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COMMITMENTS
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6 Months Ended | 12 Months Ended |
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Jun. 30, 2011
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Dec. 31, 2010
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| COMMITMENTS |
NOTE 10. - COMMITMENTS
License Agreements - Under its exclusive license
agreement with NCSU, the Company is required to pay minimum annual
royalty payments, which are credited against running royalties on
sales of licensed products. The annual minimum royalty for each of
the calendar years 2010 through 2013 is $75,000, and in 2014 the
annual minimum royalty increases to $200,000. The
license agreement continues through the life of the last-to-expire
patent, which is expected to be 2022. These minimum royalty
payments are due each February following the end of the applicable
calendar year and are reduced by any running royalties paid or
payable for that year. The agreement also requires a milestone
payment of $150,000 upon FDA approval of a product that uses the
NCSU licensed technology. The Company is also responsible for
reimbursing NCSU for actual third-party patent costs incurred.
These costs vary from year to year and the Company has certain
rights to direct the activities that result in these costs. During
the six months ended June 30, 2011, the costs incurred related to
patent costs and patent maintenance amounted to $68,544 (as
compared to $61,578 during the six months ended June 30,
2010).
The
Company has two other exclusive license agreements which require
aggregate annual license fees of approximately $55,000, which are
credited against running royalties on sales of licensed products.
Each license agreement continues through the life of the
last-to-expire patent.
Registration Rights - Pursuant to a covenant in conjunction
with the January 25, 2011 Private Placement the Company filed a
registration statement with the Securities and Exchange Commission
(“SEC”) on April 8, 2011 covering the resale of
5,434,446 shares of common stock of 22nd Century Group
(“Common Stock”) issued to the investors in the Private
Placement. The Company will use its best efforts to cause this
registration statement to be declared effective by the SEC on or
before September 23, 2011. If this registration statement is not
declared effective by the SEC by September 23, 2011, then the
holders of Common Stock to be registered shall be entitled to
monetary penalties at a rate equal to $0.005 per common share for
each full month that this registration statement is late in being
declared effective by the SEC. However, in no event shall the
aggregate of any such penalties exceed $0.05 per common share. In
addition, for a period of 90 days following the effective date of
this registration statement, the Company cannot sell any equity
securities or securities convertible into equity securities. The
Company has not paid or accrued any amount for registration rights
payments as the Company believes the registration statement will be
declared effective by September 23, 2011.
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NOTE 9. - COMMITMENTS
License Agreements - Under its exclusive license
agreement with NCSU the Company is required to pay minimum annual
royalty payments, which are credited against running royalties on
sales of licensed products. The annual minimum royalty for each of
the calendar years 2010 through 2013 is $75,000, and in 2014 the
annual minimum royalty increases to $200,000. The license
agreement continues through the life of the last-to-expire patent.
These minimum royalty payments are due each February following the
end of the applicable calendar year reduced by any running
royalties paid or payable for that year. The agreement also
requires a milestone payment of $150,000 upon FDA approval of a
product that uses the NCSU licensed technology. The Company is also
responsible for reimbursing NCSU for actual third-party patent
costs incurred. These costs vary from year to year and the Company
has certain rights to direct the activities that result in these
costs. During 2010, the costs incurred related to patent costs and
patent maintenance amounted to $125,956 ($169,512 –
2009).
The
Company has two other exclusive license agreements which require
aggregate annual license fees of approximately $55,000, which are
credited against running royalties on sales of licensed products.
Each license agreement continues through the life of the
last-to-expire patent.
Operating Leases - The Company leases office space under
non-cancelable operating leases for $1,584 per month; expiring in
October 2011. Rent expense under the operating lease was
approximately $18,600 for the year ended December 31, 2010
($18,600 – 2009). Future minimum payments due under the
operating lease are approximately $15,800 in 2011.
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