false Q3 --03-31 2024 0001465470 0001465470 2023-04-01 2023-12-31 0001465470 2024-02-14 0001465470 2023-12-31 0001465470 2023-03-31 0001465470 us-gaap:NonrelatedPartyMember 2023-12-31 0001465470 us-gaap:NonrelatedPartyMember 2023-03-31 0001465470 us-gaap:RelatedPartyMember 2023-12-31 0001465470 us-gaap:RelatedPartyMember 2023-03-31 0001465470 SHMP:SeriesERedeemableConvertiblePreferredStockMember 2023-12-31 0001465470 SHMP:SeriesERedeemableConvertiblePreferredStockMember 2023-03-31 0001465470 SHMP:SeriesFRedeemableConvertiblePreferredStockMember 2023-12-31 0001465470 SHMP:SeriesFRedeemableConvertiblePreferredStockMember 2023-03-31 0001465470 SHMP:SeriesGRedeemableConvertiblePreferredStockMember 2023-12-31 0001465470 SHMP:SeriesGRedeemableConvertiblePreferredStockMember 2023-03-31 0001465470 SHMP:SeriesEConvertiblePreferredStockMember 2023-12-31 0001465470 SHMP:SeriesEConvertiblePreferredStockMember 2023-03-31 0001465470 SHMP:SeriesAConvertiblePreferredStockMember 2023-12-31 0001465470 SHMP:SeriesAConvertiblePreferredStockMember 2023-03-31 0001465470 2023-10-01 2023-12-31 0001465470 2022-10-01 2022-12-31 0001465470 2022-04-01 2022-12-31 0001465470 us-gaap:NonrelatedPartyMember 2023-10-01 2023-12-31 0001465470 us-gaap:NonrelatedPartyMember 2022-10-01 2022-12-31 0001465470 us-gaap:NonrelatedPartyMember 2023-04-01 2023-12-31 0001465470 us-gaap:NonrelatedPartyMember 2022-04-01 2022-12-31 0001465470 us-gaap:RelatedPartyMember 2023-10-01 2023-12-31 0001465470 us-gaap:RelatedPartyMember 2022-10-01 2022-12-31 0001465470 us-gaap:RelatedPartyMember 2023-04-01 2023-12-31 0001465470 us-gaap:RelatedPartyMember 2022-04-01 2022-12-31 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-03-31 0001465470 us-gaap:CommonStockMember 2023-03-31 0001465470 us-gaap:AdditionalPaidInCapitalMember 2023-03-31 0001465470 SHMP:StockToBeIssuedMember 2023-03-31 0001465470 SHMP:SubscriptionReceivableMember 2023-03-31 0001465470 us-gaap:RetainedEarningsMember 2023-03-31 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-06-30 0001465470 us-gaap:CommonStockMember 2023-06-30 0001465470 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001465470 SHMP:StockToBeIssuedMember 2023-06-30 0001465470 SHMP:SubscriptionReceivableMember 2023-06-30 0001465470 us-gaap:RetainedEarningsMember 2023-06-30 0001465470 2023-06-30 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-09-30 0001465470 us-gaap:CommonStockMember 2023-09-30 0001465470 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0001465470 SHMP:StockToBeIssuedMember 2023-09-30 0001465470 SHMP:SubscriptionReceivableMember 2023-09-30 0001465470 us-gaap:RetainedEarningsMember 2023-09-30 0001465470 2023-09-30 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2022-03-31 0001465470 us-gaap:CommonStockMember 2022-03-31 0001465470 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001465470 SHMP:StockToBeIssuedMember 2022-03-31 0001465470 SHMP:SubscriptionReceivableMember 2022-03-31 0001465470 us-gaap:RetainedEarningsMember 2022-03-31 0001465470 2022-03-31 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2022-06-30 0001465470 us-gaap:CommonStockMember 2022-06-30 0001465470 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001465470 SHMP:StockToBeIssuedMember 2022-06-30 0001465470 SHMP:SubscriptionReceivableMember 2022-06-30 0001465470 us-gaap:RetainedEarningsMember 2022-06-30 0001465470 2022-06-30 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2022-09-30 0001465470 us-gaap:CommonStockMember 2022-09-30 0001465470 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001465470 SHMP:StockToBeIssuedMember 2022-09-30 0001465470 SHMP:SubscriptionReceivableMember 2022-09-30 0001465470 us-gaap:RetainedEarningsMember 2022-09-30 0001465470 2022-09-30 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-04-01 2023-06-30 0001465470 us-gaap:CommonStockMember 2023-04-01 2023-06-30 0001465470 us-gaap:AdditionalPaidInCapitalMember 2023-04-01 2023-06-30 0001465470 SHMP:StockToBeIssuedMember 2023-04-01 2023-06-30 0001465470 SHMP:SubscriptionReceivableMember 2023-04-01 2023-06-30 0001465470 us-gaap:RetainedEarningsMember 2023-04-01 2023-06-30 0001465470 2023-04-01 2023-06-30 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-07-01 2023-09-30 0001465470 us-gaap:CommonStockMember 2023-07-01 2023-09-30 0001465470 us-gaap:AdditionalPaidInCapitalMember 2023-07-01 2023-09-30 0001465470 SHMP:StockToBeIssuedMember 2023-07-01 2023-09-30 0001465470 SHMP:SubscriptionReceivableMember 2023-07-01 2023-09-30 0001465470 us-gaap:RetainedEarningsMember 2023-07-01 2023-09-30 0001465470 2023-07-01 2023-09-30 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-10-01 2023-12-31 0001465470 us-gaap:CommonStockMember 2023-10-01 2023-12-31 0001465470 us-gaap:AdditionalPaidInCapitalMember 2023-10-01 2023-12-31 0001465470 SHMP:StockToBeIssuedMember 2023-10-01 2023-12-31 0001465470 SHMP:SubscriptionReceivableMember 2023-10-01 2023-12-31 0001465470 us-gaap:RetainedEarningsMember 2023-10-01 2023-12-31 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2022-04-01 2022-06-30 0001465470 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001465470 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001465470 SHMP:StockToBeIssuedMember 2022-04-01 2022-06-30 0001465470 SHMP:SubscriptionReceivableMember 2022-04-01 2022-06-30 0001465470 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001465470 2022-04-01 2022-06-30 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2022-07-01 2022-09-30 0001465470 us-gaap:CommonStockMember 2022-07-01 2022-09-30 0001465470 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0001465470 SHMP:StockToBeIssuedMember 2022-07-01 2022-09-30 0001465470 SHMP:SubscriptionReceivableMember 2022-07-01 2022-09-30 0001465470 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0001465470 2022-07-01 2022-09-30 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2022-10-01 2022-12-31 0001465470 us-gaap:CommonStockMember 2022-10-01 2022-12-31 0001465470 us-gaap:AdditionalPaidInCapitalMember 2022-10-01 2022-12-31 0001465470 SHMP:StockToBeIssuedMember 2022-10-01 2022-12-31 0001465470 SHMP:SubscriptionReceivableMember 2022-10-01 2022-12-31 0001465470 us-gaap:RetainedEarningsMember 2022-10-01 2022-12-31 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2023-12-31 0001465470 us-gaap:CommonStockMember 2023-12-31 0001465470 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0001465470 SHMP:StockToBeIssuedMember 2023-12-31 0001465470 SHMP:SubscriptionReceivableMember 2023-12-31 0001465470 us-gaap:RetainedEarningsMember 2023-12-31 0001465470 us-gaap:PreferredStockMember us-gaap:SeriesAPreferredStockMember 2022-12-31 0001465470 us-gaap:CommonStockMember 2022-12-31 0001465470 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001465470 SHMP:StockToBeIssuedMember 2022-12-31 0001465470 SHMP:SubscriptionReceivableMember 2022-12-31 0001465470 us-gaap:RetainedEarningsMember 2022-12-31 0001465470 2022-12-31 0001465470 us-gaap:SubsequentEventMember 2024-01-01 2024-01-31 0001465470 SHMP:SeriesAConvertiblePreferredStockMember 2023-04-01 2023-12-31 0001465470 SHMP:SeriesERedeemableConvertiblePreferredStockMember 2023-04-01 2023-12-31 0001465470 us-gaap:SeriesFPreferredStockMember 2023-04-01 2023-12-31 0001465470 us-gaap:SeriesFPreferredStockMember 2023-12-31 0001465470 us-gaap:SeriesGPreferredStockMember 2023-04-01 2023-12-31 0001465470 us-gaap:SeriesGPreferredStockMember 2023-12-31 0001465470 us-gaap:WarrantMember 2023-04-01 2023-12-31 0001465470 SHMP:SeriesAConvertiblePreferredStockMember 2022-04-01 2022-12-31 0001465470 SHMP:SeriesAConvertiblePreferredStockMember 2022-12-31 0001465470 SHMP:SeriesERedeemableConvertiblePreferredStockMember 2022-04-01 2022-12-31 0001465470 SHMP:SeriesERedeemableConvertiblePreferredStockMember 2022-12-31 0001465470 SHMP:SeriesERedeemableConvertiblePreferredStockOneMember 2022-04-01 2022-12-31 0001465470 SHMP:SeriesERedeemableConvertiblePreferredStockOneMember 2022-12-31 0001465470 SHMP:SeriesERedeemableConvertiblePreferredStockOneMember 2022-04-01 2022-12-31 0001465470 us-gaap:SeriesFPreferredStockMember 2022-04-01 2022-12-31 0001465470 us-gaap:SeriesFPreferredStockMember 2022-12-31 0001465470 us-gaap:WarrantMember 2022-04-01 2022-12-31 0001465470 us-gaap:MeasurementInputSharePriceMember 2023-12-31 0001465470 us-gaap:MeasurementInputRiskFreeInterestRateMember srt:MinimumMember 2023-12-31 0001465470 us-gaap:MeasurementInputRiskFreeInterestRateMember srt:MaximumMember 2023-12-31 0001465470 us-gaap:MeasurementInputPriceVolatilityMember srt:MinimumMember 2023-12-31 0001465470 us-gaap:MeasurementInputPriceVolatilityMember srt:MaximumMember 2023-12-31 0001465470 us-gaap:MeasurementInputSharePriceMember 2023-03-31 0001465470 us-gaap:MeasurementInputRiskFreeInterestRateMember 2023-03-31 0001465470 us-gaap:MeasurementInputPriceVolatilityMember srt:MinimumMember 2023-03-31 0001465470 us-gaap:MeasurementInputPriceVolatilityMember srt:MaximumMember 2023-03-31 0001465470 2022-11-04 2022-11-04 0001465470 2022-11-04 0001465470 us-gaap:PatentsMember 2023-10-01 2023-12-31 0001465470 us-gaap:PatentsMember 2022-10-01 2022-12-31 0001465470 SHMP:LicenseRightMember 2023-10-01 2023-12-31 0001465470 SHMP:LicenseRightMember 2022-10-01 2022-12-31 0001465470 us-gaap:PatentsMember 2023-04-01 2023-12-31 0001465470 us-gaap:PatentsMember 2022-04-01 2022-12-31 0001465470 SHMP:LicenseRightMember 2023-04-01 2023-12-31 0001465470 SHMP:LicenseRightMember 2022-04-01 2022-12-31 0001465470 SHMP:HydrenesisDeltaSystemsLLCMember 2021-08-25 0001465470 SHMP:HydrenesisDeltaSystemsLLCMember SHMP:TechnologyRightsAgreementMember 2021-08-25 0001465470 SHMP:HydrenesisTechnologyAndEquipmentMember 2023-05-20 2023-05-21 0001465470 us-gaap:RelatedPartyMember 2023-05-21 0001465470 2023-05-20 2023-05-21 0001465470 us-gaap:WarrantMember 2023-04-01 2023-12-31 0001465470 SHMP:PromissoryNoteMember 2023-04-01 2023-12-31 0001465470 2022-04-01 2023-03-31 0001465470 us-gaap:BuildingMember 2023-12-31 0001465470 us-gaap:MachineryAndEquipmentMember srt:MinimumMember 2023-12-31 0001465470 us-gaap:MachineryAndEquipmentMember srt:MaximumMember 2023-12-31 0001465470 us-gaap:VehiclesMember 2023-12-31 0001465470 us-gaap:FurnitureAndFixturesMember srt:MinimumMember 2023-12-31 0001465470 us-gaap:FurnitureAndFixturesMember srt:MaximumMember 2023-12-31 0001465470 SHMP:ShrimpSalesMember 2023-10-01 2023-12-31 0001465470 SHMP:ShrimpSalesMember 2022-10-01 2022-12-31 0001465470 SHMP:TechnologyAndEquipmentServicesMember 2023-10-01 2023-12-31 0001465470 SHMP:TechnologyAndEquipmentServicesMember 2022-10-01 2022-12-31 0001465470 SHMP:ShrimpSalesMember 2023-04-01 2023-12-31 0001465470 SHMP:ShrimpSalesMember 2022-04-01 2022-12-31 0001465470 SHMP:TechnologyAndEquipmentServicesMember 2023-04-01 2023-12-31 0001465470 SHMP:TechnologyAndEquipmentServicesMember 2022-04-01 2022-12-31 0001465470 SHMP:CapitalOneBankMember 2023-12-31 0001465470 SHMP:CapitalOneBankMember 2023-04-01 2023-12-31 0001465470 SHMP:CapitalOneBankMember 2023-03-31 0001465470 SHMP:ChaseBankMember 2023-12-31 0001465470 SHMP:ChaseBankMember 2023-04-01 2023-12-31 0001465470 SHMP:ChaseBankMember 2023-03-31 0001465470 SHMP:JanuaryTwoThousandTwentyThreeNoteMember 2023-01-20 0001465470 SHMP:JanuaryTwoThousandTwentyThreeNoteMember 2023-01-19 2023-01-20 0001465470 SHMP:JanuaryTwoThousandTwentyThreeNoteMember 2023-11-17 2023-11-17 0001465470 SHMP:NewPromissoryNoteMember SHMP:JanuaryTwoThousandTwentyThreeNoteMember 2023-11-08 0001465470 SHMP:JanuaryTwoThousandTwentyThreeNoteMember 2023-11-08 0001465470 us-gaap:CommercialPaperMember SHMP:JanuaryTwoThousandTwentyThreeNoteMember us-gaap:CommonStockMember 2023-11-08 2023-11-08 0001465470 us-gaap:CommercialPaperMember SHMP:JanuaryTwoThousandTwentyThreeNoteMember us-gaap:CommonStockMember 2023-11-08 0001465470 SHMP:JanuaryTwoThousandTwentyThreeNoteMember us-gaap:CommercialPaperMember 2023-11-17 2023-11-17 0001465470 us-gaap:CommercialPaperMember SHMP:YottaInvestmentLLCMember 2023-04-21 0001465470 us-gaap:CommercialPaperMember SHMP:YottaInvestmentLLCMember 2023-05-17 0001465470 SHMP:WilliamsMember SHMP:PromissoryNoteMember 2020-07-15 0001465470 SHMP:WilliamsMember SHMP:PromissoryNoteMember 2020-07-15 2020-07-15 0001465470 SHMP:WilliamsMember SHMP:PromissoryNoteMember 2023-12-31 0001465470 SHMP:WilliamsMember SHMP:PromissoryNoteMember 2023-03-31 0001465470 SHMP:SecuritiesPurchaseAgreementMember 2022-08-17 0001465470 SHMP:SecuritiesPurchaseAgreementMember 2022-08-17 2022-08-17 0001465470 srt:MaximumMember 2023-12-31 0001465470 2023-11-18 2023-11-20 0001465470 SHMP:RestructuredAugustNoteMember 2023-04-01 2023-12-31 0001465470 SHMP:RestructuredAugustNoteMember 2023-12-31 0001465470 SHMP:RestructuredAugustNoteMember 2023-03-31 0001465470 SHMP:RestructuredAugustNoteMember 2022-04-01 2023-03-31 0001465470 SHMP:SecuritiesPurchaseAgreementMember SHMP:DecemberFifteenTwoThousandTwentyOneDebentureMember 2021-12-15 0001465470 SHMP:SecuritiesPurchaseAgreementMember SHMP:DecemberFifteenTwoThousandTwentyOneDebentureMember 2021-12-15 0001465470 SHMP:SecuritiesPurchaseAgreementMember SHMP:DecemberFifteenTwoThousandTwentyOneDebentureMember us-gaap:DebenturesSubjectToMandatoryRedemptionMember 2021-12-15 0001465470 SHMP:SecuritiesPurchaseAgreementMember SHMP:DecemberFifteenTwoThousandTwentyOneDebentureMember 2021-12-15 2021-12-15 0001465470 SHMP:AmendedAndRestatedSecuredPromissoryNoteMember 2022-11-04 2022-11-04 0001465470 SHMP:AmendedAndRestatedSecuredPromissoryNoteMember 2023-06-30 0001465470 SHMP:DecemberFifteenTwoThousandTwentyOneDebentureMember 2023-04-01 2023-12-31 0001465470 SHMP:RestructuredSeniorNoteMember 2023-12-31 0001465470 SHMP:RestructuredSeniorNoteMember 2023-04-01 2023-12-31 0001465470 SHMP:RestructuredSeniorNoteMember 2021-04-01 2022-03-31 0001465470 SHMP:RestructuredSeniorNoteMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2023-12-31 0001465470 SHMP:RestructuredSeniorNoteMember us-gaap:MeasurementInputPriceVolatilityMember 2023-12-31 0001465470 SHMP:RestructuredSeniorNoteMember us-gaap:MeasurementInputSharePriceMember 2023-12-31 0001465470 SHMP:RestructuredSeniorNoteMember 2023-03-31 0001465470 SHMP:RestructuredSeniorNoteMember 2022-04-01 2023-03-31 0001465470 2023-09-28 0001465470 us-gaap:SeriesAPreferredStockMember 2023-12-31 0001465470 us-gaap:SeriesBPreferredStockMember 2023-12-31 0001465470 us-gaap:SeriesDPreferredStockMember 2023-12-31 0001465470 us-gaap:SeriesEPreferredStockMember 2023-12-31 0001465470 us-gaap:SeriesEPreferredStockMember 2023-03-31 0001465470 SHMP:SeriesGRedeemableConvertiblePreferredStockMember 2023-12-01 0001465470 SHMP:SeriesGRedeemableConvertiblePreferredStockMember 2023-12-01 2023-12-01 0001465470 SHMP:SeriesGRedeemableConvertiblePreferredStockMember 2023-12-14 2023-12-14 0001465470 SHMP:SeriesGRedeemableConvertiblePreferredStockMember 2023-12-14 0001465470 SHMP:SeriesGRedeemableConvertiblePreferredStockMember 2023-12-19 2023-12-19 0001465470 SHMP:SecuritiesPurchaseAgreementMember us-gaap:SeriesEPreferredStockMember 2023-07-23 2023-07-24 0001465470 SHMP:SecuritiesPurchaseAgreementMember us-gaap:SeriesEPreferredStockMember 2023-07-24 0001465470 us-gaap:SeriesEPreferredStockMember 2023-05-01 2023-05-01 0001465470 SHMP:GHSPurchaseAgreementMember 2022-11-04 2022-11-04 0001465470 SHMP:GHSPurchaseAgreementMember 2022-11-04 0001465470 SHMP:GHSPurchaseAgreementMember 2023-04-01 2023-06-30 0001465470 SHMP:GHSPurchaseAgreementMember 2023-06-30 0001465470 SHMP:GHSPurchaseAgreementMember 2022-04-01 2023-03-31 0001465470 srt:MinimumMember SHMP:GHSPurchaseAgreementMember 2023-03-31 0001465470 srt:MaximumMember SHMP:GHSPurchaseAgreementMember 2023-03-31 0001465470 SHMP:EquityFinancingAgreementMember SHMP:GHSInvestmentLLCMember 2023-04-27 2023-04-28 0001465470 SHMP:EquityFinancingAgreementMember SHMP:GHSInvestmentLLCMember 2023-04-28 0001465470 SHMP:EquityFinancingAgreementMember 2023-07-01 2023-09-30 0001465470 SHMP:EquityFinancingAgreementMember 2023-09-30 0001465470 SHMP:EquityFinancingAgreementMember 2023-10-01 2023-12-31 0001465470 SHMP:EquityFinancingAgreementMember srt:MinimumMember 2023-12-31 0001465470 SHMP:EquityFinancingAgreementMember srt:MaximumMember 2023-12-31 0001465470 SHMP:EquityFinancingAgreementMember 2023-10-31 2023-10-31 0001465470 SHMP:GHSTwoThousandTwentyThreePurchaseAgreementMember 2023-05-08 2023-05-09 0001465470 SHMP:GHSTwoThousandTwentyThreePurchaseAgreementMember 2023-04-01 2023-06-30 0001465470 SHMP:GHSTwoThousandTwentyThreePurchaseAgreementMember srt:MinimumMember 2023-06-30 0001465470 SHMP:GHSTwoThousandTwentyThreePurchaseAgreementMember srt:MaximumMember 2023-06-30 0001465470 SHMP:NewEmployeeMember 2023-10-10 2023-10-10 0001465470 SHMP:NewEmployeeMember 2023-10-10 0001465470 SHMP:ConsultantMember 2023-12-04 2023-12-04 0001465470 SHMP:ConsultantMember 2023-12-04 0001465470 SHMP:ConsultantMember 2023-06-19 2023-06-19 0001465470 SHMP:ConsultantMember 2023-06-19 0001465470 us-gaap:WarrantMember 2023-12-31 0001465470 us-gaap:WarrantMember 2023-04-01 2023-12-31 0001465470 us-gaap:WarrantMember 2022-12-31 0001465470 us-gaap:WarrantMember 2022-04-01 2022-12-31 0001465470 srt:ChiefFinancialOfficerMember 2021-05-11 2021-05-11 0001465470 SHMP:PresidentAndChiefTechnicalOfficerMember 2021-08-10 0001465470 SHMP:PresidentAndChiefTechnicalOfficerMember 2021-04-01 2022-03-31 0001465470 SHMP:PresidentAndChiefTechnicalOfficerMember 2023-12-31 0001465470 SHMP:PresidentAndChiefTechnicalOfficerMember 2023-03-31 0001465470 us-gaap:RelatedPartyMember 2023-07-10 2023-07-17 0001465470 us-gaap:RelatedPartyMember 2023-07-17 0001465470 SHMP:LoanAgreementMember SHMP:PromissoryNotesMember 2022-08-09 2022-08-10 0001465470 SHMP:LoanAgreementMember SHMP:PromissoryNotesMember SHMP:FiveRelatedPartiesMember 2022-08-10 0001465470 SHMP:LoanAgreementMember SHMP:PromissoryNotesMember SHMP:FiveRelatedPartiesMember 2022-08-09 2022-08-10 0001465470 us-gaap:RelatedPartyMember SHMP:PromissoryNotesMember 2023-10-01 2023-12-31 0001465470 us-gaap:RelatedPartyMember SHMP:PromissoryNotesMember 2023-04-01 2023-12-31 0001465470 SHMP:LoanAgreementMember SHMP:PromissoryNotesMember us-gaap:RelatedPartyMember 2023-12-31 0001465470 SHMP:LoanAgreementMember SHMP:PromissoryNotesMember us-gaap:RelatedPartyMember 2023-03-31 0001465470 2016-01-01 0001465470 SHMP:NotesPayableMember 2021-04-01 2022-03-31 0001465470 SHMP:NotesPayableMember 2022-04-01 2023-03-31 0001465470 SHMP:NotesPayableMember 2023-04-01 2023-12-31 0001465470 SHMP:NotesPayableMember 2023-12-31 0001465470 SHMP:NotesPayableMember 2023-03-31 0001465470 SHMP:PresidentsMember us-gaap:RelatedPartyMember 2023-12-31 0001465470 SHMP:PresidentsMember 2023-04-01 2023-12-31 0001465470 SHMP:PresidentsMember us-gaap:RelatedPartyMember 2023-03-31 0001465470 2021-08-01 2021-08-01 0001465470 2022-10-01 2023-03-31 0001465470 2021-06-02 0001465470 2021-08-01 0001465470 stpr:TX 2023-12-31 0001465470 stpr:TX 2023-10-01 2023-12-31 0001465470 2023-12-20 2023-12-20 0001465470 2023-12-19 0001465470 us-gaap:SubsequentEventMember 2024-01-01 0001465470 us-gaap:SubsequentEventMember 2024-01-01 2024-01-01 0001465470 2021-09-08 2021-09-08 0001465470 2021-09-08 0001465470 SHMP:AprilOneTwoThousandFifteenMember SHMP:EmploymentAgreementMember 2023-04-01 2023-12-31 0001465470 SHMP:AprilOneTwoThousandFifteenMember SHMP:MrEasterlingMember 2021-05-04 2021-05-04 0001465470 SHMP:AprilOneTwoThousandFifteenMember 2023-04-01 2023-12-31 0001465470 SHMP:MergerAgreementMember 2023-07-20 0001465470 SHMP:EquityFinancingAgreementMember us-gaap:SubsequentEventMember 2024-01-01 2024-01-31 0001465470 SHMP:EquityFinancingAgreementMember us-gaap:SubsequentEventMember srt:MinimumMember 2024-01-31 0001465470 SHMP:EquityFinancingAgreementMember us-gaap:SubsequentEventMember srt:MaximumMember 2024-01-31 0001465470 SHMP:SeriesGRedeemableConvertiblePreferredStockMember us-gaap:SubsequentEventMember 2024-01-24 2024-01-24 0001465470 SHMP:SeriesGRedeemableConvertiblePreferredStockMember us-gaap:SubsequentEventMember 2024-01-24 0001465470 SHMP:NewPromissoryNoteMember us-gaap:SubsequentEventMember 2024-01-17 0001465470 SHMP:JanuaryTwoThousandTwentyThreeNoteMember us-gaap:SubsequentEventMember 2024-01-17 0001465470 SHMP:JanuaryTwoThousandTwentyThreeNoteMember us-gaap:SubsequentEventMember 2024-01-17 2024-01-17 iso4217:USD xbrli:shares iso4217:USD xbrli:shares SHMP:Integer xbrli:pure

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended December 31, 2023

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from _________ to _________

 

Commission file number: 000-54030

 

NATURALSHRIMP INCORPORATED

(Exact name of registrant as specified in its charter)

 

Nevada   74-3262176

(State or other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

13601 Preston Road, Suite E1092,

Dallas, TX 75240

  75240
(Address of Principal Executive Offices)   (Zip Code)

 

(888) 791-9474

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol(s)   Name of exchange on which registered
None   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
       
Non-accelerated filer Smaller reporting company
       
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of February 14, 2024, there were 1,044,421,186 shares of the registrant’s common stock outstanding.

 

 

 

 
 

 

NATURALSHRIMP INCORPORATED

FORM 10-Q

FOR THE NINE MONTHS ENDED DECEMBER 31, 2023

 

TABLE OF CONTENTS

 

  Page
   
PART I. FINANCIAL INFORMATION 3
     
ITEM 1. Financial Statements 3
     
  Condensed Consolidated Balance Sheets as of December 31, 2023 (unaudited) and March 31, 2023 3
     
  Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2023 and 2022 (unaudited) 4
     
  Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Nine Months Ended December 31, 2023 and 2022 (unaudited) 5
     
  Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2023 and 2022 (unaudited) 6
     
  Notes to Condensed Consolidated Financial Statements (unaudited) 7
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 25
     
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 42
     
ITEM 4. Controls and Procedures 42
     
PART II. OTHER INFORMATION 43
     
ITEM 1. Legal Proceedings 43
     
ITEM 1A. Risk Factors 43
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 43
     
ITEM 3. Defaults Upon Senior Securities 43
     
ITEM 4. Mine Safety Disclosures 43
     
ITEM 5. Other Information 43
     
ITEM 6. Exhibits 44
     
SIGNATURES 45

 

 2 
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

NATURALSHRIMP INCORPORATED and subsidiaries

CONDENSED Consolidated Balance Sheets

 

   December 31, 2023   March 31, 2023 
   (unaudited)     
ASSETS          
Current assets          
Cash  $36,315   $216,465 
Accounts receivable   16,321    17,325 
Inventory   38,669    25,725 
Prepaid expenses   242,632    286,593 
Deferred offering costs   -    1,336,263 
           
Total current assets   333,937    1,882,371 
           
Fixed assets, net   13,763,637    15,043,715 
           
Other assets          
Construction-in-process   25,130    25,130 
Patents, net   5,976,000    6,268,500 
License Agreement, net   8,332,376    9,142,376 
Right of Use asset   9,394    204,243 
Deposits   20,633    20,633 
           
Total other assets   14,363,533    15,660,882 
           
Total assets  $28,461,107   $32,586,968 
           
LIABILITIES, MEZZANINE AND STOCKHOLDERS’ DEFICIT          
Current liabilities          
Accounts payable  $3,679,009   $3,510,206 
Accrued interest   96,390    923,387 
Accrued interest - related parties   244,843    219,542 
Other accrued expenses   1,295,246    1,314,961 
Accrued expenses - related parties   924,204    400,306 
Contract liability   25,000    - 
Short-term Note and Lines of credit   19,817    19,817 
Notes payable   663,704    671,100 
Restructured August note payable   2,410,000    2,400,000 
Notes payable - related parties   880,412    740,412 
Dividends payable   479,304    579,248 
Warrant liability   17,950    355,000 
Lease Liability, current   3,804    87,804 
           
Total current liabilities   10,739,683    11,221,783 
           
Restructured Senior note payable   24,700,000    21,290,000 
Note payable, less current maturities   -    23,604 
Lease Liability, non-current   5,590    125,189 
           
Total liabilities   35,445,273    32,660,576 
           
Commitments and contingencies (Note 11)   -    - 
           
Series E Redeemable Convertible Preferred stock, $0.0001 par value, 10,000 shares authorized, 1,656 and 1,670 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively   1,968,600    2,003,557 
           
Series F Redeemable Convertible Preferred stock, $0.0001 par value, 750,000 shares authorized, 750,000 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively   43,612,000    43,612,000 
           
Series G Redeemable Convertible Preferred stock, $0.0001 par value, 10,000 shares authorized, 145 and 0 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively   100,000    - 
           
Stockholders’ deficit          
Series A Convertible Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively   500    500 
           
Common stock, $0.0001 par value, 1,400,000,000 shares authorized, 994,965,427 and 803,123,748 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively   99,560    80,377 
           
Additional paid in capital   125,327,383    121,156,733 
Stock to be issued   390,024    662,767 
Subscription receivable   (56,250)   (56,250)
Accumulated deficit   (178,425,983)   (167,533,292)
Total stockholders’ deficit   (52,664,766)   (45,689,165)
           
Total liabilities, mezzanine and stockholders’ deficit  $28,461,107   $32,586,968 

 

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

 

 3 
 

 

NATURALSHRIMP INCORPORATED

CONDENSED Consolidated STATEMENTS OF OPERATIONS

(Unaudited)

 

   December 31, 2023   December 31, 2022   December 31, 2023   December 31, 2022 
   For the Three Months Ended   For the Nine Months Ended 
   December 31, 2023   December 31, 2022   December 31, 2023   December 31, 2022 
                 
Sales  $101,302   $97,943   $365,184   $186,004 
Cost of sales   23,353    -    124,094    - 
Net revenue   77,949    97,943    241,090    186,004 
                     
Operating expenses:                    
General and administrative   1,473,637    1,481,195    5,175,980    4,256,819 
Research and development   -    14,212    -    190,855 
Facility operations   77,103    875,194    592,878    1,895,357 
Depreciation   433,053    416,377    1,304,732    1,349,838 
Amortization   367,500    367,500    1,102,500    1,102,500 
Total operating expenses   2,351,293    3,154,478    8,176,090    8,795,369 
                     
Net loss from operations   (2,273,344)   (3,056,535)   (7,935,000)   (8,609,365)
                     
Other income (expense):                    
Interest expense   (18,033)   (593,331)   (59,444)   (1,674,994)
Interest expense - related parties   (9,750)   (6,250)   (25,301)   (9,772)
Amortization of debt discount   -    (843,494)   -    (5,019,883)
Change in fair value of derivative liability   -    17,738,000    -    811,000 
Change in fair value of warrant liability   67,050    1,155,000    337,050    3,031,000 
Change in fair value of restructured notes   (3,180,000)   (1,594,515)   (2,512,366)   (1,594,515)
Loss due to fire   -    (6,262)   -    (869,379)
Gain on extinguishment of debt   -    2,383,088    -    2,383,088 
Extension fee   (10,000)   -    (190,000)   - 
Gain on termination of lease   22,013    -    22,013    - 
Gain on sale of machinery and equipment   -    -    16,014    - 
                     
Total other income (expense), net   (3,128,720)   18,232,236    (2,412,034)   (2,943,455)
                     
Income (loss) before income taxes   (5,402,064)   15,175,701    (10,347,034)   (11,552,820)
                     
Provision for income taxes   -    -    -    - 
                     
Net income (loss)   (5,402,064)   15,175,701    (10,347,034)   (11,552,820)
                     
Amortization of beneficial conversion feature on Preferred shares -        (28,048)   -    (212,048)
Accretion on Preferred shares   (9,300)   (198,333)   (9,300)   (755,333)
Dividends   (59,616)   (60,107)   (464,441)   (481,761)
                     
Net income(loss) available for common stockholders  $(5,470,980)  $14,889,213   $(10,820,775)  $(13,001,961)
                     
Income(Loss) per share (Basic )  $(0.01)  $0.02   $(0.01)  $(0.02)
                     
Income(Loss) per share (Diluted)  $(0.01)  $0.01   $(0.01)  $(0.02)
                     
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic)   938,229,589    697,586,776    885,304,007    682,750,957 
                     
WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted)   938,229,589    1,629,304,739    885,304,007    682,750,957 

 

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

 

 4 
 

 

NATURALSHRIMP INCORPORATED

CONDENSED Consolidated STATEMENT of CHANGES IN SHAREHOLDERS’ DEFICIT

(Unaudited)

 

   Shares   Amount   Shares   Amount   Capital   issued   receivable   deficit   deficit 
   Series A Preferred stock   Common stock  

Additional

paid in

   Stock to be   Subscription   Accumulated   Total stockholders’ 
   Shares   Amount   Shares   Amount   Capital   issued   receivable   deficit   deficit 
                                     
Balance March 31, 2023   5,000,000  $500    803,123,748  $80,377   $121,156,733  $662,767   $(56,250)  $(167,533,292)   (45,689,165)
                                              
Common stock issued for legal settlement to NSH shareholders   -    -    863,110    86    272,657    (272,743)   -    -    - 
Issuance of common shares under financing agreement   -    -    40,187,311    4,019    1,294,493    -    -    -    1,298,512 
Conversion of Series E Preferred Shares to common stock   -    -    23,989,570    2,399    825,601    -    -    (350,825)   477,175 
Dividends payable on Series E Preferred Shares   -    -    -    -    -    -    -    (54,000)   (54,000)
Common stock issued to consultants   -    -    100,000    10    4,690    -    -    -    4,700 
                                              
Net loss   -    -    -    -    -    -    -    (2,298,431)   (2,298,431)
                                              
Balance June 30, 2023   5,000,000  $500    868,263,739  $86,891   $123,554,174  $390,024   $(56,250)  $(170,236,548)   (46,261,209)
                                              
Issuance of common shares under financing agreement   -    -    31,808,246    3,181    563,089    -    (109,911)   -    456,359 
Dividends payable on Series E Preferred Shares   -    -    -    -    -    -    -    (59,616)   (59,616)
Accretion on Series E Preferred shares   -    -    -    -    -    -    -    (9,300)   (9,300)
                                              
Net loss   -    -    -    -    -    -    -    (2,646,539)   (2,646,539)
                                              
Balance September 30, 2023   5,000,000  $500    900,071,985  $90,072   $124,117,263  $390,024   $(166,161)  $(172,952,003)   (48,520,305)
                                              
Issuance of common shares under financing agreement   -    -    44,843,442    4,483    454,025    -    109,911    -    568,419 
Shares issued upon exchange of Partitioned Note   -    -    10,000,000    1,000    159,000    -    -    -    160,000 
Common stock issued to employee   -    -    50,000    5    1,095    -    -    -    1,100 
Common stock issued to consultants   -    -    40,000,000    4,000    596,000    -    -    -    600,000 
                                              
Dividends payable on Series E Preferred Shares   -    -    -    -    -    -    -    (59,616)   (59,616)
Accretion on Series E Preferred shares   -    -    -    -    -    -    -    (9,300)   (9,300)
Accretion on Series G Preferred shares                                      (3,000)   (3,000)
                                              
Net loss   -    -    -    -    -    -    -    (5,402,064)   (5,402,064)
                                              
Balance December 31, 2023   5,000,000  $500    994,965,427  $99,560   $125,327,383  $390,024   $(56,250)  $(178,425,983)   (52,664,766)
                                              
Balance March 31, 2022   5,000,000   $500    674,644,124   $67,500   $96,701,607   $20,132,650   $-   $(150,036,023)  $(33,133,765)
                                              
Common stock issued for legal settlement to NSH shareholders   -    -    61,154,136    6,112    19,311,486    (19,317,598)   -    -    - 
Conversion of Series E PS to common stock   -    -    4,537,240    454    839,546    -    -    -    840,000 
Contingent beneficial conversion feature related to the Series E Preferred Shares, fully amortized   -    -    -    -    99,000    -    -    (99,000)   - 
Amortization of beneficial conversion feature related to Series E Preferred Shares   -    -    -    -    -    -    -    (42,500)   (42,500)
Accretion of Series E Preferred Shares   -    -    -    -    -    -    -    (278,500)   (278,500)
Dividends payable on Preferred Shares   -    -    -    -    -    -    -    (102,227)   (102,227)
Common stock issued in business agreement, to be paid from revenue earned   -    -    250,000    25    56,225    -    (56,250)   -    - 
Common stock vested to consultants   -    -    -    6    24,369    -    -    -    24,375 
                                              
Net loss   -    -    -    -    -    -    -    (2,200,176)   (2,200,176)
                                              
Balance June 30, 2022   5,000,000  $500    740,585,500  $74,097   $117,032,233  $815,052   $(56,250)  $(152,758,426)   (34,892,793)
                                              
Common stock issued for legal settlement to NSH shareholders   -    -    404,067    40    127,646    (127,686)   -    -    - 
Conversion of Series E Preferred Shares to common stock   -    -    9,920,887    992    827,008    -    -    (108,000)   720,000 
Increase of 10% in Series E Preferred Shares to one holder based on certain rights   -    -    -    -    -    -    -    (156,000)   (156,000)
Amortization of beneficial conversion feature related to Series E Preferred Shares   -    -    -    -    -    -    -    (42,500)   (42,500)
Accretion of Series E Preferred Shares   -    -    -    -    -    -    -    (278,500)   (278,500)
Dividends payable on Preferred Shares   -    -    -    -    -    -    -    (55,427)   (55,427)
Common stock issued in business agreement   -    -    250,000    25    25,975    -    -    -    26,000 
Common stock issued from shares payable   -    -    100,000    10    24,590    (24,600)   -    -    - 
Common stock vested to consultants   -    -    62,500    6    24,369    -    -    -    24,375 
                                              
Net loss   -    -    -    -    -    -    -    (24,528,345)   (24,528,345)
                                              
Balance September 30, 2022   5,000,000  $500    751,322,954  $75,170   $118,061,820  $662,767   $(56,250)  $(177,927,198)   (59,183,191)
                                              
Issuance of common shares under financing agreement             17,175,675    1,718    1,378,282                   1,380,000 
Amortization of beneficial conversion feature related to Series E Preferred Shares   -    -    -    -    -    -    -    (28,048)   (28,048)
Accretion of Series E Preferred Shares   -    -    -    -    -    -    -    (198,333)   (198,333)
Dividends payable on Preferred Shares   -    -    -    -    -    -    -    (60,107)   (60,107)
Common stock vested to consultants   -    -    62,500    6    24,369    -    -    -    24,375 
                                              
Net income   -    -    -    -    -    -    -    15,175,701    15,175,701 
                                              
Balance December 31, 2022   5,000,000  $500    768,561,129  $76,894   $119,464,471  $662,767   $(56,250)  $(163,037,985)   (42,889,603)

 

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

 

 5 
 

 

NATURALSHRIMP INCORPORATED

CONDENSED Consolidated STATEMENTS OF CASH FLOWS

(Unaudited)

 

   December 31, 2023   December 31, 2022 
   For the Nine Months Ended 
   December 31, 2023   December 31, 2022 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(10,347,034)  $(11,552,820)
           
Adjustments to reconcile net loss to net cash used in operating activities          
           
Depreciation expense   1,304,732    1,349,838 
Amortization expense   1,102,500    1,102,500 
Amortization of debt discount   -    5,019,883 
Change in fair value of derivative liability   -    (811,000)
Change in fair value of warrant liability   (337,050)   (3,031,000)
Change in fair value of restructured notes payable   2,512,366    1,594,515 
Extension fee   125,000    - 
Financing costs   28,000    - 
Gain on extinguishment of debt   -    (1,883,089)
Gain on sale of machinery and equipment   (16,014)   - 
Shares issued for services   605,800    99,124 
Amortization of operating lease right-of-use assets   194,849    - 
Gain on termination of lease   (22,013)   - 
Loss due to fire   -    869,379 
           
Changes in operating assets and liabilities:          
Accounts receivable   1,004    6,883 
Inventory   (12,944)   (32,759)
Prepaid expenses and other current assets   43,961    1,021,406 
Deferred offering costs   1,336,263    (126,963)
Accounts payable   169,244    724,360 
Other accrued expenses   (19,715)   92,560 
Accrued expenses - related parties   523,898    - 
Accrued interest   80,637    1,662,647 
Accrued interest - related parties   25,301    9,772 
Contract liability   25,000    - 
Operating lease liabilities   (181,586)   - 
           
Cash used in operating activities   (2,857,801)   (3,884,764)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
           
Cash paid for fixed assets   (67,640)   (2,430,186)
Cash received for sale of machinery and equipment   59,000    700,000 
           
Cash used in investing activities   (8,640)   (1,730,186)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
           
Payments of notes payable   (24,000)   (72,000)
Repayment of short-term promissory note and lines of credit   -    (226)
Proceeds from sale of stock   2,323,291    1,380,000 
Proceeds from promissory note   -    1,465,000 
Proceeds from promissory note, related parties   140,000    250,000 
Proceeds from convertible debentures, receipt from escrow   -    1,500,000 
Escrow account in relation to the proceeds from promissory notes   -    (500,000)
Proceeds from sale of Series E Preferred Shares   150,000    - 
Proceeds from sale of Series G Preferred Shares   97,000    - 
           
Cash provided by financing activities   2,686,291    4,022,774 
           
NET CHANGE IN CASH   (180,150)   (1,592,176)
           
CASH AT BEGINNING OF PERIOD   216,465    1,734,040 
           
CASH AT END OF PERIOD  $36,315   $141,864 
           
INTEREST PAID  $616   $1,829,570 
           
Supplemental Disclosure of Non-Cash Investing and Financing Activities:          
Construction in process transferred to fixed assets  $-   $1,041,371 
Shares issued upon conversion of Preferred stock  $828,000    1,560,000 
Dividends on Series E Preferred stock  $524,057   $- 
Dividends in kind issued  $516,000   $- 
Shares issued/to be issued, for legal settlement  $272,743   $- 

 

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

 

 6 
 

 

NATURALSHRIMP INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2023

(Unaudited)

 

NOTE 1 – 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. The Company’s production facilities are located in La Coste, Texas and Webster City, Iowa.

 

The Company has three wholly-owned subsidiaries including NaturalShrimp USA Corporation (“NSC”) and NaturalShrimp Global, Inc. (“NS Global”) and Natural Aquatic Systems, Inc. (“NAS”), and owns 51% of NaturalShrimp/Hydrenesis LLC, a Texas limited liability company.

 

Going Concern

 

The accompanying condensed 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 nine months ended December 31, 2023, the Company had a net loss available for common stockholders of approximately $10,821,000. As of December 31, 2023, the Company had an accumulated deficit of approximately $178,426,000 and a working capital deficit of approximately $10,406,000. 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 nine months ended December 31, 2023, the Company received net cash proceeds of approximately $2,323,000 from the sale of common shares (See Note 8), $150,000 from the sale of Series E Preferred stock, $97,000 from the sale of Series G Preferred stock and the Company received $140,000 proceeds from the issuance of promissory notes, related parties. Subsequent to period end, the Company received approximately $248,000 for the sale of common shares and $97,000 from the sale of Series G Preferred stock (See Note 12).

 

Management believes that private placements of equity capital 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, the percentage ownership of its current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to its 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 its 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 be unable to develop its facilities and enter into production.

 

 7 
 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed financial information as of and for the three and nine months ended December 31, 2023 and 2022 has been prepared in accordance with GAAP 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 condensed consolidated financial position at such date and the condensed consolidated operating results and cash flows for such periods. Operating results for the three and nine months ended December 31, 2023 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 GAAP have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (“SEC”). These condensed consolidated unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended March 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on June 27, 2023.

 

The condensed consolidated balance sheet at March 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

 

Consolidation

 

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, NSC, NS Global, and NAS. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

Preparing financial statements in conformity with GAAP 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 unaudited condensed consolidated financial statements are computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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. As of the nine months ended December 31, 2023, the Company had 5,000,000 Series A Convertible Preferred Stock which would be converted at the holder’s option into approximately 994,965,000 underlying common shares, 1,656 of Series E Redeemable Convertible Preferred shares whose approximately 5,678,000 underlying shares are convertible at the investors’ option at a fixed conversion price of $0.35, 750,000 shares of Series F Preferred Stock which would be converted at the holders’ option into approximately 238,792,000 underlying common shares, 145 of Series G Redeemable Convertible Preferred shares whose approximately 12,429,000 underlying shares are convertible at the investors’ option at a conversion price based on the discounted market price of $0.014 and 18,573,116 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. As of the nine months ended December 31, 2022, the Company had 5,000,000 shares of Series A Convertible Preferred Stock which would be converted at the holder’s option into approximately 768,561,000 underlying common shares, 1,500 shares of Series E Redeemable Convertible Preferred shares whose approximately 5,143,000 underlying shares are convertible at the investors’ option at a fixed conversion price of $0.35, and 170 shares of Series E Redeemable Convertible Preferred shares whose approximately 2,775,000 underlying shares are convertible at the investors’ option at conversion price of 90% of the average of the two lowest market prices over the last 10 days, 750,000 shares of Series F Preferred Stock which would be converted at the holders’ option into approximately 184,387,000 underlying common shares, and 18,573,116 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive.

 

 8 
 

 

Fair Value Measurements

 

ASC Topic 820, “Fair Value Measurement”, requires that certain financial instruments be recognized at their fair values at the 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. 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 the operating results or within comprehensive income (loss) of the respective period. 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 operating results in the period the remeasurement occurred.

 

The Company did not have any Level 1 or Level 2 assets and liabilities at December 31, 2023 and March 31, 2023.

 

The warrant liabilities and fair value option on Restructured notes, are Level 3 fair value measurements.

 

The following is a summary of activity of Level 3 during the nine months ended December 31, 2023 and the year ended March 31, 2023:

 

Warrant liability

 

  

December 31, 2023

  

March 31, 2023

 
   (unaudited)     
Warrant liability balance at beginning of period  $355,000   $3,923,000 
Change in fair value   (337,050)   (3,568,000)
Balance at end of period  $17,950   $355,000 

 

At December 31, 2023, the fair value of the warrant liability was estimated using a Black Sholes option pricing model with the following inputs: the price of the Company’s common stock of $0.012; a risk-free interest rate ranging from 4.01% to 4.25%; and expected volatility of the Company’s common stock ranging from 109.9% to 114.6% and the remaining terms of each warrant issuance.

 

At March 31, 2023, the fair value of the warrant liability was estimated using a Black Sholes model with the following weighted-average inputs: the price of the Company’s common stock of $0.05; a risk-free interest rate of 3.81% and expected volatility of the Company’s common stock ranging from 113.6% to 121.0% and the remaining terms of each warrant issuance.

 

 9 
 

 

Restructured August and Senior Notes Payable

 

  

December 31, 2023

  

March 31, 2023

 
Restructured notes payable fair value at beginning of period  $23,690,000   $- 
Reclass of accrued interest   907,634    - 
Fair value of restructured notes payable upon Restructuring Agreement   -    20,847,867 
Change in fair value   2,512,366    2,842,133 
Restructured notes payable fair value at end of period  $27,110,000   $23,690,000 

 

On November 4, 2022, when the Company entered into a Restructuring Agreement for an Amended and Restated Secured Promissory Note for two of their outstanding debentures (Note 6 and Note 7), which were accounted for as debt extinguishment, the Company elected to recognize the new debt under the fair value option within ASC Topic 825, “Financial Instruments.” The fair value for both periods is based on the maturity dates, the interest of 12%, the 15% exit fee, the 2% appreciation fee for an estimated period, and a 45% and 40% present value factor, respectively as of December 31, 2023 and March 31, 2023. In accordance with ASC 825, the Company chose to present the component for the accrued interest in the same line item on the accompanying condensed consolidated balance sheet with the fair value option, and as of April 1, 2023, reclassed the accrued interest to not be presented as a separate line item.

 

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. The carrying amount of these financial instruments, with the exception of discounted debt, as reflected in the unaudited condensed consolidated balance sheets approximates fair value.

 

Cash and Cash Equivalents

 

For the purpose of the unaudited condensed 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 December 31, 2023 and March 31, 2023.

 

Concentration of Credit Risk

 

The Company maintains cash balances at two financial institutions. Accounts at this institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of December 31, 2023 and March 31, 2023, the Company’s cash balance exceeded 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 using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives are as follows:

 

Buildings   39 years
Machinery and Equipment   710 years
Vehicles   10 years
Furniture and Fixtures   310 years

 

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.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation to employees and non-employees in accordance with ASC 718. “Stock-based Compensation to Employees” is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances. Once the stock is issued the appropriate expense account is charged.

 

10

 

 

Intangible Assets

 

The Company has intangible assets, which were acquired in a patent acquisition, and license rights agreements. The Company’s patents represent definite lived intangible assets and will be amortized over the twenty-year duration of the patent, unless at some point the useful life is determined to be less than the protected life of the patent. The Company’s license rights will be amortized on a straight-line basis over the expected term of the agreements of ten years. For the three months ended December 31, 2023 and December 31, 2022, the amortization of the patents was $97,500 and $97,500 and in the amortization of the license rights was $270,000 and $270,000, respectively. For the nine months ended December 31, 2023 and December 31, 2022, the amortization of the patents was $292,500 and $292,500 and the amortization of the license rights was $810,000 and $810,000, respectively.

 

The Company periodically evaluates the remaining useful lives of its finite-lived intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. As of December 31, 2023, the Company believes the carrying value of the intangible assets are still recoverable, and there is no impairment to be recognized.

 

License agreements

 

On August 25, 2021, the Company, through its 100% owned subsidiary NAS, entered into an Equipment Rights Agreements with Hydrenesis-Delta Systems, LLC (“Hydrenesis-Delta”) and a Technology Rights Agreement, in a sub-license agreement with Hydrenesis Aquaculture LLC (“Hydrenesis-Aqua”).Both Rights agreements are for a 10-year term, which shall automatically renew for ten-year successive terms. The agreements accord the exclusive rights to purchase or distribute the technology, or buy or rent the equipment, which is the primary business and revenue stream generated from indoor aquaculture farming of any species in the territory, which will be named the NSI Technologies and Equipment (“NSI Technologies”).

 

The terms of the Agreements set forth that NAS will pay Hydrenesis 12.5% royalty fees. The royalties are calculated per all customer or sub-license revenue generated by NAS, NSI or any affiliate, from the sale or rental of either the Technologies or Hydrenesis Equipment, based on gross revenue less returns, rebates and sales taxes. There are sales milestones for exclusivity, whereby if NAS fails to achieve a sales milestone starting in Year 3, the exclusivity rights in both of the Rights agreements shall revert to non-exclusive rights. To maintain the exclusivity for the subsequent year, the Company may pay the amount of the royalty fees that would have been due if the Sales Milestones had been met in the current year.

 

Impairment of Long-lived Assets

 

The Company will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.

 

Commitments and Contingencies

 

Certain conditions may exist as of the date the unaudited condensed 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.

 

11

 

 

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 unaudited condensed 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.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers”, as such, the Company records revenue when its customers obtain control of the promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company will sell primarily to food service distributors, as well as to wholesalers, retail establishments and seafood distributors. Additionally, the Company will sell or rent the NSI Technologies.

 

To determine revenue recognition for the arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (1) identify the contract(s) with a customer by receipt of purchase orders and confirmations sent by the Company which includes a required line of credit approval process, (2) identify the performance obligations in the contract which includes shipment of goods to the customer FOB shipping point or destination, (3) determine the transaction price which initiates with the purchase order received from the customer and confirmation sent by the Company and will include discounts and allowances by customer if any, (4) allocate the transaction price to the performance obligations in the contract which is the shipment of the goods to the customer and transaction price determined in step 3 above and (5) recognize revenue when (or as) the entity satisfies a performance obligation which is when the Company transfers control of the goods to the customers by shipment or delivery of the products.

 

In the future, if the Company has customers with long-term contracts for multiple shipments of live shrimp, the Company will elect the right-to-invoice practical expedient and any variable consideration estimate will be excluded from the transaction price and the revenue will be recognized directly when the goods are delivered.

 

  

December 31, 2023

  

December 31, 2022

 
   Three months ended 
  

December 31, 2023

  

December 31, 2022

 
         
Shrimp sales  $26,302   $97,943 
Technology and equipment services   75,000     
Total revenues  $101,302   $97,943 

 

  

December 31, 2023

  

December 31, 2022

 
   Nine months ended 
  

December 31, 2023

  

December 31, 2022

 
         
Shrimp sales  $115,184   $186,004 
Technology and equipment services   250,000     
Total revenues  $365,184   $186,004 

 

On May 21, 2023, the Company entered into a six-month agreement with a company for the use of the NSI Technologies. Per the agreement, the customer is to pay a total of $300,000 comprised of an initial payment equal to $150,000 at execution of the contract and then $25,000 per month for the combined total of the Service Fee. As of December 31, 2023, the Company has received $250,000, comprised of the initial payment and $100,000 related to the monthly service fees which began September 1, 2023.  

 

12

 

 

Recently Issued Accounting Standards

 

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07,Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures” which expands annual and interim disclosure requirements for reportable segments. The amendments require enhanced disclosure for certain segment items and required disclosure on how management uses reported measures to assess segment performance. The amendments do not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments. The updated standard is effective for annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026. Early adoption is permitted. The Company is currently evaluating the effect of adopting this ASU.

 

In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” which requires two primary enhancements of 1) disaggregated information on a reporting entity’s effective tax rate reconciliation, and 2) information on cash income taxes paid. Additionally, specific disclosures related to unrecognized tax benefits and indefinite reinvestment assertions were removed. For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the effect of adopting this ASU.

 

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, “Debt: Debt with Conversion and Other Options”, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260 to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.

 

As of December 31, 2023, there were several new accounting pronouncements issued by the FASB. 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 accompanying condensed consolidated balance sheet date of December 31, 2023, through the date which the unaudited condensed consolidated financial statements were issued. Based upon the review, other than described in Note 12 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.

 

13

 

 

NOTE 3 – FIXED ASSETS

 

A summary of the fixed assets as of December 31, 2023 and March 31, 2023 is as follows:

 

  

December 31, 2023

  

March 31, 2023

 
    (unaudited)      
Land  $324,293   $324,293 
Buildings   5,528,758    5,495,150 
Machinery and equipment   12,306,776    12,293,112 
Autos and trucks   260,043    307,227 
Fixed assets,gross   18,419,870    18,419,782 
Accumulated depreciation   (4,656,233)   (3,376,067)
Fixed assets, net  $13,763,637   $15,043,715 

 

The unaudited condensed consolidated statements of operations reflect depreciation expense of approximately $433,000 and $416,000 and $1,305,000 and $1,350,000 for the three and nine months ended December 31, 2023 and 2022, respectively.

 

NOTE 4 – SHORT-TERM NOTE AND LINES OF CREDIT

 

The Company 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 34.4% as of December 31, 2023. The line of credit is unsecured. The balance of the line of credit was $9,580 at both December 31, 2023 and March 31, 2023.

 

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 18.5% as of December 31, 2023. The line of credit is secured by assets of the Company’s subsidiaries. The balance of the line of credit is $10,237 at December 31, 2023 and March 31, 2023.

 

NOTE 5 –NOTES PAYABLE

 

January 2023 Note

 

On January 20, 2023, the Company entered into a secured promissory note (“January 2023 Note”) with an investor (the “Investor”). The January 2023 Note is in the aggregate principal amount of $631,968. The Note has an interest rate of 10% per annum, with a maturity date nine months from the issuance date of the Note. The Note carried an original issue discount totaling $56,868, whereby the purchase price is $575,100. All payments made by the Company under the terms in the note, including upon repayment of this Note at maturity, shall be subject to an exit fee of 15% of the portion of the Outstanding Balance being paid. The cash was not transferred to the Company’s bank account, but instead to the merger entity, Yotta Acquisition Corporation (Note 11), for a contribution to a required extension fee for the business combination. On November 17, 2023, the Company received an extension of the maturity date to June 30, 2024, for a $5,000 extension fee.

 

On November 8, 2023, the Company and the Investor entered into an Exchange Agreement on the January 2023 Note. In the Exchange Agreement the original note was partitioned into a $132,000 new promissory note, leaving the original January 2023 Note with an adjusted balance of $499,968. The partitioned note was exchanged for 10,000,000 shares of the Company’s common stock. The shares of common stock issued had a fair value of $160,000 based on the market price of the shares of $0.016 on the execution date, resulting in an excess of $28,000 to be recognized as a financing expense.

 

April 2023 Promissory Note

 

On April 21, 2023, the Company entered into a $60,000 promissory note with Yotta Investment LLC (“Yotta Investment”), with no interest to accrue on the principal balance. The promissory note is to be settled on the date of closing of the business combination contemplated by the Merger Agreement with Yotta Acquisition Corporation, (“Merger Agreement”). Upon the occurrence of an event of default, including the termination of the Merger Agreement, the unpaid principal balance of this note, and all other sums payable with regard to this note, shall automatically and immediately become due and payable, in all cases without any action on the part of the Company. As discussed in Note 11, the Merger Agreement was terminated, and management believes the promissory note will be settled in the Breakup Fee.

 

14

 

 

May 2023 Promissory Note

 

On May 17, 2023, the Company entered into an additional $60,000 promissory note with Yotta Investment, with no interest to accrue on the principal balance. The promissory note is to be settled on the date of closing of the business combination contemplated by the Merger Agreement with Yotta Acquisition Corporation. Upon the occurrence of an event of default, including the termination of the Merger Agreement, the unpaid principal balance of this note, and all other sums payable with regard to this note, shall automatically and immediately become due and payable, in all cases without any action on the part of the Company. As discussed in Note 11, the Merger Agreement was terminated, and management believes the promissory note will be settled in the Breakup Fee.

 

Ms. Williams Promissory Note

 

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, 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. The balance as of December 31, 2023 and March 31, 2023 was $95,604 and $119,604, respectively, with the balance as of December 31, 2023 and $96,000 for the year end March 31, 2023, classified in current liabilities, on the condensed consolidated balance sheets.  

 

NOTE 6 – RESTRUCTURED AUGUST NOTE PAYABLE

 

The Company entered into a securities purchase agreement (the “SPA”) with an investor (the “Investor”) on August 17, 2022. Pursuant to the SPA, the Investor purchased a secured promissory note (the “Note”) in the aggregate principal amount totaling approximately $5,433,333. The Note has an interest rate of 12% per annum, with a maturity date nine months from the issuance date of the Note. The Note carried an original issue discount totaling $433,333 and a transaction expense amount of $10,000, both of which are included in the principal balance of the Note. On the closing date the Company received $1,100,000, with $3,900,000 put into escrow to be held until certain terms were to be met, which included $3,400,000 upon the completion of a successful uplist to NYSE or NASDAQ. The SPA includes a Security Agreement, whereby the note is secured by the collateral set forth in the agreement, covering all of the assets of the Company. All payments made by the Company under the terms in the note, including upon repayment of this Note at maturity, shall be subject to an exit fee of 15% of the portion of the outstanding balance being paid (the “Exit Fee”). As the Exit Fee is to be included in every settlement of the Note, an additional 15% of the principal balance, which totals $816,500, was recognized along with the principal balance, and offset by a contra account in a manner similar to a debt discount.

 

As soon as reasonably possible, the Company will cause the common stock to be listed for trading on either of (a) NYSE, or (b) NASDAQ (in either event, an “Uplist”). In the event the Company has not effectuated the Uplist by November 15, 2022, the then-current outstanding balance will be increased by 10%. Following the Uplist, while the Note is still outstanding, ten days after the Company may have a sale of any of its shares of common stock or preferred stock, there shall be a Mandatory Prepayment equal to the greater of $3,000,000 or thirty-three percent of the gross proceeds of the equity sale.

 

In conjunction with the Merger Agreement, entered into on October 24, 2022, with Yotta Acquisition Corporation (Note 11), on November 4, 2022, the Company entered into a Restructuring Agreement for an Amended and Restated Secured Promissory Note (the “August Note”), through which the August Note was amended and restated in its entirety. The Restructured August Note decreased the principal to $1,748,667, less an OID of $138,667, and the amount in escrow was returned to the investor, The Restructuring Agreement included key modifications, in which i) the Uplist terms were removed, ii) in the event that the closing of the Merger does not occur on or before December 31, 2022, the then-current Outstanding Balance will be increased by 2% and shall increase by 2% every 30 days thereafter until the closing or termination of the Merger Agreement, and iii) the outstanding balance of the Convertible Note may be increased by 5% to 15% upon the occurrence of an event of default or failure to obtain the Lender’s consent or notify the Lender for certain major equity related transactions (“Trigger Events”). The Merger had not yet closed, and therefore the 2% of the outstanding balance was increased as of June 30, 2023, in the amount of approximately $272,000. On July 20, 2023, the Company sent Yotta notice of the Company’s termination of the Merger Agreement. (See Note 11) On November 20, 2023, the maturity date was extended to June 30, 2024.

 

15

 

 

The Restructured August Note was analyzed under ASC 470-50 as to if the change in terms qualified as a modification or an extinguishment of the note  . The changes in terms were considered an extinguishment as the present value of the cash flows under the terms of the new debt instrument was evaluated to be a substantial change, as over 10% difference from the present value of the remaining cash flows under the terms of the original instrument. As such, with the removal of the original note and its debt discount and accrued interest as compared to the restructured note with a fair value of approximately $1,933,000, there was a loss in extinguishment of approximately $157,000. As a result of the extinguishment and at the Company’s election of the fair value option under ASC 825, the August Note will be accounted for at fair value until they are settled. In accordance with ASC 815- 15-25-1(b) a hybrid instrument that is measured at fair value under ASC 825 fair value option each period with changes in fair value reported in earnings as they occur should not be evaluated for embedded derivatives. Therefore, the provisions in the August Note were not evaluated as to if they fell under the guidance of embedded derivatives and were required to be bifurcated. The August Note was revalued as of December 31, 2023 at approximately $2,410,000, with a change in fair value of approximately $10,000 recognized in the accompanying condensed consolidated Statement of Operations. The August Note was revalued as of March 31, 2023 at approximately $2,400,000, with a change in fair value of approximately $467,000. As of December 31, 2023, the accrued interest from the restructuring date, which is included in the fair value is approximately $342,000.

 

NOTE 7 – RESTRUCTURED SENIOR NOTE PAYABLE

 

December 15, 2021 Debenture

 

The Company entered into a securities purchase agreement (the “SPA”) with an investor (the “Investor”) on December 15, 2021. Pursuant to the SPA, the Investor purchased a secured promissory note (the “Note”) in the aggregate principal amount totaling approximately $16,320,000 (the “Principal Amount”). The Note has an interest rate of 12% per annum, with a maturity date 24 months from the issuance date of the Note (the “Maturity Date”).

 

Beginning on the date that is 6 months from the issuance date of the Note, the Investor had the right to redeem up to $1,000,000 of the outstanding balance per month. Payments could have been made by the Company, at the Company’s option, (a) in cash, or (b) by paying the redemption amount in the form of shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), per the following formula: the number of redemption shares equals the portion of the applicable redemption amount divided by the Redemption Repayment Price. The “Redemption Repayment Price” equaled 90% multiplied by the average of the two lowest volume weighted average price per share of the Common Stock during the ten (10) trading days immediately preceding the date that the Investor delivers notice electing to redeem a portion of the Note. The redemption amount shall include an Exit Fee, consisting of a premium of 15% of the portion of the outstanding balance being paid. As the Exit Fee is to be included in every settlement of the Note, an additional 15% of the principal balance, which totals $2,448,000, was recognized along with the principal balance, and offset by a contra account in a manner similar to a debt discount. In addition to the Investor’s right of redemption, the Company has the option to prepay the Notes at any time prior to the Maturity Date by paying a premium of 15% plus the principal, interest, and fees owed as of the prepayment date.

 

On November 4, 2022, the Company entered into a Restructuring Agreement for an Amended and Restated Secured Promissory Note (the “Senior Note”) with the December 2021 Investor through which the December 2021 Note was amended and restated in its entirety. These amendments were made in conjunction with the Merger Agreement, entered into on October 24, 2022, with Yotta Acquisition Corporation (Note 11), The main modification of the terms of the Senior Note was that the conversion feature was eliminated. Second, a Mandatory Payment was added whereby within 3 trading days of the closing upon the Merger an amount equal to the lesser of (A) one-third of the amount retained in the Trust Account at the Effective Time or (B) $10,000,000, in order to repay a portion of the outstanding balance of the Senior Note; after which the remaining balance of the Senior Note is to be repaid in equal monthly installments over a 12-month period beginning on a date after the Merger Agreement closing date (“Closing Date”) or the termination of such agreement. All payments made shall be subject to an Exit Fee of 15% of the portion of the outstanding balance being paid. Additionally, if the Closing Date is after December 31, 2022, the outstanding balance of all indebtedness owed by the Company to December 2021 Investor will be increased automatically by 2% and will automatically increase by 2% every 30 days thereafter until the Closing, a termination, or substantially similar terms as approved by the Board of Directors of the Company. Additional key modifications include i) uplist terms in which the Company was to cause the common stock to be listed for trading on either of (a) NYSE, or (b) NASDAQ, were removed, ii) Maturity date was modified from December 15, 2023 to 12 months from the Closing or termination of the Merger Agreement, provided not to be later than September 30, 2024, and iii) the outstanding balance of the Senior Note may be increased by 5% to 15% upon the occurrence of an event of default or failure to obtain the Lender’s consent or notify the Lender for certain major equity related transactions (“Trigger Events”). As of June 30, 2023, the Merger has not yet closed, and therefore the 2% of the outstanding balance was increased as of June 30, 2023, in the amount of approximately $2,675,000. On July 20, 2023, the Company sent Yotta notice of the Company’s termination of the Merger Agreement (See Note 11). Based on the termination in July of 2023, the equal monthly payments were to begin on September 20, 2023. On November 20, 2023, the Investor issued a waiver to the Company on the equal monthly payments, which are not currently required to be paid.

 

16

 

 

The Note also contains certain negative covenants and Events of Default, which in addition to common events of default, include the Company fails to maintain the share reserve, the occurrence of a Fundamental Transaction without the Lenders written consent, the Company effectuates a reverse split of its common stock without 20 trading days written notice to Lender, fails to observe or perform or breaches any covenant, and, the Company or any of its subsidiaries, breaches any covenant or other term or condition contained in any Other Agreements in any material. Upon an Event of a Default, at its option and sole discretion, the Investor may consider the Note immediately due and payable. Upon such an Event of Default, the interest rate increases to 18% per annum and the outstanding balance of the Note increases from 5% to 15%, depending upon the specific Event of Default. As of December 31, 2023, the Company is in full compliance with the covenants and Events of Default.

 

The Restructured Senior Note was analyzed under ASC 470-50   as to if the change in terms qualified as a modification or an extinguishment of the note. The changes in terms were considered an extinguishment as the conversion feature has been eliminated and therefore the modified Senior Note is determined to be fundamentally different from the original convertible note. As such, with the removal of the original note and its debt discount and accrued interest as compared to the restructured note with a fair value of approximately $18,914,000, there was a gain in extinguishment of approximately $2,540,000. As of the restructuring date the derivative had a fair value of $12,290,000, based on assumptions used in a bi-nomial option pricing model, which resulted in a change in fair value of $17,738,000 as of the restructuring date, from its previous fair value of $30,028,000. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.16 at issuance date; a risk-free interest rate of 3.73% and expected volatility of the Company’s common stock, of 117.77%, and the strike price of $0.1017.

 

As a result of the extinguishment and at the Company’s election of the fair value option under ASC 825, the Company will account for the Restructured Senior Note at fair value every period end until it is settled. In accordance with ASC 815- 15-25-1(b) a hybrid instrument that is measured at fair value under ASC 825 fair value option each period with changes in fair value reported in earnings as they occur should not be evaluated for embedded derivatives. Therefore, the Company did not evaluate the provisions in the Restructured Senior Note as to whether they fell under the guidance of embedded derivatives and were required to be bifurcated. The Restructured Senior Note was revalued as of December 31, 2023 at approximately $24,700,000, with a change in fair value of approximately $3,410,000 recognized in the Company’s accompanying condensed consolidated Statement of Operations. The Senior Note was revalued as of March 31, 2023, at approximately $21,290,000, with a change in fair value of approximately $2,376,000 recognized in the accompanying condensed consolidated Statement of Operations. As of December 31, 2023, the accrued interest from the restructuring date, which is included in the fair value is approximately $4,937,000.

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

Common Stock

 

On September 28, 2023, the Company increased their authorized common shares to 1,400,000,000.

 

17

 

 

Preferred Stock

 

As of December 31, 2023 and March 31, 2023, 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, 5,000 shares Series B preferred stock are authorized and no shares outstanding, 5,000 shares Series D preferred stock are authorized with no shares outstanding, 10,000 shares Series E preferred stock are authorized and 1,656 and 1,670 outstanding, respectively, 750,000 shares of Series F preferred stock are authorized with 750,000 outstanding, and 10,000 shares of Series G preferred stock are authorized with 145 outstanding, respectively.

 

Series G Preferred Stock

 

On December 1, 2023, the Board authorized the issuance of 10,000 preferred shares to be designated as Series G Preferred Stock (“Series G Preferred Stock”). The Series G Preferred Stock has a par value of $0.0001, a stated value of $1,200 and bear dividends at the rate of 8% per annum, payable quarterly, to be paid in cash or in-kind, at the discretion of the Company. The Series G Preferred Stock will vote together with the common stock on an as-converted basis subject to the beneficial ownership limitations. The Series G Preferred Stock is required to be redeemed by the Company no later than one calendar year from the date of its issuance. The Series G Preferred Stock is also redeemable at the option of the Company at any time after the original issued date, upon 3 business days’ notice, at a premium rate which is (a) 1.15 if all of the Series G Preferred Stock is redeemed within 90 calendar days from the issuance date thereof; (b) 1.2 if all of the Series G Preferred Stock is redeemed after 90 calendar days and within 120 calendar days from the issuance date thereof; (c) 1.25 if all of the Series G PS is redeemed after 120 calendar days and within 180 calendar days from the issuance date thereof. The Company shall be permitted to redeem the Series G Preferred Stock at any time in cash upon 3 business days prior notice to the Holder or the Holder may convert the Series G Preferred Stock within 3 business days period prior to redemption. The Holder shall have the right to either redeem for cash or convert the Series G Preferred Stock into common stock within 3 business days following the consummation of a qualified offering. The conversion price is based on the discounted market price which is the lower of: (i) A fixed price equaling the closing bid price for the common stock on the trading day preceding the execution of the SPA ; or (ii) 100% of the lowest volume weighted average price (“VWAP)” for the common stock during 10 trading days preceding the conversion request, subject to adjustment.

 

As the redemption feature is mandatorily redeemable within one year of the issuance date, with a substantive conversion option, the Series G Preferred Stock would not fall under liability classification but is to be classified as mezzanine equity.

 

Series G Preferred Equity Offering

 

On December 14, 2023, the Company entered into a Securities Purchase Agreement for the sale of 110 shares of Series G Preferred Stock at a price of $1,000 per share of preferred stock, for a total of $110,000. The Purchaser also received an “Equity Incentive”, which was an additional 35 Series G Preferred Stock issued to the Purchaser at the initial closing and deemed to be earned at the time of its issuance. Following the initial closing, the Company and Purchaser shall mutually agree from time to time for the Company to sell and the Purchaser to purchase up to 400 shares of Series G Preferred Stock at a price of $1,000 per share in separate closings . The Series G Preferred Stock will earn a dividend of 8% per annum, for as long as the relevant Preferred Stock has not been redeemed or converted. Dividends are to be paid quarterly, and at the Company’s discretion, in cash or Preferred Stock calculated at the purchase price. On December 19, 2023, the Company received an initial tranche of $110,000 under the SPA, less $13,000 for legal and commission fees. The $77,000 discount will be accreted up to the redemption price over the one-year period until redemption. As of December 31, 2023, the accretion for the Series G Preferred Stock was $3,000.   

 

Series E Preferred Stock

 

On July 24, 2023, the Company entered into a Securities Purchase Agreement for the additional sale of 156 shares of Series E Preferred Stock at a price of $1,000 per share of Preferred Stock, for a total of $156,000. The Series E Preferred Stock will earn a dividend of 12% per annum, for as long as the relevant Preferred Stock has not been redeemed or converted. Dividends are to be paid quarterly, and at the Company’s discretion, in cash or Preferred Stock calculated at the purchase price. As of December 31, 2023 the accretion for the Series E Preferred Stock was $9,300.

 

On May 1, 2023, one of the holders converted 600 Series E Preferred Stock into 23,989,570 shares of common stock. The conversion represented their remaining Series E Preferred Stock outstanding as of that date, including the 10% increase, accrued dividends in kind of $516,000 and the 15% Exit Fee of $108,000.

 

18

 

 

GHS 2022 Purchase Agreement

 

On November 4, 2022, the Company entered into a purchase agreement (the “GHS Purchase Agreement”) with GHS Investments LLC (“GHS”), an accredited investor, pursuant to which, the Company may require GHS to purchase a maximum of up to 64,000,000 shares of the Company’s common stock (“GHS Purchase Shares”) based on a total aggregate purchase price of up to $5,000,000 over a one-year term that ends on November 4, 2023. Notwithstanding the foregoing dollar limitations, the Company and GHS may, from time to time, mutually agree in writing to waive the aforementioned limitations for a relevant Purchase Notice, which waiver, shall not exceed the 4.99% beneficial ownership limitation contained in the GHS 2022 Purchase Agreement. The Company is to control the timing and amount of any sales of GHS Purchase Shares to GHS. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes.

 

The “Purchase Price” means, with respect to a purchase made pursuant to the GHS Purchase Agreement, 90% of the lowest VWAP during the 10 consecutive business days immediately preceding, but not including, the applicable purchase date. The Company shall deliver a number of GHS Purchase Shares equal to 112.5% of the aggregate purchase amount for such GHS Purchase divided by the Purchase Price per share for such GHS Purchase.

 

If there are any default events, as set forth in the GHS Purchase Agreement, has occurred and is continuing, the Company shall not deliver to GHS any Purchase Notice.

 

Further, pursuant to the terms of the GHS Purchase Agreement, from November 4, 2022 until the date that is the later of (i) the closing of the transactions whereby Yotta Merger Sub, Inc. will merge with and into the Company, with the Company as the surviving company (the “Merger”); and (ii) the 12 month anniversary of the first delivery of GHS Purchase Shares, upon any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), GHS shall have the right to participate in any financing, up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. Following the Merger, the Participation Maximum shall be 50% of the Subsequent Financing.

 

In the three months ended June 30, 2023, the Company sold 11,981,706 shares of common stock at a net amount of approximately $376,000, at a share price of $0.03, of the GHS Purchase Agreement.

 

In the year ended March 31, 2023, the Company sold 52,018,294 shares of common stock at a net amount of approximately $3,076,000, at share prices ranging from $0.04 to $0.10.

 

$10,000,000 Common Stock Equity Financing

 

On April 28, 2023, the Company entered into an Equity Financing Agreement (“Equity Financing Agreement”) and Registration Rights Agreement with GHS. Under the terms of the Equity Financing Agreement, GHS agreed to provide the Company with up to $10,000,000 upon effectiveness of a registration statement on Form S-1 (the “Registration Statement”) filed with the SEC. The Registration Statement was filed on July 20, 2023 and the SEC declared it effective on August 14, 2023.

 

With the effectiveness of the Registration Statement, the Company now has 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 equal less than ten thousand dollars ($10,000) or greater than one million dollars ($1,000,000). 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). Following an up-list to the NASDAQ or equivalent national exchange, the price of each put share shall be equal to ninety percent (90%) of the Market Price, subject to a floor price of $1.00 per share. Puts may be delivered by the Company to GHS until the earlier of twenty-four (24) months after the effectiveness of the Registration Statement or the date on which GHS has purchased an aggregate of $10,000,000 worth of Common Stock under the terms of the Equity Financing Agreement.

 

19

 

 

In the three months ended September 30, 2023, the Company sold 31,808,246 shares of common stock at a net amount of approximately $566,000, at share price of $0.02 related to the Equity Financing Agreement.

 

In the three months ended December 31, 2023, the Company sold 44,843,442 shares of common stock at a net amount of approximately $459,000, at share prices ranging from $0.01 to $0.02, in relation to the Equity Financing Agreement. Included in this amount, on October 31, 2023, the Company issued GHS 7,868,985 shares of common stock, for no purchase price, as consideration resulting from GHS receiving a phishing email informing them to wire a purchase price to an incorrect bank, resulting in the Company not receiving the wire and for which GHS resent a second wire to the Company’s correct bank.

 

GHS 2023 Purchase Agreement

 

On May 9, 2023, the Company entered into a purchase agreement (the “GHS 2023 Purchase Agreement”) with GHS pursuant which the Company may require GHS to purchase a maximum of up to 45,923,929 shares of the Company’s common stock (“GHS 2023 Purchase Shares”) based on a total aggregate purchase price of up to $6,000,000 over a one-year term that ends on May 9, 2024. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes.

 

The GHS 2023 Purchase Agreement provides that, upon the terms and subject to the conditions and limitations set forth in the agreement, the Company has the right from time to time during the term of the agreement, in its sole discretion, to deliver to GHS a purchase notice (a “Purchase Notice”) directing GHS to purchase (each, a “GHS Purchase”) a specified number of GHS 2023 Purchase Shares. A GHS Purchase will be made in a minimum amount of $10,000 and up to a maximum of $1,500,000 and provided that, the purchase amount for any purchase will not exceed 200% of the average of the daily trading dollar volume of the Company’s common stock during the 10 business days preceding the purchase date. Notwithstanding the foregoing dollar limitations, the Company and GHS may, from time to time, mutually agree (in writing) to waive the aforementioned limitations for a relevant Purchase Notice, which waiver, for the avoidance of doubt, shall not exceed the 4.99% beneficial ownership limitation contained in the GHS Purchase Agreement. The “Purchase Price” means, with respect to a purchase made pursuant to the GHS Purchase Agreement, 90% of the lowest VWAP (as defined in the GHS 2023 Purchase Agreement) during the Valuation Period (the ten (10) consecutive business days immediately preceding, but not including, the applicable purchase date). The Company shall deliver a number of GHS 2023 Purchase Shares equal to 112.5% of the aggregate purchase amount for such GHS Purchase divided by the Purchase Price per share for such GHS Purchase, against payment by GHS to the Company of the purchase amount with respect to such Purchase (less documented deposit and clearing fees, if any), as full payment for such GHS Purchase Shares via wire transfer of immediately available funds.

 

If there are any default events, as set forth in the GHS Purchase Agreement, has occurred and is continuing, the Company shall not deliver to GHS any Purchase Notice.

 

Further, pursuant to the terms of the GHS 2023 Purchase Agreement, from May 9, 2023 until the date that is the later of (i) the closing of the transactions whereby Yotta Merger Sub, Inc. will merge with and into the Company, with the Company as the surviving company (the “Merger”); and (ii) the 12 month anniversary of the initial closing pursuant to the Section 2(a) of GHS Purchase Agreement, upon any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), GHS shall have the right to participate in any financing, up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. Following the Merger, the Participation Maximum shall be 50% of the Subsequent Financing.

 

In the three months ended June 30, 2023, the Company sold 28,205,605 shares of common stock at a net amount of approximately $923,000, at share prices ranging from $0.03 to $0.04 related to the GHS 2023 Purchase Agreement.

 

20

 

 

Common Shares Issued to Employees

 

On October 10, 2023, a new employee was issued 50,000 shares of common stock as a signing bonus with a total fair value of $1,100, based on the market price of $0.02250 on the grant date.

 

Common Shares Issued to Consultant

 

On December 4, 2023, 40,000,000 shares of common stock were issued to a consultant under an Independent Consulting Agreement. The shares are a non-refundable retainer on behalf of their consulting services for one year of services. The shares had a fair value of $600,000, based on the market price of $0.015 on the grant date, recognized as consulting services in the nine months ended December 31, 2023.

 

On June 19, 2023, 100,000 shares of common stock were issued to a consultant. The shares had a fair value of $4,700, based on the market price of $0.047 on the grant date.

 

Options and Warrants

 

The Company has not granted any options since inception.

 

All of the warrants issued have been recognized as a liability, as of the issuance of the convertible debenture on December 15, 2021, based on the fact it as it is not known if there will be sufficient authorized shares to be issued upon settlement, based on the conversion terms of the existing convertible debt.

 

The 18,573,116 warrants outstanding as of December 31, 2023, were revalued as of period end for a fair value of $17,950, with a decrease in the fair value of $337,050 recognized on the accompanying condensed consolidated Statement of Operations. The fair value of the warrant liability was estimated using Black Scholes Model, with the following inputs: a risk-free interest rate ranging from 4.01% to 4.23%; and expected volatility of the Company’s common stock ranging from 109.9% to 114.6% and the remaining terms of each warrant issuance.

 

The 18,573,116 warrants outstanding as of December 31, 2022  , were revalued as of period end for a fair value of $2,047,000, with a decrease in the fair value of $1,876,000 recognized on the accompanying condensed consolidated Statement of Operations. The fair value was estimated using Black Scholes Model, with the following inputs: the price of the Company’s common stock of $0.15; a risk-free interest rate of 4.06% to 4.25%, the expected volatility of the Company’s common stock ranging from 124.6% to 174.8%; the estimated remaining term, a dividend rate of 0%.

 

NOTE 9 – RELATED PARTY TRANSACTIONS

 

Bonus Compensation – Related Party

 

On May 11, 2021, the Company paid the Chief Financial Officer (“CFO”) a bonus of $300,000. On August 10, 2021, the Board of Directors ratified the bonus payment to the CFO and awarded the President and the CTO compensation bonuses of $300,000 each. The bonuses to the President and CTO are to be distributed within the next twelve months from the award date, and are included in accrued expenses, related parties as of December 31, 2021. During the year ended March 31, 2022, $200,000 was paid each to the President and CTO, with a total of $200,000 remaining in accrued expenses, related parties, as of December 31, 2023 and March 31, 2023.

 

Promissory Note

 

On July 10 through July 17, 2023, the Company received $140,000 in proceeds from the issuance of three promissory notes with related parties. The notes bear interest at 10% and have maturity dates one year from the issuance date.

 

On August 10, 2022, the Company issued a loan agreement for $300,000, with related parties, which is to be considered priority debt of the Company. As of this filing, five of the related parties have entered into promissory notes under the loan agreement for $50,000 each, for a total of cash received of $250,000. The notes bear interest at a 10% per annum and are due in one year from the issuance date of the notes.

 

21

 

 

For the three and nine months ended December 31, 2023, the interest expense for the related party promissory notes was approximately $9,000 and $21,000, respectively. As of December 31, 2023 and March 31, 2023, the accrued interest related to the related party promissory notes was approximately $41,000 and $22,000, respectively.

 

NaturalShrimp Holdings, Inc.

 

On January 1, 2016 the Company entered into a notes payable agreement with NaturalShrimp Holdings, Inc.(“NSH”), a shareholder. The note payable has no set monthly payment or maturity date with a stated interest rate of 2%. During the year ended March 31, 2022, the Company paid off $655,750 of the note payable. The outstanding balance is approximately $77,000 as of both December 31, 2023 and March 31, 2023. As of both December 31, 2023 and March 31, 2023, accrued interest payable was approximately $74,000.

 

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 as of both December 31, 2023 and March 31, 2023, and is classified as a current liability on the unaudited condensed consolidated balance sheets. As of December 31, 2023 and March 31, 2023, accrued interest payable was approximately $146,000.

 

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