Business Context and Reporting Period
Company: 22nd Century Group, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: March 20, 2026
Event: Entry into a Material Definitive Agreement for a registered direct offering of Series B Convertible Preferred Stock and Warrants.
Key Financial Metrics and Transaction Details
- Total Offering Size: Up to $20.0 million in Series B Convertible Preferred Stock and Warrants.
- Initial Close Amount: Approximately $16.0 million.
- Second Close Amount: Up to $4.0 million (subject to investor request or company call under specific conditions).
- Stated Value: $1,000 per share of Series B Preferred Stock.
- Conversion Price: Fixed at $3.57 per share, or alternatively at a 15% discount to the lowest 20-day VWAP, subject to a floor price.
- Warrant Terms: 100% coverage, exercise price of $3.57, 5-year term.
- Placement Agent Fees: 3.0% on the first $9.65 million; 6.0% on remaining proceeds; 6.0% on cash warrant exercises; plus expense reimbursement up to $35,000.
- Net Proceeds (Initial Close): Approximately $5.7 million after fees, expenses, and the repurchase of Series A Preferred Stock.
Material Changes and Use of Proceeds
The filing details a significant capital raise intended to restructure the company's capital stack and improve liquidity.
- Debt Repayment: Proceeds will be used to repurchase at par $9.65 million of outstanding Series A Convertible Preferred Stock issued in August 2025.
- Working Capital: The balance of net proceeds will be used for working capital and general corporate purposes.
- Restrictions: The company is prohibited from issuing securities senior to or pari passu with the Series B Preferred Stock. A lock-up on new equity issuances applies for 30 days post-closing, with limited exceptions for restricted stock and management grants.
Outlook, Risks, and Management Commentary
- Closing Timeline: The Initial Close is expected on March 24, 2026, subject to customary conditions.
- Future Financing Rights: Investors contributing at least $2.0 million have a right of first refusal to participate in 50% of future equity offerings for 9 months after the Series B stock is no longer outstanding.
- Liquidity Risks: There is no established trading market for the Series B Preferred Stock, and the company does not intend to list it, limiting liquidity for these specific securities.
- Anti-Dilution Protections: The Series B stock and Warrants include anti-dilution provisions for future issuances below the conversion/exercise price, though the Warrant protection does not apply to conversions of the Series B stock.
- Redemption: The company may redeem the Series B stock at 110% of stated value after six months.
Investor Verification Checklist
- Verify the exact closing date of the Initial Close (expected March 24, 2026) and the actual amount raised.
- Confirm the successful repurchase of the $9.65 million Series A Convertible Preferred Stock.
- Monitor the trading volume and price of Common Stock to assess the likelihood of the "Second Close" or mandatory conversion triggers (200% of conversion price for 10 days).
- Review the impact of the 15% discount alternative conversion price on potential future dilution.
- Check for any subsequent filings regarding the utilization of the At-The-Market (ATM) offering program, which is capped at $250,000 per week.