Notis Global Inc. (fka NGBL)

[penknee]

Does Notis own the Pueblo farm anymore? As of March 2017 they did, but something happened in August of 2017. Not only did they change the corporate address, Shi Farms was created as a trade name under EWSD I LLC ( a wholly owned subsidiary of Notis), and their address is listed as one of the toxic funders for Notis, “Trava.”

Notis owned 98% of the farm as of 3/21/2017, but nearly all of the revenue is being paid to the lenders, Redwood and Trava, and Redwood will own 20% of the farm when the “New Notes” are paid off. Trava is growing hemp on the farm under the name “Shi Farms,” and spent considerable money on equipment, greenhouses and paying the mortgage for Notis. Trava will pay Notis 51% of the net cash cash month, from that 51%, Notis will pay Redwood up to 80% (more details towards the bottom of this post)and a 3% royalty to Southwest Farms That leaves Notis with just 9.9% of the cash generated by the farm (Depending on who gets paid first the math could change slightly, less than 1% though). Redwood and Southwest Farms both have liens against the property, so if they don’t get paid they can foreclose. On 8/19/2017 “Shi Farms” was created as a trade name under EWSD LLC, and the mailing address was for Steven Turetsky of Trava. Then on 8/25/2017 EWSD filed with the Colorado SOS their new corporate address in NJ and listed “Alternative Advisory” as the owner. Unfortunately the company hasn’t updated anyone as to what’s going on, at best Notis owns most of the farm, but only 10% of the revenues; and at worst the toxic funders own some or all of EWSD LLC and Shi Farms. There have been no changes in the title of the property since January 2017 , and that was a lien for a loan, which is a good sign, but if the LLC sells, there would be no change.


Below is the list of all of the debt related to the Pueblo property, it does not include the toxic debt from Chicago Ventures, which was not secured debt, but it was convertible into shares. The last filing they were mentioned in said Notis was in default, and Chicago Ventures was going to work something out. Most of the money they lent to Notis was used to pay off the lawsuits.
Notis 8/7/2015 buys Pueblo farm, 214 39th Ln Pueblo, CO 81006. During the first nine months of 2015, Notis received approximately $7,432,000 in net funding from their lenders.

Two notes on farm 8/7/2015 $3,670,000 secured by the property, and $830,000 unsecured, owed to Southwest Farms, the seller of the property and Notis also agrees to pay a 3% royalty.

9/30/2016 Issued “Junior Notes” aka the “New Notes” of $3,349,599 from Redwood and from $2,633,961 Magic Farms a Redwood subsidiary, in exchange for just $1,983,599 and $1,431,401 respectively.

Upon retirement of the New Notes, the Company or its Subsidiaries or affiliates as applicable, shall assign twenty percent (20%) of their respective ownership interest in the Farm and Farm #2 to the Investor.

212 39th Ln, Pueblo CO 81006 referred to as “Farm #2 never purchased, but a lien and an assignment of rents was filed against farm #1 at 214 39th Ln 9/30/2016, the liens are from Redwood and Magic Farms loans to Notis.
You can look up EWSD here: https://erecording.co.pueblo.co.us/recorder/eagleweb/docSearch.jsp

3/21/2017 8K: PCH-Related Note of $1,000,000.00, the Lender has advanced to us approximately $768,000. The balance thereof (approximately $232,000) is in an escrow account, to be released to us upon our requests therefor and the Lender’s approval thereof. In connection with the Pre-acquisition Loans and the PCH-Related Note, the makers and co-obligors thereof entered into an Amended and Restated Security and Pledge Agreement in favor of the Lender, pursuant to which such parties, jointly and severally, granted to the Lender a security interest in all, or substantially all, of their respective property.

As of 3/21/2017 Notis owned 98% of EWSD, but nearly all of the revenues were pledged to the lenders.


Notis had already borrowed $768,000 on their newest note for a deal that never even went through.

According to their 11/12/2015 10k Notis would owe $3,536,670 on the secured note to Southwest Farms and $467,952 on the unsecured note in 2018.  


Then on 4/3/2017 they filed an NT10K that said this:

Due to certain financial constraints under which the Company has been operating, it has not yet concluded the preparation of its financial statements for the fiscal year ended December 31, 2016, such that its independent registered public accounting firm could conclude its audit procedures as of the 90-day post-fiscal year end filing date for the Company’s Annual Report on Form 10-K.

On May 31, 2017, we, and two of our subsidiaries, EWSD I, LLC (“EWSD”) and Pueblo Agriculture Supply and Equipment LLC, and Trava LLC, a Florida limited liability company that has lent various sums to us (“Trava”), entered into a Management Services Agreement (the “MS Agreement”) in respect of our hemp grow-and-extraction operations located in Pueblo, Colorado (the “Pueblo Farm”). The MS Agreement has a 36-month term with two consecutive 12-month unilateral options exercisable in the sole discretion of Trava. Pursuant to the provisions of the MS Agreement, Trava shall collect all revenue generated by the Pueblo Farm operations. Further, Trava is to satisfy all of our Pueblo Farm-related past due expenses and, subject to certain limitations, to pay all current and future operational expenses of the Pueblo Farm operations. Finally, commencing October 2017, Trava is obligated to make the monthly mortgage payments on the Pueblo Farm, although we remain responsible for any and all “balloon payments” due under the mortgage. On a cumulative calendar monthly cash-on-cash basis, Trava is obligated to tender to us or, at our option, to either or both of our subsidiaries, an amount equivalent to 51% of the net cash for each such calendar month. Such monthly payments are on the 10th calendar day following the end of a calendar month for which such tender is required.

So who is Trava llc? Trava is a Florida LLC that was created on 10/26/2016, three names show up, Daniel Sands, an attorney; Steven Turetsky, and Green V LLC. I don’t know who “Green V” is, but the address they list is for a penthouse condo in Sunny Isles Beach, FL that is worth $5.7 million according to Zillow. This condo is literally across the street from the UPS store that Redwood Management and Magic Farms use as their address. In the 8/23/2017 8K Trava and Redwood are listed collectively as “the lenders” in the settlement agreement, so there is likely some connection. I posted about Turetsky last week, he has several other mj ventures he invests in, but this seems to be the biggest, another being a CBD company that sells to retails stores.


The 8/23/2017 8k has this quote from Siegel to Goh on May 19th 2017: “He [Siegel] stated this was a requirement of the lenders and supported by you, the new Board of Directors. Shortly after the board approves the purchase of PCH and gives Goh and Pyatt a new employement contract in mid March, Goh was replaced on May 19th, just over 2 months later. We may never know why, but it can’t be good. This is the last 8k Notis has filed, so as of 8/23/2017 we know they owned at least a piece of the farm. How much is tough to say, most of the revenue is going to the lenders. 80% of the revenues was supposed to go to Redwood and Magic farms, and Trava is supposed to be paying Notis 51%, and Southwest is supposed to get a 3% royalty, so there’s not much left over.

“Furthermore, the Company shall pay to the Investor (Redwood and Magic Farms) as partial repayment of the New Notes or other indebtedness at the end of each calendar month:
 
(a)     Out of the first $1,000,000 in the aggregate of combined revenues received from all sources…80% of the Combined Revenues. Out of the second $1,000,000 in the aggregate of Combined Revenues, 70% of the Combined Net Revenues.” I have the complete agreement below.






Below are excerpts from Notis’ filings:



Completion of Acquisition or Disposition of Assets.
Acquisition of Real Property

In connection with EWSD’s purchase of the Acquired Property, EWSD entered into a secured promissory note (the “Note”) with Southwest in the principal amount of $3,670,000. Interest on the outstanding principal balance of the Note shall accrue at the rate of five percent (5.0%) per annum. The Note shall be payable by EWSD in thirty-five payments of principal and interest, which shall be calculated based upon an amortization period of thirty years, commencing on September 1, 2015 and continuing thereafter on the first day of each calendar month through and including July 1, 2018; and one final balloon payment of all unpaid principal and accrued but unpaid interest on August 1, 2018. The Note is secured by a deed of trust (the “Deed of Trust”) and assignment of rents (“Assignment of Rents and Leases”) encumbering the Acquired Property.

In connection with the Closing, EWSD also entered into an unsecured promissory note (the “Unsecured Note”) with the Seller, in respect of payments previously made by Seller to Southwest, in the principal amount of $830,000. Interest on the outstanding principal balance of the Unsecured Note shall accrue at the rate of six percent (6.0%) per annum. The Unsecured Note shall be payable by EWSD in thirty-five payments of principal and interest, which shall be calculated based upon an amortization period of thirty years, commencing on September 1, 2015 and continuing thereafter on the first day of each calendar month through and including July 1, 2018; and one final balloon payment of all unpaid principal and accrued but unpaid interest on August 1, 2018.

The purchase price to acquire EWSD (subject to the Note and the Unsecured Note) consisted of (i) $500,000 paid by the Company in cash as a deposit into the escrow for the Acquired Property, and (ii) the Company’s agreement to pay Seller a royalty of 3% of the adjusted gross revenue, if any, from operation of the Acquired Property (including sale of any portion of or interest in the Acquired Property less any applicable expenses) for the three-year period beginning on January 1, 2016 payable 50% in cash and 50% in Company common stock. The number of shares due in connection with any such payment shall be determined by dividing the dollar amount of such payment by the volume-weighted average price of the Company’s common shares for the thirty trading days prior to the due date of the payment. Adjusted gross revenue means gross revenue after deduction of Colorado state cannabis sales tax.

On September 30, 2016, EWSD I, LLC (“EWSD I”), a wholly-owned subsidiary of Notis Global, Inc. (the “Company”) granted a junior lender (the “Junior Lender”) a Second Deed of Trust, Security Agreement and Financing Statement (the “Second Trust Deed”) and an Assignment of Rents and Leases (the “Assignment of Rents”). The Second Trust Deed and the Assignment of Rents encumber certain real property comprised of 320-acres of agricultural land in Pueblo, Colorado (the “Farm”) owned by EWSD I, and the rents payable by tenants under any current and future leases of and from the Farm. The Second Trust Deed and the Assignment of Rents secure the payment of all obligations of EWSD I pursuant to any debentures issued to the Junior Lender in accordance with the Securities Purchase Agreement dated June 30, 2016 by and among EWSD I, Junior Lender, and Company (the “June Securities Purchase Agreement”).


The “New Notes”
On September 30, 2016, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Magic Farms, LLC (the “Investor”) pursuant to which two wholly-owned subsidiaries of the Company, EWSD I, LLC (“EWSD I”) and Pueblo Agriculture Supply and Equipment, LLC (“Pueblo”, and together with EWSD I, the “Subsidiaries”) agreed to jointly sell, and the Investor agreed to purchase, an aggregate of up to $3,349,599 in subscription amount of convertible secured promissory notes (plus the Magic Farms Subscription Amount of $1,431,401, described below, which was tendered with the first tranche of the Securities Purchase Agreement) (collectively, the “New Notes”) in seven tranches (each, a “Closing”)

10/20/2016 8K
The New Notes accrue interest at a rate of 5% per annum and are issued at a 40% discount to purchase price. Therefore, if each of the seven tranches described below are fully funded, the Company would receive cash in the aggregate of $1,983,599 in exchange for the issuance of New Notes with a face value of $3,349,599 in principal to be repaid to the Investor. The first New Note issued in the first tranche under the Securities Purchase Agreement was for an original purchase price of $1,881,401 (representing the Magic Farms Note Subscription Amount of $1,431,401 plus $450,000 funded purchase price) and an original principal amount of $2,633,961. The New Notes may be prepaid inclusive of interest of the greater of one year or the current amount of time that the New Note has been outstanding.


Below are the terms that Redwood wanted to get paid on their notes:


Furthermore, the Company shall pay to the Investor as partial repayment of the New Notes or other indebtedness at the end of each calendar month:
 
(a)     Out of the first $1,000,000 in the aggregate of combined revenues received from all sources, including, without limitation, any revenue from any legal settlement, judgment, or other legal proceeding (collectively, a “Legal Matter”), received of the Company and all of its Subsidiaries net of any payments to an ‘outside farmer’ (collectively, the “Combined Revenues”), 80% of the Combined Revenues, except to the extent the Combined Revenues are from a Legal Matter, in which event, the percentage shall be 50% (collectively, the “Combined Net Revenues”).
 
(b)    Out of the second $1,000,000 in the aggregate of Combined Revenues, 70% of the Combined Net Revenues, except to the extent the Combined Revenues are from a Legal Matter, in which event, the percentage shall be 50%.
 
 (c)     Out of any Combined Revenues in excess of $2,000,000, 60% of the Combined Net Revenues, except to the extent the Combined Revenues are from a Legal Matter, in which event, the percentage shall be 50%.
 
(d)     Upon full satisfaction of the New Notes, 60% of the Combined Net Revenues shall be used to redeem any outstanding indebtedness owed to the Investor.
 
(e)     The foregoing amounts may, at the Investor’s option, be reduced to allow EWSD to meet its overhead not to exceed $120,000 per month plus a maximum of $100,000 per month to the Company beginning January 15, 2017.
 
(f)      The Company shall be permitted to enter into one or more agreements with third parties to allocate to such third parties up to no more than 20% of the Combined Net Revenues. Any such agreements shall reduce the percentage of the Combined Net Revenues to be paid by the Companies to the Investor.
 
The Company agreed to use commercially reasonable efforts to amend the Subordination Agreement (referred to above) to reflect the issuance of New Notes to the Investor within 14 days of the date of the Securities Purchase Agreement. Redwood and the Investor are affiliates of one another.
 
The Company and the Subsidiaries also entered into an Exchange Agreement with Redwood, pursuant to which Redwood agreed to exchange each of the Company’s outstanding debentures issued in favor of Redwood (in the principal outstanding balance amount of approximately $5,882,242 (plus accrued interest) (the “Original Redwood Debentures”) for certain 10% Convertible Debentures issued by the Subsidiaries, due June 30, 2017, on substantially the same terms as the Redwood Debentures (the “Subsidiary Debentures”).




https://www.sec.gov/Archives/edgar/data/1547996/000161577416007693/s104365_8ka.htm

10/6/2016 8k https://www.sec.gov/Archives/edgar/data/1547996/000161577416007549/s104298_8k.htm

https://www.sec.gov/Archives/edgar/data/1547996/000161577417003653/s106808_8k.htm

2015 10Q https://www.sec.gov/Archives/edgar/data/1547996/000119312515374675/d26343d10q.htm

8/23/2017 8K https://www.sec.gov/Archives/edgar/data/1547996/000161577417004705/s107304_ex10-122.htm