New York-based 22nd Century Group said it has closed the sale of its GVB Biopharma unit, a CBD maker, taking a massive loss in the transaction. The company sold GVB for an estimated $2.25 million, less than 4% of the roughly $60 million it paid for the Las Vegas-based company in a 2022 stock swap transaction.
The sale will reduce 22nd Century’s operating costs going forward, and its debt by $3.2 million, the company said in a press release. An additional $2 million reduction is expected to come from the buyer’s payment of a promissory note due June 2024. 22nd Century also retains the right to recoup an unresolved $9 million insurance payout from a 2022 fire at a GVB manufacturing facility at Grass Valley Oregon.
The purchaser, Specialty Acquisition Corp., is a Nevada business “affiliated with current GVB employees.”
Tobacco assets
22nd Century said it will now “work to create value for our shareholders through an improved balance sheet and full focus on our tobacco assets.”
Buffalo, New York-based 22nd Century Group, Inc. swapped $60-65 million in stock for 100% of GVB in June 2022.
At the time James A. Mish, 22nd Century’s CEO, suggested the acquired company could generate positive cash flow “in the near term,” and double his company’s income, pegged at ~$31 million in 2021. The acquisition was expected to “add significant commercial scale to 22nd Century’s existing hemp/cannabis franchise,” GVB had said.
5 billion doses?
Mish was ousted in July 2023, with John Miller installed to temporarily head the company.
A highly risky penny stock traded on NASDAQ, 22nd Century Group is an agriculture biotech company with interests in reduced-nicotine tobacco, hemp, marijuana and hops. The company claimed it sold more than five billion doses of CBD in 2021.
22nd Century Group, which also owns Goodrich Tobacco Company, LLC, has suffered losses of ~$72 million through the first three quarters of this year. The company lost ~$52 million in 2022, and about ~$33 million in 2021. Past yearly reports show the company has consistently lost millions each year since going public in 2011.
