The Hype Surrounding 22nd Century Group Inc (OTCBB:XXII)

There is a lot of hype around 22nd Century Group Inc (OTCBB:XXII) recently. You can see that in their stock movements, but can they be justified by the company.

Yesterday’s trade session went extremely well for XXII as they not only managed to climb up in price, but did that on a heavy volume of traded stock that generated a healthy trade value for the day and probably made some insiders happy by filling their pockets.

XXII, who have an average volume of 237 thousand shares traded in an extreme volume yesterday, totaling 4.8 million shares that changed hands. While the trading was severe, their stock price managed to go up 15% in price going from $0.60 at market open to $0.68 at market close.

The total trade value that all this trading generated was estimated at $2.94 million and despite the fact that there was a massive amount of stock dumped in the streets today’s trade session started well for them. At least in the beginning when they opened at $0.75. After the big jump from yesterday’s price at market close the ticker started going down and it is now at $0.69, but still generates a lot of trades coming to a total of 366 thousand just 1 hour after market opened.

XXII have a market cap of $26 million, but we doubt that they can back up these numbers, because after all, if they could they would be traded in the NYSE or the NASDAQ and not in the Over The Counter Markets. They are doing well for a company that is listed at the OTC Markets, but let’s take a moment to check the numbers of prime interest from their latest quarterly report covering the period ended March 31 and get a more precise picture of what they have and what they don’t have.

• cash: $278 thousand
• total assets: $2.9 million
• current liabilities: $1.8 million
• total liabilities: $10 million
• revenue: $0
• net loss: $2.5 million

So, we were saying they have a better financial state than many other companies in the OTC Markets. This, however, doesn’t mean that the situation is not grim. The good part is that they have some cash on hand which many of the other companies in the OTC Markets don’t have. The bad news come when you look at their liabilities. They just have too much liabilities for a company that hasn’t generated any revenue in the last quarterly period. When you top that with the uncontrollable net loss of $2.5 million it starts to look even worse.

Their latest press releases seems optimistic, but a part from a few patents that were issued there is nothing solid. Be sure to do your due diligence before you decide to invest in them and after you have weighed out the risks decide if you are going to put your money with XXII.