The accompanying consolidated notes are
an integral part of these unaudited financial statements
The accompanying consolidated notes are
an integral part of these unaudited financial statements
The accompanying consolidated notes are an integral part of these unaudited financial statements
The accompanying consolidated notes are an integral part of these unaudited financial statements
Notes
to the Unaudited Consolidated Financial Statements
December
31, 2020
1.
|
NATURE OF OPERATIONS AND CONTINUANCE OF BUSINESS
|
RedHawk
Holdings Corp. (“RedHawk” or the “Company”) was incorporated in the State of Nevada on November 30, 2005
under the name “Oliver Creek Resources Inc.” Effective August 12, 2008, we changed our name from “Oliver Creek
Resources Inc.” to “Independence Energy Corp.” Effective October 13, 2015, by vote of a majority of the Company’s
stockholders, the Company’s name was changed from “Independence Energy Corp.” to “RedHawk Holdings Corp.”
Currently,
the Company is a diversified holding company which, through our subsidiaries, is engaged in sales and distribution of medical
devices, sales of branded generic pharmaceutical drugs, commercial real estate investment and leasing, sales of point of entry
full-body security systems, and specialized financial services. Through its medical products business unit, the Company sells
the SANDD™ Insulin Needle Destruction Unit (formerly known as the Disintegrator™), personal protection equipment,
WoundClot Surgical - Advanced Bleeding Control and the Carotid Artery Digital Non-Contact Thermometer. Through our United Kingdom
based subsidiary, we manufacture and market branded generic pharmaceuticals, certain other generic pharmaceuticals known as “specials”
and certain pharmaceuticals outside of the United Kingdom’s National Health Service drug tariff referred to as NP8’s.
Centri Security Systems LLC, a wholly-owned subsidiary of the Company, holds the exclusive U.S. manufacturing and distribution
rights for the Centri Controlled Entry System, a unique, closed cabinet, nominal dose transmission full body x-ray scanner. Our
real estate leasing revenues are generated from commercial properties under lease. Additionally, the Company’s real estate
investment unit holds limited liability company interests in a commercial restoration project in Hawaii.
Going
Concern
These
financial statements have been prepared on a going concern basis, which implies that the Company will be able to continue as a
going concern without further financing. The Company must continue to realize its assets to discharge its liabilities in the normal
course of business. The Company has generated limited revenues to date and has never paid any dividends on its common stock and
is unlikely to pay any common stock dividends or generate significant earnings in the immediate or foreseeable future.
For the six month period ended December 31, 2020, the Company had revenues of $660,960, a consolidated
net loss of $707,003 and cash of $211,302 used in operating activities. As of December 31, 2020, the Company had cash of $28,007,
a working capital deficit of $1,415,452 and an accumulated deficit of $8,469,842. The continuation of the Company as a going concern
is still dependent upon the continued financial support from its stockholders, the ability to raise equity or debt financing, cash
proceeds from the sale of assets and the attainment of profitable operations from the Company’s businesses in order to discharge
its obligations. We cannot predict, with certainty, the outcome of our efforts to generate liquidity and profitability, or whether
such actions would generate the expected proceeds to the Company. These factors raise substantial doubt regarding the Company’s
ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification
of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as
a going concern.
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis
of Presentation
The unaudited interim condensed financial statements of the Company as of December 31, 2020 and for the
three and six month periods ended December 31, 2020 and 2019 included herein have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules
and regulations of the Securities and Exchange Commission (the “SEC”). The year-end consolidated balance sheet dated
as of June 30, 2020 is audited and is presented here as a basis for comparison. Although the financial statements and related information
included herein have been prepared without audit, and certain information and disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, the Company believes that the note disclosures are adequate to
make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction
with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual
Report on Form 10-K as of June 30, 2020. In the opinion of our management, the unaudited interim consolidated financial statements
included herein reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation
of the Company’s financial position, results of operations, and cash flows for the periods presented. The results of operations
for interim periods are not necessarily indicative of the results expected for the full year or any future period.
Principles
of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.
All material intercompany accounts have been eliminated upon consolidation. Equity investments, which we have an ownership less
than 20%, are recorded at cost.
Use
of Estimates
The
consolidated financial statements and related notes are prepared in conformity with GAAP which requires our management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. The Company regularly evaluates estimates and assumptions related to valuation and impairment
of investments, intangible assets, and long-lived assets, and deferred income tax asset valuation allowances. The Company
bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to
be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The
actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the
extent there are material differences between the estimates and the actual results, future results of operations will
be affected.
Revenue
Recognition
In
May 2014 the Financial Accounting Standards Board (which we refer to as the “FASB”) issued ASU 2014-19, Revenue from
Contracts with Customers (ASU 2014-19). ASU 2014-19 established a single revenue recognition model for all contracts with customers,
eliminates industry specific requirements and expands disclosure requirements. The core principle of the guidance is that an entity
should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity
should apply the following five steps: (1) identify contracts with customers, (2) identify the performance obligations in the
contracts, (3) determine the transaction price, (4) allocate the transaction price to the performance obligation in the contract,
and (5) recognize revenue as the entity satisfies performance obligations. Effective July 1, 2018, we adopted ASU 2014-19 using
the modified retrospective method. The adoption of ASU 2014-19 did not have an impact on our consolidated financial statements
but required enhanced footnote disclosures. See Note 3, Revenue Recognition, for additional information.
We
derive revenue from several types of activities – medical device sales, branded generic pharmaceutical sales, and commercial
real estate leasing. Our medical device sales include the marketing and distribution of certain professional and consumer grade
digital non-contact thermometers, our needle destruction unit, personal protection equipment, and advanced bleeding control. Through
our United Kingdom based subsidiary, we manufacture, and market, branded generic pharmaceuticals. Our real estate leasing revenues
are from certain commercial properties under lease. The Company offers customer discounts in certain cases. Such discounts are
estimated at time of product sale and revenues are reduced for such discounts at the time of the sale. Shipping and handling costs
are included in revenue and costs of goods sold.
Cash
and Cash Equivalents
We
consider highly liquid investments with an original maturity of 90 days or less to be cash equivalents. The Company did not have
any cash equivalents as of December 31, 2020 or June 30, 2020.
Accounts
Receivable
Accounts
receivables are amounts due from customers of our medical device, pharmaceutical, and financial services divisions. We do not
require collateral from our customers. The amount is reported at the billed amount, net of any expected allowance for bad debts.
There was no allowance for doubtful accounts as of December 31, 2020 or June 30, 2020.
Inventory
Inventory
consist of needle destruction devices and its components, purchased thermometers, UV sanitation lights, face masks, an advanced
bleeding control, and certain branded generic pharmaceuticals held for resale. All inventories are stated at the lower of cost
or net realizable value utilizing the first-in, first-out method. A portion of our inventory is located in the United Kingdom,
which due to the COVID-19 pandemic has been in a lockdown environment for most of the period since March 31, 2020. As a result,
sales efforts related to this inventory have temporarily ceased. The Company still expects to be able to sell this inventory but
may incur additional costs in order to do so. Accordingly, an inventory reserve of approximately $60,000 has been recorded as
of December 31, 2020 to reduce the inventory to net realizable value.
Property
and Improvements
Property
and improvements are stated at cost. We provide for depreciation expense on a straight-line basis over each asset’s useful
life depreciated to their estimated salvage value. Buildings are depreciated over a useful life of 20 to 30 years. Building improvements
are depreciated over a useful life of 5 to 10 years. Tooling and equipment are depreciated over a useful life of ten years.
Our
Louisiana real estate holdings include our former corporate headquarters on Chemin Metairie Road in Youngsville, Louisiana and
a property on Jefferson Street in Lafayette, Louisiana. As of December 31, 2020, we are leasing both properties to third parties.
The Company is also continuing to use a portion of the Chemin Metairie Road property for equipment storage for our real estate
management unit.
The current lease for the Jefferson Street property is through December 31, 2022 at a rent of $3,250 per
month. Beginning September 1, 2020, the Chemin Metairie Road property is leased through February 28, 2021 at a rental rate of $2,000
per month. At the end of the lease term, the Company intends to list the Chemin Metairie Road property for sale and/or lease.
Income
Taxes
Potential
benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company follows
Accounting Standard Codification (which we refer to as “ASC”) 740, Income Taxes, which requires the Company to compute
tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized
in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating
losses carried forward in future years. The Company recognizes interest and penalties related to uncertain tax positions in income
tax expense in the period they are incurred. The Company does not believe that it has any uncertain tax positions.
Basic
and Diluted Net Loss Per Share
The
Company computes net loss per share in accordance with ASC 260, Earnings Per Share, which requires presentation of both basic
and diluted earnings per share (EPS) on the face of the consolidated statements of operations. Basic EPS is computed by dividing
net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during
the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury
stock method and the convertible notes and the convertible preferred stock using the if-converted method. In computing Diluted
EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise
of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. There were
139,558,450 outstanding warrants as of December 31, 2020 of which 113,508,450 have an exercise price of $0.005 per share and 26,050,000
have an exercise price of $0.01 per share.
At December 31, 2020,
including accrued but unpaid interest, there was one remaining 2016 Fixed Rate Convertible Note outstanding which totals $63,326
and is convertible into 4,221,740 shares of common stock upon conversion.
During
the six month period ended December 31, 2020, we issued in private offerings exempt from registration debt securities in the form
of 2019 Variable Rate Convertible Notes (See Note 7) in the aggregate principal amount of $106,000. The proceeds were used to
pay a portion of amounts due under certain litigation (See Note 8) and for working capital. The 2019 Variable Rate Convertible
Notes are convertible into shares of common stock at a variable conversion rate.
During
the six month period ended December 31, 2020, we issued in private offerings exempt from registration debt securities in the form
of 2019 Fixed Rate Convertible Notes (See Note 7) in the aggregate principal amount of $200,000. The proceeds were used to pay
a portion of amounts due under certain litigation (See Note 8), for working capital and to pay off certain 2019 Variable Rate
Convertible Notes outstanding in the amount of approximately $21,000, plus accrued interest and prepayment penalties. The 2019
Fixed Rate Convertible Notes mature on the fifth anniversary of the date of issuance and are convertible into shares of our common
stock at a price of $0.015 per share and include 25% warrant coverage at $0.01 per share.
During the six month
periods ended December 31, 2020, we issued $268,236 in 2020 Fixed Rate Convertible Notes. The 2020 Fixed Rate Convertible Notes
accrue interest at 10% per annum, are convertible into shares of our common stock at a price of $0.005 per share, mature twelve
months after issuance and are unsecured.
At
December 31, 2020, including accrued but unpaid dividends, there were potentially 85,133,333 shares of common stock issuable upon
the conversion of our outstanding Series A Preferred Stock and, including accrued but unpaid dividends, there were potentially
126,407,455 shares of common stock issuable upon the conversion of our outstanding Series B Preferred Stock (See Note 9).
The shares of common stock that could be issued upon exercise of the warrants and the shares issuable
from the conversion of the promissory notes (each discussed above), the Series A Preferred Stock, and the Series B Preferred Stock
have been excluded from earnings per share calculations because these shares are anti-dilutive due to the Company’s net loss.
Comprehensive
Income (Loss)
ASC
220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components
in the financial statements. All of our accumulated other comprehensive loss as of December 31, 2020 and June 30, 2020 relate
to foreign currency translation.
Financial
Instruments
Pursuant
to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level
of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization
within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC
820 prioritizes the inputs into the following three levels that may be used to measure fair value:
Level
1. Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or
liabilities.
Level
2. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for
the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical
assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations
in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level
3. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that
are significant to the measurement of the fair value of the assets or liabilities.
The
Company’s financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities,
debt, and amounts due to related parties. We believe that the recorded values of all of our other financial instruments approximate
their current fair values because of their nature and respective maturity dates or durations, and stated interest rates.
Leases
In
February 2016, the FASB issued ASU 2016-02, Leases (ASU 2016-02), which amended guidance for lease arrangements in order to increase
transparency and comparability by providing additional information to users of financial statements regarding an entity’s
leasing activities. The revised guidance requires reporting entities to recognize lease assets and lease liabilities on the balance
sheet for substantially all long-term lease arrangements. The Company has elected to use the short-term lease exception allowed
in ASU 2016-02. We did enter into a long-term lease in the quarter ended March 31, 2020 for new office space and have recorded
a right-of-use asset and the related lease obligation as of December 31, 2020 (See Note 6).
Reclassification
Certain
amounts in prior periods have been reclassified to conform to the current period presentation.
3.
|
REVENUE FROM
CONTRACTS WITH CUSTOMERS
|
Revenue
Recognition
Sales
of medical devices and pharmaceuticals are recognized generally at the point in time when delivery occurs and title transfers
to the buyer. Sales of medical devices and pharmaceuticals are usually collected within 90 days of the date of sale. In certain
cases, the customers make advance payments on orders of medical devices. Such advance payments are recorded as deferred revenue
in the accompanying consolidated balance sheets. As of December 31, 2020 and December 31, 2019, there was no deferred revenue
recorded.
We
have distributorship and sales representative agreements in place with third parties who do not take ownership of products. Any
costs incurred related to these agreements are considered to be sales and marketing expenses. In the year ended June 30, 2020,
we entered into a one-year distribution agreement with a distributor, which requires the distributor to order and purchase a minimum
number of medical devices in each quarter of the agreement. The Company has invoiced and recorded net revenue of approximately
$50,000 and accrued the related cost of goods sold in the year ended June 30, 2020 for the required minimum purchase. The minimum
purchase inventory not yet shipped is segregated and held by the Company.
We
also earn rental income from operating leases which is recognized over the rental period as the tenant occupies the space and
pays the rental amount. Rentals are paid at the beginning of the month covered by the lease.
Disaggregation
of Revenue
For
the six and three month periods ended December 31, 2020 and 2019, a summary of our revenue on a disaggregated basis is as follows:
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of medical devices
|
|
$
|
193,176
|
|
|
$
|
1,904
|
|
|
$
|
623,452
|
|
|
$
|
42,712
|
|
Rental revenue from operating lease payments
|
|
|
20,445
|
|
|
|
16,853
|
|
|
|
37,508
|
|
|
|
26,603
|
|
|
|
$
|
213,621
|
|
|
$
|
18,757
|
|
|
$
|
660,960
|
|
|
$
|
69,315
|
|
Transaction
Prices
In
some cases, we may offer introductory or distributor discounts to customers. In such cases, we reduce the recorded revenue for
such discounts. For the six month periods ended December 31, 2020 and 2019, our revenues were reduced by $174,144 and $42,649,
respectively, for such discounts. For the three month periods ended December 31, 2020 and 2019, our revenues were reduced by $157,250
and $28,109, respectively, for such discounts.
Shipping
and handling costs included in revenue was approximately $7,400 and $1,000 for the six month periods ended December 31, 2020 and
2019, respectively. Shipping and handling costs included in revenue was approximately $1,300 and $1,000 for the three month periods
ended December 31, 2020 and 2019, respectively.
Our
investment in Tower Hotel Fund 2013, LLC (“Hotel Fund”) is recorded at cost. The Hotel Fund owns a resort property
in Hawaii. Due to the COVID-19 pandemic, the tourism industry in Hawaii was adversely affected and the resort was temporarily
closed from March 2020 to November 2020 and hotel visits and activity generally remain below pre-pandemic activity. The return
to previous operating performance of this property and the timing, if it should occur, cannot be estimated at this time. Based
on the expected reduction in cash flows and uncertainties related to the Hawaii tourism industry, the Company recorded as of June
30, 2020, an impairment of $130,000 or approximately 50% of our remaining carrying value in this investment. The ultimate amount,
if any, we recover from this investment cannot be estimated at this time and may differ from our recorded investment.
We
are continuing to pursue the sale of our remaining investment in the Hotel Fund.
As
of December 31, 2020, we have approximately $367,956 ($254,816 net of accumulated amortization) in intangible assets related to
licenses held by EcoGen Europe Ltd. Such intangible assets are being amortized over an estimated useful life of 20 years.
In
September 2018, the Company entered into an agreement to acquire the exclusive manufacturing and distribution rights to certain
needle incineration intellectual properties for $450,000, plus a broker’s fee of $17,500. Under the terms of the license
agreement, the Company has paid $25,000 plus the first of a total twenty scheduled quarterly payments of $21,250. Any remaining
payments become immediately payable upon the receipt of final approval by the FDA of devices related to the technology. Additionally,
the Company agreed to pay a consulting fee of $1,000 per month for sixty months. The broker’s fee was paid through the issuance
of 14 million shares of the Company’s common stock. The quarterly payments and the consulting fee were suspended as the
Company believes the seller breached the terms of the purchase agreement by, among other things: failing to provide RedHawk with
exclusive rights to the intellectual properties and technology, all related inventions, patents, registrations, licenses, applications
and contracts, trademarks, copyrights, designs, drawings, patterns, manuals and instructions, mask works, product certifications,
computer programs and data, research and engineering work, critical tooling, design drawings, products, inventory, raw materials,
molds, molding tools and dies. The prototypes provided were defective, unsafe and failed to work as represented. Further, the
Seller misrepresented that it had exclusive rights to the intellectual property being purchased. We initiated and completed the
reverse engineering of this needle incineration technology.
As a result of the seller’s misrepresentations, the Company has written off all intangible assets
related to these rights ($428,125) and all remaining unpaid obligations ($403,750). As a result, an impairment of $24,375 was recorded
as of June 30, 2020.
In
the year ended June 30, 2020, we issued 20,000,000 shares of Common Stock under the terms of a 2015 consulting agreement as a
result of reaching certain milestones related to the development of our needle destruction devices. Under the terms of this consulting
agreement, an additional 40,000,000 shares of Common Stock may be issued in the future if other milestones are met.
5.
|
INSURANCE NOTE PAYABLE
|
We finance a portion of our insurance premiums. At December 31, 2020, there was a $71,560 outstanding
balance due on our premium finance agreements. The agreements have effective interest rates of 9.42% to 10.15%. The policies related
to these premiums expire between June 2021 and November 2021.
6.
|
RELATED PARTY TRANSACTIONS
|
Effective
December 1, 2016, the Company entered into a $250,000 Commercial Note Line of Credit (which we refer to as the “Line of
Credit”) with a stockholder and officer of the Company to evidence prior indebtedness and provide for future borrowings.
The advances are used to fund our operations. The Line of Credit accrues interest at 5% per annum and matures on March 31, 2021.
At maturity, or in connection with a pre-payment, subject to the conditions set forth in the Line of Credit, the stockholder has
the right to convert the amount outstanding (or the amount of the prepayment) into the Company’s Series A Preferred Stock
at the par value of $1,000 per share. At December 31, 2020, the outstanding principal balance totaled $2,750.
During the fiscal year ended June 30, 2019, certain members of the board of directors and stockholders
of the Company made $242,000 in interest free advances to the Company and are shown as “Due to related parties” on
the consolidated balance sheet. The advances are convertible into shares of the Company’s common stock at rates ranging from
$0.0024 to $0.0050 per share or 75,916,667 total shares of common stock. Prior to the quarter ended December 31, 2020, the Company
received notice from the holders of $142,000 of these advances of their intent to exercise their right to convert their advances
into 55,916,667 shares of common stock. The conversion is expected to be completed subsequent to the quarter ended December 31,
2020.
Beginning
in the quarter ended March 31, 2017, certain members of management agreed to forgo management fees in consideration of the operating
cash flow needs of the Company. There is not a set timeline to reinstitute such management fees. As of December 31, 2020 and June
30, 2019, $50,000 in such fees remain unpaid and are recorded in accounts payable and accrued liabilities in the consolidated
balance sheets.
We
entered into an office space lease in January 2020 with a company owned by a member of our Board of Directors. The lease is for
a three-year term beginning April 1, 2020. The base annual rent is $25,830. In addition to the base rent, the Company will also
pay a proportionate share of common area operating expenses. The Company initially recorded operating right-of-use (ROU) assets
and liabilities in the amount of $62,363 upon entering into this lease. The ROU asset represents our right to use the asset for
the lease term and the ROU liability represents our obligation to make lease payments arising from the lease. Operating lease
ROU assets and liabilities are recognized based on the present value of lease payments utilizing an interest rate based on a collateralized
loan with the same term as the related lease. During the six month period ended December 31, 2020, the ROU asset and liability
has been reduced by $10,085 for rental payments, which are included in general and administrative expenses in the accompanying
combined statements of operations.
7.
|
LONG-TERM DEBT, DEBENTURES AND LINES OF CREDIT
|
On
November 12, 2015, we acquired certain commercial real estate from a related party that is an entity controlled by a stockholder
and officer of the Company for $480,000 consisting of $75,000 of land costs and $405,000 of buildings and improvements. The purchase
price was paid through the assumption by the Company of $265,000 of long-term bank indebtedness (which we refer to below as the
“Note”) plus the issuance of 215 shares of the Company’s Series A Preferred Stock. The purchase price also included
the cost of specific security improvements requested by the lessee.
The
Note is dated November 13, 2015 and has a remaining principal amount of $219,401 as of December 31, 2020. Monthly payments under
the Note are $1,962 including interest accruing at a rate of 5.95% per annum. The Note matures in June 2021 and is secured by
the commercial real estate, guarantees by the Company and its real estate subsidiary and the personal guarantee of a stockholder
who is also an officer of the Company. At the maturity of this loan, the Company expects the loan to be re-financed.
In
March 2016, we issued $545,000 in principal amount of convertible promissory notes (which we refer to as the “2016 Fixed
Rate Convertible Notes”). The 2016 Fixed Rate Convertible Notes are secured by certain Company real estate holdings.
The
2016 Fixed Rate Convertible Notes mature on March 15, 2021, the fifth anniversary of the date of issuance and are convertible
into shares of our common stock at a price of $0.015 per share. Interest accrues at a rate of 5% per annum and is payable semi-annually.
The Company has the option to issue a notice of its intent to redeem, for cash, an amount equal to the sum of (a) 120% of the
then outstanding principal balance, (b) accrued but unpaid interest and (c) all liquidated damages and other amounts due in respect
of the 2016 Fixed Rate Convertible Notes. The Company may only issue the notice of its intent to redeem the 2016 Fixed Rate Convertible
Notes if the trading average of the Company’s common stock equals or exceeds 300% of the conversion price during each of
the five business days immediately preceding the date of the notice of intent to redeem. Holders of 2016 Fixed Rate Convertible
Notes have the right to convert all or any portion of the 2016 Fixed Rate Convertible Notes at the conversion price at any
time prior to redemption. At maturity, the Company expects to pay the remaining principal balance plus accrued interest.
At December 31, 2020, and June 30, 2020 there was one remaining 2016 Fixed Rate Convertible Note outstanding
with principal and accrued interest of approximately $63,300 and $62,000, respectively. This remaining 2016 Fixed Rate Convertible
Note (plus accrued interest) is convertible into our common stock at a conversion rate of $0.015 per share or 4,221,740 total shares.
During the six month periods ended December 31, 2020 and 2019, we recognized approximately $1,550 and $1,470, respectively, of
interest on this convertible note.
During
the six month periods ended December 31, 2020 and 2019, we issued $200,000 and $762,000, respectively, in principal amount of
new convertible promissory notes (which we refer to as the “2019 Fixed Rate Convertible Notes”). The 2019 Fixed Rate
Convertible Notes are secured by certain Company real estate holdings. As of December 31, 2020, $1,042,000 of 2019 Fixed Rate
Convertible Notes were outstanding.
The
2019 Fixed Rate Convertible Notes mature on the fifth anniversary of the date of issuance and are convertible into shares of our
common stock at a price of $0.015 per share and include 25% warrant coverage at $0.01 per share. Interest accrues at a rate of
7% per annum and is payable semi-annually. The Company has the option to issue a notice of its intent to redeem, for cash, an
amount equal to the sum of (a) 120% of the then outstanding principal balance, (b) accrued but unpaid interest and (c) all liquidated
damages and other amounts due in respect of the 2019 Fixed Rate Convertible Notes. The Company may only issue the notice of its
intent to redeem the 2019 Fixed Rate Convertible Notes if the trading average of the Company’s common stock equals or exceeds
300% of the conversion price during each of the five business days immediately preceding the date of the notice of intent to redeem.
The holder of the 2019 Fixed Rate Convertible Notes has the right to convert all or any portion of the 2019 Fixed Rate Convertible
Notes at the conversion price at any time prior to redemption.
During the six month
periods ended December 31, 2020 and 2019, we issued $268,236 and $0, respectively, in principal amount of new convertible notes
(which we refer to as the “2020 Fixed Rate Convertible Notes”). As of December 31, 2020, a total of $618,236 (approximately
$473,520 net of unamortized deferred loan costs of approximately $44,715 and unamortized beneficial conversion of $100,000) of
2020 Fixed Rate Convertible Notes were outstanding.
The
2020 Fixed Rate Convertible Notes accrue interest at 10% per annum, are convertible into shares of our common stock at a price
of $0.005 per share, mature twelve months after issuance and are unsecured. The proceeds from the 2020 Fixed Rate Convertible
Notes issued during the six month period ended December 31, 2020 were used to repay approximately $21,000 of obligations owed
on the 2019 Variable Rate Convertible Notes (including principal amount, accrued interest and prepayment penalties) and for working
capital purposes. When issued, the 2020 Fixed Rate Convertible Notes had an initial conversion rate below the trading price of
the Company’s common stock creating a beneficial conversion feature (“BCF”), which exceeded the total cash proceeds
received from its issuance. Accordingly, at June 30, 2020, we recorded the BCF as a debt discount and additional paid-in capital
of $85,000. The debt discount is being amortized over the one-year term of the note.
During
the six month periods ended December 31, 2020 and 2019, we issued $106,000 and $578,125, respectively, of convertible notes to
third parties with variable conversion rates (“2019 Variable Rate Convertible Notes”). The 2019 Variable Rate Convertible
Notes mature at various dates between September 2020 and June 2021. During the six month periods ended December 31, 2020 and 2019, we received approximately, net of financing costs incurred,
$100,000 and $505,696, respectively, in cash from the issuance of these notes. These 2019 Variable Rate Convertible Notes have
interest accruing at rates ranging between 8% - 12%. These notes have a variable conversion rate based on the price of the Company’s
common stock.
During the six month period ended December 31, 2020, $583,000, plus accrued interest, of the 2019 Variable
Rate Convertible Notes were converted into 204,390,925 shares of common stock. Additionally, $20,737, including accrued interest
and prepayment penalties, of the 2019 Variable Rate Convertible Notes were repaid.
Certain of the 2019
Variable Rate Convertible Notes have maturity dates within twelve months from the balance sheet date and could be classified as
a current liability. However, it is the Company’s expectation that such notes will be converted into shares, re-financed
to longer terms, or paid off with the proceeds of long-term financing. Therefore, we have classified these notes as noncurrent.
If we do not re-finance these convertible notes to longer terms, however, the holders of the convertible notes have the option
to convert these notes into equity or hold the convertible notes to maturity.
On
March 12, 2019, we obtained a $180,000 real estate loan from a financial institution. The note matured on April 1, 2020
and was extended to October 1, 2020. The Company is working on an additional extension of this loan. This real estate note
is secured by certain real estate property and the personal guarantee of an officer and director of the Company. Interest only
is payable monthly and accrues at an interest rate of 12%.
Beginning
in the quarter ended June 30, 2019, we entered into a series of credit financing arrangements from financing institutions by pledging
various Company assets and the personal guarantee of an officer and director of the Company. The proceeds from these credit agreements
were used to pay the amounts due under the Schreiber settlement agreement more fully described in Note 8. As of December 31, 2020
and June 30, 2020, we had $143,100 and $129,389, respectively, outstanding on these loans.
8.
|
COMMITMENTS AND
CONTINGENCIES
|
Schreiber
Litigation
On
January 31, 2017, the Company and Beechwood Properties, LLC (“Beechwood”) filed suit against Daniel J. Schreiber (“Mr.
Schreiber”) and the Daniel J. Schreiber Living Trust – Dtd 2/08/95 (“Schreiber Trust”) in the United States
District Court for the Eastern District of Louisiana (the “Louisiana Court”) under Civil Action No. 2:2017cv819-B(3)
(the “Litigation”).
Mr. Schreiber and the Schreiber Trust answered and counter-claimed against the Company and Beechwood and
made additional claims against Mr. G. Darcy Klug (“Mr. Klug”), an officer and director of RedHawk and sole owner of
Beechwood, in the Lawsuit.
On
March 22, 2019, the parties to the Litigation entered into a Settlement Agreement and General Release (“Settlement Agreement”)
to resolve all issues arising out of the subject matter of the Litigation.
In consideration of the mutual promises, covenants and conditions contained in the Settlement Agreement,
the parties agreed that (i) Mr. Schreiber and the Schreiber Trust would transfer all Company stock they then owned (52,377,108
common shares) to the Company and (ii) the Company would (a) make to Mr. Schreiber and the Schreiber Trust a cash payment of Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) and (b) issue two Promissory Notes, each in the principal amount of Two
Hundred Thousand and 00/100 Dollars ($200,000.00), one of which was due and payable on or before September 6, 2020 (“Note
1”) and the other was due and payable on or before September 5, 2021 (“Note 2”). As a result of this Settlement
Agreement, the Company recorded a loss of $471,880 in the year ended June 30, 2019.
Each Promissory Note
was non-interest bearing, however each (i) included a $15,000 late penalty if the principal amount was not repaid by the due date
and (ii) would bear interest at a rate of 18% per annum, from the issue date, if the principal was not repaid by the 30th date
after the due date.
Pursuant to a security agreement entered into between the parties, Mr. Klug and Beechwood secured the
Company’s obligations under the Settlement Agreement by granting first-priority security interests in (i) 1,000 shares of
Mr. Klug’s Series B Preferred Stock; and 1,473 shares of Mr. Klug’s Series A Preferred Stock, and (ii) Beechwood’s
interest in the Tower Hotels Fund 2014, LLC (collectively “the Escrow Account”).
On October 11, 2019,
the Schreiber Trust filed a Motion to Enforce Settlement Agreement (the “Motion”) with the Louisiana Court alleging
that the Company failed to comply with certain of its obligations under the Settlement Agreement. The Motion sought to, among other
things, accelerate payment of the amounts owed to Schreiber under the Settlement Agreement and collect additional amounts in interest
and attorneys’ fees.
On July 17, 2020, the
Louisiana Court granted Schreiber’s Motion and ordered the Company to pay to the Schreiber Trust $519,495.78 (“Judgment”)
representing (i) the principal amount due on Note 1 ($200,000.00); (ii) the principal amount due on Note 2 ($200,000.00); (iii)
pre-judgment interest of 18% simple interest on certain outstanding debt charged back to the date of the Settlement Agreement;
(iv) $40,000.00 of attorneys’ fees (10% of the amounts due); and (v) post-judgment interest from the date of the Judgment
as well as costs. The Company appealed the Louisiana Court’s ruling to the United States 5th Circuit Court of Appeals (the
“Court of Appeals”).
During the three month period ended September 30, 2020, Mr. Klug and Beechwood converted the 1,000 shares
of Series B Preferred Stock and the 1,473 shares of Series A Preferred Stock into 124,849,365 and 122,730,903, respectively, of
the Company’s Common Stock (collectively “the Escrow Shares”) and replaced the 1,000 shares of Series B Preferred
Stock and 1,473 shares of Series A Preferred Stock held in the Escrow Account with the Escrow Shares as security pursuant to the
Security Agreement.
Payment of the principal amount of Note 1 was tendered by the Company to Schreiber on August 13, 2020.
Notwithstanding the appeal to the Court of Appeals, the Company tendered the early repayment of the principal amount of Note 2
to Schreiber on August 24, 2020. The unsatisfied amount of the Judgment ($119,496) is shown as a “Settlement liability”
on the consolidated balance sheet.
On September 4, 2020, the Company filed a Consent Motion to Approve Supersedeas Bond and Stay of Execution
of Judgment Pending Appeal (“Motion to Approve”). On September 8, 2020 the Louisiana Court granted the Motion to Approve
and the posting of a supersedeas bond (“Bond”) by the Company in the amount of $143,491.26 representing (i) the remaining,
unsatisfied amount of the Judgment; plus (ii) post-Judgment interest of $80.27; plus, (iii) 20% of the combined amount ($23,915.21).
As the Judgment was vacated, on December 17, 2020 the Louisiana Court entered an order releasing the Bond and returning the aforementioned
funds to the Company. The returned funds are currently held in trust and are included in “Prepaid expenses” on the
consolidated balance sheet.
On November 12, 2020, the Court of Appeals issued a decision vacating the Judgment and remanding the case
to the district court.
The 14 day period to
seek rehearing from the Court of Appeals passed on November 26, 2020 with no petition filed by Schreiber; thereupon, the decision
and judgment of the Court of Appeals became final. By applicable rule, the mandate of the Court of Appeals issued 8 calendar days
thereafter, on December 4, 2020.
The Louisiana Court
also ordered the Company to file a Sur-Reply Brief. The Louisiana Court had previously denied the Company’s motion for leave
to file a sur-reply brief, after Schreiber had presented new arguments and evidence for the first time in his Reply Brief. When
the Louisiana Court ruled in Schreiber’s favor based solely on these new materials, the Court of Appeals reversed, ruling
its denial was an abuse of discretion. This order of the Louisiana Court was consistent with the ruling of the Court of Appeals.
The Louisiana Court
also sua sponte ordered that Schreiber be allowed to file a response to the Company’s Sur-Reply. Schreiber had not
requested or moved to be allowed to file a response.
Regardless, the parties
each timely filed their respective pleadings in accordance with the order. Both parties argued in favor of their position and claimed
to be entitled to an award of the reasonable attorneys’ fees and costs they incurred in connection with this litigation should
the Louisiana Court rule in their favor.
The Company is now awaiting a decision from the Louisiana Court. As previously and consistently
expressed, the Company believes Schreiber’s Motion is without merit and intends to continue to defend against it accordingly,
if and as necessary.
Consultant
Agreement
On
July 19, 2019 (the “Effective Date”), RedHawk and its wholly-owned subsidiary, RedHawk Medical Products & Services,
along with other affiliated entities, entered into a Consultant Agreement (“Agreement”) with Drew Pinsky, Inc. f/s/o
Dr. Drew Pinsky (“Consultant”), for Consultant to be the exclusive spokesperson for the Company’s Sharps Needle
and Destruction Device (“SANDD”) mini™, SANDD Pro™ and any related products and/or accessories
(“Products”) for an initial period of two (2) years (“Initial Period”), under the terms and conditions
described in the Agreement. At the end of the Initial Period, there shall be an automatic, immediately consecutive two (2) year
extension period unless DPI, within 60 days of the expiration of the Initial Period, provides written notice of its intention
not to extend the Agreement.
Under
the Agreement, the Company will pay Consultant a royalty equal to 3% of the “Net Sales”, as defined in the Agreement,
of the Products but in no event will the royalty be less than $3.50 per SANDD mini™ unit sold and $13.50 per SANDD
Pro™ unit sold.
Pursuant
to the Agreement, the Company agreed to issue to the Consultant 68,700,000 shares of the Company’s common stock, which was
equal to approximately 5% of the Company’s outstanding common stock on a fully diluted basis as of the Effective Date. Further,
the Company has agreed to issue to the Consultant, the later of one year after the Effective Date or upon Consultant’s request,
an additional 68,700,000 shares of the Company’s common stock, unless Consultant has provided the Company with written notice
of its intention not to extend the Initial Period. As of the date of this Quarterly Report on Form 10-Q, the Company has not yet
received notice from the Consultant requesting issuance any of the shares pursuant to the Agreement.
Preferred
Stock
Effective November
12, 2015, 2,750 shares of our authorized Preferred Stock have been designated as Series A 5% Convertible Preferred Stock, originally
with a $1,000 stated value (which we refer to as “Series A Preferred Stock”). The holders of the Series A Preferred
Stock are entitled to receive cumulative dividends at a rate of 5% per annum, payable quarterly in cash, or at the Company’s
option, such dividends shall be accreted to, and increase, the stated value of the issued Series A Preferred Stock (which we refer
to as “PIK”). Holders of the Series A Preferred Stock are entitled to votes on all matters submitted to stockholders
at a rate of ten votes for each share of common stock into which the Series A Preferred Stock may be converted. After six months
from issuance, each share of Series A Preferred Stock is convertible, at the option of the holder, into the number of shares of
common stock equal to the quotient of the stated value, as adjusted for PIK dividends, by $0.015, as adjusted for stock splits
and dividends.
Effective February
16, 2016, 1,250 shares of our authorized Preferred Stock have been designated as Series B 5% Convertible Preferred Stock, originally
with a $1,000 stated value (which we refer to as “Series B Preferred Stock”). The holders of the Series B Preferred
Stock are entitled to receive cumulative dividends at a rate of 5% per annum, payable quarterly in cash, or at the Company’s
option, such dividends shall be accreted to, and increase, the stated value of the issued Series B Preferred Stock (which we refer
to as “PIK”). Holders of the Series B Preferred Stock are entitled to votes on all matters submitted to stockholders
at a rate of ten votes for each share of common stock into which the Series B Preferred Stock may be converted. After six months
from issuance, each share of Series B Preferred Stock is convertible, at the option of the holder, into the number of shares of
common stock equal to the quotient of the stated value, as adjusted for PIK dividends, by $0.01, as adjusted for stock splits and
dividends.
On August 4, 2020, Mr. Klug and Beechwood converted the 1,000 shares of Series B Preferred Stock and the
1,473 shares of Series A Preferred Stock into 124,849,365 and 122,730,903 shares, respectively, of the Company’s Common Stock.
On September 28, 2020, the Escrow Account in the Schreiber Litigation was dissolved. As a result, on October 6, 2020, the Company’s
Board of Directors, Mr. Klug and Beechwood, agreed to exchange 124,849,365 and 122,730,903 of the Company’s Common Stock
into 1,000 shares of Series B Preferred Stock and the 1,473 shares of Series A Preferred Stock, respectively. On November 4, 2020,
the Company agreed to purchase from Beechwood 122,730,903 shares of the Company’s common stock in exchange for 1,473 shares
of Series A Preferred Stock, stated value of $1,133.81 per share. Subsequent to December 31, 2020, the
Company completed the re-purchase from Beechwood 122,730,903 shares of the Company’s common stock in exchange for 1,473 shares
of the Company’s 5% Series A Preferred Stock.
During the six months periods ended December 31, 2020 and 2019, we recognized $52,687 and $114,591, respectively,
of related preferred stock dividends.
Warrants
On June 20, 2019, RedHawk entered into a Stock Exchange Agreement (“Exchange Agreement”) with
Beechwood. G. Darcy Klug, the Company’s Chairman of the Board and Chief Financial Officer, is the sole member and manager
of Beechwood. Under the Exchange Agreement, the Company purchased from Beechwood 113,700,000 shares of the Company’s common
stock, in exchange for 1,277 shares of the Company’s 5% Series A Preferred Stock and a Stock Purchase Warrant (“Warrant”)
to acquire 113,508,450 shares of common stock at an exercise price of $0.005 per share. The Warrant expires on June 20, 2029.
In
conjunction with the 2019 Fixed Rate Convertible Notes, the holders of the 2019 Fixed Rate Convertible Notes were issued 26,050,000
warrants to purchase the Company’s common stock at a price of $0.01 per share. The warrants expire ten years from the date
of issuance.
In total, as of December 31, 2020, the Company had 139,558,450 warrants outstanding with a weighted average
exercise price of $0.006 and a weighted average remaining life of 8.54 years.
In
the year ended June 30, 2020, we recognized several asset impairments totaling $214,675. This impairment was comprised of the
following:
|
●
|
The resort property
owned by the real estate limited partnership, in which we have an ownership interest in, is located in Hawaii. As a result
of the COVID-19 pandemic, the tourism industry in Hawaii has been adversely affect and the resort was temporarily closed for
an extended period.
|
|
|
|
|
●
|
We have certain
inventory located in the United Kingdom. As a result of the COVID-19 pandemic, the United Kingdom has been in partial or complete
lockdown for an extended period and we have been unable to market the inventory. The inventory is still salable but additional
costs and/or price reductions may be necessary.
|
|
|
|
|
●
|
A third party from which we had agreed to acquire the exclusive manufacturing and distribution rights
to certain needle incineration intellectual properties breached that agreement.
|
SFAS
No. 131, “Disclosures About Segments of an Enterprise and Related Information,” requires that companies disclose
segment data based on how management makes decisions about allocating resources to segments and measuring their performance. Currently,
we conduct our businesses in three operating segments – Land & Hospitality, Medical Device and Pharmaceutical, and Other
Services. Our Land & Hospital and Other Services business units operate in the United States. Our Medical Device and Pharmaceutical
business unit currently operates primarily in the United Kingdom. All remaining assets, primarily our corporate offices and investment
portfolio, are located in the United States. The segment classified as Corporate includes corporate operating activities that
support the executive offices, capital structure and costs of being a public registrant. These costs are not allocated to the
operating segments when determining profit or loss. The following table reflects our segments as of December 31, 2020 and 2019
and for the six and three month periods then ended.
|
|
|
|
|
MEDICAL
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
LAND
&
|
|
|
DEVICE
&
|
|
|
OTHER
|
|
|
|
|
|
|
|
December
31, 2020
|
|
HOSPITALITY
|
|
|
PHARMA
|
|
|
SERVICES
|
|
|
CORPORATE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
37,508
|
|
|
$
|
623,452
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
660,690
|
|
Operating income (loss)
|
|
$
|
(5,768
|
)
|
|
$
|
73,538
|
|
|
$
|
(113
|
)
|
|
$
|
(256,950
|
)
|
|
$
|
(189,293
|
)
|
Interest expense
|
|
$
|
14,730
|
|
|
$
|
67,685
|
|
|
$
|
—
|
|
|
$
|
394,223
|
|
|
$
|
476,638
|
|
Depreciation and amortization
|
|
$
|
15,667
|
|
|
$
|
15,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,067
|
|
Identifiable assets
|
|
$
|
751,598
|
|
|
$
|
921,938
|
|
|
$
|
77,831
|
|
|
$
|
207,535
|
|
|
$
|
1,958,902
|
|
|
|
|
|
|
MEDICAL
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
LAND
&
|
|
|
DEVICE
&
|
|
|
OTHER
|
|
|
|
|
|
|
|
December
31, 2019
|
|
HOSPITALITY
|
|
|
PHARMA
|
|
|
SERVICES
|
|
|
CORPORATE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
26,603
|
|
|
$
|
42,712
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
69,315
|
|
Operating income (loss)
|
|
$
|
(15,976
|
)
|
|
$
|
(197,610
|
)
|
|
$
|
(75
|
)
|
|
$
|
(390,204
|
)
|
|
$
|
(603,865
|
)
|
Interest expense
|
|
$
|
26,569
|
|
|
$
|
317
|
|
|
$
|
—
|
|
|
$
|
184,629
|
|
|
$
|
211,515
|
|
Depreciation and amortization
|
|
$
|
15,667
|
|
|
$
|
26,250
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41,917
|
|
Identifiable assets
|
|
$
|
919,515
|
|
|
$
|
201,189
|
|
|
$
|
77,849
|
|
|
$
|
1,467,089
|
|
|
$
|
2,665,642
|
|
|
|
|
|
|
MEDICAL
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
LAND
&
|
|
|
DEVICE
&
|
|
|
OTHER
|
|
|
|
|
|
|
|
December
31, 2020
|
|
HOSPITALITY
|
|
|
PHARMA
|
|
|
SERVICES
|
|
|
CORPORATE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
20,445
|
|
|
$
|
193,176
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
213,621
|
|
Operating income (loss)
|
|
$
|
(5,890
|
)
|
|
$
|
28,806
|
|
|
$
|
(56
|
)
|
|
$
|
(105,008
|
)
|
|
$
|
(82,148
|
)
|
Interest expense
|
|
$
|
3,413
|
|
|
$
|
21,091
|
|
|
$
|
—
|
|
|
$
|
185,299
|
|
|
$
|
209,803
|
|
Depreciation and amortization
|
|
$
|
7,834
|
|
|
$
|
7,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,534
|
|
|
|
|
|
|
MEDICAL
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
LAND
&
|
|
|
DEVICE
&
|
|
|
OTHER
|
|
|
|
|
|
|
|
December
31, 2019
|
|
HOSPITALITY
|
|
|
PHARMA
|
|
|
SERVICES
|
|
|
CORPORATE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
16,853
|
|
|
$
|
1,904
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,757
|
|
Operating income (loss)
|
|
$
|
(10,501
|
|
|
$
|
(130,313
|
)
|
|
$
|
(75
|
)
|
|
$
|
(268,291
|
)
|
|
$
|
(409,180
|
)
|
Interest expense
|
|
$
|
12,891
|
|
|
$
|
212
|
|
|
$
|
—
|
|
|
$
|
110,540
|
|
|
$
|
123,643
|
|
Depreciation and amortization
|
|
$
|
7,833
|
|
|
$
|
13,126
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,959
|
|
The Company evaluated events occurring after December 31, 2020, and through the date the financial statements
were issued, February 22, 2021 and concluded the events or transactions below would require recognition or disclosure in these
financial statements:
|
●
|
On February 16, 2010, the Company re-purchased from Beechwood 122,730,903 shares of the Company’s common stock in exchange for 1,473 shares of the Company’s 5% Series A Preferred Stock.
|
|
|
|
|
●
|
Subsequent to December 31, 2020, 2019 Variable Rate Convertible Notes in the principal amount of $101,500
plus accrued interest were converted into 53,879,439 shares of common stock.
|
|
|
|