22nd Century Group Inc (XXII)

[Bubbster]

Local ousted cigarette exec getting $1.35 million
Clarence-based maker of cigarettes fired Pandolfino

Joseph Pandolfino, who was fired earlier this month as 22nd Century Group’s top executive, is receiving a severance package worth more than $1.35 million in cash and stock.

The size of the severance package for Pandolfino, 22nd Century’s former chairman and chief executive officer, was disclosed in a regulatory filing on Friday as the company reported that it lost $2.7 million during the third quarter as it moves closer to the start-up of its cigarette manufacturing operations early next year.

22nd Century, a Clarence-based company that makes cigarettes using tobacco that can be altered to have very high – or very low – levels of nicotine, said Pandolfino will receive $675,000 in salary over the next three years, split into monthly payments of $18,750, according to a filing with the Securities and Exchange Commission.

Pandolfino also received control over 320,000 shares of 22nd Century stock, valued at $684,000 at today’s prices, that he had previously been granted but which had not yet been turned over to him. Under the terms of Pandolfino’s employment agreement, those stock grants, which eventually would have come into Pandolfino’s possession, vested immediately once he was fired.

In the earnings report, 22nd Century said its loss equaled 5 cents per share, down from a loss of $15.4 million, or 32 cents per share, a year ago, when it absorbed nearly $14 million in warrant-related expenses. Excluding those warrant costs, the company’s loss was slightly larger than $1.6 million it lost a year ago.

22nd Century still lacks a significant revenue stream, generating $64,000 from the sale of unfiltered cigars during the quarter. Company executives said 22nd Century deliberately decided not to pursue sales of its Red Sun and Magic cigarette brands until it became part of the U.S. tobacco Master Settlement Agreement with attorney generals throughout the country. Greater cigarette sales before 22nd Century became a member of the settlement group, which occurred in late August, would have increased the $17,500 in settlement costs the company ultimately paid when it became part of the tobacco group.

22nd Century, which said its $10 million in cash is enough to fund its operations for more than a year, is preparing to ramp up production of its cigarettes at its North Carolina factory early next year. The company reached a deal this summer to produce private-label cigarettes for more than 800 Smoker Friendly International stores.

The company also said it met earlier this week with officials from the U.S. Food and Drug Administration to discuss the steps 22nd Century would need to take to win regulatory approval of its cigarettes that contain extremely low levels of tar for use a product to help smokers quit. The company intends to submit plans for an initial study of its smoking cessation cigarettes during the first quarter of next year, said Michael Moynihan, 22nd Century’s vice president of research and development.

http://www.buffalonews.com/business/local-ousted-cigarette-exec-getting-135-million-20141114


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