22nd Century Group Inc. reported Thursday another significantly larger quarterly loss, primarily caused by higher operational costs and a non-core investment loss.

The company reported a $10.2 million loss in the third quarter, compared with net income of $6.3 million a year ago.

22nd Century benefited in the third quarter of 2018 from an overall $8.34 million gain related to its investment and subsequent sale of its stake in Anandia Laboratories Inc.

Based in Williamsville, N.Y., 22nd Century opened cigarette-manufacturing operations in Mocksville in 2014 through spending $3.22 million on the production equipment of the defunct Renegade Tobacco Inc. At last count, it has 70 employees at the plant and 79 overall.

It also is involved in the development of hemp and cannabis products.

The company reported an earnings loss of 8 cents, compared with diluted earnings of 4 cents a year ago. There is no analyst forecast for 22nd Century from Zacks Investment Research.

The share price finished up Friday 2 cents to $1.60.

22nd Century reported a 3.2% increase in third-quarter revenue to $6.46 million.

The bulk of 22nd Century’s revenue comes from production of traditional tobacco products, such as filtered cigars, and from very-low-nicotine cigarettes, its Spectrum-branded line, sold to government agencies for use in public-health studies. The company landed a new filtered-cigars production contract in May 2018.

22nd Century projects higher revenue in the fourth quarter after raising on Oct. 21 pricing of third-party cigarette products sold to contract manufacturing customers.

The company has not received revenue from licensing or broad commercial sales of its very-low-nicotine tobacco products.

There were four factors in 22nd Century’s quarterly loss.

Its cost of goods sold rose 6.1% to $6.46 million. Its research and development expenses dropped 50.3% to just under $2 million. General and administrative costs jumped 103.1% to $4.06 million.

It also took a $1.14 million impairment charge that it said was related to a review of its patent and trademark costs.

Included in the general and administrative costs was a $721,000 severance package paid to former chief executive Henry Sicignano III, who resigned unexpectedly from the company and board July 26.

Clifford Fleet, a former Philip Morris USA chief executive and president, took over as 22nd Century’s chief executive Aug. 3. Fleet became an adviser to 22nd Century in December.

22nd Century reported $3.08 million in expenses through the first three quarters of fiscal 2019 related to filing its modified-risk tobacco product application to the Food and Drug Administration for its Brand A very-low-nicotine traditional cigarette.

The company could play a pivotal role in the FDA’s quest to drastically cut nicotine levels in traditional cigarettes. Approval of the very-low nicotine cigarettes could lead to a sharp increase in revenue and a potential buyout by a global tobacco manufacturer.

The FDA released in July 2017 its very-low-nicotine recommendations, which must gain approval from other federal agencies before being implemented. The company’s theory behind producing very-low-nicotine cigarettes is that by making them less addictive, smokers would consume fewer cigarettes.

Some anti-smoking advocates express concern that the very-low-nicotine traditional cigarettes will lead some smokers to use more cigarettes, thus potentially raising their exposure to carcinogens from the burning of tobacco leaves.

“We have had active and very constructive dialogue with the FDA on our tobacco product applications,” Fleet said in a statement. “Our modified-risk tobacco product application is moving quickly through the review process.

“Our regulatory affairs team is already preparing for the presentation of our application to FDA’s Tobacco Product Scientific Advisory committee, which is an important milestone for 22nd Century.”

In October 2017, 22nd Century sold 20.57 million shares in a direct public offering that yielded gross proceeds of $54 million. The company reported Thursday it had $43.7 million in cash and cash equivalents as of Sept. 30.

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