Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 29, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
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, $0.00001 par value | |
Security Exchange Name | NASDAQ | |
Trading Symbol | XXII | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 164,536,566 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,584 | $ 1,336 |
Short-term investment securities | 37,036 | 47,400 |
Accounts receivable, net | 1,220 | 585 |
Inventory, net | 3,753 | 2,881 |
Prepaid expenses and other assets | 1,389 | 2,183 |
Total current assets | 44,982 | 54,385 |
Property, plant and equipment, net | 5,949 | 5,841 |
Operating leases right-of-use assets, net | 1,631 | 1,723 |
Intangible assets, net | 7,934 | 7,919 |
Investments | 2,211 | 2,345 |
Other assets | 3,770 | 3,741 |
Total assets | 66,477 | 75,954 |
Current liabilities: | ||
Notes payable | 596 | |
Operating lease obligations | 359 | 308 |
Accounts payable | 1,512 | 2,173 |
Accrued expenses | 2,227 | 1,489 |
Accrued payroll | 405 | 2,255 |
Accrued excise taxes and fees | 2,009 | 1,270 |
Accrued severance | 187 | 217 |
Deferred income | 483 | 119 |
Total current liabilities | 7,182 | 8,427 |
Long-term liabilities: | ||
Operating lease obligations | 1,326 | 1,432 |
Severance obligations | 0 | 21 |
Total liabilities | 8,508 | 9,880 |
Commitments and contingencies (Note 11) | ||
Shareholders' equity | ||
Preferred stock, $.00001 par value, 10,000,000 shares authorized | ||
Common stock, par value | 2 | 2 |
Capital in excess of par value | 245,460 | 244,247 |
Accumulated other comprehensive loss | (562) | (162) |
Accumulated deficit | (186,931) | (178,013) |
Total shareholders' equity | 57,969 | 66,074 |
Total liabilities and shareholders' equity | $ 66,477 | $ 75,954 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
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 | 164,536,566 | 162,872,875 |
Common stock, shares outstanding | 164,536,566 | 162,872,875 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue: | ||
Sale of products, net | $ 9,045 | $ 6,806 |
Cost of goods sold (exclusive of depreciation shown separately below): | ||
Products | 8,585 | 6,159 |
Gross profit | 460 | 647 |
Operating expenses: | ||
Sales, general and administrative | 7,305 | 4,829 |
Depreciation | 168 | 138 |
Amortization | 161 | 150 |
Total operating expenses | 8,606 | 5,818 |
Operating loss | (8,146) | (5,171) |
Other income (expense): | ||
Unrealized gain (loss) on investments | (817) | 36 |
Interest income, net | 50 | 112 |
Interest expense | (5) | (7) |
Total other income (expense) | (772) | 141 |
Loss before income taxes | (8,918) | (5,030) |
Net loss | (8,918) | (5,030) |
Other comprehensive loss: | ||
Unrealized loss on short-term investment securities | (400) | (32) |
Other comprehensive income loss | (400) | (32) |
Comprehensive loss | $ (9,318) | $ (5,062) |
Net loss per common share - basic | $ (0.05) | $ (0.03) |
Net loss per common share - diluted | $ (0.05) | $ (0.03) |
Weighted average common shares outstanding - basic | 163,157 | 144,258 |
Weighted average common shares outstanding - diluted | 163,157 | 144,258 |
Products Other Than Modified Risk Tobacco Products | ||
Operating expenses: | ||
Research and development | $ 972 | $ 701 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Capital in Excess of Par Value | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2020 | $ 1 | $ 189,439 | $ 74 | $ (145,404) | $ 44,110 |
Beginning balance (in shares) at Dec. 31, 2020 | 139,061,690 | ||||
Stock issued in connection with RSU vesting (in shares) | 1,196,258 | ||||
Stock issued in connection with option exercises | 1,153 | 1,153 | |||
Stock issued in connection with option exercises (in shares) | 846,342 | ||||
Stock issued in connection with warrant exercises | $ 1 | 11,781 | 11,782 | ||
Stock issued in connection with warrant exercises (in shares) | 11,293,211 | ||||
Equity-based compensation | 507 | 507 | |||
Unrealized gain (loss) on short-term investment securities | (32) | (32) | |||
Net loss | (5,030) | (5,030) | |||
Ending balance at Mar. 31, 2021 | $ 2 | 202,880 | 42 | (150,434) | 52,490 |
Ending balance (in shares) at Mar. 31, 2021 | 152,397,501 | ||||
Beginning balance at Dec. 31, 2021 | $ 2 | 244,247 | (162) | (178,013) | 66,074 |
Beginning balance (in shares) at Dec. 31, 2021 | 162,872,875 | ||||
Stock issued in connection with RSU vesting (in shares) | 1,663,691 | ||||
Equity-based compensation | 1,213 | 1,213 | |||
Unrealized gain (loss) on short-term investment securities | (400) | (400) | |||
Net loss | (8,918) | (8,918) | |||
Ending balance at Mar. 31, 2022 | $ 2 | $ 245,460 | $ (562) | $ (186,931) | $ 57,969 |
Ending balance (in shares) at Mar. 31, 2022 | 164,536,566 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (8,918) | $ (5,030) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Amortization and depreciation | 267 | 226 |
Amortization of license fees | 62 | 62 |
Amortization of ROU Asset | 92 | 65 |
Unrealized (gain) loss on investment | 817 | (36) |
Accretion of non-cash interest expense (income) | 119 | (39) |
Equity-based employee compensation expense | 1,213 | 507 |
(Increase) decrease in assets: | ||
Accounts receivable | (635) | 135 |
Inventory | (872) | (103) |
Prepaid expenses and other assets | 794 | 526 |
Increase (decrease) in liabilities: | ||
Operating lease obligations | (55) | (66) |
Accounts payable | (661) | 381 |
Accrued expenses | 647 | (196) |
Accrued payroll | (1,850) | 214 |
Accrued excise taxes and fees | 739 | (166) |
Accrued severance | (51) | (119) |
Deferred income | 364 | (272) |
Net cash used in operating activities | (7,928) | (3,911) |
Cash flows from investing activities: | ||
Acquisition of patents, trademarks, and licenses | (105) | (20) |
Acquisition of property, plant and equipment | (258) | (100) |
Sales and maturities of short-term investment securities | 13,595 | 4,950 |
Purchase of short-term investment securities | (3,778) | (13,365) |
Investment in Change Agronomy | (682) | |
Net cash provided by (used in) investing activities | 8,772 | (8,535) |
Cash flows from financing activities: | ||
Payment on note payable | (596) | (246) |
Net proceeds from option exercise | 1,153 | |
Net proceeds from warrant exercise | 11,782 | |
Net cash provided by (used in) financing activities | (596) | 12,689 |
Net increase in cash and cash equivalents | 248 | 243 |
Cash and cash equivalents - beginning of period | 1,336 | 1,029 |
Cash and cash equivalents - end of period | 1,584 | 1,272 |
Net cash paid for: | ||
Cash paid during the period for interest | 3 | 1 |
Non-cash transactions: | ||
Patent and trademark additions included in accounts payable | 29 | |
Property, plant and equipment additions included in accounts payable | $ 43 | |
Property, plant and equipment additions included in accrued expenses | 18 | |
Patent and trademark additions included in accrued expenses | $ 73 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
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 three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The balance sheet as of December 31, 2021 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, 2021 audited consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on March 1, 2022. Principles of Consolidation - Nature of Business – Reclassifications COVID-19 Pandemic All our facilities continue to operate in compliance with state and local 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 2043. 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 from 2028 through 2036. The Company believes that costs associated with becoming a signatory to the MSA, costs related to the acquisition of a predicate cigarette brand and trademarks have indefinite lives. 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 and record the difference as an impairment. 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 and record the difference as an impairment. Fair Value of Financial Instruments - Investments – Right-of-use assets (“ROU”) and Lease Obligations Stock Based Compensation one year three-year Income Taxes - Recent Accounting Pronouncements – 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 | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 and December 31, 2021 consisted of the following: March 31, December 31, 2022 2021 Inventory - tobacco leaf $ 2,003 $ 1,352 Inventory - hemp/cannabis 113 10 Inventory - finished goods Cigarettes and filtered cigars 267 256 Inventory - raw materials Cigarette and filtered cigar components 1,470 1,363 Less: inventory reserve (100) (100) $ 3,753 $ 2,881 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY, PLANT AND EQUIPMENT, NET. | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 3. – PROPERTY, PLANT, AND EQUIPMENT, NET Property, plant, and equipment, net at March 31, 2022 and December 31, 2021 consisted of the following: March 31, December 31, Useful Life 2022 2021 Land $ 1,665 $ 1,665 Building 12 to 30 years 130 130 Leasehold Improvements shorter of 15 years or lease term 198 179 Manufacturing equipment 3 to 10 years 5,580 5,541 Office furniture, fixtures and equipment 3 150 139 Laboratory equipment 5 years 198 198 Construction in progress 1,496 1,289 Less: accumulated depreciation (3,468) (3,300) Property, plant and equipment, net $ 5,949 $ 5,841 Depreciation expense was $168 for the three months ended March 31, 2022 ($138 for the three months ended March 31, 2021). |
RIGHT-OF-USE ASSETS, LEASE OBLI
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES | 3 Months Ended |
Mar. 31, 2022 | |
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 Rockville, Maryland. The corporate headquarters has an initial term of 36 months with two 24-month 24-month The following table summarizes the Company’s discount rate and remaining lease terms: Weighted average remaining lease term in years 4.3 Weighted average discount rate 3.3 % Future minimum lease payments as of March 31, 2022 are as follows: 2022 $ 304 2023 429 2024 448 2025 418 2026 111 Thereafter 108 Total lease payments 1,818 Less: imputed interest (133) Total $ 1,685 |
INVESTMENTS & OTHER ASSETS
INVESTMENTS & OTHER ASSETS | 3 Months Ended |
Mar. 31, 2022 | |
INVESTMENTS & OTHER ASSETS | |
INVESTMENTS & OTHER ASSETS | NOTE 5. – INVESTMENTS & OTHER ASSETS The total carrying value of the Company’s investments and other assets at March 31, 2022 and December 31, 2021 consisted of the following: March 31, December 31, 2022 2021 Panacea Life Sciences Holdings, Inc. common stock $ 1,528 $ 2,340 Aurora stock warrants 1 5 Change Agronomy Ltd. ordinary shares 682 — Total investments $ 2,211 $ 2,345 Promissory note receivable $ 3,770 $ 3,741 Investment in Panacea Life Sciences Holdings, Inc. Initial Investment: On December 3, 2019, the Company entered into a securities purchase agreement with Panacea Life Sciences, Inc. (“Panacea”) whereby the Company acquired shares of Panacea Series B preferred stock; a convertible note receivable with a $7,000 face value; and a warrant to purchase additional shares of Series B preferred stock. 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”) 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; this balance is reflected in final shares as stated above), 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 was included within the Consolidated Statements of Operations and Comprehensive Loss as “Gain on Panacea investment conversion” during 2021. 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.” As of March 31, 2022, the Promissory note receivable balance was $3,770. 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. On October 25, 2021, Exactus announced the completion of a 1 for 28 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. Investment in Change Agronomy Ltd. On December 10, 2021, the Company entered into a subscription agreement to invest £500 (pounds sterling, in thousands), in exchange for 592,888 ordinary shares of Change Agronomy Ltd. (“CAL”), a private company existing under the laws of England, at a price per share of £0.84333. CAL is a vertically integrated sustainable industrial hemp business that combines world-class genetics with leading agronomic techniques and infrastructure to provide full-service industrial hemp products to multiple global end markets. CAL presently has operations in Manitoba, Canada, and Italy. This equity investment was part of an Offer for Subscription by CAL for a minimum total of £3,000 at the same price per ordinary share. Approximately U.S. $682 in funds were wired to CAL on January 26, 2022, and our investment of £500 equates to approximately 1.8% of CAL’s total equity. |
FAIR VALUE MEASUREMENTS AND SHO
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value: Fair Value March 31, 2022 Level 1 Level 2 Level 3 Total Assets Short-term investment securities: Money market funds $ 2,058 $ — $ — $ 2,058 Corporate bonds — 34,978 — 34,978 Total short-term investment securities $ 2,058 $ 34,978 $ — $ 37,036 Investments: Panacea Life Sciences Holdings, Inc. common shares $ 1,528 $ — $ — $ 1,528 Aurora stock warrants — — 1 1 Change Agronomy Ltd. ordinary shares — — 682 682 Total investments $ 1,528 $ — $ 683 $ 2,211 Fair Value December 31, 2021 Level 1 Level 2 Level 3 Total Assets Short-term investment securities: Money market funds $ 8,919 $ — $ — $ 8,919 Corporate bonds — 38,481 — 38,481 Total short-term investment securities $ 8,919 $ 38,481 $ — $ 47,400 Investments: Panacea Life Sciences Holdings, Inc. common shares $ 2,340 $ — $ — $ 2,340 Aurora stock warrants — — 5 5 Total investments $ 2,340 $ — $ 5 $ 2,345 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 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 97% and 92% as of March 31, 2022 and December 31, 2021, respectively. Therefore, changes in market volatility will impact the fair value measurement of our Aurora investment. A 20% increase or decrease in the volatility factor used as of March 31, 2022 would have the impact of increasing or decreasing the fair value measurement of the stock warrants by an average of approximately $2. A 20% increase or decrease in the volatility factor used at December 31, 2021 would have the impact of increasing or decreasing the fair value measurement of the stock warrants by an average of approximately $6. The investment in Panacea Life Sciences Holdings 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 investment in Change Agronomy Ltd. is in a privately held company and its stock does not have a readily determinable fair value; therefore, the investment is carried at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. The following table sets forth a summary of the changes in fair value of the Company’s Level 3 investments for the three months ended March 31, 2022: Fair Value at December 31, 2021 $ 5 Unrealized loss on Aurora stock warrants (4) Investment in Change Agronomy Ltd. ordinary shares 682 Fair Value at March 31, 2022 $ 683 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 March 31, 2022 and December 31, 2021: Available for Sale Debt Securities March 31, 2022 Amortized Gross Gross Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 35,541 $ — $ (563) $ 34,978 Available for Sale Debt Securities December 31, 2021 Amortized Gross Gross Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 38,643 $ 1 $ (163) $ 38,481 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 March 31, 2022 and December 31, 2021: Available for Sale Debt Securities March 31, 2022 December 31, 2021 Amortized Amortized Cost Basis Fair Value Cost Basis Fair Value Due in one year or less $ 15,508 $ 15,339 $ 8,286 $ 8,280 Due after one year through five years 20,033 19,639 30,357 30,201 $ 35,541 $ 34,978 $ 38,643 $ 38,481 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2022 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 7. - INTANGIBLE ASSETS Total intangible assets at March 31, 2022 and December 31, 2021 consisted of the following: March 31, December 31, 2022 2021 Intangible assets, net Patent and trademark costs $ 6,167 $ 5,991 Less: accumulated amortization (3,402) (3,303) Patent and trademark costs, net 2,765 2,688 License fees 3,876 3,876 Less: accumulated amortization (1,259) (1,197) License fees, net 2,617 2,679 MSA signatory costs 2,202 2,202 License fee for predicate cigarette brand 350 350 $ 7,934 $ 7,919 Amortization expense relating to the above intangible assets for the three months ended March 31, 2022 amounted to $161 ($150 for the three months ended March 31, 2021). |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2022 | |
NOTES PAYABLE. | |
NOTES PAYABLE | NOTE 8. – NOTES PAYABLE License Fees 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 was obligated to pay the University of Kentucky milestone payments totaling $1,200, of which $300 was payable upon execution, and $300 was payable annually over three years on the anniversary of the execution of the License Agreement. The Company recorded the present value of the obligations under the License Agreement as a note payable that originally amounted to $1,151. As of November 30, 2021, the Company paid the final milestone payment of $300. The cost of the 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 The table below outlines our notes payable balances as of March 31, 2022 and December 31, 2021: March 31, December 31, 2022 2021 D&O Insurance $ — $ 596 Accretion of non-cash interest expense amounted to $0 for the three months ended March 31, 2022 and $2 for the three months ended March 31, 2021. |
SEVERANCE LIABILITY
SEVERANCE LIABILITY | 3 Months Ended |
Mar. 31, 2022 | |
SEVERANCE LIABILITY | |
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 March 31, 2022 was $187 and $0 , respectively. The current and long-term accrued severance balance remaining as of December 31, 2021 was $217 and $21 , respectively. |
CAPITAL RAISE AND WARRANT EXERC
CAPITAL RAISE AND WARRANT EXERCISE | 3 Months Ended |
Mar. 31, 2022 | |
CAPITAL RAISE AND WARRANT EXERCISE | |
CAPITAL RAISE AND WARRANT EXERCISE | NOTE 10. – CAPITAL RAISE AND WARRANT EXERCISE 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 pursuant to which 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. Warrant Exercise 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 March 31, 2022. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2022 | |
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 2022 2023 2024 2025 2026 & After Total Research Agreement KeyGene Hemp / Cannabis Contract fee $ 1,406 $ 1,860 $ 1,828 $ 1,414 $ 1,630 $ 8,138 (1) License Agreement NCSU Tobacco Annual royalty fee 203 — — — — 203 (2), (3) License Agreement NCSU Tobacco Minimum annual royalty 38 50 50 50 550 738 (3) License Agreement NCSU Tobacco Minimum annual royalty 38 50 50 50 450 638 (3) Research Agreement NCSU Tobacco Contract fee 78 — — — — 78 (4) Sublicense Agreement Anandia Laboratories, Inc. Hemp / Cannabis Annual license fee — 10 10 10 100 130 (5) Research Agreement Cannametrix Hemp / Cannabis Contract fee 500 667 666 — — 1,833 (6) Consulting Agreements Various Various Contract fee 997 808 746 — — 2,551 (7) $ 3,260 $ 3,445 $ 3,350 $ 1,524 $ 2,730 $ 14,309 (1) Exclusive agreement with the Company in the field of the Cannabis Sativa L. plant. 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. On March 30, 2022, the Company and KeyGene entered into a new Framework Collaborative Research Agreement for a term of three years at an aggregate cost of $1,830 in the field related to the hops plant. 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 stated fields of each agreement. The Company has also granted KeyGene a license to commercialize the Results outside of each field and KeyGene will pay royalties in varying amounts to the Company relating to KeyGene's commercialization of the Results outside of each field. (2) The annual royalty fee is credited against running royalties on sales of licensed products. (3) The Company is also responsible for reimbursing NCSU 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 January 27, 2022, 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 11, 2022, the Company expanded its research agreement with Cannametrix for hemp/cannabis product development, formulation, and validation for a three-year period at an aggregate cost of $2,000 . (7) General corporate consulting agreements. Litigation 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 heard oral arguments on September 2, 2021 and the matter remains pending with the Second Circuit. 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 Broccuto 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 Broccuto 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 | 3 Months Ended |
Mar. 31, 2022 | |
EQUITY- BASED COMPENSATION | |
EQUITY- BASED COMPENSATION | NOTE 12 – EQUITY- BASED COMPENSATION On May 20, 2021, the shareholders of 22nd Century Group, Inc. (the “Company”) approved the 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”). The 2021 Plan allows for the granting of equity awards to eligible individuals over the life of the 2021 Plan, including the issuance of up to 5,000,000 shares of the Company’s common stock, in addition to any remaining shares under the Company’s 2014 Omnibus Incentive Plan pursuant to awards under the 2021 Plan. The 2021 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 2021 Plan and the number of shares of common stock to underlie each such award under the 2021 Plan. As of March 31, 2022, the Company had available 4,990,653 shares remaining for future awards under the 2021 Plan. Restricted Stock Units (“RSUs”) Unvested RSUs Weighted Average Number of Grant-date Shares Fair Value in thousands $ per share Unvested at December 31, 2021 3,165 $ 2.50 Granted 2,607 $ 2.19 Vested (1,664) $ 2.39 Forfeited (71) $ 2.40 Unvested at March 31, 2022 4,037 $ 2.35 The fair value of RSUs that vested during the three months ended March 31, 2022 was approximately $3,800 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, 2021 5,171 $ 1.65 Outstanding at March 31, 2022 5,171 $ 1.65 3.4 years $ 4,107 Exercisable at March 31, 2022 5,014 $ 1.62 3.3 years $ 4,107 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 Company did not grant any stock options in 2022. In 2021, 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 March 31, 2022 2021 Sales, general, and administrative $ 1,171 $ 480 Research and development 42 27 Total RSUs and stock option compensation $ 1,213 $ 507 As of March 31, 2022, unrecognized compensation expense amounted to $8,855 which is expected to be recognized over a weighted average period of approximately 1.5 years. In addition, there is approximately $682 of unrecognized compensation expense that requires the achievement of certain milestones which are not yet probable. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2022 | |
REVENUE RECOGNITION | |
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 customers’ 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, which include excise taxes and shipping and handling charges billed to customers, is recognized net of cash discounts, sales returns and allowances. There was no allowance for discounts or returns and allowances at March 31, 2022 and December 31, 2021. Excise taxes recorded in Cost of Goods Sold on the Consolidated Statement of Operations and Comprehensive Loss for the three months ended March 31, 2022 and 2021 were $2,719 and $2,063, respectively. 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: March 31, December 31, 2022 2021 Unbilled receivables $ 213 $ 178 Deferred revenue (483) (119) Net contract assets $ (270) $ 59 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. Revenue is primarily related to contract manufacturing. Three Months Ended March 31, 2022 2021 Net sales-over time $ 6,684 $ 4,512 Net sales-point in time 2,361 2,294 Total Revenue $ 9,045 $ 6,806 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2022 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 14. – EARNINGS PER SHARE The following table sets forth the computation of basic and diluted loss per common share for the three months ended March 31, 2022 and 2021, respectively. Outstanding options and RSUs were excluded from the calculation of diluted EPS as the effect was antidilutive. Three Months Ended March 31, 2022 2021 (in thousands, except for per-share data) Net loss $ (8,918) $ (5,030) Weighted average common shares outstanding - basic and diluted 163,157 144,258 Net loss per common share - basic and diluted $ (0.05) $ (0.03) Anti-dilutive shares are as follows as of March 31: Options 5,171 5,964 Restricted stock units 4,037 3,483 9,208 9,447 |
NATURE OF BUSINESS AND SUMMAR_2
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation - Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The balance sheet as of December 31, 2021 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, 2021 audited consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on March 1, 2022. |
Principles of Consolidation | Principles of Consolidation - |
Nature of Business | Nature of Business – |
Reclassifications | Reclassifications |
COVID-19 Pandemic | COVID-19 Pandemic All our facilities continue to operate in compliance with state and local 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 2043. 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 from 2028 through 2036. The Company believes that costs associated with becoming a signatory to the MSA, costs related to the acquisition of a predicate cigarette brand and trademarks have indefinite lives. 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 and record the difference as an impairment. 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 and record the difference as an impairment. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - |
Investments | Investments – |
Right-of-use ("ROU") assets and Lease Obligations | Right-of-use assets (“ROU”) and Lease Obligations |
Stock Based Compensation | Stock Based Compensation one year three-year |
Income Taxes | Income Taxes - |
Recent Accounting Pronouncement(s) | Recent Accounting Pronouncements – 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) | 3 Months Ended |
Mar. 31, 2022 | |
INVENTORY | |
Schedule of Inventories | March 31, December 31, 2022 2021 Inventory - tobacco leaf $ 2,003 $ 1,352 Inventory - hemp/cannabis 113 10 Inventory - finished goods Cigarettes and filtered cigars 267 256 Inventory - raw materials Cigarette and filtered cigar components 1,470 1,363 Less: inventory reserve (100) (100) $ 3,753 $ 2,881 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY, PLANT AND EQUIPMENT, NET. | |
Schedule of Property, plant and equipment, net | March 31, December 31, Useful Life 2022 2021 Land $ 1,665 $ 1,665 Building 12 to 30 years 130 130 Leasehold Improvements shorter of 15 years or lease term 198 179 Manufacturing equipment 3 to 10 years 5,580 5,541 Office furniture, fixtures and equipment 3 150 139 Laboratory equipment 5 years 198 198 Construction in progress 1,496 1,289 Less: accumulated depreciation (3,468) (3,300) Property, plant and equipment, net $ 5,949 $ 5,841 |
RIGHT-OF-USE ASSETS, LEASE OB_2
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES | |
Summary of discount rate and remaining lease terms | Weighted average remaining lease term in years 4.3 Weighted average discount rate 3.3 % |
Schedule of future minimum lease payments | 2022 $ 304 2023 429 2024 448 2025 418 2026 111 Thereafter 108 Total lease payments 1,818 Less: imputed interest (133) Total $ 1,685 |
INVESTMENTS & OTHER ASSETS (Tab
INVESTMENTS & OTHER ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
INVESTMENTS & OTHER ASSETS | |
Schedule of carrying value of investments | March 31, December 31, 2022 2021 Panacea Life Sciences Holdings, Inc. common stock $ 1,528 $ 2,340 Aurora stock warrants 1 5 Change Agronomy Ltd. ordinary shares 682 — Total investments $ 2,211 $ 2,345 Promissory note receivable $ 3,770 $ 3,741 |
FAIR VALUE MEASUREMENTS AND S_2
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | |
Schedule of assets and liabilities measured at fair value | Fair Value March 31, 2022 Level 1 Level 2 Level 3 Total Assets Short-term investment securities: Money market funds $ 2,058 $ — $ — $ 2,058 Corporate bonds — 34,978 — 34,978 Total short-term investment securities $ 2,058 $ 34,978 $ — $ 37,036 Investments: Panacea Life Sciences Holdings, Inc. common shares $ 1,528 $ — $ — $ 1,528 Aurora stock warrants — — 1 1 Change Agronomy Ltd. ordinary shares — — 682 682 Total investments $ 1,528 $ — $ 683 $ 2,211 Fair Value December 31, 2021 Level 1 Level 2 Level 3 Total Assets Short-term investment securities: Money market funds $ 8,919 $ — $ — $ 8,919 Corporate bonds — 38,481 — 38,481 Total short-term investment securities $ 8,919 $ 38,481 $ — $ 47,400 Investments: Panacea Life Sciences Holdings, Inc. common shares $ 2,340 $ — $ — $ 2,340 Aurora stock warrants — — 5 5 Total investments $ 2,340 $ — $ 5 $ 2,345 |
Schedule of the changes in fair value of Level 3 investments | Fair Value at December 31, 2021 $ 5 Unrealized loss on Aurora stock warrants (4) Investment in Change Agronomy Ltd. ordinary shares 682 Fair Value at March 31, 2022 $ 683 |
Schedule of available-for-sale securities reconciliation | Available for Sale Debt Securities March 31, 2022 Amortized Gross Gross Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 35,541 $ — $ (563) $ 34,978 Available for Sale Debt Securities December 31, 2021 Amortized Gross Gross Cost Unrealized Unrealized Fair Basis Gains Losses Value Corporate bonds $ 38,643 $ 1 $ (163) $ 38,481 |
Schedule of available for sale securities classified by contractual maturity | Available for Sale Debt Securities March 31, 2022 December 31, 2021 Amortized Amortized Cost Basis Fair Value Cost Basis Fair Value Due in one year or less $ 15,508 $ 15,339 $ 8,286 $ 8,280 Due after one year through five years 20,033 19,639 30,357 30,201 $ 35,541 $ 34,978 $ 38,643 $ 38,481 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
INTANGIBLE ASSETS | |
Schedule of Intangible Assets | March 31, December 31, 2022 2021 Intangible assets, net Patent and trademark costs $ 6,167 $ 5,991 Less: accumulated amortization (3,402) (3,303) Patent and trademark costs, net 2,765 2,688 License fees 3,876 3,876 Less: accumulated amortization (1,259) (1,197) License fees, net 2,617 2,679 MSA signatory costs 2,202 2,202 License fee for predicate cigarette brand 350 350 $ 7,934 $ 7,919 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
NOTES PAYABLE. | |
Schedule of notes payable balances | March 31, December 31, 2022 2021 D&O Insurance $ — $ 596 |
COMMITMENTS & CONTINGENCIES (Ta
COMMITMENTS & CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
Contractual Obligation, Fiscal Year Maturity [Table Text Block] | Future Commitments Commitment Counter Party Product Relationship Commitment Type 2022 2023 2024 2025 2026 & After Total Research Agreement KeyGene Hemp / Cannabis Contract fee $ 1,406 $ 1,860 $ 1,828 $ 1,414 $ 1,630 $ 8,138 (1) License Agreement NCSU Tobacco Annual royalty fee 203 — — — — 203 (2), (3) License Agreement NCSU Tobacco Minimum annual royalty 38 50 50 50 550 738 (3) License Agreement NCSU Tobacco Minimum annual royalty 38 50 50 50 450 638 (3) Research Agreement NCSU Tobacco Contract fee 78 — — — — 78 (4) Sublicense Agreement Anandia Laboratories, Inc. Hemp / Cannabis Annual license fee — 10 10 10 100 130 (5) Research Agreement Cannametrix Hemp / Cannabis Contract fee 500 667 666 — — 1,833 (6) Consulting Agreements Various Various Contract fee 997 808 746 — — 2,551 (7) $ 3,260 $ 3,445 $ 3,350 $ 1,524 $ 2,730 $ 14,309 (1) Exclusive agreement with the Company in the field of the Cannabis Sativa L. plant. 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. On March 30, 2022, the Company and KeyGene entered into a new Framework Collaborative Research Agreement for a term of three years at an aggregate cost of $1,830 in the field related to the hops plant. 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 stated fields of each agreement. The Company has also granted KeyGene a license to commercialize the Results outside of each field and KeyGene will pay royalties in varying amounts to the Company relating to KeyGene's commercialization of the Results outside of each field. (2) The annual royalty fee is credited against running royalties on sales of licensed products. (3) The Company is also responsible for reimbursing NCSU 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 January 27, 2022, 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 11, 2022, the Company expanded its research agreement with Cannametrix for hemp/cannabis product development, formulation, and validation for a three-year period at an aggregate cost of $2,000 . (7) General corporate consulting agreements. |
EQUITY- BASED COMPENSATION (Tab
EQUITY- BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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, 2021 3,165 $ 2.50 Granted 2,607 $ 2.19 Vested (1,664) $ 2.39 Forfeited (71) $ 2.40 Unvested at March 31, 2022 4,037 $ 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, 2021 5,171 $ 1.65 Outstanding at March 31, 2022 5,171 $ 1.65 3.4 years $ 4,107 Exercisable at March 31, 2022 5,014 $ 1.62 3.3 years $ 4,107 |
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 March 31, 2022 2021 Sales, general, and administrative $ 1,171 $ 480 Research and development 42 27 Total RSUs and stock option compensation $ 1,213 $ 507 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
REVENUE RECOGNITION | |
Schedule of contract assets and liabilities | March 31, December 31, 2022 2021 Unbilled receivables $ 213 $ 178 Deferred revenue (483) (119) Net contract assets $ (270) $ 59 |
Schedule of disaggregation of revenue | Three Months Ended March 31, 2022 2021 Net sales-over time $ 6,684 $ 4,512 Net sales-point in time 2,361 2,294 Total Revenue $ 9,045 $ 6,806 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earnings per common share | Three Months Ended March 31, 2022 2021 (in thousands, except for per-share data) Net loss $ (8,918) $ (5,030) Weighted average common shares outstanding - basic and diluted 163,157 144,258 Net loss per common share - basic and diluted $ (0.05) $ (0.03) Anti-dilutive shares are as follows as of March 31: Options 5,171 5,964 Restricted stock units 4,037 3,483 9,208 9,447 |
NATURE OF BUSINESS AND SUMMAR_3
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended |
Mar. 31, 2022subsidiary | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of subsidiaries | 5 |
Directors | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Vesting period | 1 year |
Officers and employees | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Vesting period | 3 years |
Twenty Second Century Ltd | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of subsidiaries | 2 |
Botanical Genetics | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of subsidiaries | 1 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
INVENTORY | ||
Inventory - tobacco leaf | $ 2,003 | $ 1,352 |
Inventory - hemp/cannabis | 113 | 10 |
Inventory - finished goods Cigarettes and filtered cigars | 267 | 256 |
Inventory - raw materials Cigarette and filtered cigar components | 1,470 | 1,363 |
Less: inventory reserve | (100) | (100) |
Inventory, Net | $ 3,753 | $ 2,881 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Less: accumulated depreciation | $ (3,468) | $ (3,300) | |
Property, plant and equipment, net | 5,949 | 5,841 | |
Depreciation expense | 168 | $ 138 | |
Land | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Gross | 1,665 | 1,665 | |
Building | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Gross | $ 130 | 130 | |
Building | Maximum | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Useful Life | 30 years | ||
Building | Minimum | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Useful Life | 12 years | ||
Leasehold Improvements | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Gross | $ 198 | 179 | |
Property, Plant and Equipment, Useful Life | 15 years | ||
Manufacturing equipment | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Gross | $ 5,580 | 5,541 | |
Manufacturing equipment | Maximum | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Useful Life | 10 years | ||
Manufacturing equipment | Minimum | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Useful Life | 3 years | ||
Office furniture, fixtures and equipment | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Gross | $ 150 | 139 | |
Office furniture, fixtures and equipment | Maximum | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Useful Life | 5 years | ||
Office furniture, fixtures and equipment | Minimum | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Useful Life | 3 years | ||
Laboratory equipment | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Gross | $ 198 | 198 | |
Property, Plant and Equipment, Useful Life | 5 years | ||
Construction in Progress | |||
PROPERTY, PLANT AND EQUIPMENT, NET | |||
Property, Plant and Equipment, Gross | $ 1,496 | $ 1,289 |
RIGHT-OF-USE ASSETS, LEASE OB_3
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS AND OTHER LEASES (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($)item | |
RIGHT-OF-USE ASSETS, LEASE OBLIGATIONS, AND OTHER LEASES | |
Weighted average remaining lease term in years | 4 years 3 months 18 days |
Weighted average discount rate | 3.30% |
Future minimum lease payments | |
2022 | $ 304 |
2023 | 429 |
2024 | 448 |
2025 | 418 |
2026 | 111 |
Thereafter | 108 |
Total lease payments | 1,818 |
Less: imputed interest | (133) |
Operating Lease, Liability | $ 1,685 |
Manufacturing Facility And Warehouse In North Carolina | |
Future minimum lease payments | |
Initial lease term | 24 months |
Number of renewal options | item | 1 |
Renewal term | 24 months |
Laboratory Space In Buffalo | |
Future minimum lease payments | |
Initial lease term | 36 months |
Number of renewal options | item | 2 |
Renewal term | 24 months |
Research And Development Laboratory In Rockville, MD | |
Future minimum lease payments | |
Initial lease term | 51 months |
INVESTMENTS & OTHER ASSETS - To
INVESTMENTS & OTHER ASSETS - Total carrying value (Details) £ in Thousands, $ in Thousands | Mar. 31, 2022USD ($) | Jan. 26, 2022USD ($) | Dec. 31, 2021USD ($) | Dec. 10, 2021GBP (£) | Jun. 30, 2021USD ($) |
INVESTMENTS & OTHER ASSETS | |||||
Investments | $ 2,211 | $ 2,345 | |||
Note receivable | 3,770 | 3,741 | |||
Aurora Cannabis Inc | Warrants | |||||
INVESTMENTS & OTHER ASSETS | |||||
Investments | 1 | 5 | |||
Investment in Panacea | |||||
INVESTMENTS & OTHER ASSETS | |||||
Investments | 1,528 | $ 2,340 | |||
Note receivable | 3,770 | $ 3,684 | |||
Change Agronomy | |||||
INVESTMENTS & OTHER ASSETS | |||||
Investments | $ 682 | £ 500 | |||
Change Agronomy | Common Stock | |||||
INVESTMENTS & OTHER ASSETS | |||||
Investments | $ 682 |
INVESTMENTS AND OTHER ASSETS -
INVESTMENTS AND OTHER ASSETS - Investment in Panacea Life Sciences, Inc (Details) £ in Thousands, $ in Thousands | Oct. 25, 2021shares | Jun. 30, 2021USD ($)ashares | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($)shares | Dec. 10, 2021GBP (£) | Dec. 03, 2019USD ($) |
INVESTMENTS & OTHER ASSETS | ||||||
Long-term Investments | $ 2,211 | $ 2,345 | ||||
Note receivable | 3,770 | 3,741 | ||||
Exactus | ||||||
INVESTMENTS & OTHER ASSETS | ||||||
Reverse stock split, ratio | 0.035714 | |||||
Change Agronomy | ||||||
INVESTMENTS & OTHER ASSETS | ||||||
Long-term Investments | £ | £ 500 | |||||
Investment in Panacea | ||||||
INVESTMENTS & OTHER ASSETS | ||||||
Long-term Investments | 1,528 | $ 2,340 | ||||
Note receivable | $ 3,684 | $ 3,770 | ||||
Note receivable, face amount | $ 4,300 | $ 7,000 | ||||
Note receivable interest rate | 0.00% | |||||
Area of Land | a | 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 | |||||
Exactus | ||||||
INVESTMENTS & OTHER ASSETS | ||||||
Long-term Investments | $ 9,102 | |||||
Stock received in conversion, shares | shares | 91,016,026 | |||||
Number of shares held in investee | shares | 3,250,573 | 91,016,026 |
INVESTMENTS & OTHER ASSETS - In
INVESTMENTS & OTHER ASSETS - Investment in Change Agronomy (Details) £ / shares in Units, £ in Thousands, $ in Thousands | Dec. 10, 2021GBP (£)£ / sharesshares | Jun. 07, 2021USD ($) | Mar. 31, 2022USD ($) | Jan. 26, 2022USD ($) | Dec. 31, 2021USD ($) |
Marketable Securities [Line Items] | |||||
Investments | $ | $ 2,211 | $ 2,345 | |||
Minimum total of equity investments | $ | $ 38,206 | ||||
Change Agronomy | |||||
Marketable Securities [Line Items] | |||||
Investments | £ | £ 500 | ||||
Change Agronomy | |||||
Marketable Securities [Line Items] | |||||
Investments | £ 500 | $ 682 | |||
Number of ordinary shares | shares | 592,888 | ||||
Number of ordinary price per share | £ / shares | £ 0.84333 | ||||
Ownership percentage (in percent) | 1.80% | ||||
Change Agronomy | Minimum | |||||
Marketable Securities [Line Items] | |||||
Minimum total of equity investments | £ | £ 3,000 |
FAIR VALUE MEASUREMENTS AND S_3
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS - Recurring (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022USD ($)$ / shares | Dec. 31, 2021USD ($) | |
Money Market Funds | ||
Assets | ||
Net Asset Value | $ / shares | $ 1 | |
Warrants | ||
Assets | ||
Equity Securities, FV-NI, Measurement Input | 0.97 | 0.92 |
Input increase (decrease) assumption, as a percent | 20.00% | 20.00% |
Estimated change in fair value due to change in input | $ 2 | $ 6 |
Fair Value, Recurring | ||
Assets | ||
Total investments | 2,211 | 2,345 |
Fair Value, Recurring | Short-term investments securities | ||
Assets | ||
Assets at fair value | 37,036 | 47,400 |
Fair Value, Recurring | Money Market Funds | ||
Assets | ||
Assets at fair value | 2,058 | 8,919 |
Fair Value, Recurring | Corporate Bonds | ||
Assets | ||
Assets at fair value | 34,978 | 38,481 |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | ||
Assets | ||
Total investments | 1,528 | 2,340 |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | Short-term investments securities | ||
Assets | ||
Assets at fair value | 2,058 | 8,919 |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | Money Market Funds | ||
Assets | ||
Assets at fair value | 2,058 | 8,919 |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | Corporate Bonds | ||
Assets | ||
Assets at fair value | 0 | |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | Short-term investments securities | ||
Assets | ||
Assets at fair value | 34,978 | 38,481 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | Money Market Funds | ||
Assets | ||
Assets at fair value | 0 | |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | Corporate Bonds | ||
Assets | ||
Assets at fair value | 34,978 | 38,481 |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | ||
Assets | ||
Total investments | 683 | 5 |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Short-term investments securities | ||
Assets | ||
Assets at fair value | 0 | |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Money Market Funds | ||
Assets | ||
Assets at fair value | 0 | |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Corporate Bonds | ||
Assets | ||
Assets at fair value | 0 | |
Investment in Panacea | Fair Value, Recurring | Warrants | ||
Assets | ||
Assets at fair value | 1,528 | 2,340 |
Investment in Panacea | Fair Value, Recurring | Fair Value, Inputs, Level 1 | Warrants | ||
Assets | ||
Assets at fair value | 1,528 | 2,340 |
Aurora Cannabis Inc | Fair Value, Recurring | Common Stock | ||
Assets | ||
Assets at fair value | 1 | |
Aurora Cannabis Inc | Fair Value, Recurring | Preferred stock | ||
Assets | ||
Assets at fair value | 5 | |
Aurora Cannabis Inc | Fair Value, Recurring | Fair Value, Inputs, Level 3 | Common Stock | ||
Assets | ||
Assets at fair value | 1 | |
Aurora Cannabis Inc | Fair Value, Recurring | Fair Value, Inputs, Level 3 | Preferred stock | ||
Assets | ||
Assets at fair value | $ 5 | |
Change Agronomy | Fair Value, Recurring | ||
Assets | ||
Assets at fair value | 682 | |
Change Agronomy | Fair Value, Recurring | Fair Value, Inputs, Level 3 | ||
Assets | ||
Assets at fair value | $ 682 |
FAIR VALUE MEASUREMENTS AND S_4
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS - Changes in fair value, Level 3 (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Fair value at beginning of the period | $ 5 |
Fair value at end of the period | 683 |
Aurora Cannabis Inc | |
Unrealized loss as a result of change in fair value | 4 |
Change Agronomy | |
Assets purchased | 682 |
Investment in Change Agronomy | $ 682 |
FAIR VALUE MEASUREMENTS AND S_5
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS - Available-for-sale debt securities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | ||
Available-for-sale Securities - Amortized Cost Basis | $ 35,541 | $ 38,643 |
Available-for-sale Securities - Fair Value | 34,978 | 38,481 |
Corporate Bonds | ||
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | ||
Available-for-sale Securities - Amortized Cost Basis | 35,541 | 38,643 |
Available-for-sale Securities - Gross Unrealized Gains | 1 | |
Available-for-sale Securities - Gross Unrealized Losses | (563) | (163) |
Available-for-sale Securities - Fair Value | $ 34,978 | $ 38,481 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Intangible assets, net | |||
Intangible assets, net | $ 7,934 | $ 7,919 | |
Amortization expense | 161 | $ 150 | |
MSA Signatory Costs | |||
Intangible assets, net | |||
Indefinite-lived intangible assets | 2,202 | 2,202 | |
Licensing agreements | |||
Intangible assets, net | |||
Indefinite-lived intangible assets | 350 | 350 | |
Patent and Trademark | |||
Intangible assets, net | |||
Gross | 6,167 | 5,991 | |
Less: accumulated amortization | (3,402) | (3,303) | |
Total | 2,765 | 2,688 | |
Licensing agreements | |||
Intangible assets, net | |||
Gross | 3,876 | 3,876 | |
Less: accumulated amortization | (1,259) | (1,197) | |
Total | $ 2,617 | $ 2,679 |
FAIR VALUE MEASUREMENTS AND S_6
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS - Maturity of available-for-sale securities by contractual maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS | ||
Available For Sale, Maturities One Year or Less, Amortized Cost | $ 15,508 | $ 8,286 |
Available For Sale, Maturities One Through Five Years, Amortized Cost | 20,033 | 30,357 |
Available for sale securities, amortized cost, total | 35,541 | 38,643 |
Available For Sale, Maturities One Year or Less, Fair Value | 15,339 | 8,280 |
Available For Sale, Maturities One Through Five Years, Fair Value | 19,639 | 30,201 |
Available For Sale Securities, Fair Value | $ 34,978 | $ 38,481 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) $ in Thousands | Nov. 30, 2021USD ($) | Oct. 22, 2018USD ($)item | Mar. 31, 2022USD ($) | Jun. 30, 2021USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) |
NOTES PAYABLE | ||||||
Directors And Officers insurance, policy term | 1 year | |||||
Annual premium | $ 3,315 | |||||
Premium paid | 662 | |||||
Proceeds from Notes Payable | $ 2,653 | |||||
Debt Instrument, Term | 9 months | |||||
Debt Instrument, Interest Rate, Stated Percentage | 3.49% | |||||
D&O Insurance | $ 596 | |||||
Total current notes payable | $ 596 | |||||
License Agreement | University Of Kentucky | ||||||
NOTES PAYABLE | ||||||
Aggregate milestone payments | $ 1,200 | |||||
Notes Payable | 1,151 | |||||
Annual milestone payments beyond upfront amount | $ 300 | 300 | ||||
License acquired | 1,151 | |||||
Upfront payment | $ 300 | |||||
Number of installments | item | 3 | |||||
Borrowings | ||||||
NOTES PAYABLE | ||||||
Accretion of non cash interest expense | $ 0 | $ 2 |
SEVERANCE LIABILITY (Details)
SEVERANCE LIABILITY (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Mar. 31, 2022 | Dec. 31, 2021 | |
SEVERANCE LIABILITY | ||||
Severance expense | $ 306 | $ 881 | ||
Severance accrual | $ 771 | |||
Severance period | 12 months | 42 months | ||
Accrued severance | $ 187 | $ 217 | ||
Accrued severance, noncurrent | $ 0 | $ 21 |
CAPITAL RAISE AND WARRANT EXE_2
CAPITAL RAISE AND WARRANT EXERCISE - Capital raise (Details) $ / shares in Units, $ in Thousands, shares in Millions | Jun. 07, 2021USD ($)$ / sharesshares |
CAPITAL RAISE AND WARRANT EXERCISE | |
Stock issued in connection with capital raise (in shares) | shares | 10 |
Share Price | $ / shares | $ 4 |
Stock issued in connection with capital raise | $ | $ 38,206 |
CAPITAL RAISE AND WARRANT EXE_3
CAPITAL RAISE AND WARRANT EXERCISE - Warrants (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2022 | |
CAPITAL RAISE AND WARRANT EXERCISE | ||
Net proceeds from warrant exercise | $ 11,782 | |
Exercised | (11,293,211) | |
Warrant outstanding balance | 0 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Licenses (Details) - USD ($) $ in Thousands | Mar. 30, 2022 | Mar. 11, 2022 | Mar. 31, 2022 |
Future Commitments | |||
2022 | $ 3,260 | ||
2023 | 3,445 | ||
2024 | 3,350 | ||
2025 | 1,524 | ||
2026 & After | 2,730 | ||
Contractual Obligation, Total | 14,309 | ||
Research Agreement | KeyGene | |||
Future Commitments | |||
2022 | 1,406 | ||
2023 | 1,860 | ||
2024 | 1,828 | ||
2025 | 1,414 | ||
2026 & After | 1,630 | ||
Contractual Obligation, Total | $ 8,138 | ||
Agreement Term | 3 years | 5 years | |
Agreement extension period | 2 years | ||
Aggregate cost over initial term | $ 1,830 | ||
Research Agreement | North Carolina State University | |||
Future Commitments | |||
2022 | $ 78 | ||
Contractual Obligation, Total | 78 | ||
Research Agreement | Cannametrix [Member] | |||
Future Commitments | |||
2022 | 500 | ||
2023 | 667 | ||
2024 | 666 | ||
Contractual Obligation, Total | 1,833 | ||
Agreement Term | 3 years | ||
Aggregate cost over initial term | $ 2,000 | ||
License Agreement | Annual Royalty | |||
Future Commitments | |||
2022 | 203 | ||
Contractual Obligation, Total | 203 | ||
License Agreement | Minimum Annual Royalty 1 | |||
Future Commitments | |||
2022 | 38 | ||
2023 | 50 | ||
2024 | 50 | ||
2025 | 50 | ||
2026 & After | 550 | ||
Contractual Obligation, Total | 738 | ||
License Agreement | Minimum Annual Royalty 2 | |||
Future Commitments | |||
2022 | 38 | ||
2023 | 50 | ||
2024 | 50 | ||
2025 | 50 | ||
2026 & After | 450 | ||
Contractual Obligation, Total | 638 | ||
Sublicense Agreement With Anandia | |||
Future Commitments | |||
2023 | 10 | ||
2024 | 10 | ||
2025 | 10 | ||
2026 & After | 100 | ||
Contractual Obligation, Total | 130 | ||
Consulting Agreements | |||
Future Commitments | |||
2022 | 997 | ||
2023 | 808 | ||
2024 | 746 | ||
Contractual Obligation, Total | $ 2,551 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - MRTP, litigation (Details) shares in Millions | Jun. 07, 2021shares | Jan. 15, 2020item | Nov. 19, 2019item |
COMMITMENTS AND CONTINGENCIES | |||
Number of shares issued in settlement | shares | 10 | ||
Number of counts | item | 3 | 3 |
EQUITY-BASED COMPENSATION (Deta
EQUITY-BASED COMPENSATION (Details) | 3 Months Ended |
Mar. 31, 2022shares | |
EQUITY- BASED COMPENSATION | |
Additional shares authorized during the period | 5,000,000 |
Plan term | 10 years |
Number of shares remaining for future awards | 4,990,653 |
EQUITY- BASED COMPENSATION - RS
EQUITY- BASED COMPENSATION - RSUs (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
RSUs, Number of shares | |
Nonvested, Number, Beginning Balance | shares | 3,165 |
RSUs granted, number | shares | 2,607 |
RSUs vested, number | shares | (1,664) |
RSUs forfeited, number | shares | (71) |
Nonvested, Number, Ending Balance | shares | 4,037 |
RSUs, Weighted average grant-date fair value | |
Nonvested, Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares | $ 2.50 |
RSUs granted, grant-date fair value | $ / shares | 2.19 |
RSUs vested, grant-date fair value | $ / shares | 2.39 |
RSUs forfeited, grant-date fair value | $ / shares | 2.40 |
Nonvested, Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | $ 2.35 |
Fair value of RSUs that vested during the period | $ | $ 3,800 |
EQUITY- BASED COMPENSATION - St
EQUITY- BASED COMPENSATION - Stock option activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
Number of Options | |
Options, number, Beginning of Period | shares | 5,171 |
Options, number, End of Period | shares | 5,171 |
Options exercisable, number, End of Period | shares | 5,014 |
Options, Weighted Average Exercise Price | |
Options, Beginning of Period, weighted average exercise price | $ / shares | $ 1.65 |
Options, End of Period, weighted average exercise price | $ / shares | 1.65 |
Options exercisable, End of Period, weighted average exercise price | $ / shares | $ 1.62 |
Weighted Average Remaining Contractual Term | |
Options, End of Period, weighted average remaining contractual term | 3 years 4 months 24 days |
Options exercisable, End of Period, weighted average remaining contractual term | 3 years 3 months 18 days |
Aggregate Intrinsic Value | |
Options, End of Period, aggregate intrinsic value | $ | $ 4,107 |
Options exercisable, End of Period, aggregated intrinsic value | $ | $ 4,107 |
EQUITY BASED COMPENSATION - Fai
EQUITY BASED COMPENSATION - Fair value assumptions (Details) | 3 Months Ended |
Mar. 31, 2022 | |
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 | |
Mar. 31, 2022 | Mar. 31, 2021 | |
EQUITY BASED COMPENSATION | ||
Equity-based employee compensation expense | $ 1,213 | $ 507 |
Unrecognized compensation | $ 8,855 | |
Unrecognized compensation, period for recognition | 1 year 6 months | |
Unrecognized compensation, options with milestone-based vesting | $ 682 | |
Sales, general, and administrative | ||
EQUITY BASED COMPENSATION | ||
Equity-based employee compensation expense | 1,171 | 480 |
Research and Development | ||
EQUITY BASED COMPENSATION | ||
Equity-based employee compensation expense | $ 42 | $ 27 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
REVENUE RECOGNITION | |||
Allowance for discounts or returns and allowances | $ 0 | $ 0 | |
Payment period | 21 days | ||
Unbilled receivables | $ 213 | 178 | |
Deferred revenue | (483) | (119) | |
Net contract assets | (270) | $ 59 | |
Total Revenue | 9,045 | $ 6,806 | |
Excise taxes | 2,719 | 2,063 | |
Net sales-over time | |||
REVENUE RECOGNITION | |||
Total Revenue | 6,684 | 4,512 | |
Net sales-point in time | |||
REVENUE RECOGNITION | |||
Total Revenue | $ 2,361 | $ 2,294 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Class of Stock [Line Items] | ||
Net loss | $ (8,918) | $ (5,030) |
Weighted average common shares outstanding - basic | 163,157 | 144,258 |
Weighted average common shares outstanding - diluted | 163,157 | 144,258 |
Net loss per common share - basic | $ (0.05) | $ (0.03) |
Net loss per common share - diluted | $ (0.05) | $ (0.03) |
Effect of dilutive securities: | ||
Anti-dilutive shares | 9,208 | 9,447 |
Restricted stock units | ||
Effect of dilutive securities: | ||
Anti-dilutive shares | 4,037 | 3,483 |
Options | ||
Effect of dilutive securities: | ||
Anti-dilutive shares | 5,171 | 5,964 |