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22nd Century Group (NASDAQ:XXII) on Monday said it would sell all of its GVB Biopharma hemp/cannabis operations, about a year and a half after acquiring the business.
XXII stock surged 12.8% to $0.24 after hours.
XXII will sell the operations to Specialty Acquisition Corporation, an entity affiliated with current GVB employees.
Terms of the deal include a cash payment of $1M to 22nd Century (XXII) and a 12% secured promissory note for $1.25M issued by the buyer and payable through six equal monthly installments.
“The sale of our hemp/cannabis franchise will immediately and materially further reduce the cash and operating demands within our business,” XXII’s interim top boss John Miller said in a statement.
The company also said it was entitled to retain any insurance proceeds received in connection with the fire at its Grass Valley manufacturing facility, with the damages being sought at present at about $9M.
22nd Century (XXII) develops technologies that alter the level of nicotine in tobacco plants and the level of cannabinoids in hemp/cannabis plants. The company already has U.S. Food and Drug Administration approved products in its VLN King and VLN Menthol King combustible cigarettes.