Sundance Strategies, Inc. 10-K

Item 8. Financial Statements and Supplementary Data SUNDANCE STRATEGIES, INC. AND SUBSIDIARY INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS Page(s) Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets as of March 31, 2021 and 2020 F-3 Consolidated Statements of Operations for the Years Ended March 31, 2021 and 2020 F-4 Consolidated Statements of Stockholders’ Deficit for the Years Ended March 31, 2021 and 2020 F-5 Consolidated Statements of Cash Flows for the Years Ended March 31, 2021 and 2020 F-6 Notes to the Consolidated Financial Statements F-7 29 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Sundance Strategies, Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Sundance Strategies, Inc. and Subsidiaries (“the Company”) as of March 31, 2021 and 2020, the related consolidated statements of operations , stockholders’ deficit, and cash flows for each of the years in the two-year period ended March 31, 2021 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate audit opinion on the critical audit matters or on the accounts or disclosures to which it relates. F- 1 Evaluation of a Going Concern Description of the Critical Audit Matter As described further in Note 9 to the financial statements, the Company has relied on debt and equity financing to finance operations, as there are not sufficient cash flows from operations, which raises doubt about its ability to continue as a going concern. Management has implemented plans to alleviate the substantial doubt. Management plans to address the concerns, as needed, by (a) utilizing recent financing obtained through notes payable; (b) utilizing current lines of credit. When considering these factors in conjunction with the Company’s operating plan, management believes it has sufficient ability to fund operations and satisfy the Company’s obligations as they come due for at least one year from the financial statement issuance date. We determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and execution uncertainty regarding the Company’s available capital and the risk of bias in management’s judgments and assumptions in their determination. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among others: ● We performed testing procedures such as analytical procedures to identify conditions and events that indicate there could be substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time. ● We reviewed and evaluated management’s plans for dealing with adverse effect of these conditions and events that raised doubt about the Company’s ability to continue as a going concern. ● We tested the reasonableness of management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the financial statement issuance date. ● We assessed whether the Company’s determination that there is substantial doubt about its ability to continue as a going concern was adequately disclosed. Valuation of Equity-based Compensation Description of the Critical Audit Matter During the year ended March 31, 2021, the Company issued common stock and warrants that required management to assess the fair value of these instruments in order to record and disclose the transactions. The Company’s common stock does not trade on an active market. The Company utilized a third-party valuation specialist to assist in the determination of the fair value of the Company’s common stock. The valuation specialist utilized an income method approach to discern the equity value of the Company. The model uses certain assumptions related to scenario weighting, revenue and expense projections, weighted average cost of capital and lack of marketability discount. We identified auditing the valuation of the equity-based compensation as a critical audit matter due to the significant judgements used by the Company in determining value of its common stock. Auditing the determination and valuation of the common stock involved a high degree of auditor judgement, and specialized skills and knowledge were needed. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures included the following, among others: ● We evaluated the reasonableness and appropriateness of the choice of valuation methodology and model used for valuing the common stock. ● We tested the reasonableness of the assumptions used by the third-party specialist and the Company in the valuation model, including scenario weighting, revenue and expense projections and discount rates. ● We tested the accuracy and completeness of data used in developing the assumptions used in the valuation models. ● We developed an independent expectation for comparison to the Company’s estimates, which included developing our own discount rates. ● We evaluated the knowledge, skill and ability of the third-party specialist and the specialist’s independence in relation to the Company. ● We evaluated the accuracy and completeness of the Company’s presentation of these instruments in the financial statements and related disclosures, including evaluating whether such disclosures were in accordance with relevant accounting standards. ● Professionals with specialized skill and knowledge were utilized by the Firm to assist in the evaluation of the valuation models deployed by management. /s/ Sadler, Gibb & Associates, LLC We have served as the Company’s auditor since 2018. Draper, UT June 29, 2021 F- 2 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Balance Sheets March 31, March 31, 2021 2020 ASSETS Current Assets Cash and cash equivalents $ 21,179 $ 28,784 Prepaid expenses and other assets 9,393 2,205 Total Current Assets $ 30,572 $ 30,989 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities Accounts payable $ 893,675 $ 481,716 Accrued expenses 215,443 - Current portion of notes payable, related parties 826,000 - Stock repurchase payable 400,000 400,000 Total Current Liabilities 2,335,118 881,716 Long-Term Liabilities Accrued expenses 495,708 424,954 Notes payable, related parties, net of current portion 1,915,808 2,450,508 Total Long-Term Liabilities 2,411,516 2,875,462 Total Liabilities 4,746,634 3,757,178 Stockholders’ Deficit Preferred stock, authorized 10,000,000 shares, par value $0.001; -0- shares issued and outstanding - - Common stock, authorized 500,000,000 shares, par value $0.001; 40,108,441 and 37,828,441 shares issued and outstanding as of March 31, 2021 and 2020, respectively 40,109 37,829 Additional paid in capital 24,728,638 24,191,224 Accumulated deficit (29,484,809 ) (27,955,242 ) Total Stockholders’ Deficit (4,716,062 ) (3,726,189 ) Total Liabilities and Stockholders’ Deficit $ 30,572 $ 30,989 The accompanying notes are an integral part of these consolidated financial statements. F- 3 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Statements of Operations Year Ended Year Ended March 31, March 31, 2021 2020 Interest Income on Investment in Net Insurance Benefits $ - $ - General and Administrative Expenses 907,978 828,446 Loss from Operations (907,978 ) (828,446 ) Other Income (Expense) Gain on Extinguishment of Debt 26,458 - Interest expense (225,296 ) (174,388 ) Financing expense (422,751 ) (110,000 ) Total Other Income (Expense) (621,589 ) (284,388 ) Loss Before Income Taxes (1,529,567 ) (1,112,834 ) Income Tax Provision (Benefit) - - Net Loss $ (1,529,567 ) $ (1,112,834 ) Basic: Loss per share - basic and diluted $ (0.04 ) $ (0.03 ) Weighted average shares outstanding - basic and diluted 38,904,715 37,828,441 The accompanying notes are an integral part of these consolidated financial statements. F- 4 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Statements of Stockholders’ Deficit For the Years Ended March 31, 2021 and 2020 Additional Total Common Stock Paid In Accumulated Stockholders’ Shares Amount Capital Deficit Deficit Balance, March 31, 2019 37,828,441 $ 37,829 $ 24,191,224 $ (26,842,408 ) $ (2,613,355 ) Net Loss - - - (1,112,834 ) (1,112,834 ) Balance, March 31, 2020 37,828,441 37,829 24,191,224 (27,955,242 ) (3,726,189 ) Common stock issued for consulting services 280,000 280 5,964 - 6,244 Common stock issued for director compensation 1,500,000 1,500 31,950 - 33,450 Common stock issued for cash 500,000 500 499,500 - 500,000 Net Loss - - - (1,529,567 ) (1,529,567 ) Balance, March 31, 2021 40,108,441 $ 40,109 $ 24,728,638 $ (29,484,809 ) $ (4,716,062 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows Year Ended March 31. 2021 2020 Operating Activities Net Loss $ (1,529,567 ) $ (1,112,834 ) Adjustments to reconcile to net cash provided by (used in) operating activities: Share based compensation - common stock 39,694 - Expense paid on behalf of Company by director 7,000 - Gain on Extinguishment of Debt (26,458 ) - Changes in operating assets and liabilities Prepaid expenses and other assets (7,188 ) 2,903 Accounts payable 411,959 174,845 Accrued expenses 286,197 184,791 Net Cash used in Operating Activities (818,363 ) (750,295 ) Financing Activities Proceeds from issuance of notes payable, related party 284,300 778,500 Common Stock Issued for Cash 500,000 - Proceeds from Paycheck Protection Program Loan 26,458 - Net Cash provided by Financing Activities 810,758 778,500 Net Change in Cash and Cash Equivalents (7,605 ) 28,205 Cash and Cash Equivalents at Beginning of Period 28,784 579 Cash and Cash Equivalents at End of Period $ 21,179 $ 28,784 Supplemental disclosure of cash flow information: Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - The accompanying notes are an integral part of these audited consolidated financial statements. F- 6 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 (1) ORGANIZATION AND BASIS OF PRESENTATION Sundance Strategies, Inc. (formerly known as Java Express, Inc.) was organized under the laws of the State of Nevada on December 14, 2001, and engaged in the retail selling of beverage products to the general public until these endeavors ceased in 2006; it had no material business operations from 2006, until its acquisition of ANEW LIFE, INC. (“ANEW LIFE”), a subsidiary of Sundance Strategies, Inc. (“Sundance Strategies”, “the Company”, “we” or “our”). Our historical business model has focused on purchasing or acquiring life insurance policies and residual interests in or financial products tied to life insurance policies, including notes, drafts, acceptances, open accounts receivable and other obligations representing part or all of the sales price of insurance, life settlements and related insurance contracts being traded in the secondary marketplace, often referred to as the “life settlements market.” During the latter part of the fiscal year ended March 31, 2021, the Company began developing an additional business offering, providing professional services to specialty structured finance groups, bond issuers and life settlement aggregators. The Company has now assembled an experienced team from the life settlement marketplace, as well as from other areas such as financial services and public financial markets. As a professional services provider, the Company applies industry best practices to advise on the selection of specific portfolios of life insurance policies that are tailored to meet the needs of its clients. The Company’s clients may include bond issuers, bond investors, or other structured finance product issuers. The Company develops strategies and methodologies which include the acquisition of life insurance portfolios, then uses common structured finance techniques and proprietary analytics to structure bonds for issuances, including principal protected bonds. The Company’s goal is to deliver long-term value and profitability to shareholders by growing the Company’s professional services business and asset base, resulting in the ability to pay dividends to its shareholders. Most recently the Company began working closely with bond placement agents and aggregators to establish various aspects of a proprietary, investment grade bond offering. In this arrangement, the Company participates as the sole originator in the role of structuring and advising on the structure of the proprietary bond instrument. Included in the role of structuring financial assets, the Company uses proprietary analytics to establish the makeup of the rated instrument, including but not limited to, life settlement assets (life insurance policies) and managed cash, and implements a process of selective assembly of the underlying assets and cash management that will meet the policy requirements and analytics. The Company provides current and ongoing resources for all analytics, as well as advisement support for the investment and non-investment grade ratings for the managed asset pool and the managed cash accounts. In its advisory role, the Company is reimbursed for all expenses associated with the structuring and preparation of any bond offering, will receive an advisory payment upon the closing of any bond offering, and then will hold residual rights on the balance of assets once the bond is retired. Subsequent to March 31, 2021, the Company and US Capital Global Securities LLC, an affiliate of US Capital Global, entered into an arrangement wherein the Company is the lead advisor and lead originator of tailored life insurance portfolios to be used in a life insurance-linked bond offering (“bond offering”) of between $250 million to $500 million. US Capital Global Securities LLC is the lead placement agent and is marketing the bond offering on behalf of the issuer on a best efforts basis to qualified investors. The Company has worked with Egan Jones rating agency to obtain a minimum of BBB plus to an A minus rating on the bond offering. This initial rating is based upon a sample portfolio of life settlement assets similar to those expected to be utilized in the bond offering. Once a percentage of the bond offering is in escrow, then the actual life settlement portfolios will be purchased and held until the bond offering closes. Once the final group of assets are assembled, then a final rating will be obtained. The Company has engaged a licensed asset manager, whose projected returns will be approved by the rating agency. Important for the success of the bond is the treatment of the various cash accounts that will support the bond. The two primary accounts will be the Investment account and the Cash Reserve account. These accounts will represent approximately 40% of the total cash raised from the bond offering. The Investment and Cash Reserve accounts are projected to produce sufficient annual returns to support the cost associated to maintain the bonds. A nationally recognized trust manager has been engaged to insure all the workings of the bond are handled properly and timely. An actuarial company has also been engaged to provide the modeling needed for the rating agency, asset manager and bond issuer. For services provided, the Company will receive a fee upon the closing on the bond offering and will also hold a residual monetary right to cash flows from the life settlement assets once the bond is retired. F- 7 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Estimates, The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents, For purposes of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Basic and Diluted Net Loss Per Common Share, Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods presented using the treasury stock method. Diluted net loss per common share is computed by including common shares that may be issued subject to existing rights with dilutive potential, when applicable. Potential dilutive common stock equivalents are primarily comprised of potential dilutive shares resulting from convertible debt agreements and common stock warrants. Potentially dilutive shares resulting from convertible debt agreements are evaluated using the if-converted method. Potentially dilutive securities are not included in the calculation of diluted net loss per share for the years ended March 31, 2021 and 2020, because to do so would be anti-dilutive. Potentially dilutive securities outstanding as of March 31, 2021 and 2020 include warrants convertible into 3,488,754 and 1,702,000 shares of common stock, respectively. Stock Based Compensation , The Company measures stock-based compensation expense related to employee stock-based awards based on the estimated fair value of the awards as determined on the date of grant and is recognized as expense over the remaining requisite service period. The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock options issued as compensation. The Black-Scholes model requires the input of highly subjective and complex assumptions, including the estimated fair value of the Company’s common stock on the date of grant, the expected term of the stock option, and the expected volatility of the Company’s common stock over the period equal to the expected term of the grant. The Company estimates forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Income Taxes, The Company accounts for income taxes under FASB ASC 740, “Income Taxes”. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. The tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained if the position were to be challenged by a taxing authority. The Company has examined the tax positions taken in its tax returns and determined that there are no uncertain tax positions. As a result, the Company has recorded no uncertain tax liabilities in its balance sheet. Interest and penalties for uncertain positions, when applicable, would be recognized as a component of income tax expense. The Company files United States Federal and State income tax returns. The income tax returns of the Company are subject to examination by taxing authorities for three to five years from the date they are filed. The Company has tax returns subject to examination for 2015-2020. Principles of Consolidation, The consolidated financial statements include the accounts of the Company and its subsidiary. The subsidiary is wholly owned. All intercompany accounts and transactions are eliminated in consolidation. F- 8 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 Fair Value, As defined by ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also requires the consideration of differing levels of inputs in the determination of fair values. Those levels of input are summarized as follows: ● Level 1: Quoted prices in active markets for identical assets and liabilities. ● Level 2: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. ● Level 3: Unobservable inputs that are supported by little or no market activity. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques as well as instruments for which the determination of fair value requires significant management judgment or estimation. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company did not have any transfers of assets and liabilities between Levels 1, 2 and 3 of the fair value measurement hierarchy during the years ended March 31, 2021 and 2020. The Company’s recorded values of cash and cash equivalents, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. The recorded values of the Notes Payable, Related Parties and Convertible Debenture approximates the fair values as the interest rate approximates market interest rates. (3) NEW ACCOUNTING PRONOUNCEMENTS Adopted During the Year Ended March 31, 2021 In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. The amendments are effective for the Company’s fiscal year beginning April 1, 2020, including interim periods within that fiscal year. The adoption of this standard did not have an impact on the consolidated financial statements because the Company does not hold financial instruments subject to credit losses. Not Yet Adopted The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements. (4) CASH AND CASH EQUIVALENTS Cash and cash equivalents consist principally of currency on hand and demand deposits at commercial banks. The Company had $21,179 and $28,784 in cash and cash equivalents as of March 31, 2021, and 2020, respectively. The Company maintains non-interest-bearing accounts at one financial institution. The accounts at this institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. F- 9 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 (5) STOCKHOLDERS’ EQUITY Common Stock Effective December 6, 2018, three existing stockholders have contributed to the Company a portion of their common shares held at a repurchase price to the Company of $0.05 per share. The Company has cancelled the acquired shares, which decreased the outstanding common shares on the books of the Company. The total number of common shares canceled/retired was 8,000,000. The total liability related to the repurchase of these shares is $400,000, with repayment contingent on a major financing event. During August 2020, the Company awarded members of the Board of Directors a total of 1,500,000 shares of the Company’s common stock, in lieu of director cash compensation. The stock awards vested 25% on the date of grant and the remainder of the shares vested equally over the three months following the date grant. As of March 31, 2021, all grant shares were 100% vested. Using a fair value stock price of $0.0223 per share, the transaction resulted in a compensation expense of $33,450, which was fully recognized during the year ended March 31, 2021. On October 5, 2020, the Company granted one of its consultants 280,000 shares of the Company’s common stock in exchange for services performed. The shares vested upon issuance, and the Company is under no obligation to register the restricted shares. Using a fair value stock price of $0.0223 per share, the transaction resulted in a consulting expense of $6,244, which was fully recognized during the year ended March 31, 2021. On November 10, 2020, the Company issued a private placement memorandum offering to raise up to $1,000,000 through the issuance of restricted shares of the Company’s common stock (par value $0.001) to qualified investors. As of March 31, 2021, the Company had received subscription agreements from related parties, which are family members and business associates of a significant stockholder for 500,000 common shares at a purchase price of $1 per share, with proceeds to the Company totaling $500,000. Warrants to Purchase Common Stock Effective April 3, 2020, the related party, note payable and line of credit agreement with the Chairman of the Board of Directors and a stockholder (see Note 6) was amended to include a formal provision that provides the related party lender with common stock warrants upon the lenders extension of a maturity due date or upon the loaning of additional monies. The number of warrants issued will be based on the following formula: 10,000 warrants per month the due date is extended plus 1 warrant for every $2 of the principal balance outstanding (not including interest) at the time of the extension (rounded to the nearest whole warrant). Effective April 3, 2020, the number of warrants to be issued upon the loaning of additional monies is 2 warrants for each dollar loaned. In addition, Mr. Dickman, the holder of the related party, unsecured promissory notes (see Note 6) has informed the Company that, at such time the Company requests either an extension or additional monies from the lender, in addition to interest, the lender will require 10,000 warrants per month the due date is extended plus 1 warrant for every $2 of the principal balance outstanding (not including interest) at the time of the extension (rounded to the nearest whole warrant). Upon the loaning of additional monies, the lender will also require 2 warrants for each dollar loaned. On October 1, 2020, the related party, note payable and line of credit agreement with Radiant Life, LLC, an entity partially owned by the Chairman of the Board of Directors (see Note 6) was amended to include a formal provision that provides the related party lender with common stock warrants upon the lenders extension of a maturity due date or upon the loaning of additional monies. The number of warrants issued will be based on the following formula: 10,000 warrants per month the due date is extended plus 1 warrant for every $2 of the principal balance outstanding (not including interest) at the time of the extension (rounded to the nearest whole warrant). In addition, the number of warrants to be issued upon the loaning of additional monies is 2 warrants for each dollar loaned. In this amendment, the due date was extended from August 31, 2021 to November 30, 2022 or at the immediate time when alternative financing or other proceeds are received. As per the provision outlined above, and in conjunction with the extension of the due date of the agreement, the Company also agreed to provide the Radiant Life, LLC with warrants for 579,754 shares of common stock at an exercise price of $0.05 per share. The warrants have a 5-year exercise window from the date of the extension agreement. F- 10 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 As of March 31, 2021 and 2020, the Company held outstanding warrants to related parties totaling 3,488,754 and 1,702,000, respectively. All warrants have an exercise price of $0.05 per share, a five-year life as of the date of grant and expire between November 2024 and October 2025. The estimated fair value of the warrants on the date of grant, as calculated by the Black-Scholes-Merton valuation model, was not significant. The inputs used in this calculation included a fair value of $0.0223 per share, a risk-free rate of 0.23% to 1.67%, volatility of 20% to 123% and a dividend rate of 0%. The average remaining outstanding life of the warrants as of March 31, 2021, was 4.13 years. The shares of common stock issuable upon exercise of the warrants are not registered with the Securities and Exchange Commission and the holders of the warrants do not have registration rights with respect to the warrants or the underlying shares of common stock. (6) NOTES PAYABLE, RELATED PARTY As of March 31, 2021 and 2020, the Company had borrowed $2,741,808 and $2,450,508 respectively, excluding accrued interest, from related parties. The interest associated with the Notes Payable, Related Party of $513,665 and $288,369 is recorded on the balance sheet as an Accrued Expense obligation at March 31, 2021 and March 31, 2020, respectively. Related Party Promissory Notes As of both March 31, 2021 and 2020, the Company owed $826,000 under the unsecured promissory notes from Mr. Glenn S. Dickman, a stockholder and member of the Board of Directors. The promissory notes bear interest at a rate of 8% annually. The notes are due on November 30, 2021, or at the immediate time when alternative financing or other proceeds are received. In addition, as mentioned in Note 5, prior to March 31, 2020, the Company had provided Mr. Dickman warrants for 1,202,000 shares of common stock. During the year ended March 31, 2021, the Company neither borrowed any additional funds under this agreement nor made any principal repayments. As of March 31, 2021, accrued interest on the notes totaled $142,182. In the event the Company completes a successful equity raise all principal and interest on the notes are due in full at that time. Related Party Note Payable and Line of Credit Agreements As of March 31, 2021 and 2020, the Company owed $1,056,300 and $795,000, respectively, exclusive of accrued interest, under the note payable and line of credit agreement with the Chairman of the Board of Directors and a stockholder. On October 27, 2020, the Company agreed to amend the agreement to extend the due date on the agreement to extend the due date from August 31, 2021 to November 30, 2022 or at the immediate time when alternative financing or other proceeds are received. As of March 31, 2021 , the agreement allowed for borrowings of up to $4,600,000. During the year ended March 31, 2021 the Company borrowed $256,800 in cash, and another $7,000 of expense paid on behalf of the Company, totaling and additional $263,800 in principal borrowed under this agreement. During the year ended March 31, 2021 , the company repaid $2,500 in principal on this agreement. The note payable and line of credit agreement incurs interest at 7.5% per annum and are collateralized by the Company’s NIBS, if any. As of March 31, 2021 , accrued interest on this note totaled $142,511. As discussed in Note 5, effective April 3, 2020, a provision to the lending agreement provides the related party lender with common stock warrants upon the lenders extension of a maturity due date or upon the loaning of additional monies. Under this provision, additional warrants for 527,600 shares of common stock were issued in conjunction with the $263,800 borrowed during the year ended March 31, 2021 , and warrants for 679,400 shares of common stock were issued in conjunction with the October 2020 due date extension, bringing the total number of warrants issued to the related party lender to 1,707,000 as of March 31, 2021 (see Note 5 for further details on these warrants). These warrants have an exercise price of $0.05 per share and have a 5-year exercise window from the respective dates of issuance. As of March 31, 2021 and 2020, the Company owed $859,508 and $829,508 in principal, respectively, under the note payable and lines of credit agreement with Radiant Life, LLC, an entity partially owned by the Chairman of the Board of Directors. The agreement allows for borrowings of up to $2,130,000. On October 1, 2020, the related party, note payable and line of credit agreement was amended to extend the due date from August 31, 2021 to November 30, 2022 or at the immediate time when alternative financing or other proceeds are received. The note payable and line of credit agreement incurs interest at 7.5% per annum and is collateralized by the Company’s NIBS, if any. During the year ended March 31, 2021 the Company borrowed $30,000 of principal under this agreement and made no repayments. As of March 31, 2021, accrued interest on this agreement totaled $228,972. F- 11 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 As per the provision outlined in Note 5, and in conjunction with the extension of the due date of the agreement, the Company also agreed to provide the Radiant Life, LLC with warrants for 579,754 shares of common stock at an exercise price of $0.05 per share. The warrants have a 5-year exercise window from the date of the extension agreement. (7) CONVERTIBLE DEBENTURE AGREEMENT The Company has entered into an 8% convertible debenture agreement with Satco International, Ltd., that allows for borrowings of up to $3,000,000. The holder originally had the option to convert the outstanding principal and accrued interest to unregistered, restricted common stock of the Company on June 2, 2016. Per the agreement, the number of shares issuable at conversion shall be determined by the quotient obtained by dividing the outstanding principal and accrued and unpaid interest by 90% of the 90 day average closing price of the Company’s common stock from the date the notice of conversion is received; and the price at which the Debenture may be converted will be no lower than $1.00 per share. The original maturity date was June 2, 2016, but was later extended, through a series of extensions, to December 1, 2020. On July 13, 2020, the Company agreed to amend the convertible debenture agreement to extend the due date and conversion rights from December 1, 2020 to November 30, 2021. As of March 31, 2021 and 2020, the Company owed $0 under the agreement, excluding accrued interest. The associated interest of $124,225 is recorded on the balance sheet as an accrued expense obligation at March 31, 2021 and 2020. (8) OTHER DEBT On April 20, 2020, the Company received funding under a Paycheck Protection Program (“PPP”) loan (the “PPP Loan”) from CCBank (the “Lender”). The principal amount of the PPP Loan was $26,458. The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (the “SBA”). The PPP Loan has a two-year term, maturing on April 20, 2022. The interest rate on the PPP Loan is 1.0% per annum. Principal and interest are payable in monthly installments, beginning on November 20, 2020, until maturity with respect to any portion of the PPP Loan which is not forgiven as described below. The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any facility charge to obtain the PPP Loan. The PPP Loan provides for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects. The PPP Loan could be partially or fully forgiven if the Company complied with the provisions of the CARES Act, including the use of PPP Loan proceeds for payroll costs, rent, utilities and other expenses, provided that such amounts are incurred during a 24-week period that commenced on April 20, 2020, and at least 60% of any forgiven amount had been used for covered payroll costs as defined by the CARES Act. On December 9, 2020, the Company received notice that the full PPP Loan amount of $26,458 had been forgiven. As such, the Company recorded $26,458 of Gain on Extinguishment of Debt on its Statement of Operations for the year ended March 31, 2021 . (9) LIQUIDITY REQUIREMENTS Since the Company’s inception on January 31, 2013, its operations have been primarily financed through sales of equity, debt financing from related parties and the issuance of notes payable and convertible debentures. As of March 31, 2021, the Company had $21,179 of cash assets, compared to $28,784 as of March 31, 2020. As of March 31, 2021, the Company had access to draw an additional $4,814,192 on the notes payable, related party (see Note 6) and $3,000,000 on the Convertible Debenture Agreement (See Note 7). For the year ended March 31, 2021, the Company’s average monthly operating expenses were approximately $75,000, which includes salaries of our employees, consulting agreements and contract labor, general and administrative expenses and legal and accounting expenses. The Company anticipates the average monthly expenses of $75,000 to decrease by approximately $10,000 over the next 12 months, resulting in ongoing, average monthly expenses of approximately $65,000. In addition to the monthly operating expenses, the Company continues to pursue other debt and equity financing opportunities, and as a result, financing expenses of $422,751 and $110,000 were incurred during the years ended March 31, 2021, and 2020, respectively. As management continues to explore additional financing alternatives, beginning April 1, 2021 the Company is expected to spend up to an additional $400,000 on these efforts. Outstanding Accounts Payable as of March 31, 2021 totaled $893,674. Management has concluded that its existing capital resources and availability under its existing convertible debentures and debt agreements with related parties will be sufficient to fund its operating working capital requirements for at least the next 12 months, or through June 2022. Related parties have given assurance that their continued support, by way of either extensions of due dates, or increases in lines-of-credit, can be relied on. As mentioned above, the Company also continues to evaluate other debt and equity financing opportunities. F- 12 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 The recent outbreak of COVID-19 originated in Wuhan, China, in December 2019 and has since spread to multiple countries, including the United States and several European countries. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. The COVID-19 pandemic is affecting the United States and global economies and may affect the Company’s operations and those of third parties on which the Company relies. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce the Company’s ability to access capital, which could negatively impact the Company’s short-term and long-term liquidity. The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. The Company does not yet know the full extent of potential delays or impacts on its business, financing or other activities or on healthcare systems or the global economy as a whole. However, these effects could have a material impact on the Company’s liquidity, capital resources, operations and business and those of the third parties on which we rely. The accompanying financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. (10) INCOME TAXES The Company provides for income taxes under ASC 740, Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The Company recorded no provision for income taxes for the years ended March 31, 2021 and 2020. The income tax provision differs from the amount of income tax determined by applying the U.S. federal tax rate of 21% to pretax income from continuing operations for the years ended March 31, 2021 and 2020, due to the following: 2021 2020 Income tax benefit at U. S. federal statutory rates: $ (321,209 ) $ (233,695 ) State tax, net of federal benefit (59,814 ) (43,517 ) Permanent and other differences 6,616 20 Change in valuation allowance 374,407 277,273 Change in statutory rate - - Other - (81 ) $ - $ - F- 13 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020 The tax effects of significant items comprising the Company’s net deferred taxes as of March 31, 2021 and 2020 were as follows: 2021 2020 Deferred Tax assets: Net operating loss carry forwards $ 6,948,511 $ 6,574,104 Stock and warrant compensation 479,708 479,708 Valuation allowance (7,428,219 ) (7,053,812 ) Net deferred tax asset $ - $ - Deferred tax liability: Investment in net insurance benefits - Net deferred tax liability $ - $ - The Company assesses the need for a valuation allowance against its deferred income tax assets at March 31, 2021. Factors considered in this assessment include recent and expected future earnings and the Company’s liquidity and equity positions. During the year ended March 31, 2018, the underlying policies related to the Company’s NIBs were subject to foreclosure (see Note 1). As a result, the Company has placed a 100% valuation allowance on the deferred tax assets. The deferred tax assets primarily relate to net operating loss carryforwards. As of March 31, 2021, the Company has U.S. federal net operating loss carryforwards of $27,893,903. These carry forwards are available to offset future taxable income, if any, and begin to expire in 2021. The utilization of the net operating loss carry forwards is dependent upon the tax laws in effect at the time the net operating loss carry forwards can be utilized and may be significantly limited based on ownership changes within the meaning of section 382 of the Internal Revenue Code. Under FASB ASC 740-10-05-6, tax benefits are recognized only for the tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the company’s tax return that do not meet these recognition and measurement standards. The Company had no liabilities for unrecognized tax benefits and the Company has recorded no additional interest or penalties. (11) SUBSEQUENT EVENTS Subsequent to year end, the following events transpired: On April 6, 2021, the Company borrowed $300,000 under an unsecured promissory note with Satco International, Ltd.. This promissory note bears interest at a rate of 8% annually and is due July 5, 2021. This note is separate from the 8% convertible debenture agreement that the Company has in place with Satco International, Ltd.. In conjunction with this note, the Company issued a warrant for 1,000,000 shares of common stock, exercisable at $1.00 per share and expiring in 3 years from the date of the promissory note. On May 4, 2021, the Company issued 1,200,000 shares of the Company’s common stock to members of the Board of Directors. The stock awards vested 25% on the date of grant and the remainder of the shares vested equally over the three months following the date grant. Using a fair value stock price of $0.062 per share, the transaction resulted in a compensation expense of $73,200, which is to be recognized according to the vesting schedule outlined above. F- 14 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.