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Prospectus Supplement
(To Prospectus dated January 17, 2017)
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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-215391
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20,570,000 Shares of Common Stock
_________________________
We are offering up to 20,570,000 shares
of our common stock in this offering. Our common stock is listed on the NYSE American under the symbol “XXII.” On October
6, 2017, the closing price of our common stock was $3.41 per share.
Investment in our common stock involves
risks. See “Risk Factors” on page S-3 of this prospectus supplement and the risk factors contained in the documents
incorporated by reference in this prospectus supplement and the accompanying prospectus for a discussion of certain factors which
should be considered before investing in our common stock.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.
We have retained Chardan to act as our exclusive placement agent in connection with the arrangement of this transaction. We have agreed to pay the placement
agent the placement agent fee set forth in the table below, which assumes that we sell all of the shares of common stock we are
offering. The placement agent is not required to arrange for the sale of any specific number of shares or dollar amount but will
use its “reasonable best efforts” to arrange for the sale of the shares.
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Maximum
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Offering
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Per Share
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Amount
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Offering price
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$
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2.625
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$
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53,996,250
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Placement agent fees
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$
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0.1575
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$
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3,239,775
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Proceeds, before expenses, to us
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$
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2.4675
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$
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50,756,475
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We estimate the total expenses of this offering,
excluding the placement agent fees, will be approximately $20,000. Because there is no minimum offering amount required as a condition
to closing in this offering, the actual offering amount, the placement agent fees and net proceeds to us, if any, in this offering
may be substantially less than the maximum offering amounts set forth above.
We expect to deliver the securities being
offered pursuant to this prospectus supplement on or about October 10, 2017.
Chardan
The date of this prospectus supplement is
October 8, 2017.
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
About
This Prospectus Supplement
This document is in two parts. The first
part is this prospectus supplement, which describes the specific terms of this offering. The second part, the accompanying prospectus,
gives more general information, some of which may not apply to this offering. Generally, when we refer only to the “prospectus,”
we are referring to both parts combined.
If information in this prospectus supplement
is inconsistent with the accompanying prospectus, you should rely on this prospectus supplement. This prospectus supplement, the
accompanying prospectus, any other offering material and the documents incorporated into each by reference include important information
about us, the shares of our common stock being offered and other information you should know before investing. You should read
this prospectus supplement and the accompanying prospectus as well as additional information described under “Where You Can
Find More Information” in this prospectus supplement and the accompanying prospectus before investing in shares of our common
stock.
In making your investment decision, you
should rely only on the information contained in or incorporated by reference in this prospectus supplement, the accompanying prospectus
and any free writing prospectus filed by us with the Securities and Exchange Commission (“SEC”) and any other offering
material we or the placement agent provide. We have not, and the placement agent has not, authorized any other person to provide
you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. Neither
we nor the placement agent are making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information contained or incorporated by reference in this prospectus supplement and the accompanying
prospectus is accurate only as of the date of this prospectus supplement or the accompanying prospectus, as the case may be, or
in the case of the documents incorporated by reference, the date of such documents, regardless of the time of delivery of this
prospectus supplement and the accompanying prospectus or any sales of our common stock. Our business, financial condition, results
of operations and prospects may have changed since those dates.
Unless the context otherwise requires, in
this prospectus supplement, “company,” “we,” “us,” “our” and “ours”
refer to 22nd Century Group, Inc. and its subsidiaries on a combined basis.
“Forward-Looking”
Information
The information included or incorporation
by reference into the prospectus and this prospectus supplement contains statements that the company believes to be “forward-looking
statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include, without limitation, any statement that is not a statement of historical fact, including,
without limitation, statements regarding the company’s business strategy and plans and objectives of management for future
operations or that may predict, forecast, indicate or imply future results, performance or achievements. The words “estimate,”
“project,” “intend,” “forecast,” “anticipate,” “plan,” “planning,”
“expect,” “believe,” “will,” “will likely,” “should,” “could,”
“would,” “may” or the negative of such words or words or expressions of similar meaning are intended to
identify forward-looking statements. These forward-looking statements are not guarantees of future performance, and all such forward-looking
statements involve risks and uncertainties, many of which are beyond the company’s ability to control. Actual results may
differ materially from those expressed or implied by such forward-looking statements as a result of various factors. We do not
undertake, and we disclaim, any obligation to update any forward-looking statements or to announce revisions to any of the forward-looking
statements. Certain factors that could cause results to differ materially from those projected in the forward-looking statements,
including, among other things:
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Our ability to achieve profitability and positive cash flows;
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Our ability to manage our growth effectively;
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Our ability to retain key personnel;
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Our ability to enter into additional licensing transactions;
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The potential for our clinical trials to produce negative or inconclusive results;
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Our ability to obtain significant revenue for our tobacco products;
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Our ability to obtain U.S. Food and Drug Administration (“FDA”) clearance for our potentially modified risk tobacco products and FDA approval for our X-22 smoking cessation aid;
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Our ability to gain market acceptance for our products;
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Any potential negative impact from entering the industrial hemp and medical marijuana space;
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Our ability to raise additional capital on favorable terms or at all;
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Our ability to comply with government regulations;
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Our ability to compete with competitors that may have greater resources than we have;
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The potential for our competitors to develop products that are less expensive, safer or more effective than ours;
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The potential exposure to product liability claims, product recalls and other claims; and
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Our ability to adequately protect our intellectual property and to avoid infringement on rights of third parties.
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We urge you to consider these factors before
investing in our common stock. The forward-looking statements included in this prospectus supplement, the accompanying prospectus
and any other offering material, or in the documents incorporated by reference into this prospectus supplement, the accompanying
prospectus and any other offering material, are made only as of the date of the prospectus supplement, the accompanying prospectus,
any other offering material or the incorporated document. We undertake no obligation to publicly revise any forward-looking statements
or cautionary factors except as required by law. For more detail on these and other risks, please see “Risk Factors”
in this prospectus supplement and our Annual Report on Form 10-K for our fiscal year ended December 31, 2016.
Prospectus
Supplement Summary
The following information below is only a summary of more
detailed information included elsewhere in, or incorporated by reference in, this prospectus supplement and the accompanying prospectus,
and should be read together with the information contained or incorporated by reference in other parts of this prospectus supplement
and the accompanying prospectus. This summary highlights selected information about us and this offering. This summary may not
contain all of the information that may be important to you. Before making a decision to invest in our common stock, you should
read carefully all of the information contained in or incorporated by reference into this prospectus supplement and the accompanying
prospectus, including the information set forth under the caption “Risk Factors” in this prospectus supplement and
the accompanying prospectus as well as the documents incorporated herein by reference, which are described under “Where you
can Find More Information” and “Incorporation of Certain Documents by Reference” in this prospectus supplement.
Our Company
We are a plant biotechnology company focused
on (i) potentially reduced risk tobacco cigarettes and smoking cessation products produced from modifying the nicotine content
in tobacco plants through genetic engineering and plant breeding, and (ii) research and development of unique cannabis/hemp plants
through genetic engineering and plant breeding to alter levels of cannabinoids for new medicines and improved agricultural uses.
We have an extensive intellectual property portfolio of issued patents and patent applications relating to the tobacco and cannabis
plants. Our management team is focused on monetizing our intellectual property portfolio, obtaining regulatory approval to market
both our reduced exposure tobacco cigarettes and our tobacco smoking cessation product in development, and developing and commercializing
high value products derived from our unique cannabis/hemp plants.
Our Annual Report on Form 10-K for the year
ended December 31, 2016 and subsequently filed Quarterly Reports on Form 10-Q provide additional information about our business,
operations and financial condition.
Risk Factors
An investment in our common stock involves
risk. Before deciding whether to enroll and participate in this offering, you should carefully consider the risk factors beginning
on page S-3 of this prospectus supplement and the risk factors contained in the documents incorporated by reference in this prospectus
supplement and the accompanying prospectus.
Corporate Information
We are a Nevada corporation and our corporate
headquarters is located at 9530 Main Street, Clarence, New York 14031. Our telephone number is (716) 270-1523. Our Internet website
address is www.xxiicentury.com. We do not incorporate the information on our website into the prospectus or this prospectus supplement,
and you should not consider it part of the prospectus or this prospectus supplement.
The Offering
The following summary contains basic information
about this offering. The summary is not intended to be complete. You should read the full text and more specific details contained
elsewhere in this prospectus supplement.
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Issuer
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22nd Century Group, Inc.
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Common stock offered by us
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20,570,000 shares.
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Common stock to be outstanding after this offering(1)
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123,458,117 shares.
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NYSE American symbol
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XXII
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Use of proceeds
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We intend to use the net proceeds from this offering for general corporate purposes, which may include, but are not limited to, supporting our working capital needs, subject to certain limitations. See “Use of Proceeds.”
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Risk factors
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See “Risk Factors” and the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus for a discussion of certain factors you should carefully consider before deciding to invest in shares of our common stock.
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(1)
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The number of shares outstanding after this offering
is based on 102,888,117 shares of common stock outstanding as of October 6, 2017. The number of shares of common stock to be outstanding
after this offering excludes the following as of October 6, 2017: (i) 6,936,691 shares of common stock is
suable
upon the exercise of outstanding stock options; (ii)
3,949,765
shares of common stock
available for future stock award grants; and (iii)
12,204,580
shares of common stock
subject to outstanding warrants having a weighted average exercise price of $
2.0817
per
share.
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Risk
Factors
Investing in our common stock involves
a high degree of risk. Before investing in our common stock, you should carefully consider the specific risks described below as
well as the risks described in our annual report on Form 10-K for the year ended December 31, 2016. Any of the risks we describe
below or in the information incorporated herein by reference could cause our business, financial condition, or operating results
to suffer. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially
adversely affect our business, financial condition, or operating results. Some of the statements in this section of the prospectus
supplement are forward-looking statements. For more information about forward-looking statements, please see the section of this
prospectus supplement entitled “Forward-Looking Information.”
Risks Related to the Offering
Fluctuations in the price of our common stock,
including as a result of actual or anticipated sales of shares by stockholders, may make our common stock more difficult to resell.
The market price and trading volume of our
common stock have been and may continue to be subject to significant fluctuations due not only to general stock market conditions,
but also to a change in sentiment in the market regarding the industry in which we operate, our operations, business prospects
or liquidity or this offering. During the period from January 1, 2013 to October 6, 2017, our common stock has fluctuated from
a high of $6.36 per share to a low of $0.46 per share. In addition to the risk factors discussed in our periodic reports and in
this prospectus supplement, the price and volume volatility of our common stock may be affected by actual or anticipated sales
of common stock by existing stockholders, including of shares purchased in this offering, whether in the market or in subsequent
public offerings. Stock markets in general may experience extreme volatility that is unrelated to the operating performance of
listed companies. These broad market fluctuations may adversely affect the trading price of our common stock, regardless of our
operating results.
As a result, these fluctuations in the market
price and trading volume of our common stock may make it difficult to predict the market price of our common stock in the future,
cause the value of your investment to decline and make it more difficult to resell our common stock.
We have broad discretion as to the use of the
net proceeds we receive from this offering and may not use them effectively.
We retain broad discretion to use the net
proceeds from this offering of our common stock. Accordingly, you will have to rely upon the judgment of our management with respect
to the use of those net proceeds. Our management may spend a portion or all of the net proceeds we receive from this offering in
ways that our stockholders may not desire or that may not yield a favorable return. The failure by our management to apply these
funds effectively could harm our business.
Purchasers will suffer immediate and substantial
dilution as a result of this offering.
Purchasers of shares of our common stock
offered by this prospectus supplement and accompanying prospectus will suffer immediate and substantial dilution of their investment.
Purchasers in this offering will suffer immediate dilution of approximately $2.0567 per share in the net tangible book value of
the common stock. See “Dilution” on page S-6 of this prospectus supplement for a more detailed discussion of the dilution
purchasers will incur in this offering.
Our stockholders may experience further dilution
if we issue additional shares of common stock in the future.
Any additional future issuances of common
stock by us will reduce the percentage of our common stock owned by investors purchasing shares in this offering who do not participate
in such future issuances. In most circumstances stockholders will not be entitled to vote on whether or not we issue additional
common stock. In addition, depending on the terms and pricing of additional offerings of our common stock and the value of our
assets, our stockholders may experience dilution in both the book value and fair value of their shares.
There may be future sales or other dilution
of our equity which may adversely affect the market price of our common stock.
Except as described under “Plan of
Distribution,” we are not restricted from issuing additional shares of common stock, including securities that are convertible
into or exchangeable for, or that represent the right to receive, common stock. We are offering 20,570,000 shares of common stock.
The issuance of additional shares of our common stock in this offering or other issuances of our common stock or convertible or
other equity linked securities, including options and warrants, or otherwise, in connection with capital raising transactions,
as payment of the consideration for acquisitions or for employee compensation or other purposes will dilute the ownership interest
of our common stockholders.
As of October 6, 2017, we had
102,888,117 outstanding shares of common stock, which excludes the following as of October 6, 2017: (i) 6,936,691 shares of
common stock issuable upon the exercise of outstanding stock options; (ii) 3,949,765 shares of common stock available for
future stock award grants; and (iii) 12,204,580 shares of common stock subject to outstanding warrants having a weighted
average exercise price of $2.0817 per share
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Sales of a substantial number of shares
of our common stock or other equity-related securities in the public market could depress the market price of our common stock
and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future
sales of our common stock or other equity-related securities would have on the market price of our common stock.
We are not currently paying dividends and will
likely continue not paying dividends for the foreseeable future.
We have never paid or declared any cash
dividends on our common stock. We currently intend to retain all available funds and any future earnings to fund the development
and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination
to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations,
capital requirements, contractual restrictions and other factors that our board of directors deems relevant.
Use
of Proceeds
We estimate that the net proceeds from the
sale of shares in this offering will be approximately $50.7 million, assuming that we sell the maximum number of shares we are
offering pursuant to this prospectus supplement, after deducting placement agent discounts and commissions and our estimated expenses
related to the offering. Because there is no minimum offering amount required as a condition to the closing of this offering, the
actual number of shares sold, placement agent fees and proceeds to us are not presently determinable and may be substantially less
than the maximum amount set forth above.
We intend to use the net proceeds from the
sale of our common stock for general corporate purposes, which may include supporting our working capital needs, provided that
the securities purchase agreement with the purchaser provides that we may not use the proceeds (i) for the payment of debt
(other than trade payables), (ii) for the redemption of any securities, (iii) for the settlement of litigation, or (iv) in
violation of certain regulations.
Dilution
Purchasers of shares offered by this prospectus
supplement and the accompanying prospectus will experience an immediate dilution in the net tangible book value of their common
stock from the price paid in the offering. The net tangible book value of our common stock as of June 30, 2017 was approximately
$16,083,000 or $0.1658 per share. Net tangible book value per share of our common stock as of June 30, 2017 is equal to our net
tangible assets (stockholders’ equity less goodwill, intangible assets and equity investment) divided by the number of shares
of our common stock issued and outstanding as of June 30, 2017.
Dilution per share represents the difference
between the public offering price per share and the adjusted net tangible book value per share of our common stock after giving
effect to this offering. After reflecting the sale in this offering of 20,570,000 shares of our common stock at the public offering
price of $2.6250 per share, less placement agent fees and estimated offering expenses, the adjusted net tangible book value
of our common stock as of June 30, 2017 would have been approximately $66,819,000 or $0.5683 per share. The change represents an
immediate increase in net tangible book value per share of our common stock of $0.4025 per share to existing stockholders and an
immediate dilution of $2.0567 per share to new investors purchasing the shares in this offering. The following table illustrates
this per share dilution:
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Public offering price per share
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$
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2.6250
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Net tangible book value per share as of June 30, 2017
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$
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0.1658
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Increase per share attributable to this offering
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$
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0.4025
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Adjusted net tangible book value per share as of June 30, 2017
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$
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0.5683
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Dilution per share attributable to this offering
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$
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2.0567
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The foregoing calculations are based on 97,015,911 shares of
common stock outstanding as of June 30, 2017 and exclude (i) 6,965,688 shares of common stock is
suable
upon the exercise of outstanding stock options; (ii)
3,949,765
shares of common stock
available for future stock award grants; and (iii)
12,445,247
shares of common stock
subject to outstanding warrants having a weighted average exercise price of $1.6004 per share. The foregoing calculations also
exclude the following items occurring after June 30, 2017: (i) 5,708,552 shares of common stock issued as a result of warrant exercises
for cash and (ii) the issuance of 5,708,552 warrants to purchase common stock with an exercise price of $2.15 per share.
Common
Stock Price Range And Dividends
Price of Our Common Stock
Our common stock is quoted on the NYSE American
under the symbol “XXII.” As of October 6, 2017, there were 101 holders of record of shares of our common stock. The
following table sets forth, for the quarters indicated, the high and low bid prices per share of our common stock, as derived from
quotations provided by the NYSE American.
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High
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Low
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Year
Ended December 31, 2015
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First Quarter
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$
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1.78
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$
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0.65
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Second Quarter
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$
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1.55
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$
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0.71
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Third Quarter
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$
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1.13
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$
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0.56
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Fourth Quarter
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$
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1.75
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$
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0.82
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Year Ending December 31, 2016
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First Quarter
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$
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1.44
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$
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0.71
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Second Quarter
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$
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0.98
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$
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0.73
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Third Quarter
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$
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1.48
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$
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0.79
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Fourth Quarter
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$
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1.71
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$
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0.90
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Year Ending December 31, 2017
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First Quarter
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$
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1.35
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$
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0.81
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Second Quarter
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$
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2.00
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$
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1.13
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Third Quarter
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$
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3.34
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$
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1.33
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Fourth Quarter (through October 6, 2017)
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$
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3.50
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$
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2.69
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Dividend Payments and Policy
We have not previously and do not plan to
declare or pay any dividends on our common stock. Our current policy is to retain all funds and any earnings for use in the operation
and expansion of our business. Payment of future dividends, if any, will be at the discretion of our board of directors after taking
into account various factors, including current financial condition, operating results and current and anticipated cash needs.
Description
of Securities
In this offering, we are offering a maximum
of 20,570,000 shares of our common stock The material terms and provisions of our common stock are described under the caption
“Description of Capital Stock – Common Stock” starting on page 16 of the accompanying prospectus.
The material terms and provisions of our
outstanding warrants are described under the caption “Description of Common Stock – Warrants” starting on page
17 of the accompanying prospectus as modified by our subsequently filed periodic reports.
Plan
of Distribution
Pursuant to a placement agency agreement
between us and Chardan Capital Markets, LLC (“Chardan”) we have engaged Chardan as our exclusive placement
agent to solicit offers to purchase the shares in this offering. The placement agent is not purchasing or selling any of the shares
we are offering, and it is not required to arrange the purchase or sale of any specific number of shares or dollar amount, but
it has agreed to use commercially reasonable efforts to arrange for the sale of the shares. The placement agent may retain sub-agents
and selected dealers in connection with this offering.
The placement agent proposes to arrange
for the sale of the shares we are offering pursuant to this prospectus supplement to one or more investors through securities purchase
agreements directly between the purchasers and us. All of the shares will be sold at the same price and, we expect, at a single
closing. We established the price following negotiations with prospective investors and with reference to the prevailing market
price of our common stock, recent trends in such price and other factors. It is possible that not all of the shares we are offering
pursuant to this prospectus supplement will be sold at the closing, in which case our net proceeds would be reduced. We anticipate
that the sale of the shares will be completed on the date indicated on the cover page of this prospectus supplement, subject to
customary closing conditions. On the closing date, the following will occur:
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we will receive funds in the amount of the aggregate purchase price;
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Chardan, as placement agent, will receive the placement agent fees in accordance with the terms of the placement agency agreement; and
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we will deliver the shares to the investors.
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In connection with this offering, the placement
agent may distribute this prospectus supplement and the accompanying prospectus electronically.
We will pay the placement agent cash fees
equal to six percent (6%) of the gross proceeds from the sale of the shares in this offering. In addition, we have agreed to pay
a cash fee equal to six percent (6%) of the gross proceeds from the sale of any securities to any purchaser in this offering or
a specified party that was introduced to us by the placement agent during the six (6) months following the sale of shares in this
offering. The following table shows the per share and total placement agent fee we will pay to the placement agent in connection
with the sale of the shares, assuming the purchase of all of the shares we are offering.
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Per share
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$
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0.1575
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Total
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$
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3,239,775
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The estimated offering expenses payable
by us, excluding the placement agent fees, will be approximately $20,000, which includes legal and printing costs and various other
fees associated with registering and listing the common stock. After deducting certain fees due to the placement agent and our
estimated offering expenses, we expect the net proceeds from this offering to be approximately $50.7 million.
We have agreed to indemnify the placement
agent against certain liabilities, including liabilities under the Securities Act of 1933, as amended (“Securities Act”),
and liabilities arising from breaches and representations and warranties by us as contained in the placement agency agreement.
We have also agreed to contribute to payments the placement agent may be required to make in respect of such liabilities.
The placement agency agreement is included
as an exhibit to our Current Report on Form 8-K that we will file with the SEC in connection with this offering.
Chardan may
be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it
and any profit realized on the resale of the shares sold by it while acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. As an underwriter, Chardan would be required to comply with the requirements of
the Securities Act and the Securities Exchange Act of 1934, as amended (“Exchange Act”), including, without limitation,
Rule 415(a)(4) under the Securities Act and Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may
limit the timing of purchases and sales of shares by Chardan acting as principal. Under these rules and regulations, Chardan:
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may not engage in any stabilization activity in connection with our securities; and
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may not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution.
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Electronic Distribution
A prospectus supplement in electronic format
may be made available on websites or through other online services maintained by the placement agent of the offering, or by its
affiliates. Other than the prospectus supplement in electronic format, the information on the placement agent’s websites
and any information contained in any other website maintained by the placement agent is not part of this prospectus supplement
or the registration statement of which this prospectus supplement forms a part, has not been approved and/or endorsed by us or
the placement agent in its capacity as placement agent and should not be relied upon by investors.
Listing
Our common stock is listed on the NYSE American
under the symbol “XXII.”
Selling Restrictions
No action has been taken in any jurisdiction
(except in the United States) that would permit a public offering of our common stock, or the possession, circulation or distribution
of this prospectus supplement, the accompanying prospectus or any other material relating to us or our common stock in any jurisdiction
where action for that purpose is required. Accordingly, our common stock may not be offered or sold, directly or indirectly, and
none of this prospectus supplement, the accompanying prospectus or any other offering material or advertisements in connection
with our common stock may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable
rules and regulations of any such country or jurisdiction.
The placement agent may arrange to sell
common stock offered hereby in certain jurisdictions outside the United States, either directly or through affiliates, where they
are permitted to do so.
Affiliations
The placement agent
and its affiliates have provided, and may in the future provide, various investment banking, financial advisory and other financial
services to us and our affiliates for which they have received, and in the future may receive, advisory or transaction fees, as
applicable.
Legal
Matters
The validity of the
shares of common stock offered by this prospectus supplement will be passed upon for us by Foley & Lardner LLP. As of October
6, 2017, Foley & Lardner LLP owned 515,950 shares of common stock of the Company.
Experts
The consolidated financial
statements of 22nd Century Group, Inc. have been incorporated by reference herein in reliance upon the report of Freed Maxick CPAs,
P.C., independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing. To the extent that Freed Maxick CPAs, P.C. audits and reports on consolidated financial statements
of 22nd Century Group, Inc. at future dates and consents to the use of their reports thereon, such consolidated financial statements
also will be incorporated by reference in the registration statement in reliance upon their reports and said authority.
Where
You Can Find More Information
We file annual, quarterly
and current reports, proxy statements and other information with the SEC. We also filed a registration statement on Form S-3, including
exhibits, under the Securities Act with respect to the securities offered by this prospectus supplement. This prospectus supplement
is a part of the registration statement, but does not contain all of the information included in the registration statement or
the exhibits. You may read and copy the registration statement and any other document that we file at the SEC’s public reference
room at 100 F Street, N.E., Washington D.C. 20549. You can call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference room. You can also find our public filings with the SEC on the internet at a web site maintained by the
SEC located at
www.sec.gov
, as well as you can also view our public filings on our website at www.xxiicentury.com.
Incorporation
of Certain Documents by Reference
We are “incorporating
by reference” specified documents that we file with the SEC, which means:
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incorporated documents are considered part of this prospectus supplement;
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we are disclosing important information to you by referring you to those documents; and
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information that we file with the SEC will automatically update and supersede information contained in this prospectus supplement.
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We incorporate by reference
the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act (i) after the date of the registration statement on Form S-3 filed under the Securities Act with respect to securities
offered by this prospectus and prior to the effectiveness of such registration statement and (ii) after the date of this prospectus
and before the end of the offering of the securities pursuant to this prospectus:
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our Annual Report on Form 10-K for the year ended December 31, 2016;
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our Quarterly Report on Form 10-Q for the periods ended March 31, 2017 and June 30, 2017;
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our Current Reports on Form 8-K filed on May 3, 2017, June 19, 2017 and September 25, 2017 (excluding Item 7.01 and the exhibit related thereto);
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our Definitive Proxy Statement on Schedule 14A filed March 17, 2017; and
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the description of our common stock contained in or incorporated into our Registration Statement on Form 8-A, filed March 6, 2014, and any amendment or report updating that description.
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Information in this
prospectus supersedes related information in the documents listed above, and information in subsequently filed documents supersedes
related information in both this prospectus and the incorporated documents.
We will promptly provide,
without charge to you, upon written or oral request, a copy of any or all of the documents incorporated by reference in this prospectus,
other than exhibits to those documents, unless the exhibits are specifically incorporated by reference in those documents. Requests
should be directed to:
22nd Century Group, Inc.
9530 Main Street
Clarence, New York 14031
(716) 270-1523
You can also find these
filings on our website at www.xxiicentury.com. We are not incorporating the information on our website other than these filings
into this prospectus.
22ND CENTURY GROUP, INC.
$100,000,000
Debt Securities
Common Stock
Preferred Stock
Warrants
Subscription Rights
Units
Purchase Contracts
We may offer and sell from time to time up to
$100.0 million of any combination of the securities described in this prospectus, in one or more classes or series and in amounts,
at prices and on terms that we will determine at the times of the offerings.
This prospectus describes the general manner
in which our securities may be offered using this prospectus. We will provide specific terms of the securities, including the offering
prices, in one or more supplements to this prospectus. The supplements may also add, update or change information contained in
this prospectus. You should read this prospectus and the prospectus supplement relating to the specific issue of securities carefully
before you invest.
We may offer the securities independently or
together in any combination for sale directly to purchasers or through underwriters, dealers or agents to be designated at a future
date. The supplements to this prospectus will provide the specific terms of the plan of distribution.
This prospectus also relates to the issuance
of 11,293,211 shares of our common stock upon exercise of certain of our outstanding warrants (as described herein the heading
“Description of Capital Stock – Warrants”). Such outstanding warrants and shares of common stock were registered
under our prior Registration Statement on Form S-3 (Registration Nos. 333-195386 and 333-214093) as declared effective by the Securities
and Exchange Commission (the “SEC”) on June 5, 2014 (the “Prior Registration Statement”).
Our common stock is listed on the NYSE American under
the symbol “XXII.”
Investment in our securities involves risks.
Please read carefully the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K, subsequently
filed quarterly reports on Form 10-Q and in any applicable prospectus supplement and/or other offering material for a discussion
of certain factors which should be considered in an investment of the securities which may be offered hereby.
Neither the SEC nor any state securities commission
has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is
January 17, 2017.
TABLE OF CONTENTS
About This Prospectus
Unless the context otherwise requires, in this
prospectus, “company,” “we,” “us,” “our” and “ours” refer to 22nd Century
Group, Inc. and its subsidiaries on a combined basis.
This prospectus is part of a registration statement
that we filed with the Securities and Exchange Commission, or SEC, using a “shelf” registration process. Under this
shelf registration process, we may, from time to time, sell the securities or combinations of the securities described in this
prospectus in one or more offerings. This prospectus provides you with a general description of the securities that we may offer.
Each time we offer securities, we will provide a prospectus supplement and/or other offering material that will contain specific
information about the terms of that offering. This prospectus also relates to the issuance of up to 11,293,211 shares of common
stock upon exercise of certain of our outstanding warrants. The warrants and shares of common stock issuable thereunder were registered
under the Prior Registration Statement. The prospectus supplement(s) and/or other offering material(s) may also add, update or
change information contained in this prospectus. You should read this prospectus, any prospectus supplement and any other offering
material together with additional information described herein under the heading “Where You Can Find More Information.”
You should rely only on the information contained
or incorporated by reference in this prospectus and in any prospectus supplement or other offering material. We have not authorized
any other person to provide you with different information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not making offers to sell or solicitations to buy the securities in any jurisdiction in which
an offer or solicitation is not authorized or in which the person making that offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make an offer or solicitation. You should not assume that the information in this prospectus,
any prospectus supplement or any other offering material, or the information we previously filed with the SEC that we incorporate
by reference in this prospectus or any prospectus supplement, is accurate as of any date other than its respective date. Our business,
financial condition, results of operations and prospects may have changed since those dates.
“Forward-Looking” Information
The information included
or incorporation by reference into this prospectus contains statements that the company believes to be “forward-looking statements”
within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, any statement that is not a statement of historical fact, including, without limitation,
statements regarding the company’s business strategy and plans and objectives of management for future operations or that
may predict, forecast, indicate or imply future results, performance or achievements. The words “estimate,” “project,”
“intend,” “forecast,” “anticipate,” “plan,” “planning,” “expect,”
“believe,” “will,” “will likely,” “should,” “could,” “would,”
“may” or the negative of such words or words or expressions of similar meaning are intended to identify forward-looking
statements. These forward-looking statements are not guarantees of future performance, and all such forward-looking statements
involve risks and uncertainties, many of which are beyond the company’s ability to control. Actual results may differ materially
from those expressed or implied by such forward-looking statements as a result of various factors. We do not undertake, and we
disclaim, any obligation to update any forward-looking statements or to announce revisions to any of the forward-looking statements.
Certain factors could cause results to differ materially from those projected in the forward-looking statements, including, among
other things:
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Our ability to raise additional capital on favorable terms or at all;
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Our ability to achieve profitability and positive cash flows;
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Our ability to manage our growth effectively;
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Our ability to retain key personnel;
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Our ability to enter into additional licensing transactions;
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The potential for our clinical trials to produce negative or inconclusive results;
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Our ability to obtain significant revenue for our tobacco products;
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Our ability to obtain U.S. Food and Drug Administration (“FDA”) clearance for our potentially
modified risk tobacco products and FDA approval for our X-22 smoking cessation aid;
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Our ability to gain market acceptance for our products;
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Any potential negative impact from entering the industrial hemp and medical marijuana space;
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Our ability to comply with government regulations;
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Our ability to compete with competitors that may have greater resources than we have;
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The potential for our competitors to develop products that are less expensive, safer or more effective
than ours;
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The potential exposure to product liability claims, product recalls and other claims; and
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Our ability to adequately protect our intellectual property and to avoid infringement on rights
of third parties.
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The forward-looking statements contained herein
reflect our views and assumptions only as of the date such forward-looking statements are made. You should not place undue reliance
on forward-looking statements. Except as required by law, we assume no responsibility for updating any forward-looking statements
nor do we intend to do so. Our actual results, performance or achievements could materially differ from the results expressed in,
or implied by, these forward-looking statements. The risks included in this section are not exhaustive. Additional factors that
could cause actual results to differ materially from those described in the forward-looking statements are set forth in under the
heading “Risk Factors” contained in the applicable prospectus supplement and any related free writing prospectus, and
in our most recent annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q, as well as any amendments
thereto reflected in subsequent filings with the SEC.
22nd CENTURY
GROUP, INC.
We are a plant biotechnology company focused
on (i) tobacco harm reduction products and smoking cessation products produced from modifying the nicotine content in tobacco plants
through genetic engineering and plant breeding, and (ii) research and development of unique industrial hemp and medical marijuana
plants through genetic engineering and plant breeding. We currently own or exclusively control more than 200 issued patents and
more than 50 pending patent applications around the world. Our management team is focused on monetizing our intellectual property
portfolio and obtaining regulatory approval to market our reduced exposure cigarettes and our smoking cessation product in development.
Our Annual Report on Form 10-K for the year ended December 31, 2015 and subsequently filed Forms 10-Q provide additional information
about our business, operations and financial condition.
We are a Nevada corporation incorporated in
September 2005 and our corporate headquarters is located at 9530 Main Street, Clarence, New York 14031. Our telephone number is
(716) 270-1523. Our Internet website address is www.xxiicentury.com. We do not incorporate the information on our website into
this prospectus, and you should not consider it part of this prospectus.
Use of Proceeds
Unless otherwise
described in the applicable prospectus supplement, we intend to use the net proceeds from the sale of the securities for general
corporate purposes, acquiring businesses, investing in other businesses and the repayment of debt. Pending such use, we may temporarily
invest the net proceeds in short-term investments.
FINANCIAL RATIOS
The following table shows our consolidated ratio
of earnings to (i) fixed charges and (ii) combined fixed charges and preferred stock dividends for the periods indicated:
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For the nine
months ended
September 30,
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For the year ended
December 31,
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2016
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2015
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2014
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2013
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2012
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2011
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Ratio of earnings to fixed charges
(1)(2)
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—
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—
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Ratio of earnings to combined fixed charges and preferred stock dividends
(2)(3)
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—
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(1)
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The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. The term “fixed charges”
means the sum of the following: (a) interest expensed and capitalized, (b) amortized premiums, discounts and capitalized expenses
related to indebtedness and (c) an estimate of the interest within rental expense. The term “earnings” is the amount
resulting from adding the following: (a) pre-tax income from continuing operations before adjustment for income or loss from equity
investees; (b) fixed charges; (c) amortization of capitalized interest; (d) distributed income of equity investees; and (e) share
of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges; and then subtracting
from the total added items, the following: (a) interest capitalized and (b) the noncontrolling interest in pre-tax income of subsidiaries
that have not incurred fixed charges.
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(2)
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In the nine months ended September 30, 2016 and in the years ended December 31, 2015, 2014, 2013, 2012 and 2011, we incurred
losses from operations, and as a result, our earnings were insufficient to cover our fixed charges by $8.8 million, $11.0 million,
$15.6 million, $26.2 million, $6.7 million and $1.4 million, respectively.
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(3)
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The ratio of earnings to combined fixed charges and preferred stock dividends is computed by dividing earnings by the sum of
fixed charges and preferred stock dividends. The term “fixed charges” means the sum of the following: (a) interest
expensed and capitalized, (b) amortized premiums, discounts and capitalized expenses related to indebtedness, (c) an estimate of
the interest within rental expense, and (d) preferred stock dividend requirements of consolidated subsidiaries. The term “preferred
stock dividend” is the amount of pre-tax earnings that is required to pay the dividends on outstanding preferred securities.
The term “earnings” is the amount resulting from adding the following: (a) pre-tax income from continuing operations
before adjustment for income or loss from equity investees; (b) fixed charges; (c) amortization of capitalized interest; (d) distributed
income of equity investees; and (e) share of pre-tax losses of equity investees for which charges arising from guarantees are included
in fixed charges; and then subtracting from the total added items, the following: (a) interest capitalized; (b) preferred dividend
requirements of consolidated subsidiaries; and (c) the noncontrolling interest in pre-tax income of subsidiaries that have not
incurred fixed charges.
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Description
of Debt Securities
The following description of the terms of the
debt securities sets forth general terms that may apply to the debt securities and provisions of the indenture that will govern
the debt securities, and is not complete. We will describe the particular terms of any debt securities in the prospectus supplement
relating to those debt securities.
The debt securities will be our debt securities
and will be issued under an indenture between us and a trustee, a form of which is incorporated by reference into this prospectus
and attached as an exhibit to the registration statement of which this prospectus is a part. See “Where You Can Find More
Information.” We refer to this indenture as the “indenture.”
The following is a summary of some provisions
of the indenture. The following summary does not purport to be complete, and is subject to, and qualified in its entirety by reference
to, all of the provisions of the indenture, including the definitions of specified terms used in the indenture, and the debt securities.
We encourage you to read the indenture and the debt securities because they, and not this description, set forth your rights as
a holder of our debt securities. We will describe the particular terms of any debt securities in the prospectus supplement relating
to those debt securities. Parenthetical section references under this heading are references to sections in the indenture unless
we indicate otherwise.
General Terms
The indenture does not limit the amount of debt
securities that we may issue. (Section 301). The indenture provides that debt securities may be issued up to the principal amount
authorized by us from time to time. The debt securities will be unsecured and will have the same rank as all of our other unsecured
debt. None of our subsidiaries, if any, will have any obligations with respect to the debt securities. Therefore, our rights and
the rights of our creditors, including holders of senior debt securities and subordinated debt securities, to participate in the
assets of any subsidiary will be subject to the prior claims of the creditors of any such subsidiaries.
We may issue the debt securities in one or more
separate series of senior debt securities. (Section 301). The prospectus supplement relating to the particular series of debt securities
being offered will specify the particular amounts, prices and terms of those debt securities. These terms may include:
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the title of the debt securities and the series in which the debt securities will be included;
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the authorized denominations and aggregate principal amount of the debt securities;
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the date or dates on which the principal and premium, if any, are payable;
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the rate or rates per annum at which the debt securities will bear interest, if there is any interest, or the method or methods
of calculating interest and the date from which interest will accrue;
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the place or places where the principal of and any premium and interest on the debt securities will be payable;
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the dates on which the interest will be payable and the corresponding record dates;
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the period or periods within which, the price or prices at which, and the terms and conditions on which, the debt securities
may be redeemed, in whole or in part, at our option;
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whether the debt securities of any series will be issued in whole or in part;
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whether the debt securities of any series will be issued in the form of a global security and, if so, the name of the applicable
depositary and global exchange agent;
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any obligation to redeem, repay or purchase debt securities pursuant to any sinking fund or analogous provisions or at the
option of a holder;
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the portion of the principal amount of the debt securities payable upon declaration of the acceleration of the maturity of
the debt securities;
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the person to whom any interest on any debt security will be payable if other than the person in whose name the debt security
is registered on the applicable record date;
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any events of default, covenants or warranties applicable to the debt securities;
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the currency, currencies or composite currency of denomination of the debt securities;
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the currency, currencies or composite currencies in which payments on the debt securities will be payable and whether the holder
may elect payment to be made in a different currency;
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whether and under what conditions we will pay additional amounts to holders of the debt securities;
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the terms and conditions of any conversion or exchange provisions in respect of the debt securities;
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the terms pursuant to which our obligation under the indenture may be terminated through the deposit of money or government
obligations;
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whether the debt securities of any series will be subordinated in right of payment to senior indebtedness; and
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any other specific terms of the debt securities not inconsistent with the indenture. (Section 301).
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Unless otherwise specified in the applicable
prospectus supplement, the debt securities will not be listed on any securities exchange.
Unless the applicable prospectus supplement
specifies otherwise, we will issue the debt securities in fully registered form without coupons. If we issue debt securities of
any series in bearer form, the applicable prospectus supplement will describe the special restrictions and considerations, including
special offering restrictions and special federal income tax considerations, applicable to those debt securities and to payment
on and transfer and exchange of those debt securities.
U.S. Federal Income Tax Considerations
We may issue the debt securities as original
issue discount securities, bearing no interest or bearing interest at a rate, which, at the time of issuance, may be below market
rates, to be sold at a substantial discount below their principal amount. We will describe some special U.S. federal income tax
and other considerations applicable to any debt securities that are issued as original issue discount securities in the applicable
prospectus supplement. We encourage you to consult with your own tax and financial advisors on these important matters.
Payment, Registration, Transfer and Exchange
Subject to any applicable laws or regulations,
we will make payments on the debt securities at a designated office or agency, unless the applicable prospectus supplement otherwise
sets forth. At our option, however, we may also make interest payments on the debt securities in registered form:
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by checks mailed to the persons entitled to interest payments at their registered addresses; or
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by wire transfer to an account maintained by the person entitled to interest payments as specified in the debt security register.
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Unless the applicable prospectus supplement
otherwise indicates, we will pay any installment of interest on debt securities in registered form to the person in whose name
the debt security is registered at the close of business on the regular record date for that installment of interest. (Section
307). If a holder wishes to receive payment by wire transfer, the holder should provide the paying agent with written wire transfer
instructions at least 15 days prior to the payment date.
Unless the applicable prospectus supplement
otherwise sets forth, debt securities issued in registered form will be transferable or exchangeable at the agency we may designate
from time to time. Debt securities may be transferred or exchanged without service charge, other than any tax or other governmental
charge imposed in connection with the transfer or exchange. (Section 305).
Book-Entry Procedures
The applicable prospectus supplement for each
series of debt securities will state whether those debt securities will be subject to the following provisions.
Unless debt securities in physical form are
issued, we will issue the debt securities in whole or in part in the form of one or more global certificates, which we refer to
as global securities, in denominations of $1,000 or any integral multiple of $1,000. We will deposit the global securities with
or on behalf of The Depository Trust Company, which we refer to as DTC, and registered in the name of Cede & Co., as nominee
of DTC. Beneficial interests in the global securities may be held through the Euroclear System (“Euroclear”) and Clearstream
Banking, S.A. (“Clearstream”) (as indirect participants in DTC).
We have provided the following descriptions
of the operations and procedures of DTC, Euroclear and Clearstream solely as a matter of convenience. These operations and procedures
are solely within the control of DTC, Euroclear and Clearstream and are subject to change by them from time to time. Neither we,
any underwriter nor the trustee take any responsibility for these operations or procedures, and you are urged to contact DTC, Euroclear
or Clearstream directly to discuss these matters.
DTC has advised us that:
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DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within
the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the
meaning of the New York Uniform Commercial Code and a “clearing agency” registered under Section 17A of the Securities
Exchange Act of 1934;
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DTC holds securities that its direct participants deposit with DTC and facilitates the
settlement among direct participants of securities transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in direct participants’ accounts, thereby eliminating the need for physical movement
of securities certificates
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direct participants include securities brokers and dealers, trust companies, clearing
corporations and other organizations
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DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation,
which is owned by the users of its regulated subsidiaries
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access to the DTC system is also available to indirect participants such as securities
brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a direct participant,
either directly or indirectly; and
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the rules applicable to DTC and its direct and indirect participants are on file with
the SEC.
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We expect
that under procedures established by DTC:
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upon deposit of the global securities with DTC or its custodian, DTC will credit on its
internal system the accounts of direct participants designated by the underwriters with portions of the principal amounts of the
global securities; and
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ownership of the debt securities will be shown on, and the transfer of ownership of the
debt securities will be effected only through, records maintained by DTC or its nominee, with respect to interests of direct participants,
and the records of direct and indirect participants, with respect to interests of persons other than participants.
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Investors
in the global securities who are participants in DTC’s system may hold their interests therein directly through DTC. Investors
in the global notes who are not participants may hold their interests therein indirectly through organizations (including Euroclear
and Clearstream) which are participants in such system. Euroclear and Clearstream may hold interests in the global securities on
behalf of their participants through customers’ securities accounts in their respective names on the books of their respective
depositories, which are Euroclear Bank S.A./N.V., as operator of Euroclear, and Citibank, N.A., as depository of Clearstream. All
interests in a securities, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements
of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems.
The laws of some
jurisdictions require that purchasers of securities take physical delivery of those securities in the form of a certificate. For
that reason, it may not be possible to transfer interests in a global security to those persons. In addition, because DTC can act
only on behalf of its participants, who in turn act on behalf of persons who hold interests through participants, the ability of
a person having an interest in a global security to pledge or transfer that interest to persons or entities that do not participate
in DTC’s system, or otherwise to take actions in respect of that interest, may be affected by the lack of a physical definitive
security in respect of that interest.
So long as DTC
or its nominee is the registered owner of a global security, DTC or that nominee will be considered the sole owner or holder of
the debt securities represented by that global security for all purposes under the indenture and under the debt securities. Except
as described below, owners of beneficial interests in a global security will not be entitled to have debt securities represented
by that global security registered in their names, will not receive or be entitled to receive the debt securities in the form of
a physical certificate and will not be considered the owners or holders of the debt securities under the indenture or under the
debt securities, and may not be entitled to give the trustee directions, instructions or approvals. For that reason, each holder
owning a beneficial interest in a global security must rely on DTC’s procedures and, if that holder is not a direct or indirect
participant in DTC, on the procedures of the DTC participant through which that holder owns its interest, to exercise any rights
of a holder of debt securities under the indenture or the global security.
Neither we nor
the trustee will have any responsibility or liability for any aspect of DTC’s records relating to the debt securities or
relating to payments made by DTC on account of the debt securities, or any responsibility to maintain, supervise or review any
of DTC’s records relating to the debt securities.
We will make payments
on the debt securities represented by the global securities to DTC or its nominee, as the registered owner of the debt securities.
We expect that when DTC or its nominee receives any payment on the debt securities represented by a global security, DTC will credit
participants’ accounts with payments in amounts proportionate to their beneficial interests in the global security as shown
in DTC’s records. We also expect that payments by DTC’s participants to owners of beneficial interests in the global
security held through those participants will be governed by standing instructions and customary practice as is now the case with
securities held for the accounts of customers registered in the names of nominees for such customers. DTC’s participants
will be responsible for those payments.
Payments on the debt securities represented
by the global securities will be made in immediately available funds. Transfers between participants in DTC will be made in accordance
with DTC’s rules and will be settled in immediately available funds.
Transfers between participants in DTC will
be effected in accordance with DTC’s procedures, and will be settled in same-day funds, and transfers between participants
in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.
Cross-market transfers between the participants
in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance
with DTC’s rules on behalf of Euroclear or Clearstream, as the case may be, by its depository; however, such cross-market
transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such
system in accordance with the rules and procedures and within the established deadlines (European time) of such system. Euroclear
or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective
depository to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant global
security in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable
to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear
or Clearstream.
DTC has advised us that it will take any action
permitted to be taken by a holder of notes only at the direction of one or more participants to whose account DTC has credited
the interests in the global securities and only in respect of such portion of the aggregate principal amount of the notes as to
which such participant or participants has or have given such direction. However, if there is an event of default under the notes,
DTC reserves the right to exchange the global securities for certificated notes, and to distribute such notes to its participants.
Although DTC, Euroclear and Clearstream have
agreed to the foregoing procedures to facilitate transfers of interests in the global securities among participants in DTC, Euroclear
and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures
at any time. None of the trustee, us or any of their or our respective agents will have any responsibility for the performance
by DTC, Euroclear or Clearstream or their respective direct or indirect participants of their respective obligations under the
rules and procedures governing their operations.
Physical certificates will be issued to holders
of a global security, or their nominees, if:
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DTC advises the trustee in writing that DTC is no longer willing, able or eligible to discharge properly its responsibilities
as depository and we are unable to locate a qualified successor; or
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we decide in our sole discretion to terminate the book-entry system through DTC. (Section 305).
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In such event, the trustee will notify all
holders of debt securities through DTC participants of the availability of such physical debt securities. Upon surrender by DTC
of a definitive global note representing the debt securities and receipt of instructions for reregistration, the trustee will reissue
the debt securities in physical form to holders or their nominees. (Section 305).
Physical certificates will be issued
to holders of a global security, or their nominees, if:
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DTC advises the trustee in writing that DTC is no longer willing, able or eligible to discharge properly its responsibilities
as depository and we are unable to locate a qualified successor; or
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we decide in our sole discretion to terminate the book-entry system through DTC. (Section 305).
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In any such event, the trustee will notify all
holders of debt securities through DTC participants of the availability of such physical debt securities. Upon surrender by DTC
of a definitive global note representing the debt securities and receipt of instructions for reregistration, the trustee will reissue
the debt securities in physical form to holders or their nominees. (Section 305).
Debt securities in physical form will be freely
transferable and exchangeable at the office of the trustee upon compliance with the requirements set forth in the indenture.
No service charge will be imposed for any registration
of transfer or exchange, but payment of a sum sufficient to cover any tax or other governmental charge may be required. (Section
305).
Same Day Settlement and Payment
We will make payments in respect of the notes
represented by the global securities (including principal, premium, if any, and interest) by wire transfer of immediately available
funds to the accounts specified by the global securities holder. We will make all payments of principal, interest and premium,
if any, with respect to certificated notes by wire transfer of immediately available funds to the accounts specified by the holders
of the certificated notes or, if no such account is specified, by mailing a check to each such holder’s registered address.
The notes represented by the global securities are expected to be eligible to trade in DTC’s Same-Day Funds Settlement System,
and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately
available funds. We expect that secondary trading in any certificated notes will also be settled in immediately available funds.
Because of time zone differences, the securities
account of a Euroclear or Clearstream participant purchasing an interest in a global security from a participant in DTC will be
credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement
processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC
has advised us that cash received in Euroclear or Clearstream as a result of sales of interests in a global securities by or through
a Euroclear or Clearstream participant to a participant in DTC will be received with value on the settlement date of DTC but will
be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following
DTC’s settlement date.
Consolidation, Merger or Sale by the Company
The indenture generally permits a consolidation
or merger between us and another U.S. legal entity. It also permits the sale or transfer by us of all or substantially all of our
property and assets to another legal entity. These transactions are permitted if:
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(A) we are the continuing or surviving legal entity, or (B) the resulting or acquiring legal entity, if other than us, assumes
all of our responsibilities and liabilities under the indenture, including the payment of all amounts due on the debt securities
and performance of the covenants in the indenture;
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immediately after the transaction, no event of default exists (Section 801); and
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the trustee shall have received an officer’s certificate and an opinion of legal counsel for the company stating such
consolidation, merger, conveyance, transfer or lease and, if applicable, the corresponding supplemental indenture, are in compliance
with the base indenture.
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Even though the indenture contains the provisions
described above, we are not required by the indenture to comply with those provisions if we sell all of our property and assets
to another U.S. legal entity if, immediately after the sale, that legal entity is one of our wholly-owned subsidiaries. (Section
803).
If we consolidate or merge with or into any
other legal entity or sell all or substantially all of our assets according to the terms and conditions of the indenture, the resulting
or acquiring legal entity will be substituted for us in the indenture with the same effect as if it had been an original party
to the indenture. As a result, the successor legal entity may exercise our rights and powers under the indenture, in our name or
in its own name and we will be released from all our liabilities and obligations under the indenture and under the debt securities.
(Section 802).
Events of Default, Notice and Certain Rights
on Default
Unless otherwise stated in the applicable prospectus
supplement, an “event of default,” when used with respect to any series of debt securities, means any of the following:
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failure to pay interest on any debt security of that series for 30 days after the payment is due;
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failure to pay the principal of or any premium on any debt security of that series when due;
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failure to deposit any sinking fund payment on debt securities of that series when due;
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failure to perform any other covenant in the indenture that applies to debt securities of that series for 90 days after we
have received written notice of the failure to perform in the manner specified in the indenture;
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an event of default under any debt by the company or any significant subsidiary of the company (including a default with respect
to any series of debt securities) that results in debt of an outstanding principal amount greater than $50,000,000 becoming or
being declared due and payable;
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certain events in bankruptcy, insolvency or reorganization; or
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any other event of default that may be specified for the debt securities of that series
when that series is created. (Section 501).
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If an event of default for any series of debt
securities occurs and continues, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt
securities of that series may declare the entire principal of all the debt securities of that series to be due and payable immediately.
If a declaration occurs, the holders of a majority of the aggregate principal amount of the outstanding debt securities of that
series can, subject to certain conditions, rescind the declaration. (Section 502).
The prospectus supplement relating to each series
of debt securities which are original issue discount securities will describe the particular provisions that relate to the acceleration
of maturity of a portion of the principal amount of that series when an event of default occurs and continues.
An event of default for a particular series
of debt securities does not necessarily constitute an event of default for any other series of debt securities issued under the
indenture.
The indenture requires us to furnish an officer’s
certificate to the trustee each year as to the knowledge of our principal executive, financial or accounting officer of our compliance
with all conditions and covenants under the indenture. (Section 1008). The trustee will transmit by mail to the holders of debt
securities of a series notice of any default.
Other than its duties in the case of a default,
the trustee will not be obligated to exercise any of its rights or powers under an indenture at the request, order or direction
of any holders, unless the holders offer the trustee indemnification satisfactory to the trustee. (Section 603). If indemnification
satisfactory to the trustee is provided, then, subject to certain other rights of the trustee, the holders of a majority in principal
amount of the outstanding debt securities of the affected series may, with respect to the debt securities of that series, direct
the time, method and place of:
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conducting any proceeding for any remedy available to the trustee; or
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exercising any trust or power conferred upon the trustee. (Section 512).
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The holder of a debt security of any series
will have the right to begin any proceeding with respect to the indenture or for any remedy only if:
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the holder has previously given the trustee written notice of a continuing event of default with respect to that series;
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the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made a written
request of, and offered reasonable indemnification to, the trustee to begin the proceeding;
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the trustee has not started the proceeding within 60 days after receiving the request; and
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the trustee has not received directions inconsistent with the request from the holders
of a majority in aggregate principal amount of the outstanding debt securities of that series during those 60 days. (Section 507).
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The holders of not less than a majority in aggregate
principal amount of any series of debt securities, by notice to the trustee for that series, may waive, on behalf of the holders
of all debt securities of that series, any past default or event of default with respect to that series and its consequences. (Section
513). A default or event of default in the payment of the principal of, or premium or interest on, any debt security and certain
other defaults may not, however, be waived. (Sections 508 and 513).
Modification of the Indenture
We, as well as the trustee for a series
of debt securities, may enter into one or more supplemental indentures, without the consent of, or notice to, the holders of any
of the debt securities, in order to:
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evidence the succession of another corporation to us and the assumption of our covenants by a successor;
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add to our covenants or surrender any of our rights or powers;
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add additional events of default for any series;
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change or eliminate any restrictions on the payment of principal of (or premium, if any, on) debt securities, provided such
action will not adversely affect the interest of holders of any series of debt securities in any material respect;
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permit or facilitate the issuance of debt securities in uncertificated form, provided such action will not adversely affect
the interests of holders of any series of debt securities in any material respect;
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secure the debt securities;
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establish the form or terms of debt securities not yet issued;
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evidence and provide for successor trustees;
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add, change or eliminate any provision affecting registration as to principal of debt securities;
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change or eliminate provisions or add any other provisions that are required or desirable in accordance with any amendments
to the Trust Indenture Act of 1939, which we refer to in this prospectus as the Trust Indenture Act, on the condition that this
action does not adversely affect the interests of any holder of debt securities of any series issued under the indenture in any
material respect;
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comply with requirements of the SEC in order to maintain the qualification of the indenture under the Trust Indenture Act;
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provide for uncertificated debt securities in addition to or in place of certificated debt securities;
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make any change that would provide additional rights or benefits to holders of debt securities or any series of debt securities,
or that does not adversely affect the legal rights of such holders under the indenture;
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supplement any provisions of the indenture to facilitate defeasance and discharge of any series of debt securities, provided
such action will not adversely affect the interest of the holders of debt securities of such series or any other series;
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conform text of the indenture or any debt securities to the description thereof in any prospectus supplement;
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cure any ambiguity or correct any mistake; or
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to make any other provision with respect to the indenture, provided that such actions will not adversely affect the interests
of the holders, as determined in good faith by the board of directors of the company (Section 901).
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In addition, with the consent of the holders
of not less than a majority in aggregate principal amount of the outstanding debt securities of all series affected by the supplemental
indenture, we and the trustee may execute supplemental indentures adding any provisions to or changing or eliminating any of the
provisions of the indenture or any supplemental indenture or modifying the rights of the holders of debt securities of that series.
No such supplemental indenture may, however, without the consent of the holder of each debt security that is affected:
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change the time for payment of principal or interest on any debt security;
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reduce the principal of, or any installment of principal of, or interest on, any debt security;
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reduce the amount of premium, if any, payable upon the redemption of any debt security;
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change any obligation of the company to pay additional amounts;
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reduce the amount of principal payable upon acceleration of the maturity of an original issue discount debt security;
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impair the right to institute suit for the enforcement of any payment on or for any debt security;
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reduce the percentage in principal amount of the outstanding debt securities of any series the consent of whose holders is
required for modification or amendment of the indenture or for waiver of compliance with certain provisions of the indenture or
for waiver of certain defaults;
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modify the provisions relating to waiver of some defaults or any of the foregoing provisions;
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change the currency of payment;
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adversely affect the right to repayment of debt securities of any series at the option of the holders of those debt securities;
or
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change the place of payment. (Section 902).
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Any supplemental indenture will be
filed with the SEC as an exhibit to:
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a post-effective amendment to the registration statement of which this prospectus is a part;
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an annual report on Form 10-K;
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a quarterly report on Form 10-Q; or
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a current report on Form 8-K.
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Defeasance and Covenant Defeasance
When we use the term defeasance, we mean discharge
from some or all of our obligations under the indenture. If we deposit with the trustee sufficient cash or government obligations
to pay the principal, interest, any premium and any mandatory sinking fund or analogous payments due to the stated maturity or
a redemption date of the debt securities of a particular series, then at our option:
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we will be discharged from our obligations for the debt securities of that series, the holders of the debt securities of the
affected series will no longer be entitled to the benefits of the indenture, except for registration of transfer and exchange of
debt securities and replacement of lost, stolen or mutilated debt securities, and those holders may look only to the deposited
funds or obligations for payment, which is referred to as “defeasance”; or
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we will no longer be under any obligation to comply with certain covenants under the indenture as it relates to that series,
and some events of default will no longer apply to us, which is referred to as “covenant defeasance.” (Sections 403
and 1401).
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Unless the applicable prospectus supplement
specifies otherwise and except as described below, the conditions to both defeasance and covenant defeasance are as follows:
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it must not result in a breach or violation of, or constitute a default or event of default under, the indenture, or result
in a breach or violation of, or constitute a default under, any other of our material agreements or instruments;
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certain bankruptcy-related defaults or events of default with respect to us must not have occurred and must not be occurring
during the period commencing on the date of the deposit of the trust funds to defease the debt securities and ending on the 91st
day after that date;
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we must deliver to the trustee an officer’s certificate and an opinion of counsel addressing compliance with the conditions
of the defeasance or covenant defeasance; and
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we must comply with any additional conditions to the defeasance or covenant defeasance
that the indenture may impose on us. (Sections 403 and 1401).
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In the event that government obligations deposited
with the trustee for the defeasance of such debt securities decrease in value or default subsequent to their being deposited, we
will have no further obligation, and the holders of the debt securities will have no additional recourse against us, for any decrease
in value or default. If indicated in the prospectus supplement, in addition to obligations of the United States or an agency or
instrumentality of the United States, government obligations may include obligations of the government or an agency or instrumentality
of the government issuing the currency in which debt securities of such series are payable.
We may exercise our defeasance option for the
debt securities even if we have already exercised our covenant defeasance option. If we exercise our defeasance option, payment
of the debt securities may not be accelerated because of default or an event of default. If we exercise our covenant defeasance
option, payment of the debt securities may not be accelerated because of default or an event of default with respect to the covenants
to which the covenant defeasance is applicable. If, however, acceleration occurs, the realizable value at the acceleration date
of the money and government obligations in the defeasance trust could be less than the principal and interest then due on the debt
securities because the required deposit in the defeasance trust is based on scheduled cash flow rather than market value, which
will vary depending on interest rates and other factors.
Conversion and Exchange Rights
The debt securities of any series may be convertible
into or exchangeable for other securities of our company or another issuer or property or cash on the terms and subject to the
conditions set forth in the applicable prospectus supplement. (Section 301).
Governing Law
The indenture and the debt securities will be
governed by, and construed under, the laws of the State of New York without regard to conflicts of laws principles thereof.
Regarding the Trustee
We may from time to time maintain lines of credit,
and have other customary banking relationships, with the trustee under the indenture.
The indenture and provisions of the Trust Indenture
Act that are incorporated by reference therein contain limitations on the rights of the trustee, should it become one of our creditors,
to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claim as security
or otherwise. The trustee is permitted to engage in other transactions with us or any of our affiliates; provided, however, that
if it acquires any conflicting interest (as defined under the Trust Indenture Act), it must eliminate such conflict or resign.
Description
of Capital Stock
Our authorized capital stock consists of 300,000,000
shares of common stock, $0.00001 par value per share, and 10,000,000 shares of preferred stock, $0.00001 par value per share. As
of December 23, 2016, 90,698,113 shares of common stock were issued and outstanding and no shares of preferred stock were issued
and outstanding.
The following summary of certain
provisions of our capital stock does not purport to be complete and is subject to and is qualified in its entirety by our
amended and restated articles of incorporation, amended and restated bylaws, and warrants referred to below. This
description is only a summary. For more detailed information, you should refer to the exhibits to the registration statement
of which this prospectus is a part and incorporated by reference into this prospectus. See “Where You Can Find More
Information.”
Common Stock
Our common stock is traded on the NYSE American under
the symbol “XXII.” Holders of our common stock are entitled to one vote for each share held on all matters submitted
to a vote of stockholders and do not have cumulative voting rights. Holders of common stock are entitled to receive ratably such
dividends, if any, as may be declared by the board of directors out of funds legally available therefore, subject to a preferential
dividend right of outstanding preferred stock. Upon the liquidation, dissolution or our winding up, the holders of common stock
are entitled to receive ratably our net assets available after the payment of all debts and other liabilities and subject to the
prior rights of any outstanding preferred stock. The rights, preferences and privileges of holders of our common stock are subject
to, and may be adversely affected by the rights of the holders any series of preferred stock that we may designate and issue in
the future.
Preferred Stock
Under the terms of our amended and
restated articles of incorporation, the board of directors is authorized, subject to any limitations prescribed by law,
without stockholder approval, to issue shares of preferred stock in one or more series. Each such series of preferred stock
shall have such rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion
rights, redemption privileges and liquidation preferences, as shall be determined by the board of directors.
The purpose of authorizing the board of directors
to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on
specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions
and other corporate purposes, could have the effect of making it more difficult for a third part to acquire, or of discouraging
a third party from acquiring, a majority of our outstanding voting stock. We have no present plans to issue any additional shares
of preferred stock.
The effects of issuing preferred stock
could include one or more of the following:
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decreasing the amount of earnings and assets available for distribution to holders of common stock;
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restricting dividends on the common stock;
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diluting the voting power of the common stock;
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impairing the liquidation rights of the common stock; or
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delaying, deferring or preventing changes in our control or management.
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As of the date of this prospectus, there were
no shares of preferred stock outstanding.
Stock Options and Restricted Stock
As of December 23, 2016, we had outstanding options to purchase
a total of 5,650,679 shares of common stock at a weighted average exercise price of $1.04 per share. Of this total, options to
purchase 2,711,642 were vested and 2,939,037 remain unvested. As of December 23, 2016, we had no outstanding shares of restricted
common stock subject to vesting conditions.
Warrants
Convertible Notes Issued in December 2011
and Related Warrants
On December 14, 2011, we entered into an agreement
with certain accredited investors, whereby such investors acquired approximately $1.9 million of convertible promissory notes of
the company (the “Convertible Notes”). All of the Convertible Notes were converted or paid off in full subsequent to
December 31, 2012 in transactions that resulted in the issuance of warrants to the note holders to purchase an aggregate amount
of 2,636,060 shares of our common stock at an exercise price of $1.50 per share. These warrants issued upon conversion of the Convertible
Notes have a term of five years and are exercisable at any time on or before the fifth anniversary of the issue date of the warrants.
The warrants may be exercised on a cashless basis. The exercise price and number of shares of our common stock issuable upon exercise
of these warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization,
reorganization, merger or consolidation. No fractional shares will be issued upon exercise of these warrants. Of the warrants described
above, as of December 23, 2016, warrants to purchase an aggregate of 974,945 shares of our common stock were outstanding and consisted
of 802,215 shares purchasable with an exercise price of $1.3816 per share (expiring on February 6, 2018) and 172,730 shares purchasable
with an exercise price of $1.1984 per share (expiring on February 8, 2017).
Warrants Issued in 2012
On May 15, 2012, we entered into an agreement
with certain accredited investors, whereby the investors acquired warrants with a 5-year term to purchase up to 1,710,833 shares
of our common stock at an exercise price of $1.00 per share. The exercise price and number of shares of our common stock issuable
upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization,
reorganization, merger or consolidation. No fractional shares will be issued upon exercise of these warrants. Of the warrants described
above, as of December 23, 2016, warrants to purchase an aggregate of 401,700 shares of common stock were outstanding with an exercise
price of $0.60 per share.
On November 9, 2012, we entered into an agreement
with certain accredited investors, whereby the investors acquired warrants with a 5-year term to purchase up to 1,619,000 shares
of our common stock at an exercise price of $1.00 per share. The exercise price and number of shares of our common stock issuable
upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, or our recapitalization,
reorganization, merger or consolidation. No fractional shares will be issued upon exercise of these warrants. Of the warrants described
above, as of December 23, 2016, warrants to purchase an aggregate of 925,100 shares of common stock were outstanding with an exercise
price of $0.60 per share.
Convertible Notes Issued in August 2012 and
Related Warrants
On August 9, 2012, we completed a private placement
of $222,600 of convertible notes, which were sold at a 6% discount. We received proceeds of $210,000. All of these convertible
notes were converted in August 2013 in transactions that resulted in the issuance of warrants to the note holders to purchase an
aggregate amount of 371,000 shares of our common stock at an exercise price of $1.00 per share. These warrants issued upon conversion
of such convertible notes have a term of five years and are exercisable at any time on or before the fifth anniversary of the issue
date of the warrants. The warrants may be exercised on a cashless basis. The exercise price and number of shares of our common
stock issuable upon exercise of these warrants may be adjusted in certain circumstances, including in the event of a stock dividend,
or our recapitalization, reorganization, merger or consolidation. These warrants also provide holders with weighted-average anti-dilution
price protection. No fractional shares will be issued upon exercise of these warrants. As of December 23, 2016, warrants to purchase
an aggregate of 186,965 shares of common stock were outstanding and consisted of 94,721 shares purchasable with an exercise price
of $0.9310 per share and 92,244 shares purchasable with an exercise price of $0.9060 per share. 92,244 warrants have been amended
to remove the weighted-average anti-dilution provisions.
Warrants Relating to 11,293,211 Shares
of Common Stock Being Registered in this Prospectus
This prospectus also relates to the issuance
of the 11,293,211 shares of common stock issuable upon exercise of the July 2016 Registered Direct Warrants and the October 2016
Registered Direct Warrants, described below, which were previously registered under the Prior Registration Statement. The material
terms of these warrants are summarized below, which summaries are qualified in their entirety by reference to the forms of warrants
and warrant agreements incorporated by reference as exhibits to the registration statement of which this prospectus is a part.
To the extent that the terms of the offering and issuance of the shares of common stock underlying these warrants materially differs
from those terms disclosed in this prospectus, we may provide you with a prospectus supplement that will contain specific information
about the terms of such offering.
July 2016 Registered Direct Warrants
On July 27, 2016, we closed
a registered direct offering relating to the issuance and sale of units, with each unit consisting of one share of common stock
and a warrant to purchase 1.141 shares of common stock. As a result of the offering, we issued warrants to purchase up to 7,043,211
shares of common stock with an exercise price of $1.00 per share, with warrants to purchase 1,543,210 shares of common stock being
exercisable immediately upon issuance and warrants to purchase 5,500,001 shares of common stock being exercisable six months from
the date of issuance. All of the warrants have a term of 5.5 years. The exercise price of the warrants will also be adjusted in
the event of stock splits, reverse stock splits and the like pursuant to their terms. The holder will not have the right to exercise
any portion of the warrant if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number
of shares of our common stock (including securities convertible into common stock) outstanding immediately after the exercise;
provided, however, that the holder may increase or decrease this limitation at any time, although any increase shall not be effective
until the 61st day following the notice of increase and the holder may not increase this limitation in excess of 9.99% of the number
of shares of our common stock (including securities convertible into common stock) outstanding immediately after the exercise.
As of December 23, 2016, all of these warrants remained unexercised and outstanding. The issuance of the shares of common stock
underlying these warrants were registered under the Prior Registration Statement and the registration of the issuance of such shares
is continued under this prospectus and the registration statement of which it forms a part.
October 2016 Registered
Direct Warrants
On October 19, 2016, we
closed a registered direct offering relating to the issuance and sale of units, with each unit consisting of one share of common
stock and a warrant to purchase 0.5 shares of common stock. As a result of the offering, we issued warrants to purchase up to 4,250,000
shares of common stock. The warrants provide for an exercise price of $1.45 per share and will be exercisable six months from the
date of issuance. The warrants have a term of 5.5 years. The exercise price of the warrants will also be adjusted in the event
of stock splits, reverse stock splits and the like pursuant to their terms. The holder will not have the right to exercise any
portion of the warrant if the holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of
shares of our common stock (including securities convertible into common stock) outstanding immediately after the exercise; provided,
however, that the holder may increase or decrease this limitation at any time, although any increase shall not be effective until
the 61st day following the notice of increase and the holder may not increase this limitation in excess of 9.99% of the number
of shares of our common stock (including securities convertible into common stock) outstanding immediately after the exercise.
As of December 23, 2016, all of the warrants remained unexercised and outstanding. The issuance of the shares of common stock underlying
the warrants were registered under the Prior Registration Statement and the registration of the issuance of such shares is continued
under this prospectus and the registration statement of which it forms a part.
Anti-Takeover Provisions Under Nevada Law.
Combinations
with Interested Stockholder.
Sections 78.411-78.444, inclusive, of the Nevada Revised Statutes (NRS) contain provisions governing
combinations with an interested stockholder. For purposes of the NRS, "combinations" include:
(i) any merger or
consolidation of a Nevada corporation or any subsidiary of a Nevada corporation with the interested stockholder or any other entity,
whether or not itself is an interested stockholder of the Nevada corporation, which is, or after and as a result of the merger
or consolidation would be, an affiliate or associate of the interested stockholder; (ii) any sale, lease, exchange mortgage, pledge,
transfer or other disposition, in one transaction or a series of transactions, to or with the interested stockholder or any affiliate
or associate of the interested stockholder of assets of the Nevada corporation or any subsidiary of the Nevada corporation (x)
having an aggregate market value equal to more than 5% of the aggregate market value of all of the consolidated assets of the Nevada
corporation, (y) having an aggregate market value equal to more than 5% of the aggregate market value of all the outstanding voting
shares of the Nevada corporation, or (z) representing more than 10% of the earning power or net income of the Nevada corporation
(determined on a consolidated basis); (iii) the issuance or transfer by the Nevada corporation or any subsidiary of the Nevada
corporation, in one transaction or a series of transactions, of any shares of the Nevada corporation or any subsidiary of the Nevada
corporation that have an aggregate market value equal to 5% or more of the aggregate market value of all the outstanding voting
shares of the Nevada corporation to the interested stockholder or any affiliate or associate of the interested stockholder except
under the exercise of warrants or rights to purchase shares offered, or a dividend or distribution paid or made, pro rata to all
stockholders of the Nevada corporation; (iv) the adoption of any plan or proposal for the liquidation or dissolution of the Nevada
corporation under any agreement, arrangement or understanding, whether or not in writing, with the interested stockholder or affiliate
or associate of the interested stockholder; (v) except for transactions that would not constitute a combination pursuant to subsection
(iii) above, any reclassification of securities (including share splits, share dividend or other distribution of shares with respect
to other shares, or any issuance of new shares in exchange for a proportionately greater number of old shares), any recapitalization
of the Nevada corporation, any merger or consolidation of the Nevada corporation with any of its subsidiaries, or any other transaction,
whether or not with or into or otherwise involving the interested stockholder; and (vi) any receipt by the interested stockholder
or any affiliate or associate of the interested stockholder of the benefit, directly or indirectly, except proportionately as a
stockholder of the Nevada corporation, of any loan, advance, guarantee, pledge or other financial assistance or any tax credit
or other tax advantage provided by or through the Nevada corporation.
For purposes of the NRS, an "interested
stockholder" is defined to include any person, other than the Nevada corporation or any subsidiary of the Nevada corporation,
that is: (a) a beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding voting shares of
the Nevada corporation or (b) an affiliate or associate of the Nevada corporation and was, at any time within two years immediately
before the date in question, the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then-outstanding
shares of the Nevada corporation.
Subject to certain exceptions, the provisions
of the NRS statute governing combinations with interested stockholders provide that a Nevada corporation may not engage in a combination
with an interested stockholder for two years after the date that the person first became an interested stockholder unless (i) the
combination or the transaction by which the person first became an interested stockholder is approved by the board of directors
before the person first became an interested stockholder or (ii) during the two-year period, the transaction is approved by the
board and by 60% of the disinterested stockholders at an annual or special meeting of the stockholders.
After such two-year period, corporations
subject to these statutes may not engage in specified business combinations and transactions unless: (i) the business combination
or transaction by which the person first became an interested stockholder is approved by the board of directors before the stockholder
became an interested stockholder; (ii) the business combination is approved by a majority of the outstanding voting power (excluding
the shares held by the interested stockholder or any affiliate or associate of the interested stockholder); or (iii) the combination
meets the requirements of 78.411 through 78.444 of the NRS, inclusive.
The NRS allows a corporation to "opt
out" of NRS 78.411 through 78.444, inclusive, by providing in such corporation's original articles of incorporation or bylaws
that such statutes do not apply to the corporation. Unless certain limited exceptions apply, corporations cannot opt out of such
statutes by amending their articles of incorporation or bylaws. We have not opted out of such statutes.
Control Share Acquisitions.
The
NRS also contains a "control share acquisitions statute." If applicable to a Nevada corporation, this statute restricts
the voting rights of certain stockholders referred to as "acquiring persons," that acquire or offer to acquire ownership
of a "controlling interest" in the outstanding voting stock of an "issuing corporation." For purposes of these
provisions (i) a "controlling interest" means with certain exceptions the ownership of outstanding voting stock sufficient
to enable the acquiring person to exercise one-fifth or more but less than one-third, one-third or more but less than a majority,
or a majority or more of all voting power in the election of directors and (ii) an "issuing corporation" means a Nevada
corporation that has 200 or more stockholders of record, at least 100 of whom have addresses in Nevada appearing on the stock
ledger of the corporation, and which does business in Nevada directly or through an affiliated corporation. The voting rights
of an acquiring person in the affected shares will be restored only if such restoration is approved by the holders of a majority
of the voting power of the corporation (excluding the shares held by the acquiring person) at an annual or special meeting of
the stockholders.
The NRS allows a corporation to "opt out"
of the control share acquisitions statute by providing in such corporation's articles of incorporation or bylaws, in effect on
the 10th day following the acquisition of a controlling interest by an acquiring person, that the control share acquisitions statute
does not apply to the corporation or to an acquisition of a controlling interest specifically by types of existing or future stockholders,
whether or not identified. We have not opted out of the control share acquisitions statute.
Liability and Indemnification of Directors and Officers
NRS Sections 78.7502 and 78.751 provide
us with the power to indemnify any of our directors, officers, employees or agents, or any person who serves or served at the corporation’s
request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise
(for purposes of this section, the “Indemnitee” or “Indemnitees”) against expenses, including attorneys’
fees, actually and reasonably incurred related to any threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) arising by reason of an Indemnitee’s status as a director, officer employee or
agent of the corporation if: (i) the Indemnitee is not liable for breach of fiduciary duties to the corporation involving intentional
misconduct, fraud or knowing violation of law; (ii) the Indemnitee conducted himself or herself in good faith and reasonably believes
that his or her conduct was in, or not opposed to, our best interests; or (iii) in a criminal action, the Indemnitee must not have
had reasonable cause to believe that his or her conduct was unlawful. NRS Section 78.502 requires us to indemnify any Indemnitee
for any expenses referenced above if the Indemnitee has been successful on the merits or otherwise in defense of the foregoing
actions, suits or proceedings.
Under NRS Section 78.751, any discretionary
indemnification can only occur if deemed proper by (i) the stockholders; (ii) a majority vote of a quorum consisting of disinterested
directors; or (iii) an independent counsel’s written legal opinion (if such an approach is approved by a majority vote of
a quorum consisting of disinterested directors or if a quorum consisting of disinterested directors cannot be obtained). Advances
for expenses may be made by agreement if the Indemnitee affirms in writing that he or she believes that he or she has met the statutory
standards and will personally repay the expenses if a court of competent jurisdiction determines that such Indemnitee did not meet
the statutory standards.
Our amended and restated bylaws include
an indemnification provision under which we have the power to indemnify, to the extent permitted under Nevada law, our current
and former directors and officers, or any person who serves or served at our request for our benefit as a director or officer of
another corporation or our representative in a partnership, joint venture, trust or other enterprise, against all expenses, liability
and loss reasonably incurred by reason of being or having been a director, officer or representative of ours or any of our subsidiaries.
We may make advances for expenses upon receipt of an undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he, she or it is not entitled to be indemnified by us.
Our amended and restated articles of incorporation
provides that we shall indemnify directors and officers to the fullest extent permitted by the NRS. Our amended and restated articles
of incorporation also provide a limitation of liability such that no director or officer shall be personally liable to us or any
of our stockholders to the fullest extent permitted by the NRS.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended (the “Securities Act”) may be permitted to directors, officers
and controlling persons of ours under Nevada law or otherwise, we have been advised that the opinion of the SEC is that such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event a claim for indemnification
against such liabilities (other than payment by us for expenses incurred or paid by a director, officer or controlling person
of ours in successful defense of any action, suit, or proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by our company
is against public policy in the Securities Act and will be governed by the final adjudication of such issue.
NYSE American Listing
Our common stock is listed on the NYSE American under
the symbol “XXII.”
Transfer Agent and Registrar
The transfer agent and registrar for our common
stock is Continental Stock Transfer & Trust Company, 17 Battery Place, 8th Floor, New York, NY 10004.
Description
of Warrants
Our outstanding warrants are described herein
under “Description of Capital Stock.” We may issue warrants in the future for the purchase of debt securities, common
stock or other securities. Warrants may be issued independently or together with debt securities or common stock offered by any
prospectus supplement and/or other offering material and may be attached to or separate from any such offered securities. Each
series of warrants will be issued under a separate warrant agreement to be entered into between us and the warrant holder, with
the option to also utilize a bank or trust company, as warrant agent, all as will be set forth in the prospectus supplement and/or
other offering material relating to the particular issue of warrants. The warrant agent, if any, will act solely as our agent in
connection with the warrants and will not assume any obligation or relationship of agency or trust for or with any holders of warrants
or beneficial owners of warrants.
The following summary of certain provisions
of the warrants we may issue in the future does not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all provisions of the warrant agreements.
Reference is made to the prospectus supplement
and/or other offering material relating to the particular issue of warrants offered pursuant to such prospectus supplement and/or
other offering material for the terms of and information relating to such warrants, including, where applicable:
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the designation, aggregate principal amount, currencies, denominations and terms of the series of debt securities purchasable
upon exercise of warrants to purchase debt securities and the price at which such debt securities may be purchased upon such exercise;
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the number of shares of common stock purchasable upon the exercise of warrants to purchase common stock and the price at which
such number of shares of common stock may be purchased upon such exercise;
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the designation and number of units of other securities purchasable upon the exercise of warrants to purchase other securities
and the price at which such number of units of such other securities may be purchased upon such exercise;
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the date on which the right to exercise such warrants shall commence and the date on which such right shall expire;
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U.S. federal income tax consequences applicable to such warrants;
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the amount of warrants outstanding as of the most recent practicable date; and
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any other terms of such warrants.
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Warrants will be issued in registered form only.
The exercise price for warrants will be subject to adjustment in accordance with the applicable prospectus supplement and/or other
offering material.
Each warrant will entitle the holder thereof
to purchase such principal amount of debt securities or such number of shares of common stock or other securities at such exercise
price as shall in each case be set forth in, or calculable from, the prospectus supplement and/or other offering material relating
to the warrants, which exercise price may be subject to adjustment upon the occurrence of certain events as set forth in such prospectus
supplement and/or other offering material. After the close of business on the expiration date, or such later date to which such
expiration date may be extended by us, unexercised warrants will become void. The place or places where, and the manner in which,
warrants may be exercised shall be specified in the prospectus supplement and/or other offering material relating to such warrants.
Prior to the exercise of any warrants to purchase
debt securities, common stock or other securities, holders of such warrants will not have any of the rights of holders of debt
securities, common stock or other securities, as the case may be, purchasable upon such exercise of the warrants, including the
right to receive payments of principal of, premium, if any, or interest, if any, on the debt securities purchasable upon such exercise
or to enforce covenants in the applicable indenture, or to receive payments of dividends, if any, on the common stock purchasable
upon such exercise, or to exercise any applicable right to vote.
Description
of SUBSCRIPTION RIGHTS
We may issue subscription
rights to purchase debt securities, common stock, preferred stock, other securities described in this prospectus or any combination
thereof. These subscription rights may be issued independently or together with any other security offered by us and may or may
not be transferable by the securityholder receiving the subscription rights in such offering. In connection with any offering of
subscription rights, we may enter into a standby arrangement with one or more underwriters or other investors pursuant to which
the underwriters or other investors may be required to purchase any securities remaining unsubscribed for after such offering.
To the extent appropriate,
the applicable prospectus supplement will describe the specific terms of the subscription rights to purchase shares of our securities
offered thereby, including the following:
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the date of determining the securityholders entitled
to the subscription rights distribution;
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the price, if any, for the subscription rights;
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the exercise price payable for the debt securities,
common stock, preferred stock or other securities upon the exercise of the subscription rights;
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the number of subscription rights issued to each securityholder;
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the amount of debt securities, common stock, preferred
stock or other securities that may be purchased per each subscription right;
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any provisions for adjustment of the amount of securities
receivable upon exercise of the subscription rights or of the exercise price of the subscription rights;
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the extent to which the subscription rights are transferable;
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the date on which the right to exercise the subscription
rights shall commence, and the date on which the subscription rights shall expire;
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the extent to which the subscription rights may include
an over-subscription privilege with respect to unsubscribed securities;
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the material terms of any standby underwriting or
purchase arrangement entered into by us in connection with the offering of subscription rights;
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any applicable federal income tax considerations;
and
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any other terms of the subscription rights, including
the terms, procedures and limitations relating to the transferability, exchange and exercise of the subscription rights.
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Description
of Units
We may issue units
consisting of one or more purchase contracts, warrants, shares of preferred stock, shares of common stock, debt securities or any
combination of such securities. The applicable prospectus supplement will describe the terms of the units and of the securities
comprising the units, including whether and under what circumstances the securities comprising the units may be traded separately.
You should read the particular terms of the documents pursuant to which the units will be issued, which will be described in more
detail in the applicable prospectus supplement.
Description
of Purchase Contracts
We may issue purchase
contracts obligating holders to purchase from us, and us to sell to the holders, debt securities, common stock or preferred stock.
The purchase contracts may require us to make periodic payments to the holders of purchase contracts. These payments may be unsecured
or prefunded on a basis to be specified in the prospectus supplement relating to the purchase contracts.
The applicable prospectus
supplement will describe the terms of any purchase contract. The purchase contracts will be issued pursuant to documents to be
issued by us. You should read the particular terms of such documents, which will be described in more detail in the applicable
prospectus supplement.
Plan of Distribution
We may sell securities in any one or more of
the following ways from time to time: (i) through agents; (ii) to or through underwriters; (iii) through brokers or dealers; (iv)
directly by us to purchasers, including through a specific bidding, auction or other process; (v) through the distribution of subscription
rights; or (vi) through a combination of any of these methods of sale. The applicable prospectus supplement and/or other offering
material will contain the terms of the transaction, name or names of any underwriters, dealers, agents and the respective amounts
of securities underwritten or purchased by them, the initial public offering price of the securities, and the applicable agent’s
commission, dealer’s purchase price or underwriter’s discount. Any dealers and agents participating in the distribution
of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities may be deemed
to be underwriting discounts.
Any initial offering price, dealer purchase
price, discount or commission may be changed from time to time.
The securities may be distributed from time
to time in one or more transactions, at negotiated prices, at a fixed price or fixed prices (that may be subject to change), at
market prices prevailing at the time of sale, at various prices determined at the time of sale or at prices related to prevailing
market prices.
Offers to purchase securities may be solicited
directly by us or by agents designated by us from time to time. Any such agent may be deemed to be an underwriter, as that term
is defined in the Securities Act of the securities so offered and sold.
If underwriters are utilized in the sale of
any securities in respect of which this prospectus is being delivered, such securities will be acquired by the underwriters for
their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at fixed
public offering prices or at varying prices determined by the underwriters at the time of sale. Securities may be offered to the
public either through underwriting syndicates represented by managing underwriters or directly by one or more underwriters. If
any underwriter or underwriters are utilized in the sale of securities, unless otherwise indicated in the applicable prospectus
supplement and/or other offering material, the obligations of the underwriters are subject to certain conditions precedent, and
that the underwriters will be obligated to purchase all such securities if any are purchased.
If a dealer is utilized in the sale of the securities
in respect of which this prospectus is delivered, we will sell such securities to the dealer, as principal. The dealer may then
resell such securities to the public at varying prices to be determined by such dealer at the time of resale. Transactions through
brokers or dealers may include block trades in which brokers or dealers will attempt to sell shares as agent but may position and
resell as principal to facilitate the transaction or in crosses, in which the same broker or dealer acts as agent on both sides
of the trade. Any such dealer may be deemed to be an underwriter, as such term is defined in the Securities Act of the securities
so offered and sold.
Offers to purchase securities may be solicited
directly by us and the sale thereof may be made by us directly to institutional investors or others, who may be deemed to be underwriters
within the meaning of the Securities Act with respect to any resale thereof.
If so indicated in the applicable prospectus
supplement and/or other offering material, we may authorize agents and underwriters to solicit offers from certain institutions
to purchase securities from us at the public offering price set forth in the applicable prospectus supplement and/or other offering
material pursuant to delayed delivery contracts providing for payment and delivery on the date or dates stated in the applicable
prospectus supplement and/or other offering material. Such delayed delivery contracts will be subject only to those conditions
set forth in the applicable prospectus supplement and/or other offering material.
Agents, underwriters and broker-dealers may
be entitled under relevant agreements with us to indemnification by us against certain liabilities, including liabilities under
the Securities Act, or to contribution with respect to payments which such agents, underwriters and dealers may be required to
make in respect thereof. The terms and conditions of any indemnification or contribution will be described in the applicable prospectus
supplement and/or other offering material.
We may also sell shares of our common stock
through various arrangements involving mandatorily or optionally exchangeable securities, and this prospectus may be delivered
in connection with those sales.
We may enter into derivative, sale or forward
sale transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated
transactions. If the applicable prospectus supplement and/or other offering material indicates, in connection with those transactions,
the third parties may sell securities covered by this prospectus and the applicable prospectus supplement and/or other offering
material, including in short sale transactions and by issuing securities not covered by this prospectus but convertible into, or
exchangeable for or representing beneficial interests in such securities covered by this prospectus, or the return of which is
derived in whole or in part from the value of such securities. The third parties may use securities received under derivative,
sale or forward sale transactions, or securities pledged by us or borrowed from us or others to settle those sales or to close
out any related open borrowings of stock, and may use securities received from us in settlement of those transactions to close
out any related open borrowings of stock. The third party in such sale transactions will be an underwriter and will be identified
in the applicable prospectus supplement (or a post-effective amendment) and/or other offering material.
Underwriters, broker-dealers or agents may receive
compensation in the form of commissions, discounts or concessions from us. Underwriters, broker-dealers or agents may also receive
compensation from the purchasers of shares for whom they act as agents or to whom they sell as principals, or both. Compensation
as to a particular underwriter, broker-dealer or agent might be in excess of customary commissions and will be in amounts to be
negotiated in connection with transactions involving shares. In effecting sales, broker-dealers engaged by us may arrange for other
broker-dealers to participate in the resales.
Each series of securities will be a new issue
and, other than the common stock which is listed on the NYSE American, will have no established trading market. We may elect to list
any series of securities on an exchange, and in the case of the common stock, on any additional exchange, but, unless otherwise
specified in the applicable prospectus supplement and/or other offering material, we shall not be obligated to do so. No assurance
can be given as to the liquidity of the trading market for any of the securities.
Agents, underwriters and broker-dealers may
engage in transactions with, or perform services for us and our respective subsidiaries in the ordinary course of business.
Any underwriter may engage in overallotment,
stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.
Overallotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions permit bids
to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Short covering transactions
involve purchases of the securities in the open market after the distribution is completed to cover short positions. Penalty bids
permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased
in a covering transaction to cover short positions. Those activities may cause the price of the securities to be higher than it
would otherwise be. If commenced, the underwriters may discontinue any of the activities at any time. An underwriter may carry
out these transactions on the NYSE American, in the over-the-counter market or otherwise.
The place and time of delivery for securities
will be set forth in the accompanying prospectus supplement and/or other offering material for such securities.
Legal Matters
The validity of the securities offered by this
prospectus will be passed upon for us by Foley & Lardner LLP. As of December 23, 2016, Foley & Lardner, LLP owned 515,950
shares of our common stock. The validity of the securities offered by this prospectus will be passed upon for any underwriters
or agents by counsel named in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements of 22nd
Century Group, Inc. as of December 31, 2015 and 2014, and for the years then ended, have been incorporated by reference herein
in reliance upon the report of Freed Maxick CPAs, P.C., independent registered public accounting firm, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and auditing. To the extent that Freed Maxick CPAs, P.C. audits
and reports on consolidated financial statements of 22nd Century Group, Inc. at future dates and consents to the use of their reports
thereon, such consolidated financial statements also will be incorporated by reference in the registration statement in reliance
upon their reports and said authority.
Where You Can
Find More Information
We file annual, quarterly and current reports,
proxy statements and other information with the SEC. We also filed a registration statement on Form S-3, including exhibits, under
the Securities Act with respect to the securities offered by this prospectus. This prospectus is a part of the registration statement,
but does not contain all of the information included in the registration statement or the exhibits. You may read and copy the registration
statement and any other document that we file at the SEC’s public reference room at 100 F Street, N.E., Washington D.C. 20549.
You can call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. You can also find
our public filings with the SEC on the internet at a web site maintained by the SEC located at
http://www.sec.gov
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Incorporation
of Certain Documents by Reference
We are “incorporating by reference”
specified documents that we file with the SEC, which means:
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incorporated documents are considered part of this prospectus;
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we are disclosing important information to you by referring you to those documents; and
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information we file with the SEC will automatically update and supersede information contained in this prospectus.
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We incorporate by reference the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (i) after the date
of the registration statement on Form S-3 filed under the Securities Act with respect to securities offered by this prospectus
and prior to the effectiveness of such registration statement and (ii) after the date of this prospectus and before the end of
the offering of the securities pursuant to this prospectus:
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our Annual Report on Form 10-K for the year ended December 31, 2015;
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our Quarterly Reports on Form 10-Q for the periods ended March 31, 2016, June 30, 2016 and September 30, 2016;
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our Current Reports on Form 8-K as filed on January 26, 2016, February 4, 2016, May 3, 2016, July 26, 2016, October 17, 2016
and December 20, 2016 (excluding any portion of such Form 8-K or exhibit thereto that is furnished and not filed);
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our Definitive Proxy Statement on Schedule 14A as filed on March 18, 2016; and
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the description of our common stock contained in or incorporated into our Registration Statement on Form 8-A, as filed March
6, 2014, and any amendment or report updating that description.
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Information in this prospectus supersedes related
information in the documents listed above, and information in subsequently filed documents supersedes related information in both
this prospectus and the incorporated documents.
We will promptly provide, without charge to
you, upon written request, a copy of any or all of the documents incorporated by reference in this prospectus, other than exhibits
to those documents, unless the exhibits are specifically incorporated by reference in those documents. Requests should be directed
to:
22nd Century Group, Inc.
9530 Main Street
Clarence, New York 14031
(716) 270-1523
You can also find these filings on our website
at www.xxiicentury.com. We are not incorporating the information on our website, other than the above referenced filings into this
prospectus.
_________________________
Prospectus Supplement
_________________________
The date of this prospectus supplement
is October 8, 2017
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