LOS ANGELES and DESERT HOT SPRINGS, Calif., April 26, 2021 (GLOBE NEWSWIRE) — via InvestorWire –Grapefruit USA, Inc. (OTCQB: GPFT) (“Grapefruit” or the “Company”), a diversified California based cannabis and hemp company, today announces its financial results for the year ended Dec. 31, 2020.
“We are pleased to report net revenues of $3,672,353 for the year ended Dec. 31, 2020, an increase of $3,221,157 or 714% over revenues of $451,196 for the year ended Dec. 31, 2019, despite operating during a global pandemic,” said Brad Yourist, CEO.
“We are also heartened to report that over the last several weeks we have been engaged in an exercise in holding the line for our company and its loyal shareholder base with respect to renegotiating the Notes with our institutional investor. We think we have achieved a very positive result and look forward to continuing to grow our distribution business and to fully usher in the age of Hourglass, our remarkable cannabinoid hemp based-CBD & THC topical time release delivery system.*”
“We look forward to more success in 2021, which is already off to a superb start and will shift into high gear in the next few days with Grapefruit’s live launch of its retail hemp-derived CBD products website featuring our disruptive hemp CBD based Hourglass products. In addition, we have been informed by our Canadian Joint Venture/potential acquisition group that their shareholder’s meeting will be held this week as previously reported and at the conclusion of which our discussions will restart immediately. Further updates with respect to the new Grapefruit hemp-based CBD Hourglass retail website live launch and Canadian JV/acquisition progress will be provided in real time.”
“In summary, we are gratified to have successfully renegotiated our investor Notes, built and launched our hemp-derived CBD based Hourglass retail e-commerce website and moved our Canadian initiatives forward in the first 120 days of 2021.”
Convertible Notes Restructuring Overview
The Company spent the last six weeks renegotiating certain key terms of approximately $4.2 million of convertible notes (the “Notes”) issued to its institutional investor. Prior to such renegotiations, the Company was informed by its auditors that GAAP required technical derivative calculations deriving from the fact that the Notes contained a variable conversion price feature that would force in the Company to recognize a non-cash loss in excess of $40 million for the year ended Dec. 31, 2020. This was unacceptable to Company management, who raised the issue with the Company’s investor. The investor agreed that this technical accounting anomaly was an inappropriate result and agreed to assist management in eliminating it. After a few weeks of discussions and negotiations between the parties, informed throughout by the guidance of the Company’s auditors, on April 15 the parties agreed to modify the Notes to substitute a fixed conversion price of $.075 per share for the variable one of approximately 92% of market with an extended look back, which theoretically could have resulted in conversion prices as low as below $.025. In addition, the Company has agreed to issue a warrant to purchase an additional 20,000,000 shares at $.075 per share on a cash only basis which will result in an additional $1.5 million of proceeds to the Company. As a result of these modifications to the Notes, the Company has eliminated the approximately $40 million non-cash loss for the year ended Dec. 31, 2020, from its results of operations.
For a detailed discussion of Grapefruit’s balance sheet and results of operations for the year ended Dec. 31, 2020, please refer to the Company’s annual report on Form 10-K at pages 13-22 which was posted on the GPFT landing page on the OTC Markets website on April 20, 2021. Furthermore, the fixed conversion price significantly reduces the potential number of shares to be issued to our investor upon conversion of the Notes as compared to number of shares registered in the Company’s registration statement on form S-1, the definitive prospectus that was filed with the SEC on July 1, 2020.
The amendments to the Notes insures that the Company may repay its investor at a fixed conversion price which, in turn, caps the number of shares that will be required to be issued to repay the Notes.
Management believes that the certainty engendered by the fixed conversion price will improve the Company’s ability to raise additional funds in the capital markets as the need to do so arises.
*This product is not regulated by the FDA and is not intended to cure, mitigate, treat or prevent disease.
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Grapefruit’s California offices are located in Westwood, Los Angeles, California. Grapefruit holds California permits and licenses to both manufacture and distribute cannabis products in the Golden State. Grapefruit’s extraction laboratory and manufacturing 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. To obtain further information on Grapefruit and its operations, please visit its website at https://grapefruitblvd.com/.
Safe Harbor Statement
Grapefruit 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 Report on Form 10-K for the period ended Dec. 31, 2020, and its Registration Statement on Form S-1/A. 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.
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