Item
2.01 Completion of Acquisition or Disposition of Assets.
(a)
On May 30, 2018, the Company entered into a purchase contract to purchase personal property (“the Sunza
Agreement”) with Adlon Investments, Inc. a Wyoming Corporation (“Adlon”), to acquire its 100% membership
interest in Sunza Investments, LLC, a Wyoming Limited Liability Company (“Sunza”). The Sunza Agreement was
subject to due diligence and verification of title and rental income. Adlon was 100% owned by Jacaranda Investments, Inc., a
Wyoming Corporation (“Jacaranda”), which is 100% owned by our Chairman and CEO. The acquisition was scheduled to
close on May 31, 2018 and did close on May 31, 2018. Sunza’s sole asset was the real property located at 3910 Walton
Avenue, Los Angeles, CA 90037 (the “Property”). Under the terms of the Sunza Agreement, the Company’s
purchase price is $510,000 (“the Purchase Price”), which is comprised of the following: (1) a $325,000 promissory
note dated April 5, 2018 (the “Note”) and a First Deed of Trust, secured by the Property, whereby Sunza, as
Trustee of the 3910 Walton Avenue Trust, Dated April 3, 2018 (“Maker”) promise(s) to pay Belladonna Lily
Investments, Inc, a Wyoming Corporation (“Payee”) or order, at 205 S. Beverly Drive, Ste 205, Beverly Hills, CA
90212, the sum of Three Hundred and Twenty Five Thousand, Five Hundred Dollars 00/100 ($325,000) with interest only from
April 5, 2018 ,on unpaid principal at the rate of 6% per annum. Interest only payable in monthly installments of One Thousand
Six Hundred and Twenty Seven Dollars and 50/100 ($1,627.50), or more, on the 1st day of each month, beginning on the May 1,
2018 and continuing until April 30, 2020, at which time the entire principal balance together with interest due thereon,
shall become due and payable; and (2) a $159,500 promissory note dated April 3, 2018 (the “2nd Note”) secured by
a 2nd Trust Deed and payable to Belladonna Lily Investments, Inc, a Wyoming Corporation (“Payee”) or order,
at 205 S. Beverly Drive, Ste 205, Beverly Hills, CA 90212, with interest only from April 5, 2018 on May 1, 2018 and
continuing until the April 30, 2020, at which time the entire Principal balance together with interest is due thereon, shall
become due and payable. The 2
nd
Note increased to $184,500.00 on May 31, 2018. Adlon agreed to indemnify the
Company of any liability with respect to Sunza and its assets prior to closing escrow. Each party paid its own closing costs
and one-half of the escrow fee.
Our auditors will complete their
audit of the Sunza financial statements as part of 2018 10-K.
The
foregoing description of the acquisition of the Sunza Agreement and the transaction contemplated thereby contained herein is qualified
in its entirety by reference to the Sunza Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated into
this Item 1.01 by reference.
The
Company intends to amend this Form 8-K to include the required Item 9.01 financial statements prepared pursuant to Rule 3-14 of
Regulation S-X relating to the acquisition of Sunza, which is significant within the meaning of Rule 3-14.
(b)
On August 21, 2018, the Company, through its wholly-owned subsidiary, Sunza, entered into an agreement and escrow (the
“Wisconsin Agreement”) with Jose Alfaro and Claudia Novoa (the “Property Sellers”) to acquire the
real property located at 3910 Wisconsin, Los Angeles CA (the “Wisconsin Property”) for a purchase price of
$487,500 (the “Purchase Price”). The acquisition contemplated by the Wisconsin Agreement was scheduled to close
on September 27, 2018. The terms of the acquisition was subject to three loans: (1) A first position note (the
“1
st
Note”) with unpaid principal balance of $252,867.91 taken “subject to” the Property
Sellers owing their lender, whose terms of payments are principal and interest, with the next payment payable from November
1, 2018, on unpaid principal at the rate of 4.375% per annum. Interest only payable in monthly installments of $1,627.50 or
more on the 1
st
day of each month beginning on the November 1, 2018, and continuing until October 1, 2036, at
which time the entire principal balance together with interest due thereon, shall become due and payable. The 1
st
Note was already in effect since June 13, 2006; (2) “Subject To” a $200,000 second position note owing by Sunza
to Yerba Mate Corporation, whose terms of payments due were interest only, payable from November 1, 2018 on unpaid principal
at the rate of 9% per annum. Interest only payable in monthly installments of $1,500.00 or more on the 1st day of each month
beginning on the November 1, 2018, and continuing until October 31, 2020, at which time the entire principal balance together
with any outstanding interest due thereon, shall become due and payable; and (3) “Subject To” a $40,000 third
position note owing by Sunza to Belladonna Lily Investments, Inc. (“Bella”), whose terms of payments due
were interest only, payable from November 1, 2018 on unpaid principal at the rate of 9% per annum. Interest only payable in
monthly installments of $300.00 or more on the 1st day of each month beginning on November 1, 2018 and continuing until April
30, 2022, at which time the entire principal balance together with any outstanding interest due thereon, shall become due and
payable.
The
foregoing description of the acquisition of the Wisconsin Agreement and the transaction contemplated thereby contained herein
is qualified in its entirety by reference to the Wisconsin Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated
into this Item 1.01 by reference.
(c)
On October 19, 2018, the Company entered into a purchase contract to purchase personal property (“the Lantana
Agreement”) with Jacaranda to acquire 100% membership interest in Lantana Investments, LLC, a Wyoming Limited Liability
Company (“Lantana”). Jacaranda is 100% owned by our Chairman and CEO. The acquisition was scheduled to close on
October 26, 2018. Lantana’s sole asset was the real property located at 1557 W. 29
th
Street, Los Angeles CA
(“the Property”). Under the terms of the Lantana Agreement, the Company was to acquire 100% membership interest
in Lantana for $643,500 (“the Purchase Price”) payable as follows: (1) a $443,500 promissory note (the
“Lantana Note”) with principal and interest payments of $2,531.65 from October 11, 2018 with the first payment
due on the December 1, 2018 and continuing until the October 30, 2048, at which time the entire principal balance together
with interest is due thereon and is secured by a 1
st
Trust Deed. The Lantana Note is fixed for 7 years and
thereafter adjust to 1 year labor plus 5.25%; and (2) a $200,000 promissory note (the “Lantana Second Note”)
secured by a 2
nd
Trust Deed and owing by Belladonna Lily Investments, Inc, a Wyoming Corporation
(“Payee”) or order with interest only from October 11, 2018 on unpaid principal at the rate of 6.85% per annum.
Interest only payable in monthly installments of $1,141.67 or more on the 1
st
day of each month, beginning on the
November 1, 2018 and continuing until October 30, 2022, at which time the entire principal balance together with interest due
thereon, shall become due and payable.
The
foregoing description of the acquisition of the Lantana Agreement and the transaction contemplated thereby contained herein is
qualified in its entirety by reference to the Lantana Agreement, a copy of which is attached hereto as Exhibit 10.3 and incorporated
into this Item 1.01 by reference.
Item
5.01 Departure of Directors or Certain Officers
Effective
December 31, 2018, Eric Klein is no longer Vice President of Operations and Business Development and is no longer consulting
or working with the company.