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The autonomic nervous system is known as the control center for involuntary bodily processes such as the beating of our hearts and our breathing. The fact that this part of the nervous system also has the ability to spontaneously restore muscle function following a nerve injury was recently discovered. Their findings may form the basis for improving and developing interventions to treat nerve lesions. The autonomic nervous system is known as the control centre for involuntary bodily processes such as the beating of our hearts and our breathing. The fact that this part of the nervous system also has the ability to spontaneously restore muscle function following a nerve injury was discovered by a research group at MedUni Vienna's Department of Plastic, Reconstructive and Aesthetic Surgery as part of their study recently published in the Journal of Neuroscience. Their findings may form the basis for improving and developing interventions to treat nerve lesions. The research team led by Vlad Tereshenko and Oskar Aszmann from the Clinical Laboratory for Bionic Limb Reconstruction at MedUni Vienna's Department of Plastic, Reconstructive and Aesthetic Surgery discovered this facet of the interaction between nerves and muscles -- which was previously unknown to science -- in the course of its preclinical research on facial nerves and muscles. After a nerve has been injured or severed, it is no longer able to control the motor function of the facial muscles, resulting in facial paralysis in the animal model. In some cases, the scientists observed spontaneous recovery of muscle function days or weeks after the nerve lesion. Using novel, complex techniques, they were able to establish that the autonomic nervous system takes over the function of the injured nerve, as it were. "Until now, we were unaware that the autonomic nervous system can control muscle motor function with nerve impulses. As we have seen in our experiments, the parasympathetic nerve fibres form new functional neuromuscular synapses to do this. At the same time, the patterns of the muscle fibres are modified and, hence, the physiological properties of the autonomously reinnervated muscles are changed," explains first author Vlad Tereshenko, outlining the key findings from the study. Potential actor in nerve reconstruction Following injuries or certain diseases, nerves can temporarily or permanently lose their ability to provide motor control to muscles. Well-established therapeutic concepts such as the relocation of nerves or nerve transplants are now available to remedy the resultant motor deficits. However, clinical outcomes may be affected by several factors, such as the slow rate of nerve regeneration or the lack of donor nerves. "By identifying this previously unknown ability of the autonomic nervous system, we have discovered a new potential actor in nerve reconstruction. The results of our study can therefore help to improve existing therapeutic measures and to develop new ones," says Vlad Tereshenko, looking into the future. Follow-up studies are expected to deepen our knowledge of this new facet of the neuromuscular system. One of the questions to be addressed is whether and how autonomic nerve fibres can be surgically relocated in order to restore muscle function on a temporary or permanent basis.

“Fighting through challenging times while building the company and new technologies for the future.”HOLLISTON, Mass., Nov. 08, 2022 (GLOBE NEWSWIRE) -- Harvard Bioscience, Inc. (Nasdaq: HBIO) (the “Company”) today announced financial results for the third quarter ended September 30, 2022. Jim Green, Chairman and CEO, said, "Impacted by a challenging summer, our third quarter revenues were $26.9 million, down 9% from the same quarter prior year. Growth of 6% in our cellular/molecular product revenues were more than offset by a 17% reduction in sales of our higher margin pre-clinical products and a negative currency impact of approximately $1.0 million. Gross margin was down on lower revenue as well as higher costs of labor and materials, in addition to inventory charges related to the discontinuation of certain non-strategic products as a result of our previously communicated portfolio optimization. Operating margin was down from last year mainly on lower sales and lower gross margin.” Green continued, “In spite of headwinds in the quarter, we expect sequential revenue growth and an improved product mix in Q4 resulting in our gross margins returning to first half levels. Q4 revenue is expected to be in the $30 million dollar range, with adjusted operating margin in the range of 14% to 15%. We’re very pleased to see our continued investment in research and development deliver three new product introductions. First, our new Ultrospec 7500 is a premium spectrophotometer well known in the academic laboratories now also targeted to the pharma/CRO space. Second is our exclusive continuous glucose monitoring telemetry implants driving new demand in academic, pharma, and government labs focused on ever increasing diabetes. Lastly, we’re excited to see a large Q4 order for our BTX electroporation system using our unique Flat Pack Reaction Chamber to a top pharma company for use in bioproduction. Furthering these initial inroads, we see an emerging value proposition for our BTX system, which is often used in pharmaceutical research and development to create the initial strains of a therapeutic, to be used more broadly in production.” Green concluded, “Looking to the future, we expect to complete our portfolio optimization and related cost actions in Q4, with anticipated annual improvements of approximately $4.0 million in gross margin and operating expense reductions of approximately $1.5 million as we enter 2023. This leaning activity, combined with improved pricing and exciting new product introductions, is expected to drive new growth and make 2023 the year the company becomes the profitable growth-oriented platform we envisioned.” Quarterly Financial Results Summary Q3'22 Q3'21 Revenues $ 26.9million $ 29.7million Operating (Loss) Income (GAAP) $ (3.8)million $ 0.5million Adjusted Operating Income $ 0.7million $ 3.9million Operating Margin (GAAP) (14.0)% 1.8% Adjusted Operating Margin 2.6% 13.3% Diluted Loss Per Share (GAAP) $ (0.08) $ (0.00) Diluted Adjusted (Loss) Earnings Per Share $ (0.01) $ 0.06 Net Debt* $ 45.0million $ 40.9million * Debt outstanding less cash and cash equivalents For more details on performance for the three and nine months ended September 30, 2022, a slide presentation that will be referenced during the webcast referenced below will be posted to our Investor Relations website shortly before the webcast begins. Please refer to the exhibits below for a reconciliation of certain non-GAAP to GAAP financial measures, including gross margin, operating income, net income and loss, diluted earnings per share and adjusted EBITDA. Please see “Use of Non-GAAP Financial Information” for additional information regarding our use of such adjusted financial information. Webcast and Conference Call Details Harvard Bioscience will be hosting a conference call and webcast today at 4:30 p.m. Eastern Time. Covering Analysts who want to join the call and ask a question must register here. Once registered, you will receive the dial-in numbers and a unique PIN number. Participants who want to join the audio-only webcast should go to our events and presentations on the investor website here. Use of Non-GAAP Financial Information In this press release, we have included non-GAAP financial information including adjusted operating income, adjusted operating margin, and adjusted earnings per share. We believe that this non-GAAP financial information provides investors with an enhanced understanding of the underlying operations of the business. For the periods presented, these non-GAAP financial measures have excluded certain expenses and income resulting from items that we do not believe are representative of the underlying operations of the business, such as amortization of intangibles related to acquisitions, costs related to acquisition, disposition and integration initiatives, impairment charges, severance, restructuring and other business transformation expenses, and stock-based compensation expense, and litigation settlement expenses. They also exclude the tax impact of the reconciling items. Management believes that this non-GAAP financial information is important in comparing current results with prior period results and is useful to investors and financial analysts in assessing the Company’s operating performance. Any non-GAAP financial statement information included herein is accompanied by a reconciliation to the nearest corresponding GAAP measure which are included as exhibits below in this press release. The non-GAAP financial information provided in this press release should be considered in addition to, not as a substitute for, the financial information provided and presented in accordance with GAAP and may be different than other companies’ non-GAAP financial information. About Harvard Bioscience Harvard Bioscience is a leading developer, manufacturer and seller of technologies, products and services that enable fundamental research, discovery, and pre-clinical testing for drug development. Our customers range from renowned academic institutions and government laboratories, to the world’s leading pharmaceutical, biotechnology and contract research organizations. With operations in North America, Europe, and China, we sell through a combination of direct and distribution channels to customers around the world. For more information, please visit our website at www.harvardbioscience.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of such words as "will," "guidance," "objectives," "optimistic," "potential," "future," "expects," "plans," "estimates," "continue," "drive," "strategy," "potential," "potentially," "growth," "long-term," "projects," "projected," "intends," "believes," "goals," "sees," "seek," "develop" "possible" "new," "emerging," "opportunity," "pursue" and similar expressions that do not relate to historical matters. Forward-looking statements in this press release or that may be made during our conference call may include, but are not limited to, statements or inferences about the Company's or management's beliefs or expectations, the Company's anticipated future revenues and earnings, the strength of the Company's market position and business model, industry outlook, the impact of the COVID-19 pandemic and related supply chain disruptions on the Company’s business, the Company's business strategy, the positioning of the Company for growth, the market demand and opportunity for the Company's current products, or products it is developing or intends to develop, and the Company's plans, objectives and intentions that are not historical facts. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Investors should note that many factors, as more fully described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, and in our other filings with the Securities and Exchange Commission and as otherwise enumerated herein or therein may cause the Company's actual results to differ materially from those in the forward-looking statements. The forward-looking statements in this press release are qualified by these risk factors. The Company's results may also be affected by factors of which the Company is not currently aware. The Company may not update these forward-looking statements, even though its situation may change in the future, unless it has obligations under the federal securities laws to update and disclose material developments related to previously disclosed information. Investor Inquiries: Michael RossiChief Financial Officer(508)893-8999mrossi@harvardbioscience.com HARVARD BIOSCIENCE, INC.Consolidated Statements of Operations(unaudited, in thousands, except per share data) Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Revenues$26,922 $29,663 $84,908 $85,849 Cost of revenues 14,750 13,355 39,922 37,757 Gross profit 12,172 16,308 44,986 48,092 Operating expenses: Sales and marketing expenses 5,819 6,183 19,093 17,299 General and administrative expenses 6,324 5,458 18,630 18,190 Research and development expenses 2,763 2,660 9,480 7,848 Amortization of intangible assets 1,572 1,459 4,492 4,388 Settlement of litigation, net (544) - (233) - Total operating expenses 15,934 15,760 51,462 47,725 Operating (loss) income (3,762) 548 (6,476) 367 Other expense: Interest expense (749) (373) (1,648) (1,161) Other expense, net (179) (130) (163) (477) Total other expense (928) (503) (1,811) (1,638) (Loss) income before income taxes (4,690) 45 (8,287) (1,271) Income tax (benefit) expense (1,285) 215 (437) (22) Net loss$(3,405) $(170) $(7,850) $(1,249) Loss per common share: Basic and diluted$(0.08) $(0.00) $(0.19) $(0.03) Weighted-average common shares: Basic and diluted 41,637 40,754 41,353 40,202 HARVARD BIOSCIENCE, INC.Condensed Consolidated Balance Sheets(unaudited, in thousands) September 30, 2022 December 31, 2021 Assets Cash and cash equivalents$5,144 $7,821 Accounts receivables 15,023 21,834 Inventories 26,116 27,587 Other current assets 5,535 4,341 Total current assets 51,818 61,583 Property, plant and equipment 3,555 3,415 Goodwill and other intangibles 77,315 85,074 Other long-term assets 14,325 12,272 Total assets$147,013 $162,344 Liabilities and Stockholders' Equity Current portion, long-term debt$2,720 $3,235 Other current liabilities 18,640 22,081 Total current liabilities 21,360 25,316 Long-term debt, net 46,534 45,095 Other long-term liabilities 7,140 8,532 Stockholders’ equity 71,979 83,401 Total liabilities and stockholders’ equity$147,013 $162,344 HARVARD BIOSCIENCE, INC.Condensed Consolidated Statements of Cash Flows(unaudited, in thousands) Nine Months Ended September 30, 2022 September 30, 2021 Cash flows from operating activities: Net loss$(7,850) $(1,249) Adjustments to operating cash flows 5,165 8,547 Changes in operating assets and liabilities 1,158 (6,153) Net cash (used in) provided by operating activities (1,527) 1,145 Cash flows from investing activities: Additions to property, plant and equipment (1,355) (837) Additions to intangible assets - (150) Net cash used in investing activities (1,355) (987) Cash flows from financing activities: Borrowing from revolving line of credit 7,800 2,500 Repayment of revolving line of credit (4,650) (4,000) Repayment of term debt (2,436) (1,500) Payments of debt issuance costs - (102) Proceeds from exercise of stock options and stock purchases 346 2,909 Taxes related to net share settlement of equity awards (1,167) (2,653) Net cash used in financing activities (107) (2,846) Effect of exchange rate changes on cash 312 (81) Decrease in cash and cash equivalents (2,677) (2,769) Cash and cash equivalents at the beginning of period 7,821 8,317 Cash and cash equivalents at the end of period$5,144 $5,548 HARVARD BIOSCIENCE, INC.Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)Three Months Ended September 30, 2022(in thousands, except per share data) Settlement, Restructuring, Stock-Based Acquired Assets Transformation Income Statement of OperationsGAAP Compensation Amortization & Other Taxes ADJUSTED Revenues$26,922 - - - - $26,922 Cost of revenues14,750 - (7) (1,441) - 13,302 Gross profit12,172 - 7 1,441 - 13,620 Gross Margin45.2% 50.6% Operating expenses: Sales and marketing expenses5,819 (147) (1) 120 - 5,791 General and administrative expenses6,324 (919) (8) (942) - 4,455 Research and development expenses2,763 (73) (8) (10) - 2,672 Amortization of intangible assets1,572 - (1,572) - - - Settlement of litigation, net(544) - - 544 - - Total operating expenses15,934 (1,139) (1,589) (288) - 12,918 Operating Expenses - % of Revenues59.2% 48.0% Operating (loss) income(3,762) 1,139 1,596 1,729 - 702 Operating Margin-14.0% 2.6% Other expense: Interest expense(749) - - - - (749) Other expense, net(179) - - (80) - (259) Total other expense(928) - - (80) - (1,008) Loss before income taxes(4,690) 1,139 1,596 1,649 - (306) Income tax benefit(1,285) - - - 1,244 (41) Net loss$(3,405) $1,139 $1,596 $1,649 $(1,244) $(265) Loss per share$(0.08) $(0.01) Diluted weighted average common shares41,637 41,637 HARVARD BIOSCIENCE, INC.Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)Three Months Ended September 30, 2021(in thousands, except per share data) Stock-Based Acquired Assets Restructuring, Income Statement of OperationsGAAP Compensation Amortization Transformation Taxes ADJUSTED Revenues$29,663 - - - - $29,663 Cost of revenues13,355 (32) (15) (94) - 13,214 Gross profit16,308 32 15 94 - 16,449 Gross Margin55.0% 55.5% Operating expenses: Sales and marketing expenses6,183 (149) (2) (261) - 5,771 General and administrative expenses5,458 (790) (16) (426) - 4,226 Research and development expenses2,660 (33) (10) (113) - 2,504 Amortization of intangible assets1,459 - (1,459) - - - Total operating expenses15,760 (972) (1,487) (800) - 12,501 Operating Expenses - % of Revenues53.1% 42.1% Operating income548 1,004 1,502 894 - 3,948 Operating Margin1.8% 13.3% Other expense: Interest expense(373) - - - - (373) Other expense, net(130) - - - - (130) Total other expense(503) - - - - (503) Income before income taxes45 1,004 1,502 894 - 3,445 Income tax expense215 - - - 580 795 Net (loss) income$(170) $1,004 $1,502 $894 $(580) $2,650 (Loss) income per share$(0.00) $0.06 Diluted weighted average common shares40,754 43,500 HARVARD BIOSCIENCE, INC.Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)Nine Months Ended September 30, 2022(in thousands, except per share data) Settlement, Restructuring, Stock-Based Acquired Assets Transformation Income Statement of OperationsGAAP Compensation Amortization & Other Taxes ADJUSTED Revenues$84,908 - - - - $84,908 Cost of revenues39,922 (88) (27) (1,598) - 38,209 Gross profit44,986 88 27 1,598 - 46,699 Gross Margin53.0% 55.0% Operating expenses: Sales and marketing expenses19,093 (493) (4) (250) - 18,346 General and administrative expenses18,630 (2,633) (38) (2,861) - 13,098 Research and development expenses9,480 (187) (27) (137) - 9,129 Amortization of intangible assets4,492 - (4,492) - - - Settlement of litigation, net(233) - - 233 - - Total operating expenses51,462 (3,313) (4,561) (3,015) - 40,573 Operating Expenses - % of Revenues60.6% 47.8% Operating (loss) income(6,476) 3,401 4,588 4,613 - 6,126 Operating Margin-7.6% 7.2% Other expense: Interest expense(1,648) - - - - (1,648) Other expense, net(163) - - (80) - (243) Total other expense(1,811) - - (80) - (1,891) (Loss) income before income taxes(8,287) 3,401 4,588 4,533 - 4,235 Income tax (benefit) expense(437) - - - 1,409 972 Net (loss) income$(7,850) $3,401 $4,588 $4,533 $(1,409) $3,263 (Loss) income per share$(0.19) $0.08 Diluted weighted average common shares41,353 42,665 HARVARD BIOSCIENCE, INC.Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)Nine Months Ended September 30, 2021(in thousands, except per share data) Stock-Based Acquired Assets Restructuring, Income Statement of OperationsGAAP Compensation Amortization Transformation Taxes ADJUSTED Revenues$85,849 - - - - $85,849 Cost of revenues37,757 (83) (51) (247) - 37,376 Gross profit48,092 83 51 247 - 48,473 Gross Margin56.0% 56.5% Operating expenses: Sales and marketing expenses17,299 (373) (6) (375) - 16,545 General and administrative expenses18,190 (2,593) (49) (2,380) - 13,168 Research and development expenses7,848 (87) (32) (408) - 7,321 Amortization of intangible assets4,388 - (4,388) - - - Total operating expenses47,725 (3,053) (4,475) (3,163) - 37,034 Operating Expenses - % of Revenues55.6% 43.1% Operating income367 3,136 4,526 3,410 - 11,439 Operating Margin0.4% 13.3% Other expense: Interest expense(1,161) - - - - (1,161) Other expense, net(477) - - - - (477) Total other expense(1,638) - - - - (1,638) (Loss) income before income taxes(1,271) 3,136 4,526 3,410 - 9,801 Income tax (benefit) expense(22) - - - 2,365 2,343 Net (loss) income$(1,249) $3,136 $4,526 $3,410 $(2,365) $7,458 (Loss) income per share$(0.03) $0.17 Diluted weighted average common shares40,202 43,113 HARVARD BIOSCIENCE, INC.Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)(in thousands) Three Months Ended Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Operating income$(3,762) $548 $(6,476) $367 Stock-based compensation expense 1,139 1,004 3,401 3,136 Acquired asset amortization 1,596 1,502 4,588 4,526 Settlements, restructuring and transformation costs 1,729 894 4,613 3,410 Adjusted operating income 702 3,948 6,126 11,439 Depreciation expense 364 420 1,122 1,311 Adjusted EBITDA$1,066 $4,368 $7,248 $12,750

Accelerating VLN® Sales in Colorado and Illinois, Launching in Four Corners States to Capture Market Share and VolumeGVB Biopharma Acquisition Growing Revenue on Increased VolumesThird Quarter Net Sales $19.4 Million, Up 148% from the Third Quarter 2021Strong Balance Sheet to Support Strategic Initiatives Including Accelerated VLN® Expansion BUFFALO, N.Y., Nov. 08, 2022 (GLOBE NEWSWIRE) -- 22nd Century Group, Inc. (Nasdaq: XXII), a leading agricultural biotechnology company dedicated to improving health with reduced nicotine tobacco, hemp/cannabis, and hops advanced plant technologies, today reported results for the third quarter ended September 30, 2022, and provided an update on recent business highlights. The Company will host a live audio webcast today at 10:00 a.m. E.T. James A. Mish, Chief Executive Officer of 22nd Century Group, stated: “The past few months have demonstrated tremendous commercial progress in 22nd Century’s reduced nicotine tobacco and hemp/cannabis businesses. Our VLN® product launch has expanded from the exceptional pilot in Chicago to now five states. We plan to expand that base to as many as 18 states over the next twelve months. Doing so would give us access to more than half the $80 billion U.S. tobacco market and position us in most, if not all, of the states that have enacted MRTP excise tax provisions favorable to our unique product authorization. Even just a 1% share, which we view as eminently achievable based on our pilot results, would be transformative to our revenue line. The FDA is also continuing to advance its interests in transformative menthol and reduced nicotine policies, and 22nd Century is positioned at the forefront of this opportunity with the only MRTP authorized 95% reduced nicotine combustible cigarette and years of clinical research documenting the benefits of our products. “We also reported our first full quarter of hemp/cannabis revenue benefitting from the acquisition of GVB Biopharma this spring. We are now the largest merchant market supplier of CBD in North America and positioned to grow that stake even further. We are moving quickly to complete the startup of our new Prineville crude extraction plant and secure additional certifications for our facilities that will further differentiate our products and make us the premier supplier of hemp-derived extracts and ingredients to consumer and wellness products. Success in these endeavors will enable us to increase our gross margin on this portion of our business and compete from a position of strength in a much larger active ingredient market once FDA announces its highly anticipated new product standards for the industry. “With a strengthened balance sheet and a clear path to increased revenue and gross margins, we are excited about the path forward as we work to rapidly drive market share and create operating scale across our business units,” concluded Mish. Recent Key Financial and Business Highlights Tobacco Business 22nd Century Group has moved aggressively into its commercial launch program for VLN®, leveraging its exceptional pilot results to develop an efficient, reproducible VLN® Sales Launch Blueprint that focuses resources to achieve the greatest returns. The launch blueprint is designed to be repeatable as the Company expands VLN® availability to new markets.The Company expects to gain significant market share in a new market based on consumer adoption.Consumers have described VLN® as “game-changing” and “lifesaving”. 22nd Century has refined its VLN® rollout strategy to focus on going deeper into select geographies and markets with high cigarette volume and large adult smoker populations. The Company estimates that every 1% share of the U.S. retail market equates to approximately $800 million in retail sales, which is $500 million in revenue for a premium cigarette manufacturer.22nd Century will also prioritize states with Modified Risk Tobacco Product (MRTP) state excise tax savings, which can be used toward adult consumer incentives, expand distribution, and additional programming to raise awareness, education, and trial among adult smokers of its unique products. 22nd Century announced that it is expanding its retail sales presence in Illinois following exceptional results in its Chicago pilot.The Company subsequently launched VLN® in Colorado through its expanded network of retailers and distribution partners, including Circle K, Eagle Rock Distributing Company, and Creager Mercantile. The Colorado VLN® distribution plan includes thousands of retail sites and numerous new retailers supported by 22nd Century’s distribution partnerships.The Company is initially acting on approximately 3,000 locations across the state where VLN® will be available. The Company also announced that it will launch VLN® in three additional states – Arizona, New Mexico, and Utah – covering the Four Corners region. Expanding into the Four Corners gives VLN® access to concentrated centers of adult smokers allowing the Company to market VLN® in a streamlined and efficient manner where resources can be pooled and focused.New Mexico and Utah have an MRTP tax benefit that 22nd Century Group can leverage similar to its activities in Colorado.The Company is building out a network of partners and distribution resources to not only stock or distribute VLN®, but also support additional functions such as merchandising and product education to expand the awareness of VLN®’s highly differentiated value proposition in key retail channels. Within the next 12 months, 22nd Century Group will focus on bringing VLN® to at least 12 to 18 states, including Illinois, Colorado, Arizona, New Mexico, and Utah. Circle K, in addition to Illinois and Colorado, also authorized VLN® to be sold in all their New Mexico stores. Regulatory interests for banning menthol and mandating reduced nicotine content at both the federal and state level continue to support 22nd Century Group’s approach to reducing the harms caused by smoking. The Company believes that the FDA’s proposed menthol cigarette ban could leave VLN® Menthol King as the only combustible menthol cigarette on the market, providing a critical off-ramp to help current menthol smokers to smoke less.22nd Century also has the only FDA-authorized combustible cigarette able to meet the stringent reduced nicotine content product standard under the FDA’s Comprehensive Plan requiring that all cigarettes be made “minimally or non-addictive.”In early October 2022, the Company completed the delivery of 3 million variable nicotine research cigarettes, including menthol, for use in studies underpinning FDA’s proposed menthol ban and reduced nicotine content proposals.In late October 2022, 22nd Century Group received an order for 2.8 million variable nicotine cigarettes in coordination with the FDA, the National Institute on Drug Abuse (NIDA), and others. The Company’s research cigarettes will continue to fuel numerous independent, scientific studies to validate the enormous public health benefits identified by the FDA and others of implementing a national standard requiring all cigarettes to contain minimally or non-addictive levels of nicotine. To meet anticipated demand for its VLN® products in the U.S. and elsewhere, 22nd Century planted its largest ever VLN® tobacco crop in 2022, which includes the Company’s second-generation reduced nicotine tobacco plants. VLN® 2.0 tobacco is already seeing approximately 30% higher yields, enhanced quality leaf, improved disease resistance, reduction in nutrient inputs, and increased stability across various environments and geographies.The Company’s first grow in Chile was successful, which allow for the expansion of growing acreage in 2023 in the southern hemisphere to secure year-round growing capabilities Completed expansion of the Company’s existing manufacturing operations and increased capacity by 25%, including installation of a new production line and initiation of a second shift. Hemp/Cannabis Business 22nd Century Group acquired GVB Biopharma (GVB), a global-scale specialty ingredient supplier and contract development & manufacturing organization (CDMO), on May 13, 2022. The acquisition expanded 22nd Century’s hemp/cannabis research and development (R&D) activities to include a revenue-producing business positioned for growth. GVB is the largest merchant market provider of cannabinoid extracts and isolates in North America with a focus on cannabidiol (CBD) and cannabigerol (CBG) extracted and refined at industrial scale into distillates (highly pure, liquid form cannabinoids with 70% to 90% purity) and isolates (highly pure powder firm cannabinoids (96% to 98.9% purity).GVB is widely regarded as a best-in-class operator with a leading position in the hemp-derived active ingredients market, with around 15% market share and growing.From 2020 to 2021, GVB’s total cannabinoid production increased by 200%, and from 2021 to 2022, production increased by 100%. The Company expects further production of crude extraction to increase with its Prineville facility ramping up throughout 2023. GVB gives 22nd Century control of the full vertical product cycle and provides the Company with the most complete hemp/cannabis solution in the world, from receptor science and transformative plant genetics to finished ingredients and CDMO-formulated products that meet the most exacting standards required by global consumer products and pharmaceutical companies.GVB is advancing its facilities certifications to further differentiate its products and access new, high-value isolate and distillate market opportunities. During the quarter, GVB passed the NSF International Audit with a grade A, and no deficiencies were found, and obtained a renewal of its cGMP registration for Dietary Supplements Registration for its manufacturing facilities. NSF is one of the largest third-party compliance and standards organizations globally. It provides testing, auditing, and certification services, assuring suppliers that an independent organization has reviewed a product or system to comply with specific standards for safety, quality, sustainability or performance. GVB’s CGMP registration encompasses dietary supplements, dietary ingredients, and functional food facility certification. With this audit and certification secured, GVB will pursue pharma-grade manufacturing.GVB plans to submit a Drug Master File (DMF) to the FDA to produce and supply cannabinoid-based active pharmaceutical ingredients (APIs) for the medical and pharmaceutical industries requiring the highest quality cannabinoids in the U.S.GVB will also be pursuing The International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) Q7 international pharma-grade audit standard certification so it can supply naturally derived hemp/cannabis APIs to companies globally. GVB operates three manufacturing facilities across Nevada and Oregon. GVB’s new Prineville, Oregon facility is one of the largest hemp extraction plants in the world, with expected CBD crude production capacity exceeding 15,000 kg/month at full operations, which will further improve gross margin on all GVB cannabinoid products.GVB’s capabilities add sizeable commercial scale to 22nd Century’s existing hemp/cannabis franchise. The Company plans to generate cash flow from GVB’s operations which will ultimately become a net cash contributor to 22nd Century overall and help fund not only hemp/cannabis franchise growth but also VLN® expansion. Corporate Business Highlights Lucie S. Salhany was appointed to the Company’s Board of Directors in September 2022, extending her experience in positioning unique products for successful launch, corporate strategy, and entrepreneurial ventures to help raise 22nd Century’s profile in tobacco harm reduction and the hemp/cannabis industry.The Company announced that the position of president and chief operating officer was eliminated, effective September 30, 2022. James A. Mish assumed the responsibilities of corporate president, and operations have been integrated into the tobacco and cannabis business teams. Third Quarter 2022 Financial Results Net revenues for the third quarter of 2022 were $19.4 million, an increase of 148.2% from 2021. The increase was due to increased contract manufacturing volumes as well as the addition of GVB Biopharma revenue for the full third quarter. Revenue from tobacco-related products was $11.5 million, an increase of 47.7% from 2021 primarily driven by volume increases in the number of cartons sold, price increases, and favorable mix for filtered cigar and cigarettes (including export cigarettes).Revenue from hemp/cannabis-related products was $7.8 million, compared to $0 in the prior year third quarter. Gross profit for the third quarter was $619 thousand, an increase of 111.9% compared to $292 thousand in the prior year third quarter.Total operating expenses for the third quarter of 2022 increased to $15.9 million, compared to $7.9 million in the prior year quarter, driven by: Sales, general and administrative expenses increased by approximately $7.7 million compared to the prior year period. This was driven primarily by the acquisition of GVB and higher strategic consulting and marketing, legal, and personnel costs as we continue to expand the launch of VLN® and build our executive management team.Research and development expenses increased by approximately $287 thousand, compared to the prior year period, driven by personnel expenses and costs associated with the Company’s research programs. Operating loss for the third quarter of 2022 was $15.3 million, compared to $7.6 million in the prior year period.Net loss was $13.1 million, representing a net loss per share of $0.06. Adjusted EBITDA was a loss of $11.0 million. See the tables included in this release for a reconciliation of Adjusted EBITDA (a non-GAAP measure) to net loss. Balance Sheet and Liquidity As of September 30, 2022, the Company had $43.7 million in cash, cash equivalents, and short-term investment securities.The Company is selectively deploying capital to accelerate the launch of VLN®, expand tobacco manufacturing operations, invest in GVB’s production capacity, and increase inventory levels to meet the growing demand for both hemp/cannabis and tobacco products and for research and development.22nd Century’s cash requirements are anticipated to decrease, reflecting higher sales volume of higher margin contract manufacturing operations (CMO) cigarettes and VLN® products through fiscal 2023, and continued organic growth of GVB’s operations, providing adequate liquidity from the current balance sheet to complete its planned strategic initiatives. Third Quarter Earnings Conference Call22nd Century will host a live webcast today at 10:00 a.m. E.T. to discuss its third quarter 2022 financial results and business highlights. During the webcast, James A. Mish, chief executive officer of 22nd Century Group, together with John Miller, president of 22nd Century’s tobacco business, and Hugh Kinsman, chief financial officer, will provide an update on the Company. Following prepared remarks, the Company will host a Q&A session, during which management will accept questions from interested analysts. Investors, shareholders, and members of the media will also have the opportunity to pose questions by submitting them through the interactive webcast. The live webcast, interactive Q&A, and slide presentation will be accessible in the Events section on 22nd Century’s Investor Relations website at https://www.xxiicentury.com/investors/events. An archived replay of the webcast will also be available shortly after the live event has concluded. About 22nd Century Group, Inc.22nd Century Group, Inc. (Nasdaq: XXII) is a leading agricultural biotechnology company focused on tobacco harm reduction, reduced nicotine tobacco and improving health and wellness through plant science. With dozens of patents allowing it to control nicotine biosynthesis in the tobacco plant, the Company has developed proprietary reduced nicotine content (RNC) tobacco plants and cigarettes, which have become the cornerstone of the FDA’s Comprehensive Plan to address the widespread death and disease caused by smoking. The Company received the first and only FDA MRTP authorization of a combustible cigarette in December 2021. In tobacco, hemp/cannabis, and hop plants, 22nd Century uses modern plant breeding technologies, including genetic engineering, gene-editing, and molecular breeding to deliver solutions for the life science and consumer products industries by creating new, proprietary plants with optimized alkaloid and flavonoid profiles as well as improved yields and valuable agronomic traits. Learn more at xxiicentury.com, on Twitter, on LinkedIn, and on YouTube. Learn more about VLN® at tryvln.com. Cautionary Note Regarding Forward-Looking StatementsExcept for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements. Forward-looking statements typically contain terms such as “anticipate,” “believe,” “consider,” “continue,” “could,” “estimate,” “expect,” “explore,” “foresee,” “goal,” “guidance,” “intend,” “likely,” “may,” “plan,” “potential,” “predict,” “preliminary,” “probable,” “project,” “promising,” “seek,” “should,” “will,” “would,” and similar expressions. Actual results might differ materially from those explicit or implicit in forward-looking statements. Important factors that could cause actual results to differ materially are set forth in “Risk Factors” in the Company’s Annual Report on Form 10-K filed on March 1, 2022 and in the Company’s Quarterly Reports filed on May 5, 2022 and August 9, 2022, respectively. All information provided in this release is as of the date hereof, and the Company assumes no obligation to and does not intend to update these forward-looking statements, except as required by law. Investor Relations & Media ContactMei Kuo22nd Century Group, Inc.Director, Communications & Investor Relationsmkuo@xxiicentury.com Darrow Associates Investor RelationsMatt KrepsT: 214-597-8200mkreps@darrowir.com 22nd CENTURY GROUP, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(amounts in thousands, except per-share data) September 30, December 31, 2022 2021ASSETS Current assets: Cash and cash equivalents $2,364 $1,336 Short-term investment securities 41,357 47,400 Accounts receivable, net 4,953 585 Inventory 12,264 2,881 Prepaid expenses and other current assets 3,463 2,183 Total current assets 64,401 54,385 Property, plant and equipment, net 18,279 5,841 Operating lease right-of-use assets, net 2,429 1,723 Goodwill 33,748 — Intangible assets, net 18,336 7,919 Investments 981 2,345 Other assets 4,002 3,741 Total assets $142,176 $75,954 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes and loan payable $5,825 $596 Operating and finance lease obligations 927 308 Accounts payable 5,787 2,173 Accrued expenses 2,468 1,489 Accrued payroll 1,043 2,255 Accrued excise taxes and fees 1,525 1,270 Deferred income 693 119 Other current liabilities 397 217 Total current liabilities 18,665 8,427 Long-term liabilities: Notes payable 220 — Operating and finance lease obligations 1,592 1,432 Other long-term liabilities 611 21 Total liabilities 21,088 9,880 Commitments and contingencies (Note 9) Shareholders' equity Preferred stock, $.00001 par value, 10,000,000 shares authorized Common stock, $.00001 par value, 300,000,000 shares authorized Capital stock issued and outstanding: 215,301,603 common shares (162,872,875 at December 31, 2021) Common stock, par value 2 2 Capital in excess of par value 333,124 244,247 Accumulated other comprehensive loss (507) (162)Accumulated deficit (211,531) (178,013)Total shareholders' equity 121,088 66,074 Total liabilities and shareholders’ equity $142,176 $75,954 22nd CENTURY GROUP, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(Unaudited)(amounts in thousands, except per-share data) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Revenue, net $19,383 $7,811 $42,905 $22,988 Cost of goods sold 18,764 7,519 41,086 21,733 Gross profit 619 292 1,819 1,255 Operating expenses: Sales, general and administrative 14,569 6,830 31,355 17,846 Research and development 1,318 1,031 4,355 2,789 Total operating expenses 15,887 7,861 35,710 20,635 Operating loss (15,268) (7,569) (33,891) (19,380)Other income (expense): Unrealized loss on investments (345) (1,900) (2,046) (2,040)Gain on Panacea investment conversion — — — 2,548 Realized loss on short-term investment securities (35) — (143) — Interest income, net 113 52 211 272 Interest expense (148) (23) (230) (44)Total other income (expense) (415) (1,871) (2,208) 736 Loss before income taxes (15,683) (9,440) (36,099) (18,644)Benefit for income taxes (2,581) — (2,581) — Net loss $(13,102) $(9,440) $(33,518) $(18,644) Net loss per common share - basic and diluted $(0.06) $(0.06) $(0.18) $(0.12)Weighted average common shares outstanding - basic and diluted (in thousands) 210,131 $162,721 $185,269 $153,998 Other comprehensive loss: Unrealized loss on short-term investment securities (19) (28) (488) (101)Reclassification of losses to net loss 35 — 143 — Other comprehensive income (loss) 16 (28) (345) (101)Comprehensive loss $(13,086) $(9,468) $(33,863) $(18,745) Reconciliations of Non-GAAP Measures Below is a table containing information relating to the Company’s Net loss, EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2022 and 2021, including a reconciliation of these Non-GAAP measures for such periods. Quarter Ended September 30, Dollar Amounts in Thousands ($000's) (UNAUDITED) $ Change 2022 2021 fav / (unfav)Net loss $(13,102) $(9,440) $(3,662)Interest (income)/expense, net 35 (29) 64 Amortization and depreciation 1,068 341 727 Benefit for income taxes (2,581) — (2,581)EBITDA $(14,580) $(9,128) $(5,452)Adjustments: Equity-based employee compensation expense 2,247 1,119 1,128 Unrealized loss (gain) on investment 345 1,900 (1,555)Inventory step-up 978 — 978 Adjusted EBITDA $(11,010) $(6,109) $(4,901) 1Fav = Favorable variance, which increases EBITDA and Adjusted EBITDA; Unfav = unfavorable variance, which reduces EBITDA and Adjusted EBITDA Year-to-date Ended September 30, Dollar Amounts in Thousands ($000's) (UNAUDITED) $ Change 2022 2021 fav / (unfav)Net loss $(33,518) $(18,644) $(14,874)Interest (income)/expense, net 19 (227) 246 Amortization and depreciation 1,992 932 1,060 Benefit for income taxes (2,581) — — EBITDA $(34,088) $(17,939) $(16,148)Adjustments: Equity-based employee compensation expense 4,566 2,871 1,695 Gain on Panacea investment conversion — (2,548) 2,548 Unrealized loss (gain) on investment 2,046 2,040 6 Inventory step-up 978 — 978 Adjusted EBITDA $(26,498) $(15,576) $(10,922) 1Fav = Favorable variance, which increases EBITDA and Adjusted EBITDA; Unfav = unfavorable variance, which reduces EBITDA and Adjusted EBITDA Notes regarding Non-GAAP Financial Information In addition to the Company’s reported results in accordance with generally accepted accounting principles in the United States of America (“GAAP”), the Company provides EBITDA and Adjusted EBITDA. In order to calculate EBITDA, the Company adjusts net (loss) income by adding back interest expense (income), provision (benefit) for income taxes, and depreciation and amortization expense from intangible assets. Adjusted EBITDA consists of EBITDA adjusted by the Company for certain non-cash and non-operating expense, including adding back equity-based employee compensation expense, (gain) loss on investments, inventory step-up amortization, and any unusual or infrequently occurring items. The Company believes that the presentation of EBITDA and Adjusted EBITDA are important financial measures that supplement discussion and analysis of its financial condition and results of operations and enhances an understanding of its operating performance. While management considers EBITDA and Adjusted EBITDA to be important, these financial performance measures 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) income 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.