US: 22nd Century Group Subsidiary Goodrich Tobacco Company Granted Federal Permit to Manufacture Tobacco Products

Source from:  Business Wire  03/11/2014

22nd Century Group, Inc. (OTCQB: XXII) today announced that its wholly owned subsidiary, Goodrich Tobacco Company, has been granted a federal permit to produce tobacco products by the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury ("TTB Permit").

As previously reported, 22nd Century Group entered into an Agreement to purchase all of the issued and outstanding membership interests of NASCO Products, LLC ("NASCO"), a North Carolina limited liability company (the "NASCO Acquisition"). NASCO has its own TTB permit to manufacture tobacco products and is a participating member of the tobacco Master Settlement Agreement ("MSA"), an agreement among 46 U.S. states and the tobacco industry administered by the National Association of Attorneys General ("NAAG").

The NASCO Acquisition will close immediately upon the settling states of the MSA consenting to the transaction; such consent consisting of a modified Adherence Agreement for NASCO. At this date, the terms of NASCO's modified Adherence Agreement, as negotiated among NAAG, NASCO and 22nd Century Group, are very close to final.

Upon the closing of the NASCO Acquisition, NASCO will become a wholly-owned subsidiary of 22nd Century Group and Goodrich Tobacco will surrender its TTB Permit. Joseph Pandolfino, Founder and CEO of 22nd Century Group, stated, "We look forward to closing the NASCO Acquisition, becoming a member of the MSA, and marketing our proprietary brands, RED SUN® and MAGIC® nationwide, with all the advantages afforded to MSA brands." Goodrich Tobacco's brands were previously contract manufactured by companies that were not members of the MSA.

Separately, Goodrich Tobacco engaged the Ettin Group of Northbrook, Illinois and generated approximately $640,000 of net proceeds from an auction of cigarette manufacturing equipment and other items not required for operations at the Company's factory in Mocksville, North Carolina. As previously reported on January 31, 2014, 22nd Century Group purchased approximately $3.4 million of cigarette manufacturing equipment from two bankruptcy estates and leased the manufacturing facility that houses the equipment.

The Company sold a small portion of the equipment it originally purchased out of bankruptcy, which confirms management's assertion that the $3.4 million of assets purchased is only a fraction of their actual market value. "The strategic sale of excess equipment benefits 22nd Century Group by reducing the net costs associated with the acquisition of the turnkey Mocksville factory," stated John T. Brodfuehrer, 22nd Century Group's CFO. Enditem