Hello, and welcome to 22nd Century's First Quarter Results Conference Call. Joining me today are Larry Firestone, CEO; and Dan Otto, CFO. Earlier today, we issued a press release announcing our results for the first quarter of 2024. The release and 10-Q are available in the Investors Section of our website at xxiicentury.com. We'll start today's call with prepared remarks from Larry and Dan before moving into a Q&A session with our analysts. If you have questions about our business not addressed on this call, you are welcome to e-mail Investor Relations using the contact information provided in today's press release. 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 in our annual, quarterly and other reports filed with the SEC. Also during today's call, we may 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 nonoperating expenses. For more details on these measures, please refer to our release issued earlier today. And with that, I'll now turn the call over to Larry.

Good morning, and thank you for joining 22nd Century's First Quarter 2024 Results Conference Call. When I spoke to you for the first time as CEO of this company last quarter, I told you that 22nd Century had a brand-new focus, to become a self-sustaining and cash-flowing business. I said that our priority was, what is good for the company comes first and that we are dedicated to making this company live within its skin as a profitable cash-positive NASDAQ-listed company with a strong foothold in the tobacco space focused on nicotine harm reduction. I meant that as a sincere commitment, and I want to say at the outset that I mean it just as much today. Last quarter, I told you about some of the steps we have taken right away to turn this company in the direction of profitability. I'm eager to tell you about how those steps are starting to pay off and how we are continuing to turn the ship in the right direction. At the same time, I want to be straightforward and remind everyone that turnarounds don't happen overnight, and there is a lot of work yet to be done. An example of results, cash used in the first quarter of 2024 fell to just $2.5 million as opposed to last year's quarterly cash burn rate of approximately $15 million. The number of financings we had to arrange over the past year to support that kind of spending tells the story. We will continue to consume cash over the balance of the year, but please know that we are pulling hard on all levers to continue to drop our burn along the way to breakeven and then cash positive in 2025. Before I get into more specifics, let me just say one thing about those financings, raising capital in these markets remains difficult, and we are thankful to the investors that have supported our company during this turnaround process. It's important to note that they are not just buying and selling stock, but are providing critical incremental capital that sustains us through this turnaround. In April, those investors raised an additional $4 million to help us keep moving forward to success. Every dollar counts, and we are stretching those dollars as far as we can and evaluate every decision by answering the question, how are you going to pay for it? This is in light of our goal to achieve cash positive results. Getting back to operations, I couldn't be more proud of how quickly our team has moved to drive to the goal of breakeven by making significant changes in our business that put us on a path forward to accomplishing our goal. We have increased prices on or discontinued unprofitable product lines, significantly reduced our operating expenses in all corners of the company, and our cash utilization rate is down to a fraction of what the company had been spending before I joined. We intend to show even more progress in the second quarter as we work to grow our revenues profitably and continue to push on operating expenses in our drive to breakeven in Q1 of 2025. We booked some new profitable CMO business, which we announced in April, and those orders are beginning to ramp in the second quarter. Not only have we focused on the P&L, but we have strengthened our balance sheet through debt reductions using stock as a currency. Let me unpack some of the key pieces of our transformation efforts in a little more detail. On the revenue side, we declined slightly quarter-over-quarter, which was expected as we work through the product mix, adjust pricing and, in some cases, turn off certain lines in the CMO business that had negative gross margins. Some of this may drag through Q2 and into Q3 as we have contractual agreements that obligate us while the product is transitioned out of our shop and into a new supplier. We expect gross margin improvement as we execute the rest of the year. During April, we announced a new CMO customer that will boost our CMO volumes by up to 20% once fully implemented. But just as important, we'll work to profitably offset the decline in the unprofitable filtered cigar business as we offload those that are unprofitable. Our new contracts began to ramp up in the second quarter. We also announced a new distribution agreement, adding cigarillo products to our Pinnacle brand. These will be sold through a top-5 C-store chain with more than 1,700 stores across 26 states. This is an incremental addition to the shelves in one of the highest tobacco sales volume per square foot C-stores, where Pinnacle is promoted as their store brand to save customers money. This has also begun in Q2 and will add to our top line and gross margin. Dan will get into the details on gross margin and OpEx in his section, but I want to be clear. We fully adopted a lean cost mantra across the company. All of this tallies up to substantial savings in 2024 and beyond. I've said before that our trademark brand, VLN, which stands for very low nicotine, is to cigarettes as decaf is to coffee and skim is to milk. If anyone has told you, you need to cut back, we have the tool. The name stands for something very important, and it's up to us to make that account. We are retooling our VLN branding and we'll roll out our new branding in the second half of the year. We're driving to make VLN more visible in the store and the FDA data that we use to secure our MRTP authorization makes clear that our VLN cigarettes can be a critical tool in the fight to reduce the harms from nicotine from smoking, and smokers who have used the product successfully credit VLN with playing an important part in breaking the cycle of nicotine addiction and helping them smoke less. When we launch our new branding, we want VLN to be the tip of the spear in the creation of an entire harm reduction category centered around reduced nicotine products. We are also looking for other brands that we produce to adopt and carry a VLN SKU in their product lines as well. If successful, this will give smokers who want to pursue changes in their nicotine consumption more very low nicotine choices and make the category more visible. The good news is that we have the distribution and stores to accomplish this goal in place. We just need to continue our pursuit of consumer awareness and consumer acquisition. To that end, we're focused on two aspects. First, we're rebuilding the marketing and education around VLN using resources that I've used before and similar efforts as well as our branding efforts. And second, we are moving ahead on additional strains of reduced nicotine content tobacco to support additional blends as we go forward, which will allow us to offer customers a chance to more closely match a reduced nicotine alternative to their existing preferred brands. By engaging our audiences and potentially offering a variety of VLN SKUs adjacent to their existing cigarette of choice and offering additional brand choices, we want to make it easy for smokers to recognize the concept of VLN as a choice and switch to a reduced nicotine content product and commit to their harm reduction journey. I also want to reinforce this simple message to our shareholders, government actions to push harm reduction products to the forefront could potentially help us. We simply cannot and will not rely on government action as a part of our business plan. We must run the business within our span of control and are planning our business accordingly. We want to make smokers aware of our very low nicotine product and have them make the choice real time to reduce their nicotine harm. This is a powerful tool in our toolkit and the market, but the government is not going to force customers to use our products. But even without government action, I believe that our U.S. government and the FDA want the U.S. population of smokers to realize the harmful and addictive nature of cigarettes and take the initiative to stop smoking on their own and solve the problem. The overarching cost in lives, health care, and infrastructure related to smoking is huge. Our bar for economic success with VLN remains low with 5,100 retail outlets that currently carry VLN. We just need each of them to sell 9 packs per week to completely cover the company's overhead costs. That is essentially one carton per week per store. Some of the chains that carry VLN share our interest already and are developing separate in-store categories focused on harm reduction products for smokers. This commitment by retailers would be a major step forward in VLN brand awareness. As we continue working on our branding and product awareness initiatives while we strengthen our financial capability and move towards profitability, we will increase our spending efforts with strategic retail partners and giving the message to smokers. We are looking to further increase our store distribution with relevant retailers and continue to build their support with the medical and scientific community that understands the importance of VLN brand to public health. As far as our CMO business goes, which is currently the bulk of our revenues, we see an opportunity to expand our reach and provide a valuable service to the industry and grow organically. Contract manufacturing is prevalent in many other industries, and our team in North Carolina is equipped to take the fixed cost of direct labor and overhead at our customers' sites and turn it into a variable cost for our CMO customers. This relieves them of the fixed nature of the overhead behind the direct labor and overhead, and it's a much simpler model for them as they can focus on marketing and selling. We will continue to work our strategies in this area to develop a wider network of customers with the goal of full utilization of our factory's capacity. I will now turn the call over to Dan to review the financial results for Q1 as well as some excellent news we released about our balance sheet. Dan?

Thank you, Larry. Good morning, everyone, and thank you again for joining our discussion today. I'll provide further details on our first quarter financial results. As a reminder, all financial results in our earnings release are presented on a continuing operations basis which excludes our hemp cannabis business. Net sales were $6.5 million, declining slightly from $7.4 million in the fourth quarter of 2023 due to lower volume. This is reflective of lower unit sales as a result of our ongoing reallocation and production resources at the company's NASCO facilities away from lower and, in some cases, negative margin filtered cigars to higher-margin VLN and conventional cigarette products. As Larry has outlined, we have implemented price increases and added new volume in the second quarter of 2024, which are yielding strong results in the month of May. Gross profit for the first quarter was a loss of $1.1 million, which included one-time charges related to inventory write-offs of approximately $400,000 and an excise tax assessment related to prior periods of $200,000. Accordingly, our monthly margin loss was approximately $200,000. As a result of the initiatives Larry and I have outlined that began in the second quarter, we will see these losses begin to reverse and gradually gain momentum throughout the remainder of 2024. Total operating expenses were $3.3 million, down from $10.4 million in the comparative prior period, and sequentially down from $6.4 million in the fourth quarter of 2023. As a result of our rapid cost reduction initiatives and lean operating focus, we have substantially decreased the cash needs of our business. Cash used in operations during the first quarter of 2024 declined significantly to $2.3 million as compared to the prior comparative period of $17.5 million in the fourth quarter of 2023 and $4.8 million. Net loss for the first quarter declined to $5.6 million, and adjusted EBITDA loss decreased significantly to $3.5 million. A full reconciliation table of GAAP to non-GAAP measures is included in our earnings release. Our first quarter 2024 financial results provide an initial view of the significant transformation primarily impacting the P&L to reduce costs that the company has undertaken since the fourth quarter of 2023. Not only are we focused on the P&L to reach profitability, but we also continue on the path of restoring strength to the balance sheet. We have implemented numerous cash preservation initiatives and maintain a lean cost structure and overhead mantra. We also have a goal of quickly restoring normal balance sheet KPIs for simple metrics, including positive working capital, minimum standard current ratio, and reversing shareholders' deficit to positive equity. Subsequent to quarter end, in April and May, we have completed transactions benefiting each of our balance sheet goals, including: first, we completed a registered direct offering of gross cash proceeds of $4.2 million which provides the company with extended cash runway, moving us another step closer to being funded until we are profitable and generating cash positive operations. Second, we completed multiple debt and other liability exchanges for equity transactions, resulting in a total decrease of liabilities and increase in shareholders' equity of approximately $8 million. The significant components of this include an approximately $2.7 million reduction in the JGB senior secured credit facility and approximately $5.2 million reduction of the Omnia subordinated debt. As we continue to chip away at repayment of our outstanding debt obligations, we sequentially lower cash interest payments and interest expense. We now also have in place a mechanism for consistent and repeatable debt-to-equity exchanges and have deferred the need for any minimum monthly cash amortization payments until August 2024. Collectively, the progress made to date in the second quarter is remarkable and has paved the path for reaching our balance sheet goals by the end of 2024. Finally, we continue pursuit of our lawsuit against Dorchester Insurance Company based on their failure to pay any amounts toward our claim of $9 million in actual damages for business interruption insurance, with the latest hearing having occurred in Federal Court in Oregon in April 2024. With that, we'll now open the call for questions from our analysts.

We have no questions at this time.

Hey, operator, if no further questions, I can go ahead and close.

Yes. Since we have no further questions at this time, I would now turn the call back to Larry Firestone for closing remarks.

Thank you. I would like to thank everyone for joining our call today. In closing, I will emphasize that even though we are only five months into this turnaround, at 22nd Century, we have moved very quickly and put our company on track to becoming profitable for the first time in the company's history. We have refocused operations, slashed costs, reduced our cash usage, and strengthened our balance sheet. We know what to do to become profitable in the first quarter of 2025, and now it's time to execute. We will keep our lean operating mantra going forward and are now looking to add growth in the business to our recipe to meet our targets. This will come as we expand the business on the CMO side and the rebranding and growth in distribution for VLN. This is a long road, but we're well on our way. We look forward to updating you again as new developments occur and in August in our second quarter 2024 conference call. Lastly, I would like to thank our investors for continuing to support us with critical capital, and our lenders for participating in our debt reductions, and most importantly, our employees who are committed to the mission of driving 22nd Century forward. These conclude our remarks.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.