Q2 2024 22nd Century Group Inc Earnings Call
Available in the investors section of our website at X X I I century Dot com.
Today's call will include prepared remarks from Larry and Dan updating you on 20, <unk> century's business operations strategy and financial results through June 32024, and subsequent 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.
Operator: The release and form tank you are available in the Investors section of our website at xxiicentery.com. Today's call will include prepared remarks from Larry and Dan updating you on 22nd Century business operations, strategy, and financial results through June 30, 2024, and subsequent. Before we begin, a few reminders for today's call.
Operator: The release and form tank you are available in the Investors section of our website at xxiicentery.com Today's call will include prepared remarks from Larry and Dan updating you on 22nd Century business operations strategy and financial results through June 30, 2024 and subsequent before we begin a few reminders for today's call. Some of the statements made today are for looking for 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.
Second quarter of 2020 for the release and Form 10-Q are available in the investors section of our website at X X II century Dot com.
During today's call. We will also discuss non-GAAP financial measures, including adjusted EBITDA, which we define as earnings before interest taxes, depreciation and amortization as adjusted for certain noncash and nonoperating expenses and net debt calculated as total principal amount of debt outstanding less cash and cash equivalents.
Speaker Change: Today's call will include prepared remarks from Larry and Dan updating you on 20, <unk> century's business operations strategy and financial results through June 32024, and subsequent.
Operator: Some of the statements made today are for looking for 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.
Speaker Change: 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.
More details on these measures. Please refer to our press release issued earlier today and with that I'll now turn the call over to Larry.
Larry: Thank you Matt.
Larry: Good morning, everyone and thank you for joining 20, <unk> Centurys second quarter, 2024 financial and operating results conference call.
Operator: During today's call, we will also discuss non-GAAP financial measures, including adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, and amortization, as adjusted for certain non-cash and non-operating expenses, and net debt calculated as total principal amount of debt outstanding, less cash and cash equivalents. More details on these measures; please refer to our press release issued earlier today.
Operator: During today's call we will also discuss non-gap financial measures, including adjusted evita, which we define as earnings before interest taxes, depreciation and amortization, as adjusted for certain non-cash and non-operating expenses, and net debt calculated as total principal amount of debt outstanding, less cash and cash equivalence. More details on these measures, please refer to our press release issued earlier today.
Speaker Change: Filed with the SEC.
Speaker Change: During today's call. We will also discuss non-GAAP financial measures, including adjusted EBITDA, which we define as earnings before interest taxes, depreciation and amortization as adjusted for certain noncash and nonoperating expenses and net debt calculated as total principal amount of debt outstanding less cash and cash equivalents.
Larry: This is my third call as your CEO and our second quarter results show, just how significant and positive the changes have been over the last nine months.
Larry: Since I joined in December.
Larry: Much has changed even in the last 90 days as we continue on the path to turn our company around to be a profitable cash positive business.
Speaker Change: More details on these measures. Please refer to our press release issued earlier today and with that I'll now turn the call over to Larry.
Lawrence Firestone: With that, I'm up for it in the call over to Larry. Thank you, Matt. Good morning, everyone, and thank you for joining 22nd Century's 2nd quarter 2024 financial and operating results conference call. This is my third call as your CEO, and our 2nd quarter results show just how significant and positive the changes have been over the last nine months since I joined in December. Much has changed even in the last 90 days as we continue on the path to turn our company around to be a profitable, cash-positive business. One thing that has not changed, however, is our commitment to using our unique position in the tobacco industry to confront the harms of nicotine addiction among tobacco users and to offer a meaningful option to those who want to take control of their smoking habit and addiction.
Matt Kreps: With that, I'm up for it in the call over to Larry. Thank you, Matt.
Larry: One thing that has not changed however is our commitment to using our unique position in the tobacco industry to confront the harms of nicotine addiction among tobacco users.
Lawrence Firestone: Good morning, everyone, and thank you for joining 22nd Century's 2nd quarter, 2024 financial and operating results conference call. This is my third call as your CEO and our 2nd quarter results show just how significant and positive the changes have been over the last nine months since I joined the December. Much has changed even in the last 90 days as we continue on the path to turn our company around to be a profitable cash-positive business.
Larry: Thank you Matt.
Larry: Good morning, everyone and thank you for joining 20, <unk> Centurys second quarter, 2024 financial and operating results conference call.
Larry: And to offer a meaningful option to those who want to take control of their smoking habit and addiction.
Larry: This is my third call as your CEO and our second quarter results show, just how significant and positive the changes have been over the last nine months.
Larry: Before I get into the operational updates, let me give you a summary of our financial turnaround efforts.
Larry: Since I joined in December.
Larry: As Youll see in our financial results release, we moved our company from a consolidated net loss of $21 million in the second quarter of last year to just $1 6 million this year.
Larry: Much has changed even in the last 90 days as we continue on the path to turn our company around to be a profitable cash positive business.
Lawrence Firestone: One thing that has not changed, however, is our commitment to using our unique position in the tobacco industry to confront the harms of nicotine addiction among tobacco users, and to offer a meaningful option to those who want to take control of their smoking habit and addiction. Before I get into the operational updates, let me give you a summary of our financial turnaround efforts. As you see in our financial results release, we moved our company from a consolidated net loss of 21 million in the 2nd quarter of last year to just 1.6 million this year.
Larry: One thing that has not changed however is our commitment to using our unique position in the tobacco industry to confront the harms of nicotine addiction among tobacco users.
Larry: This was no small feat.
Larry: But we won't be satisfied until those numbers turned solidly positive.
Larry: But.
Larry: I will caution our shareholders. This is a bumpy ride getting there.
Larry: And to offer a meaningful option to those who want to take control of their smoking habit and addiction.
Lawrence Firestone: Before I get into the operational updates, let me give you a summary of our financial turnaround efforts. As you see in our financial results release, we moved our company from a consolidated net loss of 21 million in the 2nd quarter of last year to just 1.6 million this year. This was no small feat, but we won't be satisfied until those numbers turn solidly positive. But, I will caution our shareholders; this is a bumpy ride getting there. The revenue growth initiatives we've been communicating, including adding volume to our factory, repricing key customer accounts, our lean operating model, and cost improvement initiatives, have taken shape.
Larry: The revenue growth initiatives, we have been communicating including adding volume to our factory repricing key customer accounts, our lean operating model and cost improvement initiatives have taken shape nicely in Q2 and will continue into the latter half of the year.
Larry: Before I get into the operational updates, let me give you a summary of our financial turnaround efforts.
Larry: As Youll see in our financial results release, we moved our company from a consolidated net loss of $21 million in the second quarter of last year to just $1 6 million this year.
Lawrence Firestone: This was no small feat, but we won't be satisfied until those numbers turn solidly positive. But, I will caution our shareholders, this is a bumpy ride getting there. The revenue growth initiatives we've been communicating, including adding volume to our factory, repricing key customer accounts, our lean operating model, and cost improvement initiatives have taken shape. We've made it nicely in Q2, and we'll continue into the latter half of the year as we make progress against achieving our goal of net income in Q1 of 2025.
Larry: As we make progress against achieving our goal of net income.
Larry: In Q1 of 2025.
Larry: This was no small feat.
Larry: But we won't be satisfied until those numbers turned solidly positive.
Larry: Dan will cover the details on our key financial metrics.
Larry: But I will caution our shareholders. This is a bumpy ride getting there.
Speaker Change: We have touched every part of this organization and business and we're still shaping it.
Larry: The revenue growth initiatives, we have been clear.
Dan: Perhaps most important now is our company is quickly switching from defense to offense, meaning.
Speaker Change: Now we are shifting from the damage control and cost containment focus over the past few quarters, and we are now focusing on growth and profitability.
Lawrence Firestone: We've made it nicely in Q2, and we'll continue into the latter half of the year as we make progress against achieving our goal of net income in Q1 of 2025.
The executive team of.
Speaker Change: 20, <unk> century has been slimmed down and completely rebuilt.
Lawrence Firestone: Dan will cover the details on our key financial metrics. We have touched every part of this organization in business, and we're still shaping it.
Daniel Otto: Dan will cover the details on our key financial metrics.
Speaker Change: We are pleased to welcome. Our latest addition to the team Robert Mann, Freedonia, who will head up our sales and marketing activities.
Lawrence Firestone: We have touched every part of this organization in business, and we're still shaping it, perhaps most important now is our company is quickly switching from defense to offense meaning that we are shifting from the damage control and cost containment focus of the past few quarters and we are now focusing on growth and profitability.
Lawrence Firestone: Perhaps most important now is our company is quickly switching from defense to offense, meaning that we are shifting from the damage control and cost containment focus of the past few quarters, and we are now focusing on growth and profitability.
Robert Mann: Robert will focus heavily on activating our <unk> brand.
Speaker Change: Rolling out our flanker brands reveal in.
Speaker Change: And then launching our new vlan that is going through the rebranding process.
Speaker Change: Robert comes from the adult beverage industry and brings with him extensive experience and new brand launch initiatives.
Lawrence Firestone: The executive team of 22nd Century has been slimmed down and completely rebuilt. We are pleased to welcome our latest addition to the team, Robert Man Pradoña, who will head up our sales and marketing activities. Robert will focus heavily on activating our VLN brand, rolling out our flanker brands for VLN, and then launching our new VLN that is going through the rebranding process. Robert comes from the adult beverage industry and brings with him extensive experience in new brand launch initiatives and seeing nascent brands true to successful traction in the market. He has worked in regulated consumer products for most of his career, so he understands how to connect with retail customers in this environment to drive consumer engagement, loyalty, and most important of all, repurchase, meaning sell through velocity.
Lawrence Firestone: The executive team of 22nd Century has been slim down and completely rebuilt.
Speaker Change: And seeing nascent brands through to successful traction in the market.
Lawrence Firestone: We are pleased to welcome our latest addition to the team Robert Man Pradoña, who will head up our sales and marketing activities. Robert will focus heavily on activating our VLN brand, rolling out our flanker brands for VLN and then launching our new VLN that is going through the rebranding process. Robert comes from the adult beverage industry and brings with him extensive experience in new brand launch initiatives and seeing nascent brands true to successful traction in the market.
Speaker Change: He has worked in regulated consumer products for most of his career. So he understands how to connect with retail customers in this environment to drive consumer engagement loyalty and most important of all repurchased meaning sell through velocity.
Speaker Change: Now lets look under the hood at the company's operations.
Speaker Change: We have two distinct businesses, a 20 <unk> century.
Speaker Change: First is our branded products business that incorporates our proprietary technologies that target control of nicotine consumption and help people smoke glass.
Lawrence Firestone: He has worked in regulated consumer products for most of his career so he understands how to connect with retail customers in this environment to drive consumer engagement, loyalty and most important of all repurchase meaning sell through velocity.
Speaker Change: The second is our contract manufacturing operations, our CMO business, where we manufacture for other brands.
Speaker Change: To talk about our CMO business first as it provides the most immediate and direct path to our breakeven goal, while our branded products provide the growth opportunity to take our company to the next level.
Lawrence Firestone: Now let's look under the hood at the company's operations. We have two distinct businesses at 22nd Century. The first is our branded products business that incorporates our proprietary technologies that target control of nicotine consumption and help people smoke less. The second is our contract manufacturing operations or CMO business, where we manufacture for other brands.
Lawrence Firestone: Now let's look under the hood at the company's operations. We have two distinct businesses at 22nd Century. The first is our branded products business that incorporates our proprietary technologies that target control of nicotine consumption and help people smoke less. The second is our contract manufacturing operations or CMO business where we manufacture for other brands.
Speaker Change: On the CMO side of the business, we produced cigarettes filtered cigars and distribute cigarillos.
Speaker Change: For what I would call OEM tobacco companies, whose products are distributed marketed and sold by them.
Speaker Change: Below the big tobacco tiers.
Speaker Change: These are usually discount brands that are sold where price per pack and price per carton are the key selling point.
Lawrence Firestone: I'm going to talk about our CMO business first, as it provides the most immediate and direct path to our breakeven goal, while our branded products provide the growth opportunity to take our company to the next level. On the CMO side of the business, we produce cigarettes, filtered cigars, and distribute cigarettes for what I would call OEM tobacco companies whose products are distributed, marketed, and sold by them below the big tobacco tiers. These are usually discount brands that are sold where price per pack and price per carton are the key selling point, and they could be house brands that are non-premium products and always based on predicates that were approved by the FDA before 2007.
Lawrence Firestone: I'm going to talk about our CMO business first as it provides the most immediate and direct path to our breakeven goal while our branded products provide the growth opportunity to take our company to the next level. On the CMO side of the business, we produce cigarettes, filtered cigars and distribute cigarettes for what I would call OEM tobacco companies whose products are distributed, marketed and sold by them below the big tobacco tiers.
Speaker Change: And they can be house brands that are non premium products.
Speaker Change: Louise.
Speaker Change: Based on predicates that were approved by the FDA before 2007.
Speaker Change: By having us manufacturer of those products on a contract basis, our customers can avoid carrying the investment in the factory the manufacturing overheads.
Speaker Change: We're having to obtain extensive regulatory approvals that would be required for in house production.
Lawrence Firestone: These are usually discount brands that are sold where price per pack and price per carton are the key selling point and they could be house brands that are non premium products and always based on predicates that were approved by the FDA before 2007. By having us manufacture those products on a contract basis, our customers can avoid carrying the investment in a factory, the manufacturing overheads or having to obtain extensive regulatory approvals that would be required for in-house production.
Speaker Change: They can also access a well known high quality manufacturing partner in our Nasco operations in North Carolina, which is critical.
Speaker Change: In order to expand the footprint of the tobacco product brand it requires.
Speaker Change: And in an intensive state by state approval process with respect to state attorney generals that govern regulated products, which is our collective organization called Nag.
Lawrence Firestone: By having us manufacture those products on a contract basis, our customers can avoid carrying the investment in a factory, the manufacturing overheads, or having to obtain extensive regulatory approvals that would be required for in-house production. They can also access a well-known high-quality manufacturing partner in our NASCO operations in North Carolina, which is critical. In order to expand the footprint of the tobacco product brand, it requires an intensive state-by-state approval process with respect to state attorney generals that govern regulated products, which is a collective organization called NAG. This process takes time and requires patience until the approval.
Speaker Change: This process takes time and requires patients until the approval.
Lawrence Firestone: They can also access a well-known high-quality manufacturing partner in our NASCO operations in North Carolina, which is critical. In order to expand the footprint of the tobacco product brand, it requires an intensive state-by-state approval process with respect to state attorney generals that govern regulated products, which is a collective organization called NAG. This process takes time and requires patience until the approval. Our CMO business is a service business and we are looking to book business which will load our factory to maximum capacity where we can help our customers drive down the cost of their products and we can both make money in this price sensitive segment of the market.
Speaker Change: Our CMO business as a service business and.
Speaker Change: And we are looking to book business, which will load our factory to maximum capacity, where we can help our customers drive down the cost of their products and we can both make money in this price sensitive segment of the market.
Speaker Change: Over time, we will look to penetrate larger brands as a manufacturing service model.
Speaker Change: Which is the structure in many other industries, such as electronics automotive and adult beverage.
Speaker Change: In addition to domestic brands import and export our two key areas of the CMO tobacco business.
Lawrence Firestone: Our CMO business is a service business, and we are looking to book business which will load our factory to maximum capacity, where we can help our customers drive down the cost of their products, and we can both make money in this price sensitive segment of the market. Over time, we will look to penetrate larger brands as a manufacturing service model, which is the structure in many other industries such as electronics, automotive, and adult beverage. In addition to domestic brands, import and export are two key areas of the CMO tobacco business. We will utilize our quality manufacturing processes and facility to attract OEMs looking for lower cost flexibility and lower overhead options to take advantage of these areas of the business.
Speaker Change: We will utilize our quality manufacturing processes and facility to attract Oems looking for lower cost flexibility.
Speaker Change: And lower overhead options to take advantage of these areas of the business.
Lawrence Firestone: Over time, we will look to penetrate larger brands as a manufacturing service model which is the structure in many other industries such as electronics, automotive, and adult beverage. In addition to domestic brands, import and export are two key areas of the CMO tobacco business. We will utilize our quality manufacturing processes and facility to attract OEMs looking for lower cost flexibility and lower overhead options to take advantage of these areas of the business.
Speaker Change: Our CMO business is in sync with our branded low nicotine businesses, we will produce under our proprietary predicate to service the demand for our new brand.
Both domestically and internationally.
Speaker Change: We have already announced a few wins in this business during the second quarter.
Speaker Change: Including a contract to expand our CMO volumes, which are in process of ramping up for the benefit in the second half of the year.
Speaker Change: We are working on other upside opportunities to help achieve our goal of consuming our factory capacity.
Lawrence Firestone: Our CMO business is in sync with our branded low nicotine businesses. We will produce under our proprietary predicate to service the demand for our new brand both domestically and internationally. We've already announced a few wins in this business during the second quarter, including a contract to expand our CMO volumes, which are in process of ramping up for the benefit of the second half of the year. We are working on other upside opportunities to help achieve our goal of consuming our factory capacity.
Lawrence Firestone: Our CMO business is in sync with our branded low nicotine businesses. We will produce under our proprietary predicate to service the demand for our new brand both domestically and internationally. We've already announced a few wins in this business during the second quarter including a contract to expand our CMO volumes which are in process of ramping up for the benefit of the second half of the year. We are working on other upside opportunities to help achieve our goal of consuming our factory capacity.
Speaker Change: Doing so has a direct benefit to our P&L and generates resources that we can reinvest into growth.
Speaker Change: On our other brands.
Which is a good transition to talk about.
Speaker Change: Nicotine and our low nicotine solution currently known as V O N.
Speaker Change: It's common knowledge.
Speaker Change: Among our investors that 20 <unk> century.
Producers the only <unk> T P. P M T a low nicotine combustible cigarettes.
Speaker Change: We have the only low nicotine predicate approved by the FDA.
Lawrence Firestone: Doing so has a direct benefit to our P&L and generates resources that we can reinvest into growth on our other brands, which is a good transition to talk about nicotine and our low nicotine solution currently known as VLN. It's common knowledge among our investors that 22nd Century produces the only MRTP PMTA low nicotine combustible cigarette. We have the only low nicotine predicate approved by the FDA, and we have extensive intellectual property rights protecting this technology. So unless we license our technology to someone else, we will be the only ones who produce this MRTP FDA-authorized predicate.
Lawrence Firestone: Doing so has a direct benefit to our P&L and generates resources that we can reinvest into growth on our other brands which is a good transition to talk about nicotine and our low nicotine solution currently known as VLN. It's common knowledge among our investors that 22nd century produces the only MRTP PMTA low nicotine combustible cigarette. We have the only low nicotine predicate approved by the FDA and we have extensive intellectual property rights protecting this technology.
Speaker Change: And we have extensive intellectual property rights protecting this technology, so unless we license our technology to someone else, we will be the only ones who produce this march.
Speaker Change: T P F D a authorized predicate.
Lawrence Firestone: So unless we license our technology to someone else, we will be the only ones who produce this MRTP FDA authorized predicate. As you'll see in our press release and our 10Q we have broken out our carton numbers so that our investors can see how we perform and track our progress as we go. Our carton numbers of VLN products shipped are still only a fraction of our factory capacity and do not yet reflect what we believe is the full potential of the product. So no matter good, bad or indifferent, we will report these numbers going forward.
Speaker Change: As Youll see in our press release, and our 10-Q, we have broken out our carton numbers. So that our investors can see how we perform and track our progress as we go.
Speaker Change: Our current numbers of V O N product shipped.
Speaker Change: Are still only a fraction of our factory capacity.
Speaker Change: And do not yet reflect what we believe is the full potential of the product so no.
Speaker Change: No matter good bad or indifferent, we will report these numbers going forward.
Speaker Change: In the U S and some other jurisdictions.
Lawrence Firestone: As you'll see in our press release and our 10-Q, we have broken out our carton numbers so that our investors can see how we perform and track our progress as we go.
There is so much energy and financial support regarding nicotine addiction, and quitting smoking for example.
Recently, you may have seen the commercials for undo dot Org U N D O Dot org, if you haven't seen them log in and watch them. The message is clear it's nicotine addiction at the center of the tobacco universe.
Lawrence Firestone: Our carton numbers of VLN products shipped are still only a fraction of our factory capacity and do not yet reflect what we believe is the full potential of the product. So no matter good, bad, or indifferent, we will report these numbers going forward. In the US and some other jurisdictions, there is so much energy and financial support regarding nicotine addiction and quitting smoking. For example, recently you may have seen the commercials for undue.org, undo.org. If you haven't seen them, log in and watch them. The message is clear. It's nicotine addiction at the center of the tobacco universe.
Speaker Change: Some groups may identify smoking, particularly cigarette smoking, but nicotine addiction, and allowing smokers to choose.
Lawrence Firestone: In the US and some other jurisdictions there is so much energy and financial support regarding nicotine addiction and quitting smoking. For example, recently you may have seen the commercials for undue.org, undo.org. If you haven't seen them, log in and watch them. The message is clear. It's nicotine addiction at the center of the tobacco universe. Some groups may identify smoking, particularly cigarette smoking, but nicotine addiction and allowing smokers to choose to smoke less or not at all is what the world is trying to solve when it talks about the health risk of smoking.
Speaker Change: To smoke less or not at all is what the world is trying to solve when it talks about the health risks of smoking.
Speaker Change: The next item that has to be respected as the smoking ritual, which entails lighting up.
Speaker Change: And the hand to mouth ritual of smoking a cigarette as well as other hand to mouth motions and rituals.
Speaker Change: In order to smoke less.
Lawrence Firestone: Some groups may identify smoking, particularly cigarette smoking, but nicotine addiction and allowing smokers to choose to smoke less or not at all is what the world is trying to solve when it talks about the health risk of smoking. The next item that has to be respected is the smoking ritual, which entails lighting up and the hand-to-mouth ritual of smoking a cigarette, as well as other hand-to-mouth motions and rituals. In order to smoke less, we have to respect this ritual, and it is well documented that hand-to-mouth rituals known as oral fixations are ingrained in our society, and in many cases since birth.
Speaker Change: We have to respect this ritual.
Speaker Change: And it is well documented that hand to mouth rituals known as oral fixations are ingrained in our society and in many cases since birth.
Speaker Change: Coffee Cup to mouth beer bottle the mouth silverware at amounts moved them out you get the picture.
Lawrence Firestone: The next item that has to be respected is the smoking ritual, which entails lighting up and the hand-to-mouth ritual of smoking a cigarette as well as other hand-to-mouth motions and rituals. In order to smoke less, we have to respect this ritual, and it is well documented that hand-to-mouth rituals known as oral fixations are ingrained in our society, and in many cases since birth. Coffee cup-to-mouth, beer bottle-to-mouth, silverware-to-mouth, food-to-mouth, you get the picture.
Speaker Change: I will argue.
Speaker Change: If an individual wants to smoke less or stop smoking altogether for the lion's share of the smokers gum won't do the trick and the patch won't do the trick as well as other nicotine replacement therapies are nrt's.
Speaker Change: How many times have you grab your coffee Cup when it's empty and tried to take a sip.
Speaker Change: Only to find an empty and you said it back down and do it again in a little while with the same empty Cup.
Lawrence Firestone: Coffee cup-to-mouth, beer bottle-to-mouth, silverware-to-mouth, food-to-mouth; you get the picture.
Speaker Change: Simple presence of the cup drives behavior smokers case nicotine drives their urge to have another.
Lawrence Firestone: I will argue, if an individual wants to smoke less or stop smoking altogether, for the lion's share of the smokers, gum won't do the trick, and the patch won't do the trick as well as other nicotine replacement therapies or NRTs. How many times have you grabbed your coffee cup when it's empty and tried to take a sip, only to find it empty, and you set it back down and do it again in a little while with the same empty cup. Simple presence of the cup drives behavior. In a smoker's case, nicotine drives their urge to have another, and going for a cigarette is part of the ritual or the oral fixation.
Lawrence Firestone: I will argue, if an individual wants to smoke less or stop smoking altogether for the lion's share of the smokers, gum won't do the trick and the patch won't do the trick as well as other nicotine replacement therapies or NRTs. How many times have you grabbed your coffee cup when it's empty and tried to take a sip, only to find it empty and you set it back down and do it again in a little while with the same empty cup.
Speaker Change: And going for a cigarette is part of the ritual or the oral fixation.
Speaker Change: Two a smoker smoking is often seen as quiet time time to think you.
Speaker Change: It can even be relaxing.
Speaker Change: Clinical data supports this and shows that most smokers, who attempt to smoke stop smoking fail.
Speaker Change: Even with the help of the most common cessation AIDS on the market today.
Speaker Change: And that's why.
Lawrence Firestone: Simple presence of the cup drives behavior. In a smokers case, nicotine drives their urge to have another and going for a cigarette is part of the ritual or the oral fixation. To a smoker, smoking is often seen as quiet time, time to think, it can even be relaxing. Clinical data supports this and shows that most smokers who attempt to stop smoking fail, even with the help of the most common cessation aids on the market today. And that's why over a half a million people die each year from smoking.
Speaker Change: Over a half a million people die each year from smoking.
Speaker Change: The smoking ritual matters.
And that is the problem, we are addressing with our solution of a 95% reduced nicotine content cigarette.
Lawrence Firestone: To a smoker, smoking is often seen as quiet time, time to think; it can even be relaxing. Clinical data supports this and shows that most smokers who attempt to stop smoking fail, even with the help of the most common cessation aids on the market today. And that's why over a half a million people die each year from smoking.
Speaker Change: Clinically documented to reduce smoking by cutting the nicotine content received while smoking.
Speaker Change: The studies show that once the highly nicotine content is taken out of the equation.
Speaker Change: Poker begins to smoke less that is the goal with V. L N and our mission to have our consumers take control versus have nicotine being control.
Lawrence Firestone: The smoking ritual matters, and that is the problem we are addressing with our solution of a 95% reduced nicotine content cigarette. Clinically documented to reduce smoking by cutting the nicotine content received while smoking. The studies show that once the highly nicotine content is taken out of the equation, the smoker begins to smoke less. That is the goal with VLN and our mission to have our consumers take control versus have nicotine being control. We offer that VLN rather than switching to vaping or other means of highly addictive nicotine content delivery, which have a lot of marketing dollars behind, and which are intended to keep the smoker addicted.
Lawrence Firestone: The smoking ritual matters and that is the problem we are addressing with our solution of a 95% reduced nicotine content cigarette. Clinically documented to reduce smoking by cutting the nicotine content received while smoking. The studies show that once the highly nicotine content is taken out of the equation, the smoker begins to smoke less. That is the goal with VLN and our mission to have our consumers take control versus have nicotine being control.
Speaker Change: We offer that V O N rather than switching to vaping or other means of highly addictive nicotine content delivery, which have a lot of marketing dollars behind.
Speaker Change: And which are intended to keep the smoker addicted.
B L. N is a truly reduced nicotine tobacco product driving lower nicotine consumption.
Speaker Change: And ultimately the harm associated with tobacco use.
Speaker Change: Clinical data from studies around the world consistently show that reduced nicotine content products like B O N E.
Lawrence Firestone: We offer that VLN rather than switching to vaping or other means of highly addictive nicotine content delivery, which have a lot of marketing dollars behind, and which are intended to keep the smoker addicted. VLN is a truly reduced nicotine tobacco product driving lower nicotine consumption and ultimately the harm associated with tobacco use. Clinical data from studies around the world consistently show that reduced nicotine content products like VLN can work very well for adult smokers if they stick with the product.
Speaker Change: And worked very well for adult smokers, if they stick with the product.
Speaker Change: The 20 <unk> century problem as we approach our go to market like we are selling a premium cigarette that already had a market presence.
Lawrence Firestone: VLN is a truly reduced nicotine tobacco product driving lower nicotine consumption and ultimately the harm associated with tobacco use. Clinical data from studies around the world consistently show that reduced nicotine content products like VLN can work very well for adult smokers if they stick with the product.
Speaker Change: We went to the market solely focused on C stores and when the sell through didn't happen. We were unable to continue funding the expansion of points of distribution and hope for improved sell through without any programs to drive sales in the market, where we had points of distribution.
Speaker Change: As a part of the solution we are in the process of re blending rebranding.
Speaker Change: R V L and to ensure that we have the best possible product for our smoking consumers.
Lawrence Firestone: The 22nd century problem is we approach our go to market like we are selling a premium cigarette that already had a market press.
Lawrence Firestone: The 22nd century problem is we approach our go to market like we are selling a premium cigarette that already had a market press. We went to the market solely focused on sea stores and when the sell-through didn't happen we were unable to continue funding the expansion of points of distribution and hope firm proves sell-through without any programs to drive sales in the market where we had points of distribution.
Speaker Change: While we are still selling BLM.
Lawrence Firestone: We went to the market solely focused on sea stores, and when the sell-through didn't happen, we were unable to continue funding the expansion of points of distribution and hope firm proves sell-through without any programs to drive sales in the market where we had points of distribution. As a part of the solution, we are in the process of rebranding our VLN to ensure that we have the best possible product for our smoking consumers.
Speaker Change: We will relaunch the new brand into the market.
Speaker Change: As we have learned from our mistakes well, let's pick on our execution for a moment.
Speaker Change: Our current branding and trade dress is like a chameleon in the cigarette space and not only is it invisible.
Speaker Change: It does not communicate the message for what the tool is designed to accomplish.
Lawrence Firestone: As a part of the solution we are in the process of rebranding, rebranding, our VLN to ensure that we have the best possible product for our smoking consumers. While we are still selling VLN we will relaunch the new brand into the market as we have learned from our mistakes but let's pick on our execution for a moment. Our current branding and trade dress is like a chameleon in the cigarette space and not only is it invisible it does not communicate the message for what the tool is designed to accomplish which is to help smokers smoke less.
Speaker Change: Which is to help smokers smoke less.
Speaker Change: We went only to the C store market.
Speaker Change: Which is convenient stores and achieved reasonable sell in success getting the product on the shelf and approximately 5100 stores.
Lawrence Firestone: While we are still selling VLN, we will relaunch the new brand into the market as we have learned from our mistakes, but let's pick on our execution for a moment. Our current branding and trade dress is like a chameleon in the cigarette space, and not only is it invisible, it does not communicate the message for what the tool is designed to accomplish, which is to help smokers smoke less.
Speaker Change: We did not have the money nor the programs to properly support the sell through.
Speaker Change: We did not properly track sell through.
Speaker Change: And same store sales velocity and as a result, we have a product that we believe can change people's lives for the better, but our brand and went neutral so far in the marketplace.
Speaker Change: We're looking at a relaunch is a new initiative initiation in the marketplace.
Lawrence Firestone: We went only to the sea store market, which is convenience stores, and achieved reasonable sell-in success, getting the product on the shelf in approximately 5,100 stores, but we did not have the money or the programs to properly support the sell-through.
Lawrence Firestone: We went only to the sea store market which is convenience stores and achieved reasonable sell-in success getting the product on the shelf in approximately 5100 stores but we did not have the money or the programs to properly support the sell-through. We did not properly track sell-through and same store sales velocity and as a result we have a product that we believe and change people's lives through the better but a brand that went neutral so far in the marketplace.
Speaker Change: In an effort to launch the brand correctly, this time and drive sales velocity along.
Speaker Change: With even further expanded distribution as we ramp.
Speaker Change: As I keep cautioning our investors. This is a long road to success, we will keep you posted as the pieces of the relaunch come into place.
Lawrence Firestone: We did not properly track sell-through and same store sales velocity, and as a result we have a product that we believe can change people's lives for the better, but a brand that went neutral so far in the marketplace.
Speaker Change: Our competitors talk a big game about smoking cessation.
Speaker Change: And in fact, our government as far as big tobacco.
Lawrence Firestone: We are looking at our relaunch as a new initiation in the marketplace in an effort to launch the brand correctly this time and drive sales velocity, along with even further expanded distribution as we ramp. As I keep cautioning our investors, this is a long road to success. We will keep you posted as the pieces of the relaunch come into place.
Lawrence Firestone: We are looking at our relaunch as a new initiation in the marketplace in an effort to launch the brand correctly this time and drive sales velocity along with even further expanded distribution as we ramp. As I keep cautioning our investors this is a long road to success we will keep you posted as the pieces of the relaunch come into place.
Speaker Change: And retail points of sale, such as C stores to pose signs declaring the fact that nicotine is addictive and tobacco products are dangerous.
Speaker Change: These tobacco companies want consumers to continue with their nicotine addiction by just changing to another line extension, meaning big tobacco is still attached to their wallets.
Speaker Change: The world needs to understand that we're offering a solution.
Speaker Change: That is different than the nicotine attachment plan.
Lawrence Firestone: Our competitors talk a big game about smoking cessation, and in fact, our government has forced big tobacco and retail points of sale such as sea stores to pose signs declaring the fact that nicotine is addictive and tobacco products are dangerous. But these tobacco companies want consumers to continue with their nicotine addiction by just changing to another line extension, meaning big tobacco is still attached to their wallets. The world needs to understand that we're offering a solution that is different than the nicotine attachment plan.
Lawrence Firestone: Our competitors talk a big game about smoking cessation and in fact our government has forced big tobacco and retail points of sale such as sea stores to pose signs declaring the fact that nicotine is addictive and tobacco products are dangerous but these tobacco companies want consumers to continue with their nicotine addiction by just changing to another line extension meaning big tobacco is still attached to their wallets. The world needs to understand that we're offering a solution that is different than the nicotine attachment plan.
If the smoking population.
Speaker Change: In the U S. Just simply smoke less than health care costs would reduce significantly including insurance premiums surgeries patient out of pockets.
Speaker Change: <unk> and former smokers would have more disposable income.
Speaker Change: Smoker health would improve meaning fewer sick days better overhaul health to improve their quality of life and productivity.
Speaker Change: And lives can be saved from those that suffer from heart and lung disease is a byproduct of smoking again all documented in global research studies.
Lawrence Firestone: If the smoking population in the US just simply smoke less, then healthcare costs would reduce significantly, including insurance premiums, surgeries, patient out of pockets. Smokers and former smokers would have more disposable income. Smoker health would improve, meaning fewer sick days, better overhaul health to improve their quality of life and productivity, and lives could be saved from those that suffer from heart and lung disease as a byproduct of smoking. Again, all documented in global research studies.
Lawrence Firestone: If the smoking population in the US just simply smoke less then healthcare costs would reduce significantly including insurance premiums, surgeries, patient out of pockets. Smokers and former smokers would have more disposal income. Smoker health would improve meaning fewer sick days better overhaul health to improve their quality of life and productivity and lives could be saved from those that suffer from heart and lung disease as a byproduct of smoking. Again all documented in global research studies.
Speaker Change: This is not going to be if you build it they will come solution.
Speaker Change: It will also not be an instant success.
Speaker Change: I know this is what some of our investors would like to see but we're gonna have to do the hard work every day day in and day out to achieve success. This is a long road and I caution our investors, who believe that our low nicotine solution will be an instant hit MFC.
Speaker Change: In a smashing success to watch our numbers as the brand rolls out.
In the rebrand we are setting up a new blend change.
Lawrence Firestone: This is not going to be an if you build that, they will come solution. It will also not be an instant success. I know this is what some of our investors would like to see, but we're going to have to do the hard work every day, day in and day out, to achieve success. This is a long road, and I caution our investors who believe that our low nicotine solution will be an instant hit and a smashing success to watch our numbers as the brand rolls out. We're chasing product and even more aligned to what smokers in the US want, new branding ensuring that the product presence and resonates with smokers so they not only try to reduce nicotine content cigarettes but also develop a brand loyalty and a commitment to drive sell through and repurchase to achieve the benefits of our product.
Lawrence Firestone: This is not going to be an if you build that they will come solution. It will also not be an instant success. I know this is what some of our investors would like to see, but we're going to have to do the hard work every day, day in and day out to achieve success. This is a long road and I caution our investors who believe that our low nicotine solution will be an instant hit and a smashing success to watch our numbers as the brand rolls out.
Speaker Change: Changing the taste to make a smoother tasting product and even more aligned to what smokers in the U S. One.
Speaker Change: New branding, ensuring that the product presence and resonates with smokers. So they not only try reduce nicotine content cigarettes, but also develop a brand loyalty and commitment to drive sell through in repurchase to achieve the benefits of our product.
Speaker Change: Point of sale shelf talkers programs at our points of distribution in.
Speaker Change: And other education sales support to make smokers aware and keep them committed to their reduced smoking journey.
Lawrence Firestone: We're chasing product and even more aligned to what smokers in the US want, new branding ensuring that the product presence and resonates with smokers so they not only try to reduce nicotine content cigarettes but also develop a brand loyalty and a commitment to drive sell through and repurchase to achieve the benefits of our product. Point of sale, shelf talkers, programs at our points of distribution and other education sales support to make smokers aware and keep them committed to their reduced smoking journey and expanded distribution.
Speaker Change: And expanded distribution the point is.
Speaker Change: 580000 people die every year in the U S from tobacco harm.
That is a number that is unacceptable and.
Speaker Change: And can and must be slashed.
Speaker Change: What we have been doing to.
Lawrence Firestone: Point of sale, shelf talkers, programs at our points of distribution, and other education sales support to make smokers aware and keep them committed to their reduced smoking journey and expanded distribution.
Speaker Change: To help smokers I E NRT.
Speaker Change: Uh huh.
Speaker Change: Is it really working.
Speaker Change: It's not bending the curve we know that.
Speaker Change: Once someone start smoking, it's incredibly hard for them to stop.
Lawrence Firestone: The point is, 580,000 people die every year in the US from tobacco harm. That is a number that is unacceptable and can and must be slashed.
Lawrence Firestone: The point is, 580,000 people die every year in the US from tobacco harm. That is a number that is unacceptable and can and must be slashed. What we have been doing to help smokers, i.e. NRT, isn't really working. It's not bending the curve. We know that.
I've heard numbers like two weeks with the full strength cigarette and less than a pack a day and you're hooked meaning addicted.
But a reduced nicotine content cigarette that delivers a non addictive levels of nicotine.
Speaker Change: Can change the game and we have the only one.
Lawrence Firestone: What we have been doing to help smokers, i.e. NRT isn't really working. It's not bending the curve. We know that. Once someone starts smoking, it's incredibly hard for them to stop. I've heard numbers like two weeks with a full strength cigarette and less than a pack a day, and you're hooked meaning addicted.
Speaker Change: The only predicate the only low nicotine cigarettes that respects, the smoking ritual or oral fixation on the journey to smoke less.
Speaker Change: Or to let the smoker take control of their habit by reducing their smokers nicotine intake.
Lawrence Firestone: Once someone starts smoking, it's incredibly hard for them to stop. I've heard numbers like two weeks with a full strength cigarette and less than a pack a day and you're hooked meaning addicted. But a reduced nicotine content cigarette that delivers a non-addictive level of nicotine can change the game and we have the only one. The only predicate, the only low nicotine cigarette that respects the smoking ritual or oral fixation on the journey to smoke less or to let the smoker take control of their habit by reducing their smoker's nicotine intake.
Speaker Change: Okay.
Speaker Change: Morris comment on this as we complete our rebranding process and introduce our improved product to the market.
Lawrence Firestone: But a reduced nicotine content cigarette that delivers a non-addictive level of nicotine can change the game, and we have the only one. The only predicate, the only low nicotine cigarette that respects the smoking ritual or oral fixation on the journey to smoke less or to let the smoker take control of their habit by reducing their smoker's nicotine intake. More is coming on this as we complete our rebranding process and introduce our improved product to the market, and we will continue to build our underlying CMO business always to first cover our cost and then contribute resources to invest in growth, all towards the goal of becoming cash positive to you one of next year.
Speaker Change: And we will continue to build our underlying CMO business.
Speaker Change: Always.
Speaker Change: So first cover our cost and then contribute resources to invest in growth all towards the goal of becoming cash positive in Q1 of next year.
Speaker Change: With that I'll turn it over to Dan to discuss the numbers.
Speaker Change: Thank you Larry good morning, everyone and thanks again for joining our discussion today.
Lawrence Firestone: More is coming on this as we complete our rebranding process and introduce our improved product to the market and we will continue to build our underlying CMO business always to first cover our cost and then contribute resources to invest in growth all towards the goal of becoming cash positive to you one of next year.
Dan: I'll walk through additional details on our second quarter financial results as a reminder, all financial results in our earnings release are presented on a continuing operations basis, which excludes our former hemp cannabis segment.
Dan: Net revenue was $7 9 million in the second quarter 2024 increased sequentially from $6 5 million in the first quarter 2024, and compared to $8 1 million in the second quarter 2023 <unk>.
Daniel Otto: And with that, I'll turn it over to Dan to discuss the numbers.
Daniel Otto: And with that, I'll turn it over to Dan to discuss the numbers. Thank you, Larry.
Dan: Included in the second quarter results was a significant one time order of our spectrum product, which are low nicotine research cigarettes, helping boost both topline revenue and gross profit.
Daniel Otto: Thank you, Larry. Good morning, everyone. And thanks again for joining our discussion today. I'll walk through additional details on our second quarter financial results. As a reminder, all financial results in our earnings release are presented on a continuing operation basis, which excludes our former hemp cannabis segment. Net revenue was 7.9 million, and the second quarter 2024 increased sequentially from 6.5 million in the first quarter 2024 and compared to 8.1 million and the second quarter 2023. Included in the second quarter results was a significant one-time order of our spectrum product, which are low nicotine research cigarettes, helping boost both top line revenue and gross profit.
Daniel Otto: Good morning, everyone. And thanks again for joining our discussion today. I'll walk through additional details on our second quarter financial results. As a reminder, all financial results in our earnings release are presented on a continuing operation spaces, which excludes our former hemp cannabis segment. Net revenue was 7.9 million and the second quarter 2024 increased sequentially from 6.5 million in the first quarter 2024 and compared to 8.1 million and the second quarter 2023.
As seen in our product line revenue results and discussion in our earnings release overall carton volume declined slightly in the second quarter 2024 compared to the prior year comparable period, which reflects the message that we've been communicating over recent quarters regarding product mix changes between cigarettes and filtered cigars.
Dan: Reaching sustainable gross profit and our CMO business is critical to our success and why we are highly focused on ensuring the appropriate pricing for our key customers and exiting any business, where we are losing money such as certain negative margin filtered cigars.
Daniel Otto: Included in the second quarter results was a significant one-time order of our spectrum product, which are low nicotine research cigarettes helping boost both top line revenue and gross profit. As seen in our product line revenue results in discussion and our earnings release, overall cart and volume declined slightly in the second quarter, 2024, compared to the prior year comparable period, which reflects the message that we've been communicating over recent quarters regarding product mix changes between cigarettes and filtered cigars.
Daniel Otto: As seen in our product line revenue results in discussion and our earnings release, overall cart and volume declined slightly in the second quarter, 2024, compared to the prior year comparable period, which reflects the message that we've been communicating over recent quarters regarding product mix changes between cigarettes and filtered cigars. Reaching sustainable growth profit in our CMO business is critical to our success, and why we're highly focused on ensuring the appropriate pricing for our key customers and exiting any business where we are losing money, such as certain negative margin filtered scars. We have served price increases to our customers effective in April 2024 and added new volume in the second quarter.
Dan: We observed price increases to our customers effective in April 2024, and added new volume in the second quarter.
Dan: The ramp in volume will accelerate more significantly in the latter half of the year as we continued to demonstrate to our customers. The high quality production capability, we possess and we secured additional wins in the female business as well as working through the relaunch initiatives related to the island.
Daniel Otto: Reaching sustainable growth profit in our CMO business is critical to our success, and why we're highly focused on ensuring the appropriate pricing for our key customers and exiting any business where we are losing money, such as certain negative margin filtered scars. We have served price increases to our customers effective in April 2024 and added new volume in the second quarter. The rampant volume will accelerate more significantly in the latter half of the years.
Dan: I will however, echo Larry's earlier remarks.
Speaker Change: Expanding our volume at the scale to reach profitability will take time and patience as we navigate the challenges of the regulatory environment that surrounds transitioning production of a new customers products to our factory.
Speaker Change: Maximizing volume capacity with this new business in our factory will allow us to achieve the gross margin profitability goals we seek.
Daniel Otto: The rampant volume will accelerate more significantly in the latter half of the years. We continue to demonstrate to our customers the high quality production capability we possess, and we secure additional wins in the CMO business, as well as working through the relaunch initiatives related to the LN.
Daniel Otto: We continue to demonstrate to our customers the high quality production capability we possess and we secure additional wins in the CMO business as well as working through the relaunch initiatives related to the LN. I will, however, echo Larry's earlier remarks. Expanding our volume at the scale to reach profitability will take time and patience as we navigate the challenges of the regulatory environment that surrounds transitioning production of a new customer's products to our factory.
Speaker Change: Total operating expenses for the second quarter, 2024, or $2 6 million decreased from $3 3 million in the first quarter of 2024, and $11 1 million in the second quarter 2023.
Daniel Otto: I will, however, echo Larry's earlier remarks. Expanding our volume at the scale to reach profitability will take time and patience as we navigate the challenges of the regulatory environment that surrounds transitioning production of a new customer's products to our factory. Maximizing volume capacity with this new business in our factory will allow us to achieve the gross margin profitability goals we seek. Total operating expenses for the second quarter 2024, or 2.6 million, decreased from 3.3 million in the first quarter of 2024 and 11.1 million in the second quarter 2023. As a result of our cost reduction initiatives and lean operating focus, we substantially decreased the G&A cash need of our business, and we will look to sustain this operating model going forward now that we've reached appropriate run rates for a public company of our size.
Speaker Change: As a result of our cost reduction initiatives and lean operating focus we've substantially decreased the G&A cash needs of our business and we will look to sustain this operating model going forward now that we've reached the appropriate run rates for a public company of our size.
Daniel Otto: Maximizing volume capacity with this new business in our factory will allow us to achieve the gross margin profitability goals we seek. Total operating expenses for the second quarter 2024 or 2.6 million decreased from 3.3 million in the first quarter of 2024 and 11.1 million in the second quarter 2023. As a result of our cost reduction initiatives and lean operating focus, we substantially decreased the G&A cash need of our business and we will look to sustain this operating model going forward now that we've reached appropriate run rates for a public company of our size.
Speaker Change: Net loss EPS and adjusted EBITDA, followed similar trends of substantial improvement sequentially as compared to the first quarter of 2024 and as compared to the prior year period.
Speaker Change: Our cash burn has declined from the prior year, when we reached a peak burn rate of almost $15 million a quarter.
Our financial discipline now being exercised by our management team ensures that every dollar spent is productive for the company and focused on our core strategy.
Speaker Change: Cash used in operations during the second quarter of 2024 was approximately $4 7 million and beyond operations and working capital Flexes is reflective of a number of balance sheet improvement initiatives that we completed during the quarter.
Daniel Otto: Net loss, EPS, and adjusted EBITDA follow similar trends of substantial improvement sequentially as compared to the first quarter of 2024 and as compared to the prior year period. Our cash burn has declined from the prior year when we reached a peak burn rate of almost 15 million a quarter. Our financial discipline now being exercised by our management team ensures that every dollar spent is productive for the company and focused on our core strategy. Cash used in operations during the second quarter of 2024 was approximately 4.7 million, and beyond operations and working capital fluxes is reflective of a number of balance sheet improvement initiatives that we completed during the quarter.
Daniel Otto: Net loss, EPS and adjusted EBITDA follow similar trends of substantial improvement sequentially as compared to the first quarter of 2024 and as compared to the prior year period. Our cash burn has declined from the prior year when we reached a peak burn rate of almost 15 million a quarter. Our financial discipline now being exercised by our management team ensures that every dollar spent is productive for the company and focused on our core strategy.
Speaker Change: This includes negotiating terminations from long term leases, we maintained at facilities no longer in use.
Speaker Change: Pedaling, a significant amount of prior liability liabilities and payables, notably below face value and cash portions of negotiated debt reduction strategies that we employed.
Speaker Change: Our second quarter 2024 financial results show that we're continuing to make steady progress against transforming our financial position with improvements to both our P&L and balance sheet.
Daniel Otto: Cash used in operations during the second quarter of 2024 was approximately 4.7 million and beyond operations and working capital fluxes is reflective of a number of balance sheet improvement initiatives that we completed during the quarter. This includes negotiating terminations from long term leases we maintained at facilities no longer in use, settling a significant amount of prior liability and payables notably below face value and cash portions of negotiated debt reduction strategies that we employed.
Speaker Change: As I mentioned last quarter, we 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.
Daniel Otto: This includes negotiating terminations from long term leases we maintained at facilities no longer in use, settling a significant amount of prior liability and payables, notably below face value, and cash portions of negotiated debt reduction strategies that we employed. Our second quarter 2024 financial results show that we're continuing to make steady progress against transforming our financial position, with improvements to both our P&L and balance sheet. As I mentioned last quarter, we 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 X.
Speaker Change: In April and May we completed transactions benefitting each of our balance sheet calls.
Daniel Otto: Our second quarter 2024 financial results show that we're continuing to make steady progress against transforming our financial position with improvements to both our P&L and balance sheet. As I mentioned last quarter we 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 X. Equity. In April and May, we completed transactions benefiting each of our branchy goals.
Speaker Change: For example, 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 $10 7 million.
Speaker Change: As we continue to repay our outstanding debt obligations. We will also continue to sequentially lower interest payments and interest expense.
Speaker Change: Collectively the progress made to date in the first half of 'twenty 'twenty four is remarkable and has paved the path to reaching our balance sheet and profitability goals.
Daniel Otto: Equity. In April and May, we completed transactions benefiting each of our branchy goals. For example, we completed multiple debt and other liability exchanges for equity transactions, resulting in a total decrease of liabilities and increase in shareholder's equity of approximately 10.7 million. As we continue to repay our outstanding debt obligations, we will also continue to sequentially lower interest payments and interest expense. Collectively, the progress made to date in the first step of 2024 is remarkable and has paved the paths for reaching our balance sheet and profitability goals.
Speaker Change: Finally, as an update to our lawsuit against Dorchester insurance company based on their failure to pay any amounts towards our claim of $9 million in actual damages for business interruption insurance.
Daniel Otto: For example, we completed multiple debt and other liability exchanges for equity transactions, resulting in a total decrease of liabilities and increase in shareholder's equity of approximately 10.7 million. As we continue to repay our outstanding debt obligations, we will also continue to sequentially lower interest payments and interest expense. Collectively, the progress made to date in the first step of 2024 is remarkable and has paved the paths for reaching our balance sheet and profitability goals.
Speaker Change: Since our last earnings call update significant discovery has taken place and the court has set a trial date in November 2025.
Speaker Change: To conclude we continue to operate from a cost efficient mindset and work toward our primary financial goal of cash positive operations in the first quarter of 2025.
Speaker Change: Now with that I'll turn it back to Larry for closing remarks.
Daniel Otto: Finally, as an update to our lawsuit against store-truster insurance companies based on their failure to pay any amounts towards our claim of 9 million in actual damages for business interruption insurance. Since our last earnings call update, significant discovery has taken place, and the court has set a trial date for November 2025. To conclude, we continue to operate from a cost-efficient mindset and work toward our primary financial goal of cash-positive operations in the first quarter of 2025.
Daniel Otto: Finally, as an update to our lawsuit against store-truster insurance companies based on their failure to pay any amounts towards our claim of 9 million in actual damages for business interruption insurance.
Speaker Change: Thanks, Dan.
Speaker Change: I would like to thank everyone for joining our call today.
Speaker Change: We are now nine months into our turnaround at 20 <unk> century.
Daniel Otto: Since our last earnings call update, significant discovery has taken place and the court has set a trial date for November 2025.
Larry: And I hope you can see the fruits of our hard work by everyone on our team.
Larry: It's been a challenging process, but the numbers have changed significantly to the positive.
Daniel Otto: To conclude, we continue to operate from a cost-efficient mindset and work toward our primary financial goal of cash positive operations in the first quarter of 2025.
Larry: Our balance sheet is stronger our operating costs has been cut and more closely aligned to our sales.
Lawrence Firestone: Now, with that, I'll turn it back to Larry for closing remarks. Thanks, Dan. I would like to thank everyone for joining our call today. We are now nine months into our turnaround at 22nd Century, and I hope you can see the fruits of our hard work by everyone on our team. It's been a challenging process, but the numbers have changed significantly to the positive. Our balance sheet is stronger, our operating costs have been cut and more closely aligned to our sales, and our CMO business is producing positive margin and growing, and we are building out a new branding and strategy on our reduced nicotine content products to drive growth opportunities ahead.
Lawrence Firestone: Now with that, I'll turn it back to Larry for closing remarks. Thanks, Dan.
Larry: And our CMO business is producing positive margin and growing.
Larry: And we are building out a new branding and strategy on a reduced nicotine content products to grow to drive growth opportunities ahead.
Lawrence Firestone: I would like to thank everyone for joining our call today. We are now nine months into our turnaround at 22nd century, and I hope you can see the fruits of our hard work by everyone on our team. It's been a challenging process, but the numbers have changed significantly to the positive. Our balance sheet is stronger, our operating costs have been cut and more closely aligned to our sales, and our CMO business is producing positive margin and growing, and we are building out a new branding and strategy on our reduced nicotine content products to drive growth opportunities ahead.
Lawrence Firestone: In short, while we are not fully out of the woods yet, 22nd century is on track to becoming a self-sustaining and profitable company for the first time in our history. The posture inside the company is quickly turning from defensive to offensive as we continue to shed the obligations of the past and focus on the future.
Larry: In short.
Speaker Change: While we are not fully out of the woods, yet 20, <unk> century's on track to becoming a self sustaining and profitable company for the first time in our history.
Speaker Change: The posture inside the company is quickly turning from defensive to offensive.
Speaker Change: As we continue to shed the obligations of the past and focus on the future.
Speaker Change: We will be participating in investor conferences later, this month and throughout the fall and look forward to updating you again as new developments occur.
Lawrence Firestone: In short, while we are not fully out of the woods yet, the 22nd century is on track to becoming a self-sustaining and profitable company for the first time in our history. The posture inside the company is quickly turning from defensive to offensive as we continue to shed the obligations of the past and focus on the future. We will be participating in investor conferences later this month and throughout the fall and look forward to updating you again as new developments occur, including branding, new contracts, and our next results report.
Speaker Change: Including branding new contracts in our next results report.
Matt Kreps: If you have any questions or would like to arrange a follow up please contact Matt Kreps Investor Relations for the company using his contact information provided on the press release.
Matt Kreps: And we'd like to wish you to have a great rest of your day. Thank you.
Lawrence Firestone: We will be participating in investor conferences later this month and throughout the fall and look forward to updating you again as new developments occur, including branding, new contracts, and our next results report.
Matt Kreps: If you have any questions or would like to arrange a follow-up, please contact Matt Krebs, Investor Relations for the company, using his contact information provided on the press release.
Matt Kreps: If you have any questions or would like to arrange a follow-up, please contact Matt Krebs, investor relations for the company, using his contact information provided on the press release.
Operator: We'd like to wish you to have a great rest of your day. Thank you.
Operator: We'd like to wish you to have a great rest of your day. Thank you.