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0 1110

22nd Century Announces Strategic Hire to Facilitate FDA Applications for Modified Risk Tobacco Product Candidates

CLARENCE, N.Y.–(BUSINESS WIRE)–

22nd Century Group, Inc. (NYSE MKT: XXII), a leader in tobacco harm reduction, announced today the appointment of Gregg M. Gellman as the Company’s Director of Business Development and Regulatory Affairs. Hired for his experience in achieving FDA compliance approval for various types of products, Mr. Gellman will be tasked with driving 22nd Century’s regulatory affairs strategies for the Company’s two modified risk cigarettes in development: “BRAND A,” the world’s lowest nicotine tobacco cigarette, and “BRAND B,” the world’s lowest tar-to-nicotine ratio cigarette.

Throughout his career, Mr. Gellman has worked intimately with the FDA to ensure products in his charge are designed and tested to be compliant with all FDA regulations. As a development and medical device manager at Greatbatch, Inc. (NYSE: GB), Mr. Gellman managed the design process and commercialization of multiple FDA-regulated products. Mr. Gellman has also proven himself an innovator in the development of new products and has amassed extensive experience in technical and clinical sales training for products ultimately approved by the FDA. Mr. Gellman is a graduate of the State University of New York at Buffalo and is certified in Quality Systems for Medical Devices (FDA’s QSR and ISO 13485) and in Global Product Submissions Directive Requirements (510(k), PMA, CE Mark).

“Hiring Gregg Gellman represents another important step in 22nd Century’s mission to bring reduced exposure cigarettes to American smokers,” explained Henry Sicignano, III, CEO and President. “Unlike some of our larger competitors, who market their products with implied health claims, 22nd Century is committed to working collaboratively with the FDA to demonstrate that our Very Low Nicotine cigarettes and our Low Tar-to-Nicotine Ratio cigarettes are legitimate – and enormously important – modified risk tobacco products.”

Aiming to become the first company in the world authorized by the FDA to market reduced exposure combustible cigarettes, 22nd Century intends to submit its application for “BRAND A” to the FDA this fall. At the same time, because regulatory pre-approval is not required to label Very Low Nicotine cigarettes outside of the United States, the Company will expand distribution of its MAGIC 0 Very Low Nicotine cigarettes in Europe. As sufficient funds are secured for additional exposure studies, the Company intends to submit in 2016 an application to the FDA for “BRAND B.”

22nd Century’s 185 issued patents make possible the Company’s two modified risk cigarettes in development. Without a license from 22nd Century, no other company can grow, make, or buy 22nd Century’s proprietary Very Low Nicotine tobacco (95% less nicotine content than conventional tobacco), or 22nd Century’s proprietary Very High Nicotine tobacco leaf that will make possible “BRAND B,” the world’s lowest tar-to-nicotine ratio cigarette.

About 22nd Century Group, Inc.

22nd Century Group is a plant biotechnology company focused on technology which allows it to increase or decrease the level of nicotine in tobacco plants through genetic engineering and plant breeding. The Company’s mission is to reduce the harm caused by smoking. 22nd Century currently owns or exclusively controls more than 185 issued patents and more than an additional 54 pending patent applications around the world. The Company’s strong IP position led to a licensing agreement with British American Tobacco (“BAT”), the world’s second largest tobacco company. 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. 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 year ended December 31, 2014, filed on February 6, 2015, 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150908005974/en/

Contact:
For 22nd Century Group, Inc.
Investor Relations:
Andrew Haag, 866-976-4784
xxii@irthcommunications.com
or
Redington, Inc.
Tom Redington, 203-222-7399

0 1243

Form 8-K for 22ND CENTURY GROUP, INC.


6-Feb-2015

Results of Operations and Financial Condition

Item 2.02. Results of Operations and Financial Condition.On February 6, 2015, 22nd Century Group, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2014. A copy of the press release is furnished as Exhibit 99.1 herewith and is incorporated herein by reference.

0 1088

22nd Century Group Files 2014 Annual Report And Announces Conference Call to Provide Business Update

CLARENCE, N.Y.–(BUSINESS WIRE)–

22nd Century Group, Inc. (NYSE MKT: XXII) today announced that the Company filed its 2014 Annual Report on Form 10-K with the U.S. Securities and Exchange Commission. Due to travel schedules over the next several days, the Company will be unable to conduct a quarterly conference call this week; instead, 22nd Century will provide a business update for investors on a conference call to be held Wednesday, February 11th at 11:00 AM (EST).

Henry Sicignano, III, President and Chief Operating Officer of 22nd Century Group, together with John T. Brodfuehrer, Chief Financial Officer, and Richard M. Sanders, an independent Director of 22nd Century Group, will conduct the call. Interested parties are invited to participate in the call by dialing: 888-820-9418 and using Conference ID 8237107.

The conference call will consist of an overview of recent business highlights and a summary of the financials presented in the Company’s 2014 Annual Report. Immediately thereafter, there will be a question and answer segment open to all callers.

As expected, the Company’s 2014 financial performance reflects a period of transition. As 22nd Century concluded its phase as a company focused primarily on research and development, the Company experienced a net loss of $15.6 million (which includes $9.5 million of non-cash expenses) on revenues of $529,000; during this period in 2014, the Company also invested and/or committed to invest $3.7 million in cash and $2.7 million in stock on intangible assets and intellectual property related assets.

Moving forward, with a management team focused on monetizing the Company’s vast intellectual property portfolio, 22nd Century has recast its priorities to emphasize: (i) commercialization of RED SUN® super-premium cigarettes in the US, (ii) launch of MAGIC® very low nicotine cigarettes (“VLN”) internationally, (iii) establishment of a base of third-party cigarette and filtered cigar contract manufacturing business at the Company’s NASCO manufacturing facility in Mocksville, North Carolina, (iv) pursuit of FDA authorization for one or more of the Company’s modified risk cigarettes in development, (v) contracting with a suitable joint venture partner to fund and conduct a Phase III clinical trial for X-22, the Company’s tobacco-based smoking cessation aid in development, and (vi) establishment of substantial multi-year sales contracts for the Company’s proprietary tobacco leaf and/or finished tobacco products internationally (with immediate focus on Asia).

Recent Business Highlights

  • As previously reported, on October 25, 2014, the 22nd Century Board of Directors terminated the employment of Joseph Pandolfino, our former Chief Executive Officer. Although Mr. Pandolfino will not be re-joining us as an employee or officer, he remains a member of the Board of Directors.
  • As the first company in more than six years approved to become a new signatory to the MSA (as a result of our acquisition of NASCO Products, LLC), the Company moved forward with the regulatory process of listing its cigarette brands on the state tobacco directories of approved products in each of the 50 states. To date, the Company has succeeded in listing RED SUN on 35 state directories, in addition to the directory of the District of Columbia; RED SUN directory listings are pending in the remaining 15 states. The Company has begun production of RED SUN and began shipping RED SUN to distributors in January 2015.
  • Also in January 2015, the Company established its “Trade Partners Program” as a strategic incentive plan for the trade. Participating cigarette distributors earn a credit of $1.00 worth of 22nd Century common stock as a rebate for each carton of RED SUN purchased in 2015 and participating retailers earn a credit of $3.00 worth of 22nd Century common stock as a rebate for each carton of RED SUN purchased in 2015. The Company believes the novel Trade Partners Program offers members of the trade a strong incentive to carry and promote RED SUN brand cigarettes.
  • Further, in January 2015, the Company’s wholly-owned subsidiary, NASCO Products, LLC, made its first shipment of Smoker Friendly (“SF”) private label cigarettes after the approval of the multi-year manufacturing agreement between the Company and Smoker Friendly International, LLC by the 46 Settling States, the District of Columbia, and 5 U.S. territories under the MSA. Currently, the Company’s factory is increasing its production and shipment of Smoker Friendly products as the prior manufacturer of Smoker Friendly products winds down its inventory. Both manufacturers will ship Smoker Friendly’s “SF” brand cigarettes until March 31, 2015, at which time the prior manufacturer will cease shipments and NASCO will have the exclusive right to both manufacture and ship “SF” brand cigarettes to distributors who serve more than 800 Smoker Friendly stores throughout the United States.
  • The Company continues to move forward with potential joint venture opportunities in Asia. In January 2015, a team of tobacco executives and scientists from China visited the Company’s manufacturing facility in Mocksville, North Carolina. Recently, the Company formed a joint venture with Crede CG III, Ltd and Century Champion Investments, Ltd. to conduct the potential business of the joint venture. To further facilitate 22nd Century’s business opportunities in China, the Company is in the process of establishing a Wholly Foreign-Owned Enterprise (“WFOE”), a customary and usual business entity formed under China law for foreign parties that desire to conduct business in China. 22nd Century executives are planning to make another trip to China in March 2015. The Company is also investigating other potential business opportunities in other parts of Asia for the Company’s unique tobaccos and finished cigarettes. The Company is optimistic that it will be able to announce one or more business contracts with Asian partners in 2015.
  • The Company continues to move forward with efforts to launch its MAGIC brand of very low nicotine cigarettes in Europe and Asia. Packaging approvals for the novel product have been secured in Spain. Orion, the Company’s contract cigarette manufacturer in Europe, will begin production of our MAGIC brand in February 2015 for a product launch in Spain planned for Q1 2015.

2014 Financial Summary

For the year ended December 31, 2014, revenue was $529,000 compared to $7,278,000 of revenue for the year ended December 31, 2013. The 2014 revenues consist of $448,000 generated from the sale of SPECTRUM® research cigarettes to the National Institute on Drug Abuse (“NIDA”), which is part of the National Institutes of Health (“NIH”), United States Department of Health and Human Services, with the balance generated from the manufacture and sale of filtered cigars. Revenues for the year ended December 31, 2013 included licensing revenue from British American Tobacco (Investments) Limited of $7,000,000.

For the year ended December 31, 2014, the Company reported an operating loss of $11.7 million as compared to operating income in the amount of $1.8 million for the year ended December 31, 2013. The decrease in operating income of $13.5 million is primarily the result of a decrease in revenues of $6.8 million, an increase in non-cash stock based compensation of $2.2 million, startup expenses incurred at our manufacturing facility of $1.2 million, costs related to a severance liability of $0.6 million, an increase of $0.3 million in depreciation and amortization, and an increase in other operating expenses of $2.4 million.

The Company’s net loss for the year ended December 31, 2014 was $15.6 million or ($0.26) per share as compared to a net loss of $26.2 million or ($0.60) per share for the year ended December 31, 2013. The results for the year ended December 31, 2014 included non-cash expenses from (i) a change in the fair value of derivatives (warrant liability) of $3.7 million, (ii) stock based compensation of $4.5 million, and (iii) an inducement expense of $145,000 from the amendment of certain warrants.

Adjusted EBITDA (as described in the paragraph and tables below) for the year ended December 31, 2014 was a negative $6.1 million or ($0.10) per share and $4.3 million or $0.10 per share for the year ended December 31, 2013.

Below are tables containing information relating to the Company’s Adjusted EBITDA for the years ended December 31, 2014 and 2013, including a reconciliation of net loss to Adjusted EBITDA for such periods.

0 1037

Form 10-K for 22ND CENTURY GROUP, INC.


6-Feb-2015

Annual Report

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.This discussion should be read in conjunction with the other sections of this Form 10-K, including “Risk Factors,” and the Financial Statements. The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Annual Report on Form 10-K. See “Forward-Looking Statements.” Our actual results may differ materially. For purposes of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, references to the “Company,” “we,” us” or “our” refer to the operations of 22nd Century Group, Inc. and its direct and indirect subsidiaries for the periods described herein.

Business Overview

We are a plant biotechnology company specializing in technology that allows for the level of nicotine and other nicotinic alkaloids (e.g., nornicotine, anatabine and anabasine) in tobacco plants to be decreased or increased through genetic engineering and plant breeding. We focused on tobacco harm reduction and smoking cessation products. We own or exclusively control 128 issued patents plus an additional 52 pending patent applications. The patents owned by or exclusively licensed to us include patents issued in 96 countries.

Our long-term focus is the research, development, licensing, manufacturing, and selling of our products to reduce the harm caused by smoking. Annual worldwide tobacco product sales, cigarettes and smokeless products, are approximately $800 billion and most of which are cigarette sales according to Euromonitor International.

� The international licensing of our technology, proprietary tobaccos, trademarks;
� The international sale of our branded proprietary tobaccos;
� The manufacture, marketing and distribution of RED SUN and MAGIC proprietary cigarettes;
� The production of SPECTRUM research cigarettes for NIDA, a part of NIH;
� The research and development of potentially less harmful or modified risk tobacco products and novel tobacco plant varieties;
� The development of X-22, a prescription-based smoking cessation aid consisting of VLN cigarettes;
� The pursuit of necessary regulatory approvals and clearances from the FDA to market in the U.S. X-22 as a prescription smoking cessation aid and BRAND A and BRAND B as reduced-risk or Modified Risk Cigarettes;
� The contract manufacturing of third-party branded tobacco products; and
� The research and development in Canada of unique plant varieties of hemp/cannabis, such as (i) plants with low to no amounts of delta-9-tetrahydrocannabinol, or THC, for the legal hemp industry, (ii) plants with high levels of THC for the legal recreational cannabis market, and (iii) plants with high levels of cannabidiol, or CBD, and other non-THC cannabinoids for the legal medical marijuana markets.

We believe our proprietary technology, tobaccos and products can generate multiple significant revenue streams from licensing of our technology and tobacco and from the sales of our products.

As previously reported, on October 25, 2014, our Board of Directors terminated the employment of Joseph Pandolfino, our former Chief Executive Officer, pursuant to Section 4.2 (Termination Without Cause) of Mr. Pandolfino’s Employment Agreement and formed an Executive Committee of the Board, consisting of the existing independent directors, to assist our management until the Board completes its search for and selection of a new Chief Executive Officer. Although Mr. Pandolfino will not be re-joining us as an employee or officer, he remains a member of the Board of Directors.

Since October 2014, the Executive Committee has been primarily working with management to assist it with forming the proper strategic direction of our business and to streamline and organize our business in light of the termination of Mr. Pandolfino. The Executive Committee expects to hire a third party advisory firm during the first quarter of 2015 in order to assist with the search for and selection of a new Chief Executive Officer.

Please refer to the “Business” section in this Annual Report on Form 10-K for additional information regarding our business and operations.

Results of Operations

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Revenue – Royalties from licensing.

In the year ended December 31, 2014, we realized no licensing revenue. During the year ended December 31, 2013 we realized royalty revenue of $7.0 million from the worldwide Research License and Commercial Option Agreement entered into with BAT.

Revenue – Sale of products.

We realized revenue of $528,991 from the sale of products during the year ended December 31, 2014, as compared to revenue of $278,383 during the year ended December 31, 2013, an increase of $250,608 or 90%. The revenue of $528,991 for the year ended December 31, 2014, consisted of $447,535 in revenue derived from the sale of 5.5 million SPECTRUM research cigarettes during January 2014 and from the production of filtered cigars in our North Carolina manufacturing facility in the amount of $81,456. The revenue for the year ended December 31, 2013, was derived from the sale of our proprietary VLN tobacco to a customer in the Netherlands in the amount of $52,500 and from the sale of our VLN tobacco to the FDA as a subcontractor under a government contract between RTI and the FDA in the amount of $225,883.

Costs of goods sold – Royalties for licensing.

During the year ended December 31, 2014, we revised the estimate of the royalty fee due to NRC in connection with the $7,000,000 fee received from BAT in the fourth quarter of 2013. The new amount due to NRC of $660,000 exceeded the estimate of $413,566, originally recorded in the year ended December 31, 2013, by $246,434.

Costs of goods sold – Products.

In the year ended December 31, 2014, costs of goods sold were $252,002 or 47.6% of revenue. The cost of goods sold consists of $177,696 relating to the production of the SPECTRUM research cigarettes and $74,306 relating to the manufacture of the filtered cigars. In the year ended December 31, 2013, the cost of goods sold were $48,105 or 17.3% of revenue.

Research and development expense.

Research and development expense was $1,249,007 for the year ended December 31, 2014, an increase of $504,777, or 67.8%, from $744,230 for the year ended December 31, 2013. This increase was primarily the result of increases in stock based compensation of approximately $220,000, research and development payroll and related benefits of approximately $104,000, royalty and license fees of approximately $187,000, and $15,000 of costs associated with an FDA modified-risk application, partially offset by a decrease in contractual research and development costs of approximately $39,000 during the year ended December 31, 2014 as compared to the year ended December 31, 2013.

General and administrative expense.

General and administrative expense was $8,793,151 in the year ended December 31, 2014, an increase of $4,686,457, or 114.1%, from $4,106,694 in the year ended December 31, 2013. The increase was primarily due to increases in employee stock based compensation of approximately $1,047,000, employee related costs of approximately $693,000, legal and professional fees of approximately $986,000, costs relating to press releases of approximately $78,000, the write off of an uncollectible advance in the approximate amount of $43,000, NYSE MKT related costs of approximately $176,000, costs associated with severance liability of approximately $637,000, director fee costs of approximately $157,000, the expense associated with the Crede consulting agreement in the approximate amount of $2,091,000, and other administrative costs of approximately $171,000, partially offset by decreases in stock based compensation and cash payments to third-party service providers of approximately $1,318,000 and $75,000, respectively, during the year ended December 31, 2014 as compared to the year ended December 31, 2013.

Pre-manufacturing facility costs.

On August 29, 2014, we completed the transaction to purchase all of the issued and outstanding membership interests of NASCO. The purchase transaction was subject to various conditions, including the required consents of the 46 Settling States of the MSA to an amendment of NASCO’s existing adherence agreement to the MSA, with the Company becoming a signatory to such amended adherence agreement as part of our acquisition of NASCO. On August 29, 2014, the Company became a signatory to the amended adherence agreement. NASCO operates our cigarette manufacturing facility in North Carolina. Prior to the closing of our acquisition of NASCO, the factory was primarily in a pre-manufacturing stage, incurring various expenses relating to preparing and upgrading the warehouse and manufacturing facility for production. Those expenses included salaries and benefits for employees, sub-contract labor, rent, utilities and other miscellaneous costs and amounted to $1,176,676 during the year ended December 31, 2014. There were no expenses relating to the cigarette manufacturing facility during the year ended December 31, 2013. We manufactured a modest quantity of filtered cigars during the year ended December 31, 2014 generating revenue in the amount of $81,456. We also commenced manufacturing our proprietary cigarette brands and an MSA brand for a chain of independent smokeshops during the fourth quarter of 2014. Sales of these brands commenced during the first quarter of 2015. NASCO will also continue to manufacture non-MSA filtered cigars.

Sales and marketing costs.

Sales and marketing costs were $85,930 for the year ended December 31, 2014, an increase of $76,878, or 849.3%, from $9,052 for the year ended December 31, 2013. The increase is primarily the result of costs associated with participation in tobacco industry trade shows, RED SUNpackaging design costs, and materials used for marketing trips to Europe and Asia.

Amortization and depreciation expense.

Amortization and depreciation expense for the year ended December 31, 2014 amounted to $462,772, an increase of $318,483 or 220.7% from $144,289 for the year ended December 31, 2013. Amortization expense relates to amortization taken on capitalized patent costs. Amortization expense for the year ended December 31, 2014 was $232,760 an increase of $91,499 or 64.8% from $141,261 for the year ended December 31, 2013. The increase is primarily due to an adjustment to the 2013 amortization that was recorded in the first quarter of 2014 and by amortization on additional investments in patents during the years ended December 31, 2014 and 2013 in the amount of $641,866 and $332,826, respectively, partially offset by a change in the estimated useful lives of one of the patent families during the year ended December 31, 2013. Depreciation expense for the year ended December 31, 2014 was $230,012, an increase of $226,984 from $3,028 for the year ended December 31, 2013. This increase is mainly due to approximately $2.9 million of cigarette manufacturing equipment placed in service during the second quarter of 2014.

Warrant liability loss – net.

The warrant liability loss of $3,676,691 for the year ended December 31, 2014 was due to an increase in the warrants liability recorded in the first quarter of 2014 in the amount of $3,841,943 in conjunction with the Warrant Amendment program offset by a decrease in the estimated fair value of the warrants during the year in the amount of $165,252, primarily attributable to the decrease in the Company’s underlying stock price from $2.14 per share at December 31, 2013, as compared to $1.65 per share at December 31, 2014.

In a private placement in the first quarter of 2013, we issued warrants which were accounted for as derivatives and upon issuance a liability at the estimated fair value was recorded. At the date of issuance of these warrants, the value exceeded that total consideration received by an aggregate of $3,987,655 resulting in an immediate charge to expense for this amount. In connection with the exercise of 1,101,034 Series B Warrants in July 2013, we issued a like number of Series C Warrants which were accounted for as derivatives and upon issuance a liability at the estimated fair value was recorded. At the date of issuance of these warrants, the value was estimated to be $1,622,069 which exceeded the sum of the net proceeds received in the exercise and the reclassification of warrant liability to capital by $343,079 resulting in an immediate charge to expense for this amount. These two charges added to the loss on warrant liability of $19,271,977, resulting from an increase in the fair value during the year ended December 31, 2013 for all warrants we have issued, resulting in a total loss on warrant liability-derivative for the year of $23,602,711. The loss on warrant liability of $19,271,977 was primarily the result of an increase in the Company’s underlying stock price from $0.75 per share at December 31, 2012, as compared to $2.14 per share at December 31, 2013.

Future periods will reflect a gain or loss based on the change in the fair value of the derivatives, which is based on a number of factors including the Company’s stock price.

Loss on equity investment.

The loss on equity investment of $101,165 for the year ended December 31, 2014, consists of (i) our 25% share of Anandia’s net loss from our initial April 11, 2014 investment in Anandia through December 31, 2014 in the amount of $84,350, plus (ii) amortization of the intangible asset represented by the difference between our equity investment in Anandia and our portion of the book value of the net assets of Anandia in the amount of $16,815.

Interest expense and amortization of debt discount and expense.

Interest expense and amortization of debt discount and debt issuance costs decreased during the year ended December 31, 2014 to $7,094 from $748,605 during the year ended December 31, 2013. This decrease of $741,511 or 99.1% was primarily the result of a decrease in the amortization of debt discount and debt issuance costs relating to convertible notes issued on August 9, 2012 that were converted into common stock in August of 2013, payment of the majority of the Company’s interest bearing debt in the fourth quarter of 2013, and the recording as interest expense the excess of the fair value of warrants issued during the year ended December 31, 2013 over the proceeds realized in the amount of approximately $509,000. The Company’s demand bank loan is the only remaining interest bearing debt outstanding at December 31, 2014.

Net loss.

We had a net loss for the year ended December 31, 2014 of $15,595,358 as compared to a net loss of $26,153,158 for the year ended December 31, 2013. The decrease in the net loss of $10,557,800 or 40.4%, was primarily the result of a decrease in the warrant liability loss – net in the amount of $19,926,020, a decrease in interest expense and amortization of debt discount in the amount of $741,511, a decrease in the warrant amendment inducement expense of $3,591,765 and an increase in the gain on the sale of machinery and equipment of $71,121, offset by a decrease in gross profit of $6,786,157, an increase in operating expenses of $6,763,271, and a decrease in other income of $206,374.

Liquidity and Capital Resources

Working Capital

As of December 31, 2014, we had working capital of approximately $8.0 million, as compared to working capital of approximately $6.8 million at December 31, 2013, an increase of approximately $1.2 million. The $1.2 million increase in working capital was primarily the result of net working capital remaining from the net proceeds of the $9.3 million raised in the September 2014 common stock private placement after operating and investing activities during the year ended December 31, 2014.

We must successfully execute our business plan to increase revenue in order to achieve positive cash flows to sustain adequate liquidity without requiring additional funds from external sources to meet minimum operating requirements. The Company’s Form S-3 universal shelf registration statement was filed with the U.S. Securities and Exchange Commission (“SEC”) on April 18, 2014, and became effective on June 5, 2014. The universal shelf registration statement will allow, but not compel, the Company to raise up to $45 million of capital over a three-year period through a wide array of securities at times and in amounts to be determined by the Company. There can be no assurance that additional capital, if required, will be available on acceptable terms or at all.

Cash demands on operations

In 2014, we had an operating loss of approximately $11.7 million and used cash in operations of approximately $6.6 million during the year ended December 31, 2014. Excluding contract growing of our proprietary tobacco with farmers, extraordinary expenses such as potential clinical trials, capital expenses for our factory, and initial expenses associated with the launch of our RED SUN cigarette brand, our monthly cash expenditures are approximately $500,000. We believe that cash on hand at December 31, 2014 of $6,402,687 is adequate to sustain operations and meet all current obligations as they come due for a period of approximately 12 months.

Net Cash (used in) provided by Operating Activities

In the year ended December 31, 2014, $6,582,730 of cash was used operating activities compared to $3,855,834 of cash provided by operating activities in the year ended December 31, 2013, a decrease of $10,438,564. This decrease in cash provided by operations was mainly due to the license revenue received from BAT under the Research License and Commercial Option Agreement in the amount of $7,000,000 in 2013 as compared to no revenue from licensing in 2014. In addition, approximately $3,400,000 in additional cash was consumed in operating activities.

Net Cash used in Investing Activities

In the year ended December 31, 2014, we used $2,707,992, as compared to $3,742,789 of cash used in investing activities during the year ended December 31, 2013, a decrease of $984,797. The decrease in cash used in investing activities is primarily due to a decrease in the acquisition of machinery and equipment in the amount of $3,239,966, and an increase in proceeds received on the sale of machinery and equipment in the amount of $631,484, offset by increases in the acquisition of patents and trademarks of $436,653, license fees of $1,450,000, the cash portion of the equity investment in Anandia of $700,000, and the cash portion of the NASCO transaction of $250,000.

Net Cash from Financing Activities

During the year ended December 31, 2014, we generated $9,862,810 from our financing activities, as compared to $5,717,366 of cash generated from financing activities during the year ended December 31, 2013, an increase of $4,145,444. The $9,862,810 generated during the year ended December 31, 2014 was mainly the a result of net cash proceeds received from a common stock private placement in September 2014, in the amount of $9,324,088, and net cash proceeds from the exercise of stock warrants and stock options in the amount of $535,251. The $5,717,366 of cash generated during the year ended December 31, 2013 was primarily the result of the net proceeds from the Series A-1 Preferred stock placement in the amount of $2,034,664, net cash proceeds received from the exercise of warrants in the amount of $2,254,999, proceeds received from the issuance of notes payable in the amount of $150,000, proceeds received from the exercise of stock options in the amount of $5,200, and net cash proceeds received from the Warrant Exchange Program in the amount of $3,239,385. These proceeds raised were partially offset by payments on notes payable, convertible notes payable and net payments to related parties and officers in the amount of $1,620,299, $339,250 and $8,993, respectively.

Critical Accounting Policies and Estimates

Accounting principles generally accepted in the United States of America, or U.S. GAAP, require estimates and assumptions to be made that affect the reported amounts in our consolidated financial statements and accompanying notes. Some of these estimates require difficult, subjective and/or complex judgments about matters that are inherently uncertain and, as a result, actual results could differ from those estimates. Due to the estimation processes involved, the following summarized accounting policies and their application are considered to be critical to understanding our business operations, financial condition and results of operations.

Revenue Recognition

We recognize revenue at the point the product is shipped to a customer and title has transferred. Revenue from the sale of our products is recognized net of cash discounts, sales returns and allowances. Federal cigarette excise taxes are included in net sales and accounts receivable billed to customers, except on sales of SPECTRUM and exported cigarettes in which such taxes do not apply.

We were chosen to be a subcontractor for a government contract between RTI International (“RTI”) and NIDA to supply research cigarettes to NIDA. These government research cigarettes are distributed under the Company’s mark SPECTRUM. Future revenue under this arrangement is expected to be related to the delivery of SPECTRUM and will be recognized at the point the product is shipped and title has transferred. In September 2013, we received a purchase order for an additional 5.5 million SPECTRUM research cigarettes that were manufactured and shipped in January 2014. Total revenue from this order was approximately $447,535 and a down payment on the order was received in the fourth quarter of 2013 in the amount of $179,014. The down payment has been recorded as deferred revenue on the Company’s balance sheet at December 31, 2013. There were no SPECTRUM cigarettes delivered during the year ended December 31, 2013.

As described above, we license our patented technology to third parties. Revenue is recognized from licensing arrangements as contractually defined in licensing agreements. We account for milestone elements contained in licensing agreements in accordance with ASC 605. Simultaneous with the signing of the Research License and Commercial Option Agreement, BAT paid us a non-refundable $7,000,000. Revenue was recognized for this amount since delivery of the patented technology took place, we had no further performance obligations, and the fee was fixed. We will be entitled to receive additional payments from BAT, up to an additional $7,000,000, during the Research Term in the event certain milestones are met by BAT with respect to BAT’s research and development of our patent rights licensed by the Company to BAT. There are four separate milestones, two of which BAT would pay us $2 million for each milestone achieved, and two of which BAT would pay us $1.5 million for each milestone achieved. In addition, the Company could earn additional future royalties if BAT elects to exercise the Commercial Option Agreement during the Research Term.

No amount related to the research milestones was recognized during 2014 or 2013. A portion of the patented technology sublicensed to BAT was exclusively licensed to 22nd Century Ltd. by NRC. Pursuant to the terms of the license agreement with NRC, 22nd Century Ltd. was obligated to make a royalty payment to NRC from the monies received from BAT. During the quarter ended September 30, 2014, 22nd Century Ltd. and NRC mutually agreed on a payment of $660,000 that was paid in December 2014. 22nd Century Ltd. had previously estimated the payment to be $413,566. The difference in the amount of $246,434 has been recorded as Royalty for licensing in the Cost of goods sold section of the Company’s Consolidated Statements of Operations for the year ended December 31, 2014.

Impairment of Long-Lived Assets

We review the carrying value of amortizing long-lived assets whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. We also assess recoverability of the asset by estimating the future undiscounted net cash flows expected to result from the asset, including eventual disposition. If the estimated future undiscounted net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value. Non-amortizing intangibles (e.g., patents and trademarks) are reviewed annually for impairment. We have not recognized any impairment losses during the two year period ended December 31, 2014.

Amortization Estimates of Intangible Assets

We generally determine amortization based on the estimated useful lives of the assets and record amortization expense on a straight-line method over such lives. The remaining life of the primary patent in each patent family is generally used to determine the estimated useful life of the related patent costs.

Valuation of our Equity Securities

We use a fair-value based method to determine compensation for all arrangements under which Company employees and others receive shares, options or warrants to purchase common shares of 22nd Century Group. Stock based compensation expense is recorded over the requisite service period based on estimates of probability and time of achieving milestones and vesting. For accounting purposes, the shares will be considered issued and outstanding upon vesting.

Income taxes

The Company recognizes deferred tax assets and liabilities for any basis differences in its assets and liabilities between tax and GAAP reporting, and for operating loss and credit carry-forwards. In light of the Company’s history of cumulative net operating losses and the uncertainty of their future utilization, the Company has established a valuation allowance to fully offset its net deferred tax assets as of December 31, 2014 and 2013.

Derivative Financial Instruments

We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. The methodology for valuing our outstanding warrants classified as derivative instruments utilizes a lattice model approach which includes probability weighted estimates of future events including volatility of our common stock. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The warrant liability is measured at fair value using certain estimated factors such as volatility and probability which are classified within Level 3 of the valuation hierarchy. Significant unobservable inputs are used in the fair value measurement of the Company’s derivative warrant liabilities include volatility. Significant increases (decreases) in the volatility input would result in a significantly higher (lower) fair value measurement. A 10% increase or decrease in the volatility factor used as of December 31, 2014 would have the impact of increasing or decreasing the liability by approximately $22,000.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

Inflation

Inflation did not have a material effect on our operating results for the years ended December 31, 2014 and 2013.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K.

1 2176

22nd Century Group Announces First Shipment of Smoker Friendly Private Label Cigarettes

CLARENCE, N.Y.–(BUSINESS WIRE)–

22nd Century Group, Inc. (NYSE MKT:XXII) today announced that its wholly-owned subsidiary, NASCO Products, LLC, a federally licensed tobacco product manufacturer and participating member of the tobacco Master Settlement Agreement (MSA), made its first shipment of Smoker Friendly private label cigarettes.

Currently, Smoker Friendly has more than 800 stores throughout the United States under license. These stores are independently owned and operated. The “SF” brand has been on the market for over 20 years and is the private label brand in Smoker Friendly stores.

Pursuant to a multi-year manufacturing agreement the Company signed with Smoker Friendly International, LLC last August, and following the approval of that agreement by the 46 Settling States, the District of Columbia, and 5 U.S. territories under the MSA, effective as of January 2015, NASCO is Smoker Friendly International’s exclusive manufacturer of “SF” brand cigarettes.

A transition will now occur under which the Company’s factory will increase its production and shipment of Smoker Friendly products as the prior manufacturer of Smoker Friendly products winds down its inventory. Both manufacturers will ship “SF” brand cigarettes until March 31, 2015, at which time the prior manufacturer will cease shipments of Smoker Friendly products. In anticipation of assuming sole rights to manufacture and ship the “SF” private label cigarettes, NASCO has already produced an inventory of all 11 brand styles.

Terry Gallagher, Jr., the President of Smoker Friendly International LLC, stated, “SF brand cigarettes are very important, high volume products for Smoker Friendly. We awarded NASCO the contract to produce our private label brand because the people of 22nd Century demonstrated their ability to manufacture truly outstanding products – with a commitment to servicing each and every one of our distributor and retail partners.”

Henry Sicignano, III, the President and Chief Operating Officer of 22nd Century, commented, “We are very pleased to be embarking on such an important strategic partnership with Smoker Friendly; not only will this contract result in substantial “SF” brand contract manufacturing revenue for 22nd Century, but it also provides our Company with the opportunity to promote our super-premium RED SUN cigarettes in Smoker Friendly stores across the country.”

For additional information about 22nd Century Group, please visit: www.xxiicentury.com

About 22nd Century Group, Inc.

22nd Century is a plant biotechnology company whose proprietary technology allows for the levels of nicotine and other nicotinic alkaloids (e.g., nornicotine, anatabine and anabasine) in the tobacco plant to be decreased or increased through genetic engineering and plant breeding. The Company’s technology also allows the levels of cannabinoids to be decreased or increased in the cannabis plant. 22nd Century owns or is the exclusive licensee of 128 issued patents plus an additional 53 pending patent applications; 22nd Century also holds co-exclusive rights to another 2 patents and 16 patent applications. Goodrich Tobacco Company, LLC, Hercules Pharmaceuticals, LLC and Botanical Genetics, LLC are wholly-owned subsidiaries of 22nd Century. Goodrich Tobacco is focused on commercial tobacco products and potentially less harmful cigarettes. Hercules Pharmaceuticals is focused on X-22, a prescription smoking cessation aid in development. Botanical Genetics is focused on novel cannabis plant varieties and on cannabis-based products.

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. 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, 2013, filed on January 30, 2014, 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.

Contact:
Redington, Inc.
Tom Redington, 203-222-7399

0 1454

22nd Century Group Announces First Shipments of RED SUN Cigarettes as a Participating Member of the MSA and Introduces Enhanced www.redsuncigarettes.com Consumer Website

CLARENCE, N.Y.–(BUSINESS WIRE)–

22nd Century Group, Inc. (NYSE MKT: XXII) today announced that its factory in North Carolina, which is now a participating manufacturer under the U.S. tobacco Master Settlement Agreement (“MSA”), has begun shipping RED SUN super-premium cigarettes.

Designed to appeal to discriminating consumers and positioned to compete with leading brands like Marlboro,® Camel,® and Natural American Spirit,® RED SUN is initially being offered to independent distributors and specialty retailers located in select markets such as New York City, Los Angeles, San Diego, Las Vegas, Boulder and Portland.

RK Company, Inc, d.b.a. Cigar Cartel, a licensed stamping agent in California, Washington, Oregon, Idaho, Arizona, Texas, Nevada, and Wyoming and once the largest independent distributor of Natural American Spirit cigarettes in Southern California, was among the first to order RED SUN. Trey Prevost, the President and owner of RK Co, Inc., stated, “RED SUN is exactly what my customers want: A great tasting, highly differentiated product that is exclusive to specialty stores… a much better cigarette than the mass market brands… made by a company that truly values its retailer and distributor partners. The 22nd Century Group Trade Partners Program makes it a no-brainer for retailers to carry and promote RED SUN.”

Last week the Company established its Trade Partners Program as a strategic incentive plan to give eligible cigarette distributors and retailers the opportunity to earn publicly tradable shares of the Company’s common stock in consideration for purchases of the Company’s RED SUN brand of cigarettes. Participating distributors will earn $1.00 worth of 22nd Century common stock as a rebate for each carton of RED SUN purchased in 2015 and participating retailers will earn $3.00 worth of 22nd Century common stock as a rebate for each carton of RED SUN purchased in 2015.

Mr. Prevost went on to explain, “I am a strong believer in 22nd Century Group and in the Company’s mission to manufacture and market tobacco products with the potential to reduce the harm caused by smoking; it is no secret that I have already purchased tens of thousands of dollars of the Company’s stock on the open market.”

As part of 22nd Century’s marketing initiative to promote RED SUN in its target markets, the RED SUN website at www.redsuncigarettes.com has been revised and expanded to include explanations about product attributes that makeRED SUN and 22nd Century Group unique, as well as irreverent humor designed to have some fun at the expense of the “Big Tobacco” companies.

Henry Sicignano, III, the President and Chief Operating Officer of 22nd Century, explained, “In the spirit of all the Davids who have ever stood up to the Goliaths of the world, I like to think that our unsurpassed quality distinguishes RED SUNcigarettes in much the same way that distinctive, flavorful beers separate Sam Adams® from mass market brands.”

Designed to be both informative and amusing, theRED SUN website aims to spark dialogue and interaction with consumers. To inspire increased discussions about the RED SUN brand, the newly enhanced website also announces a “no purchase necessary” consumer contest that promises the winner an all-expense paid trip for two adults to the land of the “Red Sun.” Finally, www.redsuncigarettes.com provides a password protected “trade portal” for licensed tobacco resellers.

22nd Century also announced this week that its wholly-owned subsidiary, Goodrich Tobacco Company, will attend the Tobacco Plus Convenience Expo in Las Vegas on January 28-29, 2015. RED SUN cigarettes will be offered for sampling and sale at this for-the-trade only exposition. Company representatives will also be on hand to discuss the RED SUN Trade Partners Program with all interested, eligible retailers and distributors in attendance.

For additional information about 22nd Century Group, please visit: www.xxiicentury.com

Additional Information about the Trade Partners Program

The Company has filed a registration statement (including a prospectus and prospectus supplement) on Form S-3 (File No. 333-195386) with the Securities and Exchange Commission (“SEC”) for the offering related to the Trade Partners Program. For more information, you should read the prospectus in that registration statement, the prospectus supplement filed on January 9, 2015 forming a part thereof, and other documents that the Company has filed with the SEC for more complete information about the Company and this offering. You may obtain these documents for free by visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, the Company will arrange to send you copies of the prospectus and most recent prospectus supplement if you request such documents by calling us at (716) 270-1523.

This is not an offer to buy or the solicitation of an offer to sell any security of the Company nor will there be any offer, sale or solicitation of any security in any jurisdiction in which such offer, sale or solicitation would be unlawful.

Notwithstanding anything to the contrary contained herein, the above summary of the Trade Partners Program is qualified in its entirety by the more detailed and most current official rules of the Trade Partners Program contained in the most recently filed registration statement (including all prospectuses and prospectus supplements) relating thereto.

About 22nd Century Group, Inc.

22nd Century is a plant biotechnology company whose proprietary technology allows for the levels of nicotine and other nicotinic alkaloids (e.g., nornicotine, anatabine and anabasine) in the tobacco plant to be decreased or increased through genetic engineering and plant breeding. The Company’s technology also allows the levels of cannabinoids to be decreased or increased in the cannabis plant. 22nd Century owns or is the exclusive licensee of 128 issued patents plus an additional 53 pending patent applications; 22nd Century also holds co-exclusive rights to another 2 patents and 16 patent applications. Goodrich Tobacco Company, LLC, Hercules Pharmaceuticals, LLC and Botanical Genetics, LLC are wholly-owned subsidiaries of 22nd Century. Goodrich Tobacco is focused on commercial tobacco products and potentially less harmful cigarettes. Hercules Pharmaceuticals is focused on X-22, a prescription smoking cessation aid in development. Botanical Genetics is focused on novel cannabis plant varieties and on cannabis-based products.

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. 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, 2013, filed on January 30, 2014, 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.

Contact:
Redington, Inc.
Tom Redington, 203-222-7399

1 1199

22nd Century Group Establishes Trade Partners Program to Promote the Sale of RED SUN Cigarettes

CLARENCE, N.Y.–22nd Century Group, Inc. (NYSE MKT: XXII) today announced that the Company has established its “Trade Partners Program” to provide retailers and distributors the opportunity to receive shares of 22nd Century Group common stock as a rebate for purchases of RED SUN brand cigarettes. The Company filed with the U.S. Securities and Exchange Commission on January 9, 2015 a prospectus supplement relating to the Trade Partners Program, in which up to $3.0 million of the Company’s pre-existing $45 million Form S-3 shelf registration statement (File No. 333-195386) may be used for common stock issuances under the program (not to exceed 300,000 shares).

The Company established its Trade Partners Program as a strategic incentive plan to give eligible cigarette distributors and retailers the opportunity to earn publicly tradable shares of the Company’s common stock in consideration for purchases of the Company’s RED SUN brand of cigarettes. Participating distributors will earn $1.00 worth of 22nd Century common stock as a rebate for each carton of RED SUN purchased in 2015 and participating retailers will earn $3.00 worth of 22nd Century common stock as a rebate for each carton of RED SUN purchased in 2015.

Various incentive and rebate programs are already prevalent in the cigarette industry; however, for awarding common stock that is freely tradable on the NYSE MKT exchange, the Trade Partners Program is truly unique. The Company believes that the novel program will be a compelling vehicle to incent cigarette distributors and retailers to purchase and promote RED SUN cigarettes.

Positioned to compete with leading brands like Marlboro® and Camel,® RED SUN is a highly innovative cigarette designed to appeal to upscale, educated consumers while also winning the loyalty of specialty retailers and distributors who were instrumental in building Santa Fe Natural Tobacco Company’s Natural American Spirit® brand.

22nd Century’s President and Chief Operating Officer, Henry Sicignano III, explained, “While spearheading sales and marketing efforts at Santa Fe Natural Tobacco Company, I had opportunities to talk with and learn from hundreds of tobacconists who championed American Spirit. Though they appreciated the sales and profits afforded by American Spirit, these small business owners expressed to me widespread disappointment that they never had the opportunity to own equity in the brand or in Santa Fe Natural Tobacco Company.”

“22nd Century is changing all that,” Mr. Sicignano continued. “Through our Trade Partners Program we are offering retailers and distributors an extraordinary opportunity to become 22nd Century Group shareholders… and a strong incentive to grow RED SUN sales in 2015.”

Many retailers who have committed to stocking 22nd Century products have informed the Company that they have already purchased the Company’s common stock on the open market. 22nd Century’s Chief Financial Officer, John Brodfuehrer explained, “We believe all of the retailers and distributors who are aware of the next phase in our Company’s development – especially pertaining to our modified risk cigarettes in development – are impressed that 22nd Century has a mission of reducing the harm caused by smoking. Furthermore, tobacconists understand that there is a huge market demand for a reduced risk combustible cigarette. We intend to meet that demand.”

For additional information about 22nd Century Group, please visit: www.xxiicentury.com

Additional Information about the Trade Partners Program

The Company has filed a registration statement (including a prospectus and prospectus supplement) on Form S-3 (File No. 333-195386) with the Securities and Exchange Commission (“SEC”) for the offering to which this communication relates. For more information on the Trade Partners Program, you should read the prospectus in that registration statement, the prospectus supplement filed on January 9, 2015 forming a part thereof, and other documents that the Company has filed with the SEC for more complete information about the Company and this offering. You may obtain these documents for free by visiting EDGAR on the SEC web site atwww.sec.gov. Alternatively, the Company will arrange to send you copies of the prospectus and most recent prospectus supplement if you request such documents by calling us at (716) 270-1523.

This is not an offer to buy or the solicitation of an offer to sell any security of the Company nor will there be any offer, sale or solicitation of any security in any jurisdiction in which such offer, sale or solicitation would be unlawful.

Notwithstanding anything to the contrary contained herein, the above summary of the Trade Partners Program is qualified in its entirety by the more detailed and most current official rules of the Trade Partners Program contained in the most recently filed registration statement (including all prospectuses and prospectus supplements) relating thereto.

About 22nd Century Group, Inc.

22nd Century is a plant biotechnology company whose proprietary technology allows for the levels of nicotine and other nicotinic alkaloids (e.g., nornicotine, anatabine and anabasine) in the tobacco plant to be decreased or increased through genetic engineering and plant breeding. The Company’s technology also allows the levels of cannabinoids to be decreased or increased in the cannabis plant. 22nd Century owns or is the exclusive licensee of 128 issued patents plus an additional 53 pending patent applications; 22nd Century also holds co-exclusive rights to another 2 patents and 16 patent applications. Goodrich Tobacco Company, LLC, Hercules Pharmaceuticals, LLC and Botanical Genetics, LLC are wholly-owned subsidiaries of 22nd Century. Goodrich Tobacco is focused on commercial tobacco products and potentially less harmful cigarettes. Hercules Pharmaceuticals is focused on X-22, a prescription smoking cessation aid in development. Botanical Genetics is focused on novel cannabis plant varieties and on cannabis-based products.

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. 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, 2013, filed on January 30, 2014, 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.

Contact:
Redington, Inc.
Tom Redington, 203-222-7399

0 1287

Form 8-K for 22ND CENTURY GROUP, INC.

9-Jan-2015

Other Events, Financial Statements and Exhibits

Item 8.01. Other Events.On January 9, 2015, 22nd Century Group, Inc. (the “Company”) filed with the Securities and Exchange Commission a prospectus supplement dated January 9, 2015, to the prospectus dated June 5, 2014, filed as part of the Company’s effective registration statement on Form S-3 (SEC File No. 333-195386). The prospectus supplement relates to the offer and sale of up to 300,000 shares of the Company’s common stock covered by the registration statement.

Item 9.01. Financial Statements and Exhibits.(d) The following exhibits are being filed herewith:

Exhibit 5.1 Opinion of Foley & Lardner LLP
Exhibit 23.1 Consent of Foley & Lardner LLP (included in Exhibit 5.1)

0 999

Form 8-K for 22ND CENTURY GROUP, INC.

29-Dec-2014

Completion of Acquisition or Disposition of Assets, Regulation FD Disclo

Item 2.01 Completion of Acquisition or Disposition of Assets.On December 23, 2014, a wholly-owned subsidiary of 22nd Century Group, Inc. (collectively, the “Company”) purchased intellectual property (both patents and patent applications) from the National Research Council of Canada (“NRC”) relating to the modification of nicotine in the tobacco plant pursuant to the terms of a Purchase Agreement, dated December 22, 2014 (the “Purchase Agreement”), between NRC and the Company’s wholly-owned subsidiary. The Company agreed to pay NRC a total of $1,873,000 (United States Dollars) for the purchase of such intellectual property, of which $873,000 was paid by the Company to NRC at the closing on December 23, 2014, with the remainder of the purchase price being payable by the Company to NRC in three (3) annual installment payments of $333,333.33 on or before December 22, 2015, $333,333.33 on or before December 22, 2016 and $333,333.34 on or before December 22, 2017.

The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the exhibit attached to this Current Report on Form 8-K and is incorporated by reference herein.

Item 7.01 Regulation FD.On December 29, 2014, the Company issued a press release announcing the transaction described above and also providing a business update. A copy of the press release is furnished herewith as Exhibit 99.1 hereto and is incorporated herein by reference.

Item 9.01(d) Financial Statements and Exhibits.Exhibit 2.1 Purchase Agreement, dated December 22, 2014, by and between 22nd Century Limited, LLC and the National Research Council of Canada.�

Exhibit 99.1 Press Release dated December 29, 2014.

�Schedules and other similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. 22nd Century hereby undertakes to furnish supplementally copies of any of the omitted schedules and attachments upon request by the U.S. Securities and Exchange Commission.

0 1152

22nd Century Acquires Important Intellectual Property from the National Research Council of Canada and Announces Hiring of 10 New Employees at Factory

CLARENCE, N.Y.–(BUSINESS WIRE)–

22nd Century Group, Inc. (NYSE MKT: XXII) today announced that on December 23, 2014, its wholly-owned subsidiary, 22nd Century Limited, LLC, purchased strategically important intellectual property (both patents and patent applications) from the National Research Council of Canada (“NRC”) relating to the modification of nicotine in the tobacco plant.

Including “transcription factor” technology and other intellectual property that represents the Company’s extraordinary second-generation gene technology for modifying the content of nicotine (very low to high) and other nicotinic alkaloids in the tobacco plant, the NRC intellectual property is the cornerstone of the Company’s tobacco harm reduction products under development. The unparalleled technology allows for the production of the world’s lowest nicotine cigarette, up to 98% less nicotine than that of “light” cigarettes, and the world’s lowest tar-to-nicotine ratio cigarette.

By obtaining full ownership and control of the NRC intellectual property to which the Company formerly had an exclusive worldwide license, 22nd Century will settle in-full all outstanding monies due to NRC and will no longer have to share with NRC any revenues derived under the Company’s license to British American Tobacco (“BAT”) and/or from the Company’s sales of tobacco and tobacco products worldwide.

22nd Century’s President and Chief Operating Officer, Henry Sicignano III stated, “This acquisition not only provides 22nd Century with more operational flexibility through full control and ownership of the NRC patent rights, it also promises savings of potentially many millions of dollars in royalty fees. We are tremendously pleased that Tom James, 22nd Century’s General Counsel, was able to negotiate this highly strategic transaction.”

The Company agreed to pay NRC a total of $1,873,000 (USD) for the purchase by the Company of such NRC intellectual property, of which $873,000 was paid in cash by wire transfer by the Company to NRC at the closing of this transaction on December 23, 2014, with the remainder of the purchase price being payable by the Company to NRC in three (3) annual installment payments of $333,333.33 on or before December 22, 2015, $333,333.33 on or before December 22, 2016 and $333,333.34 on or before December 22, 2017.

Company Hires 10 New Employees at Mocksville, NC Factory

To facilitate the January production and shipping of the Company’s RED SUN® super-premium brand cigarettes, as well as the contract manufacturing of the Smoker Friendly private label cigarette brand, 22nd Century announced that its wholly-owned subsidiary, NASCO Products, LLC, a federally licensed tobacco product manufacturer and participating member of the tobacco Master Settlement Agreement (MSA), today hired ten new full-time employees at its manufacturing facility in Mocksville, North Carolina.

Each of the new hires comes to NASCO with years of cigarette manufacturing experience. Barry Saintsing, NASCO Plant Manager and former Master Product Developer at RJ Reynolds Tobacco Company, stated “We have assembled an exceptional manufacturing team here at the factory. All five production lines are up and running now and we are eager to begin shipping product in January!”

For additional information, please visit: www.xxiicentury.com

About 22nd Century Group, Inc.

22nd Century is a plant biotechnology company whose proprietary technology allows for the levels of nicotine and other nicotinic alkaloids (e.g., nornicotine, anatabine and anabasine) in the tobacco plant to be decreased or increased through genetic engineering and plant breeding. The Company’s technology also allows the levels of cannabinoids to be decreased or increased in the cannabis plant. 22nd Century owns or is the exclusive licensee of 128 issued patents plus an additional 53 pending patent applications; 22nd Century also holds co-exclusive rights to another 2 patents and 16 patent applications. Goodrich Tobacco Company, LLC, Hercules Pharmaceuticals, LLC and Botanical Genetics, LLC are wholly-owned subsidiaries of 22nd Century. Goodrich Tobacco is focused on commercial tobacco products and potentially less harmful cigarettes. Hercules Pharmaceuticals is focused on X-22, a prescription smoking cessation aid in development. Botanical Genetics is focused on novel cannabis plant varieties and on cannabis-based products.

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. 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, 2013, filed on January 30, 2014, 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.

Contact:
Redington, Inc.
Tom Redington, 203-222-7399

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