Imaging3, Inc. Update - Grapefruit Boulevard Investments, Inc. Confirms its Intention to Complete its Previously Announced Reverse acquisition of Imaging3, Inc.


Encino, CA, April 08, 2019 (GLOBE NEWSWIRE) -- Imaging3, Inc. (OTCQB:IGNG), (“Imaging3” or the “Company”), a development stage company focused on the introduction of disruptive technologies in the medical imaging industry, is updating its prior announcement regarding the execution of a non-binding letter of intent (“LOI”) to be acquired in a reverse acquisition (the “Acquisition”) by a privately held Los Angeles based cannabis company.

As originally announced by the Company on March 13, 2019 in both a current report on Form 8-K and a press release the Company entered into a non-binding letter of intent to be acquired by a California based, California licensed cannabis company subsequently identified as Grapefruit Boulevard Investments, Inc. (“GBI”) in a reverse acquisition (the “Acquisition”) which would result in post transaction IGNG being owned approximately 80% by the current shareholders of GBI and 20% by the currently existing IGNG shareholders as of the date of the Acquisition. Since that time, IGNG management, IGNG counsel and GBI management have been working toward completion of a definitive share purchase agreement (the “SPA”) by and among IGNG, GBI and GBI’s shareholders whereby the Acquisition, intended to be tax free exchange pursuant to Section 368(a)(1)(B) of the Internal Revenue Code of 1968, as amended, would be effectuated.

All potential obstacles preventing execution of the SPA have been eliminated save for one, that being the settlement of a judgment held by Alpha Capital Anstalt, based in Vaduz, Lichtenstein (“Alpha”) and Brio Capital Master Fund (“Brio”) against IGNG in the aggregate amount of approximately $1,463,734 (the “Judgment”). From November 2, 2018 when John Hollister, IGNG CEO sent an email Alpha’s Yosef Milgrom with an offer to settle the Judgment through the March 13, 2019 IGNG press release referred to above Hollister and Milgrom communicated intermittently about IGNG’s plans to obtain financing and pay the judgment. After those several months of low key negotiation between the Company and Alpha, Alpha, without any notice, on March 26, 2019, after the original IGNG/GBI press release and concomitant rise in the price of IGNG’s common stock, caused Joshua P. Friedman (Friedman”), a local collections attorney in Calabasas, California retained by Alpha, to deliver a letter to IGNG, a copy of which letter is attached as Exhibit #1 hereto, which disingenuously threatens to bring a legally unsupportable petition for a receiver against IGNG, which letter, within its four corners, is admittedly intended to be detrimental to the interests of the thousands of IGNG shareholders. In response to this letter, negotiations in earnest commenced between IGNG and Alpha/Brio concerning settlement of the Judgment which negotiations culminated in an offer on Thursday, April 4, 2019 at 4:39 PDT by IGNG to Alpha and Brio which very closely met the terms of the last settlement offer transmitted to IGNG by Alpha and Brio.

On Friday, April 5, 2015 IGNG, in a surprise to IGNG management given the rapid pace of negotiations for the ten previous days, received no further response to the Thursday IGNG offer. However, as has been the case throughout the period from the day of the first IGNG announcement concerning the IGNG/GBI acquisition to Friday April 5, 2019, IGNG has observed unusual trading patterns in its stock, especially around the market close, indicating that short sellers have been attempting to suppress the price of IGNG stock. Of course, a lower price on the IGNG stock would be beneficial to Alpha and Brio and detrimental to IGNG in connection with establishing a price at which Alpha and Brio could convert the dollar amount of the Judgment to shares of common stock. Furthermore, on Friday April 5, 2019 at 12:32 PM PDT, John Hollister, CEO of IGNG received an unsolicited phone call from a long time IGNG investor and shareholder (the “Investor”) (who had invested side by side with Alpha and Brio in multiple investments between 2013 and 2017 in the purchase of the securities (the Original Investment), the alleged breach of the terms of which led to Alpha and Brio obtaining the Judgment, but had refrained from joining Alpha and Brio as plaintiffs in the federal lawsuit by which the judgment was obtained, despite the Alpha and Brio attempts to persuade the Investor to join the lawsuit as a plaintiff ). In this phone call the Investor informed Hollister that Yosef Milgrom, the Alpha employee responsible for the IGNG account, had just called the Investor and Milgrom suggested that the Investor and other similarly positioned persons had rights to file a “lawsuit” against IGNG based on the Investor’s participation in the Original Investment despite the fact that no such legal right to file such a “lawsuit” against IGNG presently exists. These displays of bad faith, the possible short selling of IGNG common stock and the attempt to persuade an IGNG shareholder to bring an unwarranted lawsuit against IGNG during the pendency of negotiations between IGNG and Alpha and Brio are not surprising in light of Alpha’s recent admission of its participation in a long running far reaching scheme to defraud the public.

On September 7, 2018, the United States Securities and Exchange Commission filed a Complaint in the United States District Court for the Southern District of New York charging Alpha and 19 other defendants characterized by the SEC in its associated press release (a copy of which is attached as Exhibit #2 hereto) as “a group of prolific south Florida based microcap fraudsters led by Barry Honig” with operating from 2013 to 2018 classic pump-and-dump schemes. The SEC continued “Honig and his associates engaged in brazen market manipulation that advanced their financial interests while fleecing innocent investors and undermining the integrity of our securities markets.”

On February 6, 2019, as a result of its involvement in the above schemes to defraud the public, Alpha entered into a consent decree with the SEC by which it agreed to a permanent injunction from future violations of the federal securities laws and agreed to pay disgorgement of $708,407.07 as well as prejudgment interest of $149,788.44 for a total of $858,195.51in connection with its involvement in the aforementioned schemes. (see, Exhibit #3 hereto)

Bradley Yourist, an accomplished litigator and CEO of GBI stated, “While we are disappointed by the delay of execution of the SPA caused by the above articulated bad faith antics of Brio and Alpha lead by Brio’s partner Alpha, in connection with our attempts to settle the Judgment, GBI fully intends to stay the course, settle the Judgment, execute the Agreement, complete the reverse acquisition of IGNG, proceed with our previously announced debt and equity financings and execute our business plan for the benefit of the existing and soon to be new IGNG shareholders. Alpha cannot not be permitted to bully IGNG into accepting a settlement which is not reasonable to all the parties including the public stakeholders by causing an IGNG investor to file a frivolous lawsuit against IGNG for the purpose of sweetening the terms of the IGNG/Alpha/Brio Judgment settlement .”

John Hollister, IGNG’s CEO stated, “ as we signaled to our shareholders in our press release of March 18, 2019, we had concerns that negotiating a reasonable settlement with Alpha and Brio would be challenging given the environment they are familiar with operating in, in which they have huge leverage over their debtors and routinely impose toxic terms upon their debtors. Yosef Milgrom’s behavior, as articulated herein, is particularly troubling in light of the fact that Alpha, in its February 6, 2019 Consent Decree with the SEC was enjoined from and undertook to refrain from engaging in any deceptive or manipulative behavior in connection with securities transactions. This Consent Decree was entered into less than 60 days ago, nevertheless Milgrom has exhibited the behavior articulated herein in the last two weeks. In the current situation, IGNG has all the leverage since it is clear to all the world that if we fail to reach a settlement such as the reasonable one offered to Alpha and Brio on Thursday April 4, 2019, which met essentially all their terms, the failure of the Acquisition to occur as contemplated by all the interested parties and the ensuing damages to the IGNG shareholders and losses to the Alpha and Brio fund stake holders will be laid at the doorstep of Yosef Milgrom and his counterpart at Brio. We sincerely hope and believe that with this detailed public airing of the circumstances surrounding the parties’ attempts to negotiate a mutually beneficial settlement, visible not only to the IGNG shareholders but also to Alpha’s owner/partners, Austria’s Bank fur Arbeit und Wirtschaft, known as Bawag, and Austrian Billionaire Martin Schlaff and investors as well as Brio’s investors, a final accommodation, acceptable to all the parties, can be quickly reached.

Potential investors in IGNG’s common shares are cautioned that there can be no assurances that the reverse acquisition of IGNG by GBI will ever be closed and that even if it is, there can be no assurance that the Company will thereafter be able to obtain the financing necessary to achieve its articulated goals and further that even if such financing is obtained that it will be sufficient for the Company to achieve its ultimate goals.

About Imaging3, Inc.

Imaging3, Inc., founded in 1993, has developed a patented medical imaging technology, called the Dominion SmartScan™, that produces 3D X-ray images, effectively in real time. The SmartScan technology has the potential to allow healthcare professionals to perform diagnostic and therapeutic procedures more quickly and accurately, which may result in higher throughput for the clinicians and fewer safety risks for patients. Imaging3’s technology exposes patients to less harmful radiation than current equivalent imaging technologies such as CT scans. The company believes this will allow scans to be used in many settings where scanning is currently limited by concerns about radiation exposure. The technology also notably allows for reasonably convenient portability, easier installation and use-readiness, and a significantly reduced cost burden suitable for novel settings and for healthcare systems across varied global settings. Imaging3 plans to submit a 510(k) application to FDA during 2019 and or 2020 to gain marketing authorization for initial applications for the SmartScan technology. Visit the company’s website at for detailed information about the company’s technology. Grapefruit Boulevard Investments, Inc. is a cannabis product company which holds California licenses to manufacture and distribute cannabis products. To obtain further information on GBI’s California cannabis licenses and its business plan and operations, please visit GBI’s website at

About GBI

Grapefruit Boulevard Investments, Inc. (“GBI”) is based in Westwood, Los Angeles, California. GBI holds California licenses to both manufacture and distribute cannabis products and is fully compliant with all applicable laws and regulations to operate such business. GBI has its extraction facility and distribution warehouse located in the Coachillin Industrial Cultivation and Ancillary Canna-Business Park in Desert Hot Springs, located on the extension of North Canyon Rd., approximately 10 miles north of the center of Palm Springs. GBI obtained its California licenses in January of 2018 and commenced distribution of cannabis products in June of 2018. GBI’s goal is to become a seed to sale vertically integrated fully compliant cannabis and CBD product Company.

Safe Harbor Statement

Imaging3 cautions you that any statement included in this press release that is not a description of historical facts is a forward-looking statement. Many of these forward-looking statements contain the words "anticipate," "believe," "estimate," "may" "intend," "expect" and similar expressions. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the company and are subject to a number of risks and uncertainties inherent in the Imaging3’s business, including, without limitation: the company may not ever obtain FDA approval for any of its devices; the company may not be able to secure the funds necessary to support its product development plans; and the company may not ever achieve the market success to sustain a profitable business. In addition, there are risks and uncertainties related to economic recession or terrorist actions, competition from much larger imaging companies, technological obsolescence, unexpected costs and delays, potential product liability claims, and many other factors. More detailed information about Imaging3 and the risk factors that may affect the realization of forward-looking statements is set forth in the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K and its Quarterly Report on Form 10-Q. Such documents may be read free of charge on the SEC’s website at You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, and Imaging3 undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof. This caution is made under the safe harbor provisions of Section 21E of the Private Securities Litigation Reform Act of 1995.

Investor Relations Contact:
John Hollister
Chief Executive Officer

Joshua P. Friedman

and Associates

23679 Calabasas Road Suite 377 Calabasas California 91302
Telephone (310) 278-8600 Facsimile (310) 388-5421

March 26, 2019


15300 VENTURA BLVD, #504

RE:      Alpha Capital Anstalt et al. v. Imaging3
            Case # 2:19-mc-00037-UA

Intent to Appoint Receiver

Dear Mr. Hollister:

This firm represents Alpha Capital Anstalt and Brio Capital Master Fund, Ltd. (the “Judgment Creditors”) in connection with efforts to enforce and collect on the Judgment (the “Judgment”), dated July 27, 2018, against Imaging3, Inc. (the “Company”) issued by the United States District Court for the Southern District of New York (17 Civ. 6966) in favor of the Judgment Creditors in an amount in excess of $1.4 million.

It has become abundantly clear that the Company does not have the income or assets to satisfy this legal obligation at this point in time. Although our clients have made good faith efforts to resolve this matter, the Company has failed, time and time again, to respond adequately to our efforts to address the Judgment. Nor have the Company’s recent press releases concerning a proposed transaction with Grapefruit Boulevard Investments Inc. addressed how the Company will satisfy the Judgment.

In light of the above, the Judgment Creditors have concluded that, absent immediate action by the Company to address the Judgment to our satisfaction, they now have no choice but to file a motion with the Court to appoint a receiver to assume control over and liquidate the Company. Pursuant to said motion, the Court would appoint a qualified receiver to be compensated on an hourly basis with all costs and fees to be borne by the Company. The Court would instruct the receiver to liquidate the business in the most profitable manner in order to satisfy our Judgment in full. Other outstanding creditors would thereafter also be paid in full, and only after all of the creditors have been paid in full and the receiver compensated, would any remaining assets be distributed to shareholders.

Any actions taken by management or its counsel to contravene the Judgment Creditors’ legitimate rights, which result in additional cost and expense to the Company, will be viewed as corporate waste and a diminution of funds available to satisfy the Judgment. Any individual who causes the Company assets to be so diverted will be personally held accountable. The Judgment Creditors deem management to hold Company assets which could be used to satisfy the Judgment as constructive trustees on Judgment Creditors’ behalf.

Please contact me forthwith if the Company would like to propose a plan for the full satisfaction of the Judgment. Absent meaningful progress with respect to such a resolution, however, Judgment Creditors will be filing the motion for the appointment of a receiver on or before Thursday, April 4, 2019.

Yours truly,

Joshua P. Friedman, Esq.
Attorneys for Alpha Capital Anstalt and Brio
Capital Master Fund, Ltd.

SEC Charges Microcap Fraudsters for Roles in Lucrative Market Manipulation Schemes

Litigation Release No. 24262 / September 7, 2018

Securities and Exchange Commission v. Barry C. Honig, et al., No. 18-civ-08175 (S.D.N.Y., filed September 7, 2018)

The Securities and Exchange Commission today charged a group of ten individuals and ten associated entities for their participation in long-running fraudulent schemes that generated over $27 million from unlawful stock sales and caused significant harm to retail investors who were left holding virtually worthless stock.

According to the SEC's complaint, from 2013 to 2018, a group of prolific South Florida-based microcap fraudsters led by Barry Honig manipulated the share price of the stock of three companies in classic pump-and-dump schemes. Miami biotech billionaire Phillip Frost allegedly participated in two of these three schemes. Honig allegedly orchestrated the acquisition of large quantities of the issuer's stock at steep discounts, and after securing a substantial ownership interest in the companies, Honig and his associates engaged in illegal promotional activity and manipulative trading to artificially boost each issuer's stock price and to give the stock the appearance of active trading volume. According to the SEC's complaint, Honig and his associates then dumped their shares into the inflated market, reaping millions of dollars at the expense of unsuspecting investors.

The SEC's complaint, which was filed in federal district court in Manhattan, charges Honig, John Stetson, Michael Brauser, John R. O'Rourke III, Mark Groussman, Frost, Elliot Maza, Robert Ladd, Brian Keller, John H. Ford, Alpha Capital Anstalt, ATG Capital LLC, GRQ Consultants, Inc., HS Contrarian Investments, LLC, Grander Holdings, Inc., Melechdavid, Inc., OPKO Health, Inc., Frost Gamma Investments Trust, Southern Biotech, Inc., and Stetson Capital Investments Inc. with violating antifraud, beneficial ownership disclosure, and registration provisions of the federal securities laws and seeks monetary and equitable relief.

The SEC's continuing investigation is being conducted out of its New York Regional Office by Katherine Bromberg and Charu Chandrasekhar of the Enforcement Division's Retail Strategy Task Force, Tim Nealon, Ricky Tong, Joseph Darragh, and Michael Paley of the Enforcement Division's Microcap Fraud Task Force, and Jon Daniels of the Enforcement Division's Cyber Unit , with the assistance of Edward Janowsky and Steven Vitulano of the New York Regional Office Broker Dealer and Exchange Examination Program. The litigation will be led by Nancy Brown, Ms. Bromberg, and Mr. Daniels, and the case is being supervised by Mr. Wadhwa. The SEC appreciates the assistance of the Financial Industry Regulatory Authority

Commission Partially Settles Microcap Fraud Manipulation Action

Posted on February 10, 2019 by T. Gorman Posted in SECActions

The Commission and the staff may have returned to the office in time to pack-up. By all reports there is no deal on funding the government past the end of the week, February 15, 2015. If that continues the stalemate could begin anew at the close of business on Friday.

Since the government returned the Commission has continued to move forward in court, partially settling a large microcap fraud action – the type of case that is central to its retail investor focus. The settlements were in SEC v. Honig, Civil Action 18-cv-08175 (S.D.N.Y. Filed Sept. 7, 2018) with Defendants Mark Groussman, his firm Melechdavid and Alpha Capital Anstalt, a Lichtenstein hedge fund managed by an unnamed New York based unregistered investment adviser.

Mr. Groussman settled with the agency, consenting to the entry of permanent injunctions based on Securities Act sections 5 and 17(a) and Exchange Act section 10(b). In addition, he agreed to pay disgorgement of $1,051,360, prejudgment interest of $170,554.78 and a penalty of $160,000. His firm also consented to the entry of a permanent injunction based on the same sections. A five year penny stock bar was imposed on the firm.

Alpha Capital settled, agreeing to the entry of a permanent injunction based on section 5 of the Securities Act. The firm agreed to pay disgorgement of $708,470.07 along with prejudgment interest in the amount of $149,788.44.

The underlying action also names as defendants Barry Hong, Philip Frost, John Stetson, Michael Brauser, John O’Rourke, Robert Ladd, Elliot Maza, Brian Keller, John Ford and a series of controlled entities. It centers on the manipulation of four microcap firms’ shares during the period 2013 to 2018 yielding millions of dollars in profits.

The schemes followed a basic pattern. Mr. Hong essentially directed the transactions, according to the Commission. Initially, Defendants, or a subgroup of them, acquired control of the issuer and held the shares with Mr. Honig orchestrating a series of transactions. Actions designed to generate market activity, and which would also benefit the management of the issuers, were then initiated. Indeed, management of two of the firms participated.

The schemes concluded with a pump-and-dump manipulation of the shares and their price. Defendants would sell their shares, Over the course of the scheme millions of dollars in illicit profits were made. For example, one scheme involving one issuer resulted in over $9.25 million while another yielded over $8.3 million. The complaint alleges violations of Securities Act sections 5(a), 5(c), each subsection of 17(a) and 17(b) and Exchange Act sections 9(a)(1) and (2), 10(b), 13(d) and 15(d).

The Commission is preparing an amended complaint that will be filed in early March 2019. During the government shutdown other defendants settled with the Commission.