22nd Century Group Reports 48.6% Revenue Decline in Q2 2025

22nd Century Group, Inc. reported a significant decline in financial performance for the second quarter of 2025, with net revenues of $4.1 million, a decrease of 48.6% from $7.9 million in the same period last year. The company attributed this drop to shifts in product mix and a decrease in sales volume, particularly in its contract manufacturing segment. The gross loss for the quarter was $635, compared to a gross profit of $570 in the prior year, reflecting a gross margin of -15.6%. The operating loss from continuing operations increased to $2.98 million, up from a loss of $2.05 million in the previous year.

In terms of operational metrics, the company sold 779 cartons in the second quarter of 2025, a slight increase from 719 cartons in the same quarter of 2024. However, the overall revenue decline was influenced by a contractual increase in consideration payable to customers and the absence of a one-time research cigarette order that had positively impacted the previous year's results. Total operating expenses decreased to $2.35 million from $2.62 million, primarily due to lower sales, general, and administrative expenses, as well as reduced research and development costs.

The company’s balance sheet as of June 30, 2025, showed total assets of $22.38 million, up from $21.67 million at the end of 2024. Cash and cash equivalents decreased to $3.08 million from $4.42 million, while current liabilities rose significantly to $15.39 million from $9.96 million, largely due to increased debt obligations. The accumulated deficit also widened to $401.61 million from $393.87 million, indicating ongoing financial challenges.

Strategically, 22nd Century Group has been focusing on reducing expenses and exploring financing options, including potential asset sales and partnerships, to improve liquidity. The company has expressed substantial doubt about its ability to continue as a going concern over the next year, given its negative cash flow from operations of $6.45 million for the first half of 2025. Management is actively evaluating various strategies to address these financial pressures, including potential capital raises through equity or debt securities.

Looking ahead, the company plans to launch new products, including rebranded VLN® cigarettes, in the third quarter of 2025, which it hopes will drive revenue growth. However, the success of these initiatives will depend on market acceptance and the company's ability to navigate its current financial difficulties.