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June,
2005

TOBACCO INDUSTRY NEWS (cont.)

General Tobacco to Construct Expanded Headquarters, Bonded Warehouse Facility

Miami - General Tobacco has completed negotiations for the construction of a new 300,000 square-foot facility that will serve as the company's new headquarters. The facility will allow General Tobacco to consolidate its warehousing needs and provide room for manufacturing some of its products in the U.S.

The facility, located in the Flagler Station Development area in northwest Miami-Dade County, Florida, will take 14 months to complete. The state-of-the-art facility, to be built on 13 acres of prime lakefront real estate, will centralize all of General Tobacco's current warehousing functions and increase capacity by almost 100,000 square feet. The new facility will also include a bonded warehouse and will serve as a master receiving and distribution center.

One of the larger tobacco companies in the country with approximately $400 million in annual sales, General Tobacco is poised to extend its steady growth trajectory by opening distribution centers in California, Kentucky, and New Jersey.

"By adding regional distribution centers on the east and west coast and one in the center of the country, General Tobacco can speed up delivery time to better serve its regional customers and provide steady supply to the market," says Vidal Suriel, General Tobacco's owner and founder.

These developments follow the recent hiring of more than 30 new staff members nationwide, including experienced regional directors and area managers. Current plans call for a doubling of the sales force by year's-end to increase the company's marketplace presence and to build relationships with new and existing customers as well as retailers.

General Tobacco began distributing its own generic cigarette brand, GT One, in May 2000, and now distributes three additional brands of generic cigarettes: Bronco, Silver, and Champion. The company's products are distributed throughout the country and internationally.


Dimon, Standard Commercial Merger Complete
Leaf Merchant Now Alliance One International


Danville, VA - The merger of Dimon Incorporated and Standard Commercial Corporation was completed on May 13. The new, combined company is now called Alliance One International, Inc.

The merger, originally announced November 8, 2004, creates a leading global independent leaf tobacco merchant with broad geographic processing capabilities, a diversified product offering and an established customer base, including all of the world's major consumer tobacco products companies. As a result of the merger, Alliance One is one of only two global independent leaf tobacco merchants, each with substantially similar global market shares.

Dimon and Standard Commercial have completed an extensive integration planning process, incorporating internal expertise from both companies, as well as external consultants, and implementation of those plans has immediately begun today. Through the rationalization of processing capacity and the elimination of duplicative regional and corporate overhead, Alliance One expects to realize over $60 million in potential annual pre-tax cost savings. The company expects to implement substantially all of the proposed cost savings initiatives and to realize 65% of potential annual cost savings over the next year, with 100% to be realized in fiscal year 2007.

In conjunction with the merger, Alliance One has also completed a comprehensive refinancing transaction expected to facilitate the financial flexibility required by the merged operations, while providing substantial long-term liquidity.

Alliance One is a leading independent leaf tobacco merchant. It selects, purchases, processes, stores, packs and ships tobacco grown in over 45 countries, and serves the world's large multinational cigarette manufacturers in over 90 countries. Alliance One's shares now trade under the ticker AOI. For more information visit the company's website at www.aointl.com.


Cigar Night at the Ball Park

On Monday, April 25th, Mike Chiusano, president of Cusano Cigars, threw out the ceremonial first pitch at PNC Park in Pittsburgh to begin the Pirates vs. Houston baseball game. The cigar evening was organized by CX2 Marketing and Laurie Silverman of Klafter's, Inc.; the Pirates; and local retailers. It was sponsored by Cusano Cigars and Cojimar Cigars, and may be the first in a series of other cigar-friendly events planned at PNC Park. The event was held in the stands in an area reserved for 100 cigar smokers where they could smoke complimentary Cusano and Cojimar cigars, eat hot dogs, and socialize during the game.

"The pitch did more than signify the start of a cigar evening," said Chiusano. "It was a symbolic gesture by cigar smokers that they have rights too."

Anti-smoking forces opposed the event from the start, noted Chiusano, and he congratulated the Pirate organization and event organizer CX2 for persevering and holding the evening.


Cigars Lift Altadis Q1 Results

Madrid - Tobacco group Altadis raised net profits in the first quarter by 4.0 percent to $143.6 million, and cigars provided much of the boost, the company reported. In the first quarter of 2005, sales rose by 9.7 percent.

In the United States, Altadis USA kept its focus on upmarket cigars - natural leaf wrapper and premium, hand-made segments. Total sales of Altadis USA increased in the U.S. by 15.4 % in dollar terms and converted into sales of $129 million.

The group's strategy for Cuban cigars, meanwhile, which combines "ultimate luxury" such as limited editions and special reserves, and "affordable luxury" such as Mini Cubanos, confirmed its efficiency: sales increased by 13.3% in constant currency and by 10.3 percent in Euros.


Mixed Quarterly Results at Star

Chester, VA - Star Scientific reported a reduction in revenue of $200,000 but an increase in gross margins of $900,000 in the first quarter of 2005 compared to the first quarter of 2004. There was a net loss of $7.0 million in the quarter, compared to a net loss of $2.7 million for the same quarter in 2004. Net sales decreased 1.5%, from $17.2 million for the quarter ended March 31, 2004, with 509 million cigarettes sold, to $17.0 million for the quarter ended March 31, 2005, on volume of 409 million cigarettes sold. The reduction in volume was due in part to the decision in 2004 to increase price to improve the margin on cigarette sales. The price increase also reflects the company's need to begin funding its share of payments under the recent tobacco buyout legislation.

Synergy Sees Revenues Jump 12%

Melville, NY - Synergy Brands, Inc. reported that revenues increased by 12% to $14.9 million for the quarter ended March 31, 2005. The net loss was reduced by 8% to $0.21 per share vs. $.23 for the same period. Operating profit before non-cash and financing charges increased by 395% to $ 71,933. The company's cigar operations remained flat, but management believes that the impending opening of Bill Rancic's Cigars Around the World Store in July of 2005 should increase the operating results of its cigar operations. The Cigar operation continues to develop outlets for distribution from its operation in Miami and is exploring options with PGA Clubs, strategic websites, and wholesale arrangements.


SMOKESHOP - June, 2005