22nd Century Group, Inc. (Nasdaq: XXII), a leading
biotechnology company dedicated to improving health with reduced
nicotine tobacco, hemp/cannabis and hops advanced plant
technologies, today announced that it has entered into definitive
agreements with certain investors for the purchase and sale of 11.2
million shares of common stock and warrants at a price of $0.47 per
share in a registered direct offering priced above market. Gross
proceeds to the Company from the registered direct offering are
expected to be $5.3 million, before deducting the placement agent’s
fees and other offering expenses payable by the Company. The
Company intends to use the net proceeds from this offering for the
continued commercial expansion of its VLN® reduced nicotine content
tobacco cigarettes in additional markets, working capital related
to its commercial activities and general corporate
purposes.
“We have rapidly increased availability of our
VLN® products to almost 1,100 stores across 14 states and counting
over the past few weeks, with orders to exceed 2,500-plus stores in
early July, and rapid growth above that figure for the rest of
2023,” said James A. Mish, Chief Executive Officer. “The store
count trajectory is increasingly clear, with approximately 1,500
corporate stores at the #1 convenience store chain in the U.S. are
coming online in early July, plus a growing list of that chain’s
franchise locations across multiple states joining the launch on
strong support from its franchise owners association and
leadership. Further diversifying our store count, we have an
expanding list of additional convenience, military and drug store
chains already scheduling launch dates and markets throughout the
rest of 2023. This rapid multi-state escalation means our working
capital requirements are likewise accelerating quickly to support
the continued success of the rollout, which we now expect will
exceed our original 18 state target for 2023.”
Mish continued, “In addition, our GVB business
continues to post record ingredient volumes, supporting improved
operating results driven by gross profit from our new extraction
facility, the return of gross profit from our in-house distillate
production capability at our new Prineville location, and the onset
of our new, multi-year vertically integrated license and
distribution agreements with two major consumer brands, among other
favorable gains in our hemp/cannabis business. We anticipate
further gross profit increases in this business unit as the year
advances, as well as additional license agreements and other growth
drivers.”
“Putting all of these growth drivers together,
22nd Century is tracking to our full-year outlook of $105 to $110
million in sales, with higher revenue, improved gross profit and
progressively better operating performance in the second half of
2023, ultimately leading to cash positive operations in 2024 as
previously guided,” Mish concluded.
Regarding the offering, Mish stated, “We are
grateful for the continued support of investors in bridging 22nd
Century to our goal of cash positive operations. With our business
at a key inflection point, they have committed to support the
business as needed to ensure we achieve these important goals.”
The Special Equities Group, a division of Dawson
James Securities Inc., acted as the sole placement agent for this
transaction.
The Company has eliminated its at-the-market
offering program.
As part of the transaction, the Company agreed
to issue to the investors warrants to purchase up to 11.2 million
shares of common stock. The warrants have an exercise price of
$0.47 per share, are immediately exercisable and will expire five
years following the date of issuance. In connection with the
offering, the Company also agreed to reduce the exercise price on
the previously issued 11.2 million warrants owned by the investors
participating in the offering from $2.05 to $0.47. The remaining
5.9 million previously issued warrants were not repriced and remain
at an exercise price of $2.05. The closing of the offering is
expected to occur on or about June 22, 2023, subject to the
satisfaction of customary closing conditions.
The securities are being offered by the Company
pursuant to a “shelf” registration statement on Form S-3
previously filed with the Securities and Exchange Commission, or
the SEC, and declared effective by the SEC. The offering will be
made only by means of a prospectus, including a prospectus
supplement, forming a part of the effective registration statement.
A final prospectus supplement and accompanying prospectus relating
to the securities being offered will be filed with the
SEC. Copies of the final prospectus supplement and
accompanying base prospectus may be obtained, when available, for
free by visiting EDGAR on the SEC’s website at www.sec.gov.
Alternatively, you may contact investorrelations@xxiicentury.com
for a copy of these documents or contact our principal executive
offices at 500 Seneca Street, Suite 507, Buffalo, New York 14204,
c/o Corporate Secretary, (716) 270-1523.
This press release shall not constitute an offer
to sell or the solicitation of any offer to buy the securities
discussed herein, nor shall there be any offer, solicitation, or
sale of the securities in any state in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
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 Modified Risk Tobacco Product (MRTP) authorization for
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 Statements
Except 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 9, 2023. 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 ContactMatt
KrepsInvestor Relations22nd Century
Groupmkreps@xxiicentury.com214-597-8200
22nd Century (NASDAQ:XXII)
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