Notes
to the Unaudited Consolidated Financial Statements
March
31, 2021
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1.
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NATURE
OF OPERATIONS AND CONTINUANCE OF BUSINESS
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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 nine month period ended March 31, 2021, the Company had revenues of $690,746, a consolidated net
loss of $1,152,577 and cash of $313,303 used in operating activities. As of March 31, 2021, the Company had cash of $72,003, a
working capital deficit of $1,484,065 and an accumulated deficit of $8,962,457. 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.
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2.
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SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
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Basis
of Presentation
The
unaudited interim condensed financial statements of the Company as of March 31, 2021 and for the three and nine month periods
ended March 31, 2021 and 2020 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 Accounting Standards Update
(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 from Contracts with Customers, 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 March 31, 2021 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 March 31, 2021 or June 30, 2020.
Inventory
Inventory
consists 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 since approximately 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 March 31,
2021 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 located
on Jefferson Street in Lafayette, Louisiana, that we are currently leasing to a third party. 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 rental cost of
$3,250 per month. Beginning September 1, 2020, the Chemin Metairie Road property was leased through February 28, 2021, at a rental
rate of $2,000 per month. At the end of the lease term, the Company listed 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 outstanding warrants
to purchase 139,558,450 shares of common stock as of March 31, 2021 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
March 31, 2021, including accrued but unpaid interest, there was one remaining 2016 Fixed Rate Convertible Note outstanding (See
Note 7) which totaled $64,118 and was convertible into 4,274,512 shares of common stock upon conversion.
During the nine month
period ended March 31, 2021, 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 $281,500. The 2019 Variable Rate Convertible Notes are
convertible into shares of common stock at a variable conversion rate.
During the nine month
period ended March 31, 2021, 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 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 nine month period ended March 31, 2021, 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
March 31, 2021, including accrued but unpaid dividends, there were potentially 208,373,494 shares of common stock issuable upon
the conversion of our outstanding Series A Preferred Stock and, including accrued but unpaid dividends, there were potentially
127,987,549 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 March 31, 2021 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 March 31, 2021 (See Note 6).
Reclassification
Certain
amounts in prior periods have been reclassified to conform to the current period presentation.
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3.
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REVENUE
FROM CONTRACTS WITH CUSTOMERS
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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 March 31, 2021 and June 30, 2020, 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
$50,000 and accrued the related cost of goods sold in the year ended June 30, 2020 for the required minimum purchase. The minimum
purchase inventory not yet shipped is segregated and held by the Company.
We
also earn rental income from operating leases which is recognized over the rental period as the tenant occupies the space and
pays the rental amount. Rentals are paid at the beginning of the month covered by the lease.
Disaggregation
of Revenue
For
the three and nine month periods ended March 31, 2021 and 2020, a summary of our revenue on a disaggregated basis is as follows:
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Three
Months Ended
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Nine
Months Ended
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March
31,
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March
31,
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2021
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2020
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2021
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2020
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Sales
of medical devices
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$
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15,769
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$
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133,824
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$
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639,222
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$
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176,537
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Rental
revenue from operating lease payments
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14,017
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14,850
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51,524
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41,452
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$
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29,786
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$
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148,674
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$
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690,746
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$
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217,989
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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 nine month periods ended March 31, 2021 and 2020, our revenues were reduced by $177,095 and $95,508 respectively, for
such discounts. For the three month periods ended March 31, 2021 and 2020, our revenues were reduced by $2,951 and $52,859, respectively,
for such discounts.
Shipping and handling costs included in revenue were approximately $7,600 and $1,305 for the nine month
periods ended March 31, 2021 and 2020, respectively. Shipping and handling costs included in revenue were approximately $185 and
$805 for the three month periods ended March 31, 2021 and 2020, 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 continue to 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 March 31, 2021, we have approximately $367,661 ($247,021 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 U.S. Food and Drug Administration (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. In 2019, 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.
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5.
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INSURANCE
NOTE PAYABLE
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We
finance a portion of our insurance premiums. At March 31, 2021, there was a $39,983 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.
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6.
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RELATED
PARTY TRANSACTIONS
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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, Beechwood Properties, LLC (“Beechwood”) and the Company’s Chief Executive
Officer, 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 matured 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 March 31, 2021,
the outstanding principal balance totaled $0.
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 which are shown as “Due to related parties” on the consolidated balance sheets.
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 shares of common stock in aggregate. During the quarter ended March 31, 2021, $142,000 was converted into 55,916,667
shares of common stock.
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 March 31, 2021 and June
30, 2020, $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 in part by a member of our Board of Directors and Chairman of our Audit Committee. 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 nine month period ended March 31, 2021, the ROU asset and liability has
been reduced by $15,347 for rental payments, which are included in general and administrative expenses in the accompanying combined
statements of operations.
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7.
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LONG-TERM
DEBT, DEBENTURES AND LINES OF CREDIT
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On November 12, 2015, we acquired certain commercial real estate from a related party that is an entity
controlled by Beechwood and our Chief Executive Officer 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 $216,766 as of March 31, 2021.
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 wholly-owned real estate subsidiary, RedHawk
Land & Hospitality, LLC, and the personal guarantee of Beechwood and the Company’s Chief Executive Officer. 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 matured on March 15, 2021, the fifth anniversary of the date of grant 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
March 31, 2021, and June 30, 2020 there was one remaining 2016 Fixed Rate Convertible Note outstanding with principal and accrued
interest of approximately $64,000 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 4,274,512 total shares. During the nine month
periods ended March 31, 2021 and 2020, we recognized approximately $2,340 and $2,000, respectively, of interest on this convertible
note. Subsequent to March 31, 2021, we paid the remaining principal balance outstanding plus accrued interest.
During
the nine month periods ended March 31, 2021 and 2020, we issued $200,000 and $832,000, 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 March 31, 2021, $1,042,000 of 2019 Fixed Rate Convertible Notes
were outstanding. Subsequent to March 31, 2021, we issued an additional $150,000 in principal amount of new 2019 Fixed Rate Convertible
Notes.
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. The warrants expire ten years
from the date of issuance. 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 nine month periods ended March 31, 2021 and 2020, 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 March 31, 2021, a total of $568,235 (approximately
$517,195 net of unamortized deferred loan costs of approximately $26,040 and unamortized beneficial conversion of $25,000) of
2020 Fixed Rate Convertible Notes were outstanding.
During
the nine month period ended March 31, 2021, $50,000, plus accrued interest, of the 2020 Fixed Rate Convertible Notes were converted
into 10,000,000 shares of common stock.
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 nine month period ended March 31, 2021 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 nine month periods ended March 31, 2021 and 2020, we issued $281,500 and $1,078,862, 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 April 2022 and June 2022. During the nine month periods ended March 31, 2021 and 2020, we
received approximately, net of financing costs incurred, $265,000 and $960,000, respectively, in cash from the issuance of these
notes. The remaining outstanding 2019 Variable Rate Convertible Notes as of March 31, 2021 have interest accruing at 12%. These
notes have a variable conversion rate based on the price of the Company’s common stock.
During
the nine month period ended March 31, 2021, $764,000, plus accrued interest, of the 2019 Variable Rate Convertible Notes were
converted into 281,124,078 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 2020 Fixed Rate Convertible Notes and 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 the Company’s Chief Executive Officer.
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 the Company’s Chief Executive
Officer. 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 March 31, 2021 and June 30, 2020, we had $137,727 and $129,389, respectively, outstanding on these
loans.
|
8.
|
COMMITMENTS
AND CONTINGENCIES
|
Schreiber
Litigation
On
January 31, 2017, the Company and 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 filed a counter-claim against the Company and Beechwood and made additional claims
against Mr. G. Darcy Klug (“Mr. Klug”), the Chief Executive Officer and a director of the Company, 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 dollars
($250,000) and (b) issue two Promissory Notes, each in the principal amount of Two Hundred Thousand dollars ($200,000), 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); (ii) the principal amount due on Note
2 ($200,000); (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.
As of March 31, 2021, 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 representing (i) the remaining, unsatisfied amount
of the Judgment; plus (ii) post-Judgment interest of $80; plus, (iii) 20% of the combined amount ($23,915). 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 vigorously 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 agreed to 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. As of March 31, 2021, approximately $800 of royalties have been paid to the Consultant and an additional
$850 of royalties are included in accrued liabilities on the unaudited consolidated balance sheet.
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 of any of the shares pursuant to
the Agreement.
Preferred
Stock
Effective November
12, 2015, 2,750 shares of our authorized Preferred Stock were 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 vote 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 were 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 vote 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 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 for 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 exchange
from 122,730,903 shares of the Company’s common stock held by Beechwood for 1,473 shares of Series A Preferred Stock, with
a stated value of $1,133.81 per share. During the quarter ended March 31, 2021, the Company completed the exchange with Beechwood
of 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 nine month periods ended March 31, 2021 and 2020, we recognized $99,728 and $168,068, 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, Chief Executive Officer and Chief Financial Officer, is the sole member and manager
of Beechwood. Under the Exchange Agreement, the Company exchanged 113,700,000 shares of the Company’s common stock 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 warrants to purchase 26,050,000
shares of the Company’s common stock at a price of $0.01 per share. The warrants expire at various dates between August
2029 and August 2030.
In total, as of March
31, 2021, the Company had warrants to purchase 139,558,450 shares of common stock outstanding with a weighted average exercise
price of $0.006 and a weighted average remaining life of 8.31 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 (Pharma),
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 March 31, 2021 and
2020 and for the nine and three month periods then ended.
|
|
|
|
|
|
MEDICAL
|
|
|
|
|
|
|
|
|
|
|
|
Nine
months ended
|
|
LAND
&
|
|
|
DEVICE
&
|
|
|
OTHER
|
|
|
|
|
|
|
|
|
March
31, 2021
|
|
HOSPITALITY
|
|
|
PHARMA
|
|
|
SERVICES
|
|
|
CORPORATE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$
|
51,524
|
|
|
$
|
639,222
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
690,746
|
|
|
Operating loss
|
|
$
|
(6,296
|
)
|
|
$
|
(2,778
|
)
|
|
$
|
(169
|
)
|
|
$
|
(416,236
|
)
|
|
$
|
(425,479
|
)
|
|
Interest
expense
|
|
$
|
18,289
|
|
|
$
|
69,507
|
|
|
$
|
—
|
|
|
$
|
579,086
|
|
|
$
|
666,882
|
|
|
Depreciation
and amortization
|
|
$
|
23,500
|
|
|
$
|
23,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46,600
|
|
|
Identifiable
assets
|
|
$
|
743,584
|
|
|
$
|
866,260
|
|
|
$
|
77,875
|
|
|
$
|
190,729
|
|
|
$
|
1,878,448
|
|
|
|
|
|
|
|
MEDICAL
|
|
|
|
|
|
|
|
|
|
|
|
Nine
months ended
|
|
LAND
&
|
|
|
DEVICE
&
|
|
|
OTHER
|
|
|
|
|
|
|
|
|
March
31, 2020
|
|
HOSPITALITY
|
|
|
PHARMA
|
|
|
SERVICES
|
|
|
CORPORATE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$
|
41,452
|
|
|
$
|
176,537
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
217,989
|
|
|
Operating loss
|
|
$
|
(15,145
|
)
|
|
$
|
(248,760
|
)
|
|
$
|
(160
|
)
|
|
$
|
(554,246
|
)
|
|
$
|
(818,311
|
)
|
|
Interest
expense
|
|
$
|
35,452
|
|
|
$
|
627
|
|
|
$
|
—
|
|
|
$
|
243,159
|
|
|
$
|
279,238
|
|
|
Depreciation
and amortization
|
|
$
|
23,500
|
|
|
$
|
39,875
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
63,375
|
|
|
Identifiable
assets
|
|
$
|
903,403
|
|
|
$
|
607,928
|
|
|
$
|
77,814
|
|
|
$
|
1,090,906
|
|
|
$
|
2,680,051
|
|
|
|
|
|
|
|
MEDICAL
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
|
|
LAND
&
|
|
|
DEVICE
&
|
|
|
OTHER
|
|
|
|
|
|
|
|
|
March
31, 2021
|
|
HOSPITALITY
|
|
|
PHARMA
|
|
|
SERVICES
|
|
|
CORPORATE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$
|
14,017
|
|
|
$
|
15,769
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,786
|
|
|
Operating loss
|
|
$
|
(528
|
)
|
|
$
|
(76,316
|
)
|
|
$
|
(56
|
)
|
|
$
|
(159,286
|
)
|
|
$
|
(236,186
|
)
|
|
Interest
expense
|
|
$
|
3,559
|
|
|
$
|
1,822
|
|
|
$
|
—
|
|
|
$
|
184,863
|
|
|
$
|
190,244
|
|
|
Depreciation
and amortization
|
|
$
|
7,833
|
|
|
$
|
7,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,533
|
|
23
|
|
|
|
|
|
MEDICAL
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
|
|
LAND
&
|
|
|
DEVICE
&
|
|
|
OTHER
|
|
|
|
|
|
|
|
|
March
31, 2020
|
|
HOSPITALITY
|
|
|
PHARMA
|
|
|
SERVICES
|
|
|
CORPORATE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$
|
14,849
|
|
|
$
|
133,825
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
148,674
|
|
|
Operating
loss
|
|
$
|
831
|
|
|
$
|
(51,151
|
)
|
|
$
|
(85
|
)
|
|
$
|
(164,041
|
)
|
|
$
|
(214,446
|
)
|
|
Interest
expense
|
|
$
|
8,883
|
|
|
$
|
310
|
|
|
$
|
—
|
|
|
$
|
58,530
|
|
|
$
|
67,723
|
|
|
Depreciation
and amortization
|
|
$
|
7,833
|
|
|
$
|
13,625
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,458
|
|
The
Company evaluated events occurring after March 31, 2021, and through the date the financial statements were issued, May 24, 2021
and concluded the events or transactions below would require recognition or disclosure in these financial statements:
|
|
●
|
Subsequent to March 31, 2021, the Company issued an additional $150,000 of 2019 Fixed Rate Convertible
Notes and warrants to purchase 3,750,000 shares of our common stock. The proceeds were used to repay the principal balance outstanding,
including accrued interest, on the remaining 2016 Fixed Rate Convertible Note.
|