22nd Century Group Enters into Agreement to Sell Hemp/Cannabis Franchise

Sale Expected to Result in Immediate and Significant Reduction in Operating Costs and Cash Requirements

BUFFALO, N.Y., Nov. 27, 2023 (GLOBE NEWSWIRE) -- 22nd Century Group, Inc. (Nasdaq: XXII) (the “Company” or “22nd Century”), a leading biotechnology company focused on utilizing advanced plant technologies to improve health and wellness, today announced it has reached an agreement to sell substantially all of its GVB Biopharma (“GVB”) hemp/cannabis operations to Specialty Acquisition Corporation, a Nevada corporation (the “Buyer”), an entity affiliated with current GVB employees. The transaction is subject to certain approvals and Buyer obtaining financing.

Terms of the transaction include a cash payment to the Company of $1 million at closing of the sale (the “Closing”) and a 12% secured promissory note for $1.25 million issued by the Buyer and payable through six equal monthly installments of principal and accrued interest commencing the fourth calendar month after the Closing. The parties will equally share liabilities related to any GVB entities not part of the transaction, subject to certain conditions. The Company plans to use the proceeds from the sale to further deleverage its balance sheet.

22nd Century is also entitled to retain any insurance proceeds received in connection with the fire at the Company’s Grass Valley manufacturing facility, a portion of which will be used to offset Buyer’s portion of the shared liabilities. At present, damages being sought are approximately $9 million, subject to upward revision the longer the disputed claim with the insurer remains unresolved, although the amount received will not be finalized until resolution of the matter.

The sale is expected to close in early December 2023, subject to customary closing conditions including approval by 22nd Century’s Board of Directors, receipt of a fairness opinion, Buyer obtaining $3 million of financing and receipt of third-party consents, including the consent of the Company’s senior lender. The Company is currently in discussions with the senior lender to obtain such consent. No assurances can be given that the Buyer will obtain the required financing or that the Company’s senior lender will provide the consent to the transaction.