22nd Century Group, Inc. (OTCBB:XXII) Drops Down, but Seen as Opportunity
A ticker that rarely offered surprises had a surprising dip on Monday. 22nd Century Group, Inc. (OTCBB:XXII) sank more than 14% to stand at 96 cents. The ticker has been moving sideways in the past months, with only occasional spikes, and this is the biggest dip since August. The company is not in promotion, and the last announcement came at the end of last month, when XXII shared financial results. 
XXII is moving in a general group of penny stocks that stick around the idea of alternative tobacco product with less of a health impact. In that group are several electronic cigarette companies, with differing quality of the underlying business. Vapor Corp. (OTCBB:VPCO) is the bellwether in that group.
For XXII, the slow period and the sell-off are seen as temporary, as the company slowly expands its business assets and is marked for a potential uplisting to NASDAQ. Yet it is hard to say how a company with no revenues would present itself to that wider circle of investors. Still, XXII looks immensely viable:
- $451 thousand in cash
- $3.1 million in total assets
- $10 million in total liabilities
- zero revenues for Jan-Jun 2013
- $2.9 million in net loss for Jan-Jun 2013
But now, XXII has a door open to finally entering the US market. The company bought NASCO Products, LLC, a federally licensed tobacco product manufacturer. This means that after the purchase is completed, XXII will have access to market. The deal would be within the power of XXII, being paid by $200,000 cash and by an issue of $800,000 worth of common shares.
But we will have to wait a bit to see whether XXII reaps the results. The new week sets the expectation for a new press release, as XXII has put bets on international presentation and patent selling.
Yet even companies with a ready and demanded product face difficulties on the OTC markets. The case of VPCO we mentioned showed that the company rose significantly on press releases, but continued to drop sideways, and even fall down in the last weeks.
If you see XXII as an exclusive opportunity after the dip, keep in mind that a few months back the ticker had a similar move, but went down permanently to a lower price level. Avoid investing, unless you are well aware of the time frame in which the success of XXII would happen.
