RICHMOND, Va. — Star Scientific Inc. said Friday that its CEO and several shareholders are investing $20 million in the smokeless tobacco and dietary supplement company and its top executive also is reducing his salary until the firm is profitable.
In a filing with the Securities and Exchange Commission on Friday, the Glen Allen, Va.-based company said CEO Jonnie R. Williams and several long-term shareholders made the investment through the exercise of outstanding warrants. It also said that Williams also will cut his salary to $1 per month starting in January. His base salary was $1 million in 2011.
The company did not immediately return a request seeking comment from Williams on the move.
Star Scientific cautioned earlier this week that it may need to seek additional funding to sustain its operations early next year. The company said it expects to have funding to sustain operations into the first quarter 2013, but that it may need to seek out more funds depending on its sales, market conditions and its stock price.
Over the last 10 years the company has run up annual losses. It reported a loss of $38 million in 2011, compared with a loss of $28.3 million a year earlier, despite sales more than doubling to $1.7 million.
The company used to focus primarily on research of a tobacco curing process that would prevent the formation of carcinogenic toxins in tobacco. It has sold varieties of tobacco lozenges that dissolve in the user's mouth under the Ariva and Stonewall brands since 2001. But Star Scientific has shifted its focus more toward the dietary supplements it sells through its subsidiary Rock Creek Pharmaceuticals, including its Antabloc product for anti-inflammatory support and its CigRx supplement to reduce the urge to smoke.
In August, Star Scientific changed its Nasdaq ticker symbol to STSI from CIGX. Its shares closed at $1.61 in trading Thursday and have traded in a 52-week range of $1.56 to $5.05.