MOCKSVILLE - 22nd Century (NASDAQ:XXII) Group, Inc. (NASDAQ: XXII), a biotechnology company specializing in tobacco harm reduction, has announced a strategic move to improve its financial position by reducing its outstanding debt.
The company has entered into a binding letter of agreement with JGB Capital to eliminate $2.3 million in debt. In exchange for the debt relief, 22nd Century Group will issue approximately 1.375 million shares of its common stock and pre-funded warrants to JGB Capital.
The agreement also allows the company to defer monthly amortization payments for two additional months, effectively postponing any further principal repayment until August 2024. This arrangement is part of the company's broader strategy to strengthen its balance sheet and achieve cash flow positivity by the first quarter of 2025.
Larry Firestone, Chairman and CEO of 22nd Century Group, emphasized the importance of this agreement, stating, "This transaction not only improves our balance sheet but also preserves our cash resources for commercial use as we advance towards becoming cash flow positive." Firestone also noted the company's progress in commercial programs, including new contracts and distribution agreements that are expected to boost second-quarter sales.
The securities exchanged in this private placement are exempt from registration under the Securities Act of 1933, as per Section 4(a)(2) and/or Rule 506 of Regulation D, indicating that the transaction did not involve a public offering. The details of this transaction are disclosed in an 8-K filed with the Securities and Exchange Commission on May 10, 2024.
The information in this article is based on a press release.
InvestingPro Insights
In light of 22nd Century Group's recent strategic move to improve its financial position, InvestingPro data reveals a nuanced picture of the company's current standing. The Market Cap (Adjusted) of 22nd Century Group stands at a modest $12.08 million USD, suggesting a relatively small scale in the biotechnology sector. This is further reflected in the company's Revenue over the last twelve months as of Q4 2023, totaling $21.79 million USD, which marks a decrease of 21.85% compared to the previous period. The company's Gross Profit Margin during the same timeframe was -39.91%, indicating challenges in translating sales into gross profit.
An InvestingPro Tip points out that 22nd Century Group operates with a significant debt burden and may have trouble making interest payments on its debt. This aligns with the company's recent actions to restructure its debt, which may be seen as a proactive step towards managing its financial obligations. Another tip suggests that analysts do not anticipate the company will be profitable this year, which may be of particular interest to investors considering the company's long-term viability.
For those looking to delve deeper into the financial health and future prospects of 22nd Century Group, InvestingPro offers a wealth of additional tips. In fact, there are 17 more InvestingPro Tips available, which can provide a comprehensive analysis of the company's performance and potential. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to these valuable insights.
It is also noteworthy that the company's stock price has experienced significant volatility, with the Price, Previous Close at $1.53 USD. This could be a factor for potential investors to consider, especially in the context of the company's efforts to stabilize its financial position and pursue growth through its commercial programs.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.