# EDGAR Filing Document

**Accession Number:** 0001347858
**File Stem:** 0001104659-23-028513
**Filing Date:** 2023-3
**Character Count:** 22276
**Document Hash:** 55b32e6441d375bf1337ec4d9549ed62
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-028513.hdr.sgml**: 20230303

**ACCESSION NUMBER**: 0001104659-23-028513

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 13

**CONFORMED PERIOD OF REPORT**: 20230227

**ITEM INFORMATION**: Entry into a Material Definitive Agreement

**ITEM INFORMATION**: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

**ITEM INFORMATION**: Unregistered Sales of Equity Securities

**ITEM INFORMATION**: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230303

**DATE AS OF CHANGE**: 20230303

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** 22nd Century Group, Inc.
- **CENTRAL INDEX KEY:** 0001347858
- **STANDARD INDUSTRIAL CLASSIFICATION:** CIGARETTES [2111]
- **IRS NUMBER:** 980468420
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-36338
- **FILM NUMBER:** 23705858

**BUSINESS ADDRESS:**
- **STREET 1:** 8560 MAIN STREET
- **STREET 2:** SUITE 4
- **CITY:** WILLIAMSVILLE
- **STATE:** NY
- **ZIP:** 14221
- **BUSINESS PHONE:** (716) 270-1523

**MAIL ADDRESS:**
- **STREET 1:** 8560 MAIN STREET
- **STREET 2:** SUITE 4
- **CITY:** WILLIAMSVILLE
- **STATE:** NY
- **ZIP:** 14221

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Touchstone Mining LTD
- **DATE OF NAME CHANGE:** 20051222

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the**

**Securities Exchange Act of 1934**

**Date of Report (Date of earliest event reported): February 27, 2023**

**22nd Century Group, Inc.**

(Exact Name of Registrant as Specified in Charter)

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| | | |
|:---|:---|:---|
| **Nevada** | **001-36338** | **98-0468420** |
| (State or Other Jurisdiction of <br> Incorporation) | (Commission File Number) | (I.R.S. Employer<br> Identification No.) |

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| | |
|:---|:---|
| **500 Seneca Street, Suite 507, Buffalo, New York**<br> (Address of Principal Executive Office) | **14204**<br> (Zip Code) |

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Registrant's telephone number, including area code: **(716) 270-1523**

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

◻ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

◻ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

◻ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

◻ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

**Securities Registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading <br> Symbol** | **Name of Exchange on Which Registered** |
| Common Stock, $0.00001 par value per share | XXII | Nasdaq Capital Market |

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. &nbsp;&nbsp;&nbsp;&nbsp;◻

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|:---|:---|
| **Item 1.01** | **Entry into a Material Definitive Agreement.** |

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*Securities Purchase Agreement*

On March 3, 2023, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with each of the purchasers party thereto (each, including its successors and assigns, a "Purchaser" and collectively, the "Purchasers") and JGB Collateral, LLC, a Delaware limited liability company, as collateral agent for the Purchasers (the "Agent"). Pursuant to the Purchase Agreement, the Company agreed to sell to the Purchasers (i) 7% Original Issue Discount Senior Secured Debentures (the "Debentures") with an aggregate principal amount of $21,052,632 and (ii) warrants to purchase up to 5,000,000 shares of the Company's common stock, par value $0.00001 per share (the "Common Stock"), for an exercise price of $1.275 per share, a 50% premium to the VWAP on the closing date (the "JGB Warrants"), subject to adjustments as set forth in the JGB Warrants, for a total purchase price of $20,000,000. The Purchase Agreement contains customary representations, warranties and covenants. The transactions contemplated by the Purchase Agreement were consummated on March 3, 2023.

*Debentures*

The Debentures bear interest at a rate of 7% per annum, payable monthly in arrears as of the last trading day of each month and on the maturity date. The Debentures mature on March 3, 2026. At the Company's election, subject to certain conditions, interest can be paid in cash, shares of the Company's common stock, or a combination thereof. The Debentures are subject to an exit payment equal to 5% of the original principal amount, or $1,052,632, payable on the maturity date or the date the Debentures are paid in full (the "Exit Payment"). Any time after, March 3, 2024, the Company may irrevocably elect to redeem all of the then outstanding principal amount of the Debentures for cash in an amount equal to the entire outstanding principal balance, including accrued and unpaid interest, the Exit Payment and a prepayment premium in an amount equal to 3% of the outstanding principal balance as of the prepayment date (collectively, the "Prepayment Amount"). Upon the entry into a definitive agreement that would effect a change in control (as defined in the Debentures) of the Company, the Agent may require the Company to prepay the outstanding principal balance in an amount equal to the Prepayment Amount. Commencing on March 3, 2024, at its option, the holder of a Debenture may require the Company to redeem 2% of the original principal amount of the Debentures per calendar month which amount may at the Company's election, subject to certain exceptions, be paid in cash, shares of the Company's common stock, or a combination thereof.

The Debentures contain customary representations, warranties and covenants including among other things and subject to certain exceptions, covenants that restrict the Company from incurring additional indebtedness, creating or permitting liens on assets, making or holding any investments, repaying outstanding indebtedness, paying dividends or distributions and entering into transactions with affiliates. In addition, the Company is required to maintain at least $7,500,000 on its balance sheet in a separate account and maintain certain quarterly revenue targets. The number of shares of Company Common Stock issuable under the Debentures is subject to any limitations imposed by the relevant stock exchange on which the Company's Common Stock is traded unless shareholder approval is obtained.

The Company's obligations under the Debentures can be accelerated upon the occurrence of certain customary events of default. In the event of a default and acceleration of the Company's obligations, the Company would be required to pay the Prepayment Amount, liquidated damages and other amounts owing in respect thereof through the date of acceleration.

*JGB Warrants*

The JGB Warrants are exercisable for five years from September 3, 2023, at an exercise price of $1.275 per share, a 50% premium to the VWAP on the closing date, subject, with certain exceptions, to adjustments in the event of stock splits, dividends, subsequent dilutive offerings and certain fundamental transactions, as more fully described in the JGB Warrant.

The Company is obligated to register the shares of Company Common Stock issuable upon exercise of the JGB Warrants pursuant to the terms of the Purchase Agreement.

The foregoing description of the terms of the Purchase Agreement, Debentures and JGB Warrants and the transactions contemplated thereby do not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, form of Debenture and form of JGB Warrant, which are included as Exhibits 10.1, 4.1 and 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

*Omnia Subordinated Promissory Note*

 

On March 3, 2023, the Company executed a Subordinated Promissory Note (the "Subordinated Note") with a principal amount of $2,864,767 in favor of Omnia Ventures, LP ("Omnia"). The Subordinated Note refinanced the 12% Secured Promissory Note with a principal amount of $1,000,000 dated as of October 29, 2021 payable to Omnia (the "October Note") and the 12% Secured Promissory Note with a principal amount of $1,500,000 dated as of January 14, 2022 payable to Omnia (the "January Note", and together with the October Note, the "Original Notes"), which were assumed by the Company in connection with the acquisition of GVB Biopharma.

Under the terms of the Subordinated Note, the Company is obligated to make interest payments in-kind (the "PIK Interest"). The PIK Interest accrues at a rate of 26.5% per annum, payable monthly. The Company is not permitted to prepay all or any portion of the outstanding balance on the Subordinated Note prior to maturity.

The Subordinated Note includes customary event of default provisions.

The Subordinated Note is subordinated to the Debenture pursuant to a Subordination Agreement between the Company, the Agent and Omnia.

*Omnia Warrants*

 

In connection with the Subordinated Note, the Company issued to Omnia, warrants to purchase up to 675,000 shares of the Company's Common Stock (the "Omnia Warrants"). The Omnia Warrants are exercisable for seven years from September 3, 2023, at an exercise price of $0.855 per share, subject, with certain exceptions, to adjustments in the event of stock splits, dividends, subsequent dilutive offerings and certain fundamental transactions, as more fully described in the Omnia Warrants.

The foregoing description of the terms of the Subordinated Promissory Note and Omnia Warrants and the transactions contemplated thereby do not purport to be complete and is qualified in its entirety by reference to the Subordinate Promissory Note and the Form of Common Stock Purchase Warrant to Omnia, which will be filed as exhibits to the Company's Annual Report on Form 10- K for the year ended December 31, 2022.

On March 3, 2023, the Company issued a press release relating to the transactions described herein which is attached hereto as Exhibit 99.1.

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|:---|:---|
| **Item 2.03** | **Creation of A Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.** |

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The disclosure required by this item is included in Item 1.01 of this Current Report on Form 8-K and is incorporated herein by reference.

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|:---|:---|
| **Item 3.02** | **Unregistered Sales of Equity Securities.** |

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The disclosure required by this Item 3.02 related to the issuance of the JGB Warrants and Omnia Warrants (the "Warrants") is included in Item 1.01 of this Current Report on Form 8-K and is incorporated herein by reference. The issuance of the Warrants was exempt from registration under the Securities Act pursuant to Section 4(a)(2) thereof and Rule 506(b) of Regulation D promulgated thereunder.

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|:---|:---|
| **Item 5.02(c):** | **Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers** |

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On February 27, 2023, the Company promoted Peter Ferola to the position of Chief Legal Officer, effective immediately. Mr. Ferola, age 54, has served as our General Counsel since November 2022. Mr. Ferola has over 30 years of progressive leadership experience in business management, legal affairs and corporate governance. Most recently, he served as Project Counsel in Greenberg Traurig LLP's corporate securities group. From 2011 to 2020 he served as Senior Vice President and General Counsel at BioTelemetry, Inc. (NASDAQ: BEAT). From 2009 to 2011, Mr. Ferola served as Vice President, General Counsel and Secretary of Nipro Diagnostics, Inc. (formerly Home Diagnostics, Inc., NASDAQ: HDIX). Prior to joining Home Diagnostics, Mr. Ferola worked as a corporate and securities attorney with Greenberg Traurig, LLP and with Dilworth Paxson, LLP in Washington, D.C., focusing on mergers, acquisitions, public securities offerings and corporate governance matters. From 1989 to 2002, Mr. Ferola worked in executive management roles for an American Stock Exchange listed company, most recently serving as Vice President—Administration and Corporate Secretary, overseeing the company's administrative functions, legal matters and investor relations. Mr. Ferola earned a Bachelor of Science and Juris Doctor degree from Nova Southeastern University and a Master of Laws in Securities and Financial Regulation from Georgetown University Law Center. Mr. Ferola has authored numerous articles on corporate and securities laws, with a particular focus on audit committees and regulations implemented in the wake of the Sarbanes-Oxley Act. Mr. Ferola also serves as a FINRA arbitrator and a panelist on the NASDAQ Listing Qualifications Panel.

Mr. Ferola is party to an employment agreement with the Company for an initial term until October 1, 2025. Mr. Ferola currently earns a base salary of $422,000 and is eligible for an annual cash bonus and annual equity award each valued at up to 100% of his current base salary. If Mr. Ferola's employment is terminated by the Company without Cause or for Good Reason (as such terms are defined in the employment agreement), then he will be entitled to a severance benefit in the form of a continuation of his then-base salary for a period of 12 months following the effective date of termination (plus continuing health care coverage during such period).

The foregoing summary of the terms of the employment agreement is subject to, and qualified in its entirety by, the employment agreement, which will be filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

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|:---|:---|
| **Item 9.01(d)** | **Financial Statements and Exhibits.** |

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[Exhibit 99.1](tm238522d1_ex99-1.htm) [Press Release issued on March 3, 2023.](tm238522d1_ex99-1.htm) <br>Exhibit 104 Cover Page Interactive Data File (Formatted as Inline XBRL and included as Exhibit 101)

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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| | |
|:---|:---|
|  | **22ND CENTURY GROUP, INC.**<br>/s/ Peter Ferola |
| Date: March 3, 2023 | Peter Ferola |
|  | Chief Legal Officer |

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## Exhibit 99.1

**Exhibit 99.1**

**22nd Century Group (XXII) Secures $21 Million Debt Financing to Expand Working Capital for Growth Initiatives**

*Supports Accelerated Expansion of VLN Multi-State Retail Channels, GVB Global Ingredients and CDMO Business*

 

**BUFFALO, N.Y., March 3, 2023** — 22nd Century Group, Inc. (Nasdaq: <u>XXII</u>), the world's leading biotechnology company dedicated to improving health with reduced nicotine tobacco and advanced plant technologies in both hemp/cannabis and hops, today announced a new $21 million senior secured debenture financing to support increased working capital needs related to the significant growth outlook in both its VLN® and GVB business lines. The new three-year financing was issued at 5% original issuance discount (OID), will bear cash interest at a rate of 7% per annum, and commence principal amortization in the second year at a rate of 2% of the original balance per month. The Company has the option to redeem the facility early starting in the second year.

"We anticipate significant revenue growth in both of our core business lines, and believe this financing will provide the appropriate working capital for the year ahead," said Hugh Kinsman, chief financial officer. "New retail partners already in talks to launch VLN® in additional states as part of our national-scale distribution capabilities are expected to l increase our manufacturing and inventory requirements. Additionally, the continued growth in customer demand at GVB has increased our capital needs for bulk ingredients and inventory going forward."

For its VLN® products, the Company recently announced the first of multiple national-scale distribution partners that will begin forward stocking of VLN® inventory at warehouses located across the country. These new distribution partners support several multi-state retail chains seeking to launch sales of 22nd Century's reduced nicotine content cigarette products. The company is on track to launch VLN® in up to 18 states by the end of 2023 with an expanded list of retail partners..

Said John Miller, president of tobacco products at 22nd Century Group, "Our VLN® launch has continued to evolve and expand well beyond our initial plan based on the strong consumer and industry response to our unique VLN® reduced nicotine content cigarettes. The addition of national-level distribution partners was driven by a strategic pivot to collaborate with several retail chains seeking to launch our VLN® brand on a multi-state basis in 2023, including the largest U.S. state markets we have targeted. It is important to ensure adequate working capital to support the stocking and inventory needs associated with these programs as they begin to roll out."

22nd Century's GVB business is also planning for rapid expansion in 2023, with both traditional ingredient sales activities and new CDMO opportunities to extend its leadership position in the growing hemp/cannabis industry.

"Customer demand for our high-quality CBD extracts and ingredients has scaled steadily, even after our Grass Valley fire last November. We believe that GVB is now the largest buyer of bulk CBD crude extract and seller of finished ingredients in North America. Our dominant position in ingredients has also increased demand for our CDMO capabilities with multiple leading consumer CPBD product brands wanting to centralize with a complete, vertically integrated solution from product design to finished goods and even retail category management through our increasing distribution capabilities," said James A. Mish, chief executive officer.

In conjunction with the new credit facility, 22nd Century has also extended the maturity of $2.7 million in legacy seller notes assumed with its acquisition of GVB Biopharma to mid-2024. The Company will file a Form 8-K with the Securities and Exchange Commission with complete details of the new debt facility and the terms of the refinanced legacy seller notes.

**About 22nd Century Group, Inc.**

22nd Century Group, Inc. (Nasdaq: <u>XXII</u>) is a leading biotechnology company focused on utilizing advanced alkaloid plant technologies to improve health and wellness through tobacco harm reduction, reduced nicotine tobacco, hemp/cannabis and hops. With dozens of patents allowing it to control nicotine biosynthesis in the tobacco plant, the Company has developed proprietary reduced nicotine content (RNC) tobacco plants and cigarettes, which have become the cornerstone of the <u>FDA's Comprehensive Plan</u> to address the widespread death and disease caused by smoking. The Company received the first and only FDA Modified Risk Tobacco Product (MRTP) authorization of a combustible cigarette in December 2021. In tobacco, hemp/cannabis and hop plants, 22nd Century uses modern plant breeding technologies, including genetic engineering, gene-editing, and molecular breeding to deliver solutions for the life science and consumer products industries by creating new, proprietary plants with optimized alkaloid and flavonoid profiles as well as improved yields and valuable agronomic traits.

Learn more at <u>xxiicentury.com</u>, on <u>Twitter</u>, on <u>LinkedIn</u>, and on <u>YouTube</u>.

Learn more about VLN<sup>®</sup> at tryvln.com.

**Cautionary Note Regarding Forward-Looking Statements**

Except for historical information, all of the statements, expectations, and assumptions contained in this press release including statements relating to significant future revenue growth in the VLN and GVB business lines, increase in working capital needs and sufficiency of financing to meet those increased needs, expected increase in manufacturing and inventory requirements, the expected launch of VLNs in 18 states by the end of 2023 and belief that GVB is the largest buyer of bulk CBD crude extract and seller of finished ingredients in North America, are forward-looking statements. Forward-looking statements typically contain terms such as "anticipate," "believe," "consider," "continue," "could," "estimate," "expect," "explore," "foresee," "goal," "guidance," "intend," "likely," "may," "plan," "potential," "predict," "preliminary," "probable," "project," "promising," "seek," "should," "will," "would," and similar expressions. Actual results might differ materially from those explicit or implicit in forward-looking statements. Important factors that could cause actual results to differ materially are set forth in "Risk Factors" in the Company's Annual Report on Form 10-K filed on March 1, 2022, and in the Company's Quarterly Report filed on November 8, 2022. All information provided in this release is as of the date hereof, and the Company assumes no obligation to and does not intend to update these forward-looking statements, except as required by law.

**Investor Relations & Media Contact**

Matt Kreps

22nd Century Group, Inc.

Investor Relations

<u>mkreps@xxiicentury.com</u>

214-597-8200