12-17-2013, 01:30 AM
22nd Century Group, Inc. (OTCQB:XXII) today announced that the Company’s warrant exchange, which concluded last Thursday, was a huge success greatly exceeding management’s expectations. The warrant exchange reduced 22nd Century Group’s “derivative warrant liability” by 93 percent and generated gross proceeds of approximately $3.6 million for the company.
As reported last month, the primary purpose of the warrant exchange was to reduce 22nd Century Group’s “derivative warrant liability” through the exercise or amendment of the Company’s outstanding warrants in order for the Company to have sufficient stockholders’ equity to up-list its common stock to a national securities exchange – such as NASDAQ or NYSE. Many institutional investors and retail brokers looking to build a position in 22nd Century Group stock cannot buy OTC Bulletin Board stocks.
As of December 13, 2013, 22nd Century Group had total assets of approximately $12 million, which includes approximately $6.2 million in cash, and only $700 thousand in current liabilities. The Company’s only long-term liability is its “derivative warrant liability,” which due to the warrant exchange has been reduced from $18.6 million to approximately $1.2 million.
22nd Century Group’s $6.2 million cash balance reflects $3.2 million the Company has already invested and paid in full for the equipment at its manufacturing facility. As reported in early December, the Company’s management believes that having its own factory will create tremendous shareholder value since costs will be reduced and control, production and exports of its differentiated tobacco products will be greatly facilitated.
John Brodfuehrer, 22nd Century’s Group’s CFO, stated, “We now have approximately $10 million of net stockholders’ equity, which is more than sufficient to qualify for an up-listing to a national securities exchange.”
22nd Century Group currently has 56,691,897 shares of common stock issued and outstanding, including the approximate 5.5 million shares the Company issued as a result of the warrant exchange. Approximately 5.3 million shares of common stock issued from the warrant exchange were from the exercise of warrants on a cash basis. These shares cannot be sold for 6 months pursuant to Rule 144.
The Company currently has approximately 10.6 million warrant shares outstanding. Of these, 6.25 million have a purchase price of $1.96 to $2.40 and 4.1 million are owned by the Company’s management.
The Company’s Series-A warrant holder, which is an institutional investor, has only 225,798 warrant shares remaining, as compared to approximately 3.67 million warrant shares as of September 30, 2013. There are no Series-B or Series-C warrants outstanding.
Joseph Pandolfino, Founder and CEO of 22nd Century’s Group stated, “We are now well positioned to up-list to a national securities exchange; the only qualification remaining is our share price which we expect to appreciate over the next 60 days since many catalysts are on the horizon as we continue to execute our business plan.”
Chardan Capital Markets, LLC acted as the financial advisor for 22nd Century Group’s warrant exchange.
22nd Century Group Warrant Exchange Eliminates 93% of Warrant Liability - Yahoo Finance