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Our innovative approach involves utilizing both genetically modified organism (“GMO”) and non-GMO methods to modify and develop proprietary bright, burley, and oriental RNC tobaccos, ensuring they grow with at least 95% less nicotine content. Our SPECTRUM^® research cigarettes, developed in collaboration with independent researchers, officials from the FDA, the National Institute on Drug Abuse (“NIDA”), which is part of the National Institutes of Health (“NIH”), the National Cancer Institute (“NCI”), and the CDC, have played and continue to play a crucial role in independent clinical studies, with more than 32.8 million variable nicotine research cigarettes provided since 2011. The extensive body of scientific evidenced derived from these studies, published in peer-reviewed journals, including the New England Journal of Medicine and the Journal of the American Medical Association, supports the potential impact of our RNC tobaccos. Smokers who opt for our RNC cigarettes in clinical studies experienced reductions in smoking (measured in cigarettes per day), nicotine exposure, and dependence, coupled with minimal or no evidence of compensatory smoking or withdrawal and without serious adverse events. A list of ongoing as well as completed and published clinical studies using cigarettes made with our RNC tobaccos may be viewed at https://www.xxiicentury.com/vln-clinical-studies/published-clinical-studies-on-very-low-nicotine-content-vlnc-cigarettes. These studies showed that smokers who used for RNC cigarettes increased their frequency of smoke-free days and doubled their efforts to quit smoking. SPECTRUM^® research cigarettes persist as a key component in various independent scientific studies, aimed at substantiating the public health advantage acknowledged by the FDA and other entities. This advantage is associated with the FDA’s proposal to establish a national product standard requiring that all cigarettes incorporate “minimally or nonaddictive” levels of nicotine. Notably, our SPECTRUM^® variable nicotine research cigarettes serve as the precursor to our innovative VLN^® cigarette products.

Our conviction in the significant global market potential of our proprietary RNC cigarettes, marketed under the brand name VLN^®, is rooted in substantial data. As outlined in a 2021 report by the Foundation for a Smoke Free World, global full nicotine cigarette retail sales reached an estimated 84.1% or $612 billion of the $853 billion market for products that contain nicotine. The statistics from the CDC and the World Health Organization (“WHO”) has reported that tobacco use causes more than 6highlight a substantial market, with over 1 billion global adult smokers and 30 million deaths per year globally and direct health care and lost productivity costs of more than $1.4 trillion per year around the world. The CDC website also states that in 2015, nearly 7 in 10 (68%) adult cigarette smokers wanted to stop smoking and more than 5 in 10 (55.4%) adult cigarette smokers had made a quit attempt in the prior year.U.S.

Despite the prevalence of various nicotine delivery systems, including vaping, our belief is that smokers are actively seeking alternatives to traditional addictive combustible cigarettes. Our confidence is reinforced by consumer perception studies, in which 60% of adult smokers expressed a likelihood to adopt VLN^® as their preferred choice. Importantly, VLN^® is currently available in the market for sale, positioning itself as a viable option for smokers seeking reduced harm alternatives.

Our proprietary VLN tobacco, which grows^® cigarettes are currently available in a large number of top U.S. markets and present a groundbreaking alternative with 95% less nicotine content than conventional cigarettes. Maintaining a familiar combustible product format, VLN^® replicates the conventional cigarette smoking experience, encompassing sensory and experiential elements such as taste, scent, smell, and the familiar “hand-to-mouth” behavior.

The tobacco used in conventionalVLN^® cigarettes has been shown in published, independentis meticulously crafted to contain a targeted 0.5 milligrams of nicotine per gram of tobacco, a threshold recognized by the FDA, based on clinical studies, as being associated with reductions in“minimally or non-addictive.” We believe the reduced nicotine content of VLN^® can establish a dissociation between the act of smoking nicotine exposure, and nicotine dependence, with minimal evidencethe rapid introduction of nicotine withdrawal, compensatory smoking, or serious adverse events. Theseto the bloodstream, which extensive clinical data indicates helps smokers to smoke less and potentially quit.

The results of numerous completed studies which were conducted by independent researchers and paid for by United States federal government agencies, provide a foundation ofserve as an independent scientific supportfoundation for recentlythe FDA’s advanced notice of proposed changes in the regulatory approachrule-making (“ANPRM”) on July 28, 2017, which announced FDA’s intention to institute a new rule to require that all combustible cigarettes sold in the United States contain only minimally or non-addictive levels of nicotine, also referred to addressas the harm caused by smoking combustible tobacco cigarettes. We believe these changes will significantly benefit us in the future as discussed in greater detail below.

Our Very Low NicotineComprehensive Plan for Tobacco and Nicotine Regulation. Although this proposal has not yet been finalized or adopted by the FDA, Mandatethe announcement supported our decision to Require Minimallysubmit and seek modified risk orders under MRTP applications (“MRTPAs”) for our VLN products. On December 23, 2021, we received authorization to market our VLN^® cigarettes as a Modified Risk Tobacco Product (“MRTP”) using certain modified exposure claims.

We initiated efforts to offer our proprietary VLN^® cigarettes for domestic sale after receiving the modified risk granted order. Furthermore, we continue to plan to evaluate opportunities to make VLN^® available for international sale or Non-Addictive Levelslicensing by third parties.

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Proposed Government Mandates Limiting the Nicotine in all Cigarettes in the United StatesCigarettes.

The Family Smoking Prevention and Tobacco Control Act of 2009 (“Tobacco Control Act”) granted theIn a press release dated June 16, 2010, Dr. David Kessler, a former FDA authority over the regulation of all tobacco products in the United States. While the Tobacco Control Act prohibits the FDA from banning cigarettes outright, it allowsCommissioner, advocated for swift action by the FDA to require the reduction of nicotine or any other compound in tobacco and cigarette smoke.

In a June 16, 2010 press release, Dr. David Kessler, the former FDA Commissioner, recommended that “the FDA should quickly move to reducedecrease nicotine levels in cigarettes to non-addictive levels. If we reduce the level ofthresholds. Dr. Kessler emphasized that lowering the stimulus we reducelevel would consequently diminish cravings, deeming it the craving. It is the ultimate“ultimate harm reduction strategy.” Shortly thereafter, in aWashington Post newspaper article, Dr. Kessler said thatproposed reducing the amount of nicotine content in a cigarette should dropcigarettes from aboutapproximately 10 milligrams to less than 1 milligram.

Since 2011, the FDA, NIDA and other federal government agencies in the United States have invested more than $100 million in independent clinical studies utilizing our proprietary tobaccos, with such studies being conducted by scientists at many well-known locations, including the Mayo Clinic, the MD Anderson Cancer Center at the University of Texas, the Johns Hopkins University, Duke University, the University of Pittsburgh, the University of Minnesota, the University of Vermont, the University of California, and others. Since 2011, we have provided more than 24 millionSPECTRUM research Notably, VLN^® cigarettes for use in these independent scientific clinical studies.

The results of these independent clinical studies utilizing our proprietary tobaccos have been published in peer-reviewed articles in well-respected publications, including the October 2015 issue ofThe New England Journal of Medicine (N Engl J Med 2015; 373:1340-1349), which published the results of a clinical trial funded by NIDA and the FDA’s Center for Tobacco Products (“CTP”) that was a double-blinded, parallel, randomized clinical trial involving 840 smokers at ten locations that was led by the Center for the Evaluation of Nicotine in Cigarettes. The authors of the article inThe New England Journal of Medicine concluded that the proprietary VLN cigarettes created and supplied by us for such study were “associated with reductions in smoking, nicotine exposure, and nicotine dependence, with minimal evidence of nicotine withdrawal, compensatory smoking, or serious adverse events.” A list of the completed, independent clinical studies that used our proprietary VLN tobacco can be found on our website at http://www.xxiicentury.com/published-clinical-studies/. A list of the on-going, independent clinical studies on ourSPECTRUM research cigarettes can be found on our website at http://www.xxiicentury.com/on-going-clinical-studies/. Information on our website is not incorporated into this Annual Report on Form 10-K.

contain between 0.3 to 0.7 mg/g.

In 2015, the World Health Organization (“WHO”)WHO Study Group on Tobacco Product Regulation publishedissued an advisory note onendorsing a global nicotine reduction strategy, of limitingurging limitations on the sale of cigarettes to brands with a nicotine content that is not sufficient to lead to theinsufficient for addiction development and/or maintenance of addiction. The WHO report referred to such cigarettes as “reduced-nicotine” cigarettes. The WHO report stated that conventional cigarettes – even those brands that deliver low nicotineyields as measured by machine smoking under the conditions of the International Organization for Standardization (ISO) – contain addicting levels of nicotine, but the nicotineyields are reduced as a result of many cigarette design features, including ventilated filters, with the result being that users puff ISO low-nicotine-yield cigarettes more intensely (i.e. they draw larger puffs more frequently than the conditions prescribed by machines) to obtain addicting levels of nicotine. However,maintenance. Although the WHO report found that, unlike conventional cigarettes,reduced-nicotinecontent cigarettes can limit the addictiveness of the product, as the very low nicotinecontentin the tobacco cannot deliver addicting levels of nicotine. The WHO study stated that published research shows that switching from conventional cigarettes to cigarettes with a reduced-nicotine content of 0.4 mg/g of cigarette tobacco filler doesdid not significantly increase craving or withdrawal symptoms and does not result in compensatory smoking (such as more intense smoking or smoking more cigarettes per day). The WHO study further stated that no specific amount of nicotine has yet been identified by the WHO as thespecify absolute threshold for addiction; however, the WHO reported stated thataddiction, it issuggested a likely to bethreshold equal to or possibly less than 0.4 mg/g of dry cigarette tobacco filler.

The WHO report cites 22nd Century’s Our proprietarySPECTRUM^® research cigarettes were cited in the WHO study as meeting such athis low nicotine level of nicotine ofcriterion at 0.4 mg/g of cigarette tobacco filler.

The WHO report concluded that the evidence indicates that settingestablishing a maximum allowable nicotine content for all cigarettes could (i) reduce the acquisitioninitiation of smoking and progression to addiction, (ii) reduce thedecrease smoking prevalence of smoking in a proportion ofamong addicted smokers as a result ofthrough behavioral extinction, and (iii) increase quit rates while reducing relapse rates. Emphasizing population-wide benefits, the rate of quitting and reducereport highlighted the number of smokers who relapse, and (iv) increase the development, availability, and use of alternative forms of nicotine, e.g. smokeless tobacco products, nicotine aerosol products, and medicinal nicotine, which have potential adverse health effects, including maintenance of addiction, but less than those of combusted products or conventional cigarettes. The WHO report stated that population benefits will result from decreased use ofdecrease in combusted tobacco byuse among current cigarette smokers and from the prevention of non-smokers, particularly young people, from developing addiction of non-smokers to cigarettes, especially among young people.

cigarettes.

On July 28, 2017, FDAin connection with the ANPRM then-FDA Commissioner Scott Gottlieb, M.D., announced the FDA’s planintention to exerciseuse its authority under the Tobacco Control Act to require that all combustible cigarettes sold in the United States must contain only minimally or non-addictive levels of nicotine. In that public announcement, FDA Commissioner Gottlieb stated that (i) the overwhelming amount of death and disease attributable to tobacco is caused by addiction to cigarettes – the only legal consumer product that, when used as intended, will kill half of all long-term users, (ii) unless this course is changed, 5.6 million young people alive today will die prematurely later in life from tobacco use, (iii) envisioning a world where cigarettes would no longer create or sustain addiction, and where adults who still need or want nicotine could get it from alternative and less harmful sources, needs to be the cornerstone of the FDA’s efforts, and (iv) tobacco use remains the leading cause of preventable disease and death in the United States, causing more than 480,000 deaths per year and direct health care and lost productivity costs totaling nearly $300 billion each year.

On August 16, 2017,TheNew England Journal of Medicine published an article by FDA Commissioner Scott Gottlieb, M.D. and Mitchell Zeller, J.D., the Director of the FDA/CTP, entitled “A Nicotine-Focused Framework of Public Health.” In this article, FDA Commissioner Gottlieb and FDA/CTP Director Zeller stated that the Tobacco Control Act gives the FDA a regulatory tool called a tobacco “product standard” that can be used to alter the addictiveness of combustible cigarettes, and that such standards may set requirements related to an ingredient or constituent in a tobacco product, or related to any other aspect of product composition, construction, or other property, and that the establishment of the right product standard could alter the addictiveness of combustible cigarettes by setting maximum nicotine levels in such products. The article further stated that Section 907 of the Food, Drug, and Cosmetic Act authorizes the FDA to establish tobacco product standards that the FDA has determined to be appropriate for the protection of the public health, with the statute specifically noting that such a standard may address nicotine yields, among other characteristics. Although the statute prohibits the FDA from requiring the reduction of nicotine yields of a tobacco product to zero, the FDA stated in this article that the FDA has clear authority to otherwise reduce nicotine levels. The FDA concluded in this article that a nicotine-limiting standard could make cigarettes minimally addictive or non-addictive, helping current users of combustible cigarettes to quit and allowing most future users to avoid becoming addicted and proceeding to regular use, and that disrupting that progression – from experimentation to regular use to tobacco-related disease and even death – could save millions of American lives. In this article, the FDA also stated that the FDA will consider peer-reviewed, scientific studies in proposing a maximum nicotine level, but that rigorous studies of Very Low Nicotine cigarettes have evaluated the potential effects of various nicotine levels on smoking behaviors and biomarkers, and findings from such studies could inform decision-making on a possible maximum nicotine level in tobacco filler. The FDA stated that, as in all matters of public health policy, the FDA will be led by the science in this important area.

On October 5, 2017, Dr. Dorothy Hatsukami, the Co-Director of the Center for the Evaluation of Nicotine in Cigarettes and a Professor of Psychiatry and Director of the Tobacco Research Programs at the University of Minnesota, publicly announced at the 5th Annual Conference on Tobacco Regulatory Science at the Vermont Center on Behavior and Health, partial results of a newly completed Phase III clinical study of 1,250-patients from all demographics over a 20-week study period in 10 study locations across the United States that compared smokers who were assigned to (i) an immediate reduction to Very Low Nicotine content cigarettes, (ii) a gradual reduction in reduced nicotine content cigarettes, or (iii) normal nicotine content cigarettes. Dr. Hatsukami publicly stated that the full results of this Phase III study are in peer review prior to publication, but that the results reflect that an immediate approach to nicotine reduction is most likely to lead to less harm. Dr. Hatsukami also publicly stated that the study data indicates compensatory smoking is less likely to occur with an immediate reduction in nicotine, and that there was a greater likelihood of more rapid smoking cessation with the immediate approach to nicotine reduction. Our Company provided all the research cigarettes used in this Phase III study.

Since 2011, the FDA, NIDA and other federal government agencies have invested more than $100 million in independent clinical studies utilizing our proprietary tobaccos, with such studies being conducted by scientists at many different and well-known clinical study centers. During that same time, we have provided more than 24 million proprietarySPECTRUM research cigarettes for use in such independent clinical studies. The results of these studies have been published in peer-reviewed articles and reflect the independent scientific support for the planned mandate by the FDA that all combustible cigarettes sold in the United States contain only minimally or non-addictive levels of nicotine. We believe this announcement marked a significant step towards reducing the addictive nature of cigarettes.

Following this announcement, on August 16, 2017, FDA Commissioner Scott Gottlieb, M.D., and Mitchell Zeller, J.D., the Director of the FDA’s Center for Tobacco Products (“FDA/CTP”), authored and titled “A Nicotine-Focused Framework of Public Health,” published in The New England Journal of Medicine. The article discussed the regulatory tool provided by the Tobacco Control Act, known as a tobacco “product standard,” which could be employed to alter the addictiveness of combustible cigarettes. While the statute prohibited reducing nicotine yields to zero, the FDA asserted its clear authority to otherwise reduce nicotine levels. The conclusion drawn was that a nicotine-limiting standard could render cigarettes minimally or non-addictive, aiding current users in quitting and preventing most future users from developing addiction. The FDA emphasized its commitment to being guided by scientific principles in shaping health policy. This commitment was reiterated in the context of addressing nicotine levels in cigarettes, underlining the importance of evidence-based decision-making.

We believe that recent political changes and perceptions towards nicotine addiction have the potential to be favorable to our business prospects from a policy priority and regulatory standpoint. Under the new leadership at the FDA and Center for Tobacco Products (“CTP”), we believe that the FDA could refocus on implementing its ground-breaking Comprehensive Plan for Tobacco and Nicotine Regulation, and specifically could renew efforts to cap the amount of nicotine in combustible cigarettes to a “minimally or non-addictive” level. We believe that the MRTP authorization and the launch of our VLN^® cigarettes could serve as a powerful catalyst supporting any such policies.

For example, on January 27, 2022, the FDA posted an update on its FDA Voices site stating that it “remains on track” with its plans to prohibit menthol in combustible tobacco products. The FDA published a proposed tobacco product standard to ban menthol as a characterizing flavor in cigarettes in April 2022. The proposed FDA rule includes a process for firms to request an exemption from the standard for specific products of certain types on a case-by-case basis, indicating “reduced nicotine” as an example of such an exemption. On August 1, 2022, we submitted public comments in support of a tobacco product standard for menthol in cigarettes.

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In June 2022, the FDA announced that the Biden-Harris Administration published plans for future regulatory action that includes the FDA’s plans to develop a proposed product standard that would establish a maximum nicotine level to reduce the addictiveness of cigarettes and certain other combusted tobacco products. On June 21, 2022, a proposed rule for a tobacco product standard for nicotine level of certain tobacco products was published in the Spring 2022 Unified Agenda of Regulatory and Deregulatory Actions.

In late October 2022, in coordination with the FDA, the National Institute on Drug Abuse (NIDA), and others, we received an order for 2.8 million variable nicotine cigarettes. We believe our research cigarettes will continue to fuel numerous independent, scientific studies that could evaluate the potential benefits suggested by the FDA and others of implementing a national standard requiring all cigarettes to contain minimally or non-addictive levels of nicotine.

The FDA rule making process continued to advance throughout 2023 on both the proposed menthol ban and the proposed reduced nicotine content standard, but announcement of an FDA proposed rule was delayed multiple times for additional public comment and analysis.

We continue to advance on our reduced nicotine technology as we believe that our next generation, non-GMO plant research is the key to commercializing our reduced nicotine content tobacco and technology in international markets where non-GMO products are preferred or where GMO products are banned. Our patented, non-GMO technology can introduce very low nicotine traits into virtually any variety of tobacco, including bright, burley, and oriental. We have successfully applied our non-GMO technology to bright and burley varieties of tobacco and have initiated commercial growing activities for our non-GMO bright and burley reduced nicotine varieties. We anticipate commercial production of our American blend cigarettes featuring a mix of bright and burley VLN^® tobacco varieties to begin in 2024.We believe that our RNC tobacco technology and our production and delivery of more than 24 millionmillions of proprietary variable nicotine research cigarettes since 2011 reflects thatdemonstrates the technical achievability of the FDA’s plan to dramatically reduce nicotine in cigarettes is technologically feasible. Since our proprietary VLN tobacco has been the subject of numerous completed and on-going clinical studies, we are investigating the potential use of our VLN tobacco in our own products that will be intended to comply with the new FDA regulations, as well as we are investigating the potential license of the use of our VLN tobacco by third-parties. cigarettes.

In the United States, we will focusare focused on working with the FDA on its efforts to reduce nicotine reduction mandate and on submitting a Modified Risk Tobacco Product application for ourBRAND AVery Low Nicotinein cigarettes. Outside the United States, we will focus on working with WHO-member countries that desire to utilize our proprietary VLNRNC tobacco to implement the WHO recommendation of limiting the sale of cigarettes to brands with a nicotine content that is not sufficient to lead to development and/or maintenance of addiction.

Products

BRAND A Very Low Nicotine Cigarettes

The tobacco in ourBRAND A Very Low Nicotine cigarettes contains approximately 95% less nicotine than conventional cigarette brands. The strategy behindBRAND A is to reduce smokers’ exposure to nicotine, which is the primary addictive component of cigarettes.

We are working to resubmit a Modified Risk Tobacco Product application toProducts (MRTP)

The Family Smoking Prevention and Tobacco Control Act of 2009 (“Tobacco Control Act”) granted the FDA to obtain a reduced exposure marketing authorization for ourBRAND A Very Low Nicotine cigarettes to be marketed as “less addictive” and/or containing 95% less nicotine than conventionalauthority over the regulation of all tobacco cigarettes.

products in the United States. The Tobacco Control Act further establishes procedures for the FDA to regulate the labeling and marketing of Modified Risk Tobacco Products,so-called MRTP, which includes, cigarettesamong other things tobacco products that may (i) reduce harm or the risk of tobacco-related disease or (ii) reduce or eliminate exposure to tobacco toxins and (ii) are reasonably likely to pose lower health risks, as compared to conventional cigarettes (“Modified Risk Cigarettes”).a substance. The Tobacco Control Act requiredalso includes provisions allowing the FDA to issue specific regulationssubmission and guidance regarding applications submitted to the FDA for the authorization to label and market Modified Risk Cigarettes. On March 30, 2012, the FDA issuedModified Risk Tobacco Product Applications Draft Guidance. We believe that ourBRAND A Very Low Nicotine cigarettes will qualify as Modified Risk Cigarettes.

On December 31, 2015, we submitted to the FDAof a Modified Risk Tobacco Product application requesting a reduced exposure marketing authorization from the FDA to marketBRAND A as a Modified Risk Cigarette with product labeling and advertising that states thatBRAND A has 95% less nicotine than conventional cigarettes. In December 2016, the FDA provided us with feedback on our combined Modified Risk Tobacco Product Application (“MRTPA”) and Premarket Tobacco Product Application (“PMTA”) for ourBRAND A Very Low Nicotine tobacco cigarettes. In response to the FDA’s requests, and in conjunction with additional clarifying guidance, we withdrew our existing application with the FDA in order to file a new MRTPA andtobacco product, where the PMTA with the FDA forBRAND A that will include additionalincludes scientific data and other information requested bythat demonstrates the FDA.new tobacco product is appropriate for the protection of public health.

In support of our expanded work on our revised MRTPA and PMTA for ourBRAND A Very Low Nicotine cigarettes,On December 5, 2018, we have increased the depth and experience of our scientific and regulatory team. On October 31, 2017, we hired Dr. James E. Swauger to be our new Senior Vice President of Science and Regulatory Affairs. Dr. Swauger was previously the leader of the scientific and regulatory functions at Reynolds American Inc., one of the largest tobacco companies in the United States. Dr. Swauger’s primary responsibilities with us will be to lead and oversee our scientific and regulatory affairs, plant biotechnology, research and development, and external scientific activities, including the resubmissionsubmitted to the FDA ofa PMTA and on December 17, 2019, the FDA issued a marketing order in response to our MRTPA and PMTA for ourBRAND A Very Low Nicotine cigarettes. On December 4, 2017, we hired Dr. Juan TamburrinoPMTA. While the FDA’s marketing order authorized us to be our new Vice President of Research and Development. Dr. Tamburrino was previouslymarket the head of the Plant Biotechnology Division of British American Tobacco, one of the largest tobacco companiesproducts in the world. Dr. Tamburrino will beU.S., it did not allow us to make reduced exposure claims which would indicate that the product contains 95% less nicotine. Marketing such reduced exposure claims requires the FDA to authorize an integral partMRTPA.

Because of our scientific and regulatory team workingthis, on our resubmissionDecember 27, 2018, we submitted to the FDA an MRTPA, seeking FDA authorization to market our reduced nicotine combustible cigarettes with certain reduced exposure claims. In the MRTPA, we requested authorization from the FDA to market our reduced nicotine tobacco cigarettes with certain product labeling claims under the brand name of VLN^®.

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On December 23, 2021, we secured the first and only MRTP designation for a combustible cigarette for VLN^® King and VLN^® Menthol King 95% reduced nicotine content cigarettes. The FDA authorized the marketing of VLN^® with the following reduced exposure claims: “95% less nicotine”, “Helps reduce your nicotine consumption”, and “Greatly reduces your nicotine consumption,”. The FDA also required that any use of these claims be accompanied by the statement that the product “Helps You Smoke Less,” which we consider an evidence-based claim supporting our products.

In previous years, we contracted with farmers to grow considerable quantities of RNC tobacco in anticipation of FDA authorization of our MRTPAMRTP and PMTAsubsequent commercial launch of VLN^® cigarettes. In January 2022, at our manufacturing facility in North Carolina, we produced the first cartons of our VLN^® reduced nicotine cigarettes, destined for ourBRAND A Very Low Nicotinecommercial sale. In April 2022, we launched VLN^® cigarettes and our continuing research and development of improved Very Low Nicotine tobacco plants.

SPECTRUM® Government Research Cigarettes

NIDA, which is a part of NIH, providesin the scientific community with controlled and uncontrolled research chemicals and drug compounds through its Drug Supply Program. In 2010, NIDA included an option to develop and produce research cigarettes with various levels of nicotine (from very low to high) in its request for proposals for a five-year contract for Preparation and Distribution of Research and Drug Products. We agreed, as a subcontractor to RTI International (“RTI”), to supply cigarettes with different nicotine contents (from very low to high) to NIDA. In August 2010, we met with officials from NIDA, FDA, RTI, CDC and the National Cancer Institute (“NCI”) to finalize certain aspects of the design of these research cigarettes. These government research cigarettes produced by us under the markSPECTRUM® have been, and continue to be, distributed by RTI for NIDA to independent researchers for scientific clinical studies. TheSPECTRUM® research cigarette contract was renewed in 2015 for an additional five years.

Since 2011, the FDA, NIDA and other federal government agencies have invested more than $100 million in independent clinical studies utilizing our proprietary tobaccos, with such studies being conducted at many well-known locations, including the Mayo Clinic, the MD Anderson Cancer Center at the University of Texas, the Johns Hopkins University, Duke University, the University of Pittsburgh, the University of Minnesota, the University of Vermont, the University of California, and others. Since 2011, we have provided more than 24 millionSPECTRUM® research cigarettes for use in these independent clinical studies, with the most recent shipment of 2.4 millionSPECTRUM® research cigarettes occurring in November 2017. TheSPECTRUM® product line consists of a series of 24 cigarette styles (11 regular and 13 menthol versions) that have 8 different levels of nicotine – from very low to high. A list of the completed, independent clinical studies on our proprietary tobaccos can be found on our website at http://www.xxiicentury.com/published-clinical-studies/. A list of the on-going, independent clinical studies on our proprietary VLN tobacco can be found on our website at http://www.xxiicentury.com/on-going-clinical-studies/. Information on our website is not incorporated into this Annual Report on Form 10-K.

X-22 Prescription Smoking Cessation Aid

X-22 is a tobacco-based botanical medical product for use as an aid to smoking cessation. OurX-22 therapy protocol calls for patients to smoke exclusively ourX-22 cigarettes over a six-week treatment period to facilitate the goal of the patient quitting smoking by the end of the treatment period.U.S. market. We believe thatX-22 the commercialization of VLN^® cigarettes made fromwill create further opportunities for us to license our proprietary VLN tobacco satisfy smokers’ cravings for cigarettes while (i) greatly reducing nicotine exposure and nicotine dependence and (ii) extinguishing the association between the act of smokingtechnology tobaccos and the rapid delivery of nicotine.X-22 involves the same smoking behavior as conventional cigarettes and, because patients are simply switching to cigarettes with a low nicotine content for 6 weeks,X-22 does not expose the smoker to any new drugs or new side effects.VLN^® brand.

VLN^® Commercialization Plan

Independent clinical studies have demonstrated that smokers who smoke cigarettes containing our proprietaryIn April 2022, we initiated VLN tobacco smoke fewer cigarettes per day resulting^® sales in significant reductions in smoke exposure, including “tar,” nicotine, and carbon monoxide. Due to the very low nicotine levels, compensatory smoking does not occur with cigarettes containing our proprietary VLN tobacco. A list of the completed, independent clinical studies that used our proprietary VLN tobacco can be found on our webiste at http://www.xxiicentury.com/published-clinical-studies/. We do not incorporate the information on our website into this Annual Report on Form 10-K.

As a result of the FDA’s announcement on July 28, 2017 to require the reduction of nicotine to minimally or non-addictive levels in all cigarettes soldmore than 150 Circle K stores in the United States,Chicago metro area through a pilot launch. After the pilot concluded and given the positive results, we do not believe that there will be a marketmade the decision to further deepen our reach in the United States for a prescription-based product consistingstate of Illinois and launch VLN^® in Colorado to more than 3,000 potential locations across the state with our network of retailers and distribution partners, including Eagle Rock Distributing Company and Creager Mercantile.

The pilot enabled us to refine our VLN tobacco because tobacco with minimally or non-addictive levels of nicotine will be mandated by the FDA in all combustible tobacco cigarettes in the United States. Accordingly, we will continue to explore opportunities outside of the United States forX-22 in markets where a prescription-based, smoking cessation product may be appropriate.

BRAND B Low-Tar-to-Nicotine Ratio Cigarettes

Using a proprietary high nicotine tobacco blend in conjunction with specialty cigarette components,BRAND B allows the smoker^® rollout strategy and helped us develop our VLN^® sales launch blueprint, an efficient, reproducible sales plan that focuses our resources to achieve a satisfactory amount of nicotine per cigarette while inhaling less “tar” and carbon monoxide. At the same time, we do not expect exposure to nicotine fromBRAND B to be significantly higher than commercially available full flavor cigarette brands. We believe smokers who desire to reduce smoke exposure, but are less concerned about nicotine, may findBRAND B beneficial.

greatest returns. In a 2001 report, entitledClearing the Smoke, Assessing the Science Base for Tobacco Harm Reduction, the Institute of Medicine (the health arm of the National Academy of Sciences) notes that a low “tar”/moderate nicotine cigarette is a viable strategy for reducing the harm caused by smoking. The report states: “Retaining nicotine at pleasurable or addictive levels while reducing the more toxic components of tobacco is another general strategy for harm reduction.”

We had previously intended to submit a Modified Risk Tobacco Product application to the FDA forBRAND B. However, as a result of the FDA’s announcement on July 28, 2017 to require thereduction of nicotine to minimally or non-addictive levels in all cigarettes sold in the United States, we no longer believe that there will be a market in the United States forBRAND B. As such, we will continue to explore opportunities outside of the United States forBRAND B in markets where that product may be appropriate.

RED SUN and MAGIC Cigarettes

Our subsidiary, Goodrich Tobacco Company, LLC (“Goodrich Tobacco”), introduced in a limited capacity two super-premium priced cigarette brands,RED SUN andMAGIC, into the U.S. market in the first quarter 2011. From the year 2011 through the year 2014, there werede minimis sales of these brands since we intentionally did not expand the marketing and distribution of these brands until after we became a subsequent participating manufacturer under the Master Settlement Agreement (“MSA”) which occurred on August 29, 2014, when the 46 Settling States under the MSA approved our acquisition of NASCO Products, LLC (“NASCO”) and NASCO became a subsequent participating manufacturer under the MSA. During the remainder of 2014, we worked to obtain approvals from regulatory agencies in all 50 States to have ourRED SUN brand listed on the state directories of tobacco products approved for sale in each such state. During 2014, we also worked withOrion, a cigarette manufacturer in Poland, to contract manufacture our proprietary tobacco products for distribution in the European Union, starting with ourMAGIC brand. In 2015, we focused our marketing efforts forRED SUN on national and regional distributors, tobacconists, smoke shops and other tobacco outlets in the United States. In 2015, we also introduced ourMAGIC cigarettes to distributors and retailers in Spain. We ceased marketing theMAGIC brand in Spain when the European Union changed its packaging laws to no longer allow companies to print the nicotine yield on cigarette packs. In response to the planned mandate by the FDA that all cigarettes sold in the United States contain only minimally or non-addictive levels of nicotine, we discontinued sales in the United States of ourRED SUN brand as of December 31, 2017. We will continue to explore opportunities outside of the United States for ourRED SUN andMAGIC brands in markets where such products may be appropriate.

Hemp

Our primary mission in hemp/cannabis is to develop proprietary hemp strains for potential important new medicines and agricultural crops. Our current activities involve work with only legal hemp in full compliance with federal and state laws. The hemp plant and the cannabis/marijuana plant are both part of the samecannabis sativa genus/species of plant, except that hemp has less than 0.3% dry weight content of THC and is legal under federal and state laws. The same plant with a higher THC content is cannabis/marijuana, which is legal under certain state laws, but which is not legal under federal law. The similarities between these plants can cause confusion. Our activities with fully legal hemp have sometimes been incorrectly perceived as us being involved in federally illegal cannabis/marijuana. This is not the case. We work only with legal hemp in full compliance with federal and state laws.

We currently sponsor hemp research in Canada and in the United States. In Canada, we conduct sponsored research on hemp through Botanical Genetics, which is our wholly-owned subsidiary and which was incorporated to facilitate an equity investment in Anandia Laboratories, Inc. (“Anandia”), a plant biotechnology company based in Vancouver, British Columbia, Canada. On September 15, 2014, Botanical Genetics was granted a sublicense by Anandia to 2 patents and 23 patent applications relating to genes in the hemp/cannabis plant that are required for the production of cannabinoids, the “active ingredients” in the hemp/cannabis plant, with such sublicense being exclusive in the United States and co-exclusive with Anandia everywhere else in the world, except Canada where Anandia has retained exclusive rights. The Anandia sublicense continues through the life of the last-to-expire patent, which is expected to be in 2035. Under licenses granted by the Canadian government to Anandia, we conduct research and development on unique plant varieties of hemp at Anandia, such as (i) hemp plants with low to no amounts of THC for the legal hemp industry, and (ii) hemp plants with high levels of CBD and other non-THC cannabinoids for the legal medical cannabinoid markets. Anandia and 22nd Century conduct all activities in this scientific collaboration within the parameters of all applicable licenses and permits held by Anandia for such work. The agreements with Anandia grant us exclusive rights to commercialize in the United States (and co-exclusive with Anandia everywhere else in the world outside of Canada and the United States) all results of this collaboration in consideration of royalty payments by us to Anandia.

On March 23, 2017, we publicly announced that our strategic collaboration with Anandia had resulted in new industrial hemp plants that have zero (-0-) amounts of THC (“ZERO-THC”). We believe that our ZERO-THC hemp plants are a potential solution to one of the biggest challenges facing the legal hemp industry because, currently, hemp crops that grow with THC levels above the legal limit of 0.3% THC are required to be destroyed and hemp farmers cannot obtain crop insurance to protect against this risk. However, our ZERO-THC plants offer a potential solution to this risk because our ZERO-THC hemp plants will not develop THC above the legal limits for hemp.

In the United States, we conduct sponsored research on hemp at the University of Virginia (“UVA”). In December 2016, we entered into a sponsored research agreement with UVA and an exclusive license agreement with the University of Virginia Patent Foundation d/b/a University of Virginia Licensing & Ventures Group (“UVA LVG”). Over the ensuing three years, we will invest approximately $1,000,000 in this scientific collaboration. The goals of the research agreement include: (i) creating unique industrial hemp plants with guaranteed levels of THC below the legal limits that define hemp for optimal growth in Virginia (thus eliminating the risk to growers of having to destroy non-conforming hemp crops), (ii) optimizing other desirable hemp plant characteristics to improve the plant’s suitability for growing in Virginia and in similar legacy tobacco regions of the United States, (iii) utilizing high-value medical cannabinoid hemp varieties and specialized cannabinoid extraction processes for use in human theraputics, and (iv) using our unique hemp plants for phytoremediation to clean up and reclaim polluted soils.

On October 19, 2017,November 2022, we announced that we had successfully completedintend to expand our hemp field trialsVLN^® launch to Arizona, New Mexico, and Utah, and announced plans to expand into up to 18 U.S. states over the following 12 months. In January 2023 we announced distribution partnerships with UVA. The 22nd Century - UVA hemp field trials used multiple oilCore-Mark International and fiber varieties of hemp. The Company’s hemp harvest with UVA identified proprietary varieties of hemp that have excellent agronomic properties for growth in Virginia. We are working with UVA on expanded plantings in 2018Eby-Brown Company, two of the most promising varieties of our proprietary hemp plants to optimize plant growthlargest convenience store distributors in the legacy tobacco region of the United States. UVAU.S., providing access to retailers in virtually every key U.S. market.

By concentrating and 22nd Century conduct all activities in this scientific collaboration within the parameters of stategoing deeper into select geographies and federal licensesmarkets with high cigarette volume and permits held by UVAlarge adult smoker populations, we believe we can capture greater market share effectively. We also plan to target states where there is a tax exemption for such work. The agreements with UVA and UVA LVG grant us the exclusive rights to commercialize all results of the collaboration in consideration of royalty payments by us to UVA LVG.

We are also expanding our hemp activities in our home State of New York after the many public announcements by New York Governor Andrew Cuomo that New York State (“NYS”) intends to become a leading grower and producer of hemp and hemp-derived products. On October 30, 2017, we obtained a NYS hemp research and grower license to support our expanding hemp activities in New York.

MRTP. As of December 31, 2017, there were (i) 34March 1, 2024, we have secured regulatory authorizations to sell VLN^® in 48 states in the United States and the District of Columbia that have legalized hemp, (ii) 29 states in the United StatesColumbia. At year-end 2023, our phased rollout strategy, progressing state by state and the District of Columbia that have laws and/or regulations that recognize, in one form or another, legitimate medical uses for cannabis/marijuana and consumer use of cannabis/marijuana in connection with medical treatment, and (iii) 9 states in the United States and the District of Columbia that have legalized cannabis/marijuana for adult recreational use. Many other states are considering similar legislation. Conversely, under the federal Controlled Substance Act (the “CSA”), the policies and regulations of the federal government and its agencies are that cannabis/marijuana has no medical benefit andregion by region, had placed VLN into a range of activities are prohibited, including cultivation, possession, personal use and interstate distribution of cannabis/marijuana. In the event the U.S. Department of Justice (the “DOJ”) begins strict enforcement of the CSA in states that have laws legalizing medical and/or adult recreational cannabis/marijuana, there may be a direct and adverse impact to any future potential business or prospects that we may have in the cannabis/marijuana business. However, our current activities involve only work with legal hemp, which would continue since our hemp activities are permitted under applicable federal and state laws, rules, and regulations.

Intellectual Property

Our intellectual property enables us to decrease or increase the level of nicotine and other nicotinic alkaloids in tobacco plants and the levels of cannabinoids in hemp/cannabis plants through genetic engineering and plant breeding. The basic techniques include, but are not limited to, those that are used in the production of genetically modified (“GM”) varieties of other crops, which are also known as “biotech crops.”

We have extensive patent protection and exclusive rights covering tobacco plants with altered nicotine content produced from modifying expression of certain genes in the tobacco plant, including NBB, QTP, A622, MPO and several transcription factor genes, and tobacco products produced from these plants. With the exception of the QTP patent family that will expire in 2018, the majority of our patent families related to nicotine biosynthesis will expire between 2021 and 2034, with certain extensions of terms in the U.S. applications resulting from patent term adjustments at the U.S. Patent and Trademark Office. (A “patent family” is a set of patents granted in various countries to protect a single invention.).

The creation and production of unique tobacco plants with agronomic traits of Very Low Nicotine levels, with sufficiently high germination rates, and sufficiently large plant yields at harvest, among many other desirable qualities, are necessary for the plants to be sufficiently reliable to be planted at commercial scale. The expiration of the QPT patent family in 2018 will provide third-parties with the freedom to target the QPT gene in the tobacco plant, but the targeting of the QPT gene alone does not mean that a third-party will be successful in creating a tobacco plant with altered levels of nicotine. The freedom to target the QPT gene means that a third-party may conduct scientific experiments to try to discover how to alter or affect the QPT gene in ways that may or may not result in a change in nicotine levels in the tobacco plant. If a third-party is subsequently able to learn, over time, how to utilize the QPT gene to alter nicotine levels in the tobacco plant, then such third-party would still need to develop and create a unique tobacco plant withvery low levels of nicotine (not just a “reduced nicotine” plant), which would involve, among many other things, multiple plantings over multiple generations of the plants to try to create stable and reliable Very Low Nicotine plants, with no assurance that any third-party could be successful in such efforts. However, if a third-party is able, over time, to develop a tobacco plant with very low levels of nicotine, then such third party would still need to develop a Very Low Nicotine plant with sufficiently high germination rates and sufficiently large plant yields at harvest for the plant to be sufficiently reliable to be planted in large quantities to support its use at commercial scale, which would again involve, among many other things, multiple plantings over multiple generations of the plants to determine the reliability and stability of the germination rates and plant yields at harvest of such plants.

While third-parties may desire to engage in experiments with the QPT gene, we already have proprietary VLN tobacco with germination rates, plant yields at harvest, and other desirable qualities that are acceptable to us for the plant to be sufficiently reliable to be planted by us at commercial scale. We have providedstore footprint spanning more than 24 million research cigarettes containing our proprietary VLN tobacco that was grown under strict contracts with our growers and then processed and finished into cigarettes at our factory. Thus, we believe that our VLN tobacco has the agronomic qualities that are sufficient to support its use5,000 stores in a commercial scale product. We are also developing our next-generation VLN tobacco to continue to maintain our competitive advantage in being a unique provider of VLN tobacco to third-parties that may desire to utilize it in their finished tobacco products.26 states.

In September 2014, we entered into a SublicenseTobacco Master Settlement Agreement with Anandia Laboratories, Inc. (the “Anandia Sublicense”). Under the terms of the Anandia Sublicense, we were granted an exclusive sublicense in the United States and a co-exclusive sublicense in the remainder of the world, excluding Canada, to 2 U.S. patents and 23 patent applications relating to genes in the hemp/cannabis plant that are required for the production of cannabinoids, the “active ingredients” in the hemp/cannabis plant. The Anandia Sublicense continues through the life of the last-to-expire patent, which is expected to be in 2035. As a plant biotechnology company, our entry into the legal hemp markets is a natural evolution of our activities in a plant that has important research and commercial value and applications. Under licenses granted by the Canadian government to Anandia, we conduct research and development on unique plant varieties of hemp at Anandia, such as (i) plants with low to no amounts of THC for the legal hemp industry, and (ii) plants with high levels of CBD and other non-THC cannabinoids for the legal medical cannabinoid markets.

In December 2014, we entered into a Purchase Agreement with the National Research Council of Canada (“NRC”) to acquire certain patent rights that we had previously licensed from NRC. Under the terms of the NRC Purchase Agreement, we agreed to pay NRC a total amount of $1,213,000, of which a portion was paid in cash at the closing on December 23, 2014 and with the remaining balance of such amount being paid by us to NRC in installment payments over a three-year period. We made the final installment payment to NRC in a timely manner on December 22, 2017. We do not owe any further amounts to NRC.

We own various registered trademarks in the United States and around the world. We also have exclusive plant variety rights in the United States (plant variety protection certificates are issued by the U.S. Department of Agriculture (“PVP”)) and Canada. A PVP certificate prevents anyone other than the owner/licensee from planting, propagating, selling, importing or exporting a plant variety for twenty (20) years in the U.S. and, generally, for twenty (20) years in other member countries of the International Union for the Protection of New Varieties of Plants, known as UPOV, an international treaty concerning plant breeders’ rights. There are currently more than 70 countries that are members of UPOV. Our current VLN tobacco is protected by PVP and our patent portfolio.

Licensing

We have been in negotiations with various parties in the tobacco, pharmaceutical, and hemp/cannabis industries for licensing our technology and proprietary plants and products. We believe that the FDA’s planned action to reduce nicotine in combustible cigarettes in the United States will increase opportunities for us to potentially license our VLN tobacco technology and plants to third-parties in the United States. Further, if the tobacco laws in foreign countries change in ways that are consistent with the WHO recommendation and that are similar to the FDA’s planned actions on reducing nicotine in cigarettes in the United States, we believe that international licensing opportunities relating to our VLN tobacco technology and plants will increase substantially.

On September 25, 2017, we announced that the Research License and Commercial Option Agreement, dated October 1, 2013 (the “BAT Research Agreement”), between us and British American Tobacco (Investments) Limited (“BAT”), a subsidiary of British American Tobacco plc, had ended, with BAT thereafter no longer having any rights with respect to any intellectual property or any other assets of our Company. We believe that the ending of the BAT Research Agreement was beneficial for us because we regained sole control over all rights to our intellectual property and we are no longer subject to the low monetary payments that would have resulted under the BAT Research Agreement. We believe that we have greater opportunities to negotiate significantly more favorable transactions relating to our VLN tobacco technology and plants in today’s market, especially after the FDA announcement in July 2017 of its intent to mandate nicotine reductions in combustible cigarettes, as compared to 2013 when we entered into the BAT Research Agreement. We are also now in a much stronger financial position as compared to 2013, which we believe will enable us to negotiate licensing transactions from a position of strength as compared to our much weaker financial position in 2013.

We also believe that our unique hemp plants, including our ZERO-THC hemp plants, will be highly desirable in the United States. Our ZERO-THC hemp plants can be a potential solution to one of the biggest challenges facing the legal hemp industry because, currently, hemp crops that grow with THC levels above the legal limit of 0.3% THC are required to be destroyed and hemp farmers cannot obtain crop insurance to protect against this risk. However, our ZERO-THC hemp plants can be a potential solution to this risk since our ZERO-THC hemp plants will not develop THC above legal limits for hemp. We are also developing high-value medicinal cannabinoid varieties of hemp and specialized cannabinoid extraction processes for use in human therapeutics, as well as the use of our unique hemp plants for phytoremediation to clean up and reclaim polluted soils. We believe that the many uses of legal hemp in the United States and the continued growth of the hemp industry in the United States will result in hemp business opportunities and hemp licensing opportunities for us for our unique hemp plants and the cannabinoid extracts therefrom.

Research and Development

Since our inception, the majority of our research and development (“R&D”) efforts have been outsourced to highly qualified groups in their respective fields. Since 1998, we have had multiple R&D agreements with North Carolina State University (“NCSU”) and others resulting in exclusive worldwide licenses to various patented technologies. We have utilized the same model employed by many public-sector research organizations, which entails obtaining an exclusive option or license agreement to any invention arising out of funded research. In all cases, we fund and control all patent filings as the exclusive licensee. This model of contracting with public-sector researchers has enabled us to control R&D costs while achieving our desired results, including obtaining exclusive intellectual property rights relating to our outsourced R&D.

In August 2016, we opened our own laboratory on the Buffalo Niagara Medical Campus in Buffalo, New York where we are conducting our own proprietary research and development activities in tobacco and hemp. On October 30, 2017, we obtained a New York State hemp research and grower license to support our expanding hemp activities in New York.

In December 2016, we entered into a sponsored research agreement with the University of Virginia (“UVA”) and an exclusive license agreement with the University of Virginia Patent Foundation d/b/a University of Virginia Licensing & Ventures Group (“UVA LVG”) pursuant to which we will invest approximately $1,000,000 over a three-year period with UVA to create unique industrial hemp plants with guaranteed levels of THC below the legal limits and to optimize other desirable hemp plant characteristics to improve the plant’s suitability for growing in Virginia and other legacy tobacco regions in the United States. This work with UVA will also involve the development and study of medically important cannabinoids to be extracted by UVA from our unique hemp plants and the use of our unique hemp plants for phytoremediation to clean up and reclaim polluted soils.

On October 19, 2017, we announced that UVA had completed its first successful harvest of our hemp plants and identified several promising hemp varieties that could form the foundation for commercial hemp production throughout the legacy tobacco regions of the United States. The 22nd Century-UVA hemp field trials used multiple oil and fiber varieties of hemp. Our hemp harvest with UVA identified proprietary varieties of hemp that have excellent agronomic properties for growth in Virginia. We intend to use the most promising hemp varieties for expanded hemp plantings with UVA in Virginia in 2018. We are also working with UVA on the development of high-value medicinal cannabinoid varieties of hemp and specialized cannabinoid extraction processes for use in human therapeutics. We incurred $297,710 of expenses for the R&D agreement at UVA for the year ended December 31, 2017. UVA and 22nd Century are conducting all activities in this scientific collaboration within the parameters of state and federal licenses and permits held by UVA for such work. The agreements with UVA and UVA LVG grant 22nd Century exclusive rights to commercialize all results of the collaboration in consideration of royalty payments by our Company to UVA LVG.

We committed to an R&D agreement with NCSU relating to nicotine biosynthesis in tobacco plants and incurred $162,408 in R&D expenses for the period from February 2014 through January 2016. We extended the agreement through January 31, 2017 at an additional cost of $85,681. During the years ended December 31, 2017 and 2016, we expensed $7,140 and $78,541, respectively, relating to this extended R&D agreement. We extended and amended our R&D agreement with NCSU as of February 13, 2018 to continue our research and development activities with NCSU relating to very low nicotine tobacco plants for a cost of approximately $88,000.

During the years ended December 31, 2017, 2016, and 2015, we incurred total R&D expenses of $3,366,468, $2,340,958, and $1,571,365 respectively.

MSA Membership

In September 2013, we entered into a Membership Interest Purchase Agreement (the “NASCO Acquisition”) to purchase all of the issued and outstanding membership interests of NASCO, a federally licensed tobacco product manufacturer and subsequent participating manufacturer under the Master Settlement Agreement (“MSA”) (the “NASCO Acquisition”). The MSA is an accord reached in November 1998 between the State Attorneys General of 46 states, five U.S. territories, the District of Columbia and the five largest tobacco companies in the United States concerning the advertising, marketing and promotion of tobacco products. The MSA also set standards for, and imposes restrictions on, the sale and marketing of cigarettes by participating cigarette manufacturers. On August 29, 2014, we entered into an Amended Adherence Agreement with the 46 Settling States under the MSA pursuant to which the Company was approved to acquire NASCO and become a subsequent participating manufacturer under the MSA. On that same date, we closed the NASCO Acquisition and became a subsequent participating manufacturer under the MSA. NASCO has since been aour wholly-owned subsidiary of our Company.subsidiary.

Tobacco Manufacturing

We lease aour cigarette manufacturing facility and warehouse located in Mocksville, North Carolina. In 2013, we purchased certain (i) cigarette manufacturing equipment, and (ii) equipment parts, factory items, office furniture and fixtures, vehicles and computers from the bankruptcy estate of PTM Technologies, Inc. (“PTM”) for approximately $3.22$3.2 million.

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The facility was primarily in a pre-manufacturing stage during 2014 as we sought approval during that time for us to become a subsequent participating manufacturer under the MSA. SinceOn August 29, 2014, the Company has beenwe became a subsequent participating manufacturemanufacturer under the MSA. Since 2015, we have manufactured and sold ourSPECTRUM^{® government} variable nicotine research cigarettes, together with a third-party MSA cigarette brand, and severalas well as third-party filtered cigar brands and MSA-compliant cigarette brands, at our factory in North Carolina.

OurThe strategic acquisition of our factory has allowed us to become vertically integrated so that we can control production priorities/timing and maintain the required high quality of our products, including ourSPECTRUM^® research cigarettes. Incigarettes and our MRTP-designated VLN^® brand cigarettes featuring 95% less nicotine than the future, our factory will also allow us to produce our own VLN cigarettetop 100 leading brands sold in the event they comply with the FDA mandateUnited States. In January 2022, our cigarette manufacturing facility began production of VLN^® King and VLN^® Menthol King cigarettes. With high-speed manufacturing capabilities we continue to attract additional CMO business to absorb our manufacturing overhead and help keep our unit cost profile low.

In 2023, we leased additional warehouse space in Winston-Salem, North Carolina. This bonded and temperature conditioned space will further support VLN^® growth and provide additional distribution opportunities for reduced nicotine in cigarettes, as well as ourBRAND A Very Low Nicotine cigarettes if the FDA approves our MRTPA and PMTA filings forBRAND A.customers.

Tobacco Sources of Raw Materials

We obtain a large portion of our reduced nicotine tobacco leaf from farmersthird party-growers, primarily in multiple states in the United States thatwho are under direct contracts with us. These contracts prohibit the transfer of our proprietary tobaccos, seeds and plant materials to any other parties.party. We purchase the balanceconventional tobacco destined for contract manufacturing operations through third parties.

Research & Development (R&D) & Intellectual Property (IP)

Tobacco R&D

Since our inception, most of our research and development (“R&D”) efforts have been outsourced to highly qualified groups in their respective fields. Since 1998, we have had multiple R&D agreements with North Carolina State University (“NCSU”) and others resulting in exclusive worldwide licenses to various patented technologies. We have utilized the same model employed by many public-sector research organizations, which entails obtaining an exclusive option or license agreement to any invention arising out of our funded research. In all such cases, we fund and control all patent filings as the exclusive licensee. This model of contracting with public-sector researchers has enabled us to control R&D costs while achieving our desired results, including obtaining exclusive intellectual property rights relating to our outsourced R&D.

On June 22, 2018, we entered into an amendment to our existing license agreement with NCSU under which we exclusively licensed several bright and burley tobacco plant lines with Very Low Nicotine Content that are not genetically modified (non-GMO) plants. The amendment provided for us to pay NCSU a total exclusive license fee of $1.2 million. We will also pay running royalties to NCSU based on a portion of the net sales revenue received by us from sales of products that contain any portions of the plant materials that have been received by us from NCSU.

On October 22, 2018, we entered into a license agreement with the University of Kentucky (“UK”) to license on a non-exclusive basis a next-generation very low nicotine content burley tobacco plant lines that are not genetically modified (non-GMO) plants. The UK license agreement provided for us to pay UK a total license fee of $1.2 million. We will also pay running royalties to UK based on a portion of the net sales revenue received from sales of products that contain any portions of the plant materials that have been received from UK.

On December 1, 2021, we relocated our laboratory from Buffalo, New York to Rockville, Maryland, where we were conducting our own proprietary research and development activities in tobacco. In February 2024, we relocated our laboratory activities to our Mocksville, NC manufacturing facility. This reduces the fixed cost of our research and development activities, plus provides us an advantage with the proximity to our factory and NCSU.

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In 2022, our R&D collaboration with NCSU delivered the proof of concept and field data for a new gene combination (non-GMO) to reduce nicotine below 95%. This unique gene combination enables the production of a better-quality leaf and an increase in yield. In January 2022, a utility patent to protect the new combination was filed. Our exclusive NCSU collaboration also yielded proof of concept and field data for Oriental lines with a 90-95% nicotine reduction. These results will give us the option in the future to produce VLN cigarettes that comprise burley, oriental, and bright tobacco thus improving overall quality. In addition, this year we extended our VLN production field trial to include new burley and flue-cured VLN (non-GMO).

We are currently developing new versions of our RNC cigarettes utilizing these non-GMO tobacco lines for future commercialization in the U.S. and globally.

Tobacco IP

Our intellectual property enables us to alter the level of nicotine and other nicotinic alkaloids in tobacco plants through third parties. As we prepare forgenetic engineering and modern plant breeding. The basic techniques include, but are not limited to, those that are used in the anticipated increased need for our proprietary VLNproduction of genetically modified and gene-edited varieties of other crops, which are also known as “biotech crops.”

We have extensive patent protection and exclusive rights covering tobacco plants with altered nicotine content produced by modifying the expression of genes that control the biosynthesis of nicotine in the tobacco plant. Our patent families related to nicotine biosynthesis are expected to expire between 2026 and 2043, with certain extensions of terms in the U.S. applications resulting from patent term adjustments at the U.S. Patent and Trademark Office (a “patent family” is a set of patent applications and patents, filed in various countries, that relate to at least one common earlier application).

Plant variety protection (“PVP”) certificates are issued in the United States by the U.S. Department of Agriculture. A PVP certificate prevents anyone other than the owner/licensee from planting, propagating, selling, importing, or exporting a plant variety for twenty (20) years in the eventU.S. and, generally, for twenty (20) years in other member countries of the FDA mandatesInternational Union for the Protection of New Varieties of Plants, known as UPOV, an international treaty concerning plant breeders’ rights. There are currently more than 70 countries that all combustible cigarettes contain only minimally or non-addictive levelsare members of nicotine,UPOV. Our current RNC tobaccos are protected by our patent portfolio.

In addition to our patents, patent applications, and PVP certificates, we intend to increase the amount of tobacco leaf we obtain directly from farmers under contract, bothown various registered trademarks in the United States and in foreign countries.

We likewise grow hemp under contractsaround the world. In November 2023, we signed an additional reduced nicotine content technology license with farmers that prohibitNCSU, providing additional modes of efficiently producing reduced nicotine content tobacco plants and extending our IP portfolio. This license will provide exclusive rights to the transfer of our proprietary seeds and plant materials to other parties.

technology until 2042.

Government Regulation

FDA MandateThe development, testing, manufacturing, and marketing of our products and potential products are subject to Require Minimally or Non-Addictive Levels of Nicotine in all Cigarettesextensive regulation by governmental authorities in the United States and throughout the world.

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FDA Regulation of Tobacco Products

The Family Smoking Prevention and Tobacco Control Act which became law in June 2009, granted(“Tobacco Control Act”) amended the Federal Food, Drug, and Cosmetic Act (“FDCA”) to provide the FDA with broad authority overto regulate the regulationmanufacture, quality control, advertising, promotion, labeling, packaging, storage, distribution, recordkeeping, premarket authorization, post-authorization monitoring and post-authorization reporting of all tobacco products, inincluding our tobacco products. Among its authorities, the United States.FDA requires that manufacturers of tobacco products first introduced or modified after February 15, 2007, undergo premarket review and obtain premarket authorization prior to commercialization. While the Tobacco Control Act prohibits the FDA from banning cigarettes outright, or mandating that nicotine levels be reduced to zero, it does allow the FDA to require the reduction of nicotine or other compounds in tobacco and cigarette smoke. The FDA has authority to restrict marketing and advertising, impose regulations on packaging, mandate warnings and disclosure of flavors or other ingredients, prohibit the sale of tobacco products with certain flavors or other characteristics, limit or prohibit the sale of tobacco products by certain retail establishments and the sale of tobacco products in certain packaging sizes, and seek to hold retailers and distributors responsible for the adverse health effects associated with both smoking and exposure to environmental tobacco smoke. In 2009, the Tobacco Control Act also banned all sales in the United States of cigarettes with flavored tobacco (other than menthol). As of June 2010, all cigarette companies were required to cease usinguse of the terms “low tar,” “light” and “ultra light” in describing cigarettes sold in the United States.

On July 28, 2017, FDA Commissioner Scott Gottlieb, M.D., announced the FDA’s plan to exercise its authority under the Tobacco Control Act to require that all combustible cigarettes sold in the United States contain only minimally or non-addictive levels of nicotine. The FDA will be engaging in a required rule-making process to enact such new nicotine reduction regulations. It is uncertain how long the FDA rule-making process will take to complete.

We believe this regulatory environment represents a paradigm shift for the tobacco industry and will create opportunities for us in marketingBRAND A and in licensing our proprietary technology and/or tobaccos to larger competitors.

Modified Risk Cigarettes

The Tobacco Control Act, establishes proceduresits implementing regulations and its 2016 deeming regulations establish broad FDA regulatory authority over all tobacco products and, among other provisions:

The Tobacco Control Act requires manufacturers of tobacco products to, among, other things, provide FDA with a list of ingredients added to tobacco products in the manufacturing process and register any establishment engaged in the manufacture, preparation, or processing of a tobacco product. The manufacture of products is subject to strict quality control, testing and record-keeping requirements, and continuing obligations regarding the submission of safety reports and other post-market information. The FDA has several investigatory and enforcement tools available to it, including document requests and other required information submissions, facility inspections, examinations and investigations, injunction proceedings, monetary penalties, product withdrawal and recall orders, and product seizures.

The Tobacco Control Act also authorizes FDA to promulgate regulations requiring that the methods used in, and the facilities and controls used for, the manufacture, preproduction design validation, packing, and storage of a tobacco product conform to current good manufacturing practice (“CGMP”). On March 8, 2023, FDA issued a proposed rule to promulgate such regulations. The proposed rule, if finalized, would establish requirements for manufacturers of finished and bulk tobacco products on the methods used in, and the facilities and controls used for, the manufacture, pre-production design validation, packing, and storage of tobacco product.

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Regulation of Menthol Cigarettes

In April 2022, the FDA announced proposed product standards to prohibit menthol as a characterizing flavor in cigarettes) and prohibit all characterizing flavors (other than tobacco) in cigars. In January 2023, the Semi-Annual Agenda for Fall 2022 was released in the US. Here, the Department of Health and Human Services (HHS), stated that it intended to issue a final rule on Menthol in Cigarettes. This product standard, if enacted, would prohibit menthol as a characterizing flavor in cigarettes. Although this proposed rule was expected to be finalized in August 2023, its implementation has been delayed. There has been increasing activity on the state and local levels with respect to scrutiny of menthol and flavored tobacco products. For example, in 2022, the State of California banned tobacco retailers from selling most flavored and menthol tobacco products, including VLN^® Menthol King. The state of Massachusetts has similar laws prohibiting the sale of flavored tobacco sales, including menthol cigarettes.

Premarket Tobacco Product Application (PMTA)

Certain of our products, including our low nicotine cigarettes, are marketed in the United States pursuant to a PMTA. Under Section 910(b) of the FDCA, a PMTA can be submitted for any new tobacco product seeking a marketing order to enable commercialization of a new tobacco product in the United States. For FDA to grant such an order, the PMTA must enable the FDA to regulatedetermine that: (1) permitting the labeling and marketing of the new tobacco product would be appropriate for the protection of the public health; (2) the methods used in, or the facilities and controls used for, the manufacture, processing, or packing of the product conform to the requirements of Section 906(e) of the FD&C Act (21 U.S.C. 387f(e)); (3) the product labeling is not false or misleading in any particular; and (4) the product complies with any applicable product standard in effect under section 907 of the FDCA or that there is adequate information to justify a deviation from such standard. In determining whether to authorize a PMTA, FDA considers, among other things:

Once a PMTA is submitted FDA conducts an initial acceptance review to determine whether the product falls under CTP jurisdiction and to confirm that the statutory and regulatory requirements of an application are met based upon the criteria set forth in the Tobacco Control Act. The FDA endeavors to complete its acceptance review within 21 to 60 days of receipt. If the application does not appear to contain the required information (except for product samples), the FDA may refuse to accept the application for review, and in either case, will notify the applicant. Once accepted for further review, the FDA makes a threshold determination of whether the application contains enough information to permit a substantive review, referred to as “filing,” and may refuse to file any application that does not include sufficient information. Once filed, the FDA intends to complete its review of a PMTA within 180 days of receipt, however the FDA’s review period may be paused or even restarted in response to new information from the applicant, and as such, FDA’s review may take significantly longer than expected. After the FDA completes its review of a PMTA, the FDA may issue a marketing denial order letter, or issue a marketing granted order letter. A marketing granted order becomes effective on the date it is issued in response to a PMTA and permits the new tobacco product to be legally marketed in the United States.

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A marketing order may include restrictions on the sale and distribution of the product, including restrictions on the access to, and the advertising and promotion of, the tobacco product, and unique requirements for record-keeping and post market reporting, among other things. Holders of authorized PMTAs are, among other things, required to submit detailed periodic and annual reports to the FDA within specified timelines, and are further required to submit reports for serious and unexpected adverse events associated with the product. Once granted the FDA may suspend or withdraw any marketing order on various grounds, such as a determination that the continued marketing of the tobacco product is no longer appropriate for the protection of public health, or where the PMTA holder has failed to comply with applicable post-market requirements.

Modified Risk Tobacco Products which includes(MRTP)

Certain of our products, including our VLN® cigarettes, are marketed in the United States as MRTPs. MRTPs are tobacco products that are sold or distributed for use to reduce harm, or the risk of tobacco-related disease associated with commercially marketed tobacco products. Before an MRTP can be introduced or delivered into interstate commerce in the United States, the FDA must issue a either a “risk modification order” or “exposure modification order” pursuant to the Tobacco Control Act. An order permitting the sale of an MRTP, if granted by the FDA, enables the applicant to utilize certain claims with respect to a single, specific product, not an entire class of tobacco products.

To obtain a risk modification order under the FDCA, an applicant must demonstrate that the product, as it is actually used by consumers, will: (i) significantly reduce harm and the risk of tobacco-related disease to individual tobacco users; and (ii) benefit the health of the population as a whole; taking into account both users of tobacco products and persons who do not currently use tobacco products. To obtain an exposure modification order under the FDCA, an applicant must demonstrate that:

Furthermore, for FDA to issue an exposure modification order, FDA must find, among other things, that the applicant has demonstrated that the magnitude of overall reductions in exposure to tobacco toxinsthe substance specified in the application is substantial, that such substance is harmful, that the product as actually used exposes consumers to the specified reduced level of the substance or substances, and (ii)will not expose them to higher levels of other harmful substances similar marketed products, unless such increases are minimal and the reasonably likely to pose lower health risks as compared to conventional cigarettes (“Modified Risk Cigarettes”). On March 30, 2012,overall impact of use of the product remains a substantial and measurable reduction in overall morbidity and mortality among individual tobacco users. Notably the FDA issued Modified Riskalso requires the applicant to demonstrate, through testing of actual consumer perception, that consumers will not be misled into believing that the product is or has been demonstrated to be less harmful or presents less of a risk of disease than other commercially marketed tobacco products.

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Similar to its review of PMTAs, once an MRTPA is submitted FDA conducts an initial acceptance review to determine whether the product falls under CTP jurisdiction and to confirm that the statutory and regulatory requirements of an application are met based upon the criteria set forth in the Tobacco Product Applications Draft Guidance.Control Act. If the application does not appear to contain the required information, the FDA may refuse to accept the application for review. If and when the MRTP is accepted for further review, the FDA conducts a preliminary scientific review to ensure the application contains the information required for MRTPAs under the FDCA, a process referred to as “filing,” and the FDA may refuse to file any application that does not include the required information. Once filed, the FDA intends to complete its review of the PMTA within 360 days of receipt, however the FDA’s review may take significantly longer. As part of its substantive review, the FDA is required to send the application to the Tobacco Products Scientific Advisory Committee (“TPSAC”) and ask the TPSAC to report its recommendations on the application to the FDA within 60 days. After the FDA completes its review of the MRTPA, including the views expressed by the TPSAC, the FDA may issue a modified risk order letter, or issue a no modified risk order letter. If the FDA grants a risk modification order, the applicant must submit protocols for required post market surveillance for FDA concurrence within 30 days after receiving notice that they are required to conduct such surveillance. If the FDA grants an exposure modification order, the applicant must agree to conduct post market surveillance and studies in accordance with a protocol approved by the FDA. In either case, an FDA order permitting marketing of an MRTP is valid only for the fixed time period specified in the order and is not permanent, and such period may not be longer than five years. To continue marketing an MRTP after the set term, the company must submit a new MRTPA for FDA to determine that the product still satisfies the requirements set forth in the Tobacco Control Act.

Environmental Regulations

We are subject to a variety of federal, state and local environmental laws and regulations. We have developed specific programs across our business units for ensuring high standards of environmental compliance, including, standard operating practices and procedures at our manufacturing facility as well at our research and development centers. We believe that ourBRAND A Very Low Nicotine cigarettes will qualify as Modified Risk Cigarettes. manufacturing facility complies with all federal, state, and local environmental regulations, including the Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act.

In addition, the Tobacco Control Act allowsany new products introduced by us are subject to a comprehensive environmental assessment by an independent third-party expert, including an assessment of how such products may create environmental risks. For our PMTA product, the FDA to mandate the use of reduced risk technologies in conventional tobacco products and cigarettes which could create opportunities for us to license our proprietary technology and/or our tobaccos to larger competitors.

We supply our proprietary cigarettes for use by independent researchers so studies can be conducted to obtain additional informationprepared a programmatic environmental assessment (PEA), based on our products. We expect this information will assist us, along with our own funded studies, in obtaining the necessary FDA authorizations to marketBRAND A as a Modified Risk Cigarette.

Hemp

The Agricultural Act of 2014, which became law on February 7, 2014, is also known as the Farm Bill. Section 7606 of this federal statute, titled “Legitimacy of Industrial Hemp Research,” gave authorization to state departments of agriculture and institutions of higher learning in states that have legalized hemp cultivation to grow the crop for research and pilot programs. Since the implementation of the Farm Bill, more than 30 states have passed laws regarding industrial hemp.

On August 12, 2016, the U.S. Department of Agriculture (“USDA”) publicly issued, with the concurrence of the U.S. Drug Enforcement Administration (“DEA”) and the FDA, the followingStatement of Principles on Industrial Hemp to inform the public how federal law applies to activities associated with industrial hemp that is grown and cultivatedsubmitted data in accordance with Section 7606the Council on Environmental Quality's regulations (40 CFR 1500-1508) implementing the National Environmental Policy Act (NEPA) and FDA’s NEPA regulations (21 CFR 25.40). The PEA concluded that the marketing orders would have no significant impact and that environmental impact statements would not be required.

Excise Taxes

Tobacco products are subject to substantial excise taxes in the U.S. and other countries. Significant increases in tobacco-related taxes or fees have been proposed or enacted and are likely to continue to be proposed or enacted at the federal, state and local levels within the U.S. and other countries. The frequency and magnitude of excise tax increases can be influenced by various factors, including the Agricultural Actcomposition of 2014:executive and legislative bodies. Federal, state and local cigarette excise taxes have increased substantially over the past two decades. Tax increases have an adverse impact on sales of tobacco products.

Competition

Section 7606Although our products are not approved as smoking cessation aids, we believe that our RNC tobacco cigarettes may compete with FDA-approved smoking cessation aids. In the market for FDA-approved smoking cessation aids, principal competitors would include Pfizer Inc., GlaxoSmithKline plc, Perrigo Company plc, Novartis International AG, and Niconovum AB, a subsidiary of Reynolds American Inc. The industry consists of major domestic and international companies, most of which have existing relationships in the Agricultural Act of 2014 legalized the growing and cultivating of industrial hemp for research purposes in States where such growth and cultivation is legal under State law, notwithstanding existing federal statutes that would otherwise criminalize such conduct. The statutorily sanctioned conduct, however, was limitedmarkets into which we plan to growth and cultivation by an institution of higher education or State department of agriculture for purposes of agricultural or other academic research or under the auspices of a State agricultural pilot program for the growth, cultivation, or marketing of industrial hemp.

Section 7606 authorized State departments of agriculture to promulgate regulations to carry out these pilot programs but did not provide a specific delegation to the USDA or any other agency to implement the program. As well, the statute left open many questions regarding the continuing application of federal drug control statutes to the growth, cultivation, manufacture, and distribution of industrial hemp products,sell, as well as the extent to which growth by private partiesfinancial, technical, marketing, sales, manufacturing, scaling capacity, distribution and sale of industrial hemp products are permissible. Section 7606 did not remove industrial hemp from the controlled substances list. Therefore, federal law continues to restrict hemp-related activities, to the extent that those activities have not been legalized under section 7606.

USDA, having consulted withother resources, and received concurrence from the DEA and the FDA, therefore, is issuing this statement of principles to inform the public regarding how federal law applies to activities involving industrial hemp so that individuals, institutions, and States that wish to participate in industrial hemp agricultural pilot programs can do so in accordance with Federal law.

Competition

We are not aware of any competition to our Company in the creation and provision of tobacco research cigarettes with Very Low Nicotine content for use in independent clinical studies. Since 2011, we have provided morename recognition substantially greater than 24 million research cigarettes containing our proprietary tobaccos, including our Very Low Nicotine content tobacco, for use in numerous independent clinical studies at many well-known study locations, with agencies of the United States federal government investing more than $100 million in such independent clinical studies. The results of those independent clinical studies have been published in peer-reviewed publications. We are not aware of any other independent clinical studies that have been published regarding any other tobacco research cigarette with Very Low Nicotine content.

The results of such numerous completed and on-going clinical studies provide independent scientific support for the public announcement on July 28, 2017 by the FDA that the FDA plans to mandate that all combustible cigarettes sold in the United States will be required to contain only minimally or non-addictive levels of nicotine. Since our proprietary VLN tobacco has been the subject of numerous completed and on-going, independent clinical studies paid for by agencies of the federal government, we are investigating the potential use of our VLN tobacco in our own products that will be intended to comply with the new FDA regulations, as well as we are investigating the potential license of the use of our VLN tobacco by third-parties. It is possible that other companies may develop products that also comply with the new FDA regulations in ways that we do not know of at this time since the FDA is still in the rule-making process. There is also no assurance that the FDA will actually implement such regulations on a timely basis or at all.ours. We are also investigating potential opportunities relatingaware that several domestic cigarette companies and other research groups are working to our VLNresearch and grow reduced nicotine tobacco outsideand have filed patent applications.

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Cigarette and our VLN tobacco inside or outside of the United States.

As of December 31, 2017, we no longer sell any commercial cigarettes in the United States. During the year of 2017, we had not yet ceased the selling of ourRED SUN brand and we continued manufacturing a third-party MSA cigarette brand for the third-party owner of that brand. Cigarettefiltered cigar companies compete primarily on the basis of product quality, brand recognition, brand loyalty, taste, innovation, packaging, service, marketing, advertising, retail shelf space, and price. Cigarette sales can be significantly influenced by weak economic conditions, erosion of consumer confidence, competitors’ introduction of low-price products or innovative products, higher taxes, higher absolute prices and larger gaps between price categories, and product regulation that diminishes the ability to differentiate tobacco products. Domestic cigarette competitors included Philip Morris USA Inc., Reynolds American Inc., Lorillard Inc., CommonwealthITG Brands, Inc., Liggett Group LLC, and Vector Tobacco Inc.Group Ltd. International competitors included Philip Morris International Inc., British American Tobacco, JT International SA, Imperial Tobacco Group PLCBrands plc, and regional and local tobacco companies; and in some instances, government-owned tobacco enterprises such as the China National Tobacco Corporation.

In the event the FDA approves our MRTP application forBRAND A, then it is possible that BRAND A may compete with FDA-approved smoking cessation aids. In the market for FDA-approved smoking cessation aids, our principal competitors would include Pfizer Inc., GlaxoSmithKline PLC, Novartis International AG, and Niconovum AB, a subsidiary of Reynolds American Inc. The industry consists of major domestic and international companies, most of which have existing relationships in the markets into which we plan to sell, as well as financial, technical, marketing, sales, manufacturing, scaling capacity, distribution and other resources, and name recognition substantially greater than ours.

Employees

Human Capital Resources

As of February 23, 2018,December 31, 2023, we employed seventy-nine (79) peoplehad 64 employees. All employees are located in the United States. Our human capital resource objectives are designed to attract, and retain, highly motivated and well-qualified employees. We believe that we consider our employee relationsoffer a competitive compensation package and have also worked diligently to be good.

provide a flexible and safe work environment.

Corporate Information

22nd Century Group, Inc. was incorporated under the laws of the State of Nevada on September 12, 2005 under the name Touchstone Mining Limited. On January 25, 2011, we entered into a reverse merger transaction with 22nd Century Limited, LLC, which we refer to herein as the “merger.” Upon the closing of the merger, 22nd Century Limited, LLC became our wholly-owned subsidiary. After the merger, we succeeded to the business of 22nd Century Limited, LLC as our sole line of business.

22nd Century Limited, LLC was originally formed as a New York limited liability company on February 20, 1998 as 21st Century Limited, LLC and subsequently merged with a newly-formed Delaware limited liability company, 22nd Century Limited, LLC, on November 29, 1999.

We are a Nevada corporation, and our corporate headquarters is located at 8560 Main Street, Williamsville, New York 14221 (our former address was 9530 Main Street, Clarence, New York 14031).321 Farmington Road, Mocksville, North Carolina 27028. Our telephone number is (716) 270-1523. Our internet address is www.xxiicentury.com. All of our filings with the Securities and Exchange Commission, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K can be accessed free of charge through our website promptly after filing; however, in the event that the website is inaccessible, we will provide paper copies of our most recent Annual Report on Form 10-K, the most recent Quarterly Report on Form 10-Q, Current Reports filed or furnished on Form 8-K, and all related amendments, excluding exhibits, free of charge upon request. These filings are also accessible on the SEC'sSEC’s website at www.sec.gov. We do not incorporate the information on our website into this Annual Report on Form 10-K.10-K and our web site address is included as an inactive textual reference only.

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