Imaging3, which is slated to be acquired by privately held Los Angeles-based cannabis company Grapefruit Boulevard Investments, said last week that it has settled a lawsuit it faced over claims that it breached note agreements and failed to deliver warrants to equity firms that had invested in it in 2017.
Investors Alpha Capital Anstalt and Brio Capital Master Fund were granted a motion for summary judgement in a case against Imaging3 last summer, according to the settlement agreement. Alpha Capital was awarded $804,770 while Brio Capital won $669,805.
Encino, Calif.-based Imaging3 did not have the means to pay the full amount required, and entered into a deal to provide its shares to the company in lieu of reimbursement, according to the documents.
In its recently inked deal, Imaging3 said that it will pay $100,000 cash to both Alpha and Brio when its reverse merger closes. The balance of the judgements will be converted into Imaging3 restricted common shares at a conversion price of approximately 16¢ per share, which translates to approximately 4.2 million shares to Alpha and 3.5 million shares to Brio.
In connection with the payments, both investors will seek approval of the settlement agreement, Imaging3 said. The company added that it is hopeful that the deal will be completed by mid-July this year.
“We are very pleased to have settled the long running Alpha/Brio dispute on favorable terms to both the company and Alpha and Brio. It is very satisfying to have Alpha and Brio move from creditors to investors. Furthermore, resolving this outstanding judgment is critical for completion of the acquisition. In this regard, GBI has approved the settlement as set forth above and IGNG and GBI will now proceed to sign a definitive share exchange agreement and close the Acquisition on an expedited basis,” Imaging3 CEO John Holliser said in a press release.
“We are impressed that current IGNG management was able to settle a once very contentious dispute so quickly and fairly and we look forward to both Alpha and Brio moving from the creditor to investor column. This agreement removes the largest obstacle to IGNG and GBI signing the definitive share exchange agreement and closing the Acquisition very expeditiously,” GBI CEO Bradley Yourist said in a prepared release.