Marani Brands Inc. (MRIB)

[Matthew Berg]

MRIB debt is being misrepresented here. What is being called "debt" is represented only by the fact that a note was issued in agreement to exchange shares for cash to pay expenses. Safe harbor is the only technicality that allows one to call the convertibles as debt. It is a misnomer. There was never any intention to repay any debt so to speak but to delivery shares at what was considered safe harbor. I question that as well because I see no basis for exemption and the removal of legend.

Furthermore, for the record, a company may in fact sell free trading shares directly for cash. There is rule 504 that allows for an annual exemption to sell free trading shares up to a limit of $1 million IIRC. MRIB did in fact use this exemption in 2014.

The use of the term debt reduction is misleading and deceptive. The inference is that MRIB in some way reduced overall debt which would be a good thing but that's not what happened. Every share issued out to satisfy convertibles was for bringing in new cash not pay off old debt as is being represented or suggested. At best debt remained static and not reduced in any way. We're it not for regulatory requirements MRIB would have been more than happy to issue out free trading issues in exchange for cash for expenses.

Bottom line is the supposed debt was actually just new expenses and the shares were gone the day the deal was done with no recourse associated with real debt. If I buy something from you and sign over a CD that matures in six months as payment would it be incurring a debt or a secured payment? That's essentially what we're talking about here. Without intention or option to pay the note and cancel the pledge of shares it's clearly a sale of shares at inception, nothing more and nothing less. It certainly is NOT a balance sheet improving debt reduction as being represented.