22nd Century Group Inc (XXII) 2023 Q4 法說會逐字稿

Yes, welcome to 22nd Century Group's fourth quarter 2023 Conference Call and Webcast. (Operator Instructions) It is now my pleasure to turn the floor over to Matt Kreps, Investor Relations for 22nd Century group.

是的，歡迎參加 22nd Century Group 2023 年第四季電話會議和網路廣播。（操作員說明） 現在我很高興將發言權交給 22nd Century 集團投資者關係部門的 Matt Kreps。

Please begin.

請開始。

Hello, and welcome to 22nd Century's fourth quarter results conference Call. Joining me today are Larry Firestone, CEO; and Hugh Kinsman, CFO.

您好，歡迎來到22nd Century第四季業績發表會。今天加入我的是執行長 Larry Firestone；和財務長休·金斯曼。

Earlier today, we issued a press release announcing our results for the fourth quarter of 2023. The release and 10-K are available in the Investors section of our website at 22nd Century.com. We'll start today's call with prepared remarks from Larry and Hugh before moving into a Q&A session with our analysts. If you have questions about our business not addressed on this call, you're welcome to e-mail Investor Relations using the contact information provided in today's press release.

今天早些時候，我們發布了一份新聞稿，公佈了 2023 年第四季的業績。新聞稿和 10-K 可在我們網站 22nd Century.com 的投資者部分取得。我們將以拉里和休準備好的演講開始今天的電話會議，然後進入與分析師的問答環節。如果您對本次電話會議未解決的有關我們業務的疑問，歡迎您使用今天新聞稿中提供的聯絡資訊向投資者關係部發送電子郵件。

Before we begin a few reminders for today's call, some of the statements made today are forward-looking forward-looking statements are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found on our annual quarterly and other reports filed with the SEC.

在我們開始今天電話會議的一些提醒之前，今天發表的一些陳述屬於前瞻性陳述，前瞻性陳述受到風險、不確定性和其他因素的影響，這些因素可能導致實際結果與這些陳述預期的結果有重大差異。有關這些因素的更多資​​訊可以在我們向 SEC 提交的年度季度報告和其他報告中找到。

During today's call, we may also discuss non-GAAP financial measures, including adjusted EBITDA, which we define as earnings before interest taxes, depreciation and amortization as adjusted for certain noncash and non operating expenses. For more details on these measures, please refer to our release issued earlier today.

在今天的電話會議中，我們還可能討論非公認會計準則財務指標，包括調整後的EBITDA，我們將其定義為根據某些非現金和非營運費用調整後的利息稅、折舊和攤銷前利潤。有關這些措施的更多詳細信息，請參閱我們今天早些時候發布的新聞稿。

And with that, I'll now turn the call over to Larry.

現在我將把電話轉給拉里。

Good morning, and thank you for joining 22nd Century's Fourth Quarter 2023 earnings call. I will cover the business status, and you will cover the financials, and then we will open it up for questions.

早安，感謝您參加 22nd Century 2023 年第四季財報電話會議。我將介紹業務狀況，您將介紹財務狀況，然後我們將開放提問。

The timing of this call was interesting since it technically covers the fourth-quarter results, but so much has changed over the past four months that the results are not reflective of how the company is operating today since our focus is 100% on how 22nd Century moves forward to become a self-sustaining, profitable and cash flowing business. A lot of the information contained in my part of the discussion will be oriented towards the shape of the Company in the first quarter and so some of this will cross over to the first quarter earnings call in mid-May.

這次電話會議的時機很有趣，因為從技術上講，它涵蓋了第四季度的業績，但過去四個月發生了很大的變化，結果並不能反映公司今天的營運情況，因為我們的重點是100% 關注22 世紀如何逐步成為一家能夠自我維持、獲利且現金流充足的企業。我的討論部分包含的許多資訊將針對公司第一季的狀況，因此其中一些資訊將跨越五月中旬的第一季財報電話會議。

Our priority is what is good for the company comes first. We are dedicated to making 22nd Century live within its skin, which is a profitable cash positive Nasdaq listed company with a strong foothold in the tobacco space focused on nicotine harm reduction.

我們的首要任務是對公司有利的事情放在第一位。我們致力於讓 22nd Century 活在自己的皮膚裡，這是一家盈利的、現金充足的納斯達克上市公司，在專注於減少尼古丁危害的煙草領域擁有牢固的立足點。

One of the first big changes was the sale of the GVV. hemp cannabis business at the end of December. This move helped us on several fronts. First, DVBU is the largest source of cash burn in 2023 with a lot of unfunded overhead that was driving some of our largest losses. And secondly, any company that has operations around cannabis.

第一個重大變化是 GVV 的出售。 12月底大麻業務。此舉在多個方面為我們提供了幫助。首先，DVBU 是 2023 年最大的現金消耗來源，其中大量無資金支持的管理費用導致了我們一些最大的損失。其次，任何從事大麻業務的公司。

There is what I call a tax on the business. This tax comes in the form of a cost premium, just about every cost that the entire Company incurs, for example, insurance, ensuring a business with a cannabis component, not only cost significantly more, but the mainstream insurers pass on underwriting policies due to the fact that cannabis is involved the same scenario, spreads widen across the supply chain. So there's an inherent limitation on what the company can do to keep its cost structure under control. Unfortunately, this tax on the business crosses over to the tobacco side as well, but now sans GVB., we can manage that. So unloading GVB. not only eliminated a substantial portion of our cash drain that the hemp cannabis business was causing, but also will allow us to lower our costs in the tobacco business as well.

我稱之為企業稅。這種稅以成本保費的形式出現，幾乎是整個公司產生的每一項成本，例如保險，確保大麻成分的業務不僅成本顯著增加，而且主流保險公司由於以下原因轉嫁了承保保單：事實上，大麻也涉及同樣的情況，整個供應鏈的傳播範圍擴大。因此，公司為控製成本結構所做的努力存在固有的限制。不幸的是，這種對企業徵稅也轉移到了菸草方面，但現在沒有 GVB，我們可以做到這一點。所以卸載GVB。不僅消除了大麻業務造成的大部分現金流失，而且還將使我們能夠降低菸草業務的成本。

Now let's talk about the actions we've taken in the past 120 days. To strengthen our core tobacco business. We've returned to our fundamental mission of using our patented biotechnology for creation of products that address the harms of nicotine addiction and commercializing those products we've cut our ongoing management labor overhead cost significantly.

現在我們來談談過去120天我們採取的行動。加強我們的核心菸草業務。我們回到了我們的基本使命，即利用我們的專利生物技術來創造解決尼古丁成癮危害的產品，並將這些產品商業化，我們已經大幅削減了持續的管理勞動力間接成本。

And that includes me all employment agreements for the company's executives have been terminated, meaning everyone has employed. It will, as an example, I do not have an employment agreement. If I fail, I can be terminated without a severance payments for the results in 2023. There are no bonuses paid or planned and though equity compensation passed, what was already granted when I came on board the same as planned for 2024 spending on consultants and advisors has been terminated except only those few that are mission critical. Your Board of Directors has been working without compensation effective in the last quarter of 2023.

包括我在內，公司所有高階主管的僱傭協議都已經終止，這意味著所有人都被雇用了。舉個例子，我沒有僱傭協議。如果我失敗了，我可以在 2023 年因結果而被解僱，且無需支付遣散費。沒有支付或計劃發放獎金，儘管通過了股權薪酬，但我入職時已經授予的與 2024 年計劃的顧問和顧問支出相同的獎金已被終止，只有少數關鍵任務除外。自 2023 年最後一個季度起，你們的董事會一直在無薪工作。

And the overall Board compensation has been cut aggressively for when payment does resume. We've reduced our overall headcount. And right now we have about 60 people in the company. We've raised our prices on our filtered cigars business, which has traditionally lost money at the gross profit line. We will get this part of the business on the right side of the profit line, our accident, we eliminated our second shift at our production facility and consolidated production to one shift for a substantial productivity gains.

當恢復付款時，董事會的整體薪酬已大幅削減。我們減少了總人數。目前我們公司約有 60 名員工。我們提高了過濾雪茄業務的價格，該業務傳統上在毛利潤線上一直虧損。我們將把這部分業務放在利潤線的右側，我們的意外事故，我們取消了生產設施的第二班，並將生產合併為一班，以大幅提高生產力。

We closed our facilities in Buffalo and Maryland and consolidated all of our operations to our factory in North Carolina, we sold excess tobacco inventory and although we took a non-cash accounting charge to cost of goods sold, this provided us with a non-dilutive cash infusion of approximately $1.2 million. That's an illustration of just some of the major actions we have taken. There are many more, but these are the major ones as a result of this hard work. We have reduced our cash burn substantially and are still driving towards a much lower financial breakeven point than we had as a company in 2023. We expect to reach breakeven in the first quarter of 2025.

我們關閉了布法羅和馬裡蘭州的工廠，並將所有業務合併到北卡羅來納州的工廠，我們出售了多餘的煙草庫存，儘管我們在銷售商品成本中收取了非現金會計費用，但這為我們提供了非稀釋性的收益。現金注入約120萬美元。這只是我們已採取的一些主要行動的例證。還有很多，但這些都是艱苦工作的主要成果。我們已經大幅減少了現金消耗，並且仍在努力實現比 2023 年公司低得多的財務損益平衡點。我們預計 2025 年第一季將達到損益兩平。

What I can tell you is the cash burn is now massively smaller than last year when at times we are burning $15 million in a quarter as we operate today, we are still working through prior cash obligations, but we're on a downward slope, which is much lower than where we were last year as a part of closing the gap. In addition to the cost reductions, we're working on new profitable revenue opportunities for both L. and the contract manufacturing or CDMO business to drive higher gross profits and get to our breakeven as soon as possible. We have several CMO opportunities that are near term. And once they go live, we'll gradually lift our revenue.

我可以告訴你的是，現在的現金消耗比去年要少得多，當時我們在今天的運營中有時會在一個季度燒掉1500 萬美元，我們仍在履行之前的現金義務，但我們正處於下降趨勢，作為縮小差距的一部分，這一數字遠低於去年的水平。除了降低成本之外，我們還致力於為 L. 和合約製造或 CDMO 業務尋找新的獲利收入機會，以推動更高的毛利並儘快實現盈虧平衡。我們近期有幾個 CMO 機會。一旦它們上線，我們將逐漸提高我們的收入。

These will counter some of the contracts they lose the offloading where we lose money. Once the dust settles, we're going to be in better shape. The additional CMO volume also helps our manufacturing overhead absorption. So the more volume we run through the factory on the same overhead cost, the lower our cost per carton will be on existing products. This business will continue to get healthier as we go.

這些將抵消他們在我們虧損的情況下失去的一些合約。一旦塵埃落定，我們就會處於更好的狀態。額外的 CMO 產量也有助於我們吸收製造成本。因此，在相同的管理成本下，我們在工廠生產的產量越多，現有產品的每箱成本就越低。隨著我們的發展，這項業務將繼續變得更加健康。

Now I'm going to talk VLN and I know I'm the new guy and picking up where others have left off, but I couldn't be more excited about VLN and its possibilities in the marketplace for Consumer Health and for the success of 22nd Century.

現在我要談談 VLN，我知道我是新人，正在接續其他人留下的工作，但我對 VLN 及其在消費者健康市場和成功的可能性感到無比興奮。22 世紀。

Let me first say that VLN. means Very Low Nicotine scientific community uses the acronym VLNC. to represent Very Low Nicotine Content, our trademark brand deal and to nicotine harm reduction from cigarettes as decaf coffee has to coffee or skim milk has to milk. If anyone has told you that you need to cut back, we are the alternative. We are the brand in the marketplace representing the only Very Low Nicotine cigarette and bln name stands for something very important and it's up to us to make account.

首先說VLN。科學界使用縮寫 VLNC 表示「極低尼古丁」。代表我們的商標品牌協議“極低尼古丁含量”，以及減少香菸中的尼古丁危害，就像無咖啡因咖啡與咖啡或脫脂牛奶與牛奶一樣。如果有人告訴您需要削減開支，我們就是您的選擇。我們是市面上唯一代表極低尼古丁香菸的品牌，十億的名字代表著非常重要的東西，這取決於我們的責任。

Second, I'm going to do a little level setting for our shareholders. It's been widely speculated and anticipated that various government agencies from the U.S. and other countries are going to enact laws or some form of legislation that will position our VLN cigarettes as the only alternative for smokers essentially opening up a lane where only VLN can travel, we can't simply rely on government action as a part of our business plan we also can't count on legislation of this type to happen anytime soon.

其次，我將為我們的股東做一些等級設定。人們廣泛猜測和預期，美國和其他國家的各個政府機構將頒布法律或某種形式的立法，將我們的 VLN 捲菸定位為吸煙者的唯一選擇，從本質上開闢一條只有 VLN 可以行駛的通道，我們我們不能簡單地依賴政府行動作為我們商業計劃的一部分，我們也不能指望這種類型的立法很快就會發生。

And even with action, I don't believe that the U.S. government will enact a law so that VLN. is the only cigarette on the market. We must build this brand and this company from the ground up so that our success will not only be dependent solely on legislation for federal action that would result in a huge hit to a major industry that provides substantial financial infrastructure within our domestic economy.

即使採取行動，我也不相信美國政府會頒布法律來禁止 VLN。是市面上唯一的香煙。我們必須從頭開始打造這個品牌和這家公司，這樣我們的成功將不僅僅依賴聯邦行動的立法，這將對在我們國內經濟中提供大量金融基礎設施的主要行業造成巨大打擊。

Thinking about jobs, taxes, revenue, import export related to the overall tobacco industry. We also cannot assume or bet solely on whether the US government. We'll make sure that our population of menthol smokers have menthol cigarettes available to them. If they enact a law that prohibits them from being manufactured or sold in the US, even absent government action, I would offer that our government, including the FDA, believes that the smoking population in the US will heed the warnings on the pack and realize the harmful addictive nature of cigarettes and take the initiative to stop smoking on their own and solve the problem.

考慮與整個菸草業相關的就業、稅收、收入、進出口。我們也不能僅僅假設或押注美國政府是否會這麼做。我們將確保我們的薄荷醇吸煙者能夠獲得薄荷醇香煙。如果他們頒布一項法律，禁止它們在美國製造或銷售，即使沒有政府採取行動，我建議我們的政府，包括 FDA，相信美國的吸煙人口會留意包裝上的警告，並意識到香煙的有害成癮性，主動自行戒菸並解決問題。

The overarching cost in lives, health care and infrastructure related to smoking is huge. So how do we move this forward and achieve success without relying on government actions, it's common knowledge that a majority of smokers want to quit and they are trying to quit consistently year after year and they need help to smoke less. They need tools such as VLN We are an authorized and unique enabler to help reduce nicotine consumption. We are the first and only combustible cigarette to receive an FDA authorization that specifically focuses on nicotine harm reduction we are well protected from an intellectual property standpoint.

與吸煙相關的生命、醫療保健和基礎設施的總體成本是巨大的。那麼，我們如何在不依賴政府行動的情況下推動這一進程並取得成功，眾所周知，大多數吸菸者都想戒菸，他們年復一年地試圖持續戒菸，他們需要幫助來減少吸菸。他們需要 VLN 等工具。我們是經過授權的獨特推動者，可幫助減少尼古丁消耗。我們是第一款也是唯一一款獲得 FDA 授權的可燃捲煙，專門致力於減少尼古丁危害，從智慧財產權的角度來看，我們受到了很好的保護。

We have a tool, our VLN cigarette. We believe that smokers will want to use in their fight to quit smoking, introducing a new category in any market, much less the cigarette market is disruptive, difficult and very much a ground game to make those smokers in various states where VLN has distribution become aware that this product exists and the benefits of deal ends use being in that position. We must focus on developing an audience that uses our VLN products and communicates the positive results our customers have experienced so far and make sure successes known. And the word is passed to others in the market, like all segments of consumer brand markets, getting consumers to become aware and give new or a different brand.

我們有一個工具，我們的 VLN 香菸。我們相信，吸菸者會希望在戒菸的鬥爭中使用它，在任何市場引入一個新的類別，更不用說捲菸市場具有破壞性、困難性和非常基礎的遊戲，使VLN 分銷的各州的吸菸者成為意識到該產品的存在，並且交易結束的好處是處於該位置。我們必須專注於發展使用我們 VLN 產品的受眾，並傳達我們的客戶迄今為止所經歷的積極成果，並確保成功為人所知。這個詞被傳遞給市場上的其他人，就像消費品牌市場的所有細分市場一樣，讓消費者意識到並賦予新的或不同的品牌。

A shot takes trusted results, time, energy and resources, the mission to drive reduced harm for smokers and acquire customers who want to reduce their nicotine intake is a simple math equation. The simple math is from a nicotine content perspective, one pack of 20 VLN cigarettes equals one single cigarette of any standard brand. What that means to a smoker who smoke some pack a day is the nicotine intake of smoking veal and for a full year would be the equivalent of smoking, a standard cigarette for 2.5 weeks to their pocketbook.

一次注射需要值得信賴的結果、時間、精力和資源，減少吸菸者傷害並吸引想要減少尼古丁攝取的客戶的使命是一個簡單的數學方程式。簡單的數學計算是從尼古丁含量的角度來看，一包 20 支 VLN 香菸等於一支任何標準品牌的香菸。對於每天吸一包菸的吸菸者來說，吸菸一整年的尼古丁攝取量相當於他們錢包裡吸一支標準香菸 2.5 週的尼古丁攝取量。

A pack of a smoker is spending the equivalent of $2.50 an hour on a full-time hourly rate to smoke and more to a part-time worker financially for 22nd Century. From the 5,100 retail outlets that currently carry VLN, we need them to sell nine packs per week to completely carry the company's overhead costs for essentially just one carton a week.

22nd Century 的全職吸菸者每小時花費相當於 2.5 美元，而兼職工人則花費更多。在目前銷售 VLN 的 5,100 家零售店中，我們需要他們每週銷售 9 包，才能完全承擔公司的管理費用，基本上每週只需一箱。

This does not seem like a heavy lift as we increase the deal and brand awareness, but we need to increase the awareness on a very small budget at this time. We do know that specific retail chains and independent retailers are currently selling VLN, developing separate in-store categories focused on harm reduction products for smokers. These categories would highlight products like VLN and give adult smokers an alternative to traditional cigarettes.

隨著我們增加交易和品牌知名度，這似乎不是一個沉重的負擔，但此時我們需要以非常小的預算來提高知名度。我們確實知道，特定的零售連鎖店和獨立零售商目前正在銷售 VLN，並開發單獨的店內類別，專注於為吸煙者減少危害的產品。這些類別將突出 VLN 等產品，並為成年吸菸者提供傳統捲菸的替代品。

This action and commitment by retailers, it would be a major step forward in veal and brand awareness as we continue working on our branding and our product awareness initiatives. While we strengthen our financial capability and move towards profitability, we will increase our spending efforts with strategic retail partners and getting the message to smokers. As part of our strategy, we're looking to further increase our store distribution with relevant retailers and continue to build support with the medical and scientific community that understands the importance of the VLN brand to public health.

隨著我們繼續致力於我們的品牌和產品意識計劃，零售商的這一行動和承諾將是小牛肉和品牌意識向前邁出的重要一步。在我們增強財務能力並實現盈利的同時，我們將加強與戰略零售合作夥伴的支出力度，並向吸煙者傳達訊息。作為我們策略的一部分，我們希望進一步增加與相關零售商的商店分銷，並繼續與了解 VLN 品牌對公共衛生重要性的醫學和科學界建立支持。

We also plan to continue to drive awareness through social and digital channels and to activate the incredibly important peer-to-peer advocacy process that supports smokers as they take these life-changing steps to reduce their smoking addiction. These efforts to get just the one carton per week store average plus our plans to improve the CMO sales and margin contribution put us on a path to profitability. We have laid the foundation, cut the costs and now we can focus on building the business to get there as quickly as possible.

我們也計劃繼續透過社交和數位管道提高人們的意識，並啟動極其重要的點對點宣傳流程，支持吸菸者採取這些改變生活的步驟來減少菸癮。這些努力使商店平均每週只銷售一箱，加上我們提高 CMO 銷售額和利潤貢獻的計劃，使我們走上了盈利之路。我們已經奠定了基礎，削減了成本，現在我們可以專注於業務建設，以盡快實現這一目標。

A couple of other topics to cover. As you saw in this morning's press release, we initiated the reverse stock split of one to 16 to regain compliance with the Nasdaq listing rules. Trading under the reverse split will begin April second as we evaluated the options the same way returning the Company around, we decided to move to the end-state and close the discussion around the reverse split.

還有幾個其他主題需要討論。正如您在今天早上的新聞稿中看到的那樣，我們發起了 1 股到 16 股的反向股票分割，以重新遵守納斯達克上市規則。反向分割交易將於 4 月 2 日開始，因為我們以與恢復公司相同的方式評估選擇權，我們決定進入最終狀態並結束圍繞反向分割的討論。

Part of that decision included discussions with our incumbent equity investors who have supported 22nd Century through the past 12 months and we believe are willing to support the company's greatly reduced cash needs as long as we close the gap to profitability and remain a Nasdaq listed company.

該決定的一部分包括與我們現有的股權投資者進行討論，他們在過去12 個月裡一直支持22nd Century，我們相信，只要我們縮小盈利能力差距並保持納斯達克上市公司的地位，他們就願意支持該公司大幅減少的現金需求。

I will now turn the call over to Hugh to review the financial results for Q4 and 2023.

我現在將電話轉給 Hugh，以審查第四季和 2023 年的財務表現。

Thank you, Larry, and good morning to everyone. Our fourth quarter financial results are presented on a continuing operations basis, which excludes our hemp cannabis business, which has been classified as discontinued operations.

謝謝你，拉里，祝大家早安。我們第四季的財務業績是在持續經營的基礎上公佈的，其中不包括我們的大麻業務，該業務已被歸類為終止經營業務。

Net sales decreased by 26% quarter over quarter to $7.4 million, reflecting our ongoing reallocation of production resources to higher margin product mix focused on bln and conventional cigarette products as compared to lower margin filtered cigars. Gross profit decreased quarter over quarter to negative $7.8 million due to lower filtered cigars unit sales and the shift in product mix from filtered cigars to conventional cigarettes. Additionally, we recorded approximately $8 million in inventory reserves, primarily to excess and obsolete tobacco leaf inventory. Excluding the inventory reserve charge, gross margin would have been positive [$200,000] for the quarter.

淨銷售額環比下降26%，至740 萬美元，反映出我們不斷將生產資源重新分配到利潤率較高的產品組合，重點關註十億支和傳統捲菸產品，而不是利潤率較低的過濾雪茄。由於過濾雪茄銷量下降以及產品組合從過濾雪茄轉向傳統捲煙，毛利環比下降至負 780 萬美元。此外，我們記錄了大約 800 萬美元的庫存儲備，主要用於過剩和過時的菸葉庫存。不包括庫存儲備費用，本季的毛利率將為正值 [200,000 美元]。

Net loss for the fourth quarter was $22 million as compared to $11 million in the comparable prior year period. However, adjusted EBITDA loss decreased significantly to negative $3.2 million in Q4 2023 compared to negative $9.9 million for the same quarter prior year, reflecting the substantial reduction in operating expenses and implementation of efficiency initiatives.

第四季淨虧損為 2,200 萬美元，而去年同期淨虧損為 1,100 萬美元。然而，調整後的 EBITDA 損失在 2023 年第四季大幅下降至負 320 萬美元，而去年同期為負 990 萬美元，反映出營運費用的大幅減少和效率措施的實施。

As outlined in our earnings release, we provide adjusted EBITDA as a non-GAAP measure aligned with our operating performance and as a result of the efforts undertaken by various since joining the Company on our cost-cutting initiatives and operational efficiencies, we have substantially decreased the cash needs of our business as evidenced by improvement in adjusted operating performance those efforts are ongoing in 2024 as we work to minimize cash requirements going forward and ultimately move the company to cash positive results in a few key highlights from our balance sheet, including our earnings release today of note, total assets decreased substantially to $27.5 million, primarily due to the write-down of intangible assets, including goodwill, reflecting the divestiture of the hemp cannabis business. Cash balances remained relatively unchanged at $2 million for Q4 2023, reflecting a significant decrease in cash loss from operations reduction. Operating expenses and the hemp cannabis divestiture.

正如我們的收益發布中所述，我們將調整後的EBITDA 作為與我們的經營業績相一致的非公認會計準則衡量標準，並且由於自加入公司以來各方在成本削減計劃和運營效率方面所做的努力，我們已大幅減少調整後經營業績的改善證明了我們業務的現金需求，這些努力將在2024 年持續進行，因為我們努力最大限度地減少未來的現金需求，並最終推動公司在資產負債表中的幾個關鍵亮點中兌現積極成果，包括值得注意的是，今天發布的收益報告顯示，總資產大幅下降至2750 萬美元，主要是由於包括商譽在內的無形資產的減記，反映出大麻業務的剝離。2023 年第四季現金餘額相對維持不變，為 200 萬美元，反映出業務減少導致的現金損失大幅減少。營運費用和大麻大麻剝離。

Finally, I should note that we are vigorously pursuing our lawsuit against store Chester insurance company based on their failure to pay any amount towards our claim for business interruption insurance following the devastating fire that destroyed our Grass Valley, Oregon manufacturing facility, where seeking $9 million in actual damages. In addition to the significant consequential damages, we'll now open up the call for question.

最後，我應該指出，我們正在積極對商店切斯特保險公司提起訴訟，因為在毀滅性的火災摧毀了我們俄勒岡州草谷的製造工廠後，他們未能支付我們的營業中斷保險索賠任何金額，我們要求賠償900 萬美元在實際損失中。除了重大的間接損失之外，我們現在將公開提問。

(Operator Instructions) Aaron Grey, Alliance Global Partners.

（操作員說明）Aaron Grey，Alliance Global Partners。

Good morning, and thank you for the questions. This is Remington Smith on for Aaron Grey. So my first question for VLN. Could you speak to some of the sales or velocity specifically that you've seen so far from the on cigarettes in any of your markets?

早安，謝謝你的提問。這是亞倫·格雷的雷明頓·史密斯。這是我對 VLN 的第一個問題。您能否具體談談迄今為止您在任何市場上看到的捲菸銷售或速度？

So it's some, you know, 2023 was was a largely a stocking year.

所以，你知道，2023 年很大程度上是一個庫存年。

So we've seen we've seen stock-up in the stores on the take-up of the product has been slow. And in in early 2024 in January, we also raised the price. So we had some we had some fall.

因此，我們看到商店的庫存積壓對產品的吸收速度很慢。並且在2024年1月初，我們也提高了價格。所以我們有一些我們有一些跌倒。

We had some pull-in coming from that, but it really is now sort of attraction game out in the market.

我們從中獲得了一些吸引力，但它現在確實是市場上的一種吸引力遊戲。

And that's that's our challenge. So I would say that our big lift right now is getting from from the stocking point of view up to, as I mentioned, no carton per store. But I don't have exact numbers for you. That's something we're working on. That's on the on the sell-through side.

這就是我們的挑戰。所以我想說，我們現在的重大提升是從庫存的角度來看，正如我所提到的，每家商店都沒有紙箱。但我沒有確切的數字給你。這就是我們正在努力的事情。這是在銷售方面。

Okay I appreciate the color there. And then my second question, I'm still focusing a little bit on VLN. So I appreciate the focus on profitability and the cost cuts this quarter. But given the education need to continue to build awareness for VLN, you speak a little bit more proposition of details on your planned marketing spend and initiatives and initiatives to building that awareness?

好吧，我很欣賞那裡的顏色。然後是我的第二個問題，我仍然關注 VLN。因此，我很欣賞本季對獲利能力和成本削減的關注。但考慮到繼續提高 VLN 意識的教育需要，您是否能詳細說明您計劃的營銷支出以及建立這種意識的舉措和舉措？

Yes, we're working on.

是的，我們正在努力。

We're actually engaging to work on a little bit of brand enhancement around VLN. We've got some strategies and that may allow you don't want, I would say, additional SKUs to be brought to the market as well as a consumer awareness materials that are out there that comply with the FDA. And that's that's where we've fallen short is going through 2023.

我們實際上正在致力於圍繞 VLN 進行一些品牌提升。我們有一些策略，我想說，這可能會讓您不希望將額外的 SKU 以及符合 FDA 要求的消費者意識材料推向市場。這就是 2023 年我們的不足之處。

We pulled the funding group for three pretty much all of that.

我們撤回了幾乎所有這三個項目的資助小組。

So and we'll start to we'll start to present that product in retail again, in compliance with the FDA.

因此，我們將開始按照 FDA 的規定再次在零售中展示該產品。

And that should that should help attract some attention as well as the packaging and the information we provide. We're also readdressing our social networks and in the end website that we have, especially the tri VLN. website which has information has been pretty stale out there. So I would say we're going through right now and have behaved very thin budget total redress sub of the deal M presentation.

這應該有助於吸引一些注意力以及我們提供的包裝和資訊。我們也重新定位我們的社交網路和我們擁有的最終網站，尤其是 tri VLN。提供資訊的網站已經相當陳舊。所以我想說，我們現在正在經歷，並且在交易 M 簡報中的預算總補救部分錶現得非常薄弱。

Thank you.

謝謝。

And my last question, shifting over to CMO. So could you speak to a little bit of the CMO opportunities you have on given tobacco is a more mature category with structural declines. Any color in terms of where you're seeing those opportunities potentially in additional white label opportunities? Any color there would be helpful.

我的最後一個問題是，轉向 CMO。鑑於菸草是一個更成熟的類別，且存在結構性下降，您能否談談您所擁有的 CMO 機會。您在其他白標機會中可能看到哪些機會？任何顏色都會有幫助。

Yes, there are additional white label opportunities so we have we've got a great asset in North Carolina at our in our production facility that we call Nasco. And we've got some customers that that need volume that either it exceeds their their current volume or that they're doing a cost-benefit analysis and figuring out that they'd like to use our tools in their in their structure. And so we've got I want to say, six opportunities for additional volume coming into Nashville in the form of CMO opportunities. And that's that as we look at it, as I mentioned, it's kind of a two dimensional play. One is certainly higher top line and we're quoting profitably now. And the second is, as we absorb our overhead, we will reduce the carton cost for everything that we're doing another Nasco.

是的，還有額外的白標機會，因此我們在北卡羅來納州的生產工廠（我們稱之為 Nasco）擁有大量資產。我們有一些客戶需要的數量要么超過他們當前的數量，要么他們正在進行成本效益分析並確定他們希望在他們的結構中使用我們的工具。因此，我想說的是，納許維爾有六個以 CMO 機會的形式增加銷售的機會。這就是我們所看到的，正如我所提到的，這是一種二維遊戲。其中之一肯定是更高的收入，我們現在的報價是有利可圖的。第二個是，當我們吸收管理費用時，我們將降低我們正在做另一個 Nasco 的所有事情的紙箱成本。

Great. I appreciate the color there, and I'll hop back in the queue.

偉大的。我欣賞那裡的顏色，我會跳回隊列。

(Operator Instructions) Jim McIlree, Dawson James.

（操作員說明）Jim McIlree、Dawson James。

Yes, thank you.

是的，謝謝。

Good morning.

早安.

Good morning.And Jim,

早安。吉姆，

can you talk about the GVB. note whether or not they need to raise capital in order to in order to pay you guys off?

你能談談 GVB 嗎？請注意他們是否需要籌集資金才能支付你們的費用？

Yes, I will.

是的，我會。

I'll let Hugh take that.

我會讓休拿走。

Yes, hey, Jim, the answer is yes, our understanding is they're in the process of getting that completed. And I know that received term sheets for refinancing that our facility, I think they're kind of going through the process of selecting the final lender and then closing transaction. So the answer is they're making significant progress it steadily moving towards a refinance.

是的，嘿，吉姆，答案是肯定的，我們的理解是他們正在完成這項工作。我知道收到了我們設施再融資的條款清單，我認為他們正在經歷選擇最終貸款人然後完成交易的過程。所以答案是他們正在取得重大進展，穩步邁向再融資。

Okay. And then secondly, on the on the insurance recovery, I know you addressed it. I was just hoping it could be maybe a little bit more predictive on what you think the outcome will be and and when?

好的。其次，關於保險賠償，我知道你已經解決了這個問題。我只是希望它可以更準確地預測你認為的結果會是什麼以及何時？

Sure. I'll take that Hugh want to take.

當然。我會接受休想要的。

As you know, Larry go ahead.

如你所知，拉里繼續。

That's out of the secret front, end of that, if I miss anything you fill in.

如果我漏掉了你填寫的任何內容，那就是秘密戰線了，結束了。

But so we have a hearing coming up in April first hearing.

但我們將在四月舉行第一次聽證會。

And so that should kick off the process. But I think, Jim, as you know, I mean, this is in the courts in Oregon, in federal court in Oregon. So the timing wise, it's going to be a docket question, but being more predictive on the outcome, we feel we feel pretty strong about the outcome we have just to just to kind of put a point on it.

這應該會啟動這個過程。但我想，吉姆，如你所知，我的意思是，這是在俄勒岡州的法院，在俄勒岡州的聯邦法院。因此，就時間安排而言，這將是一個待決問題，但為了對結果更具預測性，我們覺得我們對結果的感覺非常強烈，我們只是想表達觀點。

We have business interruption insurance. It's there for a reason.

我們有營業中斷保險。它的存在是有原因的。

The business got interrupted. We went to the insurance company to get paid and they didn't pay. So that's a huge problem, huge gap in their commitment and huge gap in the policy. And then so the numbers are the numbers that were put together. And so unfortunately, we instead of having them hit their commitment and then what we paid for it, we've got to take into corner to win. So it's a long longer process drawn out, but we feel pretty confident everything has been put together.

生意被打斷了。我們去保險公司理賠，他們不給。所以這是一個大問題，他們的承諾和政策上存在著巨大差距。那麼這些數字就是加在一起的數字。不幸的是，我們不是讓他們兌現承諾然後付出代價，而是必須採取競爭才能獲勝。所以這是一個漫長的過程，但我們非常有信心一切都已經整合完畢。

Okay, thank you. And I'm just trying to understand that there seems to be a conflict between the on the growth of VLN and the limited resources to make it grow and it seems like you really can't make it. You really can't get it to grow and drive that business until you get additional cash resources. And so I'm just puzzled over the timing and how you guys are looking at at accomplishing growth and deal and given the limited resources right now?

好的謝謝。我只是想了解 VLN 的成長與使其成長的有限資源之間似乎存在衝突，而且似乎你真的無法做到這一點。除非你獲得額外的現金資源，否則你真的無法讓它發展並推動業務。因此，我只是對時機以及你們如何看待在目前資源有限的情況下實現成長和交易感到困惑？

Well, first of all, you know, there's there's many There's many ways that we can, I would say and hence the presentation available in the market prices.

嗯，首先，你知道，我想說，我們可以有很多方法，因此可以在市場價格中找到簡報。

One, I don't like to touch price as a first option, but it's certainly out there for us.

第一，我不喜歡將價格作為第一選擇，但它對我們來說肯定是存在的。

And then we've got some major chains that are carrying carrier deal on right now. And so, you know, it's a move to move some market awareness material into a major chain. That's the good news is whatever money we spend gets pretty widely distributed.

然後我們有一些主要的連鎖店現在正在進行運營商交易。因此，您知道，這是將一些市場意識材料轉移到主要鏈條中的舉措。好消息是我們花的錢都會被廣泛分配。

So those will be discussions that we'll be having with the chains and then, of course, the digital the digital world is awesome. You know that we have been pretty dormant for the last deal when I looked at our Web site there and with diverse socials. I'd say it's been dormant now for about I'll just round numbers six months from so we can start to activate a lot of that on a very little. We'll budget as we go as we grow as veal and starts to sell downs of very profitable product for us. Margins are very healthy. I'm very, very tobacco industry healthy. So we just need to get we need to get the product moving through the stores and that should start than we know the generation of cash generation profitability.

因此，這些將是我們將與連鎖店進行的討論，當然，數位世界非常棒。當我查看我們的網站和不同的社交媒體時，您知道我們在上一筆交易中一直處於休眠狀態。我想說它現在已經休眠了大約六個月，所以我們可以開始在很少的情況下激活很多東西。當我們種植小牛肉並開始為我們出售非常有利可圖的產品時，我們將製定預算。利潤率非常健康。我對菸草業非常非常健康。因此，我們只需要讓產品在商店中流通，這應該開始於我們所知的現金產生獲利能力的產生。

Okay. Yes, thank you. That's helpful for me.

好的。是的，謝謝。這對我很有幫助。

Thank you, Jim.

謝謝你，吉姆。

There are no further questions at this time. I will now turn the call over to Larry for closing remarks.

目前沒有其他問題。我現在將把電話轉給拉里，讓他發表結束語。

Thank you.

謝謝。

So I'd like to thank everyone for joining our call today. And in closing, I'll emphasize that we are absolutely focused on turning 22nd Century around and becoming a profitable company for the first time in the Company's history. This, as I described earlier, is going to require our full focus on the business of making and selling cigarettes, our VLN brand and our CMO brands as well and keeping our costs in line. We look forward to updating you again soon in mid May on our first quarter 2024 conference call. But lastly, I'd like to thank our employees who keep driving 22nd Century forward.

因此，我要感謝大家今天加入我們的電話會議。最後，我要強調的是，我們絕對專注於扭轉 22 世紀的局面，並在公司歷史上首次成為一家盈利的公司。正如我之前所描述的，這將要求我們完全專注於捲菸的製造和銷售業務、我們的 VLN 品牌和我們的 CMO 品牌，並保持我們的成本一致。我們期待很快在 5 月中旬召開的 2024 年第一季電話會議上再次向您通報最新情況。最後，我要感謝我們的員工，他們不斷推動 22 世紀向前發展。

That concludes our remarks.

我們的發言到此結束。

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect.

女士們、先生們，今天的電話會議到此結束。我們感謝您的參與，並請您斷開連線。