22nd Century Group, Inc. — financial distress indicators
Financial-health summary
22nd Century Group, Inc.'s reported numbers place it in the 'Very weak' financial-health band (distress score 82/100). The main indicators are market-implied default probability >20%, losses in each of the last 3 years and revenue collapse. Independently, the Ohlson accounting model puts its 1-year failure probability at 78% and the market-implied (Merton) default probability is 83.8%. In its favour: cash on hand covers all debt (net-cash balance sheet).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default -0.99 σ → PD 84%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Revenue changed -41% year over year.
A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
Price is -100% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
O-score 1.24 → model probability 78%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Share count up +24204% in a year.
Survival financing: repeated equity raises at depressed prices.
Cash covers ~13 months of free-cash-flow burn.
Funding needs within two years make the company dependent on capital-market access.
Last price $0.87.
Below the $1 minimum-bid listing standard (Nasdaq Rule 5550(a)(2) / NYSE 802.01C); sustained breach leads to delisting and loss of capital-market access.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Cash on hand covers all debt (net-cash balance sheet).
- Strong current ratio (2.67).
📰 Recent news scan
- 22nd Century Group's Reduced-Nicotine Tobacco Platform Positioned to Support France's Nicotine-Reduction InitiativeYahoo Finance · 2026-09-28
- 22nd Century Group Urges Policymakers and FDA to Enact and Implement the Reduced Nicotine Content Standard, Citing Years Without a Final RuleYahoo Finance · 2026-09-24
- 22nd Century CEO & Chairman Larry Firestone: Improved Gross Margin, ~5,000 Retail Outlets and >$50B Market Opportunity Highlight Mid-Year Stockholder LetterYahoo Finance · 2026-09-01
- 22nd Century Group to Participate in the HC Wainwright Conference on September 15, 2026Yahoo Finance · 2026-08-18
- 22nd Century Group Inc (XXII) (Q2 2026) Earnings Call Highlights: Strategic Shift Toward ...Yahoo Finance · 2026-08-13
- 22nd Century Group Reports Second Quarter 2026 Financial ResultsYahoo Finance · 2026-08-13
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do 22nd Century Group, Inc.'s financial-health indicators show?
As of 2026-10-08, 22nd Century Group, Inc.'s public financial data places it in the 'Very weak' band with a distress score of 82/100, driven by market-implied default probability >20%, losses in each of the last 3 years and revenue collapse. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is 22nd Century Group, Inc.'s financial distress score?
82/100 ('Very weak'). Ohlson O-score 1.24 (model 1-year failure probability 78%). Merton distance-to-default -0.99 σ (model default probability 83.8%).
What works in 22nd Century Group, Inc.'s favour?
Cash on hand covers all debt (net-cash balance sheet). Strong current ratio (2.67).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Consumer Staples companies with distress indicators
- AMASS Brands, Inc. (AMSS)Very weak 100/100
- Borealis Foods Inc. (BRLS)Very weak 100/100
- Reed's, Inc. (REED)Very weak 100/100
- Sadot Group Inc. (SDOT)Very weak 100/100
- Rocky Mountain Chocolate Factory, Inc. (RMCF)Very weak 97/100
- Sow Good Inc. (SOWG)Very weak 97/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.