Nevada
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74-3262176
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(State
or other Jurisdiction of Incorporation or
Organization)
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(I.R.S.
Employer Identification No.)
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15150 Preston Road, Suite #300
Dallas, Texas
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75248
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Title of each class
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Trading symbol(s)
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Name of exchange on which registered
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None
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N/A
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N/A
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Large
accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☒
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Smaller
reporting company
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☒
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Emerging growth
company
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☐
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Page
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September 30,
2020
|
March 31,
2020
|
|
(unaudited)
|
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash
|
$315,601
|
$109,491
|
Prepaid
expenses
|
154,117
|
128,693
|
Insurance
settlement
|
-
|
917,210
|
|
|
|
Total
current assets
|
469,718
|
1,155,394
|
|
|
|
Fixed
assets
|
1,430,519
|
707,808
|
|
|
|
Other
assets
|
|
|
Construction-in-process
|
1,896,226
|
-
|
Right
of Use asset
|
275,400
|
275,400
|
Deposits
|
20,633
|
178,198
|
|
|
|
Total
other assets
|
2,192,259
|
453,598
|
|
|
|
Total
assets
|
$4,092,496
|
$2,316,800
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$809,597
|
$641,146
|
Accrued
interest
|
78,134
|
81,034
|
Accrued
interest - related parties
|
161,520
|
296,624
|
Other
accrued expenses
|
309,485
|
1,204,815
|
Short-term
Promissory Note and Lines of credit
|
578,153
|
570,497
|
Bank
loan
|
8,438
|
8,904
|
Payroll
Protection Program loan
|
103,200
|
-
|
Convertible
debentures
|
168,000
|
463,161
|
Notes
payable - related parties
|
1,247,162
|
1,221,162
|
Dividends
payable
|
94,306
|
-
|
Derivative
liability
|
-
|
176,000
|
Warrant
liability
|
-
|
90,000
|
|
|
|
Total
current liabilities
|
3,557,995
|
4,753,343
|
|
|
|
Bank
loans, less current maturities
|
210,509
|
225,837
|
Note
payable - related party, less current maturities
|
263,604
|
-
|
Lease
Liability
|
275,400
|
275,400
|
|
|
|
Total
liabilities
|
4,307,508
|
5,254,580
|
|
|
|
|
|
|
Commitments and
contingencies (Note 10)
|
|
|
|
|
|
Stockholders'
deficit
|
|
|
Series A Convertible Preferred stock, $0.0001 par
value, 5,000,000 shares authorized, 5,000,000
shares issued and outstanding at September 30, 2020 and March 31,
2020
|
500
|
500
|
Series B
Convertible Preferred stock, $0.0001 par value, 5,000 shares
authorized, 1,696 and 2,250 shares issued and outstanding at
September 30, 2020 and March 31, 2020, respectively
|
-
|
-
|
Common stock,
$0.0001 par value, 900,000,000 shares authorized, 531,023,743 and
379,742,524 shares issued and outstanding at September 30, 2020 and
March 31, 2020, respectively
|
53,103
|
37,975
|
Additional paid in
capital
|
48,638,480
|
43,533,242
|
Accumulated
deficit
|
(48,821,413)
|
(46,427,396)
|
Total
stockholders' deficit attributable to NaturalShrimp, Inc.
shareholders
|
(129,330)
|
(2,855,679)
|
|
|
|
Non-controlling
interest in NAS
|
(85,682)
|
(82,101)
|
|
|
|
Total
stockholders' deficit
|
(215,012)
|
(2,937,780)
|
|
|
|
Total
liabilities and stockholders' deficit
|
$4,092,496
|
$2,316,800
|
|
For the Three Months Ended
|
For the Six months Ended
|
||
|
September 30, 2020
|
September 30, 2019
|
September 30, 2020
|
September 30, 2019
|
Sales
|
$-
|
$-
|
$-
|
$-
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
General
and administrative
|
401,029
|
378,371
|
737,008
|
637,737
|
Research
and development
|
79,550
|
-
|
79,550
|
-
|
Facility
operations
|
68,271
|
15,035
|
79,643
|
139,559
|
Depreciation
and amortization
|
8,896
|
13,319
|
19,677
|
25,563
|
|
|
|
|
|
Total
operating expenses
|
557,746
|
406,725
|
915,878
|
802,859
|
|
|
|
|
|
Net loss from
operations
|
(557,746)
|
(406,725)
|
(915,878)
|
(802,859)
|
|
|
37.1%
|
|
14.1%
|
Other
income (expense):
|
|
|
|
|
Interest
expense
|
(29,490)
|
(57,043)
|
(59,516)
|
(119,531)
|
Amortization
of debt discount
|
-
|
(254,994)
|
-
|
(476,373)
|
Financing
costs
|
(2,643)
|
(82,949)
|
(64,452)
|
(164,218)
|
Change
in fair value of derivative liability
|
-
|
(55,000)
|
(29,000)
|
(39,000)
|
Loss
on warrant settlement
|
-
|
-
|
-
|
(50,000)
|
|
|
|
|
|
Total
other income (expense)
|
(32,133)
|
(449,986)
|
(152,968)
|
(849,122)
|
|
|
|
|
|
Loss
before income taxes
|
(589,879)
|
(856,711)
|
(1,068,846)
|
(1,651,981)
|
|
|
|
|
|
Provision
for income taxes
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Net
loss
|
(589,879)
|
(856,711)
|
(1,068,846)
|
(1,651,981)
|
|
|
|
|
|
Less
net loss attributable to non-controlling interest
|
(1,686)
|
|
(3,581)
|
|
|
|
|
|
|
Net loss
attributable to NaturalShrimp Inc.
|
(588,193)
|
(856,711)
|
(1,065,265)
|
(1,651,981)
|
|
|
|
|
|
Amortization of
beneficial conversion feature on Series B PS
|
(807,000)
|
-
|
(1,100,000)
|
|
Dividends
|
(83,960)
|
|
(228,752)
|
|
|
|
|
|
|
Net loss available
for common stockholders
|
$(1,479,153)
|
$(856,711)
|
$(2,394,017)
|
$(1,651,981)
|
|
|
|
|
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EARNINGS
PER SHARE (Basic and diluted)
|
$(0.00)
|
$(0.00)
|
$(0.01)
|
$(0.01)
|
|
|
|
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING (Basic and diluted)
|
451,549,772
|
326,488,640
|
419,177,832
|
317,572,350
|
|
Series A Preferred stock
|
Series B Preferred stock
|
Common stock
|
Additional paid
|
Accumulated
|
Non-controlling
|
Total stockholders'
|
|||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
in Capital
|
deficit
|
interest
|
deficit
|
|
|
|
|
|
|
|
|
|
|
|
Balance March
31, 2020
|
5,000,000
|
$500
|
2,250
|
$-
|
379,742,524
|
$37,975
|
$43,533,243
|
$(46,427,396)
|
$(82,101)
|
(2,937,780)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
common stock upon conversion
|
|
|
|
|
37,926,239
|
3,793
|
222,644
|
|
|
226,437
|
Reclass of
derivative liability upon conversion or redemption of related
convertible debentures
|
|
|
|
|
|
|
205,000
|
|
|
205,000
|
Purchase of
Series B Preferred shares
|
|
|
1,250
|
-
|
|
|
1,250,000
|
|
|
1,250,000
|
Beneficial
conversion feature related to the Series B Preferred
Shares
|
|
|
|
|
|
|
293,000
|
(293,000)
|
|
-
|
Dividends
payable on Series B PS
|
|
|
|
|
|
|
|
(144,792)
|
|
(144,792)
|
Series B PS
Dividends in kind issued
|
|
|
50
|
-
|
|
|
56,458
|
|
|
56,458
|
Conversion of
Serries B PS to common stock
|
|
|
(800)
|
-
|
33,569,730
|
3,357
|
(3,357)
|
|
|
-
|
Common stock
issued in Vista Warrant settlement
|
|
|
|
|
17,500,000
|
1,750
|
608,250
|
|
|
610,000
|
Reclass of
warrant liability upon the cancellation of warrants under Vista
Warrant settlement
|
|
|
|
|
|
|
90,000
|
|
|
90,000
|
Common stock
issued to consultant
|
|
|
|
|
1,250,000
|
125
|
61,125
|
|
|
61,250
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
(477,072)
|
(1,895)
|
(478,967)
|
|
|
|
|
|
|
|
|
|
|
-
|
Balance June
30, 2020
|
5,000,000
|
$500
|
2,750
|
$-
|
469,988,493
|
$47,000
|
$46,316,363
|
$(47,342,260)
|
$(83,996)
|
$(1,062,394)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
common stock upon conversion
|
|
|
|
|
1,014,001
|
101
|
125,635
|
|
|
125,736
|
Purchase of
Series B Preferred shares
|
|
|
1,250
|
-
|
|
|
1,250,000
|
|
|
1,250,000
|
Beneficial
conversion feature related to the Series B Preferred
Shares
|
|
|
65
|
-
|
|
|
807,000
|
(807,000)
|
|
-
|
Dividends
payable on Series B PS
|
|
|
|
|
|
|
|
(83,960)
|
|
(83,960)
|
Series B PS
Dividends in kind issued
|
|
|
|
|
|
|
77,984
|
|
|
77,984
|
Conversion of
Serries B PS to common stock
|
|
|
(2,369)
|
-
|
58,521,249
|
5,852
|
(5,852)
|
|
|
-
|
Common stock
issued to consultant
|
|
|
|
|
1,500,000
|
150
|
67,350
|
|
|
67,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
(588,193)
|
(1,686)
|
(589,879)
|
|
|
|
|
|
|
|
|
|
|
|
Balance
September 30, 2020
|
5,000,000
|
$500
|
1,696
|
$-
|
531,023,743
|
$53,103
|
$48,638,480
|
$(48,821,413)
|
$(85,682)
|
$(215,012)
|
|
Series A Preferred stock
|
Series B Preferred stock
|
Common stock
|
Additional
|
Accumulated
|
Non-controlling
|
Total stockholders'
|
|||
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
in Capital
|
deficit
|
interest
|
deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance April
1, 2019
|
5,000,000
|
500
|
|
|
301,758,293
|
30,177
|
38,335,782
|
(41,223,445)
|
|
(2,856,986)
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
shares under equity financing agreement
|
|
|
|
|
11,482,721
|
1,148
|
1,498,852
|
|
|
1,500,000
|
Issuance of
shares upon conversion
|
|
|
|
|
3,000,000
|
300
|
29,700
|
|
|
30,000
|
Beneficial
conversion feature
|
|
|
|
|
|
|
58,548
|
|
|
58,548
|
|
|
|
|
|
|
|
|
|
|
-
|
Net
loss
|
|
|
|
|
|
|
|
(795,270)
|
-
|
(795,270)
|
|
|
|
|
|
|
|
|
|
|
|
Balance June
30, 2019
|
5,000,000
|
$500
|
-
|
$-
|
316,241,014
|
$31,625
|
$39,922,882
|
$(42,018,715)
|
$-
|
$(2,063,708)
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of
Series B Preferred shares
|
|
|
250
|
-
|
|
|
250,000
|
|
|
250,000
|
Issuance of
shares upon conversion
|
|
|
|
|
14,000,000
|
1,400
|
138,600
|
|
|
140,000
|
Issuance of
shares under equity financing agreement
|
|
|
|
|
3,275,060
|
326
|
273,675
|
|
|
274,001
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
(856,711)
|
|
(856,711)
|
|
|
|
|
|
|
|
|
|
|
|
Balance
September 30, 2019
|
5,000,000
|
$500
|
250
|
$-
|
333,516,074
|
$33,351
|
$40,585,157
|
$(42,875,426)
|
|
$(2,256,418)
|
|
For the Six
Months Ended
|
|
|
September
30,
2020
|
September
30,
2019
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net loss
attributable to NaturalShrimp Inc.
|
$(1,065,265)
|
$(1,651,981)
|
|
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
Depreciation
expense
|
19,677
|
25,563
|
Amortization of
debt discount
|
-
|
476,373
|
Change in fair
value of derivative liability
|
29,000
|
39,000
|
Default
penalty
|
41,112
|
27,000
|
Net loss
attributable to non-controlling interest
|
(3,581)
|
-
|
Shares issued for
services
|
128,750
|
-
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
Prepaid expenses
and other current assets
|
(25,424)
|
(72,826)
|
Deposits
|
-
|
(10,133)
|
Accounts
payable
|
168,448
|
63,571
|
Other accrued
expenses
|
(174,926)
|
37,268
|
Accrued
interest
|
13,000
|
-
|
Accrued interest -
related parties
|
18,096
|
82,862
|
|
|
|
Cash
used in operating activities
|
(851,113)
|
(983,303)
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
Cash paid for
machinery and equipment
|
(742,388)
|
(267,283)
|
Cash received from
Insurance settlement
|
917,210
|
-
|
Cash paid for
construction in process
|
(1,738,661)
|
(487,218)
|
|
|
|
CASH
USED IN INVESTING ACTIVITIES
|
(1,563,839)
|
(754,501)
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
Payments on bank
loan
|
(15,794)
|
(3,946)
|
Payment of
related party notes payable
|
(24,000)
|
-
|
Repayment line of
credit short-term
|
7,656
|
(104,008)
|
Proceeds from
Payroll Protection Program loan
|
103,200
|
-
|
Proceeds from
issuance of common shares under equity agreement
|
-
|
1,774,001
|
Proceeds from sale
of Series B Convertible Preferred stock
|
2,500,000
|
250,000
|
Proceeds from
convertible debentures
|
-
|
100,000
|
Payments on
convertible debentures
|
-
|
(85,500)
|
Payments on
convertible debentures, related party
|
-
|
(47,000)
|
Cash received in
relation to Vista warrant settlement
|
50,000
|
-
|
|
|
|
Cash
provided by financing activities
|
2,621,062
|
1,883,547
|
|
|
|
NET
CHANGE IN CASH
|
206,110
|
145,743
|
|
|
|
CASH
AT BEGINNING OF PERIOD
|
109,491
|
137,499
|
|
|
|
CASH
AT END OF PERIOD
|
$315,601
|
$283,242
|
|
|
|
INTEREST
PAID
|
$41,420
|
$36,669
|
|
|
|
Supplemental
Disclosure of Non-Cash Investing and Financing
Activities:
|
|
|
Shares issued upon
conversion
|
$336,437
|
$170,000
|
Dividends in kind
issued
|
$134,443
|
$275,400
|
Shares issued on
Vista Warrant settlement
|
$610,000
|
$-
|
Note payable,
related party, issued in place of Settlement Agreement
|
$383,604
|
$-
|
|
2020
|
2019
|
Derivative
liability balance at beginning of period
|
$176,000
|
$157,000
|
Reclass to equity
upon conversion or redemption
|
(205,000)
|
-
|
Change in fair
value
|
29,000
|
39,000
|
Balance at end of
period
|
$-
|
$196,000
|
|
2020
|
2019
|
Warrant liability
balance at beginning of period
|
$90,000
|
$93,000
|
Reclass to equity
upon cancellation or exercise
|
(90,000)
|
-
|
Change in fair
value
|
-
|
-
|
Balance at end of
period
|
$-
|
$93,000
|
Buildings
|
27.5
– 39 years
|
Other
Depreciable Property
|
5
– 10 years
|
Furniture
and Fixtures
|
3
– 10 years
|
|
September 30,
2020
|
March 31,
2020
|
Land
|
$202,293
|
$202,293
|
Buildings
|
541,862
|
509,762
|
Machinery
and equipment
|
932,275
|
221,987
|
Autos
and trucks
|
19,063
|
19,063
|
|
1,695,493
|
953,105
|
Accumulated
depreciation
|
(264,974)
|
(245,297)
|
Fixed
assets, net
|
$1,430,519
|
$707,808
|
Years
ended:
|
|
March 31,
2021
|
$108,041
|
March 31,
2022
|
20,730
|
March 31,
2023
|
9,240
|
March 31,
2024
|
9,786
|
March 31,
2025
|
10,364
|
Thereafter
|
171,642
|
|
$329,803
|
|
Three Months
Ended September 30,
|
|
|
2020
|
2019
|
|
|
|
Salaries and
related expenses
|
$103,818
|
$118,022
|
Professional
fees
|
159,178
|
88,815
|
Other general and
administrative expenses
|
133,824
|
167,788
|
Rent
|
4,209
|
3,746
|
Facility
operations
|
68,271
|
15,035
|
Research and
development
|
79,550
|
-
|
Depreciation
|
8,896
|
13,319
|
Total
|
$557,746
|
$406,725
|
|
Six Months Ended
September 30,
|
|
|
2020
|
2019
|
|
|
|
Salaries and
related expenses
|
$214,533
|
$227,532
|
Professional
fees
|
287,486
|
149,611
|
Other general and
administrative expenses
|
227,146
|
252,782
|
Rent
|
7,843
|
7,812
|
Facility
operations
|
79,643
|
139,559
|
Research and
development
|
79,550
|
-
|
Depreciation
|
19,677
|
25,563
|
Total
|
$915,878
|
$802,859
|
|
September
30,
|
March
31,
|
|
2020
|
2020
|
Current
assets
|
$469,718
|
$1,155,394
|
Current
liabilities
|
3,557,995
|
4,753,343
|
Working capital
deficiency
|
$3,088,277
|
$3,597,949
|
|
Six Months Ended
September 30,
|
|
|
2020
|
2019
|
Net cash used in
operating activities
|
$(851,113)
|
$(983,303)
|
Net cash used in
investing activities
|
(1,563,839)
|
(754,501)
|
Net cash provided
by financing activities
|
2,621,062
|
1,883,547
|
Net change in
cash
|
$206,110
|
$145,743
|
Exhibit Number
|
|
Description
|
31.1*
|
|
Certificate
of Designation of Series B Preferred Stock of NaturalShrimp
Incorporated
|
31.1*
|
|
Section
302 Certification under the Sarbanes-Oxley Act of 2002 of the
Principal Executive Officer
|
31.2*
|
|
Section
302 Certification under the Sarbanes-Oxley Act of 2002 of the
Principal Financial Officer and Principal Accounting
Officer
|
32.1**
|
|
Section
906 Certification under the Sarbanes-Oxley Act of 2002 of the
Principal Executive Officer
|
32.2**
|
|
Section
906 Certification under the Sarbanes-Oxley Act of 2002 of the
Principal Financial Officer and Principal Accounting
Officer
|
101.INS*
|
|
XBRL
Instance Document
|
101.SCH*
|
|
XBRL
Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL
Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL
Taxonomy Extension Label Linkbase Document
|
101.PRE*
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document
|
|
NATURALSHRIMP
INCORPORATED
|
|
|
|
|
|
|
Date: November 16,
2020
|
By:
|
/s/ Gerald Easterling
|
|
|
|
Gerald
Easterling
|
|
|
|
Chief Executive
Officer
(Principal
Executive Officer)
|
|
|
NATURALSHRIMP
INCORPORATED
|
|
|
|
|
|
|
Date: November 16,
2020
|
By:
|
/s/ William Delgado
|
|
|
|
William
Delgado
|
|
|
|
Chief Financial
Officer
(Principal
Financial Officer and Principal Accounting Officer)
|
|
1.
|
I have
reviewed this quarterly report on Form 10-Q of NaturalShrimp
Incorporated;
|
|
|
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
|
|
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
|
|
|
|
4.
|
The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a–15(e) and
15d–15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a–15(f) and 15d–15(f))
for the registrant and have:
|
|
|
(a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
(b)
|
designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, 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;
|
|
(c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
|
(d)
|
disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting;
and
|
|
|
|
5.
|
The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
|
|
|
(a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
|
|
(b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
|
|
NATURALSHRIMP
INCORPORATED
|
|
|
|
|
|
|
Date: November 16,
2020
|
By:
|
/s/ Gerald Easterling
|
|
|
|
Gerald
Easterling
|
|
|
|
Chief Executive
Officer
(Principal
Executive Officer)
|
|
1.
|
I have
reviewed this quarterly report on Form 10-Q of NaturalShrimp
Incorporated;
|
|
|
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
|
|
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
|
|
|
|
4.
|
The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a–15(e) and
15d–15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a–15(f) and 15d–15(f))
for the registrant and have:
|
|
|
(a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
(b)
|
designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, 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;
|
|
(c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
|
(d)
|
disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting;
and
|
|
|
|
5.
|
The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
|
|
|
(a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
|
|
(b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
|
|
NATURALSHRIMP
INCORPORATED
|
|
|
|
|
|
|
Date: November
16,
2020
|
By:
|
/s/ William Delgado
|
|
|
|
William
Delgado
|
|
|
|
Chief Financial
Officer
(Principal
Financial Officer and Principal Accounting
Officer)
|
|
|
NATURALSHRIMP
INCORPORATED
|
|
|
|
|
|
|
Date: November 16,
2020
|
By:
|
/s/ Gerald Easterling
|
|
|
|
Gerald
Easterling
|
|
|
|
Chief Executive
Officer
(Principal
Executive Officer)
|
|
|
NATURALSHRIMP
INCORPORATED
|
|
|
|
|
|
|
Date: November
16,
2020
|
By:
|
/s/ William Delgado
|
|
|
|
William
Delgado
|
|
|
|
Chief Financial
Officer
(Principal
Financial Officer and Principal Accounting
Officer)
|
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Nov. 16, 2020 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NaturalShrimp Inc | |
Entity Central Index Key | 0001465470 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Current Fiscal Year End Date | --03-31 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 000-54030 | |
Entity Common Stock, Shares Outstanding | 531,023,743 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2020 |
Mar. 31, 2020 |
---|---|---|
Preferred stock, par value | $ .0001 | $ 0.0001 |
Preferred stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 531,023,743 | 379,742,524 |
Common stock, shares outstanding | 531,023,743 | 379,742,524 |
Series A Convertible Preferred Stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 5,000,000 | 5,000,000 |
Series B Convertible Preferred Stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares issued | 1,696 | 2,250 |
Preferred stock, shares outstanding | 1,696 | 2,250 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Statement [Abstract] | ||||
Sales | $ 0 | $ 0 | $ 0 | $ 0 |
Operating expenses: | ||||
General and administrative | 401,029 | 378,371 | 737,008 | 637,737 |
Research and development | 79,550 | 0 | 79,550 | 0 |
Facility operations | 68,271 | 15,035 | 79,643 | 139,559 |
Depreciation and amortization | 8,896 | 13,319 | 19,677 | 25,563 |
Total operating expenses | 557,746 | 406,725 | 915,878 | 802,859 |
Net loss from operations | (557,746) | (406,725) | (915,878) | (802,859) |
Other income (expense): | ||||
Interest expense | (29,490) | (57,043) | (59,516) | (119,531) |
Amortization of debt discount | 0 | (254,994) | 0 | (476,373) |
Financing costs | (2,643) | (82,949) | (64,452) | (164,218) |
Change in fair value of derivative liability | 0 | (55,000) | (29,000) | (39,000) |
Loss on warrant settlement | 0 | 0 | 0 | (50,000) |
Total other income (expense) | (32,133) | (449,986) | (152,968) | (849,122) |
Loss before income taxes | (589,879) | (856,711) | (1,068,846) | (1,651,981) |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net loss | (589,879) | (856,711) | (1,068,846) | (1,651,981) |
Less net loss attributable to non-controlling interest | (1,686) | (3,581) | 0 | |
Net loss attributable to Natural Shrimp Inc. | (588,193) | (856,711) | (1,065,265) | (1,651,981) |
Amortization of beneficial conversion feature on Series B PS | (807,000) | 0 | (1,100,000) | 0 |
Dividends | (83,960) | 0 | (228,752) | 0 |
Net loss available for common stockholders | $ (1,479,153) | $ (856,711) | $ (2,394,017) | $ (1,651,981) |
Earnings per share (basic and diluted) | $ (0.00) | $ (0.00) | $ (0.01) | $ (0.01) |
Weighted average share outstanding (basic and diluted) | 451,549,772 | 326,488,640 | 419,177,832 | 317,572,350 |
1. NATURE OF THE ORGANIZATION AND BUSINESS |
6 Months Ended |
---|---|
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF THE ORGANIZATION AND BUSINESS | Nature of the Business
NaturalShrimp Incorporated (“NaturalShrimp” or the “Company”), a Nevada corporation, is a biotechnology company and has developed a proprietary technology that allows it to grow Pacific White shrimp (Litopenaeus vannamei, formerly Penaeus vannamei) in an ecologically controlled, high-density, low-cost environment, and in fully contained and independent production facilities. The Company’s system uses technology which allows it to produce a naturally-grown shrimp “crop” weekly, and accomplishes this without the use of antibiotics or toxic chemicals. The Company has developed several proprietary technology assets, including a knowledge base that allows it to produce commercial quantities of shrimp in a closed system with a computer monitoring system that automates, monitors and maintains proper levels of oxygen, salinity and temperature for optimal shrimp production. Its initial production facility is located outside of San Antonio, Texas.
The Company has two wholly-owned subsidiaries including NaturalShrimp Corporation, NaturalShrimp Global, Inc. and 51% owned Natural Aquatic Systems, Inc. (“NAS”).
Going Concern
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the six months ended September 30, 2020, the Company had a net loss available for common stockholders of approximately $2,394,000. At September 30, 2020, the Company had an accumulated deficit of approximately $48,821,000 and a working capital deficit of approximately $3,088,000. These factors raise substantial doubt about the Company’s ability to continue as a going concern, within one year from the issuance date of this filing. The Company’s ability to continue as a going concern is dependent on its ability to raise the required additional capital or debt financing to meet short and long-term operating requirements. During the six months ended September 30, 2020, the Company received net cash proceeds of $2,500,000 from the sale of 2,500 Series B Preferred shares. Subsequent to September 30, 2020, the Company received $250,000 from the sale of Series B Preferred shares (See Note 11). Management believes that private placements of equity capital and/or additional debt financing will be needed to fund the Company’s long-term operating requirements. The Company may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. If the Company raises additional funds through the issuance of equity or convertible debt securities, the percentage ownership of its current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict our operations. The Company continues to pursue external financing alternatives to improve its working capital position. If the Company is unable to obtain the necessary capital, the Company may have to cease operations.
|
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation
The accompanying unaudited financial information as of and for the three and six months ended September 30, 2020 and 2019 has been prepared in accordance with GAAP in the U.S. for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three and six months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended March 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on June 26, 2020.
The condensed consolidated balance sheet at March 31, 2020 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements.
Consolidation
The consolidated financial statements include the accounts of NaturalShrimp Incorporated and its wholly-owned subsidiaries, NaturalShrimp Corporation, NaturalShrimp Global and 51 % owned Natural Aquatic Systems, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
Preparing 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 disclosure 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.
Basic and Diluted Earnings/Loss per Common Share
Basic and diluted earnings or loss per share (“EPS”) amounts in the consolidated financial statements are computed in accordance with ASC 260 – 10 “Earnings per Share”, which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of shares of common stock outstanding. Diluted EPS is based on the weighted average number of shares of common stock outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of shares of common stock outstanding (denominator) during the period. For the six months ended September 30, 2020, the Company had approximately $168,000 in convertible debentures whose approximately 672,000 underlying shares are convertible at the holders’ option at a fixed conversion price of $0.25 which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. For the six months ended September 30, 2019, the Company had approximately $1,033,000 in principal on convertible debentures whose approximately 40,717,000 underlying shares are convertible at the holders’ option at conversion prices ranging from $0.01 to $0.30 for fixed conversion rates, and 34% - 60% of the defined trading price for variable conversion rates and approximately 551,000 warrants with an exercise price of 45% of the market price of the Company’s common stock, which were not included in the calculation of diluted EPS as their effect would be anti-dilutive.
Fair Value Measurements
ASC Topic 820, “Fair Value Measurement”, requires that certain financial instruments be recognized at their fair values at our balance sheet dates. However, other financial instruments, such as debt obligations, are not required to be recognized at their fair values, but GAAP provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair values of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts in our balance sheets. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument, along with other information, including changes in the fair values of certain financial instruments recognized in income or other comprehensive income. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under “Financial Instruments.”
Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred.
The Company did not have any Level 1 or Level 2 assets and liabilities at September 30, 2020 and March 31, 2020.
The Derivative liabilities are Level 3 fair value measurements.
The following is a summary of activity of Level 3 liabilities during the six months ended September 30, 2020 and 2019:
Derivatives
At September 30, 2019, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.17; a risk-free interest rate of 1.88%, and expected volatility of the Company’s common stock of 110.05%, and the various estimated reset exercise prices weighted by probability.
Warrant liability
At September 30, 2019, the fair value of the warrant liability was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.12; a risk-free interest rate of 1.71%, and expected volatility of the Company’s common stock of 268.05%.
Financial Instruments
The Company’s financial instruments include cash and cash equivalents, receivables, payables, and debt and are accounted for under the provisions of ASC Topic 825, “Financial Instruments”. The carrying amount of these financial instruments, with the exception of discounted debt, as reflected in the consolidated balance sheets approximates fair value.
Cash and Cash Equivalents
For the purpose of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents at September 30, 2020 and March 31, 2020.
Concentration of Credit Risk
The Company maintains cash balances at two financial institution. Accounts at this institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of September 30, 2020 the Company’s cash balance exceeded FDIC coverage. As of March 31, 2020, the Company’s cash balance did not exceed FDIC coverage. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible.
Fixed Assets
Equipment is carried at historical value or cost and is depreciated over the estimated useful lives of the related assets. Depreciation on buildings is computed using the straight-line method, while depreciation on all other fixed assets is computed using the Modified Accelerated Cost Recovery System (MACRS) method, which does not materially differ from GAAP. Estimated useful lives are as follows:
Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.
The consolidated statements of operations reflect depreciation expense of approximately $9,000 and $20,000 for the three and six months ended September 30, 2020 and $13,000 and $26,000 for the three and six months ended September 30, 2019, respectively.
Commitments and Contingencies
Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
Recently Issued Accounting Standards
As of September 30, 2020, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.
Management’s Evaluation of Subsequent Events
The Company evaluates events that have occurred after the balance sheet date of September 30, 2020, through the date which the consolidated financial statements were issued. Based upon the review, other than described in Note 11 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements. |
3. FIXED ASSETS |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FIXED ASSETS | A summary of the fixed assets as of September 30, 2020 and March 31, 2020 is as follows:
On March 18, 2020, the Company’s research and development plant in La Coste, Texas was destroyed by a fire. The Company believes that it was caused by a natural gas leak, but the fire was so extensive that the cause was undetermined. The majority of the damage was to their pilot production plant, which destroyed a large portion of the fixed assets of the Company. The property destroyed had a net book value of $1,909,495, which was written off and recognized as Loss due to fire during the year ended March 31, 2020. The Company filed a claim with their insurance company, and as of June 2, 2020, received all the proceeds, which totaled $917,210. The Company is currently purchasing replacement fixed assets and reconstructing their pilot production plant.
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4. SHORT-TERM NOTE AND LINES OF CREDIT |
6 Months Ended |
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Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
SHORT-TERM NOTE AND LINES OF CREDIT | The Company has a working capital line of credit with Extraco Bank. On April 30, 2020, the line of credit was renewed with a maturity date of April 30, 2021 for a balance of $372,675. The line of credit bears an interest rate of 5.0%, that is compounded monthly and to be paid with the principal on the maturity date. The line of credit matures on April 30, 2021 and is secured by certificates of deposit and letters of credit owned by directors and shareholders of the Company. The balance of the line of credit is $372,675 at both September 30, 2020 and March 31, 2020.
The Company also has an additional line of credit with Extraco Bank for $200,000, which was renewed with a maturity date of April 30, 2021, for a balance of $177,778. The lines of credit bear interest at a rate of 5%, that is compounded monthly and to be paid with the principal on the maturity date. The line of credit is secured by certificates of deposit and letters of credit owned by directors and shareholders of the Company. The balance of the line of credit was $177,778 at both September 30, 2020 and March 31, 2020.
The Company also has a working capital line of credit with Capital One Bank for $50,000. The line of credit bears an interest rate of prime plus 25.9 basis points, which totaled 29.15% as of September 30, 2020. The line of credit is unsecured. The balance of the line of credit was $9,580 at both September 30, 2020 and March 31, 2020.
The Company also has a working capital line of credit with Chase Bank for $25,000. The line of credit bears an interest rate of prime plus 10 basis points, which totaled 13.25% as of September 30, 2020. The line of credit is secured by assets of the Company’s subsidiaries. The balance of the line of credit is $10,237 at September 30, 2020 and March 31, 2020.
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5. BANK LOAN |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
BANK LOAN | On April 10, 2020, the Company obtained a Paycheck Protection Program (“PPP”) loan in the amount of $103,200 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Interest on the loan is at the rate of 1% per year, and all loan payments are deferred for six months, at which time the balance is payable in 18 monthly installments if not forgiven in accordance with the CARES Act and the terms of the promissory note executed by the Company in connection with the loan. The promissory note contains events of default and other provisions customary for a loan of this type. As required, the Company intends to use the PPP loan proceeds for payroll, healthcare benefits, and utilities. The program provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act.
On January 10, 2017, the Company entered into a promissory note with Community National Bank for $245,000, at an annual interest rate of 5% and a maturity date of January 10, 2020 (the “CNB Note”). The CNB Note is secured by certain real property owned by the Company in LaCoste, Texas, and is also personally guaranteed by the Company’s President, as well as certain shareholders of the Company. On January 10, 2020, the loan was modified, with certain terms amended. The modified note is for the principal balance of $222,736, with initial monthly payments of $1,730 through February 1, 2037, when all unpaid principal and interest will be due and payable. The loan has an initial yearly rate of interest of 5.75% , which may change beginning on February 1, 2023 and each 36 months thereafter, to the Wall Street Journal Prime Rate plus 1%, but never below 4.25%. The monthly payments may change on the same dates as the interest changes. The Company is also allowed to make payments against the principal at any time. The balance of the CNB Note is $218,947 at September 30, 2020, $8,990 of which was in current liabilities, and $222,736 at March 31, 2020, of which $8,904 was in current liabilities.
On November 3, 2015, the Company entered into a short-term note agreement with Community National Bank for a total value of $50,000, with a maturity date of December 15, 2017. On July 18, 2018, the short-term note was replaced by a promissory note for the outstanding balance of $25,298, which bears interest at 8% with a maturity date of July 18, 2021. The note is guaranteed by an officer and director. The balance of the note at September 30, 2020 and March 31, 2020 was $7,656 and $12,005, respectively.
Maturities on Bank loan is as follows:
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6. CONVERTIBLE DEBENTURES |
6 Months Ended |
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Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBENTURES | August 24, 2018 Debenture
On August 24, 2018, the Company entered into a 10% convertible note in the principal amount of $55,000, convertible into shares of common stock of the Company, which matures August 24, 2019. The interest rate increases to 24% per annum upon an event of default, as set forth in the agreement, including a cross default to all other outstanding notes, and if the debenture is not paid at maturity the principal due increases by 10%. If the Company loses its bid price the principal outstanding on the debenture increases by 20%, and if the Company’s common stock is delisted, the principal increases by 50%.
The note is convertible into shares of the Company’s common stock at a price per share equal to 57% of the lowest closing bid price for the last 20 days. The discount is increased an additional 10%, to 47%, upon a “DTC chill". The conversion feature meets the definition of a derivative and therefore requires bifurcation and will be accounted for as a derivative liability.
During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 130% to 145% of the principal and accrued interest balance, based on the redemption date’s passage of time ranging from 60 days to 180 days from the date of issuance of the debenture. On January 10, 2019 the outstanding principal of $55,000 and accrued interest of $1,974 was purchased from the noteholder by a third party, for $82,612. The additional $25,638 represents the redemption amount owing to the original noteholder and increases the principal amount due to the new noteholder and was recognized as financing cost.
During the fourth fiscal quarter of 2019, in three separate conversions, the holder converted $57,164 of principal into 9,291,354 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall increase in the fair value of $65,000 recognized, with the fair value of the derivative liability related to the converted portion, of $171,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.28 to $0.40; a risk-free interest rate of 2.36% to 2.41% and expected volatility of the Company’s common stock, of 343.98% to 374.79%, and the various estimated reset exercise prices weighted by probability.
On May 5, 2020, the remaining outstanding balance of $29,057 was converted into 2,039,069 shares of common stock of the Company, at a conversion rate of $0.014. As a result of the conversion the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall increase in the fair value of $8,000 recognized, with the fair value of the derivative liability related to the converted portion, of $30,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion of $0.03; a risk-free interest rate of 0.13% and expected volatility of the Company’s common stock, of 158.29%, and the various estimated reset exercise prices weighted by probability.
September 14, 2018 Debenture
On September 14, 2018, the Company entered into a 12% convertible promissory note for $112,500, with an original issuance discount (OID) of $10,250, which matures on March 14, 2019. There is a right of prepayment in the first 180 days, but there is no right to repay after 180 days. Per the agreement, the Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note. The Company has not maintained the required share reservation under the terms of the note agreement. The Company believes it has sufficient available shares of the Company’s common stock in the event of conversion for these notes. The interest rate increases to a default rate of 24% for events as set forth in the agreement, including if the market capitalization is below $5 million, or there are any dilutive issuances. There is also a cross default provision to all other notes. In the event of default, the outstanding principal balance increases to 150%, and if the Company fails to maintain the required authorized share reserve, the outstanding principal increases to 200%. Additionally, If the Company enters into a 3(a)(9) or 3(a)(10) issuance of shares there are liquidation damages of 25% of principal, not to be below $15,000. The Company must also obtain the noteholder's written consent before issuing any new debt. Additionally, if the note is not repaid by the maturity date the principal balance increases by $15,000. The market capitalization has been below $5 million and therefore the note was in default, however, the holder has issued a waiver to the Company on this default provision.
The note is convertible into shares of the Company’s common stock at a variable conversion rate that is equal to the lesser of 60% of the lowest trading price for the last 20 days prior to the issuance of the note or 60% of the lowest market price over the 20 days prior to conversion. The conversion price shall be adjusted upon subsequent sales of securities at a price lower than the original conversion price. There are additional 10% adjustments to the conversion price for events set forth in the agreement, including if the conversion price is less than $0.01, if the Company is not DTC eligible, the Company is no longer a reporting company, or the note cannot be converted into free trading shares on or after nine months from issue date. Per the agreement, the Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability.
On December 13, 2018 the holder converted $11,200 of principal into 4,000,000 shares of common stock of the Company.
On January 25, 2019 the outstanding principal of $101,550, plus an additional $81,970 of default principal and $13,695 in accrued interest of the note, resulting in a new balance of $197,215, was purchased from the noteholder by a third party, who extended the maturity date.
On three separate dates during the first quarter of the fiscal year ending March 31, 2021, the remaining outstanding balance was converted into 35,887,170 shares of common stock of the Company, at a conversion rate of $0.006. As a result of the conversion the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall increase in the fair value of $8,000 recognized, with the fair value of the derivative liability related to the converted portion, of $30,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion of $0.03; a risk-free interest rate of 0.13% and expected volatility of the Company’s common stock, of 158.29%, and the various estimated reset exercise prices weighted by probability.
March 1, 2019 Debenture
On March 1, 2019, the Company entered into a 10% convertible promissory note for $168,000, with an OID of $18,000, for a purchase price of $150,000, which originally matured on November 1, 2019. The maturity date has been extended to September 1, 2020, with the noteholders waiving the default penalties through December 31, 2020. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at a prepayment percentage of 100% to 130% of the outstanding principal and accrued interest based on the redemption date’s passage of time ranging from 60 days to 180 days from the date of issuance of the debenture. Per the agreement, the Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note. In the event of default, as set forth in the agreement, the outstanding principal balance increases to 150%. In addition to standard events of default, an event of default occurs if the common stock of the Company shall lose the “bid” price for its Common Stock, on trading markets, including the OTCBB, OTCQB or an equivalent replacement exchange. If the Company enters into a 3(a)(9) or 3(a)(10) issuance of shares there are liquidation damages of 25% of principal, not to be below $15,000. The Company must also obtain the noteholder’s written consent before issuing any new debt. The note is convertible at a fixed conversion price of $0.25. If an event of default occurs, the fixed conversion price is extinguished and replaced by a variable conversion rate that is 70% of the lowest trading prices during the 20 days prior to conversion. The fixed conversion price shall reset upon any future dilutive issuance of shares, options or convertible securities. The conversion feature at issuance meets the definition of conventional convertible debt and therefore qualifies for the scope exception in ASC 815-10-15-74(a) and would not be bifurcated and accounted for separately as a derivative liability. The Company analyzed the conversion feature under ASC 470-20, “Debt with conversion and other options”, and based on the market price of the common stock of the Company on the date of funding as compared to the conversion price, determined there was a $134,000 beneficial conversion feature to recognize, which will be amortized over the term of the note using the effective interest method. There was not any amortization expense recognized during the three and six months ended September 30, 2020, as the beneficial conversion feature was fully amortized as of September 30, 2019. The amortization expense recognized during the three and six months ended September 30, 2019 amounted to approximately $50,000.
April 17, 2019 Debenture
On April 17, 2019, the Company entered into a 10% convertible promissory note for $110,000, with an OID of $10,000, for a purchase price of $100,000, which matures on January 23, 2020. The maturity date has been extended until September 1, 2020. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at a prepayment percentage of 120% to 130% of the outstanding principal and accrued interest based on the redemption date’s passage of time ranging from 60 days to 180 days from the date of issuance of the debenture. Per the agreement, the Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note. In the event of default, as set forth in the agreement, the outstanding principal balance increases to 150%. In addition to standard events of default, an event of default occurs if the common stock of the Company shall lose the “bid” price for its Common Stock, on trading markets, including the OTCBB, OTCQB or an equivalent replacement exchange. If the Company enters into a 3 (a)(9) or 3(a)(10) issuance of shares there are liquidation damages of 25% of principal, not to be below $15,000. The Company must also obtain the noteholder’s written consent before issuing any new debt. The note is convertible at a fixed conversion price of $0.124. If an event of default occurs, the fixed conversion price is extinguished and replaced by a variable conversion rate that is 70% of the lowest trading prices during the 20 days prior to conversion. The fixed conversion price shall reset upon any future dilutive issuance of shares, options or convertible securities. The conversion feature at issuance meets the definition of conventional convertible debt and therefore qualifies for the scope exception in ASC 815-10-15-74(a) and would not be bifurcated and accounted for separately as a derivative liability. The Company analyzed the conversion feature under ASC 470-20, “Debt with conversion and other options”, and based on the market price of the common stock of the Company on the date of funding as compared to the conversion price, determined there was an approximately $59,000 beneficial conversion feature to recognize, which will be amortized over the term of the note using the effective interest method. There was not any amortization expense recognized during the three and six months ended September 30, 2020, as the beneficial conversion feature was fully amortized as of September 30, 2019. The amortization expense recognized during the three and six months ended September 30, 2019 amounted to approximately $20,000. On September 14, 2020, the outstanding balance of $110,000 was converted into 1,014,001 shares of common stock of the Company, at a conversion rate of $0.124.
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7. STOCKHOLDERS' DEFICIT |
6 Months Ended |
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Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' DEFICIT | Preferred Stock
As of September 30, 2020 and March 31, 2020, the Company had 200,000,000 shares of preferred stock authorized with a par value of $0.0001. Of this amount, 5,000,000 shares of Series A preferred stock are authorized and outstanding, and 5,000 shares Series B preferred stock are authorized and 2,750 outstanding, respectively.
Series B Preferred Equity Offering
On September 17, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with GHS Investments LLC, a Nevada limited liability company (“GHS”) for the purchase of up to 5,000 shares of Series B PS at a stated value of $1,200 per share, or for a total net proceeds of $5,000,000 in the event the entire 5,000 shares of Series B PS are purchased. During the six months ended September 30, 2020 the Company received $2,500,000 for the issuance of 2,500 Series B PS. During the six months ended September 30, 2019, the Company received an initial tranche of $250,000 under the SPA. Subsequent to the period end, the Company issued 250 Series B Preferred Shares in various tranches of the SPA, totaling $250,000.
During the six months ended September 30, 2020, the Company has converted 3,054 Series B PS plus 115 Series B PS dividends-in-kind into 92,090,979 shares of the Company’s common stock.
Equity Financing Agreement 2019
On August 23, 2019, the Company entered into a new Equity Financing Agreement (“Equity Financing Agreement”) and Registration Rights Agreement (“Registration Rights Agreement”) with GHS. Under the terms of the Equity Financing Agreement, GHS agreed to provide the Company with up to $11,000,000 upon effectiveness of a registration statement on Form S-1 (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “Commission”).
Following effectiveness of the Registration Statement, the Company shall have the discretion to deliver puts to GHS and GHS will be obligated to purchase shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to GHS in each put notice shall not exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s Common Stock during the ten (10) trading days preceding the put, so long as such amount does not exceed $500,000. Pursuant to the Equity Financing Agreement, GHS and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s Common Stock to GHS that would result in GHS’s beneficial ownership equaling more than 4.99% of the Company’s outstanding Common Stock. The price of each put share shall be equal to eighty percent (80%) of the Market Price (as defined in the Equity Financing Agreement). Puts may be delivered by the Company to GHS until the earlier of thirty-six (36) months after the effectiveness of the Registration Statement or the date on which GHS has purchased an aggregate of $11,000,000 worth of Common Stock under the terms of the Equity Financing Agreement.
The Registration Rights Agreement provides that the Company shall (i) use its best efforts to file with the Commission the Registration Statement within 30 days of the date of the Registration Rights Agreement; and (ii) have the Registration Statement declared effective by the Commission within 30 days after the date the Registration Statement is filed with the Commission, but in no event more than 90 days after the Registration Statement is filed. The Registration Statement was filed on October 8, 2019 and as of this filing has not yet been deemed effective.
Common Shares Issued to Consultants
On August 24, 2020, the Company issued 1,500,000 shares of common stock to a consultant per an agreement entered into on June 25, 2020. The agreement has a six month term, and therefore the fair value of $67,500, based on the market value of $0.045 on the grant date, will be recognized over the term of the agreement, with $32,500 expensed during the three months ended September 30, 2020.
On June 12, 2020, the Company issued 1,250,000 shares of common stock to a consultant, with the fair value of $61,250 based on the market price of $0.049 on the date issued and which was recognized as professional services in the three months ended June 30, 2020.
Options and Warrants
The Company has not granted any options since inception.
The Company granted warrants in connection with various convertible debentures in previous periods. The remaining outstanding warrants were cancelled in connection with the legal settlement with Vista Capital Investments, LLC, on April 9, 2020. See discussion in Note 10. The related warrant liability was revalued upon cancellation on April 9, 2020, resulting in no change to the fair value of the warrant liability and the $90,000 fair value was reclassified to equity.
As of September 30, 2019, there were 551,452 (after adjustment) remaining warrants to purchase shares of common stock outstanding, classified as a warrant liability, which were to expire on January 31, 2022, with an exercise price of 45% of the market value of the common shares of the Company on the date of exercise.
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8. RELATED PARTY TRANSACTIONS |
6 Months Ended |
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Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Accrued Payroll – Related Parties
Included in other accrued expenses on the accompanying consolidated balance sheet is approximately $84,000 owing to the President of the Company, and approximately $175,000, owing to a key employee (which includes $50,000 in both fiscal years, from consulting services prior to his employment) as of both September 30, 2020 and March 31, 2020. These amounts include both accrued payroll and accrued allowances and expenses.
NaturalShrimp Holdings, Inc.
On January 1, 2016 the Company entered into a notes payable agreement with NaturalShrimp Holdings, Inc.(“NSH”), a shareholder. Between January 16, 2016 and March 7, 2016, the Company borrowed $134,750 under this agreement. An additional $601,361 was borrowed under this agreement in the year ended March 31, 2017. The note payable has no set monthly payment or maturity date with a stated interest rate of 2%. As of September 30, 2020 and March 31, 2020 the outstanding balance is approximately $735,000. At September 30, 2020 and March 31, 2020, accrued interest payable was approximately $58,000 and $51,000, respectively.
Shareholder Notes
The Company has entered into several working capital notes payable to multiple shareholders of NSH and Bill Williams, a former officer and director, and a shareholder of the Company, for a total of $486,500. The notes are unsecured and bear interest at 8%. These notes had stock issued in lieu of interest and have no set monthly payment or maturity date. The balance of these notes was $356,404 at September 30, 2020 and $426,404 at March 31, 2020, respectively, and is classified as a current liability on the consolidated balance sheets. At September 30, 2020 and March 31, 2020, accrued interest payable was approximately $140,000 and $240,000, respectively.
On July 15, 2020, the Company issued a promissory note to Ms. Williams in the amount of $383,604 to settle the amounts that had been recognized per the separation agreement with the late Mr. Bill Williams dated August 15, 2019 (Note 10) for his portion of the related party notes and related accrued interest discussed above, and accrued compensation and allowances. The note bears interest at one percent per annum, and calls for monthly payments of $8,000 until the balance is paid in full.
Shareholders
Beginning in 2010, the Company started entering into several working capital notes payable with various shareholders of NSH for a total of $290,000 and bearing interest at 8%. The balance of these notes at September 30, 2020 and March 31, 2020 was $54,647 and is classified as a current liability on the consolidated balance sheets.
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9. LEASE |
6 Months Ended |
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Sep. 30, 2020 | |
Leases [Abstract] | |
LEASE | On June 24, 2019, the Company entered into a service and equipment lease agreement for water treatment services, consumables and equipment. The lease term is for five years, with a renewal option of an additional five years, with a monthly lease payment of $5,000. The Company analyzed the classification of the lease under ASC 842, and as it did not meet any of the criteria for a financing lease it has been classified as an operating lease. The Company determined the Right of Use asset and Lease liability values at inception calculated at the present value of all future lease payments for the lease term, using an incremental borrowing rate of 5%. The Lease Liability will be expensed each month, on a straight line basis, over the life of the lease. As of September 30, 2020 and March 31, 2020, the lease is on hold while the Company waits for new equipment to be delivered and installed. As the lease is on hold there has been no lease expense or amortization of the Right of Use asset for the three and six months ended September 30, 2020.
For the three and six months ended September 30, 2019 the lease expense was $15,000, and the amortization of the Right of Use asset was $11,702.
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10. COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Executive Employment Agreements –Gerald Easterling
On April 1, 2015, the Company entered into an employment agreement with Gerald Easterling at the time as the Company’s President, effective as of April 1, 2015 (the “Employment Agreement”).
The Employment Agreement is terminable at will and each provide for a base annual salary of $96,000. In addition, the Employment Agreement provides that the employee is entitled, at the sole and absolute discretion of the Company’s Board of Directors, to receive performance bonuses. Mr. Easterling will also be entitled to certain benefits including health insurance and monthly allowances for cell phone and automobile expenses.
The Employment Agreement provides that in the event the employee is terminated without cause or resigns for good reason (as defined in their Employment Agreement), the employee will receive, as severance the employee’s base salary for a period of 60 months following the date of termination. In the event of a change of control of the Company, the employee may elect to terminate the Employment Agreement within 30 days thereafter and upon such termination would receive a lump sum payment equal to 500% of the employee’s base salary.
The Employment Agreement contains certain restrictive covenants relating to non-competition, non-solicitation of customers and non-solicitation of employees for a period of one year following termination of the employee’s Employment Agreement. On August 15, 2019, the late Mr. Bill Williams resigned from his position as Chairman of the Board and Chief Executive Officer of the Company, effective August 31, 2019. Mr. Easterling replaced him as the Chief Executive Officer of the Company. The separation agreement calls for the continued payment of salary, at $8,000 semi-monthly, until his accrued compensation in the amount of approximately $217,000 is paid off, as well as his monthly rent, medical and automobile payments to continue to be paid and deducted against the accrued compensation and debt. After the accrued compensation is fully paid, the payments shall be $10,000 per month against the remaining debt balance, until such balance is paid in full. On July 15, 2020, the Company issued a promissory note to Ms. Williams in the amount of $383,604 to settle the amounts agreed to in the separation agreement for accrued compensation and debt (see Note 8).
Vista Capital Investments, LLC
On April 30, 2019, a complaint was filed against the Company in the U.S. District Court in Dallas, Texas alleging that the Company breached a provision in a common stock purchase warrant (the “Vista Warrant”) issued by the Company to Vista Capital Investments, LLC (“Vista”). Vista alleged that the Company failed to issue certain shares of the Company’s Common Stock as was required under the terms of the Warrant. Vista sought money damages in the approximate amount of $7,000,000, as well as costs and reimbursement of expenses.
On April 9, 2020, the Company, Vista and David Clark (“Clark’), a principal of Vista, (the “Parties”) entered into a Settlement Agreement and Release (the “Settlement Agreement”) whereby the Company shall (i) pay to Vista the sum of $75,000, which the Company wired on April 10, 2020, and (ii) issue to Vista 17,500,000 shares of the Company’s Common Stock (the “Settlement Shares”). For a period of time equal to 90-days from the date of the settlement, or July 8, 2020, the Company shall have the right, but not the obligation, to purchase back from Vista 8,750,000 of the Settlement Shares at a price equal to the greater of (i) the volume weighted-average trading price of the Company’s common shares over the five preceding trading days prior to the date of the delivery of the Company’s written notice of such repurchase or (ii) $0.02 per share. On May 18, 2020, the Company received $50,000 as consideration for waiving the purchase option on the Settlement Shares, thereby allowing Vista to retain all of the Settlement Shares. The Vista warrants outstanding were cancelled as part of the Settlement Agreement.
RGA Labs, Inc.
On February 18, 2020, RGA Labs, Inc. (“RGA”) filed suit against the Company in the Illinois Circuit Court (23rd District) alleging that the Company owed RGA money pursuant to a written contract for the design and manufacture of certain water treatment equipment commissioned by the Company. The Company disputed the allegations and has counterclaimed against RGA for additional costs and expenses incurred by the Company in correcting, repairing and retro-fitting the equipment to enable it to work in the Company’s facilities. The amount in controversy is not material.
Gary Shover
A shareholder of NaturalShrimp Holdings, Inc. (“NSH”), Gary Shover, filed suit against the Company on August 11, 2020 in the Northern District of Texas, Dallas Division, alleging breach of contract for the Company’s failure to exchange common shares of the Company for shares Mr. Shover owns in NSH. The Company has filed its answer to the complaint and is seeking to settle the matter with Mr. Shover with the approval of the Federal District Court. A settlement stipulation has been prepared and approved by the parties and will be filed with the Court along with a proposed order.
Vista Capital Investments, LLC
On April 30, 2019, a complaint was filed against the Company in the U.S. District Court in Dallas, Texas alleging that the Company breached a provision in a common stock purchase warrant (the “Vista Warrant”) issued by the Company to Vista Capital Investments, LLC (“Vista”). Vista alleged that the Company failed to issue certain shares of the Company’s Common Stock as was required under the terms of the Warrant. Vista sought money damages in the approximate amount of $7,000,000, as well as costs and reimbursement of expenses.
On April 9, 2020, the Company, Vista and David Clark (“Clark’), a principal of Vista, (the “Parties”) entered into a Settlement Agreement and Release (the “Settlement Agreement”) whereby the Company shall (i) pay to Vista the sum of $75,000, which the Company wired on April 10, 2020, and (ii) issue to Vista 17,500,000 shares of the Company’s Common Stock (the “Settlement Shares”). For a period of time equal to 90-days from the date of the settlement, or July 8, 2020, the Company shall have the right, but not the obligation, to purchase back from Vista 8,750,000 of the Settlement Shares at a price equal to the greater of (i) the volume weighted-average trading price of the Company’s common shares over the five preceding trading days prior to the date of the delivery of the Company’s written notice of such repurchase or (ii) $0.02 per share. On May 18, 2020, the Company received $50,000 as consideration for waiving the purchase option on the Settlement Shares, thereby allowing Vista to retain all of the Settlement Shares. The Vista warrants outstanding were also cancelled as part of the Settlement Agreement. The $75,000, as well as the fair market value of the 17,500,000 common shares, which is $560,000 based on the market value of the Company’s common stock on the settlement date of $0.32, was accrued in Accrued expenses on the accompanying March 31, 2020 Balance Sheet and recognized as Loss on Warrant settlement in the fourth quarter of the year ending March 31, 2020.
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11. SUBSEQUENT EVENTS |
6 Months Ended |
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Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Subsequent to the three months ended September 30, 2020, the Company issued 250 Series B Preferred Shares in various tranches of the SPA, totaling $250,000.
On August 11, 2020, the Company issued a press release announcing that it has signed a letter of intent to acquire the assets of Alder Aqua, formerly known as VeroBlue Farms, in Webster City, Iowa, including, but not limited to, the real property, equipment, tanks, rolling stock, inventory, permits, contracts, customer lists and contracts and other such assets used in the operation of the business. The purchase price will be $10,000,000, consisting of a $5,000,000 down payment and notes due in 36 and 48 months. The acquisition is subject to successful due diligence by the Company and is expected to close in the fourth quarter of 2020. Additionally, the facilities located in Blairsburg, Iowa and Buckeye, Iowa are included in the transaction.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | The accompanying unaudited financial information as of and for the three and six months ended September 30, 2020 and 2019 has been prepared in accordance with GAAP in the U.S. for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three and six months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended March 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on June 26, 2020.
The condensed consolidated balance sheet at March 31, 2020 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements.
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Consolidation | The consolidated financial statements include the accounts of NaturalShrimp Incorporated and its wholly-owned subsidiaries, NaturalShrimp Corporation, NaturalShrimp Global and 51 % owned Natural Aquatic Systems, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.
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Use of Estimates | Preparing 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 disclosure 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.
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Basic and Diluted Earnings/Loss per Common Share | Basic and diluted earnings or loss per share (“EPS”) amounts in the consolidated financial statements are computed in accordance with ASC 260 – 10 “Earnings per Share”, which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of shares of common stock outstanding. Diluted EPS is based on the weighted average number of shares of common stock outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of shares of common stock outstanding (denominator) during the period. For the six months ended September 30, 2020, the Company had approximately $168,000 in convertible debentures whose approximately 672,000 underlying shares are convertible at the holders’ option at a fixed conversion price of $0.25 which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. For the six months ended September 30, 2019, the Company had approximately $1,033,000 in principal on convertible debentures whose approximately 40,717,000 underlying shares are convertible at the holders’ option at conversion prices ranging from $0.01 to $0.30 for fixed conversion rates, and 34% - 60% of the defined trading price for variable conversion rates and approximately 551,000 warrants with an exercise price of 45% of the market price of the Company’s common stock, which were not included in the calculation of diluted EPS as their effect would be anti-dilutive.
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Fair Value Measurements | ASC Topic 820, “Fair Value Measurement”, requires that certain financial instruments be recognized at their fair values at our balance sheet dates. However, other financial instruments, such as debt obligations, are not required to be recognized at their fair values, but GAAP provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair values of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts in our balance sheets. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument, along with other information, including changes in the fair values of certain financial instruments recognized in income or other comprehensive income. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under “Financial Instruments.”
Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred.
The Company did not have any Level 1 or Level 2 assets and liabilities at September 30, 2020 and March 31, 2020.
The Derivative liabilities are Level 3 fair value measurements.
The following is a summary of activity of Level 3 liabilities during the six months ended September 30, 2020 and 2019:
Derivatives
At September 30, 2019, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.17; a risk-free interest rate of 1.88%, and expected volatility of the Company’s common stock of 110.05%, and the various estimated reset exercise prices weighted by probability.
Warrant liability
At September 30, 2019, the fair value of the warrant liability was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.12; a risk-free interest rate of 1.71%, and expected volatility of the Company’s common stock of 268.05%.
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Financial Instruments | The Company’s financial instruments include cash and cash equivalents, receivables, payables, and debt and are accounted for under the provisions of ASC Topic 825, “Financial Instruments”. The carrying amount of these financial instruments, with the exception of discounted debt, as reflected in the consolidated balance sheets approximates fair value.
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Cash and Cash Equivalents | For the purpose of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents at September 30, 2020 and March 31, 2020.
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Concentration of Credit Risk | The Company maintains cash balances at two financial institution. Accounts at this institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of September 30, 2020 the Company’s cash balance exceeded FDIC coverage. As of March 31, 2020, the Company’s cash balance did not exceed FDIC coverage. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible.
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Fixed Assets | Equipment is carried at historical value or cost and is depreciated over the estimated useful lives of the related assets. Depreciation on buildings is computed using the straight-line method, while depreciation on all other fixed assets is computed using the Modified Accelerated Cost Recovery System (MACRS) method, which does not materially differ from GAAP. Estimated useful lives are as follows:
Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.
The consolidated statements of operations reflect depreciation expense of approximately $9,000 and $20,000 for the three and six months ended September 30, 2020 and $13,000 and $26,000 for the three and six months ended September 30, 2019, respectively.
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Commitments and Contingencies | Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
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Recently Issued Accounting Standards | As of September 30, 2020, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.
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Management's Evaluation of Subsequent Events | The Company evaluates events that have occurred after the balance sheet date of September 30, 2020, through the date which the consolidated financial statements were issued. Based upon the review, other than described in Note 11 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity of Level 3 liabilities | Derivatives
Warrant liability
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Estimated useful lives |
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3. FIXED ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed assets |
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5. BANK LOAN (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Maturities on bank loan |
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1. NATURE OF THE ORGANIZATION AND BUSINESS (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Mar. 31, 2020 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net loss available for common stockholders | $ (1,479,153) | $ (856,711) | $ (2,394,017) | $ (1,651,981) | |
Accumulated deficit | (48,821,413) | (48,821,413) | $ (46,427,396) | ||
Working capital deficit | $ (3,088,000) | (3,088,000) | |||
Proceeds from sale of Series B Convertible Preferred stock | 2,500,000 | $ 250,000 | |||
Proceeds from sale of Series B Convertible Preferred stock | $ 250,000 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Accounting Policies [Abstract] | ||
Derivative liability, beginning | $ 176,000 | $ 157,000 |
Reclass to equity upon conversion | (205,000) | 0 |
Change in fair value | 29,000 | 39,000 |
Derivative liability, ending | 0 | 196,000 |
Warrant liability, beginning | 90,000 | 93,000 |
Reclass to equity upon cancellation or exercise | (90,000) | 0 |
Change in fair value | 0 | 0 |
Warrant liability, beginning | $ 0 | $ 93,000 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) |
6 Months Ended |
---|---|
Sep. 30, 2020 | |
Buildings | Minimum | |
Estimated useful life | 27 years 6 months |
Buildings | Maximum | |
Estimated useful life | 39 years |
Other Depreciable Property | Minimum | |
Estimated useful life | 5 years |
Other Depreciable Property | Maximum | |
Estimated useful life | 10 years |
Furniture and Fixtures | Minimum | |
Estimated useful life | 3 years |
Furniture and Fixtures | Maximum | |
Estimated useful life | 10 years |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Accounting Policies [Abstract] | ||||
Depreciation | $ 8,896 | $ 13,319 | $ 19,677 | $ 25,563 |
3. FIXED ASSETS (Details) - USD ($) |
Sep. 30, 2020 |
Mar. 31, 2020 |
---|---|---|
Fixed assets, gross | $ 1,695,493 | $ 953,105 |
Accumulated depreciation | (264,974) | (245,297) |
Fixed assets, net | 1,430,519 | 707,808 |
Land | ||
Fixed assets, gross | 202,293 | 202,293 |
Buildings | ||
Fixed assets, gross | 541,862 | 509,762 |
Machinery and Equipment | ||
Fixed assets, gross | 932,275 | 221,987 |
Autos and Trucks | ||
Fixed assets, gross | $ 19,063 | $ 19,063 |
4. SHORT-TERM NOTE AND LINES OF CREDIT (Details Narrative) - USD ($) |
Sep. 30, 2020 |
Mar. 31, 2020 |
---|---|---|
Line of credit balance | $ 578,153 | $ 570,497 |
Extraco Bank | ||
Line of credit balance | 342,675 | 342,675 |
Additional Lines of Credit Extraco Bank | ||
Line of credit balance | 177,778 | 177,778 |
Capital One Bank | ||
Line of credit balance | 9,580 | 9,580 |
Chase Bank | ||
Line of credit balance | $ 10,237 | $ 10,237 |
5. BANK LOAN (Details) |
Sep. 30, 2020
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
March 31, 2021 | $ 108,041 |
March 31, 2022 | 20,730 |
March 31, 2023 | 9,240 |
March 31, 2024 | 9,786 |
March 31, 2025 | 10,364 |
Thereafter | 171,642 |
Total | $ 329,803 |
5. BANK LOAN (Details Narrative) - USD ($) |
Sep. 30, 2020 |
Mar. 31, 2020 |
---|---|---|
Bank loans, less current maturities | $ 210,509 | $ 225,837 |
Current maturities of bank loan | 8,438 | 8,904 |
Note 1 | ||
Note payable | 218,947 | 222,736 |
Note 2 | ||
Note payable | $ 7,656 | $ 12,005 |
7. STOCKHOLDERS' DEFICIT (Details Narrative) - $ / shares |
Sep. 30, 2020 |
Mar. 31, 2020 |
---|---|---|
Preferred stock, par value | $ .0001 | $ 0.0001 |
Preferred stock, shares authorized | 200,000,000 | 200,000,000 |
Series A Convertible Preferred Stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 5,000,000 | 5,000,000 |
Series B Convertible Preferred Stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares issued | 1,696 | 2,250 |
Preferred stock, shares outstanding | 1,696 | 2,250 |
8. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
Sep. 30, 2020 |
Mar. 31, 2020 |
---|---|---|
Other accrued expenses | $ 309,485 | $ 1,204,815 |
President | ||
Other accrued expenses | 84,000 | |
Key Employee | ||
Other accrued expenses | 84,000 | 175,000 |
NaturalShrimp Holdings, Inc | ||
Note payable related party | 735,000 | 735,000 |
Accrued interest payable | 58,000 | 51,000 |
Multiple Shareholders | ||
Note payable related party | 356,404 | 426,404 |
Accrued interest payable | 140,000 | 240,000 |
Various Shareholders | ||
Note payable related party | $ 54,647 | $ 54,647 |
9. LEASE (Details Narrative) - USD ($) |
6 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Leases [Abstract] | ||
Lease expense | $ 0 | $ 15,000 |
Amortization of right of use asset | $ 0 | $ 11,702 |
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