Burbank, CA, March 13, 2019 (GLOBE NEWSWIRE) — Imaging3, Inc. (OTCQB:IGNG, “Imaging3” or the “Company”), a development stage company introducing disruptive technologies in the medical imaging industry, today announced that it has executed 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 (the “Acquirer”).
John Hollister, CEO of Imaging3, explained the intersection of this opportunity with the Company’s objectives for development and commercialization of its Dominion™ 3D X-ray imaging technology: “We have continued our progress towards our targeted closure of approximately $3M of funding for our Dominion development program which we anticipate to close in the near future. A critical step in this process is the resolution of certain outstanding obligations owed by the Company. We believe that the proposed Acquisition announced today will help us to more easily resolve these obligations, thereby allowing the Dominion to devote a substantially larger percentage of the anticipated $3M funding to future endeavors as opposed to existing obligations. Conducting the Dominion enterprise in a new private entity will also eliminate the not insignificant costs of being a public entity.”
Hollister continued: “As many of us observe on a daily basis, the healthcare benefits and investment opportunities in CBD and other cannabis-derived products has been the focus of significant attention to investors of every genre. We believe that the Acquirer has wisely positioned itself to be a responsible leader in this emerging field, focusing on regulatory compliance and product quality as the drivers behind a well-planned rollup and integration of multiple facets of the cannabis business. The Acquisition of our fully-reporting and SEC current public company improves their access to the public equity markets and should facilitate their ability to rapidly attract either debt or equity financing and maximize value appreciation and liquidity for their investors and the current IGNG public shareholder. For the above reasons, IGNG’s officers and directors sincerely believe that the Acquisition is in the best interest of all parties: Imaging3’s current shareholders, the myriad financial and health care beneficiaries of the roll out of our breakthrough Dominion imaging technology, and the Acquirer.”
The Acquirer holds licenses issued by the State of California to manufacture and distribute cannabis products in California. The Acquirer commenced operations in mid-2018 and has enjoyed more than $550,000.00 in revenue from operations since they commenced. The Acquirer maintains facilities in Riverside County California near Palm Springs. On Thursday, March 7, 2019 the Acquirer obtained its final permit and clearance from the local fire department to commence operation of an ethanol-based extraction laboratory at its facilities, and will initiate related extraction and post-processing operations as soon as practicable. The Acquirer’s laboratory will be able to extract CBD hemp under Federal law pursuant to the recently signed 2018 Farm Act that classifies CBD hemp as an insurable commodity.
Pursuant to the terms of the LOI, the Company and the Acquirer have initiated negotiations intended to result in completion and execution of a definitive equity exchange agreement (the “Agreement”) defining all of the material terms of the Acquisition on or before March 31, 2019. Per the LOI, the Agreement shall provide that upon conclusion of the Acquisition, the Acquirer’s designees shall own 80% of the then outstanding common shares of the Company and the Company’s current shareholders shall own 20% of such outstanding common shares. The Company will also be required to settle the above mentioned outstanding creditor obligations on terms acceptable to both the Acquirer and the Company. Furthermore the Acquirer is required to obtain a commitment for a bridge loan of not less than $1,250,000.00 to be funded at the closing of the Acquisition and an equity infusion of up to $10,000,000.00 subsequent to closing of the transaction, each from a qualified investor(s), both of which will be applied to the growth of the Acquirer’s cannabis enterprises.
Published: March 13, 2019
Founder & Interim Editor of L.A. Cannabis News