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Hey, Butters, after the Tinker Bells are finished crapping in their pants today, ask them if they think this press release is false also even if the release was approved by one of the top SEC legal firms in the country
You can't read a financial statement, for sure
Simply look at bottom of the Statement of Cash Flow where it clearly states for the 3 months ended September 30, 2020 that $450,000 of debt was converted to equity
It is a Convertible Note. Convertible Notes are DEBT - Accounting 101
When the notes are converted, the debt is paid off - the debt is paid off with stock and not cash. Unless you are Schreiber's who wants to argue Notes are equity
The Company gets to keep its cash for other purposes - i.e. Launch of the SANDD Pro
As an "informed" investor, you really should learn how to read a financial statement
A Control Person is someone that the SEC/FINRA feels can influence the operations of a Company. Some cases it is 10% beneficial ownership, some cases it is 5% beneficial ownership.
In this case, FINRA had "history" with Schreiber and the bribery scheme and they wanted him gone.
FINRA told RedHawk they would not permit and corporate changes (i.e. name change, symbol change, etc) until Schreiber owned less than 5% of the Company's outstanding shares.
Schreiber had 52+ mil shares and Klug wanted them back
Uber, the terms of the Settlement Agreement are set forth in Note 8 to RedHawk Form 10K for the year ended June 30, 2020. The Settlement Agreement itself is Exhibit 10.4 to that same filing.
I believe the MJ due diligence is still ongoing. I understand they just finished closing the MJ year end books and records a couple of weeks back and needed to talk with the new auditors about the due diligence numbers. They've been busy working on something. I hear they've brought on some new sales people
Surprised you didn't learn about Schreiber on one of your many trips to Lafayette, Uber.
Schreiber was Klug's original partner in the transaction. They were supposed to be 50/50 partners on capital contributions except slime ball Butter's (excuse me, Schreiber) never put up a dime or contributed a single piece of his ownership in their joint real estate partnership. Also, Butter's (excuse me, Schreiber) failed to mention or disclose in his early board appointment (pre Klug), that he was previously indicted by the SEC in a $10 million bribery scheme. It wasn't discovered until Klug's attorneys (in 2015) conducted due diligence on Schreiber in connection with required 13D filings by Schreiber and Klug - Klug filed his correctly, Schreiber never filed. By that time, Schreiber had already received approximately 56 mil shares of stock. So, RedHawk and Klug sued "Doucebag". In Schreiber's deposition he said "I don't know or I don't remember over 150 time. He even perjured himself in his morning depo by saying he didn't know the name of his "boss" - turns out that RedHawk's attorneys already knew that Butter's (excuse me, Schreiber's) boss was his co-conspirator in the aforementioned bribery scheme.
Any way, a Settlement Agreement was reach in March 2019 for Schreiber to return his then remaining shares (about 52 mil plus) and he received $250,000 cash at closing plus two (2) $200k promissory notes (both have now been paid in full.
In the settlement agreement, RedHawk was to pay down the notes with 50% of the proceeds received from any sale of stock by RedHawk. Schreiber contended in Sept 2019, the issuance of RedHawk of convertible notes by itself is a sale of stock - even though no stock was issued.
The lower court first ruled in Schreiber's favor. RedHawk paid off the notes, posted a cash bond and appealed to the 5th Circuit. So, the remaining is over legal fees and penalties (about $125k).
The 5th Circuit lowered the hammer on the lower court judge - said the lower court judge abused his judicial authority in his first ruling , and remanded the case back to the lower court. There we sit. If the lower court again rules for Schreiber, I feel confident Klug is going right back to the 5th Circuit - a first year accounting student knows the issuance of debt is not the same as the issuance of shares of stock
Great day for golf here....
Not sure of the whole story but the word at the Club is that Klug is going after a lending group that he caught trying to rip off SNDD shareholders.....
Don't listen to these lies and scare tactics about massive "dilution coming"
I have already posted about this - all you need to do is call the Company to verify
The Company has $50,000 outstanding on certain purchase order financing closed over the summer to acquire certain PPE products and the Company is evaluating if it simply wants to pay off this balance
It also has about $106,000 due ($53,000 due the second week of February and $53,000 due the end of February) and the Company is evaluating the possibility of paying off these notes including prepayment penalties
Well, it sure didn't take long to simply glance at the balance sheet, read the footnotes and shoot holes in slanted mis-information by some.
As of Sept 30, 2020, there are $3.9 mil in liabilities but most (about $2.0 mil will be converted into equity at some future date at prices higher (in most cases 3x higher) than current trade prices. So, no worries there except the Company needs to make the conversion happen to reduce interest costs
Approximately $400k+ is for real estate debt in the process of being re-financed. I already posted that this business unit is cash flow positive so no worries there about real estate debt service. This debt will take care of itself from ongoing rental income and once the aforementioned debt is converted, the properties can be sold to generate cash
Approximately $120k of debt is for the amount subject to the Schreiber litigation. Klug has already posted a cash bond bond for that amount plus 20%. So no worries there. In fact, if the courts rule in RedHawk's favor (and they should), the liability goes away, RedHawk gets $143k+ back from the court and RedHawk may have a claim against Schreiber and his wife for legal fees and costs - I really want to be at that judgment debtor examination
The Company has about $200k outstanding lines of credit. The proceeds from these LOC's were used to prepay the 2nd Schreiber note and should easily be repaid as LTM (last twelve month) revenues are expected to continue to increase
The statements show about $500k in trade payables. Probably most relate to the launch of the SANDD Pro, normal legal and accounting fees, etc. There are about $700k in accrued liabilities. This is generally very conservative bs accounting estimates related to POSSIBLE future liabilities such as estimated future litigation costs R&D costs, etc. Pretty normal - once again, just fear mongering by some.
So, feel free to call in the regulators, just remember, when you do, YOU might be the one that gets what is being asked for.
No golf for the next few days so I will study some balance sheet numbers and again shoot holes in the lies and misinformation presented herein by a select few
First, a stock price only matters two days - the day you buy and the day you sell. All price fluctuations between those two days are just a needless waste of time and worry. I have heard Klug say several times, this project is a marathon, not a sprint. RedHawk is bringing cutting edge technology to a market that is currently shut down and not accepting medical rep visitors and demonstrations.
The stock price is not down 90%, that's a blatant lie. In my case it is up over 200%. This stock is an investment for my portfolio and not a simple buy and flip for a couple of new golf balls. So, as Warren Buffet once said, if you believe in your investment strategy and you are in a stock for an investment and you are upside down, then it should really be a good buy now.
So, let me go digest the balance sheet once again
While debt is reduced another $200,000 or so
RAH, RAH, RAH......the Wicked Witch of the West is Dead....RAH, RAH, RAH
I really doubt that Klug is losing any sleep worrying about who is and who is not pissed off about stock issuance when it comes from know SHORTS or from individuals that lie about the amount of SANDD products purchased. I am confident he is not worried about scar ladened SEC violators
Klug is worried about building a Company and the LONG-TERM enterprise value of that Company
Have you calculated the impact of the debt removed from the books - ANSWER, you haven't
Have you calculated the impact of the 122 mil shares that Klug has not yet exchanged back for preferred stock - ANSWER, you haven't
Do you even know what the definition of or the calculation for the ENTERPRISE VALUE of a Company - Answer, probably not and if you do and don't discuss it, then you are spreading misleading information
The EV calculation for a Company is the market capitalization (# of outstanding shares times the stock price) PLUS preferred stock PLUS the amount of outstanding debt LESS cash and cash equivalents.
So, if the stock was issued to retire debt, the EV of the company DOES NOT CHANGE
What does change though is the amount of high interest the company pays to service debt thus increasing profitability. If you spend a bit of time reviewing the Company's financial statements instead of spouting misleading information, you will see the Company needs to reduce its debt and interest burned in order to reach profitablity. Increased profitability, that is how you increase EV and PPS
Back in the saddle after a nice golf trip to San Antonio and Texas Hill Country. Weather was great for golf.
Not sure about being bruised but do know that bruises heal with time.
Unlike SEC indictments and corrupt business practices that follow people forever.
Perfect day for golf today. Cool, crisp, low humidity not a cloud in the sky. It was a nice day to walk 18 holes
I thought there were two (2) Hawaii properties that were supposed to come into RedHawk so yesterday I asked Klug about the accuracy of my memory
He confirmed that originally a property, located on the island of Kauai was planned to be added to RedHawk Land & Hospitality. The General Partner on this project is by Oaktree Capital, a huge real estate investment fund out of California. They manage these type of investments through their subsidiary - Timber Resorts
I know of them - very well respected
Well it seems that project is subject to a lawsuit between one of Schreiber's cronies (Ed Bushor) and Oaktree Capital. I found the case online (Los Angeles Superior Court, civil Case #bc604859). In fact, in the Oaktree complaint, they claim Schreiber (not a defendant - an un-indicted co-conspirator) tried to squeeze millions of $$ out of Qaktree. Instead Oaktree decided to go to war
This is the same investment wherein Schreiber admitted in his RedHawk deposition that he had told the project's limited partner investors (including Klug) he had a $250,000 investment in the project. As it turns out, he had $0 invested
Klug said this matter is scheduled to go to trial Feb 1, 2021 and it is not looking good for the Schreiber team - Oaktree is going for the jugular.
The limited partners (including Klug) are sitting back and awaiting the outcome of the lawsuit and then will decide the next course of action. Until then, this investment will stay outside of RedHawk.
Well, I don't know anything about Schreiber messing up his life.
What I have been told is that Schreiber tried to "not remember" anything in the morning session of his deposition - his false Form 4s, his work address, the name of his employer, the name of his boss who signed his paychecks, etc.
At the start of the afternoon session Andre Toce had him admit that he had committed perjury in the morning session by failing to acknowledge that he in fact knew the name of his boss who signed his paychecks - Mr. Brian Travis, his partner in the $10 mil bribery scheme
Frustrating game
He said they have aligned themselves with two (2) bio-hazard waste disposal companies to introduce to customers but allows customers to choose.
He would not elaborate beyond that as he has confidentiality agreements with both.
Off to the golf course to see if these lessons worked
Will report back later on a couple of other items
The possible cannabis grower acquisition is still in the due diligence phase.
Klug indicated the most challenging parts of a cannabis acquisition is to make sure these businesses have audit-able records going back to the Company's inception. These companies are private, work almost exclusively with cash, and many times do not keep receipts.
This acquisition due diligence has not been an exception to this challenge.
Klug is still excited about the acquisition and said they believe they have just recently compiled audit-able accounting records for this target business but those records still need to be reviewed by and discussed with the new auditors
Klug is good friends with Phil Gunn, the audit partner with P&N (the Company's previous auditor). Klug and Phil had worked together at OMNI Energy when Phil was the E&Y Audit Partner on the OMNI account.
In 2016, Klug and Tom Concannon (prior RedHawk CEO) interviewed MaloneBailey to be the Company's new auditors. Phil learned about RedHawk interviewing for new auditors and reached out to Klug. Phil is the Managing Partner at P&N and wanted to move the firm towards audits of Louisiana-based microcap companies. Being P&N is a Louisiana-based company and Klug was comfortable with Phil's level of SEC expertise, RedHawk awarded the audit to P&N starting in 2016.
In 2020, is was time for Phil to rotate off of the account as required by Sarbaines - 5 year rotation. Klug was unfamiliar the SEC audit expertise, if any, of the other P&N audit partners
Klug and Micah Vidrine (Audit Committee Chairman) decided with this rotation that it might be the right time to re-visit MB.
This is why the change occurred
MB is very highly regarded with microcap audits.
Klug would not comment on MB's international connection with China
Klug laughed when I mentioned to him that someone posted last night that he didn't "have a pot to piss in"
He said this is classic Schreiber rhetoric. He has heard that from Schreiber and his cronies the entire time of the litigation
He said that RedHawk is no longer simply about the pocketbook of Darcy Klug. The major shareholders, including himself, are high net worth players with combined net worth in "high eight figures and maybe more"
He is training new management and as such believes it is important for the Company and its new management to learn how to operate the business on its own and not rely on the pocketbooks of key shareholders unless absolutely necessary. Currently the Company has only about $250,000-$300,000 in trade debt and has invested about $250,000 in R&D and patent attorney cost for the SANDD Pro. He is not concerned about "hav(ing) a pot to piss in"
He is really excited about the newly developed IP for the SANDD Pro patent
Ran into Klug this morning at the coffee shop. Cornered him for about an hour and fired a bunch of questions at him. Many he could not answer as it was non-public information. Some he did share with me and I will share with you.
Taking a golf lesson this a.m. so will post as I have time.
He walked me through the financial statement footnotes on the amount of variable interest notes still outstanding. Currently there is one purchase order financing note with $50,000 outstanding. He will decide over the next week if he will simply payoff the balance.
Then there are two bridge loan notes outstanding in the amount of $53,000 each. These bridge loans were taken out in August to payoff Schreiber. One note is due in early February and the other late February. He hasn't decided if he will simply payoff these amounts.
Sorry to disappoint some but that is the extent of the variable interest notes - truths are never as exciting as untruths
Not a hearing, just a submission of written briefs by RedHawk
Schreiber gets to respond to RedHawk's briefs I believe about 10 days or so later
Thanks to the 5th Circuit's ruling that absolutely blasted the lower court original opinion, this week that RedHawk finally gets it's day in court to respond to Schreiber's misleading claims that RedHawk breached the Settlement Agreement.
I can't prove it right now, but from what I know about him, I doubt that Klug would make that kind of mistake which would allow Schreiber to take a shot at him
Should be an interesting read.
Some of original events that allegedly triggered the breach, actually occurred on Schreiber's watch back in 2016. I really want to see how his legal team answers that one. But I am sure failing to mention that fact to the judge was simply a honest mistake on the part of Schreiber's legal team.
Maybe once the truth is heard by the lower court, this Judge will get it right this time. If not, I am sure Klug is back in front of the 5th Circuit. He's already put up the cash bond once
Perhaps Klug will finally get his judgement against Schreiber for RedHawk's legal fees and expenses.
Maybe we can buy tickets to Schreiber's Judgement Debtor Examination if Klug wins. Knowing the players and the history, I feel confident Klug will once again have Andre Toce handle the examination of Schreiber and his wife
Probably not. Phil Gunn was the P&N audit partner and is a straight shooter.
He and Klug have history - they worked together back at OMNI when Phil was with E&Y.
You can bet Klug and Gunn have been talking about this necessary change for a while - i.e. RedHawk starting to develop an international direction when revenues were being added.
Klug announces choice for new auditors.
MB is highly regarded by Wall Street for providing high quality audit services for micro-caps
Has three (3) offices - one in Houston and two in China
Interesting
No insider information, just facts, I simply call the Company and ask questions. Not smoke and mirrors.
I don't think Klug is going to lose any sleep worrying about what you wondering about his actions. If you want to know what he is doing, simply call him. Even though you are a known commodity with a long history of being a SHORT, I am sure he will even take your call and answer as many of your questions as he can. If he is available, he always takes my calls or at least calls me back.
I do know he has taken $600k - $700k of debt off of the books - I asked
Remember, Uber, never, never, never put anything in writing you don't want read back to you?
Not sure of his reasoning or his plans but Klug still has not not yet returned the 122,700,000 plus shares he received through conversion of the preferred stock (brilliant move by Klug by the way IMHO) when Schreiber was trying to seize control of the company. Assuming nothing has changed with Klug's plan, at some point O/S is going to be reduced by approx 123 million shares. I feel confident he is just waiting for a few more pieces of the puzzle to fall into place.
So, I am not real concerned about a bit of dilution if debt is coming off of the books with these issuances.
Let RedHawk keeps its cash to launch the SANDD Pro
During the first oilfield crash, I had a T-Shirt handing in my office that said "Happiness is Positive Cash Flow" -- Amen, Amen
I would not be surprised to see Klug provide some indication of an immediate direction of the business in the near future. Not sure it will be in a press release but I remember from his days at OMNI, Klug would bury hints in either press releases or in certain regulatory filings - 8Ks.
For example, the word on the street here is that Klug and his Audit Committee Chairman have been interviewing new auditors with INTERNATIONAL reach - something his current auditors cannot provide.
Lafayette is a small town and Louisiana has very few auditors that meet that criteria and RedHawk can afford. So, tough to keep those conversations under wraps
Sorry, Guys, back to the golf course.
First time poster
Long time stockholder
Know the products offered
Know both management and some current/former board members
Happy New Year