"RedHawk also reiterated today that its previously announced preliminary results for the three month period ended June 30, 2020 are projected to be at record levels, with revenues for such period estimated to increase more than 500% over the preceding three month period ended March 31, 2020, as previously announced. Also as previously announced, normalized quarterly cash flow from operations is also preliminarily estimated to be at record levels for this same three month period. Revenues for the three month period ended June 30, 2020 were from a combination of sales from the Company's line of PPE and its SANDD™ needle incineration devices with preliminary gross profit margins averaging approximating 50%."
As previously disclosed, RedHawk Holdings Corp. (the “Company”) and Beechwood Properties, LLC (“Beechwood”) on March 22, 2019, entered into a Settlement Agreement and General Release (the “Settlement Agreement”) to resolve litigation, as previously disclosed, brought by the Company and Beechwood against Daniel J. Schreiber and the Daniel J. Schreiber Living Trust – Dtd 2/08/95 (collectively, the “Defendants”) in the United States District Court for the Eastern District of Louisiana (the “Louisiana Court”). Pursuant to the Settlement Agreement, the Company agreed to, among other things, issue two Promissory Notes to the Defendants, each in the principal amount of $200,000.00. The first Promissory Note was originally due and payable on or before September 6, 2020 (“Note 1”). The second Promissory Note was originally due and payable on or before September 5, 2021 (“Note 2”).
The Defendants filed on October 11, 2019, a Motion to Enforce Settlement Agreement (the “Motion”) with the Louisiana Court alleging that the Company failed to comply with certain obligations under the Settlement Agreement. The Motion sought to, among other things, accelerate the payment of amounts owed to the Defendants under the Settlement Agreement and assert a claim for interest and attorneys’ fees.
On July 16, 2020, the Louisiana Court granted the Defendant’s Motion ordering the Company to pay to the Defendants $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) 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, which to date remains greater than the amount of actual reasonable fees); and (v) interest from the date of the Louisiana Court’s judgment and costs. The Company has appealed the Louisiana Court’s ruling to the United States 5th Circuit Court of Appeals (the “Court of Appeals”) and intends to vigorously defend against the ruling.
Payment of the principal amount of Note 1 was tendered by the Company to the Defendants 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 the Defendants on August 24, 2020. To date, $119,495.78 of the Judgment remains outstanding (“Remaining Unsatisfied Judgment”).
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 Company’s Motion to Approve and the posting of a supersedeas bond by the Company in the whole amount of $143,491.26 representing (i) the Remaining Unsatisfied Judgment; plus (ii) Federal Post-Judgment Interest of $80.27; plus, (iii) 20% of the combined amount ($23,915.21).
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