Following the discontinuance of our dissolvable tobacco business, our Company will continue to look for licensing opportunities related to our dissolvable tobacco products and technology, including that relating to our Ariva BDL™ and Stonewall BDL™ modified risk tobacco products and the patented StarCured® tobacco curing process used in connection with the manufacturing of our low TSNA dissolvable tobacco products. Our Company anticipates annual savings of approximately $1.1 million from the discontinuance of the dissolvable tobacco business. We will incur severance costs in the form of salary continuation payments and continued health benefit costs under COBRA of approximately $829,000, for employees transitioning from Star Tobacco, Inc. In addition our Company will issue stock awards under the Company’s 2008 Incentive Award Plan in the aggregate amount up to 350,000 shares to those employees transitioning form Star Tobacco, in recognition of their long-time service to our Company. We anticipate that the stock awards will have a total value of approximately $1.1 million as well as a gross up charge for taxes of approximately $0.4 million. The total cost in connection with the discontinuance of the Company’s dissolvable tobacco business is anticipated to be an aggregate of cash and non-cash items of approximately $2.8 million in the fourth quarter. Following the discontinuation of the Star Tobacco, Inc. operations, the Company will have annual lease, real estate and insurance obligations for itsvmanufacturing facility in Chase City, Virginia in the amount of approximately $79,200. The aggregate of these payments over the remaining nine and half
years of a twenty year lease will be approximately $752,000, unless the lease is terminated or otherwise amended during the interim.