Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2015

_________________

22nd Century Group, Inc.

(Exact Name of Registrant as Specified in Charter)

Nevada	001-36338	98-0468420
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

9530 Main Street Clarence, New York (Address of Principal Executive Office)		14031 (Zip Code)
Registrant’s telephone number, including area code: (716) 270-1523

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On November 9, 2015, 22nd Century Group, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2015. A copy of the press release is furnished as Exhibit 99.1 herewith and is incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

In connection with the settlement agreement described below under Item 8.01, on November 6, 2015, Mr. Joseph Pandolfino resigned from the Board of Directors of the Company effective November 6, 2015.

Item 8.01 Other Events

On November 6, 2015, Mr. Joseph Pandolfino, Alternative Cigarettes (“AC”) and the Company entered into a settlement agreement to resolve all disputes among the parties, with the primary provisions of such settlement agreement being as follows:

Mr. Pandolfino agreed to and did resign from the Company’s Board of Directors on November 6, 2015.

Mr. Pandolfino entered into a lock-up agreement with the Company pursuant to which Mr. Pandolfino has agreed to not sell, pledge or otherwise encumber or transfer any shares of the Company’s common stock beneficially owned by Mr. Pandolfino during the period from the date of the settlement agreement through December 31, 2016, subject to the Company making all of the severance payments as described in paragraph number 5 below and the consulting payments described in paragraph number 6 below in a timely manner.

Subject to the Company making all of the severance payments and consulting payments described in paragraph numbers 5 and 6 below in a timely manner, Mr. Pandolfino agreed that he: (i) shall not vote any Company securities against the reelection of any of the current directors of the Company, and (ii) shall not vote for, or provide any support whatsoever for, any change in control of the Company or any of its affiliates or any candidate for election to the Board of Directors of the Company unless such candidate has been selected and endorsed by the Nominating Committee of the Board of Directors of the Company.

Of the total amount of $46,069 due from AC to the Company, AC has agreed to pay the Company the amount of $23,069 in cash and AC has issued to the Company a promissory note, together with a guaranty of such promissory note by Mr. Pandolfino, for the remaining balance of $23,000 to be paid by AC or Mr. Pandolfino to the Company by or before December 1, 2015. AC and Mr. Pandolfino have also transferred to the Company certain specified assets of AC. AC and Mr. Pandolfino have agreed that AC will continue to not have any operations or business and thereafter pay off all of its liabilities and liquidate, dissolve and/or be sold to an unaffiliated third-party on or before December 31, 2015.

The Company has agreed to pay the severance benefit to Mr. Pandolfino as provided under his employment agreement, with (i) payment to Mr. Pandolfino of all severance amounts due and owing for the period from February 8, 2015 through the date of the settlement agreement, after the deduction of all applicable taxes and other withholdings, and (ii) the remaining balance of Mr. Pandolfino’s severance being thereafter paid to Mr. Pandolfino by the Company, after the deduction of all applicable taxes and other withholdings, over the remaining portion of the three-year period following the prior termination date of Mr. Pandolfino’s employment with the Company. Mr. Pandolfino continues to be bound by specified provisions of his employment agreement, including, but not limited to, the non-compete, the restrictive covenants, the confidentiality provisions and the non-solicitation provisions of such employment agreement.

The Company has agreed to retain Mr. Pandolfino as a consultant for a period of thirty (30) months from the date of the settlement agreement, during which period Mr. Pandolfino will be compensated at the gross rate of Six Thousand Dollars ($6,000.00) per month. Mr. Pandolfino will perform services as reasonably requested by the Chief Executive Officer of the Company. After the first twelve (12) months of the consulting term, Mr. Pandolfino may, in his discretion, terminate the consulting arrangement on thirty (30) days’ prior written notice to the Company whereupon no further consulting fees shall be due to him, but Mr. Pandolfino will continue to be bound by the surviving provisions of the consulting agreement, the employment agreement and the settlement agreement.

As long as Mr. Pandolfino does not materially breach of any of his obligations to the Company, then (i) the stock option granted to Mr. Pandolfino on March 3, 2015, to purchase One Hundred Thousand (100,000) shares of the Company’s common stock for $1.43 per share will vest as originally scheduled on March 3, 2016, and (ii) the Company will remove Mr. Pandolfino on or before December 31, 2015 as a guarantor on a pre-existing bank loan to the Company. In addition, the Company has acknowledged its obligation to continue to indemnify Mr. Pandolfino as a former officer and director of the Company and its affiliates.

Each party has agreed to pay for its own expenses incurred in connection with the litigation proceedings to date between the parties and finalizing the settlement agreement. The settlement agreement also contains an exchange of mutual releases and a termination of all pending lawsuits by the parties against each other.

On November 9, 2015, the Company issued a press release announcing the entry into the settlement agreement described above. A copy of the press release is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01(d): Financial Statements and Exhibits.

Exhibit 99.1 Earnings Press Release dated November 9, 2015.

Exhibit 99.2 Settlement Press Release dated November 9, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	22nd Century Group, Inc.


	/s/ Thomas L. James, Esq.
Date: November 9, 2015	Thomas L. James, Esq.
	Vice President, General Counsel & Secretary

Exhibit 99.1

22nd Century Group Announces Third Quarter 2015 Financial Results

And Conference Call to Provide Business Update

November 9, 2015

Clarence, New York – 22nd Century Group, Inc. (NYSE MKT: XXII), a leader in tobacco harm reduction, announced today the Company’s third quarter 2015 financial results and will provide a business update for investors on a conference call to be held Tuesday, November 10th, at 10:00 AM (Eastern Time).

Henry Sicignano, III, President and Chief Executive Officer of 22nd Century Group, together with John T. Brodfuehrer, Chief Financial Officer, will conduct the call. Interested parties are invited to participate in the call by dialing: 877-876-9175 and using Conference ID 3413780.

The conference call will consist of an overview of the financials presented in the Company's third quarter 2015 Form 10-Q and a discussion of business highlights and updates. Immediately thereafter, there will be a question and answer segment open to all callers.

As demonstrated by significant progress this quarter on modified risk product development, publication of exciting new clinical trial data, and continued expansion of the Company’s intellectual property portfolio, 22nd Century is now recognized as key to national nicotine research efforts and is at the forefront of reduced exposure cigarette product development.

While not at full production capacity, the Company continued to grow revenues during the third quarter of 2015 through sales of RED SUN premium cigarettes, contract manufacturing of a third-party MSA cigarette brand, continued contract manufacturing of filtered cigars, and continued sales of MAGIC “0.0mg nicotine” cigarettes in Europe. Net revenues during the third quarter of 2015 in the amount of approximately $2,668,000 and net revenues for the first nine months of 2015 in the amount of $5,591,000 continued to exceed previously announced revenue expectations and were significantly higher than revenues of approximately $529,000 for the entire year of 2014. The Company reported a net loss for the three months ended September 30, 2015 of approximately $2.8 million with approximately $622,000 of such amount consisting of net non-cash expenses.

Going forward, the Company expects to generate a total of more than $8 million in revenue for this year.

Business Highlights and Updates

We prepared the bulk of our Modified Risk Tobacco Product (MRTP) application for our Very Low Nicotine BRAND A and intend to submit the final application to the FDA before the end of 2015. Compared to all other tobacco cigarettes – made by any other company – BRAND A has the world’s lowest-nicotine content. We believe 22nd Century will be the first company approved by the FDA to label and market a brand of cigarettes as a reduced exposure tobacco product.

Through the granting of new patents and the filing of new patent applications, we again dramatically increased our intellectual property portfolio this quarter. 22nd Century currently owns or exclusively controls more than 200 issued patents and more than 50 pending patent applications around the world. We continue to believe the true value of our Company – based solely on our extraordinary intellectual property portfolio and not even considering the tremendous value of the many other parts of our business – is substantially greater than the value implied by our current share price.

We strategically hired a full-time FDA expert as our new Director of Business Development and Regulatory Affairs to facilitate our continued work on our submissions to the FDA for our modified risk cigarettes in development (BRAND A contains 95% less nicotine than conventional tobacco cigarettes; compared to all other tobacco cigarettes – made by any other company – we believe BRAND B has the world’s lowest-tar-to-nicotine ratio).

We hired a Vice President of Plant Biotechnology who is uniquely qualified to grow and commercialize our impressive patent portfolio relating to both tobacco and cannabis, including spearheading our work with our modified risk tobacco products in development and our cannabis technology initiatives.

We identified and met with several pharmaceutical and other significant potential strategic partners in our efforts to contract with a third party to fund a Phase III clinical trial for X-22 and to bring this important tobacco-based smoking cessation product to market.

The New England Journal of Medicine published a milestone study using our proprietary SPECTRUM research cigarettes. The Center for the Evaluation of Nicotine in Cigarettes led the double-blind, parallel, randomized clinical trial involving 840 smokers at ten locations. 22nd Century’s proprietary low nicotine SPECTRUM cigarettes were “associated with reductions in smoking, nicotine exposure, and nicotine dependence, with minimal evidence of nicotine withdrawal, compensatory smoking, or serious adverse events.” The study’s lead author, Dr. Eric Donny, explained in an article posted on www.usatoday.com, "The evidence is getting stronger that reducing nicotine reduces smoking and makes people less addicted to cigarettes and, in doing so, might make them more likely to quit." The same research team is currently conducting a longer, Phase III clinical trial with 1,250 participants using our SPECTRUM research cigarettes to assess whether an immediate reduction or a gradual reduction in nicotine levels is most effective.

Building on the excitement and on the momentum generated by several previous independent clinical trials, we received an order for approximately 5 million additional SPECTRUM research cigarettes from the federal government so that more researchers will have access to 22nd Century’s proprietary cigarettes. (The SPECTRUM product line consists of a series of cigarette styles that vary nicotine yields over a 50-fold range – from very low to relatively high nicotine yields.)

We commenced new cannabis research with Anandia Laboratories in Vancouver, Canada to develop, protect and commercially produce unique cannabis strains that express highly desirable characteristics and will lead to exciting commercialization opportunities. The goals of the Company’s research activities relating to cannabis are to develop, protect and commercially produce unique cannabis plant varieties that include (i) plants with low to no amounts of delta-9-tetrahydrocannabinol, or THC, for the commercial hemp industry and (ii) plants with high levels of cannabidiol, or CBD, and other non-THC cannabinoids for the legal medical marijuana markets.

Having launched in the first quarter of this year the Company’s RED SUN brand, our retail store count has grown to more than 600 locations across the country. In order to reach consumers directly, we launched a consumer marketing campaign in weekly newspapers in select markets. We continue to expand our popular Brand Ambassador marketing program which places trained RED SUN personnel inside smoke shops and tobacconists to work closely with owners and managers to offer special RED SUN gift certificates to smokers of competitive brands.

Having launched MAGIC cigarettes in more than 900 state-licensed retail shops in Spain, we determined through early customer feedback that the brand’s taste characteristics are distinctly American. Accordingly, we paused in our MAGIC rollout to the U.K., Holland, France, and Italy in order to fine-tune the taste of MAGIC cigarettes so that they will be more consistent with European cigarettes. We expect to resume our MAGIC rollout in the fourth quarter of 2015 and into 2016.

Since commencing the manufacture of Smoker Friendly private label products for the 800+ Smoker Friendly stores at our NASCO manufacturing facility in North Carolina, we have expanded our third-party contract manufacturing base with the addition of five new contract partners.

Third Quarter 2015 Financial Summary

For the three and nine months ended September 30, 2015, net revenues were $2,668,000 and $5,591,000, respectively, as compared to $64,000 and $528,000 for the three and nine months ended September 30, 2014, respectively. As discussed above, revenues for the three and nine months ended September 30, 2015 were generated from the sales of various cigarette and filtered cigar products manufactured at the Company’s factory and from sales of MAGIC “0.0mg nicotine” cigarettes in Europe. The sales for the three months ended September 30, 2014 in the amount of $64,000 were derived from the production of filtered cigars, and the remainder of the revenue during the nine months ended September 30, 2014 was generated from the sale of SPECTRUM research cigarettes.

For the three and nine months ended September 30, 2015, the Company reported operating losses of $2.75 million and $9.21 million, respectively, as compared to operating losses of $2.82 million and $6.05 million, respectively, for the three and nine months ended September 30, 2014.

The Company’s net loss for the three months ended September 30, 2015 was $2.76 million, or ($0.04) per share, and $8.17 million, or ($0.12) per share, for the nine months ended September 30, 2015, as compared to a net loss of $2.72 million, or ($0.05) per share, for the three months ended September 30, 2014 and $10.01 million, or ($0.17) per share, for the nine months ended September 30, 2014. The Company’s loss for the three months ended September 30, 2015 increased by approximately $37,000 as compared to the three months ended September 30, 2014, and the net loss for the nine months ended September 30, 2015 decreased by approximately $1.84 million as compared to the nine months ended September 30, 2014. The increase in the net loss for the three months ended September 30, 2015 was primarily due to an increase in gross loss of approximately $40,000 and a decrease in net other income (expense) of approximately $115,000, partially offset by a decrease in operating expenses of approximately $117,000. The decrease in the net loss for the nine months ended September 30, 2015 was primarily a result of a decrease in the warrant liability gain (loss) – net of approximately $4,050,000 and the other income of $1,000,000 from a litigation settlement, offset by an increase in gross loss of approximately $623,000 and an increase in operating expenses of approximately $2,540,000 (approximately $1,439,000 of this increase in operating expenses was the result of a non-cash increase in equity based compensation expense, primarily to Crede and other third party service providers ).

Adjusted EBITDA (as described in the paragraph and tables below) for the three months ended September 30, 2015 was a negative $2.1 million, or ($0.03) per share, and a negative $5.4 million, or ($0.08) per share, for the nine months ended September 30, 2015, as compared to Adjusted EBITDA of negative $1.9 million, or ($0.03) per share, for the three months ended September 30, 2014 and negative $3.9 million, or ($0.07) per share, for the nine months ended September 30, 2014.

Below are tables containing information relating to the Company’s Adjusted EBITDA for the three and nine months ended September 30, 2015 and 2014, including a reconciliation of net loss to Adjusted EBITDA for such periods.

	Three Months Ended September 30,
	2015			2014			% Change

Net loss	$	(2,761,691	)	$	(2,724,309	)	1%
Adjustments:
Warrant liability gain - net		(27,723	)		(142,858	)	-81%
Amortization and depreciation		197,370			138,367		43%
Loss on equity investment		33,211			26,057		27%
Interest expense		8,702			1,788		387%
Equity based compensation –
Crede consulting agreement		-			22,486		-100%
Third-party service providers		97,969			140,170		-30%
Officers, directors, and employees		314,743			615,667		-49%

Adjusted EBITDA	$	(2,137,419	)	$	(1,922,632	)	11%

	Nine Months Ended September 30,
	2015			2014			% Change

Net loss	$	(8,167,133	)	$	(10,005,252	)	-18%
Adjustments:
Warrant liability (gain) loss - net		(199,556	)		3,850,295		-105%
Warrant amendment inducement expense		-			144,548		-100%
Amortization and depreciation		571,099			333,980		71%
Loss on equity investment		125,026			26,057		380%
Interest expense		27,963			5,306		427%
Equity based compensation -
Crede consulting agreement		1,978,785			22,486		8700%
Third-party service providers		232,187			140,170		66%
Officers, directors, and employees		1,000,603			1,609,716		-38%
Settlement proceeds		(1,000,000	)		-		100%
Gain on the sale of machinery and equipment		-			(71,121	)	-100%

Adjusted EBITDA	$	(5,431,026	)	$	(3,943,815	)	38%

Adjusted EBITDA is a financial measure not prepared in accordance with generally accepted accounting principles (“GAAP”). In order to calculate Adjusted EBITDA, the Company adjusts the net loss for certain non-cash and non-operating income and expense items listed in the tables above in order to measure the Company’s operating performance. The Company believes that Adjusted EBITDA is an important measure that supplements discussions and analysis of its operations and enhances an understanding of its operating performance. While management considers Adjusted EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP, such as operating loss, net loss and cash flows from operations. Adjusted EBITDA is susceptible to varying calculations and the Company’s measurement of Adjusted EBITDA may not be comparable to those of other companies.

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 and the level of cannabinoids in cannabis plants through genetic engineering and plant breeding. The Company’s primary mission is to reduce the harm caused by smoking. 22nd Century currently owns or exclusively controls more than 200 issued patents and more than 50 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, including but not limited to our future revenue expectations. 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, 2014, filed on February 5, 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.

Contacts

Investor Relations:

IRTH Communications

Andrew Haag, 866-976-4784

xxii@irthcommunications.com

Redington, Inc.

Tom Redington, 203-222-7399

Exhibit 99.2

22nd Century Settles All Litigation with Former CEO Pandolfino

November 9, 2015

Clarence, New York – 22nd Century Group, Inc. (NYSE MKT: XXII), a leader in tobacco harm reduction, announced today that the Company and Joseph Pandolfino, the former CEO and founder of the Company, have settled all litigation and disputes between the parties. The details of this settlement have been disclosed by the Company in its filing today with the U.S. Securities and Exchange Commission (“SEC”) of a Current Report on Form 8-K, which is publicly available on the SEC’s EDGAR database on the SEC website of www.sec.gov.

Henry Sicignano, III, 22nd Century’s Chief Executive Officer and President stated, “As the founder of 22nd Century and as a major stockholder, Joe’s interests are closely aligned with those of other shareholders. We look forward to Joe’s helpful input going forward as a strategic consultant who will be tasked with assisting 22nd Century on special projects such as commercialization of RED SUN, MAGIC and our extraordinary modified risk tobacco products in development – BRAND A and BRAND B.”

Joseph Pandolfino said, “I am thrilled that all disagreements between me and the Company have been resolved. As a strategic consultant, I look forward to working with Henry and the team to create shareholder value. 22nd Century is a unique company with an important public health mission and I remain dedicated to its success.”

About 22nd Century Group, Inc.

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.

Investor Relations:
IRTH Communications
Andrew Haag, 866-976-4784
xxii@irthcommunications.com
or
Redington, Inc.
Tom Redington, 203-222-7399