improvements to Income Tax Disclosures. The ASU requires additional quantitative and qualitative income tax disclosures to allow readers of the consolidated financial statements to assess how the Company’s operations, related tax risks and tax planning affect its tax rate and prospects for future cash flows. For public business entities, the ASU is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements. ​ 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 Provision for Impairment of GVB Hemp/Cannabis Business During the third quarter of 2023, the Company identified certain events and circumstances that could potentially be an impairment triggering event for both the tobacco and hemp/cannabis reporting units in connection with (1) the announcement of initiating a process to evaluate strategic alternatives for the Company’s assets, and (2) announcement of cost cut initiatives intended to yield significant cash savings on an annual basis. The initiation of these two processes was in response to the sustained decline in the Company's market capitalization, operating losses and negative cash flows from operations, and current liquidity position, and is intended to monetize the value or more effectively expand the market reach of our products. Accordingly, the Company evaluated the impact on each of its reporting units to assess whether there was an impairment triggering event requiring it to perform a goodwill impairment test. The Company had no recorded goodwill in its tobacco reporting unit. For the hemp/cannabis reporting unit, as part of this impairment test, the Company considered certain qualitative factors, such as the Company’s performance, business forecasts, and strategic plans. It reviewed key assumptions, including projected cash flows and future revenues. After reviewing the qualitative assessment, the Company determined a quantitative assessment was required to be performed. Using the income approach, with the discount rate selected considering and capturing the related risk associated with the forecast, the Company compared the fair value of the reporting unit to carrying value. Based on the results, the carrying value of the hemp/cannabis reporting unit exceeded its fair value and the goodwill was determined to be impaired and $ 33,360 , representing the full amount of goodwill recorded to the hemp/cannabis reporting unit, was written off as impaired during the quarter ended September 30, 2023. The impairment charge is the result of the Company's Step-1 goodwill impairment test for the former hemp/cannabis reporting unit, which reflected a decrease in the future expected cash flows related to bulk ingredient and CDMO+D product sales, along with increases in discount rates to reflect the uncertainty of future cash flows. Estimating the fair value of goodwill requires the use of estimates and significant judgments that are based on a number of factors, including unobservable level 3 inputs. These estimates and judgments may not be within the control of the Company and accordingly it is reasonably possible that the judgments and estimates could change in future periods. F-17 Table of Contents The Company also evaluated the recoverability of its hemp/cannabis segment other intangible assets, net and long-lived assets to determine whether any assets or asset groups were impaired. The Company determined that the carrying value of certain tradenames, patents and license intangible assets, net were greater than their fair value, as these intangible assets related to hemp/cannabis operations. Therefore, the Company recorded additional provision for impairment in the amount of $ 10,879 , the Cookies license acquired in the second quarter of 2023 was written-off and fully impaired in the amount of $ 3,037 , and a loss on equity investments of $ 682 . Additionally, through a similar analysis, the Company recorded provision for impairment of $ 7,418 for property, plant and equipment and $ 5,038 for operating lease right-of-use assets related to manufacturing and lab facilities. The undiscounted cash flow analysis and fair value determination requires the use of estimates and significant judgments that are based on a number of factors, including unobservable level 3 inputs. For the year ended December 31, 2023, total impairment charges for other intangibles and long-lived assets is $ 25,189 . ​ 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 “GVB Note”). Until repaid to the senior lender, the GVB Note is recorded as a current asset and corresponding amount is pledged as Current portion of long term debt on the Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023. 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 . ​ In connection with the closing of the transaction on December 22, 2023, but prior to any adjustments for Insurance Proceeds and certain shared liabilities, after selling expenses of $ 434 , the Company recognized a loss on disposal of discontinued operations of $ 58,521 during the year ended December 31, 2023, which includes the third quarter impairment charges described above. ​ 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 not met until 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, 2024 and 2023, respectively. ​ F-18 Table of Contents 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 as described above, 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 . ​ As of December 31, 2024 and 2023, all assets and liabilities of the hemp/cannabis disposal group are presented as current in the Consolidated Balance Sheets as management believes the remaining disposal and exit from hemp/cannabis is deemed probable and will occur within one year. 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, ​ 2024 ​ 2023 Prepaid expenses and other current assets $ — ​ $ 9 Property, plant and equipment, net 1,051 ​ ​ 1,207 Other assets ​ — ​ ​ 38 Current assets of discontinued operations held for sale $ 1,051 ​ $ 1,254 ​ ​ ​ ​ ​ ​ Notes and loans payable - current $ — ​ $ 2 Operating lease obligations — ​ 1,083 Accounts payable 1,210 ​ 2,013 Accrued expenses 71 ​ 79 Deferred income ​ — ​ ​ 8 Current liabilities of discontinued operations held for sale $ 1,281 ​ $ 3,185 ​ ​ ​ ​ ​ ​ Net liabilities $ ( 230 ) ​ $ ( 1,931 ) ​ F-19 Table of Contents Net income (loss) from discontinued operations for the year ended December 31, 2024 and 2023 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 2023 Revenues, net $ — ​ $ 42,113 Cost of goods sold ​ — ​ ​ 49,185 Gross loss ​ — ​ ​ ( 7,072 ) Operating expenses: ​ ​ ​ ​ ​ Sales, general and administrative ​ ( 365 ) ​ ​ 16,540 Research and development ​ 130 ​ ​ 3,010 Other operating expense, net ​ ( 386 ) ​ ​ 118 Loss on disposal of discontinued operations ​ — ​ ​ 58,521 Total operating expenses ​ ( 621 ) ​ ​ 78,189 Operating income (loss) from discontinued operations ​ 621 ​ ​ ( 85,261 ) Other income (expense): ​ ​ ​ ​ ​ Other income, net ​ — ​ ​ 65 Interest expense ​ ( 290 ) ​ ​ ( 438 ) Total other expense ​ ( 290 ) ​ ​ ( 373 ) Income (loss) from discontinued operations before income taxes ​ 331 ​ ​ ( 85,634 ) Provision (benefit) for income taxes ​ — ​ ​ 455 Net income (loss) from discontinued operations $ 331 ​ $ ( 86,089 ) ​ (1) During the year ended December 31, 2024, the Company settled outstanding obligations which resulted in reversals of previously accrued liabilities of $ 1,561 . (2) The Company recorded $ 25,189 of impairment charges in Other operating expenses, net and recorded $ 33,360 of Goodwill impairment from discontinued operations during the three months ended September 30, 2023, which were reclassified to Loss on disposal of discontinued operations during the three months ended December 31, 2023. (3) 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, ​ 2024 2023 Professional services $ 496 ​ $ 407 Severance ​ — ​ ​ 13 Gain on change in contingent consideration ​ — ​ ​ ( 1,138 ) Needlerock Farms settlement ​ — ​ ​ 769 Gain on sale or disposal of property, plant and equipment ​ 65 ​ ​ ( 64 ) Gain on release of lease obligations ​ ( 947 ) ​ ​ — Acquisition costs ​ — ​ ​ 131 Other operating expense, net $ ( 386 ) ​ $ 118 ​ F-20 Table of Contents Cash flow information from discontinued operations for years ended December 31, 2024 and 2023 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 2023 Cash used in operating activities $ 1,459 ​ $ 21,281 Cash provided by investing activities $ 22 ​ $ 799 ​ ​ ​ ​ ​ ​ Depreciation and amortization $ - ​ $ 2,443 Capital expenditures $ - ​ $ 3,752 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOTE 3. – BUSINESS ACQUISITIONS The following acquisition occurred during the year ended December 31, 2023 and was included in the Company’s former hemp/cannabis reportable segment. Accordingly, the results of operations are reported as discontinued operations in the Consolidated Statements of Operations and Comprehensive Loss for all periods presented. See Note 2 “Discontinued Operations and Divestitures” for additional information. RX Pharmatech, Ltd. On January 19, 2023, the Company acquired RX Pharmatech Ltd (“RXP”) pursuant to a share purchase agreement ("SPA”) a privately held distributor of cannabinoids with 1,276 novel food applications with the U.K. Food Standards Agency (“FSA”). RXP’s products include CBD isolate and numerous variations of finished products like gummies, oils, drops, candies, tinctures, sprays, capsules and others. The initial consideration paid to acquire RXP included $ 200 in cash and $ 503 in common stock (consisting of 31,056 unregistered shares of common stock), and an initial estimate of target working capital true-up of $ 286 . The fair value of the Company’s common stock issued as part of the consideration was determined based upon the opening stock price of the Company’s shares as of the acquisition date. Additionally, the contingent consideration in the transaction represents the estimated fair value of the Company’s obligation, under the share purchase agreement, to make additional equity based payments of up to $ 1,550 over the next three years based on specified conditions being met, which has an initial fair value of contingent consideration of $ 1,138 . The fair value of the aggregate consideration in the transaction is $ 2,127 . Based on the preliminary purchase price allocation, the assets acquired and liabilities assumed principally comprise $ 1,744 of intangible assets, and other immaterial working capital items representing a net asset of $ 93 (net of cash acquired of $ 290 ). There was no excess purchase price and therefore no goodwill recorded as part of the business combination. The determination of estimated fair value required management to make significant estimates and assumptions based on information that was available at the time the Consolidated Financial Statements were prepared. Intangible assets include the intellectual property associated with the 1,276 novel food applications with the FSA, which is determined to be indefinite lived. The preliminary fair value was determined by utilizing the cost approach and considered market data to evaluate the replacement cost per application. The intellectual property is included in the former hemp/cannabis reportable segment. The Company utilizes third-party valuation experts to assist in estimating the fair value of the contingent consideration and develops estimates by considering weighted-average probabilities of likely outcomes and discounted cash flow analysis. These estimates require the Company to make various assumptions about forecasted revenues and discount rates, which are unobservable and considered Level 3 inputs in the fair value hierarchy. A change in these inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date. F-21 Table of Contents The following table provides quantitative information associated with the initial fair value measurement of the Company’s liabilities for contingent consideration as of January 19, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Payout ​ ​ ​ ​ ​ Weighted Average Contingency Type ​ (undiscounted) ​ Fair Value ​ Unobservable Inputs or Range Revenue-based payments ​ $ 1,550 ​ $ 1,138 ​ Discount rate 16 % ​ ​ ​ ​ ​ ​ ​ ​ Projected year(s) of payment 2024-2026 ​ During the third quarter of 2023, the Company finalized amounts recorded as purchase price allocation and recorded measurement period adjustments of $ 53 , resulting from an increase of the working capital true-up amount based on final payment made to the sellers. On December 22, 2023, concurrent with the GVB divestiture (as described in Note 2) which included RXP, the Company entered into a binding letter agreement to terminate its’ remaining contingent consideration obligation payable in shares under the SPA with the sellers of RXP. Accordingly, for the year-ended December 31, 2023, the Company recognized within discontinued operations a gain of $ 1,138 in Other operating expenses, net in connection with the change in fair value of the contingent consideration. Acquisition costs During the year ended December 31, 2023, direct costs incurred as a result of the acquisition of RXP were $ 130 . Acquisition costs are expensed as incurred and included in Other operating expenses, net in the Consolidated Statements of Operations and Comprehensive Loss. NOTE 4. – INVENTORIES Inventories at December 31, 2024 and 2023 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ 2024 2023 Raw materials ​ $ 1,616 ​ $ 3,580 Work in process ​ ​ 0 ​ ​ — Finished goods ​ 399 ​ ​ 766 ​ ​ $ 2,015 ​ $ 4,346 ​ During the fourth quarter of 2023, the Company reserved certain leaf inventory totaling $ 7,720 resulting from restructuring initiatives implemented. Inventory charges are included within Cost of goods sold on the Company’s Consolidated Statement of Operations and Comprehensive Loss. ​ F-22 Table of Contents NOTE 5. – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net at December 31, 2024 and 2023 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Leasehold improvements ​ $ 238 ​ $ 262 Manufacturing equipment ​ ​ 7,114 ​ ​ 7,254 Office furniture, fixtures and equipment ​ — ​ 254 Laboratory equipment ​ ​ 181 ​ ​ — ​ ​ 7,533 ​ 7,770 Less: accumulated depreciation ​ ( 4,760 ) ​ ( 4,377 ) Property, plant and equipment, net ​ $ 2,773 ​ $ 3,393 ​ ​ Depreciation expense was $ 585 and $ 852 for the year ended December 31, 2024 and 2023, respectively. ​ ​ ​ NOTE 6. – RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES The Company leases a manufacturing facility in Mocksville, North Carolina and an inventory storage facility in Winston-Salem, North Carolina. On January 1, 2023, the Company signed the lease agreement for the inventory storage facility. The lease has 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. On March 31, 2023, the Company extended the lease terms for its manufacturing facility. 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, 2024: ​ ​ ​ ​ ​ ​ Weighted average remaining lease term in years ​ ​ 4.9 ​ Weighted average discount rate ​ 9.0 % ​ Future minimum lease payments as of December 31, 2024 are as follows: ​ ​ ​ ​ ​ 2025 ​ $ 403 2026 ​ 422 2027 ​ ​ 430 2028 ​ ​ 449 2029 ​ ​ 414 Total lease payments ​ 2,118 Less: imputed interest ​ ( 420 ) Present value of lease liabilities ​ ​ 1,698 Less: current portion of lease liabilities ​ ​ ( 261 ) Total long-term lease liabilities ​ $ 1,437 ​ Operating lease costs for the year ended December 31, 2024 and 2023, were $ 419 and $ 475 , respectively. F-23 Table of Contents Supplemental cash flow information for leases for fiscal years 2024 and 2023 are comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Cash paid for operating leases ​ $ 396 ​ $ 436 Assets acquired under operating leases ​ $ — ​ $ 1,602 ​ ​ NOTE 7. – INTANGIBLE ASSETS, NET Our intangible assets at December 31, 2024 and 2023 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Accumulated ​ ​ ​ Net Carrying December 31, 2023 Carrying Amount Amortization Impairment ​ Amount Definite-lived: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Patent ​ $ 2,913 ​ $ ( 1,622 ) ​ $ ( 487 ) ​ $ 804 License fees ​ 4,165 ​ ​ ( 1,666 ) ​ ​ ( 65 ) ​ ​ 2,434 Total amortizing intangible assets ​ $ 7,078 ​ $ ( 3,288 ) ​ $ ( 552 ) ​ $ 3,238 Indefinite-lived: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Trademarks ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 134 MSA signatory costs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,202 License fee for predicate cigarette brand ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 350 Total indefinite-lived intangible assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,686 Total intangible assets, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 5,924 ​ Aggregate intangible asset amortization expense comprises of the following: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 2023 Cost of goods sold $ 10 ​ $ 11 Research and development 408 ​ 644 Total amortization expense $ 418 ​ $ 655 ​ During the years ended December 31, 2024 and 2023, the Company incurred impairment charges of $ 68 and $ 1,375 , respectively, related to write-downs and disposals of patents, licenses and trademarks as a result of a shift in strategy related to the nature and use of the related assets. During 2024, impairment charges related to patents that are no longer being pursued. Impairment charges during the year-ended December 31, 2023 consisted of $ 552 for patents and F-24 Table of Contents trademarks the Company continues to hold but does not align with its current strategy, $ 772 was related to disposals of patents abandoned from future maintenance and renewal and $ 51 was related to disposals of trademarks abandoned. The Company also disposed of $ 1,501 of patents that had a net book value of $ 0 and no estimated future economic benefit. 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, 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2026 2027 ​ 2028 ​ 2029 ​ Thereafter Amortization expense ​ $ 422 ​ $ 379 ​ $ 368 ​ $ 302 ​ $ 210 ​ $ 1,356 ​ ​ 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 2023, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value ​ ​ December 31, 2023 ​ Level 1 Level 2 Level 3 Total Liabilities ​ ​ ​ ​ Detachable warrants ​ $ — ​ $ — ​ $ 1,350 ​ $ 1,350 Derivative liability ​ ​ — ​ ​ — ​ ​ 557 ​ ​ 557 Total liabilities ​ $ — ​ $ — ​ $ 1,907 ​ $ 1,907 ​ F-25 Table of Contents 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, 2023 ​ $ — Initial measurement (see Note 1 and 10) ​ ​ 4,214 Fair value measurement adjustment ​ ​ ( 364 ) JGB redemption of 78 warrants ​ ​ ( 2,500 ) Fair value measurement at December 31, 2023 ​ $ 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 ​ The Omnia warrants were measured at December 31, 2024 and 2023 using a Monte Carlo valuation model with the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 ​ 2023 ​ Omnia 2024 warrants ​ Omnia 2023 warrants Risk-free interest rate per year 4.3 % ​ 4.6 % Expected volatility per year 119.0 % ​ 90.9 % Expected dividend yield — % ​ — % Contractual expiration 4.3 years ​ 6.6 years Exercise price $ 288.90 ​ ​ $ 27,708.48 ​ Stock price $ 5.31 ​ ​ $ 410.40 ​ ​ 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 Omnia 2024 warrants are classified as Other current liabilities on the Consolidated Balance Sheets. See Note 12 – Debt and Note 9 – Capital Raises and Warrants for Common Stock for further details. ​ Derivative Liability ​ The following table sets forth a summary of the changes in fair value of the Company’s derivative liability 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 ​ $ - ​ F-26 Table of Contents The derivative liability related to the debentures and embedded conversion option using was measured at December 31, 2023 using a binomial lattice valuation model and contained the following assumptions: ​ ​ ​ ​ ​ ​ December 31, ​ 2023 Stock price volatility 104.1 % Expected term 2.2 years Stock price $ 410.40 ​ Risk-free interest rate 4.3 % Credit rating ​ CCC ​ Market yield (credit risk) ​ 13.8 % ​ The debentures and derivative liability 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 derivative liability include a decrease/increase in our stock price, stock price volatility, credit rating, and simulated stock price upon conversion could significantly change the fair value measurement as either an increase or decrease. ​ 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, 2024 and 2023, the Company did not have any financial assets or liabilities measured at fair value on a nonrecurring basis, other than as described in Note 2 “Discontinued Operations and Divestitures”. ​ ​ ​ ​ NOTE 9. – CAPITAL RAISES AND WARRANTS FOR COMMON STOCK The following table summarizes the Company’s warrant activity: ​ ​ ​ ​ Warrants outstanding at January 1, 2023 ​ 527 Issued ​ 30,106 Exercised ​ ( 8,372 ) Abandoned ​ ( 151 ) Warrants outstanding at December 31, 2023 ​ 22,110 Issued ​ 26,066,746 Exercised ​ ( 333,575 ) Abandoned ​ ( 21 ) Warrants outstanding at December 31, 2024 ​ 25,755,260 ​ F-27 Table of Contents The following tables summarizes the Company’s outstanding warrants as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ # of warrants outstanding ​ Issue date exercise price ​ Current exercise price (1) ​ Expiration date July 2022 RDO warrants ​ 32 ​ $ 66,420.000 ​ $ 66,420.00 ​ July 25, 2027 Senior Secured Credit Facility - JGB ​ 154 ​ $ 41,310.000 ​ $ 27,708.000 ​ September 3, 2028 July 19, 2023 RDO warrants (3) ​ 209 ​ $ 5,227.200 ​ $ 4.3021 ​ July 20, 2028 October 2023 CMPO warrants (3) ​ 93 ​ $ 1,134.000 ​ $ 4.3021 ​ October 19, 2028 2023 Inducement warrants (3) ​ 19 ​ $ 464.400 ​ $ 4.3021 ​ February 15, 2029 April 2024 RDO Placement Agent warrants (3) ​ 7,611 ​ $ 361.1250 ​ $ 4.3021 ​ April 8, 2029 August 2024 Reg A+ warrants (3) ​ 603,426 ​ $ 135.000 ​ $ 4.3021 ​ December 6, 2029 September 2024 Reg A+ warrants (3) ​ 2,835,824 ​ $ 135.000 ​ $ 4.3021 ​ December 6, 2029 September 2024 RDO warrants (3) ​ 2,376,057 ​ $ 135.000 ​ $ 4.3021 ​ December 6, 2029 September 2024 RDO Placement Agent warrants (3) ​ 89,843 ​ $ 168.750 ​ $ 4.3021 ​ December 6, 2029 September 2024 Inducement warrants (3) ​ 2,361,286 ​ $ 135.000 ​ $ 4.3021 ​ December 6, 2029 September 2024 Inducement Placement Agent warrants (3) ​ 88,548 ​ $ 168.750 ​ $ 4.3021 ​ December 6, 2029 Omnia Pre-Funded Warrants ​ 8,519 ​ $ 0.00001 ​ $ 0.00001 ​ Not applicable Omnia warrants ​ 3,408 ​ $ 361.125 ​ $ 361.1250 ​ May 1, 2029 October 2024 RDO (3) ​ 6,585,999 ​ $ 135.000 ​ $ 4.3021 ​ December 6, 2029 October 2024 RDO Placement Agent Warrants (3) ​ 248,716 ​ $ 168.750 ​ $ 4.3021 ​ December 6, 2029 October 2024 PIPE Warrants (3) ​ 9,886,421 (4) $ 135.000 ​ $ 4.3021 (4) (2) October 2024 PIPE Placement Agent Warrants (3) ​ 659,095 (4) $ 168.750 ​ $ 4.3021 (4) (2) ​ ​ 25,755,260 ​ ​ ​ ​ ​ ​ ​ ​ (1) Warrant price adjusted as a result of anti-dilution or ratchet provisions. (2) Expiration date is 5-years following shareholder approval date. (3) The exercise prices of the warrants are subject to appropriate adjustment as a result of anti-dilution or ratchet 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 warrant contains cashless and/or alternative cashless exercise features. ​ (4) Reflects the number of warrants and exercise price assuming stockholder approval is obtained. ​ The incremental value of modifications to warrants as a result of down-round ratchet provisions in outstanding warrants from the issuance of equity in a subsequent financing is determined based on Monte-Carlo and Black Scholes valuation models. Amounts recorded as Deemed dividends in determining Net loss available to common shareholders in the Statement of Operations and Comprehensive Loss are as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 ​ 2023 Total deemed dividends $ 10,303 ​ $ 9,992 ​ ​ June 19, 2023 Registered Direct Offering ​ On June 19, 2023, the Company and certain investors entered into a securities purchase agreement relating to the issuance and sale of shares of approximately $ 5,300 of shares and warrants, consisting of an aggregate of 346 shares of common stock and 346 warrants to purchase an equal number of shares, at a purchase price of $ 15,228 per unit. The net proceeds to the Company from the offering were approximately $ 4,800 . ​ F-28 Table of Contents July 6, 2023 Registered Direct Offering. ​ On July 6, 2023, the Company and certain investors entered into a securities purchase agreement relating to the issuance and sale of approximately $ 3,000 of shares and warrants, consisting of an aggregate of 360 shares of common stock and 721 warrants to purchase an equal number of shares, at a purchase price of $ 8,208 per unit. ​ July 19, 2023 Registered Direct Offering. ​ On July 19, 2023, the Company and certain investors entered into a securities purchase agreement relating to the issuance and sale of approximately $ 11,700 of shares and warrants, consisting of an aggregate of 2,025 shares of common stock and 4,050 warrants to purchase an equal number of shares, at a purchase price of $ 5,767.20 per unit. ​ October 2023- Public Equity Offering ​ On October 17, 2023, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to sell and issue, in a registered public offering, (i) an aggregate of 3,519 shares of the Company’s common stock, par value $ 0.00001 per share, (ii) warrants to purchase 9,259 shares of common stock (the “October Warrants”) and (iii) pre-funded warrants to purchase 1,111 shares of common stock. The shares were offered at a combined public offering price of $ 1,134 per share and two accompanying warrants. The pre-funded warrants were offered at a combined public offering price of $ 1,133.78 per pre-funded warrant and two accompanying warrants. In addition, the Company issued the placement agent warrants to purchase up to 463 shares of common stock (equal to 10 % of the aggregate number of shares and pre-funded warrants sold in the offering) at an exercise price of $ 1,417.50 , which represents 125 % of the public offering price per share and accompanying warrants. ​ The offering closed on October 19, 2023 with gross proceeds to the Company of approximately $ 5,250 , before deducting the placement agent fees of $ 367 and other offering expenses payable by the Company of approximately $ 288 . ​ November 2023 Warrant Inducement Offering ​ On November 28, 2023, the Company commenced a warrant inducement offering with the holders of the Company’s outstanding 14,713 warrants consisting of: (i) the common stock purchase warrants of the Company issued on or about June 22, 2023; (ii) the common stock purchase warrants of the Company issued on or about July 10, 2023; (iii) the common stock purchase warrants of the Company issued on or about July 21, 2023; and/or (iv) the common stock purchase warrants of the Company issued on or about October 19, 2023 (collectively, the “Existing Warrants”), which Existing Warrants were exercisable for an equal number of shares of common stock at an exercise price of $ 1,134 . The Company agreed to issue new warrants (the “Inducement Warrants”) to purchase up to a number of shares of common stock equal to 200 % of the number of shares of common stock issued pursuant to the exercise by the holders of the Existing Warrants during the inducement period, for cash, at a reduced exercise price equal to the Nasdaq Minimum Price (as defined in the as defined in Nasdaq Listing Rule 5635(d)). ​ For the period from November 28, 2023 to December 31, 2023, the Company entered into warrant inducement agreements with certain holders of the Existing Warrants to purchase an aggregate of 7,184 shares of common stock at a reduced exercise price of $ 464.10 Pursuant to the warrant inducement agreements, the exercising holders of the Existing Warrants received 14,368 Inducement Warrants and the Company received aggregate gross proceeds of approximately $ 3,336 from the exercise of the Existing Warrants before deducting the placement agent fees of $ 234 and other offering expenses payable by the Company of approximately $ 58 . F-29 Table of Contents ​ For the remaining inducement period from January 1, 2024 to February 15, 2024, the Company entered into warrant inducement agreements with certain holders of the Existing Warrants to purchase an aggregate of 6,081 shares of common stock at a reduced weighted average exercise price of approximately $ 398.30 . Pursuant to the warrant inducement agreements, the exercising holders of the Existing Warrants received 12,160 Inducement Warrants and the Company received aggregate gross proceeds of approximately $ 2,421 from the exercise of the Existing Warrants ​ 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 13,741 shares of common stock, pre-funded warrants to purchase 926 shares of common stock and warrants to purchase 14,667 shares of common stock, at a purchase price of $ 288.90 per share and accompanying warrant. The Company also issued an aggregate of 880 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 . ​ 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 38,041 shares of Common Stock and warrants to purchase 76,348 shares of common stock, at a purchase price of $ 30.78 per share and accompanying warrant. The Company also issued an aggregate of 2,290 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 . 2024 Warrant Inducement On September 29, 2024, the Company commenced a warrant inducement offering with the holders of outstanding warrants to purchase 37,624 shares of common stock, consisting of: (i) common stock purchase warrants to purchase 24,043 shares of common stock issued on or about November 29, 2023, and (ii) common stock purchase warrants to purchase 13,596 shares of common stock issued on or about April 9, 2024 ((i) and (ii) collectively, the “2024 Existing Warrants”), which are exercisable for an equal number of shares of common stock at an exercise price of $ 30.78 . 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 75,248 new warrants. The Company also issued an aggregate of 2,257 placement agent warrants. ​ 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 105,679 shares of common stock and warrants to purchase 211,358 shares of common stock, at a purchase price of $ 20.25 per share and accompanying warrant. The Company also issued an aggregate of 6,341 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 . F-30 Table of Contents 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 210,036 shares of common stock and warrants to purchase an aggregate of 315,055 shares of Common Stock, at a purchase price of $ 14.47 per prefunded warrant and accompanying warrant. The prefunded warrants are immediately exercisable upon issuance. The Company also issued an aggregate of 16,803 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 . The shares issuable upon exercise of the warrants are subject to stockholder approval. The Company has agreed to hold an annual or special meeting on or before May 30, 2025, to have stockholders approve the issuance of the shares of common stock underlying the warrants pursuant to applicable Nasdaq rules. ​ 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 72,000 shares of its Common Stock, par value $ 0.0001 per share of the Company at a price of $ 76.95 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 109,600 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 5,192 shares of common stock at an effective average price per share of $ 288.90 . ​ 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 13,116 shares of common stock at an effective average price per share of $ 40.03 . F-31 Table of Contents ​ March 2023 JGB Warrants In connection with the sale of the Debentures as described in Note 12 “Debt”, the Company issued the JGB Warrants to purchase up to 155 shares of common stock for an exercise price of $ 41,310 per share. The JGB warrants initial fair value of $ 4,475 net of issuance costs of $ 139 (see Note 8 “Fair Value Measurements”), of which half of the warrants met the criteria for liability classification due to a contingent put option which allows the holder to require that the Company redeem the warrants in cash for a purchase price equal to $ 32,400 . Accordingly, at issuance half of the warrants with the put provision were classified as Other long-term liabilities on the Consolidated Balance Sheets in the amount of $ 2,898 whereas the remainder of the warrants without the put provision are equity classified and recorded as a component of Capital in excess of par value in the amount of $ 1,577 . The valuation assumptions of the warrants at issuance, as detailed below, are the same for all warrants except for the put provision which derives a greater fair value. As a result of the June 19, 2023 offering, the exercise price of the Company’s outstanding JGB warrants to purchase up to 155 shares of the Company’s common stock was automatically adjusted to be $ 27,708 exercise price for up to 230 shares of common stock. As a result of the anti-dilution provision being triggered, the Company recognized a non-cash deemed dividend of $ 367 in connection with these adjustments, recorded on the Consolidated Statement of Operations and Comprehensive Loss and within Capital in excess of par value (as the Company has an accumulated deficit and therefore the deemed dividend is treated as paid out of Capital in excess of par value). There are no further anti-dilution adjustments on such warrants. ​ In connection with the Senior Secured Credit Facility Amendment and Waiver, the Company redeemed 78 of such warrants for an aggregate put price equal to $ 2,500 . See Note 12 “Debt.” The JGB detachable warrants were valued at the closing dates of the Senior Secured Credit Facility using a Monte Carlo valuation model with the following assumptions: ​ ​ ​ ​ ​ Risk-free interest rate per year 4.2 % Expected volatility per year 88.1 % Expected dividend yield — % Contractual expiration 5.5 years Exercise price $ 41,310.00 ​ Stock price $ 29,484.00 ​ ​ March 2023 Omnia Warrants In connection with the Subordinated Note as described in Note 12 “Debt”, the Company issued to Omnia, the Omnia Warrants to purchase up to 21 shares of the Company’s common stock (the “Omnia 2023 Warrants”). The Omnia 2023 Warrants are exercisable for seven years from September 3, 2023, at an exercise price of $ 27,708 per share. The Omnia warrants initial fair value was $ 1,316 (see Note 8 “Fair Value Measurements”), and met the criteria for liability classification due to contingent put option which allows the holder to require that the Company redeem the warrants in cash for a purchase price equal to $ 64,800 . The Omnia 2023 Warrants are classified as Other long-term liabilities on the Consolidated Balance Sheets. The detachable Omnia 2023 Warrants were valued at the closing dates of the Subordinated Note using a Monte Carlo valuation model with the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk-free interest rate per year 4.1 % Expected volatility per year 83.8 % Expected dividend yield — % Contractual expiration 7.5 years Exercise price $ 27,708.48 ​ Stock price $ 29,484.00 ​ ​ F-32 Table of Contents ATM Offering On March 31, 2023, 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 $ 50,000 . The Company paid a 3.00 % sales commission based on the gross proceeds of the sales price per share of common stock sold. On June 19, 2023, the Company terminated the ATM Program in connection with the June 2023 Capital Raise. The following table shows the number of shares sold under the ATM Program prior to its termination: ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2023 Number of common shares issued ​ ​ 144 Weighted average sale price per share ​ $ 20,844.00 Gross proceeds ​ $ 2,741 Net proceeds ​ $ 2,563 ​ ​ ​ ​ ​ ​ NOTE 10. – RETIREMENT PLAN The Company sponsors a defined contribution plan under IRC 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, 2024 and 2023 amounted to $ 152 and $ 231 , respectively. ​ ​ 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 2025 2026 2027 2028 ​ 2029 & After ​ Total License Agreement ​ NCSU ​ Minimum annual royalty ​ $ 150 ​ $ 50 ​ $ 100 ​ $ 150 ​ $ 3,425 ​ $ 3,875 (1) License Agreement ​ NCSU ​ Contract fee ​ ​ 500 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 500 (2) Consulting Agreements ​ Various ​ Contract fee ​ ​ 832 ​ ​ 146 ​ ​ — ​ ​ — ​ ​ — ​ ​ 978 (3) ​ ​ ​ ​ ​ ​ $ 1,482 ​ $ 196 ​ $ 100 ​ $ 150 ​ $ 3,425 ​ $ 5,353 ​ ​ (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) On November 1, 2023, the Company entered into a license agreement with NCSU for an exclusive sublicensable right and license under specific patent rights and plant variety rights for the field of use in specific licensed territories. Additional milestone fees could be required pending achievement of events pursuant to the agreement. (3) 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. F-33 Table of Contents 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. ​ In connection with ongoing restructuring efforts and the hemp/cannabis disposal group (see Note 2 “Discontinued Operations and Divestitures,” the Company has received unasserted claims related to disputed contracts, which could result in accrual of an additional amount up to $ 1,100 on the Consolidated Balance Sheet. The Company is vigorously defending its position against these claims. ​ Shareholder Derivative Cases On February 6, 2019, Melvyn Klein, a resident of Nassau County New York, filed a shareholder derivative claim against the Company, the Company’s then Chief Executive Officer, Henry Sicignano III, the Company’s Chief Financial Officer, John T. Brodfuehrer, and each member of the Company’s Board of Directors in the United States District Court for the Eastern District of New York entitled: Melvyn Klein, derivatively on behalf of 22nd Century Group v. Henry Sicignano, III, Richard M. Sanders, Joseph Alexander Dunn, Nora B. Sullivan, James W. Cornell, John T. Brodfuehrer and 22nd Century Group, Inc., Case No. 1:19 cv 00748. Mr. Klein brings this action derivatively alleging that (i) the director defendants supposedly breached their fiduciary duties for allegedly allowing the Company to make false statements; (ii) the director defendants supposedly wasted corporate assets to defend this lawsuit and the other related lawsuits; (iii) the defendants allegedly violated Section 10(b) of the Securities Exchange Act and Rule 10b 5 promulgated thereunder for allegedly approving or allowing false statements regarding the Company to be made; and (iv) the director defendants allegedly violated Section 14(a) of the Securities Exchange Act and Rule 14a 9 promulgated thereunder for allegedly approving or allowing false statements regarding the Company to be made in the Company’s proxy statement. Numerous other shareholder derivative cases were subsequently filed and consolidated into the main action. On December 5, 2023, the parties entered into a Memorandum of Settlement to fully resolve all claims pending the Court’s approval of a motion for preliminary approval of settlement, which was filed with the Court on March 6, 2025. The settlement amount is $ 768 related to plaintiffs attorney and legal fees and is fully covered by the Company’s insurance. Accordingly, the Company has recorded an accrual for litigation settlement and corresponding indemnification receivable on the Consolidated Balance Sheets as of December 31, 2024 and 2023. Class Action A complaint was originally filed against the Company and several former executive officers in the Eastern District of New York as Bull v. 22nd Century Group , Case No. 1:19-cv-00409, and later transferred to the Western District of New York in a consolidated putative class action captioned Noto v. 22nd Century Group , Case No. 1:19-cv-01285. F-34 Table of Contents The parties participated in a mediation on March 21, 2023, and reached a settlement of $ 3,000 (payable by the insurance carrier) to resolve the litigation and release all claims against the Company. On June 30, 2023, District Court preliminarily approved the settlement and on October 23, 2023 the Court finally approved the settlement and dismissed the action with prejudice. Accordingly, the Company has recorded an accrual for litigation settlement and corresponding indemnification receivable on the Consolidated Balance Sheets as of December 31, 2023 which was subsequently paid from the escrow account funded by the insurance carrier during the fourth quarter of 2024. ​ Insurance Litigation ​ In November 2022, there was a fire at the Company’s Grass Valley manufacturing facility in Oregon, which resulted in a total loss of the facility. The Company submitted an insurance claim with Dorchester Insurance Company, Ltd. (“Dorchester”) for casualty loss and business interruption coverage which was acknowledged on November 23, 2022. Dorchester funded $ 5,000 of casualty loss insurance but has failed to issue any payments in connection with the Company’s business interruption claim. ​       On July 19, 2023, the Company filed a Complaint against Dorchester in the United States District Court for the District of Oregon, Pendleton Division, Case No. 2:23-cv-01057-HL. The Company is alleging breach of contract, breach of duty of good faith and fair dealing and negligence per se. The Company is seeking full recovery of its business interruption claim under the policy plus direct, indirect and consequential damages resulting from Dorchester’s continued delay in issuing coverage payments. Fact discovery is complete. Expert discovery is complete. The trial date is November 4, 2025. ​ KeyGene Dispute On April 11, 2024 the Company received a Request for Arbitration from Keygene N.V. (“Keygene”) in connection with the Company’s termination of various framework collaborative research agreements described below. On April 3, 2019, the Company entered into the Framework Collaborative Research Agreement with KeyGene in the field of hemp/cannabis. On April 30, 2021, the Company and KeyGene entered into a First Amended and Restated Framework Collaborative Research Agreement which extended the agreement term, from first quarter 2024 to first quarter 2027. On March 30, 2022, the Company and KeyGene entered into a new Framework Collaborative Research Agreement for a term of three years in the field related to the hops plant. On January 8, 2024, the Company formally terminated both Framework Collaborative Research Agreements, as amended, related to hemp/cannabis and hops. KeyGene is seeking payment in the amount of $ 1,885 for current and future services under the Framework Collaborative Research Agreements and has invoiced the Company $ 881 for services performed. The matter is being arbitrated under the administration of the International Court of Arbitration. The Company filed its Answer to Request for Arbitration with Defenses and Counterclaims on June 4, 2024. On July 25, 2024, an arbitrator was formally appointed. The parties have submitted their Statements of Claim/Counterclaim, and their Responsive Statements to the Statements of Claim and Counterclaim. Discovery is complete. The arbitration date has been set for March 24, 2025. The Company believes it has substantial defenses to KeyGene’s claims and intends to defend itself vigorously. ​ 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, Inc. (“CCC”), Cookies SF, LLC (“CSF”), GMLC WLNS, LLC (“GMLC”) and other defendants, Case No. 24STCV27828, Superior Court of California, County of Los Angeles. F-35 Table of Contents 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 a Licensing and Distribution Agreement between GMLC, CCC and PTB. CRP is seeking monetary damages. CRP also filed an application for right to attach order and writ of attachment against PTB on February 19, 2025. A hearing date for the application is scheduled for April 4, 2025. The Company filed a demurrer to the complaint on February 24, 2025. CRP then filed a first amended complaint on March 12, 2025. Discovery is ongoing. The Company believes it has substantial defenses to CRP’s claims, and counterclaims, and intends to defend itself vigorously. 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 been served but has not yet filed its responsive pleading to the complaint. The Company believes it has substantial defenses to the claims and intends to defend itself vigorously. Maison Dispute ​ On January 23, 2024, the Company received a Notice of Intent to Arbitrate from Maison Placements Canada Inc. (“Maison”) in connection with the Company’s March 2023 Senior Secured Credit Facility transaction. Maison claims it is owed fees for closure of the Senior Secured Credit Facility transaction as a result of discussions with former Company personnel and a purported letter of engagement dating from 2021. The parties fully resolved the matter and entered into a full and final release of claims during the fourth quarter of 2024. ​ ​ ​ NOTE 12. – DEBT The Company has a senior secured credit facility (the “Senior Secured Credit Facility”), which consists of Debentures (as defined below) and previously, a subordinated promissory note (the “Subordinated Note). The Debentures were issued at a 5 % original issuance discount and are subject to a 5 % exit payment. The Subordinated Note was extinguished in April 2024, as described below. ​ Debt related to the Senior Secured Credit Facility and Subordinate Note as of December 31, 2024 and 2023 consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Senior Secured Credit Facility $ 7,690 $ 11,805 Subordinated Note ​ ​ — ​ ​ 3,554 Unamortized discount on loan and deferred debt issuance costs ​ ​ ( 1,025 ) ​ ​ ( 1,453 ) F-36 Table of Contents Total debt ​ $ 6,665 ​ $ 13,906 Current portion of long-term debt ​ ​ ( 1,500 ) ​ ​ ( 5,848 ) Total long-term debt ​ $ 5,165 ​ $ 8,058 ​ ​ Debentures ​ On March 3, 2023, the Company entered into a Securities Purchase Agreement with each of the purchasers party thereto (collectively, the “Purchasers”) and JGB Collateral, LLC, as collateral agent for the Purchasers (the “Agent”) which pursuant to the agreement, the Company sold 5 % original issuance discount senior secured debentures with an aggregate principal amount of $ 21,053 . The Debentures bear interest at a rate of 7 % per annum, payable monthly in arrears as of the last trading day of each month and on the maturity date. The Debentures mature on March 3, 2026. At the Company’s election, subject to certain conditions, interest can be paid in cash, shares of the Company’s common stock, or a combination thereof. The Debentures are subject to an exit payment equal to 5 % of the original principal amount, or $ 1,053 , payable on the maturity date or the date the Debentures are paid in full (the “Exit Payment”). Any time after, March 3, 2024, the Company may irrevocably elect to redeem all of the then outstanding principal amount of the Debentures for cash in an amount equal to the entire outstanding principal balance, including accrued and unpaid interest, the Exit Payment and a prepayment premium in an amount equal to 3 % of the outstanding principal balance as of the prepayment date (collectively, the “Prepayment Amount”). Upon the entry into a definitive agreement that would effect a change in control (as defined in the Debentures) of the Company, the Agent may require the Company to prepay the outstanding principal balance in an amount equal to the Prepayment Amount. Commencing on March 3, 2024, at its option, the holder of a Debenture may require the Company to redeem 2 % of the original principal amount of the Debentures per calendar month which amount may at the Company’s election, subject to certain exceptions, be paid in cash, shares of the Company’s common stock, or a combination thereof. ​ The Company’s obligations under the Debentures can be accelerated upon the occurrence of certain customary events of default. In the event of a default and acceleration of the Company’s obligations, the Company would be required to pay the Prepayment Amount, liquidated damages and other amounts owing in respect thereof through the date of acceleration. ​ The Debentures contain customary representations, warranties and covenants including among other things and subject to certain exceptions, covenants that restrict the Company from incurring additional indebtedness, creating or permitting liens on assets, making or holding any investments, repaying outstanding indebtedness, paying dividends or distributions and entering into transactions with affiliates. Substantially all of the company’s assets, including intellectual property, are collateralized and at risk if Debenture obligation is not satisfied. In addition, the Company was required to maintain at least $ 7,500 on its balance sheet as restricted cash in a separate account and has financial covenants to maintain certain quarterly revenue targets. ​ In connection with the sale of the Debentures, the Company issued warrants to purchase up to 155 shares of common stock for an exercise price of $ 41,310 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 155 shares of the Company’s common stock for an exercise price of $ 41,310 per share were automatically adjusted to be $ 27,708.48 exercise price for up to 231 shares of common stock. There are 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. F-37 Table of Contents 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 78 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. ​ 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 (see Note 2 “Discontinued Operations and Divestitures”). In consideration of the Holders and the Agents’ consent, the Company agreed to (i) pay to the Agent, a cash payment of $ 2,200 to reduce the outstanding principal of the Debentures (which includes the cash portion of the New Purchase Price paid directly to Agent by Buyer which consists of a cash payment of $ 1,100 and an additional $ 1,100 paid by the Company), (ii) a 12 % secured promissory note issued to the Company’s senior lender, on behalf of and at the direction of the Company, in an aggregate principal amount of $ 2,000 (the “GVB Promissory Note”), (iii) assign the GVB Insurance Proceeds to the Agent until the outstanding aggregate principal amount of the Debentures, plus accrued and unpaid interest, has been repaid in full; provided that the first $ 1,000 of Insurance Proceeds in excess of $ 5,000 shall be applied as stated in the agreement, and (iv) post-closing enter into a deed in lieu of foreclosure agreement with respect to 224 acres of real property in Delta County, Colorado commonly known as Needle Rock Farms, resulting in a non-monetary exchange yielding additional debt reduction of $ 1,000 . ​ Effective June 24, 2024, GVB Biopharma (“GVB”), the Company’s former subsidiary, made a scheduled principal and interest payment against the Company’s outstanding indebtedness to JGB, reducing the Company’s total outstanding principal indebtedness with JGB by $ 1,500 . The remaining $ 500 payable by GVB under the GVB Promissory Note was initially extended to December 31, 2024 and subsequently to March 31, 2025. ​ As of December 31, 2024, the $ 500 remaining GVB Promissory Note and $ 1,000 real estate farm asset are pledged to the senior lender for principal reduction and accordingly $ 1,500 of the Senior Secured Credit Facility is recorded as Current portion of long-term debt on the Consolidated Balance Sheets. 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) $ 1.00 per share 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. The Voluntary Conversion Option was approved by the Company’s shareholders on June 28, 2024 and the conversion option price in effect is $ 100.683 . Additional terms of the December 2023 Amendment include revised financial covenants to reflect the sale of the Purchased Interests, including lowering the Company’s quarterly revenue targets. As of December 31, 2024, the Company was in compliance with these financial covenants. ​ 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”). F-38 Table of Contents 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 $ 288.90 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 1,482 shares of common stock during the quarter-ended June 30, 2024. ​ On May 10, 2024, the Company, the Holders and the Agent entered into that certain May 2024 Exchange Agreement and May 2024 Letter Agreement to modify the terms of the Amendment Agreement, the Securities Purchase Agreement and the Debentures, as amended (“May 2024 Amendment”). Under the terms of the May 2024 Amendment, the Company and Holders have agreed the Company shall incur an aggregate amendment charge to the undersigned holders equal to $ 275 , which shall be added to the principal balance of the Debentures. Under the terms of the May 2024 Exchange Agreement, the Company and Holders exchanged an aggregate of $ 2,328 in principal, fees and expenses owed under the Debentures for 2,926 shares of common stock and 6,630 immediately exercisable pre-funded warrants to purchase shares of common stock at an exercise price of $ .00001 (at an effective per share price of $ 228.15 ). 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 3,260 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 $ 0.7458 . See Note 20 “Subsequent Events.” ​ 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 transaction was deemed to be a troubled debt restructuring, and if no, whether the transaction was deemed modification of existing debt, or an extinguishment of existing debt and new debt. ​ The October 2023 Amendment, April 2024 Amendment, May 2024 Amendment, and August 2024 Amendment was 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 F-39 Table of Contents Amendment was concluded to be an extinguishment, due to the addition of a substantive conversion option. As a result, the pre-amended debt carrying value was extinguished and the new debt was recorded at fair value, which is subsequently amortized using the effective interest method. Extinguishment charges were $ 5,158 and recorded in Interest expense on the Consolidated Statements of Operations and Comprehensive Loss for the quarter ended December 31, 2023. ​ The Company analyzed the conversion feature of the December 2023 Amendment for derivative accounting consideration under ASC 815-15 and determined that the embedded conversion features should be classified as a bifurcated derivative because the exercise price of these convertible notes are subject to a variable conversion rate. The Company has determined that the conversion feature is not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with ASC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability at fair value in the amount of $ 557 as of December 31, 2023, respectively as a component of Other Long-Term Liabilities on the Consolidated Balance Sheet. Subsequently, during the year-ended December 31, 2024, the derivative liability related to the debentures and embedded conversion option was reclassified from Other Long-Term Liabilities to Capital in Excess of Par, based on the Company’s reassessment of the classification and conclusion the derivative met the ‘fixed for fixed’ criteria in ASC 815. ​ See Note 8 “Fair Value Measurement” for additional information related to measurement of the debentures and derivative liability. ​ 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”). The Subordinated Note refinanced the 12 % Secured Promissory Note with a principal amount of $ 1,000 dated as of October 29, 2021 payable to Omnia (the “October Note”) and the 12 % Secured Promissory Note with a principal amount of $ 1,500 dated as of January 14, 2022 payable to Omnia (the “January Note”, and together with the October Note, the “Original Notes”), which were assumed by the Company in connection with the acquisition of GVB Biopharma. Under the terms of the Subordinated Note, the Company is obligated to make interest payments in-kind (the “PIK Interest”). The PIK Interest accrues monthly at a compounding rate of 26.5 % per annum, payable monthly The Company is not permitted to prepay all or any portion of the outstanding balance on the Subordinated Note prior to maturity. The maturity date of the Subordinated Note was May 1, 2024. The Subordinated Note was terminated and extinguished in April 2024. ​ In connection with the Subordinated Note, the Company issued to Omnia, warrants to purchase up to 21 shares of the Company’s common stock (the “Omnia 2023 Warrants”). The 2023 Omnia Warrants are exercisable for seven years from September 3, 2023, at an exercise price of $ 27,708.48 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 settles and extinguishes all outstanding debt and interest owed to Omnia under the outstanding Subordinated Promissory Note dated March 3, 2023 (the “Old 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) 8,519 shares of common stock and 8,519 immediately exercisable pre-funded warrants to purchase shares of common stock at an exercise price of $ 0.0001 that are exercisable until May 1, 2029 (at an effective per share price of $ 288.90 ) and (iii) 3,408 immediately exercisable warrants to purchase an equal number of shares of common stock at an exercise price of $ 288.90 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 $ 361.125 per warrant, and had an initial fair value of $ 1,515 (see Note 8). 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, F-40 Table of Contents 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 Statement of Operations and Comprehensive Loss. ​ ​ Contractual Maturities ​ The Company has $ 1,500 pledged against outstanding indebtedness under the Senior Secured Credit Facility comprised of (i) $ 500 GVB promissory note and (ii) $ 1,000 assignment of Needle Rock Farms to be applied as principal reduction in 2024. As of December 31, 2024, contractual maturities under the Senior Secured Credit Facility for the remainder of 2024 and through maturity, excluding any discounts or premiums, were to be paid in 2024 of $ 1,500 and 2026 of $ 6,190 . ​ Additionally, commencing August 2024, at its option, JGB may require the Company to redeem 2 % of the original principal amount of the Debentures, as amended to be no more than 50 % or $ 210 per calendar month through July 2025 and $ 421 per calendar month thereafter which amount may at the Company’s election, subject to certain exceptions, be paid in cash, shares of the Company’s common stock, or a combination thereof. JGB elected the monthly redemption feature and the Company repaid $ 1,053 in cash during the year ended December 31, 2024. If the redemption feature is elected, as of December 31, 2024, contractual maturities under the senior secured credit Facility for 2025 are $ 3,368 , and for 2026 are $ 4,332 . See Note 20 “Subsequent Events.” ​ Debt Issuance Costs ​ The fair values of the warrants at issuance of $ 5,791 , together with the Debentures original issuance discount of $ 1,053 , Debentures exit payment of $ 1,053 , and third-party debt issuance costs of $ 801 , are being amortized using the effective interest method over the term of the respective debt instrument, recorded as Interest expense in the Consolidated Statement of Operations and Comprehensive Loss. The components and activity of unamortized discount and deferred debt issuance costs related to the Senior Secured Credit Facility and Subordinated Note is as follows: ​ ​ ​ ​ ​ ​ ​ ​ Total January 1, 2023 ​ $ - Issuance ​ ​ 8,698 Amortization during the year ​ ​ ( 2,087 ) Debt extinguishment charges ​ ​ ( 5,158 ) December 31, 2023 ​ ​ 1,453 Amortization during the period ​ ​ ( 1,174 ) Amendment fees ​ ​ 746 December 31, 2024 ​ $ 1,025 ​ ​ ​ ​ F-41 Table of Contents NOTE 13. – NOTES AND LOANS PAYABLE The table below outlines our notes payable balances as of December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Insurance loans payable ​ $ 254 ​ $ 543 Total current notes and loans payable ​ $ 254 ​ $ 543 ​ Insurance loans payable During the second quarter of 2024, the Company renewed its Director and Officer (“D&O”) insurance for a one-year policy premium totaling $ 866 . The Company paid $ 147 as a premium down payment and financed the remaining $ 719 of policy premiums over ten months at 8.3 % annual percentage rate. During the second quarter of 2023, the Company renewed its Director and Officer (“D&O”) insurance for a one-year policy premium totaling $ 1,626 . The Company paid $ 285 as a premium down payment and financed the remaining $ 1,341 of policy premiums over ten months at a 7.88 % annual percentage rate. Additionally, during the third quarter of 2023, the Company expanded its D&O coverage, resulting in additional financing of $ 143 , at 9.38 % annual percentage rate over six months . The Company also has other insurance loans payables related to pollution, property, and general liability across the Company. As of December 31, 2024, all estimated future principal payments to be made under the above notes and loans payable will be paid in 2025. ​ ​ ​ ​ ​ ​ ​ ​ NOTE 14. – EQUITY BASED COMPENSATION Stock Compensation Plan On May 20, 2021, the stockholders 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, 2024, the Company had available 5,336,670 shares remaining for future awards under the 2021 Plan. F-42 Table of Contents Compensation Expense The Company recognized the following compensation costs, net of actual forfeitures, related to RSUs and stock options: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ 2024 2023 ​ Sales, general, and administrative ​ $ 337 ​ $ 2,052 ​ Research and development ​ 43 ​ 179 ​ Total equity based compensation - continuing operations ​ ​ 380 ​ 2,231 ​ Total equity based compensation - discontinued operations ​ ​ — ​ 448 ​ Total equity based compensation ​ $ 380 ​ $ 2,679 ​ ​ During the years ended December 31, 2024 and 2023, equity-based compensation expense reversals due to employee termination forfeitures amounted to $ 99 and $ 1,960 , respectively. Additionally, the Company recorded $ 0 and $ 523 of accelerated equity compensation expense, respectively, in connection with the vesting of an employees’ outstanding equity awards as part of termination severance agreements. On December 31, 2024, the Company canceled all remaining unvested awards which resulted in accelerated compensation expense of $ 117 . ​ 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, 2023 through December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ Unvested RSUs ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number of ​ Grant-date ​ Shares Fair Value ​ ​ ​ ​ $ per share Unvested at January 1, 2023 177 ​ $ 68,860.80 Granted 136 ​ ​ 26,870.40 Vested ​ ( 69 ) ​ ​ 64,087.20 Forfeited ​ ( 121 ) ​ ​ 45,057.60 Unvested at December 31, 2023 ​ 123 ​ $ 43,931.77 Granted ​ 3,826 ​ ​ 38.56 Vested ​ ( 2,829 ) ​ ​ 1,286.36 Forfeited ​ ( 1,117 ) ​ ​ 1,585.92 Canceled ​ ( 3 ) ​ ​ 41,558.40 Unvested at December 31, 2024 ​ — ​ $ — ​ The fair value of RSUs related to employee grants that vested during the years ended December 31, 2024 and 2023 was approximately $ 9 and $ 1,838 , respectively, based on the stock price at the time of vesting. During the year ended December 31, 2024, there were 2,750 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, 2024, the Company canceled all remaining unvested RSUs. ​ F-43 Table of Contents Stock Options. Our outstanding stock options were valued using the Black-Scholes option-pricing model on the date of the award. There was no stock option grant activity during 2024 and 2023. A summary of all stock option activity from January 1, 2023 to December 31, 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Weighted ​ Average ​ ​ ​ ​ ​ ​ ​ Average ​ Remaining ​ Aggregate ​ ​ Number of ​ Exercise ​ Contractual ​ Intrinsic ​ Options Price Term Value ​ ​ ​ ​ $ per share ​ ​ ​ ​ ​ ​ Outstanding at January 1, 2023 185 ​ $ 55,974.36 ​ ​ Forfeited ( 54 ) ​ ​ 45,984.00 ​ Expired ​ ( 4 ) ​ ​ 89,424.00 ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2023 127 ​ ​ 59,168.69 ​ Forfeited ​ ( 4 ) ​ ​ 83,916.00 ​ ​ ​ ​ ​ ​ Expired ​ ( 123 ) ​ ​ 58,363.90 ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2024 ​ — ​ $ — ​ — years ​ $ — Exercisable at December 31, 2024 ​ — ​ $ — ​ — 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. F-44 Table of Contents 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, 2024 and 2023, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ Net loss from continuing operations ​ $ ( 15,495 ) ​ $ ( 54,686 ) Net income (loss) from discontinued operations ​ ​ 331 ​ ​ ( 86,089 ) Net loss ​ ​ ( 15,164 ) ​ ​ ( 140,775 ) Deemed dividends ​ ​ ( 10,303 ) ​ ​ ( 9,992 ) Net loss available to common shareholders ​ $ ( 25,467 ) ​ $ ( 150,767 ) ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding - Basic ​ ​ 146,392 ​ ​ 9,467 Dilutive effect of warrants and RSUs ​ ​ 1,167,214 ​ ​ - Dilutive effect of convertible notes ​ ​ 76,377 ​ ​ - Denominator for diluted EPS ​ ​ 1,389,983 ​ ​ 9,467 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic loss per common share from continuing operations ​ $ ( 105.85 ) ​ $ ( 5,776.63 ) Basic loss per common share from discontinued operations ​ ​ 2.26 ​ ​ ( 9,093.89 ) Basic loss per common share from deemed dividends ​ ​ ( 70.38 ) ​ ​ ( 1,055.47 ) Basic loss per common share ​ $ ( 173.97 ) ​ $ ( 15,925.99 ) ​ ​ ​ ​ ​ ​ ​ Diluted loss per common share from continuing operations ​ $ ( 105.85 ) ​ $ ( 5,776.63 ) Diluted income (loss) per common share from discontinued operations ​ ​ 0.24 ​ ​ ( 9,093.89 ) Diluted loss per common share from deemed dividends ​ ​ ( 70.38 ) ​ ​ ( 1,055.47 ) Diluted loss per common share ​ $ ( 175.99 ) ​ $ ( 15,925.99 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Anti-dilutive shares are as follows as of December 31: ​ ​ ​ ​ ​ ​ Warrants (excluding pre-funded) ​ ​ 25,746,741 ​ ​ 22,110 Options ​ ​ — ​ ​ 127 Restricted stock units ​ ​ — ​ ​ 123 ​ ​ ​ 25,746,741 ​ ​ 22,360 ​ ​ ​ ​ 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 F-45 Table of Contents allowances. There was no allowance for discounts or returns and allowances at December 31, 2024 and December 31, 2023. 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 54 % and 63 %, for the year ended December 31, 2024 and 2023, respectively. The following table presents net revenue by product line: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 ​ 2023 Contract Manufacturing ​ ​ ​ ​ ​ Cigarettes $ 14,219 ​ $ 14,027 Filtered Cigars ​ 9,427 ​ ​ 17,240 Cigarillos ​ 756 ​ ​ - Total Contract Manufacturing ​ 24,402 ​ ​ 31,267 VLN ® ​ ( 20 ) ​ ​ 937 Total Product Line Revenues $ 24,382 ​ $ 32,204 ​ 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, ​ ​ 2024 ​ 2023 Customer A ​ 46.11 % ​ 31.49 % Customer B ​ 16.45 % ​ 21.70 % Customer C ​ 14.00 % ​ 8.59 % All other customers ​ 23.44 % ​ 38.22 % ​ 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 Revenue (contract liabilities) relate to down payments received from customers in advance of satisfying a performance obligation. This deferred revenue is included as Deferred income on the Consolidated Balance Sheets. Total contract assets and liabilities are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 Unbilled receivables $ 1,298 $ 1,053 Deferred income ​ ​ ( 20 ) ​ ​ ( 726 ) Net contract assets ​ $ 1,278 ​ $ 327 ​ ​ F-46 Table of Contents During the years ended December 31, 2024 and 2023, the Company recognized $ 726 and $ 688 of revenue that was included in the contract liability balance as of December 31, 2023 and 2022 respectively. ​ 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, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 2023 Consolidated net revenue $ 24,382 ​ $ 32,204 Less: ​ ​ ​ Cost of goods sold ​ 13,758 ​ ​ 24,181 Excise taxes ​ 12,504 ​ ​ 16,009 Selling, general and administration ​ 10,213 ​ ​ 30,911 Research and development ​ 725 ​ ​ 2,000 Depreciation and amortization ​ 1,003 ​ ​ 1,508 Other segment items (1) ​ ( 420 ) ​ ​ 2,915 Interest expense ​ 2,094 ​ ​ 9,366 ​ ​ ​ ​ ​ ​ Segment net loss from continuing operations $ ( 15,495 ) ​ $ ( 54,686 ) ​ ​ ​ ​ ​ ​ (1) Other segment items include: other operating expenses, other (income) expense, interest income, and provision for income taxes. ​ ​ ​ F-47 Table of Contents Geographic Area Information ​ For the years ended December 31, 2024 and 2023, substantially all third-party sales of product are shipped to customers in the United States. Additionally, as of December 31, 2024, and 2023, all long-lived assets are physically located or domiciled in the United States. ​ ​ ​ ​ NOTE 18. – OTHER OPERATING EXPENSES (INCOME), NET ​ The components of “Other operating expenses (income), net” were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2024 2023 Restructuring costs: ​ ​ ​ ​ ​ ​ Impairment of intangible assets (see Note 7) ​ $ — ​ $ 1,375 Impairment of fixed assets ​ ​ — ​ ​ 56 Professional services ​ ​ — ​ ​ 763 Severance (see Note 1) ​ ​ — ​ ​ 221 Total Restructuring costs ​ ​ — ​ ​ 2,415 ​ ​ ​ ​ ​ ​ ​ Acquisition and transaction costs ​ ​ — ​ ​ 223 Impairment of intangible assets ​ ​ 68 ​ ​ — Loss (gain) on sale or disposal of property, plant and equipment ​ ​ 62 ​ ​ ( 111 ) Other operating expense, net ​ $ 130 ​ $ 2,527 ​ Restructuring costs ​ During the third quarter of 2023, the Company undertook various restructuring activities in an effort to better align its internal organizational structure and costs with its strategy, as well as preserve liquidity. As a component of the restructuring, the Company has initiated a process to evaluate strategic alternatives with respect to the Company’s tobacco assets. The process will include consideration of a range of strategic, operational and financial transactions and alternatives, such as business combinations, asset sales, licensing agreements, alternate financing strategies and other options. ​ As a result, the Company incurred $ 2,415 in restructuring costs for the year ended December 31, 2023, which included costs related to employee termination, professional services and consulting, and long-lived asset impairment. ​ ​ ​ ​ ​ F-48 Table of Contents NOTE 19. – INCOME TAXES 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, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Current: ​ ​ Federal ​ $ — ​ $ — State ​ 22 ​ 40 Foreign ​ — ​ — Total current provision ​ $ 22 ​ $ 40 ​ ​ ​ ​ ​ ​ ​ Deferred: ​ ​ Federal ​ ​ ( 3,355 ) ​ ( 11,351 ) State ​ 97 ​ ( 736 ) Foreign ​ — ​ — Total deferred benefit ​ ( 3,258 ) ​ ( 12,087 ) Change in valuation allowance ​ 3,266 ​ 12,094 Total income tax provision ​ $ 30 ​ $ 47 ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Statutory federal rate 21.0 % 21.0 % Other items 0.4 0.2 GVB sale adjustments ​ 4.0 ​ — ​ Stock based compensation ( 5.3 ) ( 0.8 ) Research and development credit carryforward 1.5 0.4 State tax, net of federal benefit ( 0.7 ) 1.3 162(m) limitation — ( 0.2 ) Valuation allowance ( 21.1 ) ( 22.0 ) ​ ​ ​ ​ ​ ​ Effective tax rate ( 0.2 ) % ( 0.1 ) % ​ F-49 Table of Contents Individual components of deferred taxes consist of the following as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Deferred tax assets: ​ ​ Net operating loss carryforward ​ $ 59,605 ​ $ 54,453 Inventory ​ 990 ​ 2,020 Stock-based compensation ​ — ​ 862 Start-up expenditures ​ 124 ​ 155 Research and development credit carryforward ​ 1,654 ​ 1,424 Accrued bonus ​ — ​ 133 Severance liability ​ 24 ​ 95 Allowance for credit losses ​ ​ 2 ​ ​ 2 Research and development costs ​ ​ 1,827 ​ ​ 1,617 Operating lease obligations ​ 400 ​ 476 Capital loss on investment ​ ​ 2,622 ​ ​ 2,449 Interest expense limitation ​ ​ 2,259 ​ ​ 1,687 Note payable and warrant liability ​ ​ 373 ​ ​ 581 Other ​ 314 ​ 71 ​ ​ $ 70,194 ​ $ 66,025 Deferred tax liabilities: ​ ​ Machinery and equipment ​ ( 334 ) ​ ( 283 ) Patents and trademarks ​ ( 149 ) ​ ( 193 ) Operating lease right-of-use assets ​ ( 386 ) ​ ( 467 ) Other intangible assets ​ ( 409 ) ​ ( 385 ) ​ ​ ( 1,278 ) ​ ( 1,328 ) Valuation allowance ​ ( 68,989 ) ​ ( 64,763 ) ​ ​ ​ ​ ​ ​ ​ Net deferred taxes ​ $ ( 73 ) ​ $ ( 66 ) ​ The Company has net operating loss (“NOL”) carryforwards of approximately $ 215,397 as of December 31, 2024 that do not expire. The Company also accumulated an NOL carryforward of approximately $ 46,920 through December 31, 2017 and this NOL carryforward begins to expire in 2030. As of December 31, 2024, 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 $ 11,119 as of December 31, 2024, 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. 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 reduce the net deferred tax asset associated with the definite lived assets to zero. For the years ended December 31, 2024 and 2023, the valuation allowance increased for continuing operations by $ 3,305 and $ 12,094 , and increased an additional $ 922 and $ 12,910 , respectively 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 US federal return for the year ended December 31, 2024 and 2023. 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, 2024 and 2023. ​ ​ ​ F-50 Table of Contents NOTE 20. – SUBSEQUENT EVENTS ​ JGB Senior Secured Credit Facility ​ As previously disclosed, on October 9, 2024, 22nd Century Group, Inc. (the “Company”) entered into that certain Letter Agreement to modify the terms of the Securities Purchase Agreement dated March 3, 2023 (the “JGB SPA”) and debentures (the “Debentures”), as amended, with JGB Partners, LP (“JGB Partners”), JGB Capital, LP (“JGB Capital”) and JGB Capital Offshore Ltd. (“JGB Offshore” and collectively with JGB Partners and JGB Capital, the “Holders”) and JGB Collateral, LLC, as collateral agent for the Holders (the “Agent”). Under the terms of the Letter Agreement, as approved by the stockholders at the December 6, 2024 special meeting of stockholders, the Company was granted approval 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. On January 13, 2025, the Board of Directors approved the reset of the Conversion Price to $ 6.04 per share. The Holders exercised conversion notices in the amount of $ 3,132 in January 2025 and the Company issued 518,600 shares of common stock. The remaining principal balance of the Debentures is $ 4,558 , of which the Company and Holders have $ 1,500 of non-operating assets pledged for repayment. ​ Nasdaq Compliance ​ On January 21, 2025, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) confirming that the Company had regained compliance with the bid price requirement under Nasdaq Listing Rule 5550(a)(2). As a result, the Company’s hearing before the hearings panel has been cancelled and the Company’s common stock will remain listed on Nasdaq. ​ NCSU Payment Agreement ​ On September 5, 2024, the Company entered into a Payment Agreement (the “Agreement”) with NCSU to satisfy outstanding payments due under existing License Agreements with NCSU and to prepay license fees and minimum royalty payments related to sponsored research for the Company’s intellectual property program through the end of 2025. ​ The second installment of payments was satisfied through the issuance of 83,299 shares of Company common stock occurred on January 30, 2025. ​ ​ ​ ​ F-51 Table of Contents ​ ​ 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 Table of Contents 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). ​ ​ ​ 3.2 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 4.1 to the Company’s Form 8-K filed with the Commission on July 25, 2022). ​ ​ ​ 4.3 ​ Form of Amended Original Issue Discount Senior Secured Debentures dated March 3, 2023 (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on December 28, 2023). ​ ​ ​ 4.4 ​ Form of JGB Warrant (incorporated by reference to Exhibit 4.4 to the Company’s Form 10-K filed with the Commission on March 9, 2023). ​ ​ ​ 4.5 ​ Form of Omnia Warrant (incorporated by reference to Exhibit 4.5 to the Company’s Form 10-K filed with the Commission on March 9, 2023). ​ ​ ​ 4.6 ​ Form of Inducement Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on November 29, 2023). ​ ​ ​ 4.7 ​ Waiver and Amendment Agreement (Incorporated by reference from Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on October 16, 2023). ​ ​ ​ 4.8 ​ Form of Common Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on October 18, 2023). ​ ​ ​ 4.9 ​ Form of Placement Agent Warrant (Incorporated by reference from Exhibit 4.3 to the Company’s Form 8-K filed with the Commission on October 18, 2023). 45 Table of Contents 4.10 ​ Form of Prefunded Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on October 24, 2024). ​ 4.11 ​ 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). ​ 4.12 ​ Form of Placement Agent Warrant (Incorporated by reference from Exhibit 4.3 to the Company’s Form 8-K filed with the Commission on October 24, 2024). ​ 4.13 ​ Form of Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on October 15, 2024). ​ 4.14 ​ Form of Placement Agent Warrant (Incorporated by reference from Exhibit 4.2 to the Company’s Form 8-K filed with the Commission on October 15, 2024). ​ 4.15 ​ Form of Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on September 30, 2024). ​ 4.16 ​ Form of Placement Agent Warrant (Incorporated by reference from Exhibit 4.2 to the Company’s Form 8-K filed with the Commission on September 30, 2024). ​ 4.17 ​ Form of Warrant (Incorporated by reference from Exhibit 4.3 to the Company’s Form 8-K filed with the Commission on September 30, 2024). ​ 4.18 ​ Form of Placement Agent Warrant (Incorporated by reference from Exhibit 4.4 to the Company’s Form 8-K filed with the Commission on September 30, 2024). ​ 4.19 ​ Form of Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on September 13, 2024). ​ 4.20 ​ Form of Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on August 28, 2024). ​ 4.21 ​ Form of Pre Funded Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on May 10, 2024). ​ 4.22 ​ Form of Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on April 30, 2024). ​ 4.23 ​ Form of Pre Funded Warrant (Incorporated by reference from Exhibit 4.2 to the Company’s Form 8-K filed with the Commission on April 30, 2024). ​ 4.24 ​ Form of Common Warrant (Incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed with the Commission on April 9, 2024). ​ ​ ​ 4.25 ​ Form of Pre-Funded Warrant (Incorporated by reference from Exhibit 4.2 to the Company’s Form 8-K filed with the Commission on April 9, 2024). ​ 4.26 ​ Form of Placement Agent Warrant (Incorporated by reference from Exhibit 4.3 to the Company’s Form 8-K filed with the Commission on April 9, 2024). ​ ​ ​ ​ 46 Table of Contents 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). 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 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (incorporated by reference from Appendix B to the Company’s definitive proxy statement filed April 29, 2024) 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 ​ Securities Purchase Agreement dated March 3, 2023 with each of the purchasers party thereto and JGB Collateral, LLC, a Delaware limited liability company, as collateral agent for the Purchasers (incorporated by reference to Exhibit 10.18 to the Company’s Form 10-K filed with the Commission on March 9, 2023) ​ ​ ​ 10.8.1 ​ Amendment to Securities Purchase Agreement dated March 3, 2023 with each of the purchasers party thereto and JGB Collateral, LLC, a Delaware limited liability company, as collateral agent for the Purchasers (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Commission on December 28, 2023) ​ ​ ​ 10.8.2 ​ Letter Agreement with JGB (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on October 10, 2024) ​ 10.8.3 ​ Letter Agreement with JGB (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on August 28, 2024) ​ 10.8.4 ​ May 2024 Letter Agreement with JGB (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on May 10, 2024) ​ 10.8.5 ​ May 2024 Exchange Agreement with JGB (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Commission on May 10, 2024) ​ 10.8.6 ​ Letter Agreement with JGB (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on April 8, 2024) 47 Table of Contents ​ ​ ​ 10.9 ​ Subordinated Promissory Noted dated March 3, 2023 (incorporated by reference to Exhibit 10.19 to the Company’s Form 10-K filed with the Commission on March 9, 2023) ​ ​ ​ 10.10 ​ Equity Purchase Agreement dated November 20, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on November 27, 2023) ​ ​ ​ 10.10.1 ​ Amendment to Equity Purchase Agreement dated December 22, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on December 28, 2023) ​ ​ ​ 10.11 ​ 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) ​ ​ ​ 10.12* ​ Master Services Agreement and Addendum #1 with Smoker Friendly International, LLC dated January 1, 2025. ​ 10.13 ​ Payment Agreement with NCSU (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on September 9, 2024) ​ 10.14 ​ General Release and Settlement Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on April 30, 2024) ​ ​ ​ 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 Freed Maxick P.C. (f/k/a Freed Maxick CPAs, 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 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* 48 Table of Contents ​ ​ ​ 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. ​ ​ ​ 49 Table of Contents ​ ​ 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 20, 2025 By: /s/ Lawrence D. Firestone Lawrence D. Firestone Chief Executive Officer and Director (Principal Executive Officer) Date: March 20, 2025 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 20, 2025 By: /s/ Andrew Arno Andrew Arno Director ​ ​ ​ ​ ​ ​ ​ ​ nthony Date: March 20, 2025 By: /s/ Anthony Johnson Anthony Johnson Director ​ Date: March 20, 2025 By: /s/ Lucille S. Salhany Lucille S. Salhany Director ​ ​ ​ ​ 50