NaturalShrimp Inc 10-Q

Item 1. Financial Statements NATURALSHRIMP INCORPORATED and subsidiaries CONDENSED Consolidated Balance Sheets June 30, 2023 March 31, 2023 ASSETS Current assets Cash $ 69,771 $ 216,465 Accounts receivable 36,329 17,325 Inventory 46,657 25,725 Prepaid expenses 254,131 286,593 Deferred offering costs 1,391,766 1,336,263 Total current assets 1,798,654 1,882,371 Fixed assets, net 14,634,999 15,043,715 Other assets Construction-in-process 25,130 25,130 Patents, net 6,171,000 6,268,500 License Agreement, net 8,872,376 9,142,376 Right of Use asset 183,950 204,243 Deposits 20,633 20,633 Total other assets 15,273,089 15,660,882 Total assets $ 31,706,742 $ 32,586,968 LIABILITIES, MEZZANINE AND STOCKHOLDERS’ DEFICIT Current liabilities Accounts payable $ 3,545,400 $ 3,510,206 Accrued interest 15,753 923,387 Accrued interest - related parties 225,792 219,542 Accrued interest Other accrued expenses 1,326,993 1,314,961 Accrued expenses - related parties 571,996 400,306 Accrued expenses Short-term Note and Lines of credit 19,817 19,817 Notes payable 790,704 671,100 Restructured August note payable 2,590,000 2,400,000 Notes payable - related parties 740,412 740,412 Notes payable Dividends payable 360,072 579,248 Warrant liability 305,000 355,000 Lease Liability, current 87,804 87,804 Total current liabilities 10,579,743 11,221,783 Restructured Senior note payable 21,870,000 21,290,000 Note payable, less current maturities - 23,604 Lease Liability, non-current 106,208 125,189 Total liabilities 32,555,951 32,660,576 Commitments and contingencies (Note 11) - - Series E Redeemable Convertible Preferred stock, $ 0.0001 par value, 20,000 shares authorized, 1,500 and 1,670 shares issued and outstanding at June 30, 2023 and March 31, 2023, respectively 1,800,000 2,003,557 Series F Redeemable Convertible Preferred stock, $ 0.0001 par value, 750,000 shares authorized, 750,000 shares issued and outstanding at June 30, 2023 and March 31, 2023, respectively 43,612,000 43,612,000 Temporary equity, value Stockholders’ deficit Series A Convertible Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at June 30, 2023 and March 31, 2023 500 500 Common stock, $ 0.0001 par value, 900,000,000 shares authorized, 868,263,739 and 803,123,748 shares issued and outstanding at June 30, 2023 and March 31, 2023, respectively 86,891 80,377 Additional paid in capital 123,554,174 121,156,733 Stock to be issued 390,024 662,767 Subscription receivable ( 56,250 ) ( 56,250 ) Accumulated deficit ( 170,236,548 ) ( 167,533,292 ) Total stockholders’ deficit ( 46,261,209 ) ( 45,689,165 ) Total liabilities, mezzanine and stockholders’ deficit $ 31,706,742 $ 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) June 30, 2023 June 30, 2022 For the 3 Months Ended June 30, 2023 June 30, 2022 Sales $ 205,872 $ 36,336 Cost of sales 49,741 - Net revenue 156,131 36,336 Operating expenses: General and administrative 1,298,451 1,326,032 Research and development - 172,643 Facility operations 358,258 531,736 Depreciation 434,809 525,229 Amortization 367,500 367,500 Total operating expenses 2,459,018 2,923,140 Net loss from operations ( 2,302,887 ) ( 2,886,804 ) Other income (expense): Interest expense ( 2,713 ) ( 502,372 ) Interest expense - related parties ( 6,250 ) - Amortization of debt discount - ( 2,040,000 ) Change in fair value of derivative liability - 1,314,000 Change in fair value of warrant liability 50,000 1,915,000 Change in fair value of restructured notes 137,634 - Extension fee ( 180,000 ) - Gain on sale of machinery and equipment 5,785 - Total other income, net 4,456 686,628 Loss before income taxes ( 2,298,431 ) ( 2,200,176 ) Provision for income taxes - - Net loss ( 2,298,431 ) ( 2,200,176 ) Amortization of beneficial conversion feature on Preferred shares - ( 141,500 ) Accretion on Preferred shares - ( 278,500 ) Dividends ( 404,825 ) ( 102,227 ) Net loss available for common stockholders $ ( 2,703,256 ) $ ( 2,722,403 ) Loss per share (Basic and Diluted) $ ( 0.00 ) $ ( 0.00 ) WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and Diluted) 839,745,626 665,999,390 The accompanying footnotes are an integral part of these condensed consolidated financial statements. 4 NATURALSHRIMP INCORPORATED CONDENSED Consolidated STATEMENT of CHANGES IN STOCKHOLDERS’ 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 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 ) 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 ) Balance, 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 ) Balance, 5,000,000 $ 500 740,585,500 $ 74,097 $ 117,032,233 $ 815,052 $ ( 56,250 ) $ ( 152,758,426 ) ( 34,892,793 ) The accompanying footnotes are an integral part of these condensed consolidated financial statements. 5 NATURALSHRIMP INCORPORATED CONDENSED Consolidated STATEMENTS OF CASH FLOWS (Unaudited) June 30, 2023 June 30, 2022 For the 3 Months Ended June 30, 2023 June 30, 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 2,298,431 ) $ ( 2,200,176 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation expense 434,809 525,229 Amortization expense 367,500 367,500 Amortization of debt discount - 2,040,000 Change in fair value of derivative liability - ( 1,314,000 ) Change in fair value of warrant liability ( 50,000 ) ( 1,915,000 ) Change in fair value of promissory notes ( 137,634 ) - Financing costs 120,000 - Gain on sale of machinery and equipment ( 5,785 ) - Shares issued for services 4,700 24,375 Amortization of operating lease right-of-use assets 20,293 - Changes in operating assets and liabilities: Accounts receivable ( 19,004 ) ( 24,132 ) Inventory ( 20,932 ) ( 35,368 ) Prepaid expenses and other current assets 32,462 ( 481,750 ) Deferred offering costs ( 55,503 ) - Accounts payable 35,636 450,606 Other accrued expenses 12,032 11,140 Accrued expenses - related parties 171,690 - Accrued interest - 488,797 Accrued interest - related parties 6,250 8,275 Operating lease liabilities ( 18,981 ) - Cash used in operating activities ( 1,400,898 ) ( 2,054,504 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for fixed assets ( 39,308 ) ( 491,112 ) Cash received for sale of machinery and equipment 19,000 - Cash used in investing activities ( 20,308 ) ( 491,112 ) CASH FLOWS FROM FINANCING ACTIVITIES Payments of notes payable ( 24,000 ) ( 24,000 ) Proceeds from sale of stock 1,298,512 - Proceeds from convertible debentures, receipt from escrow - 1,500,000 Cash provided by financing activities 1,274,512 1,476,000 NET CHANGE IN CASH ( 146,694 ) ( 1,069,616 ) CASH AT BEGINNING OF PERIOD 216,465 1,734,040 CASH AT END OF PERIOD $ 69,771 $ 664,424 INTEREST PAID $ 616 $ 5,300 Supplemental Disclosure of Non-Cash Investing and Financing Activities: Construction in process transferred to fixed assets $ - $ 1,040,617 Shares issued upon conversion of Preferred stock $ 828,000 840,000 Dividends on Series E Preferred stock $ 404,825 $ - 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 THREE MONTHS ENDED JUNE 30, 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 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 three months ended June 30, 2023, the Company had a net loss available for common stockholders of approximately $ 2,703,000 . As of June 30, 2023, the Company had an accumulated deficit of approximately $ 170,237,000 and a working capital deficit of approximately $ 8,781,000 . 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 three months ended June 30, 2023, the Company received net cash proceeds of approximately $ 1,299,000 from the sale of common shares (See Note 8). Subsequent to period end, the Company received $ 140,000 proceeds from the issuance of promissory notes, related parties (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. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited financial information as of and for the three months ended June 30, 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 financial position at such date and the operating results and cash flows for such periods. Operating results for the three months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. 7 Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (“SEC”). These 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 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 NaturalShrimp Incorporated 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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Basic and Diluted Earnings/Loss per Common Share Basic and diluted earnings or loss per share (“EPS”) amounts in the 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 three months ended June 30, 2023, the Company had 5,000,000 Series A Convertible Preferred Stock which would be converted at the holder’s option into approximately 868,264,000 underlying common shares, 1,500 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 , 750,000 shares of Series F Preferred Stock which would be converted at the holders’ option into approximately 208,383,000 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. As of the three months ended June 30, 2022, the Company had 5,000,000 Series A Convertible Preferred Stock which would be converted at the holder’s option into approximately 740,711,000 underlying common shares, 1,500 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 640 of Series E Redeemable Convertible Preferred shares whose approximately 7,676,000 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 177,771,000 underlying common shares, approximately $ 18,768,000 in a convertible debenture whose approximately 164,177,000 underlying shares are convertible at the holders’ option at conversion price of 90 % of the average of the two lowest market prices over the last 10 days and 18,506,429 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 our balance sheet dates. However, other financial instruments, such as debt obligations, are not required to be recognized at their fair values, but GAAP provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair values of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts in our balance sheets. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument, along with other information, including changes in the fair values of certain financial instruments recognized in income or other comprehensive income. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under “Financial Instruments.” Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred. The Company did not have any Level 1 or Level 2 assets and liabilities at June 30, 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 derivatives during the three months ended June 30, 2023 and the year ended March 31, 2023: SCHEDULE OF DERIVATIVE AND WARRANT AND PROMISSORY NOTE AT FAIR VALUE Warrant liability June 30, 2023 March 31, 2023 (unaudited) Warrant liability balance at beginning of period $ 355,000 $ 3,923,000 Change in fair value ( 50,000 ) ( 3,568,000 ) Balance at end of period $ 305,000 $ 355,000 At June 30, 2023, the fair value of the warrant liability was estimated using the following inputs: the price of the Company’s common stock of $ 0.05 ; a risk-free interest rate ranging from 3.89 % to 4.49 %; and expected volatility of the Company’s common stock ranging from 108.4 % to 121.5 % 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. SCHEDULE OF RESTRUCTURED NOTE AT FAIR VALUE Restructured August and Senior Notes Payable June 30, 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 ( 137,634 ) 2,842,133 Restructured notes payable fair value at end of period $ 24,460,000 $ 23,690,000 9 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 ASC 825 fair value option. 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 40% present value factor. In accordance with ASC 825, the Company chose to present the component for the accrued interest in the same line item on the 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, “ Financial Instruments” . 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 June 30, 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 June 30, 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: SCHEDULE OF ESTIMATED USEFUL LIVES Buildings 39 years Machinery and Equipment 7 – 10 years Vehicles 10 years Furniture and Fixtures 3 – 10 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. 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 June 30, 2023 and June 30, 2022, the amortization of the patents was $ 97,500 and $ 97,500 and in the license rights was $ 270,000 and $ 270,000 . 10 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 June 30, 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 their 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. 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 meet 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. 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. 11 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 either the Hydrenesis Technologies or Equipment. 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. SCHEDULE OF REVENUE RECOGNITION June 30, 2023 June 30, 2022 Three months ended June 30, 2023 June 30, 2022 Shrimp sales $ 55,872 $ 36,336 Technology and equipment services 150,000 — Total revenues $ 205,872 $ 36,336 On May 21, 2023, the Company entered into a six month agreement with a company for the use of the Hydrenesis Technology and Equipment. Per the agreement, the customer is to pay a total of $ 300,000 comprised of an initial payment equal to $ 150,000 and then $ 25,000 per month for the combined total of the Service Fee. Recently Issued Accounting Standards In August 2020, the FASB issued 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, Earnings Per Share, 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. 12 As of June 30, 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 balance sheet date of June 30, 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. NOTE 3 – FIXED ASSETS A summary of the fixed assets as of June 30, 2023 and March 31, 2023 is as follows: SCHEDULE OF FIXED ASSETS June 30, 2023 March 31, 2023 (unaudited) Land $ 324,293 $ 324,293 Buildings 5,509,918 5,495,150 Machinery and equipment 12,297,284 12,293,112 Autos and trucks 307,227 307,227 Fixed assets,gross 18,438,722 18,419,782 Accumulated depreciation ( 3,803,723 ) ( 3,376,067 ) Fixed assets, net $ 14,634,999 $ 15,043,715 The unaudited condensed consolidated statements of operations reflect depreciation expense of approximately $ 435,000 and $ 525,000 for the three months ended June 30, 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 34.15 % as of June 30, 2023. The line of credit is unsecured. The balance of the line of credit was $ 9,580 at both June 30, 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 18.25 % as of June 30, 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 June 30, 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 “Exit Fee”). 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. 13 April 2023 Promissory Note On April 21, 2023, the Company entered into a $ 60,000 promissory note with Yotta Investment LLC (“Yotta”), 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 (“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 12, the Merger Agreement was terminated subsequent to the period end. May 2023 Promissory Note On May 17, 2023, the Company entered into an additional $ 60,000 promissory note with Yotta, 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. 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 12, the Merger Agreement was terminated subsequent to the period end. 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 June 30, 2023 and March 31, 2023 was $ 95,604 and $ 119,604 , respectively, with the balance as of June 30, 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 . 14 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 has 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 12) 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 June 30, 2023 at approximately $ 2,590,000 , with a change in fair value of approximately $ 190,000 recognized in the 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 June 30, 2023, the accrued interest from the restructuring date, which is included in the fair value is approximately $ 203,000 . 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 . 15 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, 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 June 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 12) 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 June 30, 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 June 30, 2023 at approximately $ 21,870,000 , with a change in fair value of approximately $ 580,000 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 June 30, 2023, the accrued interest from the restructuring date, which is included in the fair value is approximately $ 3,487,000 . 16 NOTE 8 – STOCKHOLDERS’ EQUITY Preferred Stock As of June 30, 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 1,500 and 1,670 outstanding, respectively, and 750,000 shares of Series F preferred stock are authorized with 750,000 outstanding, respectively. Series E Preferred Stock 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, including the 10% increase, accrued dividends in kind of $ 516,000 and the 15% Exit Fee of $ 108,000 . 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 40,187,311 shares of common stock at a gross amount of approximately $ 1,299,000 , at share prices ranging from $ 0.03 to $ 0.04 . 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. 17 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 . GHS Purchase Agreement On May 9, 2023, the Company entered into a purchase agreement (the “GHS 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 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 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 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 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 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 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. 18 Common Shares Issued to Consultant 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 June 30, 2023, were revalued as of period end for a fair value of $ 305,000 , with a decrease in the fair value of $ 50,000 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: the price of the Company’s common stock of $ 0.05 ; a risk-free interest rate ranging from 3.89 % to 4.49 %; and expected volatility of the Company’s common stock ranging from 108.4 % to 121.5 % and the remaining terms of each warrant issuance. The 18,506,429 warrants outstanding as of June 30, 2022, were revalued as of period end for a fair value of $ 2,008,000 , with a decrease in the fair value of $ 1,915,000 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 $ 0.12 ; a risk-free interest rate of 3.01 %, the expected volatility of the Company’s common stock ranging from 182.4 % to 197.5 %; 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 June 30, 2023 and March 31, 2023. Promissory Note 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. For the three months ended June 30, 2023, the interest expense was $ 3,500 . As of June 30, 2023 and March 31, 2023, the accrued interest was approximately $ 26,000 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 June 30, 2023 and March 31, 2023. As of both June 30, 2023 and March 31, 2023, accrued interest payable was approximately $ 74,000 . 19 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 June 30, 2023 and March 31, 2023, and is classified as a current liability on the unaudited condensed consolidated balance sheets. As of June 30, 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 %. The balance of these notes at June 30, 2023 and March 31, 2023 was $ 54,647 and is classified as a current liability on the unaudited condensed consolidated balance sheets. NOTE 10 – LEASE On May 26, 2021, the Company entered into a sublease for a new office space in Texas, on two floors. The lease commenced on August 1, 2021 for a monthly rent of $ 7,000 , and will terminate on October 31, 2025 , for one of the spaces, and commence in the second half of 2022 for monthly rent of $ 1,727 , and terminate on October 31, 2025 , for the second space. On June 2, 2021, the Company paid a deposit of $ 52,362 which shall be applied to the last six months of the sublease term, and $ 17,454 security deposit, which is included in Prepaid expenses on the accompanying condensed consolidated balance sheet. The Company assessed its new office lease as an operating lease. At inception, on August 1, 2021, the ROU and lease liability was calculated as approximately $ 316,000 , based on the net present value of the future lease payments over the term of the lease. When available, the Company uses the rate implicit in the lease discount payments as the incremental borrowing rate to calculate the net present value; however, the rate implicit in the lease is not readily determinable for their corporate office lease. In this case, the Company estimated its incremental borrowing rate of 5.75 % as the interest rate it could have incurred to borrow an amount equal to the lease payments in a similar economic environment on a collateralized basis over a term similar to the lease term . The Company estimated its rate based on observable risk-free interest rate and credit spreads for commercial debt of a similar duration as to what rate would have been effective for the Company. On September 8, 2021, the Company entered into an equipment lease agreement for VOIP phone equipment. The lease term is for sixty months, with a monthly lease payment of approximately $ 300 . The Company assessed the equipment lease as an operating lease. The Company determined the Right of Use asset and Lease liability values at inception as approximately $ 17,000 calculated at the present value of all future lease payments for the lease term, using an incremental borrowing rate of 5.75 %. The following is a schedule of maturities of lease liabilities as of June 30, 2023: SCHEDULE OF MATURITIES OF LEASE LIABILITIES 2024 $ 65,856 2025 87,808 2026 54,709 Total future minimum lease payments 208,373 Less: imputed interest 14,361 Total $ 194,012 20 NOTE 11 – COMMITMENTS AND CONTINGENCIES Executive Employment Agreements –Gerald Easterling On April 1, 2015, the Company entered into an employment agreement with Gerald Easterling at the time as the Company’s President, effective as of April 1, 2015 (the “Employment Agreement”). The Employment Agreement is terminable at will and each provide for a base annual salary of $ 96,000 . On May 4, 2021, the Company’s Board of Directors approved a salary for Mr. Easterling of $ 180,000 per annum. In addition, the Employment Agreement provides that the employee is entitled, at the sole and absolute discretion of the Company’s Board of Directors, to receive performance bonuses. Mr. Easterling will also be entitled to certain benefits including health insurance and monthly allowances for cell phone and automobile expenses. The Employment Agreement provides that in the event the employee is terminated without cause or resigns for good reason (as defined in their Employment Agreement), the employee will receive, as severance the employee’s base salary for a period of 60 months following the date of termination. In the event of a change of control of the Company, the employee may elect to terminate the Employment Agreement within 30 days thereafter and upon such termination would receive a lump sum payment equal to 500% of the employee’s base salary . The Employment Agreement contains certain restrictive covenants relating to non-competition, non-solicitation of customers and non-solicitation of employees for a period of one year following termination of the employee’s Employment Agreement. Merger Agreement On October 24, 2022, the Company entered into a Merger Agreement (as it may be amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among the Company, Yotta Acquisition Corporation, a Delaware corporation (“Yotta”), and Yotta Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Yotta (“Merger Sub”). The Merger Agreement and the transactions contemplated thereby (the “Transactions”) were approved by the Board of Directors of each of the Company, Yotta, and Merger Sub. The Merger Agreement provided, among other things, that Merger Sub will merge with and into the Company, with the Company as the surviving company (the “Surviving Company”) in the merger and, after giving effect to such merger, the Company was to be a wholly-owned subsidiary of Yotta (the “Merger”). In addition, Yotta was to be renamed “NaturalShrimp, Incorporated” or such other name as shall be designated by the Company. As noted in Notes 6 and 7, the Company entered into Restructuring Agreements as required in the Merger Agreement. On July 20, 2023, the Company sent Yotta notice of the Company’s termination of the Merger Agreement. (See Note 12) NOTE 12 – SUBSEQUENT EVENTS On July 20, 2023, the Company sent Yotta notice of the Company’s termination of the Merger Agreement pursuant to Section 10.2(b) thereof based on breaches by Yotta of certain representations in the Merger Agreement that would render impossible the satisfaction of certain conditions to the Company’s obligations to consummate the transactions contemplated by the Merger Agreement. In particular, Yotta will not be able to comply with the provision of its Amended and Restated Certificate of Incorporation that prohibits Yotta from consummating an initial business combination unless it has net tangible assets of at least $ 5,000,001 upon consummation of such initial business combination. This conflicts with Yotta’s representation in the Merger Agreement that its consummation of the transactions contemplated by the Merger Agreement will not conflict with its organizational documents. The Company also cited delays in the SEC registration process that are attributable to Yotta, which breached its covenant pursuant to the Merger Agreement to use its reasonable best efforts to take all actions reasonably necessary or advisable to consummate the transactions contemplated by Merger Agreement as promptly as reasonably practicable. As of August 16, 2023, Yotta has not responded to the Company’s notice of termination. 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 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. 22