Replies to post #54985 on Grapefruit USA Inc (GPFT)

[CAD11]

Looking good this Morning! ''closing the Acquisition very expeditiously”
price went down for alpha and brio yesterday! XD

[CashBowski]

Their balance sheet is so convoluted with debt, convertible notes, warrants, and judgement that I’ll have to take longer than a few minutes to look it over.

Keep in mind that those that are noted as “in default” — usually have a default provision in the contract (seldom they don’t). Some sort of ratcheting. So if Hollister didn’t pay or issue shares when he was supposed to (defaulted) then they automatically turn convertible. Without knowing the details of the contract it’s difficult to say for sure, or if so at what discount rate, or are they at par value which wouldn’t be good at all.

I’ll try to find some time today to take a closer look.

[CashBowski]

Marty, I had a chance to take a brief look to try to address your question...there’s some troubling aspects of this 10-k that hasn’t been addressed by Hollister.

Aside from the fact that they’re issuing 8M shares to Brio/Alpha + $200K in cash (where’s the cash coming from with $14k on hand?) they still have heavy liabilities in form of notes payable and convertible debt, etc. which they’ll likely issue a bunch of shares to settle and satisfy GBI LOI terms, but most importantly there’s an Administrative Claim of Greenberg Glusker Fields Claman & Machtinger LLP for over a million dollars that’s in default (highlighted below) which by the way is a stipulation to their bankruptcy.

Also, what I could find in response to your question about warrants and if they’re excersised at those specific prices (between .20 -.40) — it seems not! — I’ve highlighted below that provision and trigger. Presumably by issuing shares to Alpha/Brio at .164 (lower than stated exercise price) they’ve triggered anti-dilution provisions which ratchet those prices down.

In interest of current shareholders, Hollister needs to come clean and disclose in his next PR...

> exactly what’s outstanding in terms of convertible debt, and currently being diluted, and
> what’s being paid for in shares (besides 8M to Brio/Alpha that isn’t even issued yet), and
> where is the $200k payment coming from (printing more shares?), and
> what’s the deal with the Administrative Claim for over $1M, why no mention - where’s the settlement, and
> are any of those ~over 4M warrants cancelled? If not, how are they discounted, and
> Where did ~10M shares issued in the past month go, and
> How much of the liabilities is going to spill over to GBI since LOI terms indicated there has to be a settlement before merger goes through.

At this point due to other factors attributed to the merger that I don’t see folks taking into consideration, I foreshadow a reverse split in the cards once Grapefruit Boulevard takes over. It’s unfortunate, but this wasn’t exactly a clean shell. GBI as the surviving entity beyond the merger is a different story and they should do well on their own without current IGNG baggage.

All IMO. GLTY