22nd Century (NASDAQ:XXII) Group, Inc. (NASDAQ:XXII), a company specializing in cigarette manufacturing, has received a warning from NASDAQ due to its stock price falling below the required minimum. The notice, dated Monday, July 16, 2024, indicated that the company's common stock did not meet the NASDAQ Capital Market's minimum closing bid price of $1.00 per share over the last 30 consecutive business days.
The current situation does not immediately affect the trading of 22nd Century Group's shares. The company has been given 180 calendar days, until January 13, 2025, to regain compliance. To achieve this, the stock must close at or above $1.00 per share for at least 10 consecutive business days.
Should the company fail to meet the NASDAQ's minimum bid price requirement by the given deadline, it may be eligible for an additional 180-day grace period. However, to qualify for this extension, 22nd Century Group must meet all other NASDAQ Capital Market initial listing standards, with the exception of the bid price, and must notify NASDAQ of its intent to correct the price deficiency.
This announcement comes as a challenge for 22nd Century Group, which is incorporated in Nevada and has its principal executive office in Mocksville, North Carolina. The company, known previously as Touchstone Mining LTD before a name change in December 2005, is now tasked with addressing the stock price issue to maintain its listing on the NASDAQ exchange.
In other recent news, 22nd Century Group, a plant biotechnology entity, has been making strategic moves to improve its financial standing. The company has been granted an extension by Nasdaq to regain compliance with a key listing rule, providing additional time to address its equity deficit.
On a different note, the President of Tobacco at 22nd Century Group, John Miller, has announced his resignation. Miller was instrumental in the successful launch and distribution of the VLN® product line and the expansion of the company's contract manufacturing operations.
In terms of fiscal management, 22nd Century Group has taken steps to reduce its debt. The company entered into a binding agreement with JGB Capital to eliminate $2.3 million in debt, issuing shares of its common stock and pre-funded warrants in exchange. Furthermore, it has restructured its debt with Omnia, a move expected to strengthen its balance sheet and increase shareholder equity.
InvestingPro Insights
In light of 22nd Century Group's recent warning from NASDAQ, investors may consider various financial metrics and analyst insights to gauge the company's current standing and future prospects. According to InvestingPro data, 22nd Century Group has a market capitalization of $6.18 million and has experienced a significant revenue decline of 36.57% in the last twelve months as of Q1 2024. Additionally, the company's gross profit margin was notably negative at -50.91% during the same period, which aligns with the challenges it faces.
InvestingPro Tips suggest that 22nd Century Group operates with a substantial debt burden and analysts do not expect the company to be profitable this year. Moreover, the company's short-term obligations exceed its liquid assets, which could pose a risk to its financial stability. These factors are critical for investors to consider, especially in light of the NASDAQ compliance issue.
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