22nd Century Group, Inc. Announces Major Corporate Actions: Reverse Stock Split, Warrant Inducement, and Preferred Stock Redemption
Key Points Investors Must Know
- Reverse Stock Split: The Company is implementing a 1-for-20 reverse stock split of its common shares, effective June 12, 2026.
- Warrant Inducement Agreement: The Company entered into an inducement agreement to encourage the exercise of outstanding warrants.
- Preferred Stock Redemption: Simultaneous with warrant exercise, the Company is redeeming a significant portion of its Series B Preferred Stock.
- NASDAQ Compliance: The reverse split is designed to restore compliance with the NASDAQ Capital Market continued listing requirements.
- Unregistered Securities: New warrants and underlying shares are unregistered and may be subject to resale restrictions.
Detailed Breakdown
1. Reverse Stock Split
On June 10, 2026, 22nd Century Group, Inc. announced that it will effect a 1-for-20 reverse stock split of its outstanding common stock. The reverse split will take effect at 12:01 a.m. Eastern Time on June 12, 2026. Every 20 shares of the Company’s issued and outstanding common stock will automatically convert into 1 share. Importantly, no fractional shares will be issued. Instead, any fractional share resulting from the split will be rounded up to the next whole share.
Why is this important? The reverse split is being implemented solely to enable the Company to quickly restore compliance with the NASDAQ Capital Market’s minimum bid price requirement, a critical factor for maintaining its public listing. Delisting from NASDAQ could materially impact the liquidity and valuation of the Company’s shares.
- Shareholders holding shares in brokerage accounts will see the split automatically reflected; no action is required.
- Shareholders with paper certificates may, but are not required to, exchange them for new post-split certificates via the transfer agent, Continental Stock Transfer & Trust Company.
- All outstanding options, warrants, and Series B Preferred Stock convertible to common stock will be adjusted proportionally to reflect the split.
Potential Price Sensitivity: Reverse splits often affect share prices and may be interpreted by the market as a sign of financial distress or a strategic effort to boost the share price above exchange minimums.
2. Warrant Inducement and Preferred Stock Redemption
The Company has entered into a warrant inducement transaction with certain holders of its outstanding warrants. Under this arrangement:
- Warrant holders were incentivized to exercise their existing warrants for cash.
- As a result, the Company received approximately \$462,800 in gross cash proceeds.
- Additionally, the Company redeemed \$2,010,000 in Series B Preferred Stock (2,010 shares) held by the exercising parties, reducing the outstanding Series B Preferred Stock to 8,050 shares.
- In exchange for early exercise, holders received new inducement warrants (the “Inducement Warrants”).
Warrant and Share Terms: The Inducement Warrants are not registered under the Securities Act and may only be resold under an effective registration statement or an exemption from registration. The Company has committed to seek shareholder approval for the issuance of these warrants and register the underlying shares for resale.
Potential Price Sensitivity: The cash proceeds strengthen the Company’s balance sheet and the reduction in preferred stock liabilities may be viewed positively. However, inducement warrants could lead to further dilution for common shareholders if exercised.
3. Amendments to Charter Documents
The Company will file a Certificate of Amendment to its Restated Articles of Incorporation in Nevada to effectuate the reverse stock split. The amendment does not affect the par value or the number of authorized shares, only the number of issued and outstanding shares.
The Company has committed to maintaining its NASDAQ listing and will promptly seek to secure listing approval for all new shares issued under the inducement warrants.
What Shareholders Should Watch
- Reverse Split Implementation: Monitor how the market reacts to the reverse split and whether the Company regains compliance with NASDAQ listing standards.
- Potential Dilution: The exercise of inducement warrants could result in future dilution. Shareholders should review warrant terms and the Company’s filings for details.
- Financial Position: The recent cash inflow and preferred stock redemption have immediate impacts on the balance sheet.
- No Fractional Shares: Any fractional shares post-split will be rounded up, which may have minor effects on individual holdings.
- Unregistered Securities: The new warrants and their underlying shares are unregistered and subject to resale limitations until registration is completed.
Exhibits and Further Information
- Certificate of Amendment to Restated Articles of Incorporation
- Form of Inducement Warrant
- Form of Inducement Letter
