CLARENCE, N.Y.--(BUSINESS WIRE)--22nd Century Group, Inc. (NYSE MKT: XXII), a plant biotechnology company that is a leader in tobacco harm reduction, announced today that warrants previously issued by the Company to Crede CG III, Ltd. to purchase an aggregate of 2,250,000 shares of common stock of the Company expired on September 29, 2016, which resulted in a decrease of approximately 19.1% of the total number of shares of Company common stock purchasable by warrants. Further, as previously reported, two separate Crede Warrants to purchase an aggregate of 2,000,000 additional shares of the Company’s common stock will expire without exercise due to Crede’s non-performance in a prior joint venture with the Company.
On September 29, 2014, the Company issued to Crede the now-expired Tranche 1A Warrant to purchase 1,250,000 shares of Company common stock at an exercise price of $3.36 per share and the now-expired Tranche 1B Warrant to purchase 1,000,000 shares of Company common stock at an exercise price of $2.5951 per share pursuant to the terms of a now-expired consulting agreement and subsequently terminated joint venture agreement with Crede. As previously disclosed, the Company remains in litigation with Crede in the United States District Court for the Southern District of New York (“SDNY”) regarding Crede’s claim for the issuance of shares of the Company’s common stock under an exchange provision of the Tranche 1A Warrant. On June 14, 2016, after hearing evidence on Crede’s claim, the SDNY Court denied Crede’s request for preliminary relief in the case to allow Crede to exercise its exchange rights, with the SDNY Court determining, among other things, that Crede had not proven a reasonable likelihood that it will prevail on its claims under the Tranche 1A Warrant. In addition, the Company has filed motions to dismiss certain of Crede’s claims and to transfer certain claims to the United States District Court for the Western District of New York located in Buffalo, where the Company’s headquarters are located. The Company intends to continue to vigorously defend itself in this case and is confident that it will prevail against Crede. If the case continues, the Company also intends to file counterclaims against Crede, against its principal, Terren Peizer, and against several Peizer affiliates, personally.
On September 29, 2014, the Company also issued to Crede a Tranche 2 Warrant and a Tranche 3 Warrant to purchase an aggregate total of 2,000,000 additional shares of Company common stock at an exercise price of $3.3736 per share. Although the Tranche 2 and Tranche 3 Warrants do not expire until September 29, 2019, these warrants are subject to certain vesting conditions related to the Company’s prior joint venture agreement with Crede. Since the Company terminated the joint venture agreement with Crede on June 22, 2015 due to non-performance by Crede, the vesting conditions for the Tranche 2 and Tranche 3 Warrants will never be satisfied and, for that reason, the Company no longer recognizes the Tranche 2 and Tranche 3 Warrants in the Company’s financial statements.
“The expiration of the Tranche 1A and Tranche 1B Warrants is very positive news for our other shareholders,” explained Henry Sicignano, III, President and Chief Executive Officer of 22nd Century Group. “Furthermore, because the Tranche 2 and Tranche 3 Warrants will never become exercisable, an aggregate of 4,250,000 shares of potential dilution from the exercise of all the Crede warrants will be avoided entirely.”
About 22nd Century Group, Inc.
22nd Century is a plant biotechnology company focused on technology which allows it to increase or decrease the level of nicotine in tobacco plants and the level of cannabinoids in cannabis plants through genetic engineering and plant breeding. The Company’s primary mission is to reduce the harm caused by smoking. 22nd Century currently owns or exclusively controls more than 200 issued patents and more than 50 pending patent applications around the world. Visit www.xxiicentury.com for more information.
Cautionary Note Regarding Forward-Looking Statements: This press release contains forward-looking information, including all statements that are not statements of historical fact regarding the intent, belief or current expectations of 22nd Century Group, Inc., its directors or its officers with respect to the contents of this press release, including but not limited to our future revenue expectations. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. We cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these forward-looking statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to reflect actual results, later events or circumstances, or to reflect the occurrence of unanticipated events. You should carefully review and consider the various disclosures made by us in our annual report on Form 10-K for the fiscal year ended December 31, 2015, filed on February 18, 2016, including the section entitled “Risk Factors,” and our other reports filed with the U.S. Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.