Los Angeles/Desert Hot Springs, CA, Jan. 31, 2020 (GLOBE NEWSWIRE) -- Grapefruit USA, Inc., a Delaware corporation, (OTCPink: “GPFT”) (“Grapefruit” or the “Company”) a California based fully compliant cannabis company is announcing today that both its Corporate name change from Imaging 3, Inc. to Grapefruit USA, Inc. and ticker symbol change from IGNG to GPFT have been completed and approved by FINRA. Furthermore the Company’s common shares will temporarily be quoted on the OTCPink Market as a result of a delay in the effectiveness date of its pending registration statement on Form S-1 caused by the autumn 2019 delays in connection with the audit of the Company’s wholly owned subsidiary, Grapefruit Boulevard Investments, Inc. (“GBI”).

In order to fully inform our shareholders why this highly technical temporary regulatory step has been deemed necessary by OTC Markets Compliance Department a review of certain aspects of the history of GBI’s reverse acquisition of Imaging3, Inc. is in order.

On March 13, 2019, Imaging3, Inc. (hereinafter “IGNG” or the “Company”) executed a non-binding letter of intent with GBI related to a proposed reverse acquisition of IGNG by GBI.

On March 28, 2019, management of both GBI and IGNG met with IGNG’s independent public auditors Rose, Snyder and Jacobs, CPAs (hereinafter “RSJ”). The purpose of the meeting with RSJ was to ascertain if it had the requisite professional experience to successfully audit a cannabis company such as GBI. At the conclusion of the meeting and after RSJ reviewed GBI’s financials, RSJ represented to the Company that, although it lacked prior professional experience in auditing a cannabis company, RSJ felt comfortable with the project of auditing GBI’s financials for the filing of a Form 8K/A concerning the proposed reverse acquisition after its completion. RSJ requested that GBI hire a cannabis accounting expert of its choice to review GBI’s books and records, which GBI consented to.

On April 30, 2019, RSJ conduct a successful warehouse inventory audit on GBI at GBI’s site in Desert Hot Springs, California.

On May 31, 2019, IGNG and GBI executed a Share Exchange Agreement documenting the reverse acquisition of IGNG by GBI.

In mid-June 2019, IGNG, Inc. engaged Lucosky Brookman, LLP to prepare and file an S-1 Registration required by the terms its financing commitment with its major institutional investor. (pre-GBI audit.)

In early-July 2019, GBI and IGNG successfully completed the post-closing conditions on the reverse acquisition and on August 21, 2019 shares were exchanged.

On July 25, 2019, IGNG filed the S-1 registration statement. On August 21, 2019, IGNG received the SEC’s first comment letter, which consisted of only fourteen (14) minor comments, and one (1) very significant comment requesting that IGNG include the GBI audited financials in its Amended S-1 Registration. The following is the press release hyperlink related to the SEC’s first comment letter: https://www.globenewswire.com/news-release/2019/08/22/1905294/0/en/Imaging3-Inc-Grapefruit-OTCQB-IGNG-Announces-Receipt-of-SEC-Comment-Letter-on-its-Registration-Statement-on-Form-S-1-filed-by-Grapefruit-on-July-25-2019.html

In late August 2019, without any prior notice, RSJ “regretfully” informed GBI and IGNG that after examining the situation, it reached the conclusion that it could not audit GBI because of the very specialized cash accounting issues related to the industry. RSJ recommended that GBI retain SingerLewak as its new auditors because SingerLewak is a nationally recognized auditor with prior experience in auditing cannabis and hemp companies. This totally unforeseeable event resulted in a substantial delay in completing the GBI audit which initiated a chain reaction of additional delays including most, importantly, IGNG’s filing of its post reverse acquisition Form 8-K/A and Amendment No. 1 to the S-1 registration statement because without the audit, IGNG could file neither the Form 8-K/A or Amendment No. 1to the S-1 registration statement.

On August 22, 2019, GBI engaged SingerLewak as its new public auditors.

From August 22, 2019 to September 22, 2019, the Company and its management were reasonably expecting that SingerLewak would complete the audit in a timely matter by no later than September 23, 2019.

On the morning of September 23, 2019, SingerLewak unexpectedly informed GBI and IGNG that it would need an additional “few weeks” to complete the audit due one of the audit partner’s “family issues” and because some of its staff were in training. In late October 2019, SingerLewak again unexpectedly informed GBI that because of “unpredicted” tax issues due to GBI’s involvement in the cannabis industry, SingerLewak needed “additional time” to complete the audit through no fault of GBI or IGNG. In early November 2019, SingerLewak, without any prior notice to the Company, requested that GBI hire a tax expert to prepare a specialized tax treatment opinion letter which caused another delay through no fault of GBI or IGNG.

On or about November 26, 2019, SingerLewak finally successfully completed the audit of GBI’s financials, and consented to using the audited finals in the IGNG Form 8K/A and Amendment No. 1 to the S-1 Registration Statement.

On November 29, 2019, the Company filed Amendment No. 1 to its current report on Form 8-K which was originally filed on July 16, 2019 which Amendment contains GBI’s audited balance sheets as of April 30, 2019 and 2018 and the related statements of operations, changes in stockholder’s (deficit) equity and cash flows for period August 28, 2017 (inception) to April 30, 2018, the year ended April 30, 2019 and the related notes to the financial statements. (collectively, the “Financial Statements”) and the Unaudited Pro Forma Combined Financial Information consisting of the unaudited combined balance sheet and statement of operations of GBI and IGNG (collectively, the Pro Forma Financial Statements). The Financial Statements and the Pro Forma Financial Statements were prepared by GBI’s then Independent Auditor, SingerLewak LLP.

On December 16, 2019, IGNG filed with the Financial Industry Regulatory Authority (“FINRA”) to change the Company’s Corporate Name to “Grapefruit USA, Inc.”, and Stock Ticker symbol to “GUSA”, “GPRE”, “GPFT” or such other Ticker symbol as FINRA and GBI might agree upon.

On January 17, 2020, IGNG filed Amendment No. 1 to its Registration Statement on Form S-1 originally filed on July 25, 2019. The Registration Statement covers shares to be issued to its institutional investor, Auctus Fund, LLC. (“Auctus”) of Boston, MA in connection with conversions of Convertible Notes (the “Notes”) issued to Auctus at 95% of Market and upon exercise of callable cash exercise only Warrants issued by the Company to Auctus. If all of the Notes are issued and the Warrants called, IGNG will have received $10,000,000.00 of gross proceeds from the transactions.

On January 22, 2020, the Company, with no prior warning, was informed by OTC Markets Compliance Department (“OTC Compliance”), that it needed to immediately provide OTC Compliance with the “S-1 clearance”, “name change effectiveness” and evidence that the “float is above 10%.” Without any prior notice whatsoever, OTC Compliance set an arbitrary deadline of January 30, 2020, seven (7) days from the notice to complete the open items, or OTC Compliance would unilaterally “move” IGNG to the “Pink Market”. OTC Compliance essentially took the position that the Company’s reapplication to the OTCQB required by the change in control of IGNG occasioned by the reverse acquisition of IGNG by GBI had been pending too long and thusly set the January 30, 2020 deadline.

On Friday, January 24, 2020, FINRA informed IGNG that the name change and ticker symbol change were both approved and the Company immediately filed a Certificate of Amendment of its Articles of Incorporation with the Delaware Secretary of State to change its name from Imaging3, Inc. to Grapefruit USA, Inc. The name and ticker symbol change were placed on the FINRA daily list on Monday, January 27, 2020 and effective the next day or January 28, 2020. Furthermore on Monday January 27, 2020, the Company provided reports from its transfer agent, VStock, LLC, which reflect that the float is approximately 14.3% of the currently outstanding shares of the Company. Therefore two (2) of the three (3) items required by OTC Compliance were completed by January 27, 2020. However, the timing of the “S-1 clearance” is in the hands of the SEC Corporation Finance Division and is out of the Company’s control.

As stated above, the Company filed Amendment No. 1 to the S-1 registration statement on January 17, 2020, therefore it will receive new comments on or before February 17, 2020. Lucosky Brookman has informed GPFT that they believe the comments should be minimal, but this cannot be certain. As soon as the Company receives the next comment letter from the SEC staff, it will respond to any comments and request acceleration of effectiveness of the registration statement. Immediately upon effectiveness, the Company will reapply to the OTCQB, all of whose qualification criteria it meets.

With respect to the expiration of the change in control application, Bradley J. Yourist, Grapefruit CEO, stated, “ As set forth in more detail above on January 22, 2020, without any prior notice, OTC Markets Compliance informed management of the Company that after reviewing its change in control application and the length of time it had been pending, OTC Markets Compliance decided to set a deadline of January 30, 2020 for the Company to complete three action items: First, obtain effectiveness of its S-1 Registration Statement; Second, complete the name change and ticker change process; and third, demonstrate that the Company’s float exceeded 10% of the Company’s total outstanding shares. The Company was given 7 business days to complete these action items, otherwise the Company would be temporarily unilaterally “moved” to the OTCPink Market commencing January 31, 2020 until such time as the action items were achieved. On January 28, 2020 counsel for the Company informally appealed to OTC Markets Compliance , explaining that that action items 2 and 3 had been achieved but that effectiveness of the Company’s S-1 was an open item and was out of the company’s control and requested additional time to complete that item before being moved to the OTCPink Market. OTC Compliance declined to grant the extra time.

While we are disappointed that the Company’s common shares will now be temporarily quoted on the OTCPink Market we understand the OTC’s position that a change in control re-application must be generally completed within 3 months-time which we exceeded. The delay in completion of the re-application was caused by the long delay of the completion of the GBI audit which prevented the Company from filing Amendment No. 1 to the S-1 registration as the Amendment required the inclusion of the GBI audit. The unforseen delay in completion of the audit caused a chain reaction resulting in the delay in completing the change in control application with the OTC and triggering the decision by OTC Compliance. GPFT shareholders should be aware that this temporary move to the OTCPink Market is of no practical import. The Company remains a fully reporting, audited company and will continue to timely file periodic reports. No aspect of our core business is negatively affected by this action. We are in the process of preparing our annual report on Form 10-K for the year ended December 31, 2019 which will be filed timely or earlier. Very importantly, we believe that our relationship with our main institutional investor remains solid and that our financing will not be delayed due to this temporary move to the OTCPink Market. Lastly but certainly not least, this temporary adjustment will in no way impair our efforts to continue to take all steps necessary to grow our revenues as we move forward to our stated goal of becoming a leading force in the legal cannabis industry.”

To learn more about Grapefruit, please visit our website at:
https://grapefruitblvd.com

About GRAPEFRUIT

Grapefruit’s corporate headquarters is in Westwood, Los Angeles, California. Grapefruit holds California permits and licenses to both manufacture and distribute cannabis products. Grapefruit’s extraction laboratory and distribution facilities are located in the industry recognized Coachillin’ Industrial Cultivation and Ancillary Canna-Business Park in Desert Hot Springs, located on the extension of North Canyon Rd., approximately 14 miles north of downtown Palm Springs. Grapefruit obtained its California cannabis licenses in January 2018 and commenced distribution of cannabis products thereafter. Grapefruit’s vision is to become a seed to sale, fully vertically integrated ethical and compliant cannabis product Company. To obtain further information on Grapefruit and its operations, please visit its website at https://grapefruitblvd.com/. To learn more about Grapefruit’s Sugar Stoned branded line of cannabis and CBD infused edibles, please visit us at https://sugarstoned.com/.

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 Grapefruit’s business, including, without limitation: the company may not ever obtain additional funds necessary to support its business development and growth plans; and the company may not ever achieve the market success to reach or sustain a profitable business. In addition, there are risks and uncertainties related to economic recession or terrorist actions, competition from much larger cannabis companies, unexpected costs and delays, potential product liability claims, and many other factors. More detailed information about Grapefruit 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, its Quarterly Reports on Form 10-Q for the period ended June 30, 2019 and its Registration Statement on Form S-1. Such documents may be read free of charge on the SEC’s website at www.sec.gov. 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 Grapefruit 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:
Bradley Yourist
brad@grapefruitblvd.com
18776 Blue Dream Crossing, Unit LL1 53-07
Desert Hot Springs, California 92240
(760) 205-1382
https://grapefruitblvd.com/