In a recent development, 22nd Century Group (NASDAQ:XXII), a plant biotechnology company, has received an extension from the Nasdaq Stock Market to regain compliance with a key listing rule. On Monday, the company announced that Nasdaq had reviewed its compliance plan and granted a 180-day extension, until October 1, 2024, to meet the minimum stockholders' equity requirement.
The issue first arose when Nasdaq notified 22nd Century Group on April 4, 2024, that it did not comply with Nasdaq Listing Rule 5550(b)(1). The rule requires listed companies to maintain a minimum stockholders' equity of $2.5 million. As of December 31, 2023, the company reported a stockholders' equity deficit of approximately $8.41 million. Additionally, the company did not meet the alternative compliance standards based on the market value of listed securities or net income from continuing operations.
In response, 22nd Century Group submitted a plan to regain compliance on May 17, 2024. The approval of this plan has resulted in the extension, providing the company with additional time to address its equity deficit. If the company fails to demonstrate compliance by the October 1 deadline, it risks being delisted from the Nasdaq exchange. However, if delisting proceedings commence, the company will have the right to appeal the decision before a Nasdaq hearings panel.
22nd Century Group has expressed its intention to take all reasonable measures to regain compliance with the Nasdaq listing requirement. Despite these intentions, the company has acknowledged that there is no guarantee of achieving compliance, maintaining other listing requirements, or succeeding in an appeal if delisted.
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