MOCKSVILLE - 22nd Century (NASDAQ:XXII) Group, Inc. (NASDAQ: XXII), a company specializing in reduced-nicotine tobacco products, announced today that it has raised an additional $1.68 million in gross proceeds. The funds were obtained through a Regulation A offering, priced at $0.57 per share, and a separate private placement of common warrants.
The North Carolina-based biotechnology company also reported an amendment to its existing debentures with JGB Partners and related entities. The amendment includes a suspension of provisions that previously required 22nd Century Group to allocate 20% of any equity issuances to the debenture holders until December 31, 2024. Moreover, JGB will cap its monthly redemption right at 50% of the allowed amounts from August 2024 through July 2025.
Chairman and CEO Larry Firestone stated that the additional capital and the revised repayment terms of the Senior Secured Credit Facility will allow the company to focus on expanding its contract manufacturing business and reactivating its FDA-authorized VLN® reduced nicotine content product line in the markets.
22nd Century Group, known for its tobacco harm reduction efforts, offers products with 95% less nicotine than conventional cigarettes. The company holds the distinction of receiving the first and only FDA Modified Risk Tobacco Product authorization for a combustible cigarette in December 2021. It operates as a subsequent participating manufacturer under the Master Settlement Agreement and manages vertically integrated production for both its proprietary products and contract manufacturing operations.
The company's announcements today are part of its broader strategy to improve health and wellness by offering alternatives designed to help smokers reduce their nicotine intake. This information is based on a press release statement from 22nd Century Group.
In other recent news, 22nd Century Group has announced a significant financial agreement to sell 460,000 shares of common stock to an institutional investor, resulting in gross proceeds of $262,200. This transaction follows the company's Q2 earnings announcement, where it maintained its performance outlook. The company also hired Robert Manfredonia as the new Executive Vice President of Sales and Marketing, a move expected to enhance its sales strategies.
In a bid to improve its financial standing, 22nd Century Group reduced its debt by $2.3 million through an agreement with JGB Capital and restructured its debt with Omnia. The company also received a warning from NASDAQ due to its stock price falling below the required minimum, with a 180-day period given to regain compliance.
Additionally, 22nd Century Group expanded the distribution of its VLN® reduced nicotine content cigarettes in South Korea through a commercial agreement with Nico-Tech Korea, Inc. The company also partnered with Greenbutts, LLC to manufacture biodegradable cigarette filters, aiming to tackle the environmental issue of cigarette butt litter. These are recent developments in the company's operations.
InvestingPro Insights
In light of 22nd Century Group's recent capital raise and strategic financial restructuring, investors are closely monitoring the company's financial health and market performance. According to InvestingPro data, 22nd Century Group has a market capitalization of $4.27 million, reflecting its size in the industry. The company's revenue for the last twelve months as of Q2 2024 stands at $19.23 million, yet it has experienced a significant revenue decline of 28.49% in the same period. This contraction highlights the challenges the company faces in generating sales growth.
InvestingPro Tips suggest that 22nd Century Group operates with a significant debt burden and may encounter difficulties in meeting its interest payments on debt. This is particularly relevant as the company has amended its debenture terms to ease financial pressure in the short term. The tips also indicate that analysts are optimistic about sales growth in the current year, which could be pivotal for the company's efforts to expand its contract manufacturing business and re-launch its VLN® reduced nicotine content product line.
InvestingPro offers additional insights, with a total of 20 tips available for 22nd Century Group at https://www.investing.com/pro/XXII. These tips could provide investors with a more comprehensive understanding of the company's financial position and market potential.
Finally, the stock's current price, as of the previous close, was $0.46, which is near its 52-week low, suggesting a period of undervaluation or investor skepticism. This price point could be of interest to investors looking for entry points into the stock, especially in the context of the company's recent moves to secure its financial footing and focus on growth initiatives.
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