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1 Kevin Singer
Superior Court Receiver
2 Receivership Specialists
11150 W. Olympic Boulevard, Suite 810
3 Los Angeles, California 90064
Telephone: (310) 552-9064
4 Facsimile: (310) 552-9066
E-Mail: Kevin@ReceivershipSpecialists.com
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Receivership Property:
6 HERBL, Inc.
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8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF SANTA BARBARA – SOUTH COUNTY DIVISION
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EAST WEST BANK, a California state ) Case No. 23CV02629
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banking corporation, )
) SUPERIOR COURT RECEIVER’S
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Plaintiff, ) SEPTEMBER 2023 REPORT AND
vs. ) NOTICE OF INTENT TO PAY
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) RECEIVER’S FEES AND EXPENSES
HERBL, Inc., a California corporation )
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dba HERBL, HERBL DISTRIBUTION ) Hon. Colleen K. Sterne
SOLUTIONS, and HDS NATURALS, ) Dept. 5
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Defendant. ) Complaint Filed: June 20, 2023
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RECEIVER’S REPORT 003
RECEIVERSHIP SPECIALISTS
STATE AND U.S. FEDERAL COURT RECEIVERS/REFEREES/TRUSTEES
Corporate Headquarters
Los Angeles
SUPERIOR COURT RECEIVER’S SEPTEMBER 2023 REPORT AND 11500 W. Olympic Blvd.
Suite 530
NOTICE OF INTENT TO PAY RECEIVER’S FEES AND EXPENSES Los Angeles, CA 90064
Tel: (310) 552-9064
Fax: (310) 552-9066
Presented by Kevin Singer, Superior Court Receiver
Irvine
One Park Plaza
Suite 600, PMB 435
Irvine, CA 92614
EAST WEST BANK, a California state banking corporation; Tel: (949) 238-2801
Plaintiff Fax: (949) 852-4480
v. San Francisco
1 Sansome Street
Suite 3500
HERBL, INC., a California corporation, dba HERBL, HERBL San Francisco, CA 94104
Tel: (415) 590-4823
DISTRIBUTION SOLUTIONS, and HDS NATURALS; Fax: (415) 946-8837
Defendant
San Diego
4660 La Jolla Village Drive
Suite 100
San Diego, CA 92122
Tel: (858) 546-4815
Santa Barbara County Superior Court Case No. 23CV02629 Fax: (858) 646-3097
Presiding Judge: Hon. Colleen K. Sterne
Ventura/Santa Barbara
Receivership Estate: 1500 Palma Drive
2nd Floor
HERBL, Inc. Ventura, CA 93003
Tel: (805) 267-1283
Fax: (805) 654-0080
Sacramento
980 9th Street
16th Floor
Sacramento, CA 95814
Tel: (916) 449-9655
Fax: (916) 446-7104
Las Vegas
7251 W. Lake Mead Blvd.
Suite 300
Las Vegas, NV 89128
Tel: (702) 562-4230
Fax: (702) 562-4001
Reno
200 S. Virginia Street
Suite 800
Reno, NV 89501
Tel: (775) 398-3103
Fax: (775) 686-2401
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Phoenix
RECEIVER’S REPORT 003
2 N. Central Avenue
Suite 1800
Phoenix, AZ 85004
October 30, 2023
Dear Vested Parties:
On June 28, 2023, the Court, the Honorable Colleen K. Sterne presiding,
entered Order (1) Approving Stipulation for Appointment of Receiver; (2)
Appointing Receiver; and (3) Issuing Preliminary Injunction (the “Appointing
Order”) which appointed me, Kevin Singer, as Superior Court Receiver (the
“Receiver”) over defendant HERBL, Inc. (“HERBL”) and all of its assets.
HERBL is a major cannabis distribution company with subsidiaries in
California and Nevada. I have been appointed to take possession, custody, and
control of HERBL, and to ultimately sell HERBL’s assets. I was appointed
pursuant to a stipulation at the request of Plaintiff East West Bank (“Plaintiff”)
after HERBL defaulted on a loan obtained from Plaintiff.
Plaintiff is represented by Marshall J. Hogan, Esq. (“Hogan”), Andrew B.
Still, Esq. (“Still”), and Bryce A. Suzuki, Esq. (“Suzuki”) of Snell & Wilmer
LLP. Hogan, Still, and Suzuki are referred to herein individually and collectively
as “Plaintiff’s counsel”. Defendant is not represented by counsel; CEO Michael
Beaudry (“Beaudry”) signed the stipulation for my appointment on HERBL’s
behalf. Plaintiff and Herbl are each referred to herein individually as a “Party”
and collectively as the “Parties”.
Locations associated with HERBL include:
1) 749 and 839 Ward Drive, Goleta, CA (collectively, the “Goleta
Property,” which I understand includes several buildings);
2) 3144 W. Adams Street #C, Santa Ana, CA (the “Santa Ana
Property”);
3) 3152-3158 Condo Street, Santa Rosa, CA and 600 Bicentennial Way,
Santa Rosa, CA (collectively, the “Santa Rosa Properties”);
4) 580 Sunshine Lane, Reno, NV and 4291 Danta Blvd., Reno, NV
(collectively, the “Reno Properties”); and
5) 6450 S. Cameron Street #110, Las Vegas, NV (the “Las Vegas
Property”).
The following summarizes what has transpired since I assumed my role as
the Receiver in this matter through the end of September 2023:
June 2023 Activity:
➢ 6/14/2023 I executed my Oath of Receiver, which Plaintiff
subsequently filed on June 26, 2023. Note that the
stipulation for my appointment had been executed during
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RECEIVER’S REPORT 003
May 2023. I subsequently began preparations to assume my
duties upon the Court’s entry of the Appointing Order,
including reviewing documents and records relating to
HERBL and speaking with brokers regarding potential
asset sales.
➢ 6/27/2023 My Senior Project Manager Jen Gote (“Gote”) met via
phone with Mary Lou Allen (“Allen”) and Stuart Broma
(“Broma”) of Plaintiff, along with Suzuki, regarding my
appointment to gather information about HERBL.
➢ 6/28/2023 I spoke via phone with Plaintiff’s representatives regarding
my appointment, HERBL’s assets, and immediate action
items.
➢ 6/28/2023 Following a phone introduction, I prepared and sent (via
email) a letter to Jacqueline Hartwell (“Hartwell”),
HERBL’s Chief Financial Officer, in which I formally
advised of my appointment and requested numerous
documents and information relating to HERBL.
➢ 6/29/2023 Hartwell sent me a Notice of Determination issued to
HERBL on June 1, 2023, by the California Department of
Tax and Fee Administration (the “CDTFA”) which states
that HERBL owes a total of $2,501,983.08 in taxes,
penalties, and interest.
➢ 6/29/2023 I corresponded via email with Mason Sperakos
(“Sperakos”), a Special Investigator with the Department
of Cannabis Control (the “DCC”), regarding my
appointment and HERBL’s status. I advised Sperakos that
it is my understanding that HERBL has temporary ceased
distributions and that my compliance counsel, Sharmi
Shah, Esq. (“Shah”), is filing the necessary paperwork with
the DCC to bring HERBL’s cannabis licenses under my
control.
➢ 6/29/2023 Gote and I traveled to the Goleta Property for an initial
inspection, takeover, and meeting with Beaudry and
Hartwell.
➢ 6/30/2023 Gote returned to the Goleta Property to continue our
takeover and review of documents on site.
➢ 6/30/2023 Shah and I spoke via phone with Sperakos and other DCC
representatives regarding the receivership and HERBL’s
status.
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RECEIVER’S REPORT 003
➢ 6/30/2023 Shah submitted four Notification and Request forms to the
DCC regarding my appointment.
➢ 6/2023 As of the end of June 2023 I had just commenced my
appointment and was rapidly working to review all of
HERBL’s assets and payment obligations. My team is
particularly focused on wholly-owned HERBL subsidiary
Blackbird Logistics Corp. (“Blackbird”), a Nevada entity
which appears to be HERBL’s most valuable asset.
➢ 6/2023 Note that I was appointed two days before the end of June
2023 and would ordinarily have waited to prepare this
Initial Receiver’s Report until after the end of July 2023.
However, doing so would mean that my initial report would
not be filed until mid-August 2023, contrary to the
Appointing Order’s instructions regarding the timing for
my initial report, and thus I have prepared the instant
report, which covers the final days of June 2023. Because
of the short time period covered herein, I have not prepared
financials for June 2023; I will present financials for July
2023 with my July 2023 Receiver’s Report.
July 2023 Activity:
➢ 7/2023 Note that July 2023 was an extraordinarily active month for
the receivership. To reduce administrative expenses, this
report provides a summary of key events rather than an
exhaustive account of my team’s activities. For a day-to-
day account, please refer to my July 2023 invoice.
➢ 7/2023 During early July 2023 I approached various major
cannabis businesses (including Kiva, Nabis, Statehouse,
Glass House, Mammoth, and Petalfast) in an effort to sell
all of the Receivership Estate’s assets in a single
transaction. However, there was no market interest in
purchasing all of HERBL’s assets together. Consequently, I
determined that the best path forward would be to sell
HERBL’s assets individually.
➢ 7/3/2023 I received a letter from William W. Hatcher, Esq.
(“Hatcher”), counsel for the owner of 3152-3158 Condo
Street (one of the Santa Rosa Properties), advising that the
owner had commenced eviction proceedings prior to my
appointment due to unpaid rent in the amount of
$20,405.30 as of June 30, 2023. Hatcher requested an
update on the rent payment.
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RECEIVER’S REPORT 003
As Hatcher’s client is an unsecured creditor, I am unable to
remit payment at this time as doing so could constitute a
preferential payment. The same is true for HERBL’s other
landlords.
➢ 7/5/2023 My team conducted a takeover of Blackbird’s Reno
facilities.
➢ 7/7/2023 The CDTFA sent a letter to Beaudry and HERBL advising
that HERBL’s sales and use tax account has been selected
for a “routine audit” for July 1, 2020 through June 30,
2023.
➢ 7/5/2023 My team conducted a takeover of Blackbird’s Las Vegas
facilities.
➢ 7/10/2023 B.H. 3640 Central Avenue, LLC, landlord for 600
Bicentennial Way (one of the Santa Rosa Properties) filed
an unlawful detainer action against HERBL.
➢ 7/11/2023 I executed a consulting agreement with WeCannca, Inc.
(“WeCann”) to market the Receivership Estate assets for
sale with a projected listing price of $9,000,000.
➢ 7/12/2023 The CDTFA filed a Notice of State Tax Lien against
HERBL in the amount of $17,343,418.75.
➢ 7/19/2023 The DCC issued a pair of Notices to Comply relating to the
Goleta Property which advised that Professional Technical
Union, Local 33 (“Pro-Tech 33”) has been determined by
the ALRB to not be a bona fide labor organization, and
consequently HERBL’s labor peace agreement with Pro-
Tech 33 is insufficient to satisfy regulatory requirements.
As such, HERBL has been directed to enter into a labor
peace agreement with a bona fide labor organization on or
before October 17, 2023.
➢ 7/23/2023 I engaged the law firm Howard & Howard to provide legal
counsel to the Receivership Estate in the State of Nevada,
where I must domesticate the Appointing Order in order to
proceed with sales of Blackbird and the other Nevada
assets. John Savage, Esq. (“Savage”) will be lead counsel.
➢ 7/27/2023 I prepared and submitted (on HERBL’s behalf) a City of
Santa Ana Monthly Cannabis – Distribution Business
License Tax Report for June 2023, which reported a total
amount due of $1,704.
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RECEIVER’S REPORT 003
➢ 7/27/2023 I prepared and submitted (on HERBL’s behalf) an El
Dorado County Commercial Cannabis Activities Tax
Apportionment Form for June 2023, which reported a total
amount due of $77.06.
➢ 7/28/2023 I prepared and submitted (on HERBL’s behalf) a pair of
City of San Diego Cannabis Business Tax Apportionment
Forms for June 2023, which reported total amounts due of
$61.02 (non-cash) and $95.97 (cash), respectively.
➢ 7/28/2023 I prepared and submitted (on HERBL’s behalf) a pair of
City of San Diego Cannabis Business Tax Apportionment
Forms for May 2023, which reported total amounts due of
$402.72 (non-cash) and $61.04 (cash), respectively.
➢ 7/28/2023 I prepared and submitted (on HERBL’s behalf) a City of
Goleta Cannabis Business Tax Return for Q2 2023, which
reported a total amount due of $29,814.20.
➢ 7/27/2023 I prepared and submitted (on HERBL’s behalf) an El
Dorado County Commercial Cannabis Activities Tax
Apportionment Form for May 2023, which reported a total
amount due of $195.48.
➢ 7/31/2023 My counsel prepared, served, and filed two ex parte
applications:
1. An application for issuance of an order scheduling
an auction sale of all of HERBL’s assets (in order to
expedite resolution of the receivership and
minimize ongoing administrative costs, thereby
maximizing funds available for creditors); and
2. An application for various administrative orders,
including setting my bond amount, clarifying that
HERBL’s subsidiaries are part of the Receivership
Estate, authorizing my retention of Ervin Cohen &
Jessup LLP and Howard & Howard nunc pro tunc,
authorizing me to enter into settlement agreements
and sales under $100,000 without Court
confirmation, authorizing me to continue utilizing
the services of HERBL’s pre-receivership debt
collector (Jonathan Neil & Associates, Inc.
(“JNA”)) and their counsel (Bruce Hatkoff
(“Hatkoff”) and Robert Pollak (“Pollak”)) and
authorizing me to file debt collection lawsuits on
HERBL’s behalf, and authorizing me to file an
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RECEIVER’S REPORT 003
action in Nevada to domesticate the Appointing
Order.
The Court ultimately granted both applications in early
August 2023. The auction sale was initially scheduled for
August 28, 2023, but has since been rescheduled for
September 7, 2023.
➢ 7/2023 As of the end of July 2023 I was negotiating a settlement
agreement with Glass House regarding a dispute between
HERBL and Glass House over accounts receivable, which
settlement will bring in additional funds for the
Receivership Estate.
➢ 7/2023 As of the end of July 2023 I had gained control of the
Receivership Estate’s assets, including but not limited to:
i. Entities: HERBL, Inc., HERBL Pro, Inc., Blackbird
Logistics Corp. (including its intellectual property), and
Blackbird’s subsidiaries, Bootleg Courier Company, LLC,
Blkbrd Software, LLC, Blkbrd OCA, LLC, Blkbrd CA,
Corp, and Blkbrd NV, LLC;
ii. California cannabis licenses: C11-0000975-LIC, C11-
0001467-LIC, C11-0001080-LIC, C11-0001135-LIC, and
C11-0000794-LIC;
iii. California leases and FFE: 3158 Condo Court, Santa Rosa;
3152 Condo Court, Santa Rosa; 749 Ward Drive, Goleta;
759 Ward Drive, Goleta; 839 Ward Drive, Goleta; 3144 W.
Adams St., Suite C, Santa Ana; and 600 Bicentennial Way,
Santa Rosa;
iv. Nevada leases and FFE: 465 Sunshine Ln, Reno, NV; 580
Sunshine Ln, Reno, NV; 6450 Cameron Way #110, Las
Vegas, NV; and
v. Approximately 90 collections actions (being handled by
JNA on HERBL’s behalf).
/ / /
/ / /
/ / /
/ / /
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August 2023 Activity:
➢ 8/2023 Note that August 2023 was an extraordinarily active month
for the receivership. To reduce administrative expenses,
this report provides a summary of key events rather than an
exhaustive account of my team’s activities. For a day-to-
day account, please refer to my August 2023 invoice.
➢ 8/1/2023 The Court heard and granted both of my ex parte
applications.
➢ 8/2/2023 The Court entered Order re Receiver Kevin Singer’s Ex
Parte Application to Schedule Auction Sale, which
scheduled the auction sale for August 28, 2023 at 2:00 PM.
➢ 8/3/2023 Gote provided an update to Plaintiff on our efforts. As of
this date:
i. The Santa Rosa Properties were nearly closed out and the
new owner for 3158 Condo Street had purchased the
remaining racking and equipment for $40,000, along with
three trucks for an additional total of $45,000. Gote also
reported sales of three additional trucks at the Santa Rosa
Property for a total of $28,500. The 600 Bicentennial Way
location was turned over to its landlord as there was no
interest in the furniture therein.
ii. The Santa Ana Property will be turned over to its landlord,
who has refused to cooperate with the receivership.
Fortunately, the associated cannabis permit can be
relocated to a new location.
iii. We are transferring two box trucks with office equipment
from Goleta to Nevada to improve operational efficiency.
iv. JNA continues to work to collect the approximately $2.5
million in accounts receivable that we placed with them for
collection. Over the past year they have reportedly
recovered $180,000 at roughly 28 cents per dollar.
➢ 8/4/2023 The Court entered Order re Receivership Administrative
Issues, which, inter alia, set my bond amount. I
subsequently made arrangements to post my $10,000 bond.
➢ 8/9/2023 I executed a pair of bills of sale to sell a 2018 Ford Transit
150 and a 2019 Ford Transit 350, both owned by HERBL,
to Seed to Leaf Inc for $8,000 and $10,000, respectively.
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➢ 8/9/2023 Claims management company Sedgwick sent a letter to
HERBL (which I later obtained) on behalf of HERBL’s
insurer, Transverse Specialty Insurance Company,
regarding a complaint filed on June 20, 2023 by Kiffen,
LLC against HERBL, Beaudry, and Hartwell. Sedgwick
advised that HERBL’s policy does not afford coverage for
the complaint.
➢ 8/10/2023 Ricardo Ramos of the City of San Diego, Office of the City
Treasurer contacted my office regarding HERBL’s
outstanding cannabis tax balance and provided a copy of a
notice dated August 2, 2023, which states a total balance
due to the City of San Diego of $748,850.99.
➢ 8/11/2023 I executed a creditor’s declaration prepared by JNA for the
North Country Operations collections matter (Sacramento
County case number 23CV000771), which seeks payment
of $108,892.30 owed to HERBL.
➢ 8/14/2023 Savage prepared, served, and filed (in Clark County,
Nevada District Court) a Verified Petition to Appoint
Ancillary Receiver (the “Nevada Petition”), whereby I
sought an order from a Nevada court appointing me as
ancillary receiver over all of HERBL’s Nevada assets
pursuant to the same terms and provisions of my
Appointing Order.
➢ 8/14/2023 Savage prepared and sent a pair of letters to the Nevada
Cannabis Compliance Board (the “Nevada CCB”). The
first, captioned Notice of Transfer of Interest, advised of
my appointment and asked the Nevada CCB to complete
processing a Transfer of Interest (“TOI”) application
submitted prior to my appointment which sought to transfer
cannabis distribution licenses T002 and T003 from
Crooked Wine Company, LLC (“Crooked Wine”) to
Blkbrd.
The second letter, captioned Management Agreement
Update, inquired as to whether the CCB requires any
additional information or documentation to update its
records and keep the management agreement (whereby
Blackbird operates Crooked Wine’s cannabis distribution
licenses) in good standing.
➢ 8/14/2023 I received a Statement of Account from the CDTFA,
addressed to BLKBRD OCA, LLC (a California entity),
which reports a balance due of $2,526,634.86 for cannabis
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taxes, along with a Notice of Redetermination advising that
a $10,837.02 credit was applied to the previously-reported
balance. It appears from the notice that this tax balance
solely relates to the California entity BLKBRD OCA, LLC
and does not impact the Nevada entities.
➢ 8/15/2023 Tim McMahon, counsel for Kind Op Corp (aka
“POSIBL”), sent a letter to HERBL, copying me, which
states that POSIBL is terminating its supplier agreement
with HERBL.
➢ 8/15/2023 As part of a settlement agreement with Glass House Brands
(“Glass House”) which will bring in a payment of
$100,000 to the Receivership Estate, Glass House’s
chairman, Kyle Kazan (“Kazan”) and I executed a joint
letter to HERBL and Glass House’s customers advising that
Glass House is entitled to receive its accounts receivable
for Glass House products delivered by HERBL beginning
March 28, 2023 and that HERBL will not be seeking to
separately receive said accounts receivable.
➢ 8/17/2023 I executed a Settlement Agreement and Mutual Release (on
HERBL’s behalf) with Speedy Weedy Vista, Inc., Speedy
Weedy Santa Ana LLC, and Welcome the Healing Touch,
Inc (collectively, “Speedy Weedy”), whereby Speedy
Weedy will pay $160,000 to HERBL over twelve
payments, with the final payment due October 1, 2024.
➢ 8/18/2023 I executed a stipulation in a collections matter brought by
HERBL against Canna Cloud, LLC (“Canna Cloud”)
(Riverside County case number CVRI2303105) whereby
Canna Cloud shall pay $36,287.67 to HERBL in three
payments, with the final payment due by September 15,
2023.
➢ 8/18/2023 I executed a creditor’s declaration prepared by JNA for the
SJV Management and Go Treez collections matter
(Sacramento County case number 23CV001420), which
seeks payment of $14,775.96 owed to HERBL.
➢ 8/22/2023 My counsel prepared, served, and filed Receiver Kevin
Singer’s Ex Parte Application for Issuance of Order
Authorizing and Confirming Sale of Receivership Personal
Property (the “Goleta Ex Parte”). The Goleta Ex Parte
sought Court approval of a proposed sale of HERBL’s
personal property at 759 and 839 Ward Dr., Goleta, CA
93111 to Central Coast Processing LLC for $350,000.
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➢ 8/22/2023 Counsel for Townsgate Business Park 2 and Majestic Luna
2, LLC, HERBL’s landlord for the Goleta Property, filed an
ex parte application (the “Landlord Ex Parte”) for an
order modifying my Appointing Order, namely, (1)
requiring me to remove HERBL’s personal property from
the Goleta Property and surrender possession within five
business days, (2) requiring me to pay prorated rent to the
landlord in the amount of $57,683.85, and (3) allowing the
landlord to dispose of HERBL’s personal property if it is
not removed within five business days.
➢ 8/23/2023 My counsel prepared, served, and filed an opposition to the
Landlord Ex Parte, arguing that it lacked exigency and that
the requested relief would violate unlawful detainer
requirements and would constitute a preferential
distribution.
➢ 8/23/2023 I received and reviewed a letter from the City of Santa
Rosa, addressed to Beaudry and HERBL, advising that the
City of Santa Rosa has engaged Avenue Insights &
Analytics LLC / MuniServices, LLC to conduct an audit of
HERBL’s business tax payments for January 1, 2020,
through December 31, 2022. Gote has advised the City of
Santa Rosa that HERBL has ceased business operations.
➢ 8/23/2023 I received a letter from collections agency Tavco Credit
Services which sought payment of a purported $1,107.91
balance allegedly owed by HERBL to Leetee Generators.
➢ 8/24/2023 The Court heard the Goleta Ex Parte and the Landlord Ex
Parte and continued the hearings to August 29th.
➢ 8/25/2023 I prepared, served, and filed Notice of Receiver’s Bond.
➢ 8/25/2023 I prepared and submitted a Nevada Cannabis Compliance
Board agent card application. As a preview to the
September 2023 Receiver’s Report, the CCB issued a
temporary agent card to me in early September 2023.
➢ 8/28/2023 The Nevada Court entered Order Granting Motion to
Appoint Ancillary Receiver on Order Shortening Time (the
“Nevada Appointing Order”).
➢ 8/29/2023 The Court granted my Goleta Ex Parte and denied the
Landlord Ex Parte.
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➢ 8/31/2023 I prepared and submitted (on HERBL’s behalf) a City of
Santa Ana Monthly Cannabis – Distribution Business
License Tax Report for July 2023, which reported a total
amount due of $1,704.
➢ 8/31/2023 I executed an additional creditor’s declaration for a JNA
collections matter whereby HERBL seeks to recover
$33,496.97 from Northern Erudite Ventures dba
HERBNJOY and Hanford Erudite dba HERBNJOY.
September 2023 Activity:
➢ 9/2023 Note that September 2023 was another extraordinarily
active month for the receivership. To reduce administrative
expenses, this report provides a summary of key events
rather than an exhaustive account of my team’s activities.
For a day-to-day account, please refer to my September
2023 invoice, attached below as Exhibit 11.
➢ 9/1/2023 I prepared, served, and filed a second Oath of Receiver with
the Nevada Court (as required by the Nevada Appointing
Order).
➢ 9/6/2023 I executed a declaration in support of a request for entry of
default judgment in the collections matter HERBL v. Urban
Buds LLC et al. The total judgment sought is $173,665.31.
➢ 9/7/2023 I conducted the auction of HERBL’s assets. However, none
of the assets were sold at the auction as no bidders were
willing to meet the reserve prices for any of the assets. I
will now reengage with the prospective purchasers.
➢ 9/7/2023 Gote provided an update to Plaintiff on the receivership.
Key points included:
1. Background on the auction outcome, including
presenting the tracking sheet used to monitor
Campuzano’s communications with over 100
prospective purchasers prior to the auction;
2. We intend to reengage with the prospective
purchasers who declined to participate in the
auction.
3. Turnover of the Goleta Property is expected to be
completed on the following day (9/8/23).
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4. HERBL’s actual accounts receivable appear to be
closer to $1 million than the originally-estimated $7
million because HERBL owes significant sums to
product manufacturers, having acquired inventory
on consignment.
5. We are moving forward with the Transfer of
Interest process for the licenses held by Crooked
Wine.
➢ 9/8/2023 The Nevada CCB issued a temporary agent card to me,
which card is valid for 90 days. Attached hereto as
“Exhibit 1” is the letter confirming the issuance of the
temporary agent card.
➢ 9/14/2023 Gote provided another update on the receivership to
Plaintiff. By this date, all California locations had been
returned to the landlords and the HERBL licenses for the
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1 Kevin Singer Superior Court Receiver 2 Receivership Specialists 11150 W. Olympic Boulevard, Suite 810 3 Los Angeles, California 90064 Telephone: (310) 552-9064 4 Facsimile: (310) 552-9066 E-Mail: Kevin@ReceivershipSpecialists.com 5 Receivership Property: 6 HERBL, Inc. 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SANTA BARBARA – SOUTH COUNTY DIVISION 10 EAST WEST BANK, a California state ) Case No. 23CV02629 11 banking corporation, ) ) SUPERIOR COURT RECEIVER’S 12 Plaintiff, ) SEPTEMBER 2023 REPORT AND vs. ) NOTICE OF INTENT TO PAY 13 ) RECEIVER’S FEES AND EXPENSES HERBL, Inc., a California corporation ) 14 dba HERBL, HERBL DISTRIBUTION ) Hon. Colleen K. Sterne SOLUTIONS, and HDS NATURALS, ) Dept. 5 15 ) Defendant. ) Complaint Filed: June 20, 2023 16 ) ) 17 ) ) 18 ) ) 19 20 21 22 23 24 25 26 27 28 Page 1 RECEIVER’S REPORT 003 RECEIVERSHIP SPECIALISTS STATE AND U.S. FEDERAL COURT RECEIVERS/REFEREES/TRUSTEES Corporate Headquarters Los Angeles SUPERIOR COURT RECEIVER’S SEPTEMBER 2023 REPORT AND 11500 W. Olympic Blvd. Suite 530 NOTICE OF INTENT TO PAY RECEIVER’S FEES AND EXPENSES Los Angeles, CA 90064 Tel: (310) 552-9064 Fax: (310) 552-9066 Presented by Kevin Singer, Superior Court Receiver Irvine One Park Plaza Suite 600, PMB 435 Irvine, CA 92614 EAST WEST BANK, a California state banking corporation; Tel: (949) 238-2801 Plaintiff Fax: (949) 852-4480 v. San Francisco 1 Sansome Street Suite 3500 HERBL, INC., a California corporation, dba HERBL, HERBL San Francisco, CA 94104 Tel: (415) 590-4823 DISTRIBUTION SOLUTIONS, and HDS NATURALS; Fax: (415) 946-8837 Defendant San Diego 4660 La Jolla Village Drive Suite 100 San Diego, CA 92122 Tel: (858) 546-4815 Santa Barbara County Superior Court Case No. 23CV02629 Fax: (858) 646-3097 Presiding Judge: Hon. Colleen K. Sterne Ventura/Santa Barbara Receivership Estate: 1500 Palma Drive 2nd Floor HERBL, Inc. Ventura, CA 93003 Tel: (805) 267-1283 Fax: (805) 654-0080 Sacramento 980 9th Street 16th Floor Sacramento, CA 95814 Tel: (916) 449-9655 Fax: (916) 446-7104 Las Vegas 7251 W. Lake Mead Blvd. Suite 300 Las Vegas, NV 89128 Tel: (702) 562-4230 Fax: (702) 562-4001 Reno 200 S. Virginia Street Suite 800 Reno, NV 89501 Tel: (775) 398-3103 Fax: (775) 686-2401 Page 2 ____________________________________________________________________________________________________________________________________ Phoenix RECEIVER’S REPORT 003 2 N. Central Avenue Suite 1800 Phoenix, AZ 85004 October 30, 2023 Dear Vested Parties: On June 28, 2023, the Court, the Honorable Colleen K. Sterne presiding, entered Order (1) Approving Stipulation for Appointment of Receiver; (2) Appointing Receiver; and (3) Issuing Preliminary Injunction (the “Appointing Order”) which appointed me, Kevin Singer, as Superior Court Receiver (the “Receiver”) over defendant HERBL, Inc. (“HERBL”) and all of its assets. HERBL is a major cannabis distribution company with subsidiaries in California and Nevada. I have been appointed to take possession, custody, and control of HERBL, and to ultimately sell HERBL’s assets. I was appointed pursuant to a stipulation at the request of Plaintiff East West Bank (“Plaintiff”) after HERBL defaulted on a loan obtained from Plaintiff. Plaintiff is represented by Marshall J. Hogan, Esq. (“Hogan”), Andrew B. Still, Esq. (“Still”), and Bryce A. Suzuki, Esq. (“Suzuki”) of Snell & Wilmer LLP. Hogan, Still, and Suzuki are referred to herein individually and collectively as “Plaintiff’s counsel”. Defendant is not represented by counsel; CEO Michael Beaudry (“Beaudry”) signed the stipulation for my appointment on HERBL’s behalf. Plaintiff and Herbl are each referred to herein individually as a “Party” and collectively as the “Parties”. Locations associated with HERBL include: 1) 749 and 839 Ward Drive, Goleta, CA (collectively, the “Goleta Property,” which I understand includes several buildings); 2) 3144 W. Adams Street #C, Santa Ana, CA (the “Santa Ana Property”); 3) 3152-3158 Condo Street, Santa Rosa, CA and 600 Bicentennial Way, Santa Rosa, CA (collectively, the “Santa Rosa Properties”); 4) 580 Sunshine Lane, Reno, NV and 4291 Danta Blvd., Reno, NV (collectively, the “Reno Properties”); and 5) 6450 S. Cameron Street #110, Las Vegas, NV (the “Las Vegas Property”). The following summarizes what has transpired since I assumed my role as the Receiver in this matter through the end of September 2023: June 2023 Activity: ➢ 6/14/2023 I executed my Oath of Receiver, which Plaintiff subsequently filed on June 26, 2023. Note that the stipulation for my appointment had been executed during Page 3 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 May 2023. I subsequently began preparations to assume my duties upon the Court’s entry of the Appointing Order, including reviewing documents and records relating to HERBL and speaking with brokers regarding potential asset sales. ➢ 6/27/2023 My Senior Project Manager Jen Gote (“Gote”) met via phone with Mary Lou Allen (“Allen”) and Stuart Broma (“Broma”) of Plaintiff, along with Suzuki, regarding my appointment to gather information about HERBL. ➢ 6/28/2023 I spoke via phone with Plaintiff’s representatives regarding my appointment, HERBL’s assets, and immediate action items. ➢ 6/28/2023 Following a phone introduction, I prepared and sent (via email) a letter to Jacqueline Hartwell (“Hartwell”), HERBL’s Chief Financial Officer, in which I formally advised of my appointment and requested numerous documents and information relating to HERBL. ➢ 6/29/2023 Hartwell sent me a Notice of Determination issued to HERBL on June 1, 2023, by the California Department of Tax and Fee Administration (the “CDTFA”) which states that HERBL owes a total of $2,501,983.08 in taxes, penalties, and interest. ➢ 6/29/2023 I corresponded via email with Mason Sperakos (“Sperakos”), a Special Investigator with the Department of Cannabis Control (the “DCC”), regarding my appointment and HERBL’s status. I advised Sperakos that it is my understanding that HERBL has temporary ceased distributions and that my compliance counsel, Sharmi Shah, Esq. (“Shah”), is filing the necessary paperwork with the DCC to bring HERBL’s cannabis licenses under my control. ➢ 6/29/2023 Gote and I traveled to the Goleta Property for an initial inspection, takeover, and meeting with Beaudry and Hartwell. ➢ 6/30/2023 Gote returned to the Goleta Property to continue our takeover and review of documents on site. ➢ 6/30/2023 Shah and I spoke via phone with Sperakos and other DCC representatives regarding the receivership and HERBL’s status. Page 4 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 ➢ 6/30/2023 Shah submitted four Notification and Request forms to the DCC regarding my appointment. ➢ 6/2023 As of the end of June 2023 I had just commenced my appointment and was rapidly working to review all of HERBL’s assets and payment obligations. My team is particularly focused on wholly-owned HERBL subsidiary Blackbird Logistics Corp. (“Blackbird”), a Nevada entity which appears to be HERBL’s most valuable asset. ➢ 6/2023 Note that I was appointed two days before the end of June 2023 and would ordinarily have waited to prepare this Initial Receiver’s Report until after the end of July 2023. However, doing so would mean that my initial report would not be filed until mid-August 2023, contrary to the Appointing Order’s instructions regarding the timing for my initial report, and thus I have prepared the instant report, which covers the final days of June 2023. Because of the short time period covered herein, I have not prepared financials for June 2023; I will present financials for July 2023 with my July 2023 Receiver’s Report. July 2023 Activity: ➢ 7/2023 Note that July 2023 was an extraordinarily active month for the receivership. To reduce administrative expenses, this report provides a summary of key events rather than an exhaustive account of my team’s activities. For a day-to- day account, please refer to my July 2023 invoice. ➢ 7/2023 During early July 2023 I approached various major cannabis businesses (including Kiva, Nabis, Statehouse, Glass House, Mammoth, and Petalfast) in an effort to sell all of the Receivership Estate’s assets in a single transaction. However, there was no market interest in purchasing all of HERBL’s assets together. Consequently, I determined that the best path forward would be to sell HERBL’s assets individually. ➢ 7/3/2023 I received a letter from William W. Hatcher, Esq. (“Hatcher”), counsel for the owner of 3152-3158 Condo Street (one of the Santa Rosa Properties), advising that the owner had commenced eviction proceedings prior to my appointment due to unpaid rent in the amount of $20,405.30 as of June 30, 2023. Hatcher requested an update on the rent payment. Page 5 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 As Hatcher’s client is an unsecured creditor, I am unable to remit payment at this time as doing so could constitute a preferential payment. The same is true for HERBL’s other landlords. ➢ 7/5/2023 My team conducted a takeover of Blackbird’s Reno facilities. ➢ 7/7/2023 The CDTFA sent a letter to Beaudry and HERBL advising that HERBL’s sales and use tax account has been selected for a “routine audit” for July 1, 2020 through June 30, 2023. ➢ 7/5/2023 My team conducted a takeover of Blackbird’s Las Vegas facilities. ➢ 7/10/2023 B.H. 3640 Central Avenue, LLC, landlord for 600 Bicentennial Way (one of the Santa Rosa Properties) filed an unlawful detainer action against HERBL. ➢ 7/11/2023 I executed a consulting agreement with WeCannca, Inc. (“WeCann”) to market the Receivership Estate assets for sale with a projected listing price of $9,000,000. ➢ 7/12/2023 The CDTFA filed a Notice of State Tax Lien against HERBL in the amount of $17,343,418.75. ➢ 7/19/2023 The DCC issued a pair of Notices to Comply relating to the Goleta Property which advised that Professional Technical Union, Local 33 (“Pro-Tech 33”) has been determined by the ALRB to not be a bona fide labor organization, and consequently HERBL’s labor peace agreement with Pro- Tech 33 is insufficient to satisfy regulatory requirements. As such, HERBL has been directed to enter into a labor peace agreement with a bona fide labor organization on or before October 17, 2023. ➢ 7/23/2023 I engaged the law firm Howard & Howard to provide legal counsel to the Receivership Estate in the State of Nevada, where I must domesticate the Appointing Order in order to proceed with sales of Blackbird and the other Nevada assets. John Savage, Esq. (“Savage”) will be lead counsel. ➢ 7/27/2023 I prepared and submitted (on HERBL’s behalf) a City of Santa Ana Monthly Cannabis – Distribution Business License Tax Report for June 2023, which reported a total amount due of $1,704. Page 6 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 ➢ 7/27/2023 I prepared and submitted (on HERBL’s behalf) an El Dorado County Commercial Cannabis Activities Tax Apportionment Form for June 2023, which reported a total amount due of $77.06. ➢ 7/28/2023 I prepared and submitted (on HERBL’s behalf) a pair of City of San Diego Cannabis Business Tax Apportionment Forms for June 2023, which reported total amounts due of $61.02 (non-cash) and $95.97 (cash), respectively. ➢ 7/28/2023 I prepared and submitted (on HERBL’s behalf) a pair of City of San Diego Cannabis Business Tax Apportionment Forms for May 2023, which reported total amounts due of $402.72 (non-cash) and $61.04 (cash), respectively. ➢ 7/28/2023 I prepared and submitted (on HERBL’s behalf) a City of Goleta Cannabis Business Tax Return for Q2 2023, which reported a total amount due of $29,814.20. ➢ 7/27/2023 I prepared and submitted (on HERBL’s behalf) an El Dorado County Commercial Cannabis Activities Tax Apportionment Form for May 2023, which reported a total amount due of $195.48. ➢ 7/31/2023 My counsel prepared, served, and filed two ex parte applications: 1. An application for issuance of an order scheduling an auction sale of all of HERBL’s assets (in order to expedite resolution of the receivership and minimize ongoing administrative costs, thereby maximizing funds available for creditors); and 2. An application for various administrative orders, including setting my bond amount, clarifying that HERBL’s subsidiaries are part of the Receivership Estate, authorizing my retention of Ervin Cohen & Jessup LLP and Howard & Howard nunc pro tunc, authorizing me to enter into settlement agreements and sales under $100,000 without Court confirmation, authorizing me to continue utilizing the services of HERBL’s pre-receivership debt collector (Jonathan Neil & Associates, Inc. (“JNA”)) and their counsel (Bruce Hatkoff (“Hatkoff”) and Robert Pollak (“Pollak”)) and authorizing me to file debt collection lawsuits on HERBL’s behalf, and authorizing me to file an Page 7 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 action in Nevada to domesticate the Appointing Order. The Court ultimately granted both applications in early August 2023. The auction sale was initially scheduled for August 28, 2023, but has since been rescheduled for September 7, 2023. ➢ 7/2023 As of the end of July 2023 I was negotiating a settlement agreement with Glass House regarding a dispute between HERBL and Glass House over accounts receivable, which settlement will bring in additional funds for the Receivership Estate. ➢ 7/2023 As of the end of July 2023 I had gained control of the Receivership Estate’s assets, including but not limited to: i. Entities: HERBL, Inc., HERBL Pro, Inc., Blackbird Logistics Corp. (including its intellectual property), and Blackbird’s subsidiaries, Bootleg Courier Company, LLC, Blkbrd Software, LLC, Blkbrd OCA, LLC, Blkbrd CA, Corp, and Blkbrd NV, LLC; ii. California cannabis licenses: C11-0000975-LIC, C11- 0001467-LIC, C11-0001080-LIC, C11-0001135-LIC, and C11-0000794-LIC; iii. California leases and FFE: 3158 Condo Court, Santa Rosa; 3152 Condo Court, Santa Rosa; 749 Ward Drive, Goleta; 759 Ward Drive, Goleta; 839 Ward Drive, Goleta; 3144 W. Adams St., Suite C, Santa Ana; and 600 Bicentennial Way, Santa Rosa; iv. Nevada leases and FFE: 465 Sunshine Ln, Reno, NV; 580 Sunshine Ln, Reno, NV; 6450 Cameron Way #110, Las Vegas, NV; and v. Approximately 90 collections actions (being handled by JNA on HERBL’s behalf). / / / / / / / / / / / / Page 8 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 August 2023 Activity: ➢ 8/2023 Note that August 2023 was an extraordinarily active month for the receivership. To reduce administrative expenses, this report provides a summary of key events rather than an exhaustive account of my team’s activities. For a day-to- day account, please refer to my August 2023 invoice. ➢ 8/1/2023 The Court heard and granted both of my ex parte applications. ➢ 8/2/2023 The Court entered Order re Receiver Kevin Singer’s Ex Parte Application to Schedule Auction Sale, which scheduled the auction sale for August 28, 2023 at 2:00 PM. ➢ 8/3/2023 Gote provided an update to Plaintiff on our efforts. As of this date: i. The Santa Rosa Properties were nearly closed out and the new owner for 3158 Condo Street had purchased the remaining racking and equipment for $40,000, along with three trucks for an additional total of $45,000. Gote also reported sales of three additional trucks at the Santa Rosa Property for a total of $28,500. The 600 Bicentennial Way location was turned over to its landlord as there was no interest in the furniture therein. ii. The Santa Ana Property will be turned over to its landlord, who has refused to cooperate with the receivership. Fortunately, the associated cannabis permit can be relocated to a new location. iii. We are transferring two box trucks with office equipment from Goleta to Nevada to improve operational efficiency. iv. JNA continues to work to collect the approximately $2.5 million in accounts receivable that we placed with them for collection. Over the past year they have reportedly recovered $180,000 at roughly 28 cents per dollar. ➢ 8/4/2023 The Court entered Order re Receivership Administrative Issues, which, inter alia, set my bond amount. I subsequently made arrangements to post my $10,000 bond. ➢ 8/9/2023 I executed a pair of bills of sale to sell a 2018 Ford Transit 150 and a 2019 Ford Transit 350, both owned by HERBL, to Seed to Leaf Inc for $8,000 and $10,000, respectively. Page 9 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 ➢ 8/9/2023 Claims management company Sedgwick sent a letter to HERBL (which I later obtained) on behalf of HERBL’s insurer, Transverse Specialty Insurance Company, regarding a complaint filed on June 20, 2023 by Kiffen, LLC against HERBL, Beaudry, and Hartwell. Sedgwick advised that HERBL’s policy does not afford coverage for the complaint. ➢ 8/10/2023 Ricardo Ramos of the City of San Diego, Office of the City Treasurer contacted my office regarding HERBL’s outstanding cannabis tax balance and provided a copy of a notice dated August 2, 2023, which states a total balance due to the City of San Diego of $748,850.99. ➢ 8/11/2023 I executed a creditor’s declaration prepared by JNA for the North Country Operations collections matter (Sacramento County case number 23CV000771), which seeks payment of $108,892.30 owed to HERBL. ➢ 8/14/2023 Savage prepared, served, and filed (in Clark County, Nevada District Court) a Verified Petition to Appoint Ancillary Receiver (the “Nevada Petition”), whereby I sought an order from a Nevada court appointing me as ancillary receiver over all of HERBL’s Nevada assets pursuant to the same terms and provisions of my Appointing Order. ➢ 8/14/2023 Savage prepared and sent a pair of letters to the Nevada Cannabis Compliance Board (the “Nevada CCB”). The first, captioned Notice of Transfer of Interest, advised of my appointment and asked the Nevada CCB to complete processing a Transfer of Interest (“TOI”) application submitted prior to my appointment which sought to transfer cannabis distribution licenses T002 and T003 from Crooked Wine Company, LLC (“Crooked Wine”) to Blkbrd. The second letter, captioned Management Agreement Update, inquired as to whether the CCB requires any additional information or documentation to update its records and keep the management agreement (whereby Blackbird operates Crooked Wine’s cannabis distribution licenses) in good standing. ➢ 8/14/2023 I received a Statement of Account from the CDTFA, addressed to BLKBRD OCA, LLC (a California entity), which reports a balance due of $2,526,634.86 for cannabis Page 10 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 taxes, along with a Notice of Redetermination advising that a $10,837.02 credit was applied to the previously-reported balance. It appears from the notice that this tax balance solely relates to the California entity BLKBRD OCA, LLC and does not impact the Nevada entities. ➢ 8/15/2023 Tim McMahon, counsel for Kind Op Corp (aka “POSIBL”), sent a letter to HERBL, copying me, which states that POSIBL is terminating its supplier agreement with HERBL. ➢ 8/15/2023 As part of a settlement agreement with Glass House Brands (“Glass House”) which will bring in a payment of $100,000 to the Receivership Estate, Glass House’s chairman, Kyle Kazan (“Kazan”) and I executed a joint letter to HERBL and Glass House’s customers advising that Glass House is entitled to receive its accounts receivable for Glass House products delivered by HERBL beginning March 28, 2023 and that HERBL will not be seeking to separately receive said accounts receivable. ➢ 8/17/2023 I executed a Settlement Agreement and Mutual Release (on HERBL’s behalf) with Speedy Weedy Vista, Inc., Speedy Weedy Santa Ana LLC, and Welcome the Healing Touch, Inc (collectively, “Speedy Weedy”), whereby Speedy Weedy will pay $160,000 to HERBL over twelve payments, with the final payment due October 1, 2024. ➢ 8/18/2023 I executed a stipulation in a collections matter brought by HERBL against Canna Cloud, LLC (“Canna Cloud”) (Riverside County case number CVRI2303105) whereby Canna Cloud shall pay $36,287.67 to HERBL in three payments, with the final payment due by September 15, 2023. ➢ 8/18/2023 I executed a creditor’s declaration prepared by JNA for the SJV Management and Go Treez collections matter (Sacramento County case number 23CV001420), which seeks payment of $14,775.96 owed to HERBL. ➢ 8/22/2023 My counsel prepared, served, and filed Receiver Kevin Singer’s Ex Parte Application for Issuance of Order Authorizing and Confirming Sale of Receivership Personal Property (the “Goleta Ex Parte”). The Goleta Ex Parte sought Court approval of a proposed sale of HERBL’s personal property at 759 and 839 Ward Dr., Goleta, CA 93111 to Central Coast Processing LLC for $350,000. Page 11 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 ➢ 8/22/2023 Counsel for Townsgate Business Park 2 and Majestic Luna 2, LLC, HERBL’s landlord for the Goleta Property, filed an ex parte application (the “Landlord Ex Parte”) for an order modifying my Appointing Order, namely, (1) requiring me to remove HERBL’s personal property from the Goleta Property and surrender possession within five business days, (2) requiring me to pay prorated rent to the landlord in the amount of $57,683.85, and (3) allowing the landlord to dispose of HERBL’s personal property if it is not removed within five business days. ➢ 8/23/2023 My counsel prepared, served, and filed an opposition to the Landlord Ex Parte, arguing that it lacked exigency and that the requested relief would violate unlawful detainer requirements and would constitute a preferential distribution. ➢ 8/23/2023 I received and reviewed a letter from the City of Santa Rosa, addressed to Beaudry and HERBL, advising that the City of Santa Rosa has engaged Avenue Insights & Analytics LLC / MuniServices, LLC to conduct an audit of HERBL’s business tax payments for January 1, 2020, through December 31, 2022. Gote has advised the City of Santa Rosa that HERBL has ceased business operations. ➢ 8/23/2023 I received a letter from collections agency Tavco Credit Services which sought payment of a purported $1,107.91 balance allegedly owed by HERBL to Leetee Generators. ➢ 8/24/2023 The Court heard the Goleta Ex Parte and the Landlord Ex Parte and continued the hearings to August 29th. ➢ 8/25/2023 I prepared, served, and filed Notice of Receiver’s Bond. ➢ 8/25/2023 I prepared and submitted a Nevada Cannabis Compliance Board agent card application. As a preview to the September 2023 Receiver’s Report, the CCB issued a temporary agent card to me in early September 2023. ➢ 8/28/2023 The Nevada Court entered Order Granting Motion to Appoint Ancillary Receiver on Order Shortening Time (the “Nevada Appointing Order”). ➢ 8/29/2023 The Court granted my Goleta Ex Parte and denied the Landlord Ex Parte. Page 12 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 ➢ 8/31/2023 I prepared and submitted (on HERBL’s behalf) a City of Santa Ana Monthly Cannabis – Distribution Business License Tax Report for July 2023, which reported a total amount due of $1,704. ➢ 8/31/2023 I executed an additional creditor’s declaration for a JNA collections matter whereby HERBL seeks to recover $33,496.97 from Northern Erudite Ventures dba HERBNJOY and Hanford Erudite dba HERBNJOY. September 2023 Activity: ➢ 9/2023 Note that September 2023 was another extraordinarily active month for the receivership. To reduce administrative expenses, this report provides a summary of key events rather than an exhaustive account of my team’s activities. For a day-to-day account, please refer to my September 2023 invoice, attached below as Exhibit 11. ➢ 9/1/2023 I prepared, served, and filed a second Oath of Receiver with the Nevada Court (as required by the Nevada Appointing Order). ➢ 9/6/2023 I executed a declaration in support of a request for entry of default judgment in the collections matter HERBL v. Urban Buds LLC et al. The total judgment sought is $173,665.31. ➢ 9/7/2023 I conducted the auction of HERBL’s assets. However, none of the assets were sold at the auction as no bidders were willing to meet the reserve prices for any of the assets. I will now reengage with the prospective purchasers. ➢ 9/7/2023 Gote provided an update to Plaintiff on the receivership. Key points included: 1. Background on the auction outcome, including presenting the tracking sheet used to monitor Campuzano’s communications with over 100 prospective purchasers prior to the auction; 2. We intend to reengage with the prospective purchasers who declined to participate in the auction. 3. Turnover of the Goleta Property is expected to be completed on the following day (9/8/23). Page 13 ____________________________________________________________________________________________________________________________________ RECEIVER’S REPORT 003 4. HERBL’s actual accounts receivable appear to be closer to $1 million than the originally-estimated $7 million because HERBL owes significant sums to product manufacturers, having acquired inventory on consignment. 5. We are moving forward with the Transfer of Interest process for the licenses held by Crooked Wine. ➢ 9/8/2023 The Nevada CCB issued a temporary agent card to me, which card is valid for 90 days. Attached hereto as “Exhibit 1” is the letter confirming the issuance of the temporary agent card. ➢ 9/14/2023 Gote provided another update on the receivership to Plaintiff. By this date, all California locations had been returned to the landlords and the HERBL licenses for the