[At the Crossroads] Amridge ③ Allegations of Largest Shareholder Diverting Company-Owned Building

Building Title Transferred to Corporation Linked to Largest Shareholder
Transaction Details Remain Unclear... Allegations of False Disclosure Emerge

There is evidence that the largest shareholder of Amridge, a KOSDAQ-listed company, has misappropriated a company-owned building. After transferring the building’s title to a corporation related to the largest shareholder, a mortgage loan was also taken out. In particular, since this was not disclosed in the company’s annual report, there are also allegations of false disclosure.

According to the Financial Supervisory Service’s electronic disclosure system on September 4, Amridge acquired a building located in Los Angeles, United States, for 7 million dollars (approximately 9.7 billion won) in July 2019. This building is operated by Amridge’s subsidiary, NWLA Holdings, LLC, as a cannabis retail store called Royal Greens.

In its 2019 annual report, Amridge disclosed that it had acquired tangible assets worth 7 million dollars in relation to this building. The acquisition funds appear to have been raised through the issuance of convertible bonds (CB). These convertible bonds have already been converted into shares in the market. In effect, Amridge shareholders’ money was used to purchase the building.

Although the building was acquired, Amridge did not register the building’s ownership. Without registration, the company is left in a legally vulnerable position. In Korea, a transaction is not considered complete without registration.

While this uncertain situation persisted, in October 2022, a corporation called JDW ASSOCIATION, LLC suddenly became the registered owner of the building.

According to the building’s transaction records, the previous owner who had agreed to sell the building to Amridge in July 2019 and JDW conducted a sales transaction in October 2022. There is no record of the transaction that Amridge had contracted in 2019. Despite Amridge’s disclosure in its annual report that it had acquired tangible assets, there is no actual record of the transaction.

Furthermore, Amridge did not disclose the change in ownership to JDW. If the company had sold a building it owned, it should have disclosed the disposal of tangible assets. However, since the initial acquisition disclosure in 2019, Amridge continues to report holding tangible assets worth 7 million dollars.

The sale price of the building in the October 2022 transaction was 4.1 million dollars (approximately 5.7 billion won). Even if Amridge had sold the building properly, it would have incurred a loss of 2.9 million dollars (approximately 4 billion won).

The CEO of JDW, which registered the building’s ownership, is Byun Miran. Byun is the 100% largest shareholder of Lux Hoover LLC, which is Amridge’s largest shareholder. The largest shareholder of Amridge transferred company assets into the ownership of a personal corporation. In addition, JDW took out a real estate mortgage loan of 1.9 million dollars (approximately 2.6 billion won) using this building.

An official in the financial investment industry pointed out, “Since the building sale was not disclosed, it is possible that this is a case of a nominee trust. However, in that case, it must be clarified why the title was registered under the largest shareholder’s related corporation instead of Amridge, and how the loan proceeds were used.”

Amridge was contacted for comment on this matter but did not respond.