We are developing the next generation of e-vapor technology

While heating tobacco is one possibility in developing alternatives to cigarette smoking, another approach is to produce a nicotine-containing aerosol without the use of tobacco. Our e-vapor products use nicotine that is extracted from tobacco leaves. These battery-powered devices – commonly known as e-cigarettes – vaporize a liquid solution containing nicotine and flavors.

In 2014, we acquired Nicocigs, a leading e-cigarette company in the U.K., which produces a variety of products (Nicocig and Vivid) that includes disposables, rechargeables, and tank systems.

In addition, under an agreement announced in 2013, Altria Group, Inc. has made available its e-cigarette products exclusively to PMI for commercialization outside the U.S., which we currently sell under the brand name Solaris in Israel and Spain.

We are now well advanced in the development of our next generation e-vapor product platform that we call MESH. The heating technology behind MESH is a completely new approach to e-vapor generation. It uses a metallic mesh with tiny holes to heat a pre-filled, pre-sealed e-liquid cartridge that contains nicotine and flavors. The consumer activates the MESH heating process by pressing on a button. As the MESH heater is in contact with the e-liquid in the cartridge, it heats the e-liquid to generate a nicotine-containing vapor. Each pre-filled and pre-sealed cartridge contains its own MESH heater.

Unlike typical e-cigarette cartridges, MESH cartridges are manufactured, assembled, pre-filled, and pre-sealed in a fully automated process in our European production facilities. MESH also features puff-activated heating and a low-liquid level detection system that ensures the consistency and quality of the vapor generated and inhaled. These improvements address the current concerns of adult vapers in relation to quality, safety, consistency, and origin.

We launched a city test of our new vaporization technology under the brand name MESH, along with four new unique e-liquid flavor offers, in the U.K. in November 2016.



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