RedHawk Holdings Corp (fka SNDD)

[Divest]

You speak about this exchange agreement as if it was a bad thing that hurts shareholders. Let's simplify what is saying so that we all understand what happened. 

1. How many shares did Klug remove from the OS by converting his common shares into preferred shares?  From the 2019 10K:  

Under the Exchange Agreement, the Company purchased from Beechwood113,700,000 shares of the Company’s common stock, $0.001 par value per share (“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 (collectively, the “Transactions”). The Warrant expires June 20, 2029.

If this was the only action it would have reduced the number of shares in the OS by 113.5 million shares however that same day the company allowed noteholders to dilute shares. Which brings us to our second question: 

2. How many shares did the company dilute that the day? 
   

Concurrent with the execution of the Exchange Agreement, holders of $574,250 aggregate principal amount of the Company’s 5% convertible promissory notes (“Notes”), including accrued interest, converted their Notes into 114,849,929 shares of Common Stock. The extinguishment of the notes and the related accrued interest for the shares of common stock resulted in a gain on extinguishment of $375,000 based on the closing price of the common stock as of the exchange date.

3. What was the net change in the OS? 

Simple math will help us here: 

114,849,929 shares sold minus 113,508,405 bought equals a 1,341,524 net increase in OS. All the above was reported in an 8k, Form 4 and the 2019 10 K. 

So just to recap what actually occurred, without the exchange agreement 114,849,929 would have been added to the OS, with the exchange agreement only 1,341,524 shares were added to the OS. Looks like Klug was looking out for shareholders interests to unbiased shareholders.