Business Context and Reporting Period
Company: 22nd Century Group, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 29, 2014
Event: Completion of the acquisition of NASCO Products, LLC, a federally licensed tobacco product manufacturer and participant in the Master Settlement Agreement (MSA).
Key Financial Metrics
This filing reports a specific transaction rather than periodic financial results. Consequently, revenue, profit, cash flow, margins, debt, and liquidity metrics for the reporting period are not provided in this document.
Transaction Consideration:
- Cash Payment: $250,000
- Equity Issuance: 640,000 unregistered shares of common stock
- Contingency: Purchase price subject to potential reduction for any unpaid liabilities of NASCO.
Material Changes
The primary material change is the closing of the acquisition of NASCO Products, LLC on August 29, 2014. This transaction was contingent upon obtaining consents from the Settling States of the MSA to amend NASCO's adherence agreement. On the closing date, 22nd Century Group, Inc. became a signatory to the amended adherence agreement, finalizing the transfer of all issued and outstanding membership interests of NASCO.
Guidance, Outlook, and Risks
Management Commentary: The Company issued a press release on September 2, 2014, announcing the closing of the transaction. The shares issued were exempt from registration under Section 4(2) of the Securities Act of 1933.
Risks and Contingencies: The purchase price is subject to reduction based on unpaid liabilities of NASCO. The transaction summary is qualified in its entirety by the Membership Interest Purchase Agreement, as amended.
Investor Verification Checklist
- Verify the final purchase price after any adjustments for unpaid NASCO liabilities.
- Review the full text of the Membership Interest Purchase Agreement (as amended) for additional terms and conditions.
- Confirm the impact of the 640,000 new shares on existing shareholder dilution.
- Examine the September 2, 2014 press release (Exhibit 99.1) for further strategic details regarding the tobacco manufacturing business.