Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 04, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity File Number | 001-36338 | |
Entity Registrant Name | 22nd Century Group, Inc. | |
Entity Central Index Key | 0001347858 | |
Current Fiscal Year End Date | --12-31 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 98-0468420 | |
Entity Address, Address Line One | 500 Seneca Street | |
Entity Address, Address Line Two | Suite 507 | |
Entity Address, City or Town | Buffalo | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 14204 | |
City Area Code | 716 | |
Local Phone Number | 270-1523 | |
Title of 12(b) Security | Common Stock, $0.00001 par value | |
Security Exchange Name | NYSEAMER | |
Trading Symbol | XXII | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 162,735,483 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 2,037 | $ 1,029 |
Short-term investment securities | 60,284 | 21,313 |
Accounts receivable, net | 2,137 | 2,159 |
Inventory, net | 2,313 | 2,034 |
Prepaid expenses and other assets | 3,943 | 1,806 |
Total current assets | 70,714 | 28,341 |
Property, plant and equipment, net | 4,847 | 2,483 |
Operating leases right-of-use assets, net | 595 | 247 |
Intangible assets, net | 8,119 | 8,211 |
Investments | 9,200 | 6,536 |
Other assets | 3,684 | 5,876 |
Total assets | 97,159 | 51,694 |
Current liabilities: | ||
Notes payable | 2,659 | 539 |
Operating lease obligations | 174 | 247 |
Accounts payable | 981 | 1,116 |
Accrued expenses | 5,072 | 4,830 |
Accrued severance, current | 212 | 339 |
Deferred income | 145 | 272 |
Total current liabilities | 9,243 | 7,343 |
Long-term liabilities: | ||
Operating lease obligations | 423 | 0 |
Severance obligations | 130 | 241 |
Total liabilities | 9,796 | 7,584 |
Commitments and contingencies (Note 11) | ||
Shareholders' equity | ||
Common stock value | 2 | 1 |
Capital in excess of par value | 241,968 | 189,439 |
Accumulated other comprehensive (loss) income | 1 | 74 |
Accumulated deficit | (154,608) | (145,404) |
Total shareholders' equity | 87,363 | 44,110 |
Total liabilities and shareholders' equity | $ 97,159 | $ 51,694 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares issued | 162,685,483 | 139,061,690 |
Common stock, shares outstanding | 162,685,483 | 139,061,690 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue: | ||||
Sale of products, net | $ 8,371 | $ 6,435 | $ 15,177 | $ 13,493 |
Cost of goods sold (exclusive of depreciation shown separately below): | ||||
Products | 7,785 | 6,234 | 13,944 | 13,005 |
Gross profit (loss) | 586 | 201 | 1,233 | 488 |
Operating expenses: | ||||
Sales, general and administrative | 6,177 | 3,501 | 11,006 | 6,640 |
Impairment of intangible assets | 146 | 146 | ||
Depreciation | 150 | 157 | 288 | 313 |
Amortization | 153 | 189 | 303 | 361 |
Total operating expenses | 7,226 | 4,954 | 13,044 | 9,384 |
Operating loss | (6,640) | (4,753) | (11,811) | (8,896) |
Other income (expense): | ||||
Unrealized gain (loss) on investments | (176) | 312 | (140) | (133) |
Impairment of Panacea investment | (1,062) | (1,062) | ||
Gain on Panacea investment conversion | 2,548 | 2,548 | ||
Realized gain (loss) on short-term investment securities | 3 | |||
Interest income, net | 108 | 462 | 220 | 1,074 |
Interest expense | (14) | (19) | (21) | (31) |
Total other income (expense) | 2,466 | (304) | 2,607 | (152) |
Loss before income taxes | (4,174) | (5,057) | (9,204) | (9,048) |
Income taxes | 38 | |||
Net loss | (4,174) | (5,057) | (9,204) | (9,086) |
Other comprehensive income (loss): | ||||
Unrealized gain (loss) on short-term investment securities | (41) | 241 | (73) | 45 |
Reclassification of (gain) loss to net loss | (3) | |||
Other comprehensive income (loss) | (41) | 238 | (73) | 45 |
Comprehensive loss | $ (4,215) | $ (4,819) | $ (9,277) | $ (9,041) |
Net loss per common share - basic and diluted | $ (0.03) | $ (0.04) | $ (0.06) | $ (0.07) |
Weighted average common shares outstanding - basic and diluted (in thousands) | 154,811 | 138,854 | 149,564 | 138,732 |
Products Other Than Modified Risk Tobacco Products [Member] | ||||
Operating expenses: | ||||
Research and development | $ 744 | $ 957 | $ 1,433 | $ 1,770 |
Modified Risk Tobacco Product [Member] | ||||
Operating expenses: | ||||
Research and development | $ 2 | $ 4 | $ 14 | $ 154 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Capital in Excess of Par Value [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Total |
Beginning balance at Dec. 31, 2019 | $ 1,000 | $ 187,735,000 | $ 7,000 | $ (125,693,000) | $ 62,050,000 |
Beginning balance (in shares) at Dec. 31, 2019 | 138,362,809 | ||||
Stock issued in connection with RSU vesting (in shares) | 491,384 | ||||
Equity-based compensation | $ 0 | 480,000 | 0 | 0 | 480,000 |
Equity-based compensation (in shares) | 0 | ||||
Unrealized gain (loss) on short-term investment securities | $ 0 | 0 | (196,000) | 0 | (196,000) |
Reclassification of losses (gains) to net loss | 0 | 0 | 3,000 | 0 | 3,000 |
Net loss | 0 | 0 | 0 | (4,029,000) | (4,029,000) |
Ending balance at Mar. 31, 2020 | $ 1,000 | 188,215,000 | (186,000) | (129,722,000) | 58,308,000 |
Ending balance (in shares) at Mar. 31, 2020 | 138,854,193 | ||||
Beginning balance at Dec. 31, 2019 | $ 1,000 | 187,735,000 | 7,000 | (125,693,000) | 62,050,000 |
Beginning balance (in shares) at Dec. 31, 2019 | 138,362,809 | ||||
Net loss | (9,086,000) | ||||
Ending balance at Jun. 30, 2020 | $ 1,000 | 188,591,000 | 52,000 | (134,779,000) | 53,865,000 |
Ending balance (in shares) at Jun. 30, 2020 | 138,854,193 | ||||
Beginning balance at Mar. 31, 2020 | $ 1,000 | 188,215,000 | (186,000) | (129,722,000) | 58,308,000 |
Beginning balance (in shares) at Mar. 31, 2020 | 138,854,193 | ||||
Equity-based compensation | 376,000 | 376,000 | |||
Unrealized gain (loss) on short-term investment securities | 241,000 | 241,000 | |||
Reclassification of losses (gains) to net loss | (3,000) | (3,000) | |||
Net loss | (5,057,000) | (5,057,000) | |||
Ending balance at Jun. 30, 2020 | $ 1,000 | 188,591,000 | 52,000 | (134,779,000) | 53,865,000 |
Ending balance (in shares) at Jun. 30, 2020 | 138,854,193 | ||||
Beginning balance at Dec. 31, 2020 | $ 1,000 | 189,439,000 | 74,000 | (145,404,000) | 44,110,000 |
Beginning balance (in shares) at Dec. 31, 2020 | 139,061,690 | ||||
Stock issued in connection with RSU vesting | $ 0 | 0 | 0 | 0 | 0 |
Stock issued in connection with RSU vesting (in shares) | 1,196,258 | ||||
Stock issued in connection with warrant exercises | $ 1,000 | 11,781,000 | 11,782,000 | ||
Stock issued in connection with warrant exercises (in shares) | 11,293,211 | ||||
Stock issued in connection with option exercises | 1,153,000 | $ 1,153,000 | |||
Stock issued in connection with option exercises (in shares) | 846,342 | 846,000 | |||
Equity-based compensation | $ 0 | 507,000 | 0 | 0 | $ 507,000 |
Equity-based compensation (in shares) | 0 | ||||
Unrealized gain (loss) on short-term investment securities | $ 0 | 0 | (32,000) | 0 | (32,000) |
Net loss | 0 | 0 | 0 | (5,030,000) | (5,030,000) |
Ending balance at Mar. 31, 2021 | $ 2,000 | 202,880,000 | 42,000 | (150,434,000) | 52,490,000 |
Ending balance (in shares) at Mar. 31, 2021 | 152,397,501 | ||||
Beginning balance at Dec. 31, 2020 | $ 1,000 | 189,439,000 | 74,000 | (145,404,000) | 44,110,000 |
Beginning balance (in shares) at Dec. 31, 2020 | 139,061,690 | ||||
Net loss | (9,204,000) | ||||
Ending balance at Jun. 30, 2021 | $ 2,000 | 241,968,000 | 1,000 | (154,608,000) | 87,363,000 |
Ending balance (in shares) at Jun. 30, 2021 | 162,685,483 | ||||
Beginning balance at Mar. 31, 2021 | $ 2,000 | 202,880,000 | 42,000 | (150,434,000) | 52,490,000 |
Beginning balance (in shares) at Mar. 31, 2021 | 152,397,501 | ||||
Stock issued in connection with RSU vesting, net of shares withheld for taxes | (469,000) | (469,000) | |||
Stock issued in connection with RSU vesting, net of shares withheld for taxes (in shares) | 200,103 | ||||
Stock issued in connection with option exercises | 106,000 | $ 106,000 | |||
Stock issued in connection with option exercises (in shares) | 87,879 | 88,000 | |||
Stock issued in connection with capital raise | 38,206,000 | $ 38,206,000 | |||
Stock issued in connection with capital raise (in shares) | 10,000,000 | ||||
Equity-based compensation | 1,245,000 | 1,245,000 | |||
Unrealized gain (loss) on short-term investment securities | (41,000) | (41,000) | |||
Net loss | (4,174,000) | (4,174,000) | |||
Ending balance at Jun. 30, 2021 | $ 2,000 | $ 241,968,000 | $ 1,000 | $ (154,608,000) | $ 87,363,000 |
Ending balance (in shares) at Jun. 30, 2021 | 162,685,483 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (9,204) | $ (9,086) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Impairment of intangible assets | 146 | |
Impairment of Panacea investment | 1,062 | |
Amortization and depreciation | 466 | 549 |
Amortization of license fees | 124 | 125 |
Amortization of ROU assets | 149 | 151 |
Unrealized (gain) loss on investment | 140 | 133 |
Gain on Panacea investment conversion | (2,548) | |
Accretion of non cash interest expense | 4 | 12 |
Accretion of non-cash interest income | (85) | (306) |
Equity-based employee compensation expense | 1,752 | 856 |
(Increase) decrease in assets: | ||
Accounts receivable | 21 | (132) |
Inventory | (280) | (503) |
Prepaid expenses and other assets | (2,307) | (2,934) |
Increase (decrease) in liabilities: | ||
Operating lease obligations | (148) | (149) |
Accounts payable | (140) | (1,032) |
Accrued expenses | 151 | (384) |
Accrued severance | (238) | 24 |
Deferred income | (127) | (5) |
Net cash provided by (used in) operating activities | (12,270) | (11,473) |
Cash flows from investing activities: | ||
Acquisition of patents and trademarks | (179) | (198) |
Acquisition of property, plant and equipment | (388) | (42) |
Sales and maturities of short-term investment securities | 19,037 | 19,272 |
Purchase of short-term investment securities | (58,137) | (8,853) |
Net cash provided by (used in) investing activities | (39,667) | 10,179 |
Cash flows from financing activities: | ||
Payment on note payable | (538) | (542) |
Proceeds from note payable issuance | 2,653 | 2,195 |
Net proceeds from option exercises | 1,259 | |
Net proceeds from warrant exercises | 11,782 | |
Net proceeds from issuance of common stock | 38,258 | |
Taxes paid related to net share settlement of RSUs | (469) | |
Proceeds from SBA loan | 1,183 | |
Repayment of SBA loan | (1,183) | |
Net cash provided by (used in) financing activities | 52,945 | 1,653 |
Net increase (decrease) in cash and cash equivalents | 1,008 | 359 |
Cash and cash equivalents - beginning of period | 1,029 | 485 |
Cash and cash equivalents - end of period | 2,037 | 844 |
Net cash paid for: | ||
Cash paid during the period for interest | 8 | 6 |
Non-cash transactions: | ||
Patent and trademark additions included in accounts payable | 54 | |
Property, plant and equipment additions included in accounts payable | 9 | 0 |
Property, plant and equipment additions included in accrued expenses | 7 | |
Right-of-use assets and corresponding operating lease obligations | 497 | $ 198 |
Patent and trademark additions included in accrued expenses | 32 | |
Capital raise issuance fees included in accrued expenses | 52 | |
Panacea investment conversion | $ 12,485 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The balance sheet as of December 31, 2020 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. These interim consolidated financial statements should be read in conjunction with the December 31, 2020 audited consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on March 11, 2021. Principles of Consolidation - Nature of Business - Reclassifications – COVID-19 Pandemic During April 2021, the Company relocated its corporate headquarters into downtown Buffalo, NY. The new office, as well as all of our facilities, continue to operate in compliance with New York and North Carolina guidance (as applicable) related to the prevention of COVID-19 transmission and employee safety. We also continue to allow remote work arrangements by our employees where job duties permit. Our executive leadership team and staff are monitoring this evolving situation and its impacts on our business. We will continue to monitor the local, state, and federal guidance regarding our business practices. Use of Estimates - Intangible Assets The Company’s capitalized intellectual property costs are amortized using the straight-line method over the remaining statutory life of the patent assets in each of the Company’s patent families, which have estimated expiration dates ranging from 2026 to 2041. Periodic maintenance or renewal fees are expensed as incurred. Annual minimum license fees are charged to expense. License fees paid for third-party intellectual property are amortized on a straight-line basis over the last to expire patents, which have expected expiration dates ranging from 2028 through 2036. The Company believes that costs associated with becoming a signatory to the MSA and costs related to the acquisition of a predicate cigarette brand have an indefinite life. As such, no amortization is taken. At each reporting period, the Company evaluates whether events and circumstances continue to support the indefinite-lived classification. Impairment of Long-Lived Assets Intangible assets subject to amortization are reviewed for strategic importance and commercialization opportunity prior to expiration. If it is determined that the asset no longer supports the Company’s strategic objectives and/or will not be commercially viable prior to expiration, the asset is impaired. In addition, the Company will assess the expected future undiscounted cash flows for its intellectual property based on consideration of future market and economic conditions, competition, federal and state regulations, and licensing opportunities. If the carrying value of such assets are not recoverable, the carrying value will be reduced to fair value. Indefinite-lived intangible asset carrying values are reviewed at least annually or more frequently if events or changes in circumstances indicate that it is more likely than not that an impairment exists. The Company first performs a qualitative assessment and considers its current strategic objectives, future market and economic conditions, competition, and federal and state regulations to determine if an impairment is more likely than not. If it is determined that an impairment is more likely than not, a quantitative assessment is performed to compare the asset carrying value to fair value. Fair Value of Financial Instruments - Investments – investment securities (the adjustment to fair value) are recorded in other comprehensive income or loss on the Company’s Consolidated Statements of Operations and Comprehensive Loss. Stock Based Compensation one year three-year Income Taxes - Recent Accounting Pronouncement(s) – We consider the applicability and impact of all ASUs. If the ASU is not listed above, it was determined that the ASU was either not applicable or would have an immaterial impact on our financial statements and related disclosures. |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2021 | |
INVENTORY | |
INVENTORY | NOTE 2. - INVENTORY Inventories are valued at the lower of historical cost or net realizable value. Cost is determined using an average cost method for tobacco leaf inventory, hemp/cannabis inventory, and raw materials inventory. Standard cost is primarily used for finished goods inventory. Inventories are evaluated to determine whether any amounts are not recoverable based on slow moving or obsolete condition and are written off or reserved as appropriate. Inventories at June 30, 2021 and December 31, 2020 consisted of the following: June 30, December 31, 2021 2020 Inventory - tobacco leaf $ 863 $ 821 Inventory - hemp/cannabis 68 — Inventory - finished goods Cigarettes and filtered cigars 193 171 Inventory - raw materials Cigarette and filtered cigar components 1,289 1,142 Less: inventory reserve (100) (100) $ 2,313 $ 2,034 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2021 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 3. – PROPERTY, PLANT, AND EQUIPMENT, NET Property, plant, and equipment, net at June 30, 2021 and December 31, 2020 consisted of the following: June 30, December 31, Useful Life 2021 2020 Land $ 1,665 $ — Building and leasehold improvements 7 to 40 309 123 Manufacturing equipment 3 to 10 years 5,518 4,893 Office furniture, fixtures and equipment 5 years 119 20 Laboratory equipment 5 years 192 117 Less: accumulated depreciation (2,956) (2,670) Property, plant and equipment, net $ 4,847 $ 2,483 Depreciation expense was $150 and $288 for the three and six months ended June 30, 2021 ($157 and $313 for the three and six months ended June 30, 2020). |
RIGHT-OF-USE ASSETS, LEASE OBLI
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES | 6 Months Ended |
Jun. 30, 2021 | |
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES | |
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES | NOTE 4. - RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES The Company leases a manufacturing facility and warehouse in North Carolina, a corporate headquarters in Buffalo, New York, and a laboratory space in Buffalo, New York. During the second quarter of 2021, the Company moved into a new corporate headquarters in downtown Buffalo, NY. The lease has an initial term of 36 months 24-month The following table summarizes the Company’s discount rate and remaining lease terms: Weighted average remaining lease term in years 5.5 Weighted average discount rate 3.8 % Future minimum lease payments as of June 30, 2021 are as follows: 2021 $ 146 2022 85 2023 78 2024 80 2025 82 Thereafter 192 Total lease payments 663 Less: imputed interest (66) Total $ 597 |
INVESTMENTS AND OTHER ASSETS
INVESTMENTS AND OTHER ASSETS | 6 Months Ended |
Jun. 30, 2021 | |
INVESTMENTS & OTHER ASSETS | |
INVESTMENTS & OTHER ASSETS | NOTE 5. – INVESTMENTS & OTHER ASSETS The total carrying value of the Company’s investments and other assets at June 30, 2021 and December 31, 2020 consisted of the following: June 30, December 31, 2021 2020 Aurora stock warrants $ 98 $ 239 Panacea preferred stock — 5,173 Panacea stock warrant — 1,124 Exactus common stock 9,102 — Total Investments $ 9,200 $ 6,536 Convertible note receivable $ — $ 5,876 Promissory note receivable $ 3,684 $ — Investment in Panacea Life Sciences, Inc. Initial Investment: On December 3, 2019, the Company entered into a securities purchase agreement with Panacea Life Sciences, Inc. (“Panacea”) for consideration valued at $13,297 ( $12,000 cash and $1,297 of the Company’s shares of common stock valued at $1 per share) in exchange for a 15.8% ownership interest. The Company’s investment consisted of three instruments: shares of Series B preferred stock (“preferred stock”); a convertible note receivable with a $7,000 face value; and a warrant (“stock warrant”) to purchase additional shares of Series B preferred stock, to obtain 51% ownership of Panacea, at an exercise price of $2.344 per share. The convertible note receivable had a term of five years , interest of 10% per annum, and could be converted to shares of Series B preferred stock at the Company’s discretion. The embedded conversion option was not considered a derivative instrument for accounting purposes. The preferred stock carried an annual 10% cumulative dividend, compounded annually, and had an implicit put option after the fifth anniversary date so long that the stock warrants had not been exercised. The put option was not considered a derivative instrument for accounting purposes. The stock warrant was exercisable at any time after the fifth anniversary date and would be accelerated if Panacea achieved certain sales targets for two consecutive years. The Series B preferred stock also included first priority equity preferences in the event of a liquidation, sale, or transfer of Panacea assets. These rights entitled the Company to the original Series B issuance price of $7,000 plus any unpaid accrued dividends. To allocate the cost of the stock warrant, the Company calculated a fair value based on the following assumptions: volatility of 70% , discount of 25% for lack of marketability, and a risk-free rate of 2% . The value of the stock warrant was allocated to the preferred stock and the convertible note receivable, equally, at a discount to the acquisition price. The discount on the preferred stock was determined to be for lack of control and the discount on the convertible note receivable was determined to be for issuing the note at a below market interest rate for similar instruments. The convertible note receivable and the preferred stock investment were considered available for sale debt securities with a private company that was not traded in active markets. Since observable price quotations were not available at acquisition, fair value was estimated based on cost less an appropriate discount upon acquisition. The discount of each instrument is accreted into interest income over the respective term as shown within the Company’s Consolidated Statements of Operations and Comprehensive Loss. See Note 6 for additional information on these fair value measurements. The stock warrant was recorded at its cost basis in accordance with the practicability exception under ASU 2016-01. Impairment of Panacea Investment: As a result of increased competition and other macroeconomic factors, the Company recognized an impairment of $1,062 on the Panacea stock warrant during the second quarter of 2020. The impairment is recorded within the Consolidated Statements of Operations and Comprehensive Loss as “Impairment of Panacea Investment.” During the fourth quarter of 2020, the Company entered into a non-binding agreement with Panacea to potentially restructure the investment and business relationship—including the transfer of an agricultural facility and other assets. As of December 31, 2020, the Company adjusted certain assets to represent the fair value outlined in the non-binding agreement. Conversion of Panacea Investment: On June 30, 2021, the Company entered into a Promissory Note Exchange Agreement with Panacea and a Securities Exchange Agreement with Panacea, Exactus, Inc. (“Exactus”) (OTCQB:EXDI) and certain other Panacea shareholders. Pursuant to the Securities Exchange Agreement, Exactus fully acquired Panacea. These transactions effected the (i) conversion of all of the Company’s Series B Preferred Stock in Panacea into 91,016,026 shares of common stock in Exactus valued at $9,102 as of June 30, 2021 and (ii) the conversion of the Company’s existing debt in Panacea by converting the outstanding $7,000 principal balance convertible note receivable and all accrued but unpaid interest thereon for fee simple ownership of Needle Rock Farms (224 acres in Delta County, Colorado) and equipment valued at $2,248, $500 in Panacea’s Series B Preferred Stock (which was subsequently converted to Exactus common stock under the Securities Exchange Agreement), and a new $4,300 promissory note (the “Promissory note receivable”) with a maturity date of June 30, 2026 and a 0% interest rate. The Promissory note receivable is with a related party of Panacea and is fully secured by a first priority lien on Panacea’s headquarters located in Golden, Colorado. All other rights and obligations of the Company in Panacea and Panacea’s affiliate, Quintel-MC Incorporated, were terminated by this transaction—including all warrant rights and obligations for future investment. The conversion was recorded as a non-monetary transaction, based on the fair value of the assets received, and resulted in a gain of $2,548 which is included within the Consolidated Statements of Operations and Comprehensive Loss as “Gain on Panacea investment conversion.” The Promissory note receivable was valued at $3,684 ($4,300 face value less $616 discount) and is included within the Consolidated Balance Sheets as “Other Assets.” The Company intends to hold the Promissory note receivable to maturity and the associated discount will be amortized into interest income over the term of the note. The ownership of Needle Rock Farms and related equipment is included within “Property, plant, and equipment, net” on the Consolidated Balance Sheets. The common shares of Exactus, Inc. are considered equity securities in accordance with ASC 321 and are recorded at fair value—changes in fair value will be included within the statement of operations. See Note 6 for additional information on the fair value measurements. Investment in Aurora Cannabis, Inc. The Company has an investment in Aurora Cannabis Inc. (“Aurora”) stock warrants that are considered equity securities under ASC 321 – Investments – Equity Securities and a derivative instrument under ASC 815 – Derivatives and Hedging. The stock warrants are not designated as a hedging instrument, and in accordance with ASC 815, the Company’s investment in stock warrants are recorded at fair value with changes in fair value recorded to unrealized gain/loss as shown within the Company’s Consolidated Statements of Operations and Comprehensive Loss. See Note 6 for additional information on the fair value measurements. |
FAIR VALUE MEASUREMENTS AND SHO
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | 6 Months Ended |
Jun. 30, 2021 | |
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | |
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | NOTE 6. – FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS FASB ASC 820 - “Fair Value Measurements and Disclosures” establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: ● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; ● Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and ● Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset’s or a financial liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The following table presents information about our assets and liabilities measured at fair value as of June 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value: Fair Value June 30, 2021 Level 1 Level 2 Level 3 Total Assets Short-term investment securities: Money market funds $ 43,892 $ — $ — $ 43,892 Corporate bonds — 16,392 — 16,392 Total short-term investment securities $ 43,892 $ 16,392 $ — $ 60,284 Investment - Aurora stock warrants $ — $ — $ 98 $ 98 Investment - Exactus common shares $ 9,102 $ — $ — $ 9,102 Fair Value December 31, 2020 Level 1 Level 2 Level 3 Total Assets Short-term investment securities: Money market funds $ 8,636 $ — $ — $ 8,636 Corporate bonds — 12,677 — 12,677 Total short-term investment securities $ 8,636 $ 12,677 $ — $ 21,313 Investment - Aurora stock warrants $ — $ — $ 239 $ 239 Investment - Panacea preferred stock $ — $ — $ 5,173 $ 5,173 Convertible note receivable $ — $ — $ 5,876 $ 5,876 Money market mutual funds are valued at their daily closing price as reported by the fund. Money market mutual funds held by the Company are open-end mutual funds that are registered with the SEC that generally transact at a stable $1.00 Net Asset Value (“NAV”) representing its estimated fair value. On a daily basis the fund’s NAV is determined by the fund based on the amortized cost of the funds underlying investments. Corporate bonds are valued using pricing models maximizing the use of observable inputs for similar securities. The investment in the Aurora (“ACB”) stock warrants is measured at fair value using the Black-Scholes pricing model and is classified within Level 3 of the valuation hierarchy. The unobservable input is an estimated volatility factor of 88% and 137% as of June 30, 2021 and December 31, 2020, respectively. Therefore, changes in market volatility will impact the fair value measurement of our ACB investment. A 20% increase or decrease in the volatility factor used as of June 30, 2021 would have the impact of increasing or decreasing the fair value measurement of the stock warrants by approximately $73. A 20% increase or decrease in the volatility factor used at December 31, 2020 would have the impact of increasing or decreasing the fair value measurement of the stock warrants by approximately $115. The investment in Exactus, Inc. common shares is considered an equity security with a readily determinable fair value. The fair value is determined using the quotable market price as of the last trading day of the fiscal quarter. The Panacea convertible note receivable and the preferred stock investment are considered available-for-sale debt securities with a private company that is not traded in active markets. Since observable price quotations were not available, fair value was estimated based on cost less an appropriate discount upon acquisition. The following table sets forth a summary of the changes in fair value of the Company’s Level 3 investments for the six months ended June 30, 2021: Fair Value at December 31, 2020 $ 11,288 Unrealized gain as a result of change in fair value (140) Accretion of interest on Panacea preferred stock 142 Panacea investment conversion (11,192) Fair Value at June 30, 2021 $ 98 The following tables set forth a summary of the Company’s available-for-sale debt securities from amortized cost basis to fair value as of June 30, 2021 and December 31, 2020: Available for Sale Debt Securities June 30, 2021 Amortized Gross Gross Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 16,391 $ 1 $ — $ 16,392 Available for Sale Debt Securities December 31, 2020 Amortized Gross Gross Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 12,603 $ 74 $ — $ 12,677 Convertible note receivable 5,876 — — 5,876 Investment - Panacea preferred stock 5,173 — — 5,173 $ 23,652 $ 74 $ — $ 23,726 The following table sets forth a summary of the Company’s available-for-sale securities at amortized cost basis and fair value by contractual maturity as of June 30, 2021 and December 31, 2020: Available for Sale Debt Securities June 30, 2021 December 31, 2020 Amortized Amortized Cost Basis Fair Value Cost Basis Fair Value Due in one year or less $ 6,394 $ 6,409 $ 11,692 $ 11,753 Due after one year through five years 9,997 9,983 11,960 11,973 $ 16,391 $ 16,392 $ 23,652 $ 23,726 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2021 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 7. - INTANGIBLE ASSETS Total intangible assets at June 30, 2021 and December 31, 2020 consisted of the following: June 30, December 31, 2021 2020 Intangible assets, net Patent and trademark costs $ 5,879 $ 5,667 Less: accumulated amortization (3,115) (2,936) Patent and trademark costs, net 2,764 2,731 License fees 3,876 3,876 Less: accumulated amortization (1,073) (948) License fees, net 2,803 2,928 MSA signatory costs 2,202 2,202 License fee for predicate cigarette brand 350 350 $ 8,119 $ 8,211 Amortization expense relating to the above intangible assets for the three and six months ended June 30, 2021 amounted to $153 and $303 ($189 and $361 for the three and six months ended June 30, 2020). Impairment expense for the three and six months ended June 30, 2020 amounted to $146 (cost of approximately $448 less accumulated amortization of approximately $302) and related to patent intellectual property that would be expired prior to expected commercialization. |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2021 | |
NOTES PAYABLE | |
NOTES PAYABLE | NOTE 8. – NOTES PAYABLE License Fees On June 22, 2018, the Company entered into the Second Amendment to the License Agreement (the “Second Amendment”) with North Carolina State University (“NCSU”) that amended an original License Agreement between the Company and NCSU, dated December 8, 2015, and the First Amendment, dated February 14, 2018, to the original License Agreement. Under the terms of the Second Amendment, the Company was obligated to pay NCSU milestone payments totaling $1,200, which originally amounted to a present value of $1,175. As of June 30, 2020, the Company paid the final milestone payment of $300. The cost of the of acquired license amounted to $1,175 and is included in Intangible assets, net on the Company’s Consolidated Balance Sheets, and is amortized on a straight-line basis over the last-to-expire patent, which is expected to be in 2036. On October 22, 2018, the Company entered into a License Agreement with the University of Kentucky. Under the terms of the License Agreement, the Company is obligated to pay the University of Kentucky milestone payments totaling $1,200, of which $300 was payable upon execution, and $300 will be payable annually over three years on the anniversary of the execution of the License Agreement. The Company has recorded the present value of the obligations under the License Agreement as a note payable that originally amounted to $1,151. The cost of the of acquired licenses amounted to $1,151 and is included in Intangible assets, net on the Company’s Consolidated Balance Sheets and will be amortized on a straight-line basis over the last-to-expire patent, which is expected to be in 2033. D&O Insurance During the second quarter of 2021, the Company renewed its Director and Officer (“D&O”) insurance for a one-year nine months During the second quarter of 2020, the Company renewed its Director and Officer (“D&O”) insurance for a one-year policy premium totaling $2,744. The Company paid $549 as a premium down payment and financed the remaining $2,195 of policy premiums over nine months at a 3.19% annual percentage rate. The table below outlines our notes payable balances as of June 30, 2021 and December 31, 2020: June 30, December 31, 2021 2020 License Fees $ 297 $ 293 D&O Insurance 2,362 246 Total current notes payable $ 2,659 $ 539 Accretion of non-cash interest expense amounted to $2 and $4 for the three and six months ended June 30, 2021 and $6 and $12 for the three and six months ended June 30, 2020. |
SEVERANCE LIABILITY
SEVERANCE LIABILITY | 6 Months Ended |
Jun. 30, 2021 | |
Postemployment Benefits [Abstract] | |
SEVERANCE LIABILITY | NOTE 9. – SEVERANCE LIABILITY During the second quarter of 2020, the Company recorded severance benefits related to a resignation of $306 . The benefits were provided over a twelve-month period. During 2019, the Company recorded severance benefits of $881 . Consistent with certain contractual obligations, $771 of the related benefit will be provided over a period of forty-two months . The current and long-term accrued severance balance remaining as of June 30, 2021 was $212 and $130 , respectively. The current and long-term accrued severance balance remaining as of December 31, 2020 was $339 and $241 , respectively. |
WARRANT EXERCISE AND CAPITAL RA
WARRANT EXERCISE AND CAPITAL RAISE | 6 Months Ended |
Jun. 30, 2021 | |
WARRANT EXERCISE AND CAPITAL RAISE | |
WARRANT EXERCISE AND CAPITAL RAISE | NOTE 10. – WARRANT EXERCISE AND CAPITAL RAISE On June 7, 2021, the Company entered into a placement agent agreement (the “Placement Agent Agreement”) with Cowen and Company, LLC (the “Placement Agent”) relating to the Company’s registered direct offering (the “Offering”) to a select investor (the “Investor”). In addition, on June 7, 2021, the Company and the Investor entered into a securities purchase agreement relating to the issuance and sale of shares of common stock. The Investor purchased 10,000,000 shares of common stock at $4.00 per share. The net proceeds to the Company from the Offering, after deducting Placement Agent fees and offering expenses, was $38,206. During the first quarter of 2021, the Company’s warrant holders exercised all 11,293,211 outstanding warrants for cash in exchange for common stock. In connection with these exercises, the Company received net proceeds of $11,782. No warrants remain outstanding as of June 30, 2021. The following table summarizes the Company’s outstanding warrant activity since December 31, 2020: Number of Warrants Warrants outstanding at December 31, 2020 11,293,211 Warrants exercised in Q1 2021 (11,293,211) Warrants outstanding at June 30, 2021 — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 11. - COMMITMENTS AND CONTINGENCIES License agreements and sponsored research – Future Commitments Commitment Counter Party Product Relationship Commitment Type 2021 2022 2023 2024 2025 & After Total Research Agreement KeyGene Hemp / Cannabis Contract fee $ 500 $ 1,150 $ 1,200 $ 1,227 $ 2,893 $ 6,970 (1) License Agreement NCSU Tobacco Annual royalty fee 135 225 — — — 360 (2), (3) License Agreement NCSU Tobacco Minimum annual royalty 13 50 50 50 600 763 (3) License Agreement NCSU Tobacco Minimum annual royalty 26 50 50 50 500 676 (3) Research Agreement NCSU Tobacco Contract fee 30 — — — — 30 (4) Sublicense Agreement Anandia Laboratories, Inc. Hemp / Cannabis Annual license fee 10 10 10 10 110 150 (5) Research Agreement Cannametrix Hemp / Cannabis Contract fee 51 50 — — — 101 (6) Growing Agreement Various Various Contract fee 78 — — — — 78 (7) $ 843 $ 1,535 $ 1,310 $ 1,337 $ 4,103 $ 9,128 (1) Exclusive agreement with the Company with respect to the Cannabis Sativa L. plant (the "Field"). The initial term of the agreement was five years with an option for an additional two years . On April 30, 2021, the Company and KeyGene entered into a First Amended and Restated Framework Collaborative Research Agreement which extended the agreement term, from first-quarter 2024 to first-quarter 2027, and preserves the Company’s option for an additional 2-year extension, now through first quarter of 2029. The Company will exclusively own all results and all intellectual property relating to the results of the collaboration with KeyGene (the "Results”). The Company will pay royalties in varying amounts to KeyGene relating to the Company's commercialization in the Field of certain Results. The Company has also granted KeyGene a license to commercialize the Results outside of the Field and KeyGene will pay royalties in varying amounts to the Company relating to KeyGene's commercialization of the Results outside of the Field. (2) The license agreement also requires a milestone payment of $150 upon FDA approval or clearance of a product that uses the NCSU licensed technology. The annual royalty fee is credited against running royalties on sales of licensed products. (3) The Company is also responsible for reimbursing NSCU for actual third-party patent costs incurred, including capitalized patent costs and patent maintenance costs. These costs vary from year to year and the Company has certain rights to direct the activities that result in these costs. (4) On September 11, 2020, the Company entered into a one-year Sponsored Project Agreement with NCSU for continued research of tobacco alkaloid formation. (5) The Company is also responsible for the payment of certain costs, including, capitalized patent costs and patent maintenance costs, a running royalty on future net sales of products made from the sublicensed intellectual property, and a sharing of future sublicensing consideration received from sublicensing to third parties in all countries except for Canada. Anandia retains all patent rights, and is responsible for all patent maintenance, in Canada. (6) On March 1, 2021, the Company entered into a 14-month research agreement with Cannametrix for hemp/cannabis product development, formulation, and validation. (7) Various R&D growing agreements for hemp / cannabis and tobacco. Modified Risk Tobacco Product Application (“MRTP Application”) Litigation not establish an accrued liability. As a litigation or regulatory matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. If, at the time of evaluation, the loss contingency related to a litigation or regulatory matter is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable. When a loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Company will establish an accrued liability with respect to such loss contingency and record a corresponding amount of related expenses. The Company will then continue to monitor the matter for further developments that could affect the amount of any such accrued liability. Class Action On January 21, 2019, Matthew Jackson Bull, a resident of Denver, Colorado, filed a Complaint against the Company, the Company’s then Chief Executive Officer, Henry Sicignano III, and the Company’s then Chief Financial Officer, John T. Brodfuehrer, in the United States District Court for the Eastern District of New York entitled: Matthew Bull, Individually and on behalf of all others similarly situated, v. 22nd Century Group, Inc., Henry Sicignano III, and John T. Brodfuehrer, Case No. 1:19 cv 00409. On January 29, 2019, Ian M. Fitch, a resident of Essex County Massachusetts, filed a Complaint against the Company, the Company’s then Chief Executive Officer, Henry Sicignano III, and the Company’s then Chief Financial Officer, John T. Brodfuehrer, in the United States District Court for the Eastern District of New York entitled: Ian Fitch, Individually and on behalf of all others similarly situated, v. 22nd Century Group, Inc., Henry Sicignano III, and John T. Brodfuehrer, Case No. 2:19 cv 00553. On May 28, 2019, the plaintiff in the Fitch case voluntarily dismissed that action. On August 1, 2019, the Court in the Bull case issued an order designating Joseph Noto, Garden State Tire Corp, and Stephens Johnson as lead plaintiffs. On September 16, 2019, pursuant to a joint motion by the parties, the Court in the Bull case transferred the class action to federal district court in the Western District of New York, where it remains pending as Case No. 1:19-cv-01285. Plaintiffs in the Bull case filed an Amended Complaint on November 19, 2019 that alleges three counts: Count I sues the Company and Messrs. Sicignano and Brodfuehrer and alleges that the Company's quarterly and annual reports, SEC filings, press releases and other public statements and documents contained false statements in violation of Section 10(b) of the Securities Exchange Act and Rule 10b-5; Count II sues Messrs. Sicignano and Brodfuehrer pursuant to Section 10(b) of the Securities Exchange Act and Rule 10b5(a) and (c); and Count III sues Messrs. Sicignano and Brodfuehrer for the allegedly false statements pursuant to Section 20(a) of the Securities Exchange Act. The Amended Complaint seeks to certify a class, and unspecified compensatory and punitive damages, and attorney's fees and costs. On January 29, 2020, the Company and Messrs. Sicignano and Brodfuehrer filed a Motion to Dismiss the Amended Complaint. On July 31, 2020, the Court heard oral arguments on the motion to dismiss. On January 14, 2021, the Court granted motion, dismissing all claims with prejudice. The Plaintiffs filed a notice of appeal on February 12, 2021 to the Second Circuit Court of Appeals. The Second Circuit has granted an expedited briefing schedule and Plaintiff’s/Appellant’s was filed on April 12, 2021 and the Company’s was filed on May 17, 2021. The Second Circuit has scheduled an oral argument for September 2, 2021. We believe that the claims are frivolous, meritless and that the Company and Messrs. Sicignano and Brodfuehrer have substantial legal and factual defenses to the claims. We intend to vigorously defend the Company and Messrs. Sicignano and Brodfuehrer against such claims. Shareholder Derivative Cases On February 6, 2019, Melvyn Klein, a resident of Nassau County New York, filed a shareholder derivative claim against the Company, the Company’s then Chief Executive Officer, Henry Sicignano III, the Company’s Chief Financial Officer, John T. Brodfuehrer, and each member of the Company’s Board of Directors in the United States District Court for the Eastern District of New York entitled: Melvyn Klein, derivatively on behalf of 22nd Century Group v. Henry Sicignano, III, Richard M. Sanders, Joseph Alexander Dunn, Nora B. Sullivan, James W. Cornell, John T. Brodfuehrer and 22nd Century Group, Inc., Case No. 1:19 cv 00748. Mr. Klein brings this action derivatively alleging that (i) the director defendants supposedly breached their fiduciary duties for allegedly allowing the Company to make false statements; (ii) the director defendants supposedly wasted corporate assets to defend this lawsuit and the other related lawsuits; (iii) the defendants allegedly violated Section 10(b) of the Securities Exchange Act and Rule 10b 5 promulgated thereunder for allegedly approving or allowing false statements regarding the Company to be made; and (iv) the director defendants allegedly violated Section 14(a) of the Securities Exchange Act and Rule 14a 9 promulgated thereunder for allegedly approving or allowing false statements regarding the Company to be made in the Company’s proxy statement. On February 11, 2019, Stephen Mathew filed a shareholder derivative claim against the Company, the Company’s then Chief Executive Officer, Henry Sicignano III, the Company’s Chief Financial Officer, John T. Brodfuehrer, and each member of the Company’s Board of Directors in the Supreme Court of the State of New York, County of Erie, entitled: Stephen Mathew, derivatively on behalf of 22nd Century Group, Inc. v. Henry Sicignano, III, John T. Brodfuehrer, Richard M. Sanders, Joseph Alexander Dunn, James W. Cornell, Nora B. Sullivan and 22nd Century Group, Inc., Index No. 801786/2019. Mr. Mathew brings this action derivatively generally alleging the same allegations as in the Klein case. The Complaint seeks declaratory relief, unspecified monetary damages, corrective corporate governance actions, and attorney’s fees and costs. On August 15, 2019, the Court consolidated the Mathew and Klein actions pursuant to a stipulation by the parties (Western District of New York, Case No. 1-19-cv-0513). We believe that the claims are frivolous, meritless and that the Company and the individual defendants have substantial legal and factual defenses to the claims. We intend to vigorously defend the Company and the individual defendants against such claims. On June 10, 2019, Judy Rowley filed a shareholder derivative claim against the Company, the Company’s then Chief Executive Officer, Henry Sicignano III, the Company’s Chief Financial Officer, John T. Brodfuehrer, and each member of the Company’s Board of Directors in the Supreme Court of the State of New York, County of Erie, entitled: Judy Rowley, derivatively on behalf of 22nd Century Group, Inc. v. Henry Sicignano, III, Richard M. Sanders, Joseph Alexander Dunn, Nora B. Sullivan, James W. Cornell, John T. Brodfuehrer, and 22nd Century Group, Inc., Index No. 807214/2019. Ms. Rowley brings this action derivatively alleging that the director defendants supposedly breached their fiduciary duties by allegedly allowing the Company to make false statements. The Complaint seeks declaratory relief, unspecified monetary damages, corrective corporate governance actions, and attorney’s fees and costs. We believe that the claims are frivolous, meritless and that the Company and the individual defendants have substantial legal and factual defenses to the claims. We intend to vigorously defend the Company and the individual defendants against such claims. On September 13, 2019, the Court ordered the litigation stayed pursuant to a joint stipulation by the parties. On January 15, 2020, Kevin Broccuto filed a shareholder derivative claim against the Company, the Company's then Chief Executive Officer, Henry Sicignano III, the Company's Chief Financial Officer, John T. Brodfuehrer, and certain members of the Company's prior Board of Directors in the District Court of the State of Nevada, County of Clark, entitled: Kevin Broccuto, derivatively on behalf of 22nd Century Group, Inc. v. James W. Cornell, Richard M. Sanders, Nora B. Sullivan, Henry Sicignano, III, and John T. Brodfuehrer, Case No. A-20-808599. Mr. Broccuto brings this action derivatively alleging three counts: Count I alleges that the defendants breached their fiduciary duties; Count II alleges they committed corporate waste; and Count III that they were unjustly enriched, by allegedly allowing the Company to make false statements. On February 11, 2020, Jerry Wayne filed a shareholder derivative claim against the Company, the Company's then Chief Executive Officer, Henry Sicignano III, the Company's Chief Financial Officer, John T. Brodfuehrer, and certain members of the Company's prior Board of Directors in the District Court of the State of Nevada, County of Clark, entitled: Jerry Wayne, derivatively on behalf of 22nd Century Group, Inc. v. James W. Cornell, Richard M. Sanders, Nora B. Sullivan, Henry Sicignano, III, and John T. Brodfuehrer, Case No. A-20-808599. Mr. Wayne brings this action derivatively alleging generally the same allegations as the Brocutto case. The Complaint seeks unspecified monetary damages, corrective corporate governance actions, disgorgement of alleged profits and imposition of constructive trusts, and attorney's fees and costs. The Complaint also seeks to declare as unenforceable the Company's Bylaw requiring derivative lawsuits to be filed in Erie County, New York, where the Company is headquartered. On March 25, 2020, the Court ordered the Brocutto and Wayne cases consolidated and stayed pursuant to a joint stipulation from the parties. We believe that the claims are frivolous, meritless and that the Company and the individual defendants have substantial legal and factual defenses to the claims. We intend to vigorously defend the Company and the individual defendants against such claims. |
EQUITY- BASED COMPENSATION
EQUITY- BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2021 | |
EQUITY- BASED COMPENSATION | |
EQUITY- BASED COMPENSATION | NOTE 12 – EQUITY- BASED COMPENSATION On May 20, 2021, the stockholders of 22nd Century Group, Inc. (the “Company”) approved the 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (the “Plan”). The Plan allows for the granting of equity awards to eligible individuals over the life of the Plan, including the issuance of up to 5,000,000 shares of the Company’s common stock and any remaining shares under the Company’s 2014 Omnibus Incentive Plan pursuant to awards under the Plan. The Plan has a term of ten years and is administered by the Compensation Committee of the Company’s Board of Directors to determine the various types of incentive awards that may be granted to recipients under the Plan and the number of shares of common stock to underlie each such award under the Plan. As of June 30, 2021, the Company had available 7,089,486 shares remaining for future awards under the Plan. Restricted Stock Units (“RSUs”) Unvested RSUs Weighted Average Number of Grant-date Shares Fair Value in thousands $ per share Unvested at December 31, 2020 2,938 $ 0.85 Granted 1,995 $ 3.20 Vested (1,234) $ 0.85 Forfeited (216) $ 0.67 Unvested at March 31, 2021 3,483 $ 2.21 Granted 15 $ 4.60 Vested (288) $ 0.86 Forfeited (25) $ 1.04 Unvested at June 30, 2021 3,185 $ 2.35 The fair value of RSUs that vested during the six months ended June 30, 2021 was approximately $4,903 based on the stock price at the time of vesting. Stock Options. Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term Value in thousands $ per share Outstanding at December 31, 2020 6,581 $ 1.50 Granted 235 $ 3.10 Exercised (846) $ 1.36 Expired (6) $ 2.76 Outstanding at March 31, 2021 5,964 $ 1.59 4.3 years $ 7,480 Exercised (88) $ 1.21 Forfeited (100) $ 0.80 Outstanding at June 30, 2021 5,776 $ 1.60 4.1 years $ 13,265 Exercisable at June 30, 2021 4,940 $ 1.57 3.9 years $ 14,068 The intrinsic value of a stock option is the amount by which the current market value or the market value upon exercise of the underlying stock exceeds the exercise price of the option. The weighted average of fair value assumptions used in the Black-Scholes option-pricing model for such grants were as follows: 2021 Risk-free interest rate (1) 0.54 % Expected dividend yield (2) — % Expected volatility (3) 87.92 % Expected term of stock options (4) 4.09 years (1) The risk-free interest rate is based on the period matching the expected term of the stock options based on the U.S. Treasury yield curve in effect on the grant date. (2) The expected dividend yield is assumed as zero. The Company has never paid cash dividends nor does it anticipate paying dividends in the foreseeable future. (3) The expected volatility is based on historical volatility of the Company’s stock. (4) The expected term represents the period of time that options granted are expected to be outstanding based on vesting date and contractual term. Compensation Expense Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Sales, general, and administrative $ 1,197 $ 334 $ 1,677 $ 772 Research and Development 48 42 75 84 Total RSUs and stock option compensation $ 1,245 $ 376 $ 1,752 $ 856 As of June 30, 2021, unrecognized compensation expense amounted to $6,676 which is expected to be recognized over a weighted average period of approximately 1.3 years. In addition, there is approximately $581 of unrecognized stock option compensation expense that requires the achievement of certain milestones which have yet to be obtained. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | NOTE 13. – REVENUE RECOGNITION The Company recognizes revenue when it satisfies a performance obligation by transferring control of the product to a customer. The Company’s customer contracts consist of obligations to manufacture the customer’s branded filtered cigars and cigarettes. For certain contracts, the performance obligation is satisfied over time as the Company determines, due to contract restrictions, it does not have an alternative use of the product and it has an enforceable right to payment as the product is manufactured. The Company recognizes revenue under those contracts at the unit price stated in the contract based on the units manufactured. Revenue from the sale of the Company’s products is recognized net of cash discounts, sales returns and allowances. There was no allowance for discounts or returns and allowances at June 30, 2021 and December 31, 2020. Contract Assets and Liabilities Unbilled receivables (contract assets) represent revenues recognized for performance obligations that have been satisfied but have not been billed. These receivables are included as Accounts receivable, net on the Consolidated Balance Sheets. Customer payment terms vary depending on the terms of each customer contract, but payment is generally due prior to product shipment or within extended credit terms up to twenty-one (21) days after shipment. Deferred Revenue (contract liabilities) relate to down payments received from customers in advance of satisfying a performance obligation. This deferred revenue is included as Deferred income on the Consolidated Balance Sheets. Total contract assets and contract liabilities are as follows: June 30, December 31, 2021 2020 Unbilled receivables $ 300 $ 349 Deferred Revenue (145) (272) Net contract assets $ 155 $ 77 Disaggregation of Revenue The Company’s net sales revenue is derived from customers located primarily in the United States of America and is disaggregated by the timing of revenue recognition—net sales transferred over time and net sales transferred at a point in time. All revenue is related to contract manufacturing. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net sales-over time $ 5,915 $ 3,718 $ 10,347 $ 8,526 Net sales-point in time 2,456 2,717 4,830 4,967 Total Revenue $ 8,371 $ 6,435 $ 15,177 $ 13,493 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2021 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 14. – EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings (loss) per common share for the three and six months ended June 30, 2021 and 2020, respectively. Outstanding warrants, options, and RSUs were excluded from the calculation of diluted EPS as the effect was antidilutive. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (in thousands, except for per-share data) Net loss $ (4,174) $ (5,057) $ (9,204) $ (9,086) Weighted average common shares outstanding - basic and diluted 154,811 138,854 149,564 138,732 Net loss per common share - basic and diluted $ (0.03) $ (0.04) $ (0.06) $ (0.07) Anti-dilutive shares are as follows: Warrants — 11,293 — 11,293 Options 5,776 7,424 5,776 7,424 Restricted stock units 3,185 2,943 3,185 2,943 8,961 21,660 8,961 21,660 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 15. – SUBSEQUENT EVENTS On July 28, 2021, the Company signed a lease agreement for a new research and development (“R&D”) laboratory in Rockville, MD. The new laboratory space has over four thousand square feet and will support the Company’s continued growth and R&D partnerships. The lease has an initial monthly base rent of $12 (escalating 2.5% annually after the first year), a term of 51 months , and an expected commencement date of either late third or early fourth quarter of this year. The lease also calls for abatement of 100% of the base rent for the first five months following the lease commencement date. The Company will recognize the respective right-of-use asset and lease liability for the above lease upon lease commencement. The current lease on the New York laboratory, currently included within Note 4, has converted to month-to-month. |
NATURE OF BUSINESS AND SUMMAR_2
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation - Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The balance sheet as of December 31, 2020 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. These interim consolidated financial statements should be read in conjunction with the December 31, 2020 audited consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on March 11, 2021. |
Principles of Consolidation | Principles of Consolidation - |
Nature of Business | Nature of Business - |
Reclassifications | Reclassifications – |
COVID-19 Pandemic | COVID-19 Pandemic During April 2021, the Company relocated its corporate headquarters into downtown Buffalo, NY. The new office, as well as all of our facilities, continue to operate in compliance with New York and North Carolina guidance (as applicable) related to the prevention of COVID-19 transmission and employee safety. We also continue to allow remote work arrangements by our employees where job duties permit. Our executive leadership team and staff are monitoring this evolving situation and its impacts on our business. We will continue to monitor the local, state, and federal guidance regarding our business practices. |
Use of Estimates | Use of Estimates - |
Intangible Assets | Intangible Assets The Company’s capitalized intellectual property costs are amortized using the straight-line method over the remaining statutory life of the patent assets in each of the Company’s patent families, which have estimated expiration dates ranging from 2026 to 2041. Periodic maintenance or renewal fees are expensed as incurred. Annual minimum license fees are charged to expense. License fees paid for third-party intellectual property are amortized on a straight-line basis over the last to expire patents, which have expected expiration dates ranging from 2028 through 2036. The Company believes that costs associated with becoming a signatory to the MSA and costs related to the acquisition of a predicate cigarette brand have an indefinite life. As such, no amortization is taken. At each reporting period, the Company evaluates whether events and circumstances continue to support the indefinite-lived classification. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Intangible assets subject to amortization are reviewed for strategic importance and commercialization opportunity prior to expiration. If it is determined that the asset no longer supports the Company’s strategic objectives and/or will not be commercially viable prior to expiration, the asset is impaired. In addition, the Company will assess the expected future undiscounted cash flows for its intellectual property based on consideration of future market and economic conditions, competition, federal and state regulations, and licensing opportunities. If the carrying value of such assets are not recoverable, the carrying value will be reduced to fair value. Indefinite-lived intangible asset carrying values are reviewed at least annually or more frequently if events or changes in circumstances indicate that it is more likely than not that an impairment exists. The Company first performs a qualitative assessment and considers its current strategic objectives, future market and economic conditions, competition, and federal and state regulations to determine if an impairment is more likely than not. If it is determined that an impairment is more likely than not, a quantitative assessment is performed to compare the asset carrying value to fair value. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - |
Investments | Investments – investment securities (the adjustment to fair value) are recorded in other comprehensive income or loss on the Company’s Consolidated Statements of Operations and Comprehensive Loss. |
Stock Based Compensation | Stock Based Compensation one year three-year |
Income Taxes | Income Taxes - |
Recent Accounting Pronouncements | Recent Accounting Pronouncement(s) – We consider the applicability and impact of all ASUs. If the ASU is not listed above, it was determined that the ASU was either not applicable or would have an immaterial impact on our financial statements and related disclosures. |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
INVENTORY | |
Schedule of Inventories | June 30, December 31, 2021 2020 Inventory - tobacco leaf $ 863 $ 821 Inventory - hemp/cannabis 68 — Inventory - finished goods Cigarettes and filtered cigars 193 171 Inventory - raw materials Cigarette and filtered cigar components 1,289 1,142 Less: inventory reserve (100) (100) $ 2,313 $ 2,034 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of Property, Plant and Equipment | June 30, December 31, Useful Life 2021 2020 Land $ 1,665 $ — Building and leasehold improvements 7 to 40 309 123 Manufacturing equipment 3 to 10 years 5,518 4,893 Office furniture, fixtures and equipment 5 years 119 20 Laboratory equipment 5 years 192 117 Less: accumulated depreciation (2,956) (2,670) Property, plant and equipment, net $ 4,847 $ 2,483 |
RIGHT-OF-USE ASSETS, LEASE OB_2
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS AND OTHER LEASES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES | |
Summary of discount rate and lease term | Weighted average remaining lease term in years 5.5 Weighted average discount rate 3.8 % |
Schedule of future minimum lease payments | 2021 $ 146 2022 85 2023 78 2024 80 2025 82 Thereafter 192 Total lease payments 663 Less: imputed interest (66) Total $ 597 |
INVESTMENTS AND OTHER ASSETS (T
INVESTMENTS AND OTHER ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
INVESTMENTS & OTHER ASSETS | |
Schedule of carrying value of investments | June 30, December 31, 2021 2020 Aurora stock warrants $ 98 $ 239 Panacea preferred stock — 5,173 Panacea stock warrant — 1,124 Exactus common stock 9,102 — Total Investments $ 9,200 $ 6,536 Convertible note receivable $ — $ 5,876 Promissory note receivable $ 3,684 $ — |
FAIR VALUE MEASUREMENTS AND S_2
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | |
Schedule of assets and liabilities measured at fair value | Fair Value June 30, 2021 Level 1 Level 2 Level 3 Total Assets Short-term investment securities: Money market funds $ 43,892 $ — $ — $ 43,892 Corporate bonds — 16,392 — 16,392 Total short-term investment securities $ 43,892 $ 16,392 $ — $ 60,284 Investment - Aurora stock warrants $ — $ — $ 98 $ 98 Investment - Exactus common shares $ 9,102 $ — $ — $ 9,102 Fair Value December 31, 2020 Level 1 Level 2 Level 3 Total Assets Short-term investment securities: Money market funds $ 8,636 $ — $ — $ 8,636 Corporate bonds — 12,677 — 12,677 Total short-term investment securities $ 8,636 $ 12,677 $ — $ 21,313 Investment - Aurora stock warrants $ — $ — $ 239 $ 239 Investment - Panacea preferred stock $ — $ — $ 5,173 $ 5,173 Convertible note receivable $ — $ — $ 5,876 $ 5,876 |
Schedule of the changes in fair value of Level 3 investments | Fair Value at December 31, 2020 $ 11,288 Unrealized gain as a result of change in fair value (140) Accretion of interest on Panacea preferred stock 142 Panacea investment conversion (11,192) Fair Value at June 30, 2021 $ 98 |
Schedule of available-for-sale securities reconciliation | Available for Sale Debt Securities June 30, 2021 Amortized Gross Gross Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 16,391 $ 1 $ — $ 16,392 Available for Sale Debt Securities December 31, 2020 Amortized Gross Gross Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 12,603 $ 74 $ — $ 12,677 Convertible note receivable 5,876 — — 5,876 Investment - Panacea preferred stock 5,173 — — 5,173 $ 23,652 $ 74 $ — $ 23,726 |
Schedule of available for sale securities classified by contractual maturity | Available for Sale Debt Securities June 30, 2021 December 31, 2020 Amortized Amortized Cost Basis Fair Value Cost Basis Fair Value Due in one year or less $ 6,394 $ 6,409 $ 11,692 $ 11,753 Due after one year through five years 9,997 9,983 11,960 11,973 $ 16,391 $ 16,392 $ 23,652 $ 23,726 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
INTANGIBLE ASSETS | |
Schedule of Intangible Assets | June 30, December 31, 2021 2020 Intangible assets, net Patent and trademark costs $ 5,879 $ 5,667 Less: accumulated amortization (3,115) (2,936) Patent and trademark costs, net 2,764 2,731 License fees 3,876 3,876 Less: accumulated amortization (1,073) (948) License fees, net 2,803 2,928 MSA signatory costs 2,202 2,202 License fee for predicate cigarette brand 350 350 $ 8,119 $ 8,211 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
NOTES PAYABLE | |
Schedule of notes payable balances | June 30, December 31, 2021 2020 License Fees $ 297 $ 293 D&O Insurance 2,362 246 Total current notes payable $ 2,659 $ 539 |
WARRANT EXERCISE AND CAPITAL _2
WARRANT EXERCISE AND CAPITAL RAISE (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
WARRANT EXERCISE AND CAPITAL RAISE | |
Schedule of warrant activity | Number of Warrants Warrants outstanding at December 31, 2020 11,293,211 Warrants exercised in Q1 2021 (11,293,211) Warrants outstanding at June 30, 2021 — |
COMMITMENTS & CONTINGENCIES (Ta
COMMITMENTS & CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
Contractual Obligation, Fiscal Year Maturity [Table Text Block] | Future Commitments Commitment Counter Party Product Relationship Commitment Type 2021 2022 2023 2024 2025 & After Total Research Agreement KeyGene Hemp / Cannabis Contract fee $ 500 $ 1,150 $ 1,200 $ 1,227 $ 2,893 $ 6,970 (1) License Agreement NCSU Tobacco Annual royalty fee 135 225 — — — 360 (2), (3) License Agreement NCSU Tobacco Minimum annual royalty 13 50 50 50 600 763 (3) License Agreement NCSU Tobacco Minimum annual royalty 26 50 50 50 500 676 (3) Research Agreement NCSU Tobacco Contract fee 30 — — — — 30 (4) Sublicense Agreement Anandia Laboratories, Inc. Hemp / Cannabis Annual license fee 10 10 10 10 110 150 (5) Research Agreement Cannametrix Hemp / Cannabis Contract fee 51 50 — — — 101 (6) Growing Agreement Various Various Contract fee 78 — — — — 78 (7) $ 843 $ 1,535 $ 1,310 $ 1,337 $ 4,103 $ 9,128 (1) Exclusive agreement with the Company with respect to the Cannabis Sativa L. plant (the "Field"). The initial term of the agreement was five years with an option for an additional two years . On April 30, 2021, the Company and KeyGene entered into a First Amended and Restated Framework Collaborative Research Agreement which extended the agreement term, from first-quarter 2024 to first-quarter 2027, and preserves the Company’s option for an additional 2-year extension, now through first quarter of 2029. The Company will exclusively own all results and all intellectual property relating to the results of the collaboration with KeyGene (the "Results”). The Company will pay royalties in varying amounts to KeyGene relating to the Company's commercialization in the Field of certain Results. The Company has also granted KeyGene a license to commercialize the Results outside of the Field and KeyGene will pay royalties in varying amounts to the Company relating to KeyGene's commercialization of the Results outside of the Field. (2) The license agreement also requires a milestone payment of $150 upon FDA approval or clearance of a product that uses the NCSU licensed technology. The annual royalty fee is credited against running royalties on sales of licensed products. (3) The Company is also responsible for reimbursing NSCU for actual third-party patent costs incurred, including capitalized patent costs and patent maintenance costs. These costs vary from year to year and the Company has certain rights to direct the activities that result in these costs. (4) On September 11, 2020, the Company entered into a one-year Sponsored Project Agreement with NCSU for continued research of tobacco alkaloid formation. (5) The Company is also responsible for the payment of certain costs, including, capitalized patent costs and patent maintenance costs, a running royalty on future net sales of products made from the sublicensed intellectual property, and a sharing of future sublicensing consideration received from sublicensing to third parties in all countries except for Canada. Anandia retains all patent rights, and is responsible for all patent maintenance, in Canada. (6) On March 1, 2021, the Company entered into a 14-month research agreement with Cannametrix for hemp/cannabis product development, formulation, and validation. (7) Various R&D growing agreements for hemp / cannabis and tobacco. |
EQUITY- BASED COMPENSATION (Tab
EQUITY- BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
EQUITY- BASED COMPENSATION | |
Summary of changes in unvested restricted stock | Unvested RSUs Weighted Average Number of Grant-date Shares Fair Value in thousands $ per share Unvested at December 31, 2020 2,938 $ 0.85 Granted 1,995 $ 3.20 Vested (1,234) $ 0.85 Forfeited (216) $ 0.67 Unvested at March 31, 2021 3,483 $ 2.21 Granted 15 $ 4.60 Vested (288) $ 0.86 Forfeited (25) $ 1.04 Unvested at June 30, 2021 3,185 $ 2.35 |
Schedule of stock option activity | Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term Value in thousands $ per share Outstanding at December 31, 2020 6,581 $ 1.50 Granted 235 $ 3.10 Exercised (846) $ 1.36 Expired (6) $ 2.76 Outstanding at March 31, 2021 5,964 $ 1.59 4.3 years $ 7,480 Exercised (88) $ 1.21 Forfeited (100) $ 0.80 Outstanding at June 30, 2021 5,776 $ 1.60 4.1 years $ 13,265 Exercisable at June 30, 2021 4,940 $ 1.57 3.9 years $ 14,068 |
Schedule of fair value assumptions | 2021 Risk-free interest rate (1) 0.54 % Expected dividend yield (2) — % Expected volatility (3) 87.92 % Expected term of stock options (4) 4.09 years (1) The risk-free interest rate is based on the period matching the expected term of the stock options based on the U.S. Treasury yield curve in effect on the grant date. (2) The expected dividend yield is assumed as zero. The Company has never paid cash dividends nor does it anticipate paying dividends in the foreseeable future. (3) The expected volatility is based on historical volatility of the Company’s stock. (4) The expected term represents the period of time that options granted are expected to be outstanding based on vesting date and contractual term. |
Schedule of compensation costs related to restricted stock and stock options | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Sales, general, and administrative $ 1,197 $ 334 $ 1,677 $ 772 Research and Development 48 42 75 84 Total RSUs and stock option compensation $ 1,245 $ 376 $ 1,752 $ 856 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of contract assets and liabilities | June 30, December 31, 2021 2020 Unbilled receivables $ 300 $ 349 Deferred Revenue (145) (272) Net contract assets $ 155 $ 77 |
Schedule of disaggregation of revenue | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net sales-over time $ 5,915 $ 3,718 $ 10,347 $ 8,526 Net sales-point in time 2,456 2,717 4,830 4,967 Total Revenue $ 8,371 $ 6,435 $ 15,177 $ 13,493 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earnings per common share | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (in thousands, except for per-share data) Net loss $ (4,174) $ (5,057) $ (9,204) $ (9,086) Weighted average common shares outstanding - basic and diluted 154,811 138,854 149,564 138,732 Net loss per common share - basic and diluted $ (0.03) $ (0.04) $ (0.06) $ (0.07) Anti-dilutive shares are as follows: Warrants — 11,293 — 11,293 Options 5,776 7,424 5,776 7,424 Restricted stock units 3,185 2,943 3,185 2,943 8,961 21,660 8,961 21,660 |
Schedule of anti-dilutive shares excluded from dilutive securities | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (in thousands, except for per-share data) Net loss $ (4,174) $ (5,057) $ (9,204) $ (9,086) Weighted average common shares outstanding - basic and diluted 154,811 138,854 149,564 138,732 Net loss per common share - basic and diluted $ (0.03) $ (0.04) $ (0.06) $ (0.07) Anti-dilutive shares are as follows: Warrants — 11,293 — 11,293 Options 5,776 7,424 5,776 7,424 Restricted stock units 3,185 2,943 3,185 2,943 8,961 21,660 8,961 21,660 |
NATURE OF BUSINESS AND SUMMAR_3
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 6 Months Ended |
Jun. 30, 2021subsidiary | |
Condensed Financial Statements, Captions [Line Items] | |
Number of subsidiaries | 4 |
Directors | |
Condensed Financial Statements, Captions [Line Items] | |
Vesting period | 1 year |
Officers and employees | |
Condensed Financial Statements, Captions [Line Items] | |
Vesting period | 3 years |
Twenty Second Century Ltd [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Number of subsidiaries | 2 |
Botanical Genetics [Member] | |
Condensed Financial Statements, Captions [Line Items] | |
Number of subsidiaries | 1 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
INVENTORY | ||
Inventory - tobacco leaf | $ 863 | $ 821 |
Inventory - hemp/cannabis | 68 | |
Inventory - finished goods | 193 | 171 |
Inventory - raw materials | 1,289 | 1,142 |
Less: inventory reserve | (100) | (100) |
Inventory, Net | $ 2,313 | $ 2,034 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||||
Less: accumulated depreciation | $ (2,956) | $ (2,956) | $ (2,670) | ||
Total property, plant and equipment | 4,847 | 4,847 | 2,483 | ||
Depreciation expense | 150 | $ 157 | 288 | $ 313 | |
Land [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | 1,665 | 1,665 | |||
Building and Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | 309 | $ 309 | 123 | ||
Building and Leasehold improvements | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 40 years | ||||
Building and Leasehold improvements | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 7 years | ||||
Manufacturing equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | 5,518 | $ 5,518 | 4,893 | ||
Manufacturing equipment | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 10 years | ||||
Manufacturing equipment | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 3 years | ||||
Office furniture, fixtures and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | 119 | $ 119 | 20 | ||
Property, Plant and Equipment, Useful Life | 5 years | ||||
Laboratory equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, Plant and Equipment, Gross | $ 192 | $ 192 | $ 117 | ||
Property, Plant and Equipment, Useful Life | 5 years |
RIGHT-OF-USE ASSETS, LEASE OB_3
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS AND OTHER LEASES (Details) $ in Thousands | Jul. 28, 2021USD ($) | Jun. 30, 2021USD ($)item |
Lessee, Lease, Description [Line Items] | ||
Initial lease term | 36 months | |
Number of renewal options | item | 2 | |
Renewal term | 24 months | |
Weighted average remaining lease term in years | 5 years 6 months | |
Weighted average discount rate | 3.80% | |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2021 | $ 146 | |
2022 | 85 | |
2023 | 78 | |
2024 | 80 | |
2025 | 82 | |
Thereafter | 192 | |
Total lease payments | 663 | |
Less: imputed interest | (66) | |
Operating Lease, Liability | $ 597 | |
Subsequent Event [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Initial lease term | 53 months | |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
Base Rent Annual Increase, as a percent | 2.50% | |
Monthly base rent | $ 12 |
INVESTMENTS AND OTHER ASSETS -
INVESTMENTS AND OTHER ASSETS - Total carrying value (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 03, 2019 |
Marketable Securities [Line Items] | |||
Investments | $ 9,200 | $ 6,536 | |
Note receivable | 3,684 | 5,876 | |
Aurora Cannabis Inc [Member] | Warrant | |||
Marketable Securities [Line Items] | |||
Investments | 98 | 239 | |
Investment in Panacea | |||
Marketable Securities [Line Items] | |||
Exercise price | $ 2.344 | ||
Investments | $ 13,297 | ||
Note receivable | 3,684 | ||
Investment in Panacea | Warrant | |||
Marketable Securities [Line Items] | |||
Investments | 1,124 | ||
Investment in Panacea | Preferred stock | |||
Marketable Securities [Line Items] | |||
Investments | $ 5,173 | ||
Exactus [Member] | |||
Marketable Securities [Line Items] | |||
Investments | $ 9,102 |
INVESTMENTS AND OTHER ASSETS (D
INVESTMENTS AND OTHER ASSETS (Details) $ / shares in Units, $ in Thousands | Jun. 30, 2021USD ($)ashares | Dec. 03, 2019USD ($)item$ / shares | Jun. 30, 2021USD ($)a | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)a | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Marketable Securities [Line Items] | |||||||
Long-term Investments | $ 9,200 | $ 9,200 | $ 9,200 | $ 6,536 | |||
Note receivable | 3,684 | 3,684 | 3,684 | 5,876 | |||
Impairment of Panacea investment | $ 1,062 | $ 1,062 | |||||
Gain on Panacea investment conversion | 2,548 | 2,548 | |||||
Investment in Panacea | |||||||
Marketable Securities [Line Items] | |||||||
Long-term Investments | $ 13,297 | ||||||
Amount paid to acquire investments | $ 12,000 | ||||||
Shares issued in purchase, value per share | $ / shares | $ 1 | ||||||
Shares issued for Panacea, value | $ 1,297 | ||||||
Ownership percentage (in percent) | 15.80% | ||||||
Number of instruments comprising the investment | item | 3 | ||||||
Note receivable | 3,684 | 3,684 | 3,684 | ||||
Exercise price | $ / shares | $ 2.344 | ||||||
Note receivable, face amount | $ 4,300 | $ 7,000 | $ 4,300 | $ 4,300 | |||
Note receivable term | 5 years | ||||||
Note receivable interest rate | 0.00% | 10.00% | 0.00% | 0.00% | |||
Dividend rate | 10.00% | ||||||
Number of years for acceleration of exercise date | 2 years | ||||||
Area of Land | a | 224 | 224 | 224 | ||||
Gain on Panacea investment conversion | $ 2,548 | ||||||
Panacea conversion assets included in acquisition of property, plant and equipment | 2,248 | ||||||
Stock received in conversion, value | 500 | ||||||
Note receivable, discount | 616 | $ 616 | $ 616 | ||||
Investment in Panacea | Preferred stock | |||||||
Marketable Securities [Line Items] | |||||||
Long-term Investments | 5,173 | ||||||
Investment in Panacea | Warrant | |||||||
Marketable Securities [Line Items] | |||||||
Long-term Investments | $ 1,124 | ||||||
Ownership percentage (in percent) | 51.00% | ||||||
Impairment of Panacea investment | $ 1,062 | ||||||
Investment in Panacea | Warrant | Volatility | |||||||
Marketable Securities [Line Items] | |||||||
Warrants measurement input | 0.70 | ||||||
Investment in Panacea | Warrant | Discount for lack of marketability | |||||||
Marketable Securities [Line Items] | |||||||
Warrants measurement input | 0.25 | ||||||
Investment in Panacea | Warrant | Risk-free rate | |||||||
Marketable Securities [Line Items] | |||||||
Warrants measurement input | 0.02 | ||||||
Exactus [Member] | |||||||
Marketable Securities [Line Items] | |||||||
Long-term Investments | $ 9,102 | $ 9,102 | $ 9,102 | ||||
Stock received in conversion, shares | shares | 91,016,026 |
FAIR VALUE MEASUREMENTS - Recur
FAIR VALUE MEASUREMENTS - Recurring (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021USD ($)$ / shares | Dec. 31, 2020USD ($) | |
Money Market Funds | ||
Assets | ||
Net Asset Value Per Share | $ / shares | $ 1 | |
Warrant | ||
Assets | ||
Estimated change in fair value due to change in input | $ 73 | |
Warrant | Volatility | ||
Assets | ||
Equity Securities, FV-NI, Measurement Input | 0.88 | 1.37 |
Input increase (decrease) assumption, as a percent | 20.00% | 20.00% |
Estimated change in fair value due to change in input | $ 115 | |
Fair Value, Recurring [Member] | Short-term Investments [Member] | ||
Assets | ||
Assets at fair value | $ 60,284 | 21,313 |
Fair Value, Recurring [Member] | Money Market Funds | ||
Assets | ||
Assets at fair value | 43,892 | 8,636 |
Fair Value, Recurring [Member] | Corporate Bonds | ||
Assets | ||
Assets at fair value | 16,392 | 12,677 |
Fair Value, Recurring [Member] | Warrant | ||
Assets | ||
Assets at fair value | 98 | 239 |
Fair Value, Recurring [Member] | Common Stock [Member] | ||
Assets | ||
Assets at fair value | 9,102 | |
Fair Value, Recurring [Member] | Preferred stock | ||
Assets | ||
Assets at fair value | 5,173 | |
Fair Value, Recurring [Member] | Notes Receivable [Member] | ||
Assets | ||
Assets at fair value | 5,876 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 | Short-term Investments [Member] | ||
Assets | ||
Assets at fair value | 43,892 | 8,636 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 | Money Market Funds | ||
Assets | ||
Assets at fair value | 43,892 | 8,636 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 | Corporate Bonds | ||
Assets | ||
Assets at fair value | 0 | 0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 | Warrant | ||
Assets | ||
Assets at fair value | 0 | 0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 | Common Stock [Member] | ||
Assets | ||
Assets at fair value | 9,102 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 | Preferred stock | ||
Assets | ||
Assets at fair value | 0 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 | Notes Receivable [Member] | ||
Assets | ||
Assets at fair value | 0 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 | Short-term Investments [Member] | ||
Assets | ||
Assets at fair value | 16,392 | 12,677 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 | Money Market Funds | ||
Assets | ||
Assets at fair value | 0 | 0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 | Corporate Bonds | ||
Assets | ||
Assets at fair value | 16,392 | 12,677 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 | Warrant | ||
Assets | ||
Assets at fair value | 0 | 0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 | Common Stock [Member] | ||
Assets | ||
Assets at fair value | 0 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 | Preferred stock | ||
Assets | ||
Assets at fair value | 0 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 | Notes Receivable [Member] | ||
Assets | ||
Assets at fair value | 0 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 | Short-term Investments [Member] | ||
Assets | ||
Assets at fair value | 0 | 0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 | Money Market Funds | ||
Assets | ||
Assets at fair value | 0 | 0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 | Corporate Bonds | ||
Assets | ||
Assets at fair value | 0 | 0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 | Warrant | ||
Assets | ||
Assets at fair value | 98 | 239 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 | Common Stock [Member] | ||
Assets | ||
Assets at fair value | $ 0 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 | Preferred stock | ||
Assets | ||
Assets at fair value | 5,173 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 | Notes Receivable [Member] | ||
Assets | ||
Assets at fair value | $ 5,876 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in fair value, Level 3 (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($) | |
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | |
Fair value at beginning of the period | $ 11,288 |
Unrealized gain as a result of change in fair value | (140) |
Accretion of interest on note | 142 |
Panacea investment conversion | (11,192) |
Fair value at end of the period | $ 98 |
FAIR VALUE MEASUREMENTS - Avail
FAIR VALUE MEASUREMENTS - Available-for-sale securities (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Available-for-sale Securities - Amortized Cost Basis | $ 16,391 | $ 23,652 |
Available-for-sale Securities - Gross Unrealized Gains | 74 | |
Available-for-sale Securities - Gross Unrealized Losses | 0 | |
Available-for-sale Securities - Fair Value | 16,392 | 23,726 |
Corporate Bonds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Available-for-sale Securities - Amortized Cost Basis | 16,391 | 12,603 |
Available-for-sale Securities - Gross Unrealized Gains | 1 | 74 |
Available-for-sale Securities - Gross Unrealized Losses | 0 | 0 |
Available-for-sale Securities - Fair Value | $ 16,392 | 12,677 |
Notes Receivable [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Available-for-sale Securities - Amortized Cost Basis | 5,876 | |
Available-for-sale Securities - Gross Unrealized Gains | 0 | |
Available-for-sale Securities - Gross Unrealized Losses | 0 | |
Available-for-sale Securities - Fair Value | 5,876 | |
Preferred stock | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Available-for-sale Securities - Amortized Cost Basis | 5,173 | |
Available-for-sale Securities - Gross Unrealized Gains | 0 | |
Available-for-sale Securities - Gross Unrealized Losses | 0 | |
Available-for-sale Securities - Fair Value | $ 5,173 |
FAIR VALUE MEASUREMENTS - Matur
FAIR VALUE MEASUREMENTS - Maturity of available-for-sale securities by contractual maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | ||
Available For Sale, Maturities One Year or Less, Amortized Cost | $ 6,394 | $ 11,692 |
Available For Sale, Maturities One Through Five Years, Amortized Cost | 9,997 | 11,960 |
Available For Sale Securities, Amortized Cost | 16,391 | 23,652 |
Available For Sale, Maturities One Year or Less, Fair Value | 6,409 | 11,753 |
Available For Sale, Maturities One Through Five Years, Fair Value | 9,983 | 11,973 |
Available For Sale Securities, Fair Value | $ 16,392 | $ 23,726 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Intangible assets, net | |||||
Intangible assets, net | $ 8,119 | $ 8,119 | $ 8,211 | ||
Amortization expense | 153 | $ 189 | 303 | $ 361 | |
Impairment of intangible assets | 146 | 146 | |||
Intangible assets written off, cost | 448 | 448 | |||
Intangible assets written off, accumulated amortization | $ 302 | $ 302 | |||
MSA Signatory Costs | |||||
Intangible assets, net | |||||
Indefinite-lived intangible assets | 2,202 | 2,202 | 2,202 | ||
Licensing agreements | |||||
Intangible assets, net | |||||
Indefinite-lived intangible assets | 350 | 350 | 350 | ||
Patent and Trademark [Member] | |||||
Intangible assets, net | |||||
Gross | 5,879 | 5,879 | 5,667 | ||
Less: accumulated amortization | (3,115) | (3,115) | (2,936) | ||
Total | 2,764 | 2,764 | 2,731 | ||
Licensing agreements | |||||
Intangible assets, net | |||||
Gross | 3,876 | 3,876 | 3,876 | ||
Less: accumulated amortization | (1,073) | (1,073) | (948) | ||
Total | $ 2,803 | $ 2,803 | $ 2,928 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) $ in Thousands | Oct. 22, 2018USD ($)item | Jun. 22, 2018USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Proceeds from SBA loan | $ 1,183 | ||||||
Directors And Officers insurance, policy term | 1 year | 1 year | |||||
Annual premium | $ 3,315 | $ 2,744 | |||||
Premium paid | 662 | 549 | |||||
Proceeds from Notes Payable | $ 2,653 | $ 2,195 | $ 2,653 | $ 2,195 | |||
Debt Instrument, Term | 9 months | 9 months | |||||
Debt Instrument, Interest Rate, Stated Percentage | 3.49% | 3.19% | 3.49% | 3.19% | |||
License fees, current | $ 297 | $ 297 | $ 293 | ||||
D&O insurance payable | 2,362 | 2,362 | 246 | ||||
Notes Payable, Current, Total | 2,659 | 2,659 | $ 539 | ||||
Accretion of non cash interest expense | 4 | $ 12 | |||||
License Agreement | North Carolina State University [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Aggregate milestone payments | $ 1,200 | ||||||
Notes Payable | 1,175 | ||||||
Annual milestone payments beyond upfront amount | 300 | ||||||
License acquired | $ 1,175 | ||||||
License Agreement | University Of Kentucky [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Aggregate milestone payments | $ 1,200 | ||||||
Notes Payable | 1,151 | ||||||
Annual milestone payments beyond upfront amount | 300 | ||||||
License acquired | 1,151 | ||||||
Upfront payment | $ 300 | ||||||
Number of installments | item | 3 | ||||||
Borrowings [Member] | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Accretion of non cash interest expense | $ 2 | $ 6 | $ 4 | $ 12 |
SEVERANCE LIABILITY (Details)
SEVERANCE LIABILITY (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2021 | Dec. 31, 2020 | |
Postemployment Benefits [Abstract] | ||||
Severance expense | $ 306 | $ 881 | ||
Severance accrual | $ 771 | |||
Severance period | 42 months | |||
Accrued severance, current | $ 212 | $ 339 | ||
Accrued severance, noncurrent | $ 130 | $ 241 |
WARRANT EXERCISE AND CAPITAL _3
WARRANT EXERCISE AND CAPITAL RAISE - Capital raise (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | Jun. 07, 2021 | Jun. 30, 2021 |
WARRANT EXERCISE AND CAPITAL RAISE | ||
Stock issued in connection with capital raise (in shares) | 10 | |
Share Price | $ 4 | |
Stock issued in connection with capital raise | $ 38,206 | $ 38,206 |
WARRANT EXERCISE AND CAPITAL _4
WARRANT EXERCISE AND CAPITAL RAISE - Warrants (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
WARRANT EXERCISE AND CAPITAL RAISE | |||
Warrants exercised | (11,293,211) | ||
Net proceeds from warrant exercises | $ 11,782 | $ 11,782 | |
Warrant outstanding balance | 11,293,211 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Licenses (Details) - USD ($) $ in Thousands | Apr. 30, 2021 | Mar. 01, 2021 | Jun. 30, 2021 |
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
2021 | $ 843 | ||
2022 | 1,535 | ||
2023 | 1,310 | ||
2024 | 1,337 | ||
2025 & After | 4,103 | ||
Contractual Obligation, Total | 9,128 | ||
Research Agreement | KeyGene | |||
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
2021 | 500 | ||
2022 | 1,150 | ||
2023 | 1,200 | ||
2024 | 1,227 | ||
2025 & After | 2,893 | ||
Contractual Obligation, Total | $ 6,970 | ||
Agreement Term | 5 years | ||
Agreement extension period | 2 years | 2 years | |
Research Agreement | North Carolina State University [Member] | |||
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
2021 | $ 30 | ||
Contractual Obligation, Total | $ 30 | ||
Agreement Term | 1 year | ||
Research Agreement | Cannametrix [Member] | |||
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
2021 | $ 51 | ||
2022 | 50 | ||
Contractual Obligation, Total | 101 | ||
Agreement Term | 14 months | ||
License Agreement | Annual Royalty [Member] | |||
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
2021 | 135 | ||
2022 | 225 | ||
Contractual Obligation, Total | 360 | ||
License Agreement | Minimum Annual Royalty 1 [Member] | |||
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
2021 | 13 | ||
2022 | 50 | ||
2023 | 50 | ||
2024 | 50 | ||
2025 & After | 600 | ||
Contractual Obligation, Total | 763 | ||
License Agreement | Minimum Annual Royalty 2 [Member] | |||
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
2021 | 26 | ||
2022 | 50 | ||
2023 | 50 | ||
2024 | 50 | ||
2025 & After | 500 | ||
Contractual Obligation, Total | 676 | ||
License Agreement | North Carolina State University [Member] | |||
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
Milestone payment upon approval of a product | 150 | ||
Sublicense Agreement With Anandia | |||
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
2021 | 10 | ||
2022 | 10 | ||
2023 | 10 | ||
2024 | 10 | ||
2025 & After | 110 | ||
Contractual Obligation, Total | 150 | ||
Growing Agreement [Member] | |||
Contractual Obligation, Fiscal Year Maturity Schedule [Abstract] | |||
2021 | 78 | ||
Contractual Obligation, Total | $ 78 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - MRTP, litigation (Details) $ in Thousands, shares in Millions | Jun. 07, 2021shares | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jan. 15, 2020item | Nov. 19, 2019item |
Other Commitments [Line Items] | |||||||
Number of shares issued in settlement | shares | 10 | ||||||
Number of counts | item | 3 | 3 | |||||
Modified Risk Tobacco Product [Member] | |||||||
Other Commitments [Line Items] | |||||||
Research and development expense | $ | $ 2 | $ 4 | $ 14 | $ 154 |
EQUITY-BASED COMPENSATION (Deta
EQUITY-BASED COMPENSATION (Details) | 6 Months Ended |
Jun. 30, 2021shares | |
EQUITY- BASED COMPENSATION | |
Additional shares authorized during the period | 5,000,000 |
Plan term | 10 years |
Number of shares remaining for future awards | 7,089,486 |
EQUITY- BASED COMPENSATION - RS
EQUITY- BASED COMPENSATION - RSUs (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | |
RSUs, Number of shares | |||
Nonvested, Number, Beginning Balance | 3,483 | 2,938 | 2,938 |
RSUs granted, number | 15 | 1,995 | |
RSUs vested, number | (288) | (1,234) | |
RSUs forfeited, number | (25) | (216) | |
Nonvested, Number, Ending Balance | 3,185 | 3,483 | 3,185 |
RSUs, Weighted average grant-date fair value | |||
Nonvested, Weighted Average Grant Date Fair Value, Beginning Balance | $ 2.21 | $ 0.85 | $ 0.85 |
RSUs granted, grant-date fair value | 4.60 | 3.20 | |
RSUs vested, grant-date fair value | 0.86 | 0.85 | |
RSUs forfeited, grant-date fair value | 1.04 | 0.67 | |
Nonvested, Weighted Average Grant Date Fair Value, Ending Balance | $ 2.35 | $ 2.21 | $ 2.35 |
Fair value of RSUs that vested during the period | $ 4,903 |
EQUITY- BASED COMPENSATION - St
EQUITY- BASED COMPENSATION - Stock option activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | |
Number of Options | |||
Options, number, Beginning of Period | 5,964 | 6,581 | 6,581 |
Options granted, number | 235 | ||
Options exercised, number | (88) | (846) | |
Options forfeited, number | (100) | ||
Options expired, number | (6) | ||
Options, number, End of Period | 5,776 | 5,964 | 5,776 |
Options exercisable, number, End of Period | 4,940 | 4,940 | |
Options, Weighted Average Exercise Price | |||
Options, Beginning of Period, weighted average exercise price | $ 1.59 | $ 1.50 | $ 1.50 |
Options granted, weighted average exercise price | 3.10 | ||
Options exercised, weighted average exercise price | 1.21 | 1.36 | |
Options forfeited, weighted average exercise price | 0.80 | ||
Options expired, weighted average exercise price | 2.76 | ||
Options, End of Period, weighted average exercise price | 1.60 | $ 1.59 | 1.60 |
Options exercisable, End of Period, weighted average exercise price | $ 1.57 | $ 1.57 | |
Weighted Average Remaining Contractual Term | |||
Options, End of Period, weighted average remaining contractual term | 4 years 1 month 6 days | 4 years 3 months 18 days | |
Options exercisable, End of Period, weighted average remaining contractual term | 3 years 10 months 24 days | ||
Aggregate Intrinsic Value | |||
Options, End of Period, aggregate intrinsic value | $ 13,265 | $ 7,480 | $ 13,265 |
Options exercisable, End of Period, aggregated intrinsic value | $ 14,068 | $ 14,068 |
EQUITY BASED COMPENSATION - Fai
EQUITY BASED COMPENSATION - Fair value assumptions (Details) | 6 Months Ended |
Jun. 30, 2021 | |
EQUITY- BASED COMPENSATION | |
Risk-free interest rate (weighted average) | 0.54% |
Expected stock price volatility | 87.92% |
Expected life of options (weighted average) | 4 years 1 month 2 days |
EQUITY-BASED COMPENSATION - Com
EQUITY-BASED COMPENSATION - Compensation expense and unrecognized compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based employee compensation expense | $ 1,245 | $ 376 | $ 1,752 | $ 856 |
Unrecognized compensation | 6,676 | $ 6,676 | ||
Unrecognized compensation, period for recognition | 1 year 3 months 18 days | |||
Unrecognized compensation, options with milestone-based vesting | 581 | $ 581 | ||
Selling, General and Administrative Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based employee compensation expense | 1,197 | 334 | 1,677 | 772 |
Research and Development Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based employee compensation expense | $ 48 | $ 42 | $ 75 | $ 84 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||||
Allowance for discounts or returns and allowances | $ 0 | $ 0 | $ 0 | ||
Payment period | 21 days | ||||
Unbilled receivables | 300 | $ 300 | 349 | ||
Deferred revenue | (145) | (145) | (272) | ||
Contract asset (liability), net | 155 | 155 | $ 77 | ||
Sale of products, net | 8,371 | $ 6,435 | 15,177 | $ 13,493 | |
Transferred over Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Sale of products, net | 5,915 | 3,718 | 10,347 | 8,526 | |
Transferred at Point in Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Sale of products, net | $ 2,456 | $ 2,717 | $ 4,830 | $ 4,967 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
EARNINGS PER SHARE | ||||||
Net loss attributed to common shareholders | $ (4,174) | $ (5,030) | $ (5,057) | $ (4,029) | $ (9,204) | $ (9,086) |
Weighted average common shares outstanding - basic and diluted (in thousands) | 154,811 | 138,854 | 149,564 | 138,732 | ||
Loss per common share - basic and diluted | $ (0.03) | $ (0.04) | $ (0.06) | $ (0.07) |
EARNINGS PER SHARE - Anti-dilut
EARNINGS PER SHARE - Anti-dilutive securities (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities outstanding but excluded from computation of earnings per share | 8,961 | 21,660 | 8,961 | 21,660 |
Warrant | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities outstanding but excluded from computation of earnings per share | 11,293 | 11,293 | ||
Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities outstanding but excluded from computation of earnings per share | 5,776 | 7,424 | 5,776 | 7,424 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Securities outstanding but excluded from computation of earnings per share | 3,185 | 2,943 | 3,185 | 2,943 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) ft² in Thousands, $ in Thousands | Jul. 28, 2021USD ($)ft² | Jun. 30, 2021 |
Subsequent Event [Line Items] | ||
Initial lease term | 36 months | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Area under operating lease | ft² | 4 | |
Monthly base rent | $ | $ 12 | |
Base Rent Annual Increase, as a percent | 2.50% | |
Initial lease term | 53 months | |
Percentage abatement of monthly base rent | 100.00% | |
Rent abatement period | 5 months |