In a decisive move, 22nd Century (NASDAQ:XXII) Group, Inc. (NASDAQ:XXII), a company specializing in cigarette manufacturing with a market capitalization of just $3.8 million, received approval from its shareholders for a series of significant proposals during a special meeting held today. The company's stock has faced significant challenges, trading at $0.09, down nearly 98% over the past year.
According to InvestingPro analysis, the stock appears undervalued despite these challenges, with 16 additional key insights available to subscribers. Among the approved items, the most notable was an amendment to the company's Articles of Incorporation to effect a reverse stock split of its common stock. This strategic step is aimed at ensuring compliance with Nasdaq Listing Rules.
The approved reverse stock split will allow the Board of Directors to select a ratio ranging from 1-for-2 to 1-for-250. The exact ratio will be determined at the Board's discretion. The move could potentially increase the market price of the company's common stock, making it more attractive to investors and maintaining its listing status on the Nasdaq Capital Market.
InvestingPro data reveals concerning fundamentals, including a weak financial health score of 0.77 and a debt-to-equity ratio of 2.69, highlighting the urgency of these corporate actions.
Additionally, shareholders sanctioned the issuance of shares of common stock upon the exercise of various warrants issued throughout 2024. These warrants, referred to as the Inducement Warrants, August Warrants, September 13 Warrants, September 27 Warrants, and October 11 Warrants, were all approved for issuance in accordance with Nasdaq Listing Rules.
Furthermore, an amendment to the outstanding convertible Debentures, known as the JGB Amendment, was also approved. This amendment is pursuant to Rules 5635(b) and 5635(d) of the Nasdaq Stock Market and suggests modifications to the terms of the existing debt securities.
Lastly, the shareholders agreed to the adjournment of the Special Meeting to a later date if necessary. This would allow for further solicitation and voting on proxies if there are insufficient votes or other concerns related to the previously mentioned proposals.
In other recent news, 22nd Century Group has announced a series of significant developments. The company has altered the terms of a previous agreement with investment entities JGB Partners, LP, JGB Capital, LP, and JGB Capital Offshore Ltd., which involves a Letter Agreement to amend the Securities Purchase Agreement and associated debentures. This agreement allows the company to reset the conversion price of the debentures, contingent upon shareholder approval.
In financial maneuvers, 22nd Century Group has successfully met the NASDAQ Capital Market's minimum shareholders' equity requirement, ensuring its continued listing on the exchange. This was achieved through a series of actions such as issuing shares of common stock to settle subordinated debt and the sale of additional shares. The company also secured approximately $3.48 million in an equity sale involving 6.1 million shares of common stock.
In terms of business expansion, 22nd Century Group has entered into new agreements to increase its manufacturing volumes by producing filtered cigar products for an existing customer and introducing its Moonlight brand cigarettes to the Southeast Asian market. Additionally, the company plans to extend the distribution of its VLN® cigarettes, which contain 95% less nicotine than standard cigarettes, aiming to increase its footprint to over 270,000 retail outlets nationwide.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.