22nd Century Group (XXII)

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At the time of the annual letter to shareholders in March, 22nd Century announced a decision to reallocate resources away from sales and marketing to regulatory affairs. The company generated $12 million in sales last year and still projected a sales increase in 2017 due to signed deals in the pipeline. The term "greatly exceed" is now being replaced with a sales target in excess of $16 million for 2017 and significantly beyond $20 million by 2018. Even more important, the goal is for the manufacturing factory to reach cash flow positive next year, providing the company a business outlet to offset some of the risks surrounding obtaining FDA approvals. Fellow contributor Samuel Rae recently outlined more details on the company's background and the potential issues with the FDA now in charge of approving products containing nicotine. The recent shift in regulatory authority makes the impact to 22nd Century difficult to predict.

22nd Century: No Harm Owning This Stock - 22nd Century Group, Inc. (NYSEMKT:XXII) | Seeking Alpha

For a small plant biotech firm, one shouldn't be surprised that 22nd Century is burning cash. For Q1, the cash balance dipped by about $2.7 million. The company ended March with $10.7 million cash on the balance sheet and the company suggests enough funds exist to fund operations until 2018. 22nd Century last raised funds back in October 2016 by selling shares and warrants for net proceeds of $11 million. The offering included 8.5 million common shares and 4.25 million warrants with an exercise price of $1.45. As well, the company raised about $10 million in a couple of other equity offerings in 2016.

22nd Century: No Harm Owning This Stock - 22nd Century Group, Inc. (NYSEMKT:XXII) | Seeking Alpha