22nd Century Group Files 2017 First Quarter Report and Announces Conference Call to Provide Business Update

CLARENCE, N.Y.–(BUSINESS WIRE)– 22nd Century Group, Inc. (NYSE MKT:XXII),
a plant biotechnology company that is focused on tobacco harm reduction
and cannabis research, announced today the Company’s first quarter 2017
financial results and will provide a business update for investors on a
conference call to be held Tuesday, May 9th, at 4:15 PM (EDT).

Henry Sicignano, III, President and Chief Executive Officer of 22nd
Century Group, together with John T. Brodfuehrer, Chief Financial
Officer, will conduct the call. Interested parties are invited to
participate in the call by dialing: (800) 768-6490 and using Conference
ID 3629103. The conference call will consist of an overview of recent
business highlights and a summary of the financials presented in the
Company’s first quarter 2017 Form 10-Q. Immediately thereafter, there
will be a question and answer segment open to all callers.

As a result of already signed manufacturing agreements, 22nd Century is
raising the Company’s 2017 revenue projections. The Company previously
estimated 2017 revenue to exceed $12,000,000. 22nd Century now projects
2017 revenue will be more than $16,000,000. The Company will release
more details about its increasing manufacturing business in a separate
news release to be issued tomorrow, May 9, 2017.

In the first months of 2017, 22nd Century also made significant progress
in regulatory matters. As recently announced, this summer the Company
will have three products in front of the U.S. Food and Drug
Administration (“FDA”). Regulatory advancement of any one of these
products will be an important milestone for the Company and could prove
enormously disruptive of the broader tobacco industry. 22nd Century will
present one smoking cessation aid candidate and two Modified Risk
Tobacco Products (“MRTP’s”) in development to the FDA:

1. This June, the Company has scheduled a guidance meeting with the FDA’s
   Center for Drug Evaluation and Research (“CDER”) to discuss “X-22,”
   the Company’s signature prescription-based smoking cessation aid in
   development. At the June meeting, the Company will seek guidance from
   CDER/FDA on an appropriate path for X-22 to become a
   prescription-based cessation aid for smokers in the United States.
   Pending FDA authorization, 22nd Century intends to conduct a Phase III
   clinical trial in 2018. The Company also plans to seek “fast track”
   designation by the FDA for X-22.
2. Also this summer, 22nd Century will meet with the FDA’s Center for
   Tobacco Products (“CTP”) to discuss the Company’s BRAND A MRTP
   application. Based on this meeting, and on previous written feedback
   supplied by the FDA/CTP, 22nd Century will resubmit a more expansive
   and robust MRTP application that will include additional scientific
   data and information from already completed clinical studies on the
   Company’s Very Low Nicotine (“VLN”) tobacco cigarettes. Also in
   response to the CTP’s clarifying guidance, the Company intends to
   divide its combined MRTP application into a separate Premarket Tobacco
   Product (“PMT”) application and a separate MRTP application for BRAND
   A to enjoy the benefit of the CTP/FDA’s shorter review period for
   PMT applications as compared to MRTP applications.
3. Also this summer, 22nd Century will conduct an FDA-authorized clinical
   trial to study BRAND B (low tar-to-nicotine) cigarettes. This
   trial is designed to confirm that as smokers make the adjustment to a
   higher nicotine cigarette, they take in less smoke because the
   nicotine is more readily available. The Company has engaged a Contract
   Research Organization with extensive experience in combustible
   cigarette exposure studies to conduct the BRAND B clinical
   trial this summer. The Company intends to submit an MRTP application
   to the FDA for BRAND B.

Separately, as a result of 22nd Century’s strategic involvement in the
medical marijuana and hemp industries, the Company has expanded its
scientific achievements beyond altered-nicotine tobacco and now boasts
important research achievements on two fronts. In March 2017, 22nd
Century announced that its research collaboration with strategic
partner, Anandia Laboratories, Inc. in Vancouver, Canada, resulted in
new industrial hemp plants that have zero THC – the psychotropic
compound found in hemp/cannabis plants. Hemp without THC is a
revolutionary plant. Zero THC hemp eliminates the risk that growers have
in producing a plant that is subject to destruction if it tests above
the federal limit of 0.3% THC. Zero THC hemp will also be a foundational
plant for many new food and nutraceutical products. Furthermore, zero
THC hemp has generated intense interest from producers of medical
marijuana and pharmaceutical products.

In order to build on 22nd Century’s success with its THC-free
cannabis/hemp, going forward the Company will focus on optimizing its
zero THC hemp and on developing a range of next generation industrial
hemp plants that contain optimized levels of other important
cannabinoids, such as CBD, CBC and CBG.

First Quarter 2017 Financial Summary

Net sales revenue for the first quarter of 2017 was $2,231,517, a
decrease of $787,539, or 26.1%, over net sales revenue of $3,019,056 for
the three months ended March 31, 2016. The decrease in net sales revenue
for the first quarter of 2017 was primarily the result of (i) decreased
net sales revenue from our contract manufacturing business and (ii) a
decrease in the net sales revenue from SPECTRUM research
cigarettes in the amount of $329,321, when compared to the net sales
revenue for the first quarter of 2016.

For the three months ended March 31, 2017, the Company reported an
operating loss of $2,969,949 as compared to operating loss of $3,228,404
for the three months ended March 31, 2016, a decrease in the operating
loss of approximately $258,000. The decrease in the operating loss is
primarily due to a decrease in operating expenses of approximately
$656,000, partially offset by an increase in the gross loss on product
sales in the amount of $398,000.

The Company’s net loss for the three months ended March 31, 2017 was
approximately $2,621,277, or ($0.03) per share, as compared to a net
loss of approximately $3,252,452, or ($0.04) per share, for the three
months ended March 31, 2016. The decrease in the net loss of $631,175,
or 19.4%, was primarily the result of a decrease in operating expenses
of approximately $656,000 and an increase in other income (expense) in
the approximate amount of $373,000, partially offset by a decrease in
gross (loss) profit of approximately $398,000. The results for the three
months ended March 31, 2017 included non-cash expenses consisting of
equity based compensation totaling approximately $169,000 and
depreciation and amortization in the amount of $229,000.

Adjusted EBITDA (as described in the paragraph and table below) was a
negative $2,571,961, or ($0.03) per share for the three months ended
March 31, 2017, and it was a negative $2,740,099, or ($0.04) per share,
for the three months ended March 31, 2016.

Below is a table containing information relating to the Company’s
Adjusted EBITDA for the three months ended March 31, 2017 and 2016,
including a reconciliation of net loss to Adjusted EBITDA for such
periods.

Adjusted EBITDA is a financial measure not prepared in accordance with
generally accepted accounting principles (“GAAP”). In order to calculate
Adjusted EBITDA, the Company adjusts the net loss for certain non- cash
and non-operating income and expenses items listed in the table above in
order to measure the Company’s operating performance. The Company
believes that Adjusted EBITDA is an important measure that supplements
discussions and analysis of its operations and enhances an understanding
of its operating performance. While management considers Adjusted EBITDA
to be important, it should be considered in addition to, but not as a
substitute for or superior to, other measures of financial performance
prepared in accordance with GAAP, such as operating (loss) income, net
loss and cash flows from operations. Adjusted EBITDA is susceptible to
varying calculations and the Company’s measurement of Adjusted EBITDA
may not be comparable to those of other companies.

About 22nd Century Group, Inc.

22nd Century is a plant biotechnology company focused on technology
which allows it to increase or decrease the level of nicotine in tobacco
plants and the level of cannabinoids in cannabis plants through genetic
engineering and plant breeding. The Company’s primary mission in tobacco
is to reduce the harm caused by smoking. The Company’s primary mission
in cannabis is to develop proprietary cannabis strains for important new
medicines and agricultural crops. Visit www.xxiicentury.com
and www.botanicalgenetics.com
for more information.

Cautionary Note Regarding Forward-Looking Statements: This
press release contains forward-looking information, including all
statements that are not statements of historical fact regarding the
intent, belief or current expectations of 22nd Century Group, Inc., its
directors or its officers with respect to the contents of this press
release, including but not limited to our future revenue expectations.
The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,”
“believe,” “intend” and similar expressions and variations thereof are
intended to identify forward-looking statements. We cannot guarantee
future results, levels of activity or performance. You should not place
undue reliance on these forward-looking statements, which speak only as
of the date that they were made. These cautionary statements should be
considered with any written or oral forward-looking statements that we
may issue in the future. Except as required by applicable law, including
the securities laws of the United States, we do not intend to update any
of the forward-looking statements to conform these statements to reflect
actual results, later events or circumstances, or to reflect the
occurrence of unanticipated events. You should carefully review and
consider the various disclosures made by us in our annual report on Form
10-K for the fiscal year ended December 31, 2016, filed on March 8,
2017, including the section entitled “Risk Factors,” and our other
reports filed with the U.S. Securities and Exchange Commission which
attempt to advise interested parties of the risks and factors that may
affect our business, financial condition, results of operation and cash
flows. If one or more of these risks or uncertainties materialize, or if
the underlying assumptions prove incorrect, our actual results may vary
materially from those expected or projected.

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