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 (PCAOB ID NO: 3627 ) F-1 Consolidated Balance Sheets as of March 31, 2022 and 2021 F-3 Consolidated Statements of Operations for the Years Ended March 31, 2022 and 2021 F-4 Consolidated Statements of Stockholders’ Deficit for the Years Ended March 31, 2022 and 2021 F-5 Consolidated Statements of Cash Flows for the Years Ended March 31, 2022 and 2021 F-6 Notes to the Consolidated Financial Statements F-7 31 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 Subsidiary (“the Company”) as of March 31, 2022 and 2021, the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended March 31, 2022 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, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2022, 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 Instruments Description of the Critical Audit Matter During the year ended March 31, 2022, 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 actively trade on an active market. The Company utilized a valuation methodology that incorporated the price from equity instruments issued for cash and also utilized a third-party valuation specialist to assist in the determination of the fair value of the Company’s common stock. 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, specialized skills and knowledge. 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 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 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, 2022 F- 2 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Balance Sheets March 31, 2022 March 31, 2021 ASSETS Current Assets Cash and cash equivalents $ 267,966 $ 21,179 Prepaid expenses and other assets 8,167 9,393 Total Current Assets $ 276,133 $ 30,572 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities Accounts payable $ 580,972 $ 893,675 Accrued expenses 354,205 215,443 Notes payable 300,000 - Current portion of notes payable, related parties 876,000 826,000 Stock repurchase payable 400,000 400,000 Total Current Liabilities 2,511,177 2,335,118 Long-Term Liabilities Accrued expenses 666,015 495,708 Notes payable, related parties, net of current portion 2,125,808 1,915,808 Total Long-Term Liabilities 2,791,823 2,411,516 Total Liabilities 5,303,000 4,746,634 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 ; 41,408,441 and 40,108,441 shares issued and outstanding as of March 31, 2022 and 2021, respectively 41,409 40,109 Additional paid in capital 27,181,618 24,728,638 Accumulated deficit ( 32,249,894 ) ( 29,484,809 ) Total Stockholders’ Deficit ( 5,026,867 ) ( 4,716,062 ) Total Liabilities and Stockholders’ Deficit $ 276,133 $ 30,572 The accompanying notes are an integral part of these consolidated financial statements. F- 3 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Statements of Operations $ 2022 $ 2021 Year Ended March 31, 2022 2021 Income from Investments $ - $ - General and Administrative Expenses 690,709 907,978 Loss from Operations ( 690,709 ) ( 907,978 ) Other Income (Expense) Gain (loss) on extinguishment of debt ( 1,869,971 ) 26,458 Gain on settlement of liabilities 285,192 - Interest expense ( 287,687 ) ( 225,296 ) Financing expense ( 197,761 ) ( 422,751 ) Total Other Expense ( 2,070,227 ) ( 621,589 ) Loss Before Income Taxes ( 2,760,936 ) ( 1,529,567 ) Income Tax Provision (Benefit) 4,149 - Net Loss $ ( 2,765,085 ) $ ( 1,529,567 ) Loss per share - basic and diluted $ ( 0.07 ) $ ( 0.04 ) Weighted average shares outstanding - basic and diluted 41,218,263 38,904,715 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, 2022 and 2021 Shares Amount Capital Deficit Deficit Additional Total Common Stock Paid In Accumulated Stockholders’ Shares Amount Capital Deficit Deficit 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 ) Common stock issued for director compensation 1,200,000 1,200 72,720 - 73,920 Common stock and warrants issued for cash 100,000 100 499,900 - 500,000 Warrants issued in connection with debt issuances 40,211 40,211 Warrants issued in connection to extinguishment of debt - - 1,840,149 - 1,840,149 Net loss - - - ( 2,765,085 ) ( 2,765,085 ) Balance, March 31, 2022 41,408,441 $ 41,409 $ 27,181,618 $ ( 32,249,894 ) $ ( 5,026,867 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows 2022 ) 2021 ) Year Ended March 31, 2022 2021 Operating Activities Net Loss $ ( 2,765,085 ) $ ( 1,529,567 ) Adjustments to reconcile to net cash used in operating activities: Share based compensation - common stock 73,920 39,694 Expense paid on behalf of Company by director - 7,000 Gain on settlement of liabilities ( 285,192 ) - Loss (gain) on extinguishment of debt 1,869,971 ( 26,458 ) Amortization of debt discount 10,389 - Changes in operating assets and liabilities Prepaid expenses and other assets 1,226 ( 7,188 ) Accounts payable ( 27,511 ) 411,959 Accrued expenses 309,069 286,197 Net Cash used in Operating Activities ( 813,213 ) ( 818,363 ) Financing Activities Proceeds from issuance of notes payable, related party 260,000 284,300 Proceeds from issuance of notes payable 300,000 - Common stock issued for cash 500,000 500,000 Proceeds from Paycheck Protection Program loan - 26,458 Debt issuance costs - - Net Cash provided by Financing Activities 1,060,000 810,758 Net Change in Cash and Cash Equivalents 246,787 ( 7,605 ) Cash and Cash Equivalents at Beginning of Period 21,179 28,784 Cash and Cash Equivalents at End of Period $ 267,966 $ 21,179 Supplemental disclosure of cash flow information: Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - Non Cash Financing & Investing Activities, and Other Disclosures Issued warrants as debt issuance costs $ 40,211 $ - 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, 2022 and 2021 (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. During the latter part of the year ended March 31, 2021, 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. On January 1, 2022, the Company entered into a marketing and consulting agreement with Tradability, LLC (“Consultant”) that requires the Company to make an initial $ 100,000 payment and up to an additional $ 400,000 in the future (which will be financed by the Consultant via a promissory note). The $ 400,000 obligation is contingent upon the Consultant and the Company successfully reaching certain milestones. Further, the agreement requires the Company to issue between 1,000,000 and 10,000,000 stock options (which are exercisable into the Company’s common stock at prices between $ 1.00 to $ 2.50 per share) contingent upon the Consultant and the Company successfully reaching certain milestones. The milestones primarily relate to the Consultant finalizing the tokenization of 500 million non-fungible tokens (“NFTs”) and the successful placement of NFTs with proceeds of between $ 100 million and $ 500 million. The proceeds will be used to purchase Life Settlements for which the Company will be an advisor. As of March 31, 2022 and the issuances of these financial statements, none of the milestones related to the potential issuance of equity have been met. F- 7 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (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, 2022 and 2021, because to do so would be anti-dilutive. Potentially dilutive securities outstanding as of March 31, 2022 and 2021 include warrants convertible into 7,520,241 and 3,488,754 shares of common stock, respectively. Stock Based Compensation and Financing Costs , The Company measures stock-based compensation expense related to employee stock-based awards and stock based expense associated with certain financing costs 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 for options and vesting period for warrants. The Company utilizes the Black-Scholes pricing model to estimate the fair value of stock options issued as compensation and warrants issued as financing costs. 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 warrant, 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 2016-2021. 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. 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. F- 8 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 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, 2022 and 2021. 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 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 $ 267,966 and 21,179 in cash and cash equivalents as of March 31, 2022, and 2021, respectively. The Company maintains non-interest-bearing accounts at two financial institutions. The accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $ 250,000 . (5) STOCKHOLDERS’ EQUITY Common Stock On October 29, 2021, the Company issued a private placement memorandum offering to raise up to $ 500,000 through the issuance of restricted shares of the Company’s common stock (par value $ 0.001 ) to qualified investors. From November 5, 2021 to March 28, 2022, the Company received subscription agreements from investors, for 100,000 common shares at a purchase price of $ 5 per share, including 500,000 warrants exercisable at $ 5 per share, vested immediately upon issuance, with a five year expiration. Proceeds to the Company totaled $ 500,000 . On May 4, 2021, the Company issued 1,200,000 shares of the Company’s common stock to members of the Board of Directors in lieu of 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 granted. Using a fair value stock price of $ 0.062 per share, the transaction resulted in a compensation expense of $ 73,920 . 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 . 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. F- 9 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 Warrants to Purchase Common Stock The following table summarizes the changes in warrants outstanding of the Company during years ended March 31, 2022 and 2021: SCHEDULE OF WARRANT OUTSTANDING Number of Warrants Weighted Average Exercise Price ($) Outstanding at March 31, 2020 1,702,000 $ 0.05 Granted 1,786,754 0.05 Outstanding at March 31, 2021 3,488,754 0.05 Granted 3,761,487 0.99 Outstanding at March 31, 2022 7,250,241 $ 0.54 The Company’s related party lenders consist of: the Chairman of the Board of Directors and a stockholder, Radiant Life, LLC and Mr. Dickman, a board member and stockholder. These holders of the related party unsecured promissory notes, hold agreements that provide each related party with common stock warrants upon the lender’s extension of a maturity due date or upon the loaning of additional monies. The number of warrants issued for an extension is 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) . Upon the loaning of additional monies, the lender will also require 2 warrants for each dollar loaned. All warrants issued under these terms vested immediately upon issuance, have an exercise price of $ 0.05 , and expire 5 years from the date of issuance. On February 5, 2022, the Company issued 649,754 warrants to Radiant Life, LLC, 653,150 warrants to the Chairman of the Board of Directors and a stockholder and 488,583 warrants to Mr. Dickman in conjunction with various extensions of maturity dates during the period (see Note 7) per the terms outlined above. The exercise price of these warrants was $ 0.05 . The value of the warrants on the date of grant, as calculated by the Black-Scholes-Merton valuation model, was $ 1,840,149 . The inputs used in this calculation included a fair value of the underlying common stock of $ 1.049 per share, a risk-free of 1.76 %, volatility of 131.78 % and a dividend rate of 0 %. Subsequent to March 31, 2022, the exercise price was adjusted from $ 0.05 to $ 1.05 , which was the estimated fair market value of the common stock on the grant date (see Note 11). On January 5, 2022, the Company issued 200,000 warrants to Radiant Life, LLC in conjunction with monies borrowed (see Note 7) per the terms outlined above. The exercise price of these warrants was $ 0.05 . The value of the warrants on the date of grant, as calculated by the Black-Scholes-Merton valuation model, was $ 205,393 . The inputs used in this calculation included a fair value of the underlying common stock of $ 1.049 per share, a risk-free rate of 1.43 %, volatility of 131.78 % and a dividend rate of 0 %. The Company determined the cost of debt issuance to be $ 40,211 , to originally be amortized quarterly through November 30, 2022 (the due date of the lender’s line of credit at the time of the borrowing event). As such, $ 10,389 of debt discount was amortized as interest expense until February 7, 2022. On February 7, 2022, the related party note payable and line of credit agreement was amended to extend the due date from November 30, 2022 to November 30, 2023, and on the date of the amendment the Company recorded the remaining $ 29,822 of debt discount as a loss on extinguishment of debt. Subsequent to March 31, 2022, the exercise price was adjusted from $ 0.05 to $ 1.05 , which was the estimated fair market value of the common stock on the date of the lending event (see Note 11). Between August 1, 2021 and September 16, 2021, the Company issued 200,000 warrants to Radiant Life, LLC and 20,000 warrants to the Chairman of the Board of Directors and Mr. Dickman in conjunction with monies borrowed during the period (see Note 7) per the terms outlined above. The exercise price of these warrants was $ 0.05 . The 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 $ 0.062 per share, a risk-free rate ranging from 0.81 % to 0.84 %, volatility ranging from 41.97 % to 42.01 % and a dividend rate of 0 %. F- 10 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 As mentioned above, on October 29, 2021, the Company issued a private placement memorandum offering to raise up to $ 500,000 through the issuance of restricted shares of the Company’s common stock (par value $ 0.001 ) to qualified investors. From November 5, 2021 to March 28, 2022, the Company received subscription agreements from investors for 100,000 common shares at a purchase price of $ 5 per share, including 500,000 warrants exercisable at $ 5 per share, vested immediately upon issuance, with a five year expiration. On July 29, 2021, the Company borrowed an additional $ 50,000 from Radiant Life, LLC. In conjunction with this specific loan event, a one-time agreement specifies that the associated warrants issued totaled 50,000 , vested immediately upon issuance, have an exercise price of $ 2.00 , and expire in 5 years. The 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 the underlying common stock of $ 0.062 per share, a risk-free rate of 0.66 % volatility of 42.14 % and a dividend rate of 0 %. On April 6, 2021, the Company borrowed $ 300,000 under an unsecured promissory note with Satco International, Ltd. (see Note 6). In conjunction with this note, the Company issued warrants exercisable into 1,000,000 shares of common stock, which vest immediately upon issuance, exercisable at $ 1.00 per share and expire three years from the date of the promissory note. The 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 the underlying common stock of $ 0.062 per share, a risk-free rate of 0.35 %, volatility of 50.3 % and a dividend rate of 0 %. On October 1, 2020, the related party, note payable and line of credit agreement with Radiant Life, LLC, 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. As per the provision in place, 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. 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 the underlying common stock of $ 0.0223 per share, a risk-free rate of 0.27 %, volatility of 27 % and a dividend rate of 0 %. From April 3, 2020 to October 27, 2020, in the Company issued warrants for 527,600 shares of common stock in conjunction with borrowing $ 263,800 from the Chairman of the Board of Directors and a stockholder, and an additional 679,400 shares in conjunction with a due date extension on the note payable and line of credit with the Chairman of the Board of Directors and a stockholder. These warrants had an exercise price of $ 0.05 per share and a 5 -year exercise window from the date of issuance. The estimated fair value of the warrants on the dates 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 the underlying common stock of $ 0.0223 per share, a risk-free rate of 0.23 % to 0.39 %, volatility of 41.6 % to 123.85 % and a dividend rate of 0 %. The following table summarizes the warrants issued and outstanding as of March 31, 2022: SCHEDULE OF WARRANTS ISSUED AND OUTSTANDING Exercise Price ($) Warrants Outstanding Warrants Exercisable Weighted Average Remaining Contractual Life (Years) Proceeds to Company if Exercised 0.05 5,700,241 5,700,241 3.68 $ 285,013 1.00 1,000,000 1,000,000 2.02 1,000,000 2.00 50,000 50,000 4.35 100,000 5.00 500,000 500,000 4.82 2,500,000 7,250,241 7,250,241 $ 3,885,013 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 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 was due January 6, 2022 . In conjunction with this note, the Company issued warrants 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 February 2, 2022, the unsecured promissory note with Satco International, Ltd. was amended to extend the due date from January 6, 2022 to April 6, 2022 , or at the immediate time when alternative financing or other proceeds are received. This extension has no bearing on the warrants that were issued in conjunction with the original promissory note. This note is separate from the 8 % convertible debenture agreement that the Company has in place with Satco International, Ltd. (see note 7). As of March 31, 2022 accrued interest on the note totaled $ 23,605 . F- 11 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (7) NOTES PAYABLE, RELATED PARTY As of March 31, 2022 and 2021, the Company had borrowed $ 3,001,808 and $ 2,741,808 respectively, excluding accrued interest, from related parties. The interest associated with the Notes Payable, Related Party of $ 767,358 and $ 513,665 is recorded on the balance sheet as an Accrued Expense obligation at March 31, 2022 and March 31, 2021, respectively. Related Party Promissory Notes As of both March 31, 2022 and 2021, the Company owed $ 826,000 under the unsecured promissory notes from Mr. Dickman,. The promissory notes bear interest at a rate of 8 % annually. On February 10, 2022, the notes were amended to extend the due date from November 30, 2021 to October 31, 2022, or at the immediate time when alternative financing or other proceeds are received. As per the provision outlined in Note 5, and in conjunction with the extension of the due date of the promissory notes, the Company also agreed to provide Mr. Dickman with warrants for 488,583 shares of common stock (see Note 5), During the year ended March 31, 2022, the Company neither borrowed any additional funds under this agreement nor made any principal repayments. As of March 31, 2022, accrued interest on the notes totaled $ 222,810 . In the event the Company completes a successful equity raise all principal and interest on the notes are due in full at that time. On July 29, 2021, the Company entered into an unsecured promissory note agreement with Radiant Life, LLC. This agreement was in conjunction with the Company borrowing $ 50,000 of Notes Payable, Related Party, and is not part of the existing note payable and lines of credit agreement the Company has with Radiant Life, LLC. The promissory note bears interest at a rate of 8 % annually and is due on July 29, 2022 . In conjunction with this specific loan event, the agreement awards Radiant Life, LLC with 50,000 common stock warrants, which have an exercise price of $ 2.00 , and expire in 5 years (see Note 5). As of March 31, 2022, accrued interest on the note totaled $ 2,758 . Related Party Note Payable and Line of Credit Agreements As of March 31, 2022 and 2021, the Company owed $ 1,066,300 and $ 1,056,300 , 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 February 7, 2022, the related party note payable and line of credit agreement was amended to extend the due date from November 30, 2022 to November 30, 2023, or at the immediate time when alternative financing or other proceeds are received. As of March 31, 2022 , the agreement allowed for borrowings of up to $ 4,600,000 . During the year ended March 31, 2022, the Company borrowed $ 10,000 in principal and made no repayments of principal on this agreement. The note payable and line of credit agreement incurs interest at 7.5 % per annum As of March 31, 2022 , accrued interest on this note totaled $ 222,180 . As per the provision outlined in Note 4, and in conjunction with the due date extension and the $ 10,000 borrowed during the year ended March 31, 2022, the Company also agreed to provide the Chairman of the Board of Directors and a stockholder, with warrants for 673,150 shares of common stock, vested immediately upon issuance, having an exercise price of $ 0.05 per share, and a 5 -year exercise window from the dates of issuance. The total number of warrants issued to the related party lender was 2,380,150 as of March 31, 2022 (see Note 5 for further details on these warrants). As of March 31, 2022 and 2021, the Company owed $ 1,059,508 and $ 859,508 in principal, respectively, under the note payable and lines of credit agreement with Radiant Life, LLC. The agreement allows for borrowings of up to $ 2,130,000 . On February 7, 2022, the related party note payable and line of credit agreement was amended to extend the due date from November 30, 2022 to November 30, 2023, 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. During the year ended March 31, 2022 the Company borrowed $ 200,000 of principal under this agreement and made no repayments. As of March 31, 2022, accrued interest on this agreement totaled $ 319,610 . As per the provision outlined in Note 5, and in conjunction with the due date extension and the $ 200,000 borrowed under the note payable and lines of credit agreement during the year, the Company also agreed to provide Radiant Life, LLC with warrants for 1,099,754 shares of common stock, vested immediately upon issuance, a 5 -year exercise window from the dates of issuance, 50,000 warrants having an exercise price of $ 2.00 per share, and the remainder having an exercise price of $ 0.05 per share. The total number of warrants issued to the related party lender was 1,679,508 as of March 31, 2022 (see Note 5 for further details). F- 12 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (8) 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 January 6, 2022 . On February 2, 2022 the unsecured promissory note with Satco International, Ltd. was amended to extend the due date from January 6, 2022 to April 6, 2022, or at the immediate time when alternative financing or other proceeds are received. This extension has no bearing on the warrants that were issued in conjunction with the original promissory note. As of March 31, 2022 and March 31, 2021, 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, 2022 and 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, 2022, the Company had $ 267,966 of cash assets, compared to $ 21,179 as of March 31, 2021. As of March 31, 2022, the Company had access to draw an additional $ 4,604,192 on the notes payable, related party (see Note 7) and $ 3,000,000 on the Convertible Debenture Agreement (See Note 7). For the year ended March 31, 2022, 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 $ 197,761 and $ 422,751 were incurred during the years ended March 31, 2022, and 2021, respectively. As management continues to explore additional financing alternatives, beginning April 1, 2022 the Company is expected to spend up to an additional $ 400,000 on these efforts. Outstanding Accounts Payable as of March 31, 2022 totaled $ 580,972 . 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. 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. F- 13 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2022 and 2021 (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 $ 4,149 and $ 0 provision for income taxes for the years ended March 31, 2022 and 2021, respectively. 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, 2022 and 2021, due to the following: SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) 2022 2021 Income tax benefit at U. S. federal statutory rates: $ ( 579,797 ) $ ( 321,209 ) State tax, net of federal benefit ( 103,817 ) ( 59,814 ) Change in valuation allowance 215,724 374,407 Other 3,632 - Income Tax $ 4,149 $ - The tax effects of significant items comprising the Company’s net deferred taxes as of March 31, 2022 and 2021 were as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2022 2021 Deferred Tax assets: Net operating loss carry forwards $ 7,164,235 $ 6,948,511 Stock and warrant compensation 479,708 479,708 Valuation allowance ( 7,643,943 ) ( 7,428,219 ) Net deferred tax asset $ - $ - The Company assesses the need for a valuation allowance against its deferred income tax assets at March 31, 2022. Factors considered in this assessment include recent and expected future earnings and the Company’s liquidity and equity positions. 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, 2022, the Company has U.S. federal net operating loss carryforwards of $ 28,812,816 . These carry forwards are available to offset future taxable income, if any, and begin to expire in 2023 . 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 June 20, 2022, the Company amended the agreements with the related party lenders to adjust the exercise price of the warrants issued in conjunction with extensions of due dates and new monies lent on the outstanding notes payable, related parties (see Note 5 and Note 7). The original agreements stated that the exercise price of the warrants issued was $ 0.05 . The amended agreements adjust the exercise price from $ 0.05 to $ 1.05 , which is the estimated fair market value of the common stock on the grant dates of the warrants. The original agreements inadvertently stated an exercise price of $ 0.05 , when the Company had intended to grant warrants with an exercise price of $ 1.05 . On June 15, 2022 the unsecured promissory note with Satco International, Ltd. (see Note 5) was amended to extend the due date from April 6, 2022 to July 6, 2022 , or at the immediate time when alternative financing or other proceeds are received. This extension has no bearing on the warrants that were issued in conjunction with the original promissory note. F- 14 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures (a) Disclosure Controls and Procedures We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms. We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of these disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of March 31, 2022. Based on this evaluation, our principal executive officer and principal financial officer concluded our disclosure controls and procedures were not effective as of March 31, 2022, the end of the period covered by this Annual Report on Form 10-K due to the material weakness described below. (b) Management’s Report on Internal Control over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our internal control over financial reporting is designed to provide reasonable assurance of achieving its objectives as specified above. Management does not expect, however, that our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. Management, including our principal executive officer and principal financial officer, has assessed the effectiveness of our internal control over financial reporting as of March 31, 2022. In making our assessment of the effectiveness of internal control over financial reporting, management used the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management has concluded that, as of March 31, 2022, our internal control over financial reporting was not effective due to the material weakness described below. (c) Material Weaknesses As defined in SEC Regulation S-X, a material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management determined that the following material weaknesses exited as of March 31, 2022: The design and operating effectiveness of our control environment and risk assessment, control activities and monitoring activities were inadequate to ensure that complex accounting matters relating to the valuation of equity-based compensation instruments are always properly accounted for and reviewed in a timely manner. Our principal executive and principal financial officer is in the process of performing a review of our processes and controls over complex accounting matters relating to the valuation of equity-based compensation instruments. Notwithstanding the identified material weakness, the Company believes the financial statements included in this Annual Report on Form 10-K fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with accounting principles generally accepted in the United States of America. This Annual Report does not include an attestation report of our registered public accounting firm regarding our internal controls over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Annual Report. (c) Changes in Internal Control Over Financial Reporting Other than described above in