Item 1.01. Entry into Material Definitive Agreement.
Arbitration Award
RedHawk Holdings Corp. ("RedHawk" or the "Company"), a diversified holding
company engaged primarily in the sale and distribution of medical devices and
certain types of personal protection equipment, announced today that RedHawk
Medical Products & Services, LLC ("RedHawk Medical"), a wholly-owned subsidiary
of the Company, was awarded, through binding arbitration, $44,950,000, plus
attorney fees, arbitration costs, and judicial interest.
On June 22, 2021, RedHawk Medical entered into a $950,000,000 contract (the
"Contract") with N-95 Shield, LLC, an Arizona-based medical supply distribution
company (the "Buyer") and member of Nevada-based Coastal Group Partners, LLC,
for RedHawk Medical to sell to the Buyer certain medical products offered by
RedHawk Medical. The Buyer failed to perform under the terms of the Contract and
RedHawk Medical's attempts to amicably resolve the dispute with the Buyer were
unsuccessful.
On January 6, 2022, RedHawk Medical issued to the Buyer a Notice of Default
("Default") wherein RedHawk notified the Buyer that RedHawk Medical (i) believed
the Buyer was in breach of the Contract; and (ii) if the Buyer failed to cure
the Default within the timeline set forth in the Contract, RedHawk Medical would
pursue its available remedies pursuant to the terms of the Contract.
The Buyer failed to cure the Default.
Accordingly, pursuant to the terms of the Contract, RedHawk Medical initiated
binding arbitration proceedings on May 21, 2022 through Judicial Arbitration and
Mediation Services, Inc. ("JAMS").
On February 22, 2023, a binding arbitration hearing was held in Lafayette,
Louisiana.
On May 1, 2023, RedHawk Medical was awarded a monetary judgment ("Judgment") in
the amount of $44,950,000, plus, attorney fees and arbitration costs in the
amount of approximately $69,000, and judicial interest from June 22, 2021 until
paid. As of May 1, 2023, accrued judicial interest totaled approximately
$3,400,000.
The Judgment is not subject to appeal.
The Company said it will recognize the net income from the Judgment in its
financial statements when the proceeds from the Judgment are collected by
RedHawk Medical.
Med Tech Farms LLC
On December 12, 2022, RedHawk Land & Hospitality, LLC ("RedHawk Land"), a wholly
owned subsidiary of the Company, acquired 100% of the limited liability company
interest in a Louisiana-based start-up disaster response company and commercial
construction subcontractor. The acquisition was effective October 1, 2022 and
included the purchase of certain assets of Med Tech Farms LLC ("Med Tech"), an
Oklahoma-based start-up grower and supplier of cannabis products.
The purchase price was approximately $840,000 and was paid through a combination
of promissory notes, available net operating tax loss carryforwards and the
distribution of certain disaster response company assets to the former owner.
The Med Tech assets acquired include, but are not limited to, the equipment
necessary to grow, manufacture, transport and sell cannabis products. The assets
will be relocated to the Company's new warehouse and storage facilities in
Broussard, Louisiana (see Item 8.01 - Other Events).
Tower Hotels Fund 2014
On April 30, 2023, RedHawk Land announced it will acquire 140,000 Class A Units
of fully paid, non-assessable units of limited liability company interests in
Towers Hotels Fund 2014, LLC (the "Units") from Beechwood Properties, LLC
("Beechwood"), an entity owned and controlled by G. Darcy Klug, the Chief
Executive Officer of the Company, for an amount ("Purchase Price") to be
determined by an independent third-party valuation mutually acceptable to both
RedHawk Land and Beechwood. The Purchase Price will be paid by with the issuance
of a convertible promissory note to Beechwood in the amount of the Purchase
Price.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
In January 2023, the Company re-negotiated the repayment terms ("Revised
Repayment Terms") of the 2020 Fixed Rate Convertible Notes ("Notes") with the
holders of the Notes. As of December 31, 2022, the balance owed under the Notes
was approximately $571,068, including accrued interest.
Under the Revised Repayment Terms, the Company agreed to pay the holders of the
Notes, in monthly installments, a total of approximately $553,900, including
interest, over a period of 4 years with a single balloon payment due at
maturity:
Year 1 $ 85,000
Year 2 $ 77,500
Year 3 $ 77,500
Year 4 $ 30,000
At Maturity $283,902
Additionally, the holders of the Notes agreed to waive their rights to convert
the Notes into the Company's common stock unless otherwise mutually agreed to by
both the Company and the holders of the Notes.
Item 4.01. Changes in Registrant's Certifying Accountant.
On May 9, 2023, the Audit Committee approved the engagement of California-based
GreenGrowth CPA's ("GreenGrowth"), to serve as the Company's independent
registered public accounting firm to audit the Company's financial statements
for its fiscal years ended June 30, 2021, June 30, 2022 and the nine months
ended March 31, 2023.
The Company's financial statements for the year ended June 30, 2020, were
audited by Postlethwaite& Netterville, APAC ("P&N"). P&N resigned as the
Company's auditors on December 31, 2020. P&N's resignation was previously
reported in a Form 8-K filed on January 7, 2021.
During the two most recent fiscal years, and in the subsequent interim periods
through March 31, 2023, the Company did not consult with GreenGrowth regarding
(i) the application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's consolidated financial statements, and neither a written report
nor oral advice was provided to the Company that GreenGrowth concluded was an
important factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue; or (ii) any matter that was
either the subject of a disagreement, as contemplated by Item 304(a)(1)(iv) of
Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a
reportable event, as described in Item 304(a)(1)(v) of Regulation S-K.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Advisory Director
On February 27, 2023, the Board of Directors (the "Board") of RedHawk Holdings
Corp. (the "Company") approved the appointment of Christopher S. Swiecicki as an
Advisory Director to the Board effective February 27, 2023. Mr. Swiecicki is 61
years of age and has over thirty (30) years of C-suite executive and legal
experience including more than ten (10) years of executive banking management
and more than ten (10) years of senior financial management experience.
Mr. Swiecicki is currently the Managing Member of Swiecicki & Muskett, LLC
("Swiecicki & Muskett"), a Missouri-based legal practice which he founded in
2018. Swiecicki & Muskett focuses primarily on corporate management and legal
representation, mergers and acquisitions, taxation, contract negotiations,
business litigation, jury trials, executive fiduciary duties and
responsibilities, and preparation of both Federal and State appeals.
From 2012 to 2018, Mr. Swiecicki was the Chief Financial Officer and Chief Legal
Officer of Fall Protection Systems, Inc., a Missouri-based manufacturer and
supplier of industrial safety equipment. Between 2008 and 2012, Mr. Swiecicki
was the Corporate Tax Counsel for Ameren Corporation, a Missouri-based utility
company, which employs more than 9,000 personnel and is traded on the NYSE.
Mr. Swiecicki was Senior Vice President of Regions Bank in St. Louis, Missouri
between 1997 to 2008, in private law practice between 1992 to 1997 and was a tax
associate with Deloitte between 1990 and 1992.
Mr. Swiecicki graduated in 1984 from Southern Illinois University with a
Bachelor of Science degree in Business Administration. In 1990, Mr. Swiecicki
received his Juris Doctorate degree from Washington University School of Law. In
2005, Mr. Swiecicki received his Master of Taxation (LLM) degree from Washington
University School of Law.
There are no arrangements or understandings pursuant to which Mr. Swiecicki was
appointed as an advisor to the Board, and there are no transactions reportable
pursuant to Item 404(a) of Regulation S-K under the Securities Act of 1933 in
connection with Mr. Swiecicki's appointment.
Departure of Director
On January 19, 2023, due to health reasons, Mr. Charles F. D'Agostino resigned
his position as a member of the Board, effective February 20, 2023 after
completing his three (3) year term as a member of the Board. Mr. D'Agostino's
resignation was not the result of any disagreement with the Company or the
Board.
Item 8.01 Other Events.
On February 27, 2023, RedHawk Holdings Corp. ("RedHawk" or the "Company"), a
diversified holding company engaged primarily in the sale and distribution of
medical devices, the sale and distribution of certain types of personal
protection equipment, and investments in, and restoration of, certain real
estate properties, announced the relocation of its corporate offices to 204
Burgess Drive, Broussard, Louisiana 70518 (the "New Headquarters") beginning on
April 1, 2023.
The Company's telephone and facsimile numbers will remain unchanged.
The New Headquarters will facilitate the consolidation of the Company's
corporate offices with its medical and security system warehousing, inventory
storage, assembly and testing. The Company's corporate offices are currently
located in Lafayette, Louisiana and its medical and security system warehousing,
inventory storage, assembly and testing offices, are currently located at the
Louisiana State University Business and Innovation Center, in Baton Rouge,
Louisiana.
RedHawk Land & Hospitality, LLC ("RedHawk Land"), a wholly owned subsidiary of
the Company, has entered into a twenty-four (24) month, triple net lease
("Lease") effective March 1, 2023. Monthly rentals for the New Headquarters are
$2,400 per month in the first year of the Lease and $2,500 per month in the
second year of the Lease. RedHawk Land has the option to renew the Lease for two
(2), twelve (12) month lease extensions, each at a rate of $2,600 per month.
The former lease for the Company's corporate offices expired on March 31, 2023.
© Edgar Online, source Glimpses