Welcome to 22nd Century Group's Third Quarter 2025 Conference Call and Webcast. At this time, all participants have been placed in listen-only mode. It is now my pleasure to turn the floor over to Matt Kreps, Investor Relations for 22nd Century Group. Please begin. Hello, and welcome to 22nd Century's Third Quarter 2025 Results Conference Call. Joining me today are Larry Firestone, CEO, and Dan Otto, CFO. Earlier today, we issued a press release announcing our results for the quarter ended September 30, 2025. The release and thank you are available in the Investors section of our website at xxii-century.com. Today's call will include prepared remarks from Larry and Dan, updating you on 22nd Century's business, operations, strategy, and financial results through September 30, 2025, and subsequent events post the close of quarter end. Before we begin, a few reminders for today's call. Some of the statements made today are forward-looking. Forward-looking statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found in our annual, quarterly, and other reports filed with the SEC. During today's call, we may also discuss non-GAAP financial measures, including adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, and amortization as adjusted for certain non-cash and non-operating expenses. For more details on these measures, please refer to our release issued earlier today. With that, I'll now turn the call over to Larry. Thank you, Matt. Good morning, everyone. Thank you for joining 22nd Century's Third Quarter 2025 Results Conference Call. Our team continues to make significant progress. We've transitioned from a company that was dedicated to a massive cleanup and restructuring to a company poised to contribute important technology to a very well-established industry, which will fuel our growth phase. We have also improved our balance sheet significantly during this quarter, becoming debt-free, and now we are funded with cash resources we have not had over the past two years. Today, I will lay out the direction of our company as we end 2025 and enter 2026, where we are focused on growing distribution, followed by measuring and accelerating the rate of sale of our products. To start, I want to review some facts and lay some groundwork on the tobacco plant, nicotine, and the overall industry. As the tobacco plant grows, it produces the highly addictive substance nicotine. The leaves are harvested and cured, and the nicotine contained within is then utilized for a variety of highly addictive consumer products, both combustible and non-combustible. These products are designed to release neurotransmitters that bind to the receptors in the brain, triggering the release of dopamine, neopinephrine, and serotonin, which cause a feeling of pleasure and alertness, which contributes to its highly addictive nature. Once this cycle starts, the nicotine-laden products in the market keep consumers coming back for more, and they remain addicted to nicotine. Nicotine addiction is the market our competitors have thrived on. According to the University of California, San Francisco, nicotine has been proven to be as or more addictive as cocaine and heroin. Therefore, many people who use these products, cigarette smokers for example, develop nicotine dependence, which makes it extremely hard to quit, especially when they try to stop smoking under their own influence and will. Seventy percent of smokers report they want to quit, but unfortunately, all too often, quitting attempts are not successful or pursued to completion unless they are predicated on the user having developed a significant tobacco-related health issue such as heart disease, cancer, or a stroke. Sadly, according to the American Lung Association, tobacco use is the number one cause of preventable death in the U.S., and of the 28.8 million smokers in the U.S., almost 500,000 people die each year from smoking-related issues. We can extrapolate these statistics and apply them to the worldwide market of 1.1 billion smokers, and the same math, only larger numbers such as approximately 8 million people die each year due to smoking-related health issues. In the U.S., we spend approximately $600 billion annually, or six times more than the total U.S. tobacco industry revenues, in healthcare costs, cleaning up the mess that this industry has made. This is why, over the years, there's been a whole industry developed to help nicotine-addicted consumers reduce their consumption or quit, including pharma, health centers, rehabilitation centers, nonprofits, et cetera. This does not include the billions that are siphoned from smokers' pocketbooks when they purchase cigarettes. To allow the tobacco industry to make payments under the Master Settlement Agreement to the settling states, which is funding designed to handle the significant healthcare prevention of youth smoking, education, and tobacco control issues resulting from smoking. Nicotine addiction is clearly the issue at hand. That needs to be addressed and solved. Some of our peers in the industry talk a big game, and some not at all. The whole concept of tobacco harm reduction starts by addressing the nicotine that is produced in the tobacco plant itself. We at 22nd Century have made tobacco harm reduction our mission and are here to help solve this big problem with our technology and our products. One thing is clear. There is a substantial place in the market for our low nicotine tobacco and other VLN products. In our opinion, every combustible cigarette brand should be carrying a VLN set of SKUs to round out their product portfolio and shift their position to support the FDA and the tobacco harm reduction movement. Now to our business. We have spoken in our remarks throughout 2025 about a shift in our strategy away from elements of our legacy CMO business, whereby we have had either negative margin or low margin product sales. Many of these customer contracts were high volume with razor-thin margins and consumed significant working capital. Although high volume in manufacturing is usually an advantage, frankly, the nature of this business model in our company is not aligned to our mission and is counter to our overall profitability goals. Our financial results each quarter this year reflect the slow transition of revenues from this business into the higher margin branded products as our product mix shifts. However, with the sustained losses at the gross profit line during the third quarter, we also implemented widespread changes in our manufacturing operations to improve the cost structure so that it fits in the direction of where this company is headed and to shutter the slow drip burn in profitability and cash. Had we continued, our break-even point running the former CMO business would have been over 12 million cartons annually. This simply was not achievable for these products and, frankly, was a distraction to our larger strategy and does not take advantage of the cornered resource we have in our IT and our technology. Now to our branded business. We are the only company that produces and distributes brands that carry both full nicotine and very low nicotine combustible cigarettes. So far, the brands that we are carrying in the full nicotine landscape are primarily represented in tier four. We believe in offering our customers other mid-tier and premium options in these brands. This is important, as our sales pitch to distributors, wholesalers, and retail requires a full slate of product offerings as opposed to just VLN products. Although our primary goal is to advance our VLN products in the market, we need to continue to gain brand recognition, awareness, and product availability in order to be successful. This is why our product offerings have expanded to include other mid-tier and premium full nicotine combustibles, primarily with natural style cigarettes. Natural style cigarettes, generally having only tobacco and water as the main ingredients, are underrepresented in the market with respect to the lower-tier brands. Most natural style product offerings are in a premium position only. Not only does our company benefit from the expanded product offerings at higher margin, but we are also able to provide customers with a product mix of SKUs that have higher margin per slot in a category that carries significant demand. By pairing the natural style with existing brands and a partner brand VLN, we are able to more quickly gain market penetration. Our newly branded and partner-branded VLN products are finally in the market for sale, with shipments occurring in the third quarter and many store display resets are actually being implemented. Smoker Friendly VLN can be found in Smoker Friendly stores in Missouri and Florida. Pinnacle VLN can be found in 1,361 Murphy USA stores in 20 states. 22nd Century VLN can now be found in Illinois in the Chicagoland area in Circle K. We also have commitments from some smaller wholesalers and retailers in other markets that will keep our VLN brands moving to the market and widening distribution and consumer accessibility. Our new tryVLN.com webpage has a store locator that will allow our customers to find our VLN and partner VLN products in the market and currently reflects all locations I just mentioned. With respect to adoption of our natural, VLN, and partner VLN product offerings, we have added Smoker Friendly Black Label, which is a natural style, and Smoker Friendly VLN, now represented by over 20 different SKUs in total for all styles. Likewise, we are adding Pinnacle Pure as a natural to complement the Pinnacle VLN products for a top five C-store chain in the US, bringing that total SKU count to 10. We will continue this strategy as we continue to introduce our brands and expand our presence. The importance of this approach, where we develop brands with both a full nicotine and a low nicotine presentation, is that if and when the FDA enacts their very low nicotine mandate, our branded customers will already be positioned to have a surviving product with long-term brand recognition. In any event, we are helping our customers address the changing demands of the tobacco consumer in the US. We look forward to having additional customers and brands adopt our partner VLN strategy and add a set of VLN SKUs to their roster, ultimately to widen the VLN presence in the market and to be prepared to support the FDA mandate. We are currently in development of a third brand under this strategy, as well as others that would be available for licensing to retailers for their own private label brand. Given the margin profile of the one-two punch of the natural style and VLN product offerings, our profitability will benefit regardless of product mix between them. The natural and VLN products business model, in comparison to the high-volume business model, has a break-even point of approximately 500,000 cartons, which is quite a difference from selling over 12 million cartons of the low-margin CMO products required to be sold for us to break even. Now to our technology. We continue to move ahead. Our plans are to offer not only packaged combustible cigarette products, but also to offer low nicotine leaf to other players in the market, as well as licensing opportunities. Therefore, our technology development platform is the nucleus of our company, and we believe will be a key to a transformation of the tobacco industry. We understand that others are developing alternate technologies for low nicotine combustible products. We have seen vapes, hemp cannabis, tea, and other composites as attempts to deliver a similar result to our VLN cigarette. The challenge is, smoking is a very personal habit, and having to change form factors to something other than the familiarity of a combustible cigarette is a big deal. We believe that our straightforward low nicotine tobacco combustible solution is the strongest offering for the market, with very entrenched customers who are used to smoking tobacco in cigarette form. For that reason, we see our solution as the easiest and most straightforward transition to a low nicotine tobacco product. Not to mention, our VLN predicate is already FDA authorized, familiar in taste and form factor, and is now in the retail market that offers the consumer an easy choice. Our development plans also include 100-millimeter VLN cigarettes to join our king size, which we will file a PMTA application with the FDA in the coming months. Additional low nicotine tobacco strains, which will be available for licensed or alternative blends. We successfully grew very low nicotine oriental tobacco varieties as part of our 2025 crop year to add to our flue-cured and burley leaf. Disease resistance to help crop yields. Very low nicotine filtered cigars. We previously developed this form factor and have sold limited quantities to universities to be used for research purposes. Under the FDA's proposed rule, filtered cigars are included and therefore are an important addition to our very low nicotine products offerings in the market. Other tobacco harm reduction attributes. We are not finished developing improved technology for this industry. In 2024, there was a marketplace research study that was completed using our 95% less nicotine spectrum research cigarettes, and out of 450 subjects, 40% of them changed their smoking habit dramatically and reduced their consumption over the 12-week period. This is a huge result. If we extrapolate that against the 28.8 million US smoking population, that would mean that 11.5 million smokers could potentially dramatically change their smoking habit and take control of their dependence on nicotine and their addiction in roughly the same amount of time. 11.5 million smokers is 57% of the 70% of the smoking population that has reported that they want to quit. We know of no other technology and solution that has the potential impact that our VLN products have. Following that backdrop, here's where we are in the progress of building 22nd Century. Our management team has completely reshaped 22nd Century since November of 2023, and we are now ready for the marathon of building a technology-driven consumer products business with market-leading technology in the tobacco industry. Our business model going forward will change again, as we will support not only products manufactured and sold by us. Given the importance of addressing the nicotine epidemic in the US and around the world, we will also support licensing arrangements that will allow other tobacco companies to adopt VLN products under their brands. This could come through us selling leaf, licensing the plant science technology to other companies, licensing our FDA authorized VLN predicate, or licensing the use of the VLN trademark for use in their products like our partner brands. We believe by opening this door to others in the industry, this will welcome other tobacco companies to join forces with us and support the FDA and the low nicotine mandate by licensing our technology and offering the choice of low nicotine products under their brands. Many in the industry currently oppose the FDA's goal with respect to implementation of a low nicotine standard for combustibles. However, we believe it is similar to other sweeping industry changes that we've seen in the past, caused from the enactment of law for the betterment of public health, such as the implementation of unleaded gas. We already are and plan to continue to be the first to market and the architect of the low nicotine combustible market with both cigarettes and filtered cigars. When other players in this industry begin to understand that low nicotine tobacco is crucial to tobacco harm reduction and fits within the scope of their harm reduction mission and a complementary product offering necessary for consumers, we stand ready to help them. We have several solutions to offer the industry. 22nd Century branded VLN products, those are already in the market. Partner branded VLN products such as Smoker Friendly and Pinnacle, those are already in the market. Other partner VLN brand options, ones manufactured by 22nd Century, we can make those for people. Licensed for manufacturing by others, we can license out so that folks can manufacture with our tobacco, our low nicotine tobacco. That is leaf, not consumed by us, can be sold to other companies who wish to adopt and license a VLN product line or can be licensed to other tobacco companies who wish to license our technology and leaf to grow their own and license a VLN product line. When we look at the industry and our consumers, we believe that we have the right product for this changing market in a form factor that is familiar to the consumer. We are very much aligned with the advent of the NA beer and NA spirits markets, as those established markets are also transitioning. Like these parallels, beer and spirits industry delivered these NA products in the same form factor that was familiar and customary for the consumer. VLN cigarettes do the same. Tobacco harm reduction does not need to rely on new electronic vessels to consume tobacco products. We believe that a better combustible low nicotine cigarette or filtered cigar that gives the consumer a choice is a far superior answer in this market to solve a problem. The product reviews of our newly branded and partner branded VLN products are strong. Our VLN products receive excellent reviews on taste and smoking experience. Now, as we expand distribution to all 50 states in the U.S. and gain traction with C-stores, independents, and other retail outlets, rate of sale will be the key measure for all products in our branded portfolio, and this will drive our business model to the profitability targets that our industry delivers. Before I transition to Dan to talk over the numbers, I want to end with a reflection of accomplishments during the quarter and through today. Our company and management team is increasingly focused on our future, and for the most part, we are no longer dealing with the issues of the past. Examples of this include we filed our response to the FDA's low nicotine mandate. Not only are we in support of the FDA's proposed rule, our technology is the foundational backbone, and we have proven the commercial feasibility of this standard. Further, we are fully aligned with the responses publicly available on the FDA's website, commissioned by the medical community, touting the impactful benefits to public health. From an industry point of view, based on published comments, 22nd Century Group is the only tobacco company that is an ally of the FDA and the proposed rule. Every other tobacco company is opposed and wants to fight the FDA and keep nicotine addiction as part of the equation. Having the wider tobacco industry carry both full nicotine and low nicotine cigarettes would be a huge step forward in the tobacco harm reduction movement. As Dan will share, we finally have a balance sheet that we can now direct our resources towards the future versus the cleanup that we've been executing. This included raising capital, which allowed us to pay off our senior secured debt and ground the balance sheet for growth capital. We also settled the insurance lawsuit, which has added $9.5 million in non-dilutive cash to the balance sheet. We will also implement an at-the-market ATM facility. This is a responsible tool for us to selectively and opportunistically raise capital to meet the demands we will have for growth capital. We currently are well-funded, and therefore will look to this resource to maintain lower cost of capital moving forward in comparison to where we have been in the past two years. Finally, this management team has entered into customary executive employment agreements with our key NEOs, who have been instrumental in transitioning this company and will be key resources moving forward to achieve rapid growth. We're very excited to see the fruits of our work here and are very much looking forward to advancing VLN throughout the US and internationally. Now, I'll turn the call over to Dan to discuss the numbers. Thank you, Larry. Good morning, everyone, and thanks again for joining our discussion today. Third quarter 2025 is a story of significant improvement to our balance sheet and completion of the necessary steps to drive margin improvement with the restructuring of our manufacturing operations. The stage is set now for adoption of our higher margin branded products to begin delivering sequential quarterly improvement, both top line and in overall profitability. Shipments of our newly branded VLN and partner VLN products year-to-date through the end of October now represent approximately 6,000 cartons. Natural style cigarettes, which have been shipping for a larger portion of the year, have added an additional 14,000 cartons. As we push forward to break even profitability, we will measure progress against our annual goal of 500,000 cartons of these products, adding to the remaining layer of base CMO business. The higher margin branded products typically provide for gross profit margin of 20%-30% after accounting for pricing promotions and other marketing dollars. Scaling will occur through adoption of these products at additional store locations. VLN and partner VLN cigarette products are now in approximately 1,500 stores today across 21 states, and we are authorized in approximately 40 states. The full detail of state authorizations for each brand is provided in our earnings release. As our state authorizations continue to increase for each product SKU, that will allow for more rapid expansion to increase store count. Availability of very low nicotine cigarettes across the United States is paramount to our ongoing effort of educating consumers and garnering trial and adoption, and therefore each additional state we receive from authorization is key. We expect to begin seeing rate of sale metrics in the early part of 2026. These metrics will provide invaluable data as to the efforts and successes of our marketing collateral, which is all reflective of our latest branding, as well as our current pricing structures such as buy downs, rebates, and other spend. As I mentioned, we implemented cost savings and restructuring initiatives of our manufacturing operations during the quarter in effort to more rapidly improve gross margin. Outside of raw materials used for our products, our costs are largely fixed, and therefore each additional carton manufactured and sold drives improvement to margin. With the strategy shift to focus on higher margin branded products, we will be able to reach our profit goals with significantly fewer cartons. We expect to see sequential improvement in the fourth quarter of 2025 and throughout 2026 reflecting these efforts. I'll transition now to walk through some of the specific numbers and our financial results for the quarter, all excluding discontinued operations unless noted. The balance sheet includes $4.8 million of cash on hand and a $9.5 million receivable related to insurance recovery from the Dorchester business interruption insurance claim, which was subsequently received in cash in October 2025. This increased total assets to $32.4 million as compared to $21.7 million at December 31, 2024. Current and long-term debt were zero at September 30, 2025, reflecting the full repayment of the senior secured credit facility during the quarter. The company also paid in full the put option exercised on the Omnia warrants of $1.23 million held by a former subordinated lender after quarter end, further improving our liabilities and overhang from the past. Total liabilities decreased to $11.3 million at September 30, 2025, as compared to $17.7 million at December 31, 2024. Accordingly, we have ended the quarter with having improved our balance sheet current ratio to approximately 2.3 to 1. Moving to the P&L, net revenue was $4 million in the third quarter 2025, decreased from $4.1 million in the second quarter 2025. Total cartons sold were 517,000 versus 779,000. The decrease in volume reflects the aforementioned adjustments we have made in shifting our strategy within the CMO business. Gross profit was a loss of $1.1 million in the third quarter of 2025 as compared to a $0.6 million loss in the second quarter 2025. The increase in loss was reflective of lower volume and the transition period of our product mix from low margin CMO to higher margin branded products, as well as incurring some restructuring costs from implementing our cost savings initiatives and inventory write-downs. Total operating expenses for the third quarter were $2.2 million as compared to $2.3 million in the second quarter. Interest expense for the third quarter was $0.5 million, but included a $0.4 million non-cash debt extinguishment charge related to the full repayment of the senior secured credit facility. Continuing on, third quarter 2025 net loss from continuing operations was approximately $3.8 million as compared to $3.3 million in the second quarter, and adjusted EBITDA during the third quarter was a loss of $2.9 million as compared to a loss of $2.6 million in the second quarter of 2025. Finally, consolidated basic earnings per share for the third quarter 2025, inclusive of discontinued operations, was $1.55 per share, reflective of recognizing the $9.5 million gain on insurance settlement from the Dorchester business interruption claim. That's compared to a basic loss per share of $13.61 in the second quarter of 2025. That concludes our prepared remarks. I'd now like to open it up for any questions from our analysts. We will now begin the question- and answer session. To ask a question, you may press Star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star and 2. At this time, we will pause momentarily to assemble our roster. The first question comes from the line of Andrew White with Emerging Growth Research. Please go ahead. Morning, guys. Good to hear from you again. Looks like you had a pretty interesting quarter, a good quarter, too. I had a couple of questions if I could ask you. First and foremost, it looks like post the end of the quarter, you have about $14 million in cash. What are your plans to use that cash going forward? Okay, Andy, good morning. Go ahead. Go ahead, Dan. Go ahead. Yeah, Andy, we're going to look forward to entering 2026 with a pretty well-funded balance sheet, as Larry said. This represents some growth capital that we've really needed and haven't had over the last couple of years. This will support operations. It will support advancing VLN in the market where we'll continue to add additional store count and distribution. We actually have a little bit of R&D and CapEx that will start. That'll commence in the early part of 2026 as well, where we've really not been able to do much of that in the last couple of years as we work through the restructuring. Okay. Thank you. Do you intend to use any of the cash to settle outstanding warrants and, for that matter, what's the share equivalent of outstanding warrants right now? No. No. Okay. And what's the current share equivalent of outstanding warrants? Just under 7 million shares outstanding as of quarter end and on a fully diluted basis with the convertible Series A preferred and common warrants fully diluted basis were 23.7 million. Okay. I was wondering if you could spend a little bit more time on the Needham sale agreement. And And the severance agreement. Why now? And what will be the impact on SG&A going forward? Sure. I'll start with that. So, yeah, starting with the employment agreements, Andy, these are just customary employment agreements. They will not change what the current G&A level is, just formalizing terms and conditions for our named executive officers. As far as the sales agent agreement with Needham, we're commencing an at-the-market offering up to $25 million that will be off the shelf. As Larry and I said in our remarks, we're currently well-funded, and so really, this is just a responsible tool that we've got, another arrow in our quiver, if you will, where if we can opportunistically raise additional capital to support our growth, we will, but we certainly are not necessarily under the gun in any respect to go ahead and use that. Okay. Good to hear. And last but not least. I'm sorry. Andy, let me just add one thing on the executive agreements. When I joined the company, I disbanded all agreements with the executives. And just to execute the turnaround so that everyone that's here at the company is on the same playing field. And now I feel like that we've come through the turnaround that we've come through, and we've got the company positioned where it's positioned. It's time to actually put situations like that back into play for the team. We've got an awesome team, and we want them taking us to the next step. Understandable. Okay. Thank you, Larry. And last but not least. EBITDA break-even, before you had indicated second quarter of 2026. I understand your rate of sales stats aren't in yet for the end of the year, but are you standing by that second quarter break-even for EBITDA, or has that changed? We're still driving for that, Andy. That's our line of sight. That's where we're looking to. Great. Good to hear. That was it for me. Thank you. Okay. This concludes our question and answer session. I would like to turn the conference back over to Larry Firestone for any closing remarks. Thank you. All the structural changes we've made to date have been leading up to this point. I don't believe there's an element of this company that we have not touched or reshaped. Our team has put the building blocks in place to start the long process of securing distribution and rate of sale. And we're fortunate to have had investors who have funded our turnaround so that we could bring the company to this spot. 22nd Century has very important technology for the tobacco industry. Instead of the traditions in the industry of having secret recipes and trying to outmaneuver one another, we welcome our larger peers to join us in leading the tobacco harm reduction movement by licensing our technology and pushing our VLN technologies expansion as fast as we all can. Based on the scientific results, our low nicotine tobacco and VLN cigarettes are a game changer for those who smoke and want to take control. The wider tobacco universe needs to become good stewards of the health of our consumers and move this technology into the market. This would allow a wider audience to join the FDA and the medical profession. In the pursuit of a healthier America instead of the constant fighting. The core elements of the fight can be resolved with VLN products in the marketplace. This would also keep the industry economics in place for growers, employees, taxes, etc. This is the long game from here, but we're excited to take on the challenge, and we have a great team to bring this together. On behalf of the board and myself personally, I say thank you to our entire team. I appreciate our team for their extremely hard work transitioning our company in a very short period of time with very limited resources. This has been a monumental task, and they've done an awesome job. We look forward to updating you with press releases along the way and again in Q1 as we close 2025. Thank you all. Have a great day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.