22nd Century Group, Inc. Stock Compensation Disclosure
NOTE 14. – EQUITY-BASED COMPENSATION
Stock Compensation Plan
On May 20, 2021, the shareholders of 22nd Century Group, Inc. (the “Company”) approved the 22nd Century Group, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”). The 2021 Plan allows for the granting of equity awards to eligible individuals over the life of the 2021 Plan, including any remaining shares under the Company’s 2014 Omnibus Incentive Plan pursuant to awards under the 2021 Plan. The 2021 Plan has a term of ten years and is administered by the Compensation Committee of the Company’s Board of Directors to determine the various types of incentive awards that may be granted to recipients under the 2021 Plan and the number of shares of common stock to underlie each such award under the 2021 Plan. As of December 31, 2025, the Company had available 3,772,848 shares remaining for future awards under the 2021 Plan.
Compensation Expense
The Company recognized the following compensation costs, net of actual forfeitures, related to RSUs and stock options:
Year Ended | |||||||
December 31, | |||||||
| 2025 | | 2024 | ||||
Sales, general, and administrative | $ | 370 | $ | 337 | |||
Cost of goods sold | 23 | — | |||||
Research and development |
| 28 |
| 43 | |||
Total equity-based compensation | $ | 421 | $ | 380 | |||
On December 31, 2024, the Company canceled all remaining unvested awards at that time which resulted in accelerated compensation expense of $117. During the years ended December 31, 2025 and 2024, equity-based compensation expense reversals due to employee termination forfeitures amounted to $17 and $99, respectively.
Restricted Stock Units (“RSUs”). We typically grant RSUs to employees and non-employee directors. The following table summarizes the changes in unvested RSUs from January 1, 2024 through December 31, 2025.
Unvested RSUs | |||||
Weighted | |||||
Average | |||||
Number of | Grant-date | ||||
| Shares | | Fair Value | ||
$ per share | |||||
Unvested at December 31, 2024 | — | $ | — | ||
Granted | 24,365 | 31.92 | |||
Forfeited | (31) | 693.45 | |||
Unvested at December 31, 2025 | 24,334 | $ | 31.12 | ||
The fair value of RSUs related to employee grants that vested during the year ended December 31, 2024, was $9, based on the stock price at the time of vesting. During the year ended December 31, 2024, there were 121 shares granted and immediately vested during the period for settled indebtedness for consulting and other services provided; in which the fair value at the time of vesting amounted to $125.
As of December 31, 2025, unrecognized compensation expense for new granted RSUs amounted to $642 which is expected to be recognized over a weighted average period of approximately 2.6 years.
Stock Options. Our outstanding stock options were valued using the Black-Scholes option-pricing model on the date of the award. A summary of all stock option activity from January 1, 2024 to December 31, 2025 is as follows:
Weighted | |||||||||||
Weighted | Average | ||||||||||
Average | Remaining | Aggregate | |||||||||
Number of | Exercise | Contractual | Intrinsic | ||||||||
| Options | | Price | | Term | | Value | ||||
$ per share | |||||||||||
Outstanding at December 31, 2024 |
| — | $ | — |
| |
|
| | ||
Granted | 73,062 | 31.91 | |||||||||
Forfeited | (89) | 693.45 | |||||||||
Outstanding at December 31, 2025 | 72,973 | $ | 31.12 | 9.8 | years | $ | — | ||||
Exercisable at December 31, 2025 | — | $ | — | — | years | $ | — | ||||
The intrinsic value of a stock option is the amount by which the current market value or the market value upon exercise of the underlying stock exceeds the exercise price of the option.
As of December 31, 2025, unrecognized compensation expense for new granted stock options amounted to $1,696, which is expected to be recognized over a weighted average period of approximately 2.6 years.
The weighted average of fair value assumptions used in the Black-Scholes option-pricing model for such grants were as follows:
| 2025 | ||
Grant date fair value | $28.14 | ||
Risk-free interest rate (1) |
| 3.88 | % |
Expected dividend yield (2) |
| — | % |
Expected volatility (3) |
| 119.71 | % |
Expected term of stock options (4) |
| 6.25 | years |
(1) The risk-free interest rate is based on the period matching the expected term of the stock options based on the U.S. Treasury yield curve in effect on the grant date. | |||
(2) The expected dividend yield is assumed as zero. The Company has never paid cash dividends nor does it anticipate paying dividends in the foreseeable future. | |||
(3) The expected volatility is based on historical volatility of the Company’s stock. | |||
(4) The expected term represents the period of time that options granted are expected to be outstanding based on vesting date and contractual term. | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 26, 2026 | Showing above |
| 2024 | Mar 20, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Mar 1, 2022 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.