What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-16 compared with 2021-02-16 · 464 added, 2695 removed, 66 unchanged (98% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

 (unaudited)

$ 311,848  

$ 109,491  

778,019  

128,693  

917,210  

Total current

1,089,867  

1,155,394  

12,286,515  

707,808  

June 30, 2021

March 31, 2021

Current assets

Prepaid expenses

Total current assets

Construction-in-process

1,719,945  

275,400  

20,633  

178,198  

2,015,978  

453,598  

$ 15,392,360  

$ 2,316,800  

AND STOCKHOLDERS' DEFICIT

$ 896,379  

$ 641,146  

64,246  

81,034  

interest - related parties

175,520  

296,624  

Other accrued

628,204  

1,204,815  

Promissory Note and Lines of credit

575,910  

570,497  

103,200  

463,161  

Right of Use asset

Total other assets

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities

Accounts payable

Accrued interest

Accrued interest - related parties

Other accrued expenses

Short-term Promissory Note and Lines of credit

Convertible debentures

Notes payable - related parties

Dividends payable

Total current liabilities

Bank loans, less current maturities

Notes payable

- related parties

1,247,162  

1,221,162  

182,639  

176,000  

90,000  

Total current

3,881,698  

4,753,343  

less current maturities

208,493  

225,837  

5,000,000  

Note payable -

related party, less current maturities

239,604  

275,400  

9,605,195  

5,254,580  

and contingencies (Note 11)

Redeemable Convertible Preferred stock, $0.0001 par value, 20,000

shares authorized, 5,000 and 0 shares issued and outstanding at

December 31, 2020 and March 31, 2020,

208,333  

Stockholders'

Convertible Preferred stock, $0.0001 par value, 5,000,000 shares

authorized, 5,000,000 shares issued and outstanding at December 31,

2020 and March 31, 2020

Convertible Preferred stock, $0.0001 par value, 5,000 shares

authorized, 1,920 and 2,250 shares issued and outstanding at

December 31, 2020 and March 31, 2020,

Common stock,

$0.0001 par value, 900,000,000 shares authorized, 544,989,181 and

379,742,524 shares issued and outstanding at December 31, 2020 and

March 31, 2020, respectively

54,500  

37,975  

paid in capital

55,437,431  

43,533,242  

135,000  

Note payable, less current maturities

Lease Liability

Total liabilities

Commitments and contingencies (Note 14)

Series E Redeemable Convertible Preferred stock, $ 0.0001 par value, 10,000 shares authorized, 3,740 and 0 shares issued and outstanding at June 30, 2021 and March 31, 2021, respectively

Series D Redeemable Convertible Preferred stock, $ 0.0001 par value, 20,000 shares authorized, 0 and 6,050 shares issued and outstanding at June 30, 2021 and March 31, 2021, respectively

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, 2021 and March 31, 2021, respectively

Series B Convertible Preferred stock, $ 0.0001 par value, 5,000 shares authorized, 345 and 607 shares issued and outstanding at June 30, 2021 and March 31, 2021, respectively

Common stock, $ 0.0001 par value, 900,000,000 shares authorized, 603,019,728 and 560,745,180 shares issued and 602,644,728 and 560,745,180 shares outstanding at June 30, 2021 and March 31, 2021, respectively

Additional paid in capital

Stock Payable

Accumulated deficit

( 62,856,334 )

( 53,683,268 )

stockholders' deficit attributable to NaturalShrimp, Inc.

5,665,588  

Non-controlling

interest in NAS

stockholders' deficit

5,578,832  

liabilities mezzanine and stockholders' deficit

$ 15,392,360  

$ 2,316,800  

accompanying footnotes are in integral part of these condensed

consolidated financial statements.

NATURALSHRIMP INCORPORATED AND SUBSIDIARIES

Total stockholders' deficit attributable to NaturalShrimp Incorporated shareholders

Non-controlling interest in NAS

Total stockholders' deficit

Total liabilities mezzanine and stockholders' deficit

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

NATURALSHRIMP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine months Ended

administrative

394,654  

306,834  

1,131,662  

944,571  

101,500  

79,550  

101,500  

154,470  

41,375  

234,113  

180,934  

Depreciation and

18,173  

15,958  

37,850  

41,521  

Total operating

567,297  

465,667  

1,483,175  

1,268,526  

Net loss from

Amortization of debt

Change in fair value of

derivative liability

58,000  

19,000  

Change in fair value of

warrant liability

Loss on warrant

Total other income

Loss before income

Provision for income

Less net loss

attributable to non-controlling interest

-51363  

Net loss attributable

to NaturalShrimp Inc.

Amortization of

beneficial conversion feature on PS

Net loss available for

common stockholders

For the 3 months Ended

June 30, 2021

June 30, 2020

Operating expenses:

General and administrative

Research and development

Facility operations

Depreciation and amortization

Total operating expenses

Net loss from operations

( 2,238,090 )

Other income (expense):

Interest expense

Amortization of debt discount

Financing costs

Change in fair value of derivative liability

Change in fair value of warrant liability

Forgiveness of PPP loan

Loss on disposal of fixed assets

Loss due to fire

Total other income (expense)

Loss before income taxes

( 2,562,743 )

Provision for income taxes

( 2,562,743 )

EARNINGS PER SHARE

(Basic and diluted)

451,549,772  

345,260,292  

419,177,832  

326,835,226  

accompanying footnotes are in integral part of these condensed

consolidated financial statements.

NATURALSHRIMP INCORPORATED AND SUBSIDIARIES

Less net loss attributable to non-controlling interest

Net loss attributable to NaturalShrimp Incorporated

( 2,562,743 )

Amortization of beneficial conversion feature on Preferred shares

Accretion on Series D Preferred shares

Redemption and exchange of Series D Preferred shares

( 5,792,947 )

Net loss available for common stockholders

$ ( 9,173,066 )

$ ( 914,864 )

EARNINGS PER SHARE (Basic and diluted)

WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and diluted)

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

NATURALSHRIMP INCORPORATED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Series A Preferred stock  

Series B Preferred stock  

Common stock  

Additional paid

Series A Preferred Stock

Series B Preferred Stock

Additional Paid In

Non-controlling

1 unchanged sentence

Balance March 31, 2021

5,000,000  

379,742,524  

$ 37,975  

$ 43,533,243  

$ ( 53,683,268 )

common stock upon conversion

37,926,239  

222,644  

226,437  

derivative liability upon conversion or redemption of related

convertible debentures

205,000  

205,00  

Series B Preferred shares

1,250,000  

conversion feature related to the Series B Preferred

293,000  

payable on Series B PS

Dividends in kind issued

56,458  

Conversion of

Series B PS to common stock

33,569,730  

issued in Vista Warrant settlement

17,500,000  

608,250  

610,000  

warrant liability upon the cancellation of warrants under Vista

Warrant settlement

90,000  

issued to consultant

1,250,000  

61,125  

61,250  

5,000,000  

469,988,493  

$ 47,000  

$ 46,316,363  

Issuance of common stock upon conversion

Conversion of Series B PS to common stock

Conversion of Series D PS to common stock

Exchange of Series D PS to Series E PS

( 3,258,189 )

common stock upon conversion

1,014,001  

125,635  

125,736  

Series B Preferred shares

1,250,000  

conversion feature related to the Series B Preferred

807,000  

payable on Series B PS

Dividends in kind issued

77,984  

Conversion of

Series B PS to common stock

58,521,249  

issued to consultant

1,500,000  

67,350  

67,500  

September 30, 2020

5,000,000  

531,023,743  

$ 53,103  

$ 48,638,480  

Sale of common shares and warrants for cash, less offering costs and commitment shares

Exercise of warrants related to the sale of common shares

Beneficial conversion feature related to the Series E Preferred Shares

Amortization of beneficial conversion feature related to Series E Preferred Shares

Redemption of Series D Preferred shares

( 2,534,758 )

$ (85,682 ) 

common stock upon conversion

795,387  

198,768  

198,848  

Series B Preferred shares

750,000  

conversion feature related to the Series B Preferred

235,000  

payable on Series B Preferred Shares

Conversion of

Series B Preferred Shares to common stock

5,670,051  

conversion feature related to the Series D Preferred

5,000,000  

of beneficial conversion feature related to Series D Preferred

shares issued with Series D Preferred Shares

6,000,000  

issued to consultant

1,500,000  

616,350  

616,500  

to be issued as finder's fees related to asset

135,775  

December 31, 2020

5,000,000  

544,989,181  

$ 54,500  

$ 55,437,431  

135,775  

( 2,534,758 )

$ (86,756 ) 

$ 5,579,607  

Series A Preferred stock  

Series B Preferred stock  

Common stock  

Additional paid

Non-controlling

Total stockholders'

Balance April

5,000,000  

301,758,293  

30,177  

38,335,782  

Amortization of beneficial conversion feature related to Series D Preferred Shares

Commitment shares issued with Series D Preferred Shares

Common shares to be issued for the acquisition of the non-controlling interest subsidiary's remaining equity

( 3,087,830 )

shares under equity financing agreement

11,482,721  

1,498,852  

1,500,000  

shares upon conversion

3,000,000  

29,700  

30,000  

conversion feature

58,548  

5,000,000  

316,241,014  

$ 31,625  

$ 39,922,882  

( 1,000,000 )

Common shares to be issued for Patent acquisition

Common stock vested to consultant

( 2,562,743 )

Series B Preferred shares

250,000  

shares upon conversion

14,000,000  

138,600  

140,000  

shares under equity financing agreement

3,275,060  

273,675  

274,001  

September 30, 2019

5,000,000  

333,516,074  

$ 33,351  

$ 40,585,157  

( 2,562,743 )

Balance June 30, 2021

$ ( 62,856,334 )

Series B Preferred shares

1,250,000  

shares upon conversion

20,600,461  

211,388  

213,448  

derivative liability upon conversion of related convertible

conversion feature related to the Series B Preferred

380,000  

December 31, 2019

5,000,000  

354,116,535  

$ 35,411  

$ 42,434,545  

Balance March 31, 2020

$ ( 46,427,396 )

( 2,937,780 )

accompanying footnotes are in integral part of these condensed

consolidated financial statements.

NATURALSHRIMP INCORPORATED AND SUBSIDIARIES

Issuance of common stock upon conversion

Reclass of derivative liability upon conversion or redemption of related convertible debentures

Purchase of Series B Preferred shares

Beneficial conversion feature related to the Series B Preferred Shares

Dividends payable on Series B PS

Series B PS Dividends in kind issued

Conversion of Series B PS to common stock

Common stock issued in Vista Warrant settlement

Reclass of warrant liability upon the cancellation of warrants under Vista Warrant settlement

Common stock issued to consultant

Balance June 30, 2020

$ ( 47,342,260 )

$ ( 1,060,499 )

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

NATURALSHRIMP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

For the 3 Months Ended

June 30, 2021

June 30, 2020

CASH FLOWS FROM OPERATING ACTIVITIES

attributable to NaturalShrimp Inc.

Net loss attributable to NaturalShrimp Incorporated

$ ( 2,562,743 )

$ ( 477,072 )

Adjustments to

reconcile net loss to net cash used in operating

37,850  

41,521  

of debt discount

515,204  

Change in fair

value of derivative liability

29,000  

41,112  

27,000  

attributable to non-controlling interest

Shares issued

745,250  

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation expense

Amortization of debt discount

Change in fair value of derivative liability

Financing costs

Default penalty

Net loss attributable to non-controlling interest

Forgiveness of PPP loan

Shares issued for services

Changes in operating assets and liabilities:

expenses and other current assets

255,231  

56,002  

Other accrued

143,793  

180,728  

29,959  

interest - related parties

32,096  

Prepaid expenses and other current assets

Accounts payable

Other accrued expenses

Accrued interest

Accrued interest - related parties

Cash used in operating activities

FROM INVESTING ACTIVITIES

Cash paid for

machinery and equipment

Cash paid for

asset acquisition with VeroBlue Farms, Inc.

Cash received

from Insurance settlement

917,210  

Cash paid for

construction in process

CASH USED IN INVESTING ACTIVITIES

( 2,140,788 )

( 1,187,035 )

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for machinery and equipment

Cash paid for patent acquisition with F & T

( 2,000,000 )

Cash paid for acquisition of shares of NCI

( 1,000,000 )

Cash received from Insurance settlement

Cash paid for construction in process

Cash (used in) provided by investing activities

( 4,160,944 )

CASH FLOWS FROM FINANCING ACTIVITIES

related party notes payable

     Repayment

line of credit short-term

Proceeds from

103,200  

Proceeds from

issuance of common shares under equity

1,774,001  

Proceeds from

sale of Series B Convertible Preferred stock

3,250,000  

1,500,000  

Proceeds from

convertible debentures

100,000  

Proceeds from

sale of Series D PS

5,000,000  

convertible debentures, related party

Cash received

in relation to Vista warrant settlement

50,000  

Payments on bank loan

Payment of note payable

Payment of note payable, related party

Repayment of short-term promissory note and lines of credit

Proceeds from PPP loan

Proceeds from issuance of common shares

Shares issued upon exercise of warrants

Proceeds from sale of Series B Convertible Preferred stock

Payments on convertible debentures

Redemption of Series D PS

( 3,513,504 )

Proceeds from sale of Series D PS

Cash received in relation to Vista warrant settlement

Cash provided by financing activities

8,342,803  

3,102,724  

NET CHANGE IN CASH

202,357  

445,491  

CASH AT BEGINNING OF PERIOD

109,491  

137,499  

CASH AT END OF PERIOD

$ 311,848  

$ 582,990  

INTEREST PAID

$ 69,961  

$ 170,911  

Supplemental Disclosure of Non-Cash Investing and Financing

Shares issued

upon conversion

$ 1,131,824  

$ 383,448  

asset and Lease liability

$ 275,400  

$ 134,446  

Shares issued

on Vista Warrant settlement

$ 610,000  

Note payable,

related party, issued in place of Settlement

$ 383,604  

Notes payable,

issued as consideration in VeroBlue Farms, Inc.

$ 5,000,000  

payable, to be issued as finders fee in VeroBlue Farms, Inc.

$ 135,775  

accompanying footnotes are in integral part of these condensed

consolidated financial statements.

NATURALSHRIMP INCORPORATED AND SUBSIDIARIES

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Shares issued upon conversion

Cancellation of Right of Use asset and Lease liability

Dividends in kind issued

Shares issued on Vista Warrant settlement

Shares to be issued as consideration for Patent acquisition

Shares to be issued as consideration for acquisition of remaining NCI

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

NATURALSHRIMP INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2020

NOTE 1 –

NATURE OF THE ORGANIZATION AND BUSINESS

FOR THE THREE MONTHS ENDED JUNE 30, 2021

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

Nature of the Business

NaturalShrimp

Incorporated (“NaturalShrimp”

“Company”), a Nevada corporation, is a biotechnology

company and has developed a proprietary technology that allows it

to grow Pacific White shrimp (Litopenaeus vannamei, formerly

Penaeus vannamei) in an ecologically controlled, high-density,

low-cost environment, and in fully contained and independent

production facilities.

The Company’s system uses technology

which allows it to produce a naturally-grown shrimp

“crop”

weekly, and accomplishes this without the use of

antibiotics or toxic chemicals.

The Company has developed several

proprietary technology assets, including a knowledge base that

allows it to produce commercial quantities of shrimp in a closed

system with a computer monitoring system that automates, monitors

and maintains proper levels of oxygen, salinity and temperature for

optimal shrimp production.

Its initial production facility is

located outside of San Antonio, Texas.

Company has two wholly-owned subsidiaries including NaturalShrimp

Corporation, NaturalShrimp Global, Inc.

and 51% owned Natural

Aquatic Systems, Inc.

(“NAS”).

NaturalShrimp Incorporated (“NaturalShrimp” or the “Company”), a Nevada corporation, is a biotechnology company and has developed a proprietary technology that allows it to grow Pacific White shrimp (Litopenaeus vannamei, formerly Penaeus vannamei) in an ecologically controlled, high-density, low-cost environment, and in fully contained and independent production facilities.

The Company’s system uses technology which allows it to produce a naturally-grown shrimp “crop” weekly and accomplishes this without the use of antibiotics or toxic chemicals.

The Company has developed several proprietary technology assets, including a knowledge base that allows it to produce commercial quantities of shrimp in a closed system with a computer monitoring system that automates, monitors and maintains proper levels of oxygen, salinity and temperature for optimal shrimp production.

Its initial production facility is located outside of San Antonio, Texas.

On December 15, 2020, the Company entered into an Asset Purchase Agreement (“APA”) between VeroBlue Farms USA, Inc., a Nevada corporation (“VBF”), VBF Transport, Inc., a Delaware corporation (“Transport”), and Iowa’s First, Inc., an Iowa corporation (“Iowa’s First”) (each a “Seller” and collectively, “Sellers”).

Transport and Iowa’s First were wholly-owned subsidiaries of VBF.

The agreement called for the Company to purchase all of the tangible assets of VBF, the motor vehicles of Transport and the real property (together with all plants, buildings, structures, fixtures, fittings, systems and other improvements located on such real property) of Iowa’s First.

The facility was originally designed as an aquaculture facility, with the company having production issues.

The Company began a modification process to convert the plant to produce shrimp, which will allow them to scale faster without having to build new facilities.

The three Iowa facilities contain the tanks and infrastructure that will be used to support the production of shrimp with the incorporation of the Company's patented EC platform technology.

On May 19, 2021, the Company entered into a Securities Purchase Agreement (the “SPA”) with F&T Water Solutions, LLC (“F&T”), for F&T’s owned shares of Natural Aquatic Systems, Inc.

Prior to entering into the SPA, the Company owned fifty-one percent (51%) and F&T owned forty-nine percent (49%) of the issued and outstanding shares of common stock of NAS.

After the SPA, NAS is a 100% owned subsidiary of the Company (See Note 8).

The Company has three wholly-owned subsidiaries including NaturalShrimp Corporation, NaturalShrimp Global, Inc.

Going Concern

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 nine months ended December 31, 2020,

the Company had a net loss available for common stockholders of

approximately $3,534,000.

As of December 31, 2020, the Company had

an accumulated deficit of approximately $49,962,000 and a working

capital deficit of approximately $2,792,000.

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

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, 2020, the

Company received net cash proceeds of $3,250,000 from the sale of

3,250 Series B Preferred shares and $5,000,000 from the sale of

5,000 Series D Preferred shares.

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

our common stock.

Additional financing may not be available upon

acceptable terms, or at all.

If adequate funds are not available or

are not available on acceptable terms, the Company may not be able

to take advantage of prospective business endeavors or

opportunities, which could significantly and materially restrict

our operations.

The Company continues to pursue external financing

alternatives to improve its working capital position.

Company is unable to obtain the necessary capital, the Company may

be unable to develop its facilities and enter in

NOTE 2 –

SUMMARY OF SIGNIFICANT ACCOUNTING

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, 2021, the Company had a net loss available for common stockholders of approximately $ 9,173,000 .

At June 30, 2021, the Company had an accumulated deficit of approximately $ 62,856,000 .

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, 2021, the Company received net cash proceeds of approximately $ 17,277,000 from the sale of common shares (See Note 9).

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 our common stock.

Additional financing may not be available upon acceptable terms, or at all.

If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict our operations.

The Company continues to pursue external financing alternatives to improve its working capital position.

If the Company is unable to obtain the necessary capital, the Company may be unable to develop its facilities and enter in production.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

accompanying unaudited financial information as of and for the

three and nine months ended December 31, 2020 and 2019 has been

prepared in accordance with GAAP in the U.S.

for interim financial

information and with the instructions to Quarterly Report on Form

10-Q and Article 10 of Regulation S-X.

In the opinion of

management, such financial information includes all adjustments

(consisting only of normal recurring adjustments) considered

necessary for a fair presentation of our financial position at such

date and the operating results and cash flows for such periods.

Operating results for the three and nine months ended December 31,

2020 are not necessarily indicative of the results that may be

expected for the entire year or for any other subsequent interim

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 accompanying unaudited financial information as of and for the three months ended June 30, 2021 and 2020 has been prepared in accordance with GAAP in the U.S.

for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X.

In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods.

Operating results for the three months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S.

Securities and Exchange Commission, or the SEC.

unaudited financial statements and related notes should be read in

conjunction with our audited financial statements for the year

ended March 31, 2020 included in the Company’s Annual

Report on Form 10-K filed with the SEC on June 26,

condensed consolidated balance sheet as of March 31, 2020 has been

derived from the audited financial statements at that date but does

not include all of the information and footnotes required by

generally accepted accounting principles in the U.S.

financial statements.

Consolidation

consolidated financial statements include the accounts of

NaturalShrimp Incorporated and its wholly-owned subsidiaries,

NaturalShrimp Corporation, NaturalShrimp Global and 51 % owned

Natural Aquatic Systems, Inc.

All significant intercompany accounts

and transactions have been eliminated in

These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended March 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on June 29, 2021.

The condensed consolidated balance sheet at March 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S.

for complete financial statements.

Consolidation

The consolidated financial statements include the accounts of NaturalShrimp Incorporated and its wholly-owned subsidiaries, NaturalShrimp Corporation, NaturalShrimp Global and Natural Aquatic Systems, Inc.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Preparing financial

statements in conformity with accounting principles generally

accepted in the United States of America requires management to

make estimates and assumptions that affect the reported amounts of

assets and liabilities and disclosure of contingent assets and

liabilities at the date of the financial statements and the

reported amounts of revenues and expenses during the reporting

Actual results could differ from those

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

and diluted earnings or loss per share (“EPS”) amounts

in the consolidated financial statements are computed in accordance

with ASC 260 –

10 “Earnings per Share”, which

establishes the requirements for presenting EPS.

Basic EPS is based

on the weighted average number of shares of common stock

Diluted EPS is based on the weighted average number of

shares of common stock outstanding and dilutive common stock

Basic EPS is computed by dividing net income or loss

available to common stockholders (numerator) by the weighted

average number of shares of common stock outstanding (denominator)

during the period.

For the nine months ended December 31, 2020, the

Company had a 1,920 shares of Series B PS whose approximately

12,308,000 underlying shares are convertible at the

investors’

option at a conversion price based on the lowest

market price over the last 20 trading days, and 5,000 of Series D

PS whose approximately 50,000,000 underlying shares are convertible

at the investors’

option at a fixed conversion price of

$0.10, which were not included in the calculation of diluted EPS as

their effect would be anti-dilutive.

For the nine months ended

December 31, 2019, the Company had approximately $709,000 in

principal on convertible debentures whose approximately 22,895,000

underlying shares are convertible at the holders’

conversion prices  ranging from

$0.01 to $0.30 for fixed conversion rates, and 57% - 60% of the

defined trading price for variable conversion rates and

approximately 848,000 warrants 

with an exercise price

of 45% of the market price of the Company’s common stock,

which were not included in the calculation of diluted EPS as their

effect would be anti-dilutive.

Basic and diluted earnings or loss per share (“EPS”) amounts in the consolidated financial statements are computed in accordance with ASC 260 – 10 “Earnings per Share”, which establishes the requirements for presenting EPS.

Basic EPS is based on the weighted average number of shares of common stock outstanding.

Diluted EPS is based on the weighted average number of shares of common stock outstanding and dilutive common stock equivalents.

Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of shares of common stock outstanding (denominator) during the period.

For the three months ended June 30, 2021, the Company had 10,000,000 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive.

For ,the three months ended June 30,2020, the Company had approximately $ 278,000 in convertible debentures whose approximately 1,560,000 underlying shares are convertible at the holders’ option at conversion prices ranging from $0.124 to $0.25 for fixed conversion rates which were not included in the calculation of diluted EPS as their effect would be anti-dilutive .

Fair Value Measurements

Topic 820, “

Measurement”

, requires that certain financial

instruments be recognized at their fair values at our balance sheet

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

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.”

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.

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.

Company did not have any Level 1 or Level 2 assets and liabilities

as of December 31, 2020 and March 31, 2020.

Derivative liabilities are Level 3 fair value

measurements.

following is a summary of activity of Level 3 liabilities during

the nine months ended December 31, 2020 and 2019:

liability balance at beginning of period

$ 176,000  

$ 157,000  

Reclass to equity

upon conversion or redemption

Change in fair

29,000  

Balance at end of

$ 130,000  

of December 31, 2019, the fair value of the derivative liabilities

of convertible notes was estimated using the following

weighted-average inputs:

the price of the Company’s common

stock of $0.11;

a risk-free interest rate of 1.55%, and expected

volatility of the Company’s common stock of 98.46%, and the

various estimated reset exercise prices weighted by

Warrant liability

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, 2021 and March 31, 2021.

The Derivative and Warrant liabilities are Level 3 fair value measurements.

There were no Level 3 fair value measurements during the three months ended June 30.

The following is a summary of activity of Level 3 liabilities during the three months ended June 30, 2021 and 2020:

Derivative liability balance at beginning of period

Reclass to equity upon conversion or redemption

Change in fair value

Balance at end of period

At June 30, 2020, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs:

the price of the Company’s common stock of $ 0.04 ;

a risk-free interest rate of 0.13 %, and expected volatility of the Company’s common stock of 158.29 %, and the various estimated reset exercise prices weighted by probability.

Warrant liability

balance at beginning of period

$ 90,000  

$ 93,000  

Reclass to equity

upon cancellation or exercise

Change in fair

Balance at end of

$ 93,000  

of December 31, 2019, the fair value of the warrant liability was

estimated using the following weighted-average inputs:

the Company’s common stock of $0.11;

a risk-free interest

rate of 1.55%, and expected volatility of the Company’s

common stock of 281.4%.

Warrant liability balance at beginning of period

Reclass to equity upon cancellation or exercise

Change in fair value

Balance at end of period

At June 30, 2020, the fair value of the warrant liability was estimated using the following weighted-average inputs:

the price of the Company’s common stock of $ 0.12 ;

a risk-free interest rate of 1.71 %, and expected volatility of the Company’s common stock ranging of 268.05 %.

Financial Instruments

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”

carrying amount of these financial instruments, with the exception

of discounted debt, as reflected in the consolidated balance sheets

approximates fair value.

The Company’s financial instruments include cash and cash equivalents, receivables, payables, and debt and are accounted for under the provisions of ASC Topic 825, “ Financial Instruments” .

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

Cash and Cash Equivalents

purpose of the consolidated statements of cash flows, the Company

considers all highly liquid instruments purchased with a maturity

of three months or less to be cash equivalents.

There were no cash

equivalents as of December 31, 2020 and March 31,

For the purpose of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

There were no cash equivalents at June 30, 2021 and March 31, 2021.

Concentration of Credit Risk

Company maintains cash balances at two financial institution.

Accounts at this institution are insured by the Federal Deposit

Insurance Corporation (FDIC) up to $250,000.

As of December

31, 2020 the Company’s

cash balance exceeded FDIC coverage.

As of March 31, 2020, the

Company’s cash balance did not exceed FDIC coverage.

The Company has not experienced any losses in such accounts and

periodically evaluates the credit worthiness of the financial

institutions and has determined the credit exposure to be

carried at historical value or cost and is depreciated over the

estimated useful lives of the related assets.

Depreciation on

buildings is computed using the straight-line method, while

depreciation on all other fixed assets is computed using the

Modified Accelerated Cost Recovery System (MACRS) method, which

does not materially differ from GAAP.

Estimated useful lives are as

Depreciable Property

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

consolidated statements of operations reflect depreciation expense

of approximately $18,000 and $38,000 for the three and nine months

ended December 31, 2020 and $16,000 and $42,000 for the three and

nine months ended December 31, 2019, respectively.

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, 2021 the Company’s cash balance exceeded FDIC coverage.

As of March 31, 2021, the Company’s cash balance did not exceed FDIC coverage.

The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible.

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:

27.5 – 39 years

Machinery and Equipment

Furniture and Fixtures

Maintenance and repairs are charged to expense as incurred.

At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

The consolidated statements of operations reflect depreciation expense of approximately $ 306,000 and $ 11,000 for the three months ended June 30, 2021 and 2020, respectively.

Commitments and Contingencies

conditions may exist as of the date the consolidated financial

statements are issued, which may result in a loss to the Company

but which will only be resolved when one or more future events

occur or fail to occur.

The Company’s management and its

legal counsel assess such contingent liabilities, and such

assessment inherently involves an exercise of judgment.

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.

assessment of a contingency indicates that it is probable that a

material loss has been incurred and the amount of the liability can

be estimated, then the estimated liability would be accrued in the

Company’s consolidated financial statements.

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.

contingencies considered remote are generally not disclosed unless

they involve guarantees, in which case the nature of the guarantee

would be disclosed.

Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.

The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.

If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

Recently Issued Accounting Standards

December 31, 2020, there were several new accounting pronouncements

issued by the Financial Accounting Standards Board.

Each of these

pronouncements, as applicable, has been or will be adopted by the

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

Company evaluates events that have occurred after the balance sheet

date of December 31, 2020, through the date which the 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 consolidated

financial statements.

NOTE 3 –

ASSET ACQUISITION

December 15, 2020, the Company entered into an Asset Purchase

Agreement (“APA”) between VeroBlue Farms USA, Inc., a

Nevada corporation (“VBF”), VBF Transport, Inc., a

Delaware corporation (“Transport”), and Iowa’s

First, Inc., an Iowa corporation (“Iowa’s First”)

(each a “Seller”

and collectively,

“Sellers”).

Transport and Iowa’s First were

wholly-owned subsidiaries of VBF.

The agreement called for the

Company to purchase all of the tangible assets of VBF, the motor

vehicles of Transport and the real property (together with all

plants, buildings, structures, fixtures, fittings, systems and

other improvements located on such real property) of Iowa’s

The consideration was $10,000,000, consisting of $5,000,000

in cash, paid at closing on December 17, 2020, (ii) $3,000,000

payable in 36 months with interest thereon at the rate of 5% per

annuum, interest only payable quarterly on the first day of the

quarter, with the remaining balance to be paid to VBF as a balloon

payment on the maturity date, (“Promissory Note A”),

and (iii) $2,000,000 payable in 48 months with interest thereon at

the rate of 5% per annuum, interest only payable quarterly on the

first day of the quarter, with the remaining balance to be paid to

VBF as a balloon payment on the maturity date (“Promissory

Note B”).

The Company also agreed to issue 500,000 shares of

common stock as a finder’s fee, which would be considered as

transaction fees in relation to the asset acquisition, with a fair

value of $135,000 based on the market value of the common stock as

of the closing date of the acquisition (Note 8).

facility was originally designed as a farming facility, with the

company never beginning production.

The Company’s plan is to

begin a modification process to convert the plant to produce

shrimp, which will allow them to scale faster without having to

build new facilities.

The three Iowa facilities contain the tanks

and infrastructure that will be used to support the production of

shrimp with the incorporation of the Company's patented EC platform

Company determined the asset acquisition did not qualify as a

business combination as not only did the Company only acquire

certain listed tangible assets, but VBF did not fall under the

definition of a business in accordance with ASU 2017-01.

early stage company that had not yet generated revenue, and it did

not yet include an input and a substantive process that will afford

the Company the ability to create an output.

Additionally, the

acquisition does not include an organized workforce.

assets acquired are to be used by the Company as a location in

which to apply their own patented process and create their output,

the production of shrimp.

$10,136,000 consideration was allocated to the assets acquired

based on their relative fair value:

$ 7,014,000  

202,000  

2,797,000  

122,000  

$ 10,135,000  

NOTE 4 –

summary of the fixed assets as of December 31, 2020 and March 31,

2020 is as follows:

$ 323,564  

$ 202,293  

3,338,644  

509,762  

and equipment

8,686,256  

221,987  

221,199  

19,063  

12,569,663  

953,105  

$ 12,286,516  

$ 707,808  

fixed assets include the assets purchased in the asset acquisition

on December 15, 2020, in Note 3.

March 18, 2020, the Company’s research and development plant

in La Coste, Texas was destroyed by a fire.

The Company believes

that it was caused by a natural gas leak, but the fire was so

extensive that the cause was undetermined.

The majority of the

damage was to their pilot production plant, which destroyed a large

portion of the fixed assets of the Company.

The property destroyed

had a net book value of $1,909,495, which was written off and

recognized as Loss due to fire during the year ended March 31,

The Company filed a claim with their insurance company, and

as of June 2, 2020, received all the proceeds, which totaled

The Company is currently purchasing replacement fixed

assets and reconstructing their pilot production

NOTE 5 –

SHORT-TERM NOTE AND LINES OF CREDIT

Company has a working capital line of credit with Extraco Bank.

April 30, 2020, the line of credit was renewed with a maturity date

of April 30, 2021 for a balance of $372,675.

The line of credit

bears an interest rate of 5.0%, that is compounded monthly and to

be paid with the principal on the maturity date.

The line of credit

matures on April 30, 2021 and is secured by certificates of deposit

and letters of credit owned by directors and shareholders of the

The balance of the line of credit is $372,675 at both

December 31, 2020 and March 31, 2020.

Company also has an additional line of credit with Extraco Bank for

$200,000, which was renewed with a maturity date of April 30, 2021,

for a balance of $177,778.

The lines of credit bear interest at a

rate of 5%, that is compounded monthly and to be paid with the

principal on the maturity date.

The line of credit is secured by

certificates of deposit and letters of credit owned by directors

and shareholders of the Company.

The balance of the line of credit

was $177,778 at both December 31, 2020 and March 31,

Company also has a working capital line of credit with Capital One

Bank for $50,000.

The line of credit bears an interest rate of

prime plus 25.9 basis points, which totaled 29.15% as of December

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.

As of June 30, 2021, there were several new accounting pronouncements issued by the Financial Accounting Standards Board.

Each of these pronouncements, as applicable, has been or will be adopted by the Company.

Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

Management’s Evaluation of Subsequent Events

The Company evaluates events that have occurred after the balance sheet date of June 30, 2021, through the date which the consolidated financial statements were issued.

Based upon the review, other than described in Note 13 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

NOTE 3 – FIXED ASSETS

A summary of the fixed assets as of June 30, 2021 and March 31, 2021 is as follows:

June 30, 2021

March 31, 2021

Machinery and equipment

Autos and trucks

Accumulated depreciation

Fixed assets, net

The fixed assets include the assets purchased in the asset acquisition on December 15, 2020, with VBF.

The $ 10,136,000 consideration was allocated to the fixed assets acquired based on their relative fair value.

NOTE 4 – PATENT ACQUISITION

On May 19, 2021, the Company entered into a Patents Purchase Agreement (the “Patents Agreement”) with F&T.

The Company and F&T had previously jointly developed and patented a water treatment technology used or useful in growing aquatic species in re-circulating and enclosed environments (the “Patent”) with each party owning a fifty percent ( 50 %) interest.

Upon the closing of the Patents Agreement, the Company would purchase F&T’s interest in the Patent, F&T’s 100 % interest in a second patent associated with the first Patent issued to F&T in March 2018, and all other intellectual property rights owned by F&T for a purchase price of $ 2,000,000 in cash and issued 9,900,990 shares of the Company’s common stock with a market value of $ 0.505 per share for a total fair value of $ 5,000,000 , for a total acquisition price of $ 7,000,000 .

The Company paid the cash purchase price on May 20, 2021 and the closing of the Patents Agreement took place on May 25, 2021.

As of June 30, 2021, the shares of common stock have not been issued and are therefore classified in Shares payable.

In accordance with ASC 805-10-55-5A, as substantially all the assets acquired are concentrated in a single identifiable asset, the patents, the acquisition has been determined to not be considered a business combination but an asset acquisition.

The consideration will be allocated to the two patents, which were both approved in December, 2018, and will be amortized through the earliest of their useful life or December, 2038.

Amortization over the next five years is expected to be $ 390,000 per year, for a total of $ 1,950,000 .

Amortization expense was $ 49,000 for the three months ended June 30, 2021

NOTE 5 – SHORT-TERM NOTE AND LINES OF CREDIT

The Company has a working capital line of credit with Extraco Bank.

On April 30, 2020, the line of credit was renewed with a maturity date of April 30, 2021 for a balance of $ 372,675 .

The line of credit bore an interest rate of 5.0% , that was compounded monthly and to be paid with the principal on the maturity date.

The line of credit matured on April 30, 2021 and was secured by certificates of deposit and letters of credit owned by directors and shareholders of the Company.

On May 5, 2021, the Company paid off the line of credit.

The balance of the line of credit was $ 372,675 at March 31, 2021.

The Company also had an additional line of credit with Extraco Bank for $ 200,000 , which was renewed with a maturity date of April 30, 2021, for a balance of $ 177,778 .

The line of credit bore interest at a rate of 5% , that was compounded monthly and to be paid with the principal on the maturity date.

The line of credit was secured by certificates of deposit and letters of credit owned by directors and shareholders of the Company.

On April 15, 2021, the line of credit was paid off in full.

The balance of the line of credit was $ 177,778 at March 31, 2021.

The Company also has a working capital line of credit with Capital One Bank for $ 50,000 .

The line of credit bears an interest rate of prime plus 25.9 basis points, which totaled 29.15% as of June 30, 2021.

The line of credit is unsecured.

The balance of the line

of credit was $9,580 at both December 31, 2020 and March 31,

Company also has a working capital line of credit with Chase Bank

The line of credit bears an interest rate of prime

plus 10 basis points, which totaled 13.25% as of December 31, 2020.

The line of credit is secured by assets of the Company’s

subsidiaries.

The balance of the line of credit is $10,237 as of

December 31, 2020 and March 31, 2020.

NOTE 6 –

On April 10, 2020, the Company obtained a Paycheck

Protection Program (“PPP”) loan in the amount of

$103,200 pursuant to the Coronavirus Aid, Relief, and Economic

Security Act (the “CARES Act”).

Interest on the loan is

at the rate of 1% per year, and all loan payments are deferred for

nine months, at which time the balance is payable in 18 monthly

installments if not forgiven in accordance with the CARES Act and

the terms of the promissory note executed by the Company in

connection with the loan.

The promissory note

contains events of default and other provisions customary for a

loan of this type.

the Company intends to use the PPP loan proceeds for payroll,

healthcare benefits, and utilities.

The program provides

that the use of PPP Loan amount shall be limited to certain

qualifying expenses and may be partially or wholly forgiven in

accordance with the requirements set forth in the CARES

January 10, 2017, the Company entered into a promissory note with

Community National Bank for $245,000, at an annual interest rate of

5% and a maturity date of January 10, 2020 (the “CNB

Note”).

The CNB Note is secured by certain real property

owned by the Company in LaCoste, Texas, and is also personally

guaranteed by the Company’s President, as well as certain

shareholders of the Company.

On January 10, 2020, the loan was

modified, with certain terms amended.

The modified note is for the

principal balance of $222,736, with initial monthly payments of

$1,730 through February 1, 2037, when all unpaid principal and

interest will be due and payable.

The loan has an initial yearly

rate of interest of 5.75%, which may change beginning on February

1, 2023 and each 36 months thereafter, to the Wall Street Journal

Prime Rate plus 1%, but never below 4.25%.

The monthly payments may

change on the same dates as the interest changes.

The Company is

also allowed to make payments against the principal at any time.

The balance of the CNB Note is $216,931 as of December 31, 2020,

$8,438 of which was in current liabilities, and $222,736 as of

March 31, 2020, of which $8,904 was in current

November 3, 2015, the Company entered into a short-term note

agreement with Community National Bank for a total value of

$50,000, with a maturity date of December 15, 2017.

2018, the short-term note was replaced by a promissory note for the

outstanding balance of $25,298, which bears interest at 8% with a

maturity date of July 18, 2021.

The note is guaranteed by an

officer and director.

The balance of the note as of December 31,

2020 and March 31, 2020 was $5,413 and $12,005,

respectively.

Maturities on Bank

loan is as follows:

$ 103,782  

20,730  

10,364  

171,642  

$ 325,544  

NOTE 7 –

CONVERTIBLE DEBENTURES

August 24, 2018 Debenture

August 24, 2018, the Company entered into a 10% convertible note in

the principal amount of $55,000, convertible into shares of common

stock of the Company, which matures August 24, 2019.

rate increases to 24% per annum upon an event of default, as set

forth in the agreement, including a cross default to all other

outstanding notes, and if the debenture is not paid at maturity the

principal due increases by 10%.

If the Company loses its bid price

the principal outstanding on the debenture increases by 20%, and if

the Company’s common stock is delisted, the principal

increases by 50%.

note is convertible into shares of the Company’s common stock

at a price per share equal to 57% of the lowest closing bid price

for the last 20 days.

The discount is increased an additional 10%,

to 47%, upon a “DTC chill".

The conversion feature meets the

definition of a derivative and therefore requires bifurcation and

will be accounted for as a derivative liability.

the first 180 days the convertible redeemable note is in effect,

the Company may redeem the note at amounts ranging from 130% to

145% of the principal and accrued interest balance, based on the

redemption date’s passage of time ranging from 60 days to 180

days from the date of issuance of the debenture.

On January 10,

2019 the outstanding principal of $55,000 and accrued interest of

$1,974 was purchased from the noteholder by a third party, for

The additional $25,638 represents the redemption amount

owing to the original noteholder and increases the principal amount

due to the new noteholder and was recognized as financing

the fourth fiscal quarter of 2019, in three separate conversions,

the holder converted $57,164 of principal into 9,291,354 shares of

common stock of the Company.

As a result of the conversions the

derivative liability related to the debenture was remeasured

immediately prior to the conversions with an overall increase in

the fair value of $65,000 recognized, with the fair value of the

derivative liability related to the converted portion, of $171,000

being reclassified to equity.

The key valuation assumptions used

consist, in part, of the price of the Company’s common stock

on the dates of conversion, of $0.28 to $0.40;

a risk-free interest

rate of 2.36% to 2.41% and expected volatility of the

Company’s common stock, of 343.98% to 374.79%, and the

various estimated reset exercise prices weighted by

5, 2020, the remaining outstanding balance of $29,057 was converted

into 2,039,069 shares of common stock of the Company, at a

conversion rate of $0.014.

As a result of the conversion the

derivative liability related to the debenture was remeasured

immediately prior to the conversions with an overall increase in

the fair value of $8,000 recognized, with the fair value of the

derivative liability related to the converted portion, of $30,000

being reclassified to equity.

The key valuation assumptions used

consist, in part, of the price of the Company’s common stock

on the dates of conversion of $0.03;

a risk-free interest rate of

0.13% and expected volatility of the Company’s common stock,

of 158.29%, and the various estimated reset exercise prices

weighted by probability.

September 14, 2018 Debenture

September 14, 2018, the Company entered into a 12% convertible

promissory note for $112,500, with an original issuance discount

(OID) of $10,250, which matures on March 14, 2019.

There is a right

of prepayment in the first 180 days, but there is no right to repay

after 180 days.

Per the agreement, the Company is required at all

times to have authorized and reserved three times the number of

shares that is actually issuable upon full conversion of the note.

The Company has not maintained the required share reservation under

the terms of the note agreement.

The Company believes it has

sufficient available shares of the Company’s common stock in

the event of conversion for these notes.

The interest rate

increases to a default rate of 24% for events as set forth in the

agreement, including if the market capitalization is below $5

million, or there are any dilutive issuances.

There is also a cross

default provision to all other notes.

In the event of default, the

outstanding principal balance increases to 150%, and if the Company

fails to maintain the required authorized share reserve, the

outstanding principal increases to 200%.

Additionally, If the

Company enters into a 3(a)(9) or 3(a)(10) issuance of shares there

are liquidation damages of 25% of principal, not to be below

The Company must also obtain the noteholder's written

consent before issuing any new debt.

Additionally, if the note is

not repaid by the maturity date the principal balance increases by

The market capitalization has been below $5 million and

therefore the note was in default, however, the holder has issued a

waiver to the Company on this default provision.

note is convertible into shares of the Company’s common stock

at a variable conversion rate that is equal to the lesser of 60% of

the lowest trading price for the last 20 days prior to the issuance

of the note or 60% of the lowest market price over the 20 days

prior to conversion.

The conversion price shall be adjusted upon

subsequent sales of securities at a price lower than the original

conversion price.

There are additional 10% adjustments to the

conversion price for events set forth in the agreement, including

if the conversion price is less than $0.01, if the Company is not

DTC eligible, the Company is no longer a reporting company, or the

note cannot be converted into free trading shares on or after nine

months from issue date.

Per the agreement, the Company is required

at all times to have authorized and reserved three times the number

of shares that is actually issuable upon full conversion of the

The conversion feature meets the definition of a derivative

and therefore requires bifurcation and is accounted for as a

derivative liability.

December 13, 2018 the holder converted $11,200 of principal into

4,000,000 shares of common stock of the Company.

January 25, 2019 the outstanding principal of $101,550, plus an

additional $81,970 of default principal and $13,695 in accrued

interest of the note, resulting in a new balance of $197,215, was

purchased from the noteholder by a third party, who extended the

maturity date.

three separate dates during the first quarter of the fiscal year

ending March 31, 2021, the remaining outstanding balance was

converted into 35,887,170 shares of common stock of the Company, at

a conversion rate of $0.006.

As a result of the conversion the

derivative liability related to the debenture was remeasured

immediately prior to the conversions with an overall increase in

the fair value of $8,000 recognized, with the fair value of the

derivative liability related to the converted portion, of $30,000

being reclassified to equity.

The key valuation assumptions used

consist, in part, of the price of the Company’s common stock

on the dates of conversion of $0.03;

a risk-free interest rate of

0.13% and expected volatility of the Company’s common stock,

of 158.29%, and the various estimated reset exercise prices

weighted by probability.

March 1, 2019 Debenture

March 1, 2019, the Company entered into a 10% convertible

promissory note for $168,000, with an OID of $18,000, for a

purchase price of $150,000, which originally matured on November 1,

The maturity date has been extended to September 1, 2020,

with the noteholders waiving the default penalties through December

During the first 180 days the convertible redeemable note

is in effect, the Company may redeem the note at a prepayment

percentage of 100% to 130% of the outstanding principal and accrued

interest based on the redemption date’s passage of time

ranging from 60 days to 180 days from the date of issuance of the

Per the agreement, the Company is required at all times

to have authorized and reserved three times the number of shares

that is actually issuable upon full conversion of the note.

event of default, as set forth in the agreement, the outstanding

principal balance increases to 150%.

In addition to standard events

of default, an event of default occurs if the common stock of the

Company shall lose the “bid”

price for its Common

Stock, on trading markets, including the OTCBB, OTCQB or an

equivalent replacement exchange.

If the Company enters into a

3(a)(9) or 3(a)(10) issuance of shares there are liquidation

damages of 25% of principal, not to be below $15,000.

must also obtain the noteholder’s written consent before

issuing any new debt.

The note is convertible at a fixed conversion

price of $0.25.

If an event of default occurs, the fixed conversion

price is extinguished and replaced by a variable conversion rate

that is 70% of the lowest trading prices during the 20 days prior

to conversion.

The fixed conversion price shall reset upon any

future dilutive issuance of shares, options or convertible

The conversion feature at issuance meets the definition

of conventional convertible debt and therefore qualifies for the

scope exception in ASC 815-10-15-74(a) and would not be bifurcated

and accounted for separately as a derivative liability.

analyzed the conversion feature under ASC 470-20, “Debt with

conversion and other options”, and based on the market price

of the common stock of the Company on the date of funding as

compared to the conversion price, determined there was a $134,000

beneficial conversion feature to recognize, which will be amortized

over the term of the note using the effective interest method.

There was not any amortization expense recognized during the three

and nine months ended December 31, 2020, as the beneficial conversion feature was

fully amortized as of September 30, 2019.

The amortization expense

recognized during the three and nine months ended December

31, 2019 amounted to

approximately $50,000.

On December 21, 2020, the

outstanding balance of $168,000 and accrued interest of $30,847 was

converted into 795,387 shares of common stock of the Company, at a

conversion rate of $0.25.

April 17, 2019 Debenture

April 17, 2019, the Company entered into a 10% convertible

promissory note for $110,000, with an OID of $10,000, for a

purchase price of $100,000, which matures on January 23, 2020.

maturity date has been extended until September 1, 2020.

first 180 days the convertible redeemable note is in effect, the

Company may redeem the note at a prepayment percentage of 120% to

130% of the outstanding principal and accrued interest based on the

redemption date’s passage of time ranging from 60 days to 180

days from the date of issuance of the debenture.

Per the agreement,

the Company is required at all times to have authorized and

reserved three times the number of shares that is actually issuable

upon full conversion of the note.

In the event of default, as set

forth in the agreement, the outstanding principal balance increases

In addition to standard events of default, an event of

default occurs if the common stock of the Company shall lose the

“bid”

price for its Common Stock, on trading markets,

including the OTCBB, OTCQB or an equivalent replacement exchange.

If the Company enters into a 3 (a)(9) or 3(a)(10) issuance of

shares there are liquidation damages of 25% of principal, not to be

below $15,000.

The Company must also obtain the noteholder’s

written consent before issuing any new debt.

convertible at a fixed conversion price of $0.124.

If an event of

default occurs, the fixed conversion price is extinguished and

replaced by a variable conversion rate that is 70% of the lowest

trading prices during the 20 days prior to conversion.

conversion price shall reset upon any future dilutive issuance of

shares, options or convertible securities.

The conversion feature

at issuance meets the definition of conventional convertible debt

and therefore qualifies for the scope exception in ASC

815-10-15-74(a) and would not be bifurcated and accounted for

separately as a derivative liability.

The Company analyzed the

conversion feature under ASC 470-20, “Debt with conversion

and other options”, and based on the market price of the

common stock of the Company on the date of funding as compared to

the conversion price, determined there was an approximately $59,000

beneficial conversion feature to recognize, which will be amortized

over the term of the note using the effective interest method.

There was not any amortization expense recognized during the three

and nine months ended December 31, 2020, as the beneficial conversion feature was

fully amortized as of December 31, 2019.

The amortization

expense recognized during the three and nine months ended December

31, 2019 amounted to approximately $20,000.

On September 14, 2020,

the outstanding balance of $110,000 was converted into 1,014,001

shares of common stock of the Company, at a conversion rate of

NOTE 8 –

STOCKHOLDERS’

The balance of the line of credit was $ 9,580 at both June 30, 2021 and March 31, 2021.

The Company also has a working capital line of credit with Chase Bank for $ 25,000 .

The line of credit bears an interest rate of prime plus 10 basis points, which totaled 13.25% as of June 30, 2021.

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, 2021 and March 31, 2021.

NOTE 6 – BANK LOANS

On April 10, 2020, the Company obtained a Paycheck Protection Program (“PPP”) loan in the amount of $ 103,200 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

On April 16, 2021, the Company filed for the forgiveness of the PPP loan and was approved for forgiveness of such loan on April 26, 2021.

On January 10, 2017, the Company entered into a promissory note with Community National Bank for $ 245,000 , at an annual interest rate of 5% and a maturity date of January 10, 2020 (the “CNB Note”).

The CNB Note is secured by certain real property owned by the Company in LaCoste, Texas, and is also personally guaranteed by the Company’s President, as well as certain shareholders of the Company.

On January 10, 2020, the loan was modified, with certain terms amended.

The modified note is for the principal balance of $ 222,736 , with initial monthly payments of $ 1,730 through February 1, 2037 , when all unpaid principal and interest will be due and payable.

The loan has an initial yearly rate of interest of 5.75% , which may change beginning on February 1, 2023 and each 36 months thereafter, to the Wall Street Journal Prime Rate plus 1% , but never below 4.25% .

The monthly payments may change on the same dates as the interest changes.

The Company is also allowed to make payments against the principal at any time.

The balance of the CNB Note is $ 212,810 at June 30, 2021, $ 8,990 of which was in current liabilities, and $ 222,736 at March 31, 2021, of which $ 8,904 was in current liabilities.

On November 3, 2015, the Company entered into a short-term note agreement with Community National Bank for a total value of $ 50,000 , with a maturity date of December 15, 2017 .

On July 18, 2018, the short-term note was replaced by a promissory note for the outstanding balance of $ 25,298 , which bears interest at 8% with a maturity date of July 18, 2021 .

The note is guaranteed by an officer and director.

The balance of the note at June 30, 2021 and March 31, 2021 was $ 789 and $ 3,124 , respectively.

The note was paid off in full in July of 2021 .

Maturities on Bank loan is as follows:

March 31, 2022

March 31, 2023

March 31, 2024

March 31, 2025

NOTE 7 – CONVERTIBLE DEBENTURES

February 26, 2021 Debenture

On February 26, 2021, the Company entered into a convertible note for the principal amount of $ 720,000 , with an original issue discount of $ 120,000 , convertible into shares of common stock of the Company.

The note bears interest of 12 % and is due six months from the date of issuance.

The note is convertible from the date of issuance, at a fixed conversion rate of $ 0.36 .

The conversion rate shall change to $ 0.10 upon the event of default.

The conversion feature at issuance meets the definition of conventional convertible debt and therefore qualifies for the scope exception in ASC 815-10-15-74(a) and would not be bifurcated and accounted for separately as a derivative liability.

The Company analyzed the conversion feature under ASC 470-20, “Debt with conversion and other options”, and based on the market price of the common stock of the Company on the date of funding as compared to the conversion price, determined there was an approximately $ 164,000 beneficial conversion feature to recognize, which will be amortized over the term of the note using the effective interest method.

The amortization of the beneficial conversion feature was $ 27,273 and the original issuance discount was $ 20,000 , for the year ended March 31, 2021.

On April 16, 2021, the Company settled the convertible note, consisting of $ 720,000 in principal, approximately $ 13,000 in accrued interest, and approximately $ 110,000 in redemption fee, for a total of $ 842,972 .

The Company paid $ 421,486 in cash, and settled the remaining balance through the conversion into the issuance of 1,303,982 common shares.

NOTE 8 – ACQUISITION OF NON-CONTROLLING INTEREST

On May 19, 2021, the Company entered into a Securities Purchase Agreement (“SPA”) with F&T, for the shares owned by F&T of NAS.

Upon the closing of the SPA, the Company purchased the 980,000 shares of NAS’ common stock owned by F&T for a purchase price of $ 1,000,000 in cash and issued 3,960,396 shares of the Company’s common stock at a market value of $ 0.505 per share, for a total fair value of $ 2,000,000 , for a total acquisition price of $ 3,000,000 .

The Company paid the cash purchase price on May 20, 2021 and the purchase of the NAS shares closed on May 25, 2021.

Prior to entering into the SPA, the Company owned fifty-one percent ( 51% ) and F&T owned forty-nine percent ( 49% ) of the issued and outstanding shares of common stock of NAS, and therefore, NAS was included in the consolidated financial statements of the Company, with F&T’s ownership accounted for as a non-controlling interest.

After the SPA, the non-controlling interest was no longer in existence and NAS became a 100% owned subsidiary of the Company.

In accordance with ASC 810-10-45, when the parent’s ownership interest changes while the parent retains its controlling interest in a subsidiary, it is accounted for as an equity transaction and there is no gain or loss recognized in the consolidated net loss.

The difference between the fair value of the consideration paid and the amount of the non-controlling interest as of the acquisition of NAS shares held by F&T is recognized in equity attributable to the Company.

The carrying amount of the non-controlling interest prior to the acquisition was a deficit of $ 87,830 , and as a result, a deduction of $ 3,087,830 was recognized in additional paid in capital in the Consolidated Statement of Changes in Equity, for the three months ended June 30, 2021.

NOTE 9 – STOCKHOLDERS’ DEFICIT

Preferred Stock

December 31, 2020 and March 31, 2020, the Company had 200,000,000

shares of preferred stock authorized with a par value of $0.0001.

Of this amount, 5,000,000 shares of Series A preferred stock are

authorized and outstanding, 5,000 shares Series B preferred stock

are authorized and 1,920 outstanding, and 20,000 shares Series D

preferred stock are authorized and 5,000 outstanding

respectively.

December 16, 2020, the Board authorized the issuance of 20,000

preferred shares to be designated as Series D Preferred Stock

(“Series D PS”).

The Series D PS have a par value of

$0.0001, a stated value of $1,200 and will vote together with the

common stock on an as-converted basis.

In addition, as further

described in the Series D Designation, as long as any of the shares

of Series D Preferred Stock are outstanding, the Company will not

take certain corporate actions without the affirmative vote at a

meeting (or the written consent with or without a meeting) of the

majority of the shares of Series D Preferred Stock then

Each holder of Series D Preferred Stock shall be

entitled to receive, with respect to each share of Series D

Preferred Stock then outstanding and held by such holder, dividends

at the rate of twelve percent (12%) per annum (the “Preferred

Dividends”).

Dividends may be paid in cash or in shares of

Preferred Stock at the discretion of the Company.

Series D PS are convertible into Common Stock at the election of

the holder of the Series D PS at any time following five days after

a qualified offering (defined as an offering of common stock for an

aggregate price of at least $10,000,000 resulting in the listing

for trading of the Common Stock on the NYSE American, the Nasdaq

Capital Market, the Nasdaq Global Market, the Nasdaq Global Select

Market or the New York Stock Exchange) at a 35% discount to the

offering price, or, if a qualified offering has not occurred, at a

price of $0.10 per share, subject to adjustment based on several

situations, including future dilutive issuances and a Fundamental

Series D PS shall be redeemed by the Corporation on the date that

is no later than one calendar year from the date of its issuance.

The Series D PS are also redeemable at the Company's option, at

percentages ranging from 115% to 125% for the first 180 days, based

on the passage of time.

The Company shall redeem the Series D PS in

cash upon a three business days prior notice to the holder or the

holder may convert the Series D PS within such three business days

period prior to redemption.

Additionally, the holder shall have the

right to either redeem for cash or convert the Preferred Stock into

Common Stock within three business days following the consummation

of a qualified offering.

The Series D PS are also redeemable at the

holder’s option, upon the occurrence of a triggering event

which includes a change of control, bankruptcy, and the inability

to deliver shares of common stock requested under conversion

The triggering redemption amount is 150% of the stated

the dissolution, liquidation or winding up of the Company, whether

voluntary or involuntary, the holders of Series D PS shall be

entitled to receive out of the assets of the Company an amount

equal to the stated value, plus any accrued and unpaid dividends

and any other fees or liquidated damages then due and owing for

each share of Series D PS before any payment or distribution shall

be made to the holders of any Junior securities.

Series D PS has a conditional redemption date, as it is

convertible, it is classified in mezzanine and, it is considered to

be an debt host instrument.

The conversion price, unless and until

there is a qualified offering, is a fixed price and as such the

conversion feature is not required to be bifurcated and accounted

for as a derivative liability.

Company will analyze the conversion feature under ASC 470-20,

“Debt with conversion and other options”, at each

issuance date and based on the market price of the common stock of

the Company on the commitment date as compared to the conversion

price, determine if there is a beneficial conversion feature to

Series D Designation are subject to certain Registration Rights,

whereby if the Corporation does not complete a market listing to

the NYSE American, the Nasdaq Capital Market, the Nasdaq Global

Market, the Nasdaq Global Select Market or the New York Stock

Exchange (or any successors to any of the foregoing) within one

hundred twenty (120) calendar days from the issuance of the Series

D Preferred Stock, the Company will, within ten (10) calendar days,

file a registration statement covering the shares of Common Stock

underlying the Series D Preferred Shares.

Additionally, the Company

will include the shares of Common Stock underlying the Series D

Preferred Shares in any registration statement which is being filed

by the Corporation’s existing investment banker, provided,

that said registration statement is not yet effective with the SEC

and provided that the Company receives the prior written approval

of said investment banker.

As of June 30, 2021 and March 31, 2021, 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 345 and 607 outstanding, respectively, 5,000 shares Series D preferred stock are authorized and 0 and 6,050 outstanding, respectively and 5,000 shares Series E preferred stock are authorized and 3,740 and 0 outstanding, respectively.

Series E Preferred Stock

On April 14, 2021, the Board authorized the issuance of 10,000 shares of the Company’s Series E Preferred Stock and has filed a Certificate of Designation of Preferences of the Series E Convertible Preferred Stock with the State of Nevada.

The shares of Series E Preferred Stock have a stated value of $1,200 per share and are convertible into shares of common stock at the election of the holder of the Series E Preferred Stock at any time at a price of $ 0.35 per share, subject to adjustment (the “Conversion Price”).

The Series E Preferred Stock is convertible into that number of shares of common stock determined by dividing the Series E Stated Value (plus any and all other amounts which may be owing in connection therewith) by the Conversion Price, subject to certain beneficial ownership limitations.

Each holder of Series E Preferred Stock shall be entitled to receive, with respect to each share of Series E Preferred Stock then outstanding and held by such holder, dividends at the rate of twelve percent ( 12 %) per annum, payable quarterly.

Each share of Series E Preferred Stock shall be redeemed by the Company on the date that is no later than one calendar year from the date of its issuance.

The Series D PS are also redeemable at the Company's option, at percentages ranging from 115 % to 125 % for the first 180 days, based on the passage of time.

The holders of Series E Preferred Stock rank senior to the Common Stock and Common Stock Equivalents (as defined in the Series E Designation) with respect to payment of dividends and rights upon liquidation and will vote together with the holders of the Common Stock on an as-converted basis, subject to beneficial ownership limitations, on each matter submitted to a vote of holders of Common Stock (whether at a meeting of shareholders or by written consent).

Upon any liquidation, dissolution or winding-up of the Company, the holders shall be entitled to receive out of the assets of the Company an amount equal to the stated value, plus any accrued and unpaid dividends and any other fees or liquidated damages then due and owing for each share of Preferred Stock, before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the holders shall be ratably distributed among the holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.

Series B Preferred Equity Offering

September 17, 2019, the Company entered into a Securities Purchase

Agreement (“SPA”) with GHS Investments LLC, a Nevada

limited liability company (“GHS”) for the purchase of

up to 5,000 shares of Series B PS at a stated value of $1,200 per

share, or for a total net proceeds of $5,000,000 in the event the

entire 5,000 shares of Series B PS are purchased.

During the nine

months ended December 31, 2020 the Company received $3,250,000 for

the issuance of 3,250 Series B PS.

During the nine months ended

December 31, 2019, the Company received $1,500,000 under the

the nine months ended December 31, 2020, the Company has converted

3,554 Series B PS plus 141 Series B PS dividends-in-kind into

97,761,030 shares of the Company’s common stock.

Series D Preferred Equity Offering

December 18, 2020, the Company entered into securities purchase

agreements (the “Purchase Agreement”) with GHS

Investments LLC, Platinum Point Capital LLC and BHP Capital NY

(collectively, the “Purchaser”) , whereby, at the

closing, each Purchaser agreed to purchase from the Company, up to

5,000 shares of the Company’s Series D PS, par value $0.0001

per share, at a purchase price of $1,000 per share of Series D

Preferred Stock.

The aggregate purchase price per Purchaser for the

Series D Preferred Stock is $5,000,000.

In connection with the sale

of the Series D Preferred Stock, the Purchasers were granted

6,000,000 shares of the Company’s common stock, par value

$0.0001 (the “Commitment Shares”), which have a fair

value of $1,616,250 based on the market price of the common shares

of $0.27 on the date of the Series D PS purchase.

The Company analyzed the conversion feature under

ASC 470-20, “Debt with conversion and other options”,

and based on the market price of the common stock of the Company on

the dates of funding as compared to the conversion price,

determined there was a $8,471,000, capped at $5,000,000 based on

the purchase price of the Series B PS, beneficial conversion

feature to recognize, which will be amortized over the term of the

note using the effective interest method.

The amortization expense

recognized during the three and nine months ended December

2020 amounted to approximately $208,000.

On September 17, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with GHS Investments LLC, a Nevada limited liability company (“GHS”) for the purchase of up to 5,000 shares of Series B PS at a stated value of $ 1,200 per share, or for a total net proceeds of $ 5,000,000 in the event the entire 5,000 shares of Series B PS are purchased.

On April 8, 2021, the Company converted 262 Series B into 3,144,000 shares of the Company’s common stock.

Securities Purchase Agreement

On April 14, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Purchaser”), for the offering (the “Offering”) of (i) $ 5,000,000 worth of common stock (“Shares”), par value $0.0001 per share, of the Company (“Common Stock”);

at a per share purchase price of $ 0.55 per Share (ii) common stock purchase warrants (“Warrants”) to purchase up to an aggregate of 10,000,000 shares of Common Stock, which are exercisable for a period of five years after issuance at an initial exercise price of $ 0.75 per share, subject to certain adjustments, as provided in the Warrants;

and (iii) 1,000,000 shares of Common Stock (the “Commitment Shares”).

Pursuant to the Purchase Agreement, on April 15, 2021, the Company received net proceeds of $ 4,732,123 from the Purchaser.

Further, pursuant to the terms of the Purchase Agreement, from the date thereof until the date that is the twelve-month anniversary of the closing of the Offering, 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”), each Purchaser shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.

Pursuant to the Purchase Agreement, on May 5, 2021, the Purchaser purchased an additional 15,454,456 shares of common stock at a per share purchase price of $ 0.55 per share (the “Second Closing”), for net proceeds of approximately $ 8,245,000 .

Additionally, on May 20, 2021, the Purchaser purchased an additional 2,727,272 shares of common stock at a price per share of $ 0.55 per share (“Third Closing”), for net proceeds of approximately $ 1,455,000 .

GHS Purchase Agreement

On June 28, 2021, the Company entered into a securities purchase agreement with GHS (the “June GHS Purchase Agreement”) for the offering of up to (i) $ 3,000,000 worth of common stock of the Company at a per share purchase price of $ 0.40 and (ii) $ 11,000 worth of prefunded common stock purchase warrants to purchase an aggregate of up to 1,100,000 shares of common stock, which are exercisable upon issuance and shall not expire prior to exercise, and are subject to certain adjustments, as provided in the warrants.

Pursuant to the June GHS Purchase Agreement, on June 28, 2021, GHS purchased 7,500,000 shares of common stock and 1,100,000 shares of common stock underlying the prefunded warrants, for an aggregate purchase price of $ 3,011,000 , less offering expenses of $ 90,330 , for net proceeds of $ 2,909,670 .

Share Exchange Agreement and Redemption

On April 14, 2021, the Company, entered into a share exchange agreement (the “Exchange Agreement”) with a holder of the Series D Preferred Stock, whereby, at the closing of the Offering, the Holder agreed to exchange an aggregate of 3,600 shares of the Company’s Series D Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”) into 3,739.63 shares of the Company’s Series E Convertible Preferred stock, par value $0.0001 (the “Series E Preferred Stock”).

The exchange was completed on April 15, 2021.

In accordance with ASC 260-10-S99-2, exchanges of preferred stock that are considered to be extinguishments are to be accounted for as a redemption.

Therefore, the difference between the fair value of the Series E Preferred Stock transferred to the holder of the Series D Preferred Stock and the carrying amount of the Series D Preferred Stock immediately prior to the exchange, which was $ 3,258,189 , was accounted for in a manner similar to a dividend.

In addition, in relation to the Offering, on April 15, 2021, the Company redeemed the remaining 2,450 of the Series D PS for $ 3,513,504 .

In accordance with ASC 260-10-S99-2, the difference between the fair value of the consideration transferred to the holder of the Series D Preferred Stock and the carrying amount of the Series D Preferred Stock immediately prior to the redemption, which was $ 2,719,538 , was accounted for in a manner similar to a dividend.

Leak-Out Agreements

In connection with the issuance of a total of 13,861,386 shares of the Company’s common stock pursuant to the SPA (Note 8) and the Patents Agreement (Note 3) (the “Shares”), the Company and F&T, on May 19, 2021, entered into two separate leak-out agreements (the “Leak-Out Agreements”).

Pursuant to the Leak-Out Agreements, F&T agreed that it would not sell or transfer the Shares for six months following the closing of the SPA and Patents Agreement and that, following these six months, each shareholder of F&T who was issued a portion of the Shares could sell up to one-sixth of their portion of the Shares every thirty-day period occurring thereafter for the next six months.

Following the one-year anniversary of the closings, there will be no further restrictions regarding the sale or transfer of the Shares.

Common Shares Issued to Consultants

connection with the VBF asset acquisition (Note 3), the Company

agreed to issue 500,000 shares of common stock as a finder’s

fee, with a fair value of $135,000 based on the market value of the

common stock of $0.27 as of December 15, 2020, the closing date of

the acquisition.

The shares were issued on February XX, 2021, and

have been recognized in the accompanying consolidated financial

statements as Stock Payable as of December 31, 2020.

August 24, 2020, the Company issued 1,500,000 shares of common

stock to a consultant per an agreement entered into on June 25,

The agreement has a six month term, and therefore the fair

value of $67,500, based on the market value of $0.045 on the grant

date, will be recognized over the term of the agreement, with

$32,500 and $67,500 expensed during the three and nine months ended

December 31, 2020.

On December 25, 2020, the Company renewed the

agreement for an additional six months.

As consideration for the

agreement the Company issued 1,500,000 shares of common stock to

the consultant.

The agreement has a six month term, and therefore

the fair value of $616,500, based on the market value of $0.041 on

the grant date, is recognized in Prepaid expense as of the period

end December 31, 2020, and will be expensed over the term of the

12, 2020, the Company issued 1,250,000 shares of common stock to a

consultant, with the fair value of $61,250 based on the market

price of $0.049 on the date issued and which was recognized as

professional services in the three months ended June 30,

On April 14, 2021, 500,000 shares of common stock were issued to a consultant per an agreement entered into on January 20, 2021 for advisory services for a two-year period.

The shares had a fair value of $ 195,000 , based on the market price of $ 0.39 on the grant date.

62,500 common shares shall vest each quarter through October 1, 2022, at $ 24,275 , with $ 48,750 vested through the three months ended June 30, 2021.

On May 24, 2021, the Company entered into an agreement with a consultant, with a three-month term, that shall automatically renew each three months unless one party terminates the agreement.

The compensation shall be $ 12,500 in cash per month for the first six months and $ 15,000 per month thereafter.

Also included in compensation are 200,000 shares of common stock, with a fair value of $ 99,600 based upon the market price of $ 0.50 upon the grant date.

The shares of common stock will vest in quarterly installments, with 50,000 to vest immediately.

The shares of common stock have not yet been issued, and therefore the 50,000 vested shares, at $ 24,900 , are included in Shares payable.

On August 24, 2020, the Company issued 1,500,000 shares of common stock to a consultant per an agreement entered into on June 25, 2020.

On December 25, 2020, the Company renewed the agreement for an additional six months.

As consideration for the agreement the Company issued 1,500,000 shares of common stock to the consultant.

The agreement has a six-month term, and therefore the fair value of $ 616,500 , based on the market value of $ 0.041 on the grant date, was recognized in Prepaid expense to be amortized over the six-month term.

As of the year end March 31, 2021, $ 308,250 remained in Prepaid expense with $ 308,250 recognized in consulting expense for the year end March 31, 2021.

The remaining $308.250 was expensed in the three months ended June 30, 2021.

Options and Warrants

Company has not granted any options since inception.

Company granted warrants in connection with various convertible

debentures in previous periods.

The remaining outstanding warrants

were cancelled in connection with the legal settlement with Vista

Capital Investments, LLC, on April 9, 2020.

See discussion in Note

The related warrant liability was revalued upon cancellation on

April 9, 2020, resulting in no change to the fair value of the

warrant liability and the $90,000 fair value was reclassified to

September 30, 2019, there were 551,452 (after adjustment) remaining

warrants to purchase shares of common stock outstanding, classified

as a warrant liability, which were to expire on January 31, 2022,

with an exercise price of 45% of the market value of the common

shares of the Company on the date of exercise.

NOTE 9 –

RELATED PARTY TRANSACTIONS

Accrued Payroll –

Related Parties

Included in other

accrued expenses on the accompanying consolidated balance sheet is

approximately $47,000 and $84,000 owing to the President of the

Company as of December 31, 2020 and March 31, 2020, respectively,

and approximately $175,000, owing to a key employee (which includes

$50,000 in both fiscal years, from consulting services prior to his

employment) as of both December 31, 2020 and March 31, 2020.

amounts include both accrued payroll and accrued allowances and

The Company has not granted any options since inception.

NOTE 10 – RELATED PARTY TRANSACTIONS

Accrued Payroll – Related Parties

Included in other accrued expenses on the accompanying consolidated balance sheet is approximately $ 18,000 and $ 35,000 owing to the President of the Company as of June 30, 2021 and March 31, 2021, respectively, and approximately $ 130,000 and $ 154,000 , owing to a key employee (which includes $ 50,000 in both fiscal years, from consulting services prior to his employment) as of June 30, 2021 and March 31, 2021.

These amounts include both accrued payroll and accrued allowances and expenses.

Bonus Compensation – Related Party

On May 11, 2021, the Company paid a compensation bonus to the Chief Financial Officer, for $ 300,000 .

NaturalShrimp Holdings, Inc.

January 1, 2016 the Company entered into a notes payable agreement

with NaturalShrimp Holdings, Inc.(“NSH”), a

Between January 16, 2016 and March 7, 2016, the

Company borrowed $134,750 under this agreement.

An additional

$601,361 was borrowed under this agreement in the year ended March

The note payable has no set monthly payment or maturity

date with a stated interest rate of 2%.

As of December 31, 2020 and

March 31, 2020 the outstanding balance is approximately $735,000.

As of December 31, 2020 and March 31, 2020, accrued interest

payable was approximately $62,000 and $51,000,

respectively.

On January 1, 2016 the Company entered into a notes payable agreement with NaturalShrimp Holdings, Inc.(“NSH”), a shareholder.

Between January 16, 2016 and March 7, 2016, the Company borrowed $ 134,750 under this agreement.

An additional $ 601,361 was borrowed under this agreement in the year ended March 31, 2017.

The note payable has no set monthly payment or maturity date with a stated interest rate of 2%.

During the three months ended June 30, 2021, the Company paid off $ 655,750 of the note payable.

The outstanding balance is approximately $ 77,000 and $ 735,000 , as of June 30, 2021 and March 31, 2021, respectively.

At June 30, 2021 and March 31, 2021, accrued interest payable was approximately $ 68,000 and $ 66,000 , respectively.

Shareholder Notes

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

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 %.

notes had stock issued in lieu of interest and have no set monthly

payment or maturity date.

The balance of these notes was $366,404

as of December 31, 2020 and $426,404 as of March 31, 2020,

respectively, and is classified as a current liability on the

consolidated balance sheets.

As of December 31, 2020 and March 31,

2020, accrued interest payable was approximately $110,000 and

$240,000, respectively.

15, 2020, the Company issued a promissory note to Ms.

the amount of $383,604 to settle the amounts that had been

recognized per the separation agreement with the late Mr.

Williams dated August 15, 2019 (Note 11) 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,

2020 was $335,604, with $96,000 classified in current liabilities

on the consolidated balance sheet.

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 as of

December 31, 2020 and March 31, 2020 was $54,647 and is classified

as a current liability on the consolidated balance

NOTE 10 –

24, 2019, the Company entered into a service and equipment lease

agreement for water treatment services, consumables and equipment.

The lease term is for five years, with a renewal option of an

additional five years, with a monthly lease payment of $5,000.

Company analyzed the classification of the lease under ASC 842, and

as it did not meet any of the criteria for a financing lease it has

been classified as an operating lease.

The Company determined the

Right of Use asset and Lease liability values at inception

calculated at the present value of all future lease payments for

the lease term, using an incremental borrowing rate of 5%.

Lease Liability will be expensed each month, on a straight line

basis, over the life of the lease.

As of December 31, 2020 and

March 31, 2020, the lease is on hold while the Company waits for

new equipment to be delivered and installed.

As the lease is on

hold there has been no lease expense or amortization of the Right

of Use asset for the three and nine months ended December 31,

three and nine months ended December 31, 2019 the lease expense was

$15,000, and the amortization of the Right of Use asset was

NOTE 11 –

COMMITMENTS AND CONTINGENCIES

Executive Employment Agreements –Gerald

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”).

Employment Agreement is terminable at will and each provide for a

base annual salary of $96,000.

In addition, the Employment

Agreement provides that the employee is entitled, at the sole and

absolute discretion of the Company’s Board of Directors, to

receive performance bonuses.

Easterling will also be entitled

to certain benefits including health insurance and monthly

allowances for cell phone and automobile expenses.

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.

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

August 15, 2019, the late Mr.

Bill Williams resigned from his

position as Chairman of the Board and Chief Executive Officer of

the Company, effective August 31, 2019.

Easterling replaced him

as the Chief Executive Officer of the Company.

The separation

agreement calls for the continued payment of salary, at $8,000

semi-monthly, until his accrued compensation in the amount of

approximately $217,000 is paid off, as well as his monthly rent,

medical and automobile payments to continue to be paid and deducted

against the accrued compensation and debt.

After the accrued

compensation is fully paid, the payments shall be $10,000 per month

against the remaining debt balance, until such balance is paid in

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, 2021 and March 31, 2021, and is classified as a current liability on the consolidated balance sheets.

As of March 31, 2021 and March 31, 2021, accrued interest payable was approximately $ 125,000 and $ 118,000 , respectively.

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, 2021 and March 31, 2021 was $ 54,647 and is classified as a current liability on the consolidated balance sheets.

NOTE 11 – LEASE

On June 24, 2019, the Company entered into a service and equipment lease agreement for water treatment services, consumables and equipment.

The lease term was for five years, with a renewal option of an additional five years, with a monthly lease payment of $ 5,000 .

The Company analyzed the classification of the lease under ASC 842, and as it did not meet any of the criteria for a financing lease it has been classified as an operating lease.

The Company determined the Right of Use asset and Lease liability values at inception calculated at the present value of all future lease payments for the lease term, using an incremental borrowing rate of 5% .

As of March 31, 2021, the lease was on hold while the Company waited for new equipment to be delivered and installed.

During the first quarter of fiscal 2022, the Company has cancelled the lease.

As the lease was on hold there has been no lease expense or amortization of the Right of Use asset since inception of the lease and recognition of the Lease liability and Right of Use asset, and therefore there is no gain or loss recognized upon cancellation of the lease.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Executive Employment Agreements –Gerald Easterling

On April 1, 2015, the Company entered into an employment agreement with Gerald Easterling at the time as the Company’s President, effective as of April 1, 2015 (the “Employment Agreement”).

The Employment Agreement is terminable at will and each provide for a base annual salary of $ 96,000 .

In addition, the Employment Agreement provides that the employee is entitled, at the sole and absolute discretion of the Company’s Board of Directors, to receive performance bonuses.

Easterling will also be entitled to certain benefits including health insurance and monthly allowances for cell phone and automobile expenses.

The Employment Agreement provides that in the event the employee is terminated without cause or resigns for good reason (as defined in their Employment Agreement), the employee will receive, as severance the employee’s base salary for a period of 60 months following the date of termination.

In the event of a change of control of the Company, the employee may elect to terminate the Employment Agreement within 30 days thereafter and upon such termination would receive a lump sum payment equal to 500% of the employee’s base salary .

The Employment Agreement contains certain restrictive covenants relating to non-competition, non-solicitation of customers and non-solicitation of employees for a period of one year following termination of the employee’s Employment Agreement.

On August 15, 2019, the late Mr.

Bill Williams resigned from his position as Chairman of the Board and Chief Executive Officer of the Company, effective August 31, 2019.

Easterling replaced him as the Chief Executive Officer of the Company.

On July 15, 2020, the Company issued a promissory note to Ms.

Williams in the amount of $383,604 to settle the amounts agreed to

in the separation agreement for accrued compensation and debt (see

Vista Capital Investments, LLC

April 30, 2019, a complaint was filed against the Company in the

District Court in Dallas, Texas alleging that the Company

breached a provision in a common stock purchase warrant (the

“Vista Warrant”) issued by the Company to Vista Capital

Investments, LLC (“Vista”).

Vista alleged that the Company failed to issue

certain shares of the Company’s Common Stock as was required

under the terms of the Warrant.

Vista sought money damages in the

approximate amount of $7,000,000, as well as costs and

reimbursement of expenses.

On April 9, 2020, the Company, Vista and David

Clark (“Clark”), a principal of Vista, (the

“Parties”) entered into a Settlement Agreement and

Release (the “Settlement Agreement”) whereby the

Company shall (i) pay to Vista the sum of $75,000, which the

Company wired on April 10, 2020, and (ii) issue to Vista 17,500,000

shares of the Company’s Common Stock (the “Settlement

Shares”).

For a period of time equal to 90-days from the date

of the settlement, or July 8, 2020, the Company shall have the

right, but not the obligation, to purchase back from Vista

8,750,000 of the Settlement Shares at a price equal to the greater

of (i) the volume weighted-average trading price of the

Company’s common shares over the five preceding trading days

prior to the date of the delivery of the Company’s written

notice of such repurchase or (ii) $0.02 per share.

18, 2020, the Company received $50,000 as consideration for waiving

the purchase option on the Settlement Shares, thereby allowing

Vista to retain all of the Settlement Shares.

T he Vista warrants outstanding were also cancelled

as part of the Settlement Agreement.

The $75,000, as well as the

fair market value of the 17,500,000 common shares, which is

$560,000 based on the market value of the Company’s common

stock on the settlement date of $0.32, was accrued in Accrued

expenses on the accompanying March 31, 2020 Balance Sheet and

recognized as Loss on Warrant settlement in the fourth quarter of

the year ending March 31, 2020.

Williams in the amount of $ 383,604 to settle the amounts agreed to in the separation agreement for accrued compensation and debt (see Note 10).

RGA Labs, Inc.

On February 18, 2020, RGA Labs, Inc.

(“RGA”) filed suit against the Company in the Illinois

Circuit Court (23 rd

District) alleging that the Company

owed RGA money pursuant to a written contract for the design and

manufacture of certain water treatment equipment commissioned by

The Company disputed the allegations and has

counterclaimed against RGA for additional costs and expenses

incurred by the Company in correcting, repairing and retro-fitting

the equipment to enable it to work in the Company’s

On December 1, 2020, the Company filed a motion to

dismiss the lawsuit as a sanction for the failure of RGA to comply

with a court order compelling responses to the Company’s

requests for production and first set of interrogatories.

was held on the motion to dismiss on January 20, 2021.

has taken the matter under advisement and will issue its ruling on

March 19, 2021.

shareholder of NaturalShrimp Holdings, Inc.

(“NSH”),

Gary Shover, filed suit against the Company on August 11, 2020 in

the Northern District of Texas, Dallas Division, alleging breach of

contract for the Company’s failure to exchange common shares

of the Company for shares Mr.

(“RGA”) filed suit against the Company in the Illinois Circuit Court (23rd District) alleging that the Company owed RGA money pursuant to a written contract for the design and manufacture of certain water treatment equipment commissioned by the Company.

The Company disputed the allegations and has counterclaimed against RGA for additional costs and expenses incurred by the Company in correcting, repairing and retro-fitting the equipment to enable it to work in the Company’s facilities.

As a result of RGA’s failure to respond to written discovery served by the Company and failure of RGA to satisfy requirements imposed by an order compelling response, the court issued an order prohibiting RGA from introducing any evidence at the time of trial other than the original agreement between RGA and the Company.

Further, the Court sustained the Company’s objection to RGA’s written discovery obviating the Company’s obligation to respond.

The parties are required to mediate the case prior to trial which mediation has not been scheduled at this time.

A shareholder of NaturalShrimp Holdings, Inc.

(“NSH”), Gary Shover, filed suit against the Company on August 11, 2020 in the Northern District of Texas, Dallas Division, alleging breach of contract for the Company’s failure to exchange common shares of the Company for shares Mr.

Shover owns in NSH.

The Company has

filed its answer to the complaint and is seeking to settle the

matter with Mr.

Shover with the approval of the Federal District

A settlement stipulation has been prepared and approved by

the parties and will be filed with the Court along with a proposed

It is anticipated that the stipulation, joint motion to

approve stipulation and proposed order approving the stipulation

and settlement will be filed with the Court during the week of

February 15, 2021.

NOTE 12 –

SUBSEQUENT EVENTS

Subsequent to the

nine months ended December 31, 2020, the Company has converted 526

Series B PS plus 141 Series B PS dividends-in-kind into 6,312,000

shares of the Company’s common stock.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q

includes a number of forward-looking statements that reflect

management’s current views with respect to future events and

financial performance.

Forward-looking statements are

projections in respect of future events or our future financial

In some cases, you can identify forward-looking

statements by terminology such as “may,”

“should,”

“expects,”

“plans,”

“anticipates,”

“believes,”

“estimates,”

“predicts,”

“potential”

or “continue”

or the negative

of these terms or other comparable terminology.

These statements include statements

regarding the intent, belief or current expectations of us and

members of our management team, as well as the assumptions on which

such statements are based.

Prospective investors are cautioned that

any such forward-looking statements are not guarantees of future

performance and involve risk and uncertainties, and that actual

results may differ materially from those contemplated by such

forward-looking statements.

These statements are only

predictions and involve known and unknown risks, uncertainties and

other factors, including the risks set forth in the section

entitled “Risk Factors”

in our Annual Report on Form

10-K for the fiscal year ended March 31, 2020, as filed with the

Securities and Exchange Commission (the “SEC”) on

June 26, 2020, any of which may cause our company’s or our

industry’s actual results, levels of activity, performance or

achievements to be materially different from any future results,

levels of activity, performance or achievements expressed or

implied in our forward-looking statements.

These risks and factors

include, by way of example and without limitation:

our ability on a

timely basis to successfully rebuild our research and development

plant in La Coste, Texas which was completely destroyed by a fire

on March 18, 2020;

our ability, once

our research and development plan is rebuilt, to successfully

commercialize our equipment and shrimp farming operations to

produce a market-ready product in a timely manner and in enough

contracts with customers or suppliers;

our ability to

maintain and develop relationships with customers and

our ability to

successfully integrate acquired businesses or new

the impact of

competitive products and pricing;

supply constraints

or difficulties;

the retention and

availability of key personnel;

general economic

and business conditions;

substantial doubt

about our ability to continue as a going concern;

our continued

ability to raise funding through institutional investors at the

pace and quantities required to scale our plant needs to

commercialize our products;

our ability to

successfully recruit and retain qualified personnel in order to

continue our operations;

our ability to

successfully implement our business plan;

our ability to

successfully acquire, develop or commercialize new products and

the commercial

success of our products;

interruptions resulting from geo-political actions, including war,

and terrorism or disease outbreaks (such as the outbreak of

property claims brought by third parties;

the impact of any

industry regulation.

Although we believe

that the expectations reflected in the forward-looking statements

are reasonable, we cannot guarantee future results, levels of

activity, or performance.

Except as required by applicable law,

including the securities laws of the United States, we do not

intend to update any of the forward-looking statements to conform

these statements to actual results.

are urged to carefully review and consider the various disclosures

made by us in this report and in our other reports filed with the

Securities and Exchange Commission (the “SEC”).

undertake no obligation to update or revise forward-looking

statements to reflect changed assumptions, the occurrence of

unanticipated events or changes in the future operating results

over time except as required by law.

We believe that our

assumptions are based upon reasonable data derived from and known

about our business and operations.

No assurances are made that

actual results of operations or the results of our future

activities will not differ materially from our

in this Quarterly Report on Form 10-Q and unless otherwise

indicated, the terms “Company,”

“we,”

“us,”

and “our”

refer to NaturalShrimp

Incorporated and its wholly-owned subsidiaries:

NaturalShrimp

Corporation (“NSC”) and NaturalShrimp Global, Inc.

(“NS Global”) and our 51% owned subsidiary, Natural

Aquatic Systems, Inc.

Unless otherwise specified, all dollar

amounts are expressed in United States Dollars.

Corporate History

incorporated in the State of Nevada on July 3, 2008 under the name

“Multiplayer Online Dragon, Inc.”

Effective November 5,

2010, we effected an 8-for-1 forward stock split, increasing the

issued and outstanding shares of our common stock from 12,000,000

shares to 96,000,000 shares.

On October 29, 2014, we effected a

1-for-10 reverse stock split, decreasing the issued and outstanding

shares of our common stock from 97,000,000 to

November 26, 2014, we entered into an Asset Purchase Agreement (the

“Agreement”) with NaturalShrimp Holdings, Inc.

Delaware corporation (“NSH”), pursuant to which we

agreed to acquire substantially all of the assets of NSH which

assets consisted primarily of all of the issued and outstanding

shares of capital stock of NSC and NS Global, and certain real

property located outside of San Antonio, Texas (the

“Assets”).

January 30, 2015, we consummated the acquisition of the Assets

pursuant to the Agreement.

In accordance with the terms of the

Agreement, we issued 75,520,240 shares of our common stock to NSH

as consideration for the Assets.

As a result of the transaction,

NSH acquired 88.62% of our issued and outstanding shares of common

NSC and NS Global became our wholly-owned subsidiaries, and

we changed our principal business to a global shrimp farming

connection with our receipt of approval from the Financial Industry

Regulatory Authority (“FINRA”), effective March 3,

2015, we amended our Articles of Incorporation to change our name

to “NaturalShrimp Incorporated.”

Business Overview

a biotechnology company, and we have developed a proprietary

technology that allows us 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.

Our system uses technology which

allows us to produce a naturally-grown shrimp “crop”

weekly, and accomplishes this without the use of antibiotics or

toxic chemicals.

We have developed several proprietary technology

assets, including a knowledge base that allows us 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

Our initial production facility is located outside of

San Antonio, Texas.

Global was a 50% shareholder of NaturalShrimp Europe GmBH, which

ultimately re-domiciled from Switzerland to Norway in the name of

NaturalShrimp International A.S.

and later changed its name to

Gamba International, A.S., supplied the original technology and

design support for the first production subsidiary formed in Medina

del Campo, Spain and operated as GambaNatural de España, S.L.

Today, NS Global holds less than 1% ownership in Norwegian-based

Noray Seafood A.S.

(formally Gamba International

October 16, 2015, we formed Natural Aquatic Systems, Inc.

(“NAS”).

The purpose of the NAS is to formalize the

business relationship between our Company and F&T Water

Solutions LLC for the joint development of certain water

technologies.

The technologies shall include, without limitation,

any and all inventions, patents, intellectual property and know-how

dealing with enclosed aquatic production systems worldwide.

includes construction, operation, and management of enclosed

aquatic production, other than shrimp, facilities throughout the

world, co-developed by both parties at our facility located outside

of La Coste, Texas.

On December 25, 2018, we were awarded U.S.

Patent “Recirculating Aquaculture System and Treatment Method

for Aquatic Species”

covering all indoor aquatic species that

utilizes proprietary art.

December 15, 2020, we entered into an Asset Purchase Agreement

(“APA”) between VeroBlue Farms USA, Inc., a Nevada

corporation (“VBF”), VBF Transport, Inc., a Delaware

corporation (“Transport”), and Iowa’s First,

Inc., an Iowa corporation (“Iowa’s First”) (each

a “Seller”

and collectively, “Sellers”).

Transport and Iowa’s First were wholly-owned subsidiaries of

The agreement called for us to purchase all of the tangible

assets of VBF, the motor vehicles of Transport and the real

property (together with all plants, buildings, structures,

fixtures, fittings, systems and other improvements located on such

real property) of Iowa’s First.

The consideration was

$10,000,000, consisting of $5,000,000 in cash, paid at closing on

December 17, 2020, (ii) $3,000,000 payable in 36 months with

interest thereon at the rate of 5% per annuum, interest only

payable quarterly on the first day of the quarter, with the

remaining balance to be paid to VBF as a balloon payment on the

maturity date, (“Promissory Note A”), and (iii)

$2,000,000 payable in 48 months with interest thereon at the rate

of 5% per annuum, interest only payable quarterly on the first day

of the quarter, with the remaining balance to be paid to VBF as a

balloon payment on the maturity date (“Promissory Note

APA, other than the purchased assets, all other assets and

properties were excluded from the purchased assets ("Excluded

Assets"), which consisted of intangible assets and intellectual

property rights, as well as the server, all records on the server,

hard copies of accounting records and documents, claims, Pranger

retrofit designs, and the equity interest VBF holds in VBF IP Inc.,

a Texas corporation including, by extension, any and all patents,

trademarks and other items of intellectual property owned by VBF

The assets purchased are therefore only tangible

facility was originally designed for the growth of barramundi fish,

but the company never began production and declared bankruptcy on

September 21, 2018.

Our plan is to begin a modification process to

convert the plant to produce shrimp.

The three Iowa facilities

contain the tanks and infrastructure that will be used to support

the production of shrimp with the incorporation of the Company's

patented EC platform technology.

The Company also plans to convert

additional square footage currently used as storage to a shrimp

processing plant.

Final plans and decisions related to this project

continue to be developed.

Company has two wholly-owned subsidiaries, NSC and NS Global and

owns 51% of NAS.

Evolution of Technology and Revenue Expectations

Historically,

efforts to raise shrimp in a high-density, closed system at the

commercial level have been met with either modest success or

outright failure through “BioFloc Technology.”

Infectious agents such as parasites, bacteria and viruses are the

most damaging and most difficult to control.

Bacterial infection

can in some cases be combated through the use of antibiotics

(although not always), and in general, the use of antibiotics is

considered undesirable and counter to “green”

cultivation practices.

Viruses can be even worse, in that they are

immune to antibiotics.

Once introduced to a shrimp population,

viruses can wipe out entire farms and shrimp populations, even with

intense probiotic applications.

primary solution against infectious agents is our “Vibrio

Suppression Technology.”

We believe this system creates

higher sustainable densities, consistent production, improved

growth and survival rates and improved food conversion without the

use of antibiotics, probiotics or unhealthy anti-microbial

Vibrio Suppression Technology helps to exclude and

suppress harmful organisms that usually destroy

“BioFloc”

and other enclosed technologies.

2001, we began research and development of a high density, natural

aquaculture system that is not dependent on ocean water to provide

quality, fresh shrimp every week, fifty-two weeks a year.

initial system was successful, but we determined that it would not

be economically feasible due to high operating costs.

Over the next

several years, using the knowledge we gained from developing the

first system, we developed a shrimp production system that

eliminated the high costs associated with the previous system.

have continued to refine this technology, eliminating bacteria and

other problems that affect enclosed systems, and now have a

successful shrimp growing process.

We have produced thousands of

pounds of shrimp over the years in order to develop a design that

will consistently produce quality shrimp that grow to a large size

at a specific rate of growth.

This included experimenting with

various types of natural live and synthesized feed supplies before

selecting the most appropriate nutritious and reliable combination.

It also included utilizing monitoring and control automation

equipment to minimize labor costs and to provide the necessary

oversight for proper regulation of the shrimp environment.

there were further enhancements needed to our process and

technology in order to begin production of shrimp on a commercially

viable scale and to generate revenues.

current system consists of a reception tank where the shrimp are

acclimated, then moved to a larger grow-out tank for the rest of

the twenty-four week cycle.

During 2016, we engaged in additional

engineering projects with third parties to further enhance our

indoor production capabilities.

For example, through our

relationship with Trane, Inc., a division of Ingersoll-Rand Plc

(“Trane”), Trane provided a detailed audit to use data

to build and verify the capabilities of then initial Phase 1

prototype of a Trane-proposed three tank system at our La Coste,

Texas facility.

The Company contracted F&T Water Solutions and

RGA Labs, Inc.

(“RGA Labs”) to complete final

engineering and building of the initial patent-pending modified

Electrocoagulation system for the grow-out, harvesting and

processing of fully mature, antibiotic-free Pacific White Leg

The design presented a viable pathway to begin generating

revenue and producing shrimp on a commercially viable scale.

design was completed and was installed in early June 2018 by RGA

Labs, and final financing for the system provided by one of the

Company’s existing intuitional investors.

The first post

larvae (PL) arrived from the hatchery on July 3, 2018.

used the shrimp for sampling to key potential customers and special

events such as the Texas Restaurant Association trade show.

Company also received two production PL lots from Global Blue

Technologies on March 21, 2019 and April 17, 2019 and from American

Penaeid, Inc.

on August 7, 2019.

Because the shrimp displayed

growth that was slower than normal, the Company had a batch tested

by an independent lab at the University of Arizona.

tested positive for Infectious hypodermal and hematopoietic

necrosis (“IHHNV”) and the Texas Parks and Wildlife

Department was notified that the facility was under quarantine.

August 26, 2019, the Company was forced to terminate all lots due

to the infection.

On August 30, 2019, the Company received notice

that it was in compliance again and the quarantine had been lifted.

During the aforementioned quarantine, the Company decided to begin

an approximately $1,000,000 facility renovation demolishing the

interior 16 wood structure lined tanks (720,000 gallons).

Company would be replacing the previous tanks with 40 new

fiberglass tanks (600,000 gallons) at a cost of approximately

$400,000 allowing complete production flexibility with more smaller

The Company had expected that the first shrimp tanks harvest

target date would be April 2020.

March 18, 2020, our research and development plant in La Coste,

Texas was destroyed by a fire.

The Company believes that it was

caused by a natural gas leak, but the fire was so extensive that

the cause was undetermined.

No one was injured as a result of the

The majority of the damage was to our pilot production plant,

which comprises approximately 35,000 square feet of the total size

of all facilities at the La Coste location of approximately 53,000

square feet, but the fire did not impact the separate greenhouse,

reservoirs or utility buildings.

We have received total insurance

proceeds in the amount of $917,210, the full amount of our claim.

These funds are being utilized to convert the original greenhouse

into an 8,000 square foot water treatment plant, rebuild a 40,000

square foot production facility at the La Coste facility and to

repurchase the equipment and technology needed to replace what was

lost in the fire.

We began stocking PLs in the water treatment

plant in January 2021 to perform testing of the facility support

systems and will begin stocking the new grow-out facility with

regular biweekly supplies of PLs in February 2021.

December 18, 2020, we closed the acquisition for the assets of

Alder Aqua, formerly known as VeroBlue Farms in Webster City, Iowa,

including but not limited to the real property, equipment, tanks,

rolling stock, inventory, permits, customer lists, contracts and

other such assets used in the operation of the business.

facilities were previously used to raise Barramundi fish.

begun the conversion from a fish aquaculture facility to a shrimp

production facility that includes inserting the Company patented

“Vibrio Suppression Technology”.

We will begin stocking

PLs in that facility in March 2021 to perform testing of the

support systems.

Recent developments

December 15, 2020, the Company entered into an Asset Purchase

Agreement (“APA”) between VeroBlue Farms USA, Inc., a

Nevada corporation (“VBF”), VBF Transport, Inc., a

Delaware corporation (“Transport”), and Iowa’s

First, Inc., an Iowa corporation (“Iowa’s First”)

(each a “Seller”

and collectively,

“Sellers”).

Transport and Iowa’s First were

wholly-owned subsidiaries of VBF.

The agreement called for the

Company to purchase all of the tangible assets of VBF, the motor

vehicles of Transport and the real property (together with all

plants, buildings, structures, fixtures, fittings, systems and

other improvements located on such real property) of Iowa’s

The consideration was $10,000,000, consisting of $5,000,000

in cash, paid at closing on December 17, 2020, (ii) $3,000,000

payable in 36 months with interest thereon at the rate of 5% per

annuum, interest only payable quarterly on the first day of the

quarter, with the remaining balance to be paid to VBF as a balloon

payment on the maturity date, and (iii) $2,000,000 payable in 48

months with interest thereon at the rate of 5% per annuum, interest

only payable quarterly on the first day of the quarter, with the

remaining balance to be paid to VBF as a balloon payment on the

maturity date.

The Company also agreed to issue 500,000 shares of

common stock as a finder’s fee, with a fair value of $135,000

based on the market value of the common stock as of the closing

date of the acquisition.

facility was originally designed as a farming facility, with the

company never beginning production.

The Company’s plan is to

begin a modification process to convert the plant to produce

shrimp, which will allow them to scale faster without having to

build new facilities.

The three Iowa facilities contain the tanks

and infrastructure that will be used to support the production of

shrimp with the incorporation of the Company’s patented EC

platform technology.

Results of Operations

Comparison of the Three Months Ended December 31, 2020 to the Three

Months Ended December 31, 2019

not earned any significant revenues since our inception and,

although we expect revenues to begin in fiscal year 2021, we can

provide no assurances as to how significant they will be at that

expenses for the three months ended December 31, 2020 are

summarized as follows, in comparison to our expenses for the three

months ended December 31, 2019:

Ended December 31,

related expenses

$ 97,090  

$ 109,733  

228,967  

116,844  

Other general and

administrative expenses

64,762  

75,906  

154,470  

41,375  

101,500  

18,173  

15,958  

$ 567,297  

$ 465,667  

Operating expenses

for the three months ended December 31, 2020 were $567,297, which

is an approximately 22% increase over operating expenses of

$465,667 for the same period in 2019.

The overall change in

expenses is mainly due to the increase in professional fees

resulting from an increase in legal fees this period, related in

part to the warrant settlement with Vista, the designation of the

new series Preferred shares as well as its purchase and an increase

in accounting and consulting fees, over the same period in the

previous year.

The increase of approximately $113,000 in the three

months ended December 31, 2020 for facility operations is a result

of the Company recommencing with its testing and start-up

operations in the production plant.

The research and development

cost in the prior period was for the NAS 51% subsidiary.

costs between periods are fairly consistent.

Comparison of the Nine Months Ended December 31, 2020 to the Nine

Months Ended December 31, 2019

not earned any significant revenues since our inception and,

although we expect revenues to begin in fiscal year 2021, we can

provide no assurances as to how significant they will be at that

expenses for the nine months ended December 31, 2020 are summarized

as follows, in comparison to our expenses for the nine months ended

December 31, 2019:

Ended December 31,

related expenses

$ 311,623  

$ 337,265  

516,453  

266,455  

Other general and

administrative expenses

291,908  

328,688  

11,678  

12,163  

234,113  

180,934  

79,550  

101,500  

37,850  

41,521  

$ 1,483,175  

$ 1,268,526  

Operating expenses

for the nine months ended December 31, 2020 were $1,483,175, which

is an increase of approximately 17% as compared to operating

expenses for the same period in 2019.

The overall change in

expenses is mainly due to the increase in professional fees and

facility operations, offset by the decrease in other general and

administrative expenses and research and development between the

The increase in professional fees is due to an increase in

legal fees this period, related in part to the Vista warrant

settlement and the new Series D PS, and an increase in accounting

and consulting fees, over the same period in the previous year.

increase of approximately $53,000 in facility operations is a

result of the fire on March 18, 2020, at our pilot production

plant, which is currently in the process of being rebuilt, with

additional amounts also spent on testing and startup operations.

the three months ending December 31, 2019, the Company was also

progressing with its testing and planning to begin commercial

operations, which had resulted in a ramp-up of costs, as well as

the research and development of the 51% subsidiary NAS.

costs between periods are fairly consistent.

Liquidity, Financial Condition and Capital Resources

December 31, 2020, we had cash on hand of approximately $312,000

and a working capital deficiency of approximately $2,792,000, as

compared to cash on hand of approximately $109,000 and a working

capital deficiency of approximately $3,598,000 as of March 31,

The decrease in working capital deficiency for the nine

months ended December 31, 2020 is mainly due to the decrease in

current liabilities as a result of decreases in convertible debt

and the related derivatives due to conversions of approximately

$463,000 of convertible debt, the Vista settlement in April of

2020, which was accrued as of March 31, 2020 and which consisted of

$560,000 in accrued expenses and $90,000 in warrant liability, as

well as the issuance of the related party note to Ms.

exchange for the amounts owed under the late Mr.

William’s

settlement agreement, a portion of which in now non-current.

is offset by a decrease in current assets as a result of the

collection of the insurance settlement of approximately

Working Capital Deficiency

working capital deficiency as of December 31, 2020, in comparison

to our working capital deficiency as of March 31, 2020, can be

summarized as follows:

$ 1,089,867  

$ 1,155,394  

3,881,698  

4,753,343  

Working capital

$ 2,791,831  

$ 3,597,949  

decrease in current assets is due to the receipt of the insurance

settlement of approximately $917,000 which was in current assets as

of March 31, 2020.

While this decreased current assets as compared

to the prior year end, the remaining proceeds have increased cash

as of December 31, 2020, by approximately $202,000.

The decrease in

current liabilities is primarily due to the issuance of the shares

of the Company’s common stock in the current period related

to the Vista warrant settlement, with a fair value of $560,000,

plus the cash payment to Vista of $75,000 on April 10, 2020, which

were both included in accrued expenses as of March 31.

with the reclassification of the $90,000 warrant liability to

equity upon cancellation of the Vista warrants.

liabilities also were decreased by the conversion of approximately

$463,000 of principal of convertible notes and the related

reclassification to equity of the total derivative liability upon

Additionally, the issuance of the related party note to

Williams in exchange for the amounts owed under the late Mr.

William’s settlement agreement, also resulted in a decrease

to current liabilities as a portion of the new note payable in now

Lastly, there also is an increase of approximately

$255,000 in accounts payable.

cash flows for the nine months ended December 31, 2020, in

comparison to our cash flows for the nine months ended December 31,

2019, can be summarized as follows:

Ended December 31,

Net cash used in

operating activities

$ (1,013,718 )

$ (1,503,708 )

Net cash used in

investing activities

Net cash provided

by financing activities

8,342,803  

3,102,724  

Net change in

$ 202,357  

$ 634,353  

decrease in net cash used in operating activities in the nine

months ended December 31, 2020 compared to the same period in 2019

is attributable partly due to the decrease in the net loss, as well

as the approximately $745,000 fair value of the shares issued for

There also was the decrease in accrued expenses, which

was a result of the settlement with Vista and in accrued interest

due to related parties, stemming from the issuance of the new Ms.

Williams note payable in settlement of the late Mr.

separation agreement.

This is offset in the current period of no

longer recognizing amortization of debt discount, which was

approximately $515,000 in the prior period.

cash used in investing activities in the nine months ended December

31, 2020 includes cash paid for the VeroBlue Farm asset

acquisition, as well as machinery and equipment and construction in

process to rebuild the Texas plant and is offset by the $917,210 of

cash proceeds received from the insurance settlement for the fire

to the pilot production plant.

In the same period in 2019, the

Company used cash for investing activities to purchase machinery

and equipment and payments on construction in process on the Texas

facility, prior to the March 2020 fire.

cash provided by financing activities increased by approximately

$738,000 between periods.

For the current period, the Company

received $3,250,000 from the Securities Purchase Agreement for the

sale of Series B Convertible Preferred Stock, $5,000,000 from the

Securities Purchase Agreement for the sale of Series D Redeemable

Convertible Preferred Stock, as well as $103,200 from a Paycheck

Protection Program (“PPP”) loan, which is expected to

be forgiven within the current year, and $50,000 connected to the

Vista warrant settlement.

In the same period in the prior year, the

financing activities primarily arose from the proceeds received

from the equity financing agreement of $1,774,000 and $100,000

proceeds from a new convertible debenture in April of 2019, and

$250,000 from the initial tranche of the Stock Purchase Agreement

of the Series B Convertible Preferred Stock, offset by payments

made on the credit line and convertible debentures in fiscal

cash position was approximately $312,000 as of December 31, 2020.

Management believes that our cash on hand and working capital are

not sufficient to meet our current anticipated cash requirements

for the next twelve months, as more fully described

Recent Financing Arrangements and Developments During the

Short-Term Debt and Lines of Credit

Company has a working capital line of credit with Extraco Bank.

April 30, 2020, the line of credit was renewed with a maturity date

of April 30, 2021 for a balance limit of $372,675.

credit bears an interest rate of 5.0%, that is compounded monthly

and to be paid with the principal on the maturity date.

credit matures on April 30, 2021 and is secured by certificates of

deposit and letters of credit owned by directors and shareholders

of the Company.

The balance of the line of credit is $372,675 at

both December 31, 2020 and March 31, 2020.

Company also has an additional line of credit with Extraco Bank for

$200,000, which was renewed with a maturity date of April 30, 2021,

for a balance of $177,778.

The lines of credit bear interest at a

rate of 5%, that is compounded monthly and to be paid with the

principal on the maturity date.

The line of credit is secured by

certificates of deposit and letters of credit owned by directors

and shareholders of the Company.

The balance of the line of credit

was $177,778 at both December 31, 2020 and March 31,

Company also has a working capital line of credit with Capital One

Bank for $50,000.

The line of credit bears an interest rate of

prime plus 25.9 basis points, which totaled 29.15% as of December

The line of credit is unsecured.

The balance of the line

of credit was $9,580 at both December 31, 2020 and March 31,

Company also has a working capital line of credit with Chase Bank

The line of credit bears an interest rate of prime

plus 10 basis points, which totaled 13.25% as of December 31, 2020.

The line of credit is secured by assets of the Company’s

subsidiaries.

The balance of the line of credit is $10,237 as of

December 31, 2020 and March 31, 2020.

April 10, 2020, the Company obtained a PPP loan in the amount of

$103,200 pursuant to the Coronavirus Aid, Relief, and Economic

Security Act (the “CARES Act”).

Interest on the loan is

at the rate of 1% per year, and all loan payments are deferred for

six months, at which time the balance is payable in 18 monthly

installments if not forgiven in accordance with the CARES Act and

the terms of the promissory note executed by the Company in

connection with the loan.

The promissory note contains events of

default and other provisions customary for a loan of this

As required, the Company intends to use the PPP loan

proceeds for payroll, healthcare benefits, and utilities.

The program provides that

the use of PPP Loan amount shall be limited to certain qualifying

expenses and may be partially or wholly forgiven in accordance with

the requirements set forth in the CARES Act.

January 10, 2017, the Company entered into a promissory note with

Community National Bank for $245,000, at an annual interest rate of

5% and a maturity date of January 10, 2020 (the “CNB

Note”).

The CNB Note is secured by certain real property

owned by the Company in LaCoste, Texas, and is also personally

guaranteed by the Company’s President, as well as certain

shareholders of the Company.

On January 10, 2020, the loan was

modified, with certain terms amended.

The modified note is for the

principal balance of $222,736, with initial monthly payments of

$1,730 through February 1, 2037, when all unpaid principal and

interest will be due and payable.

The loan has an initial yearly

rate of interest of 5.75%, which may change beginning on February

1, 2023 and each 36 months thereafter, to the Wall Street Journal

Prime Rate plus 1%, but never below 4.25%.

The monthly payments may

change on the same dates as the interest changes.

The Company is

also allowed to make payments against the principal at any time.

The balance of the CNB Note is $216,931 as of December 31, 2020,

$8,438 of which was in current liabilities, and $220,899 as of

March 31, 2020, of which $8,904 was in current

November 3, 2015, the Company entered into a short-term note

agreement with Community National Bank for a total value of

The short-term note had a stated interest rate of 5.25%,

maturity date of December 15, 2017 and had an initial interest only

payment on February 3, 2016.

On July 18, 2018, the short-term note

was replaced by a promissory note for the outstanding balance of

$25,298, which bears interest at 8% with a maturity date of July

The note is guaranteed by an officer and director.

balance of the note as of December 31, 2020 and March 31, 2020 was

$5,413 and $12,005, respectively.

Convertible Debentures

August 24, 2018, the Company entered into a 10% convertible note in

the principal amount of $55,000, convertible into shares of common

stock of the Company, which matures August 24, 2019.

rate increases to 24% per annum upon an event of default, as set

forth in the agreement, including a cross default to all other

outstanding notes, and if the debenture is not paid at maturity the

principal due increases by 10%.

If the Company loses its bid price

the principal outstanding on the debenture increases by 20%, and if

the Company’s common stock is delisted, the principal

increases by 50%.

On January 10, 2019 the outstanding principal of

$55,000 and accrued interest of $1,974 was purchased from the

noteholder by a third party, for $82,612.

The additional $25,638

represents the redemption amount owing to the original noteholder

and increases the principal amount due to the new noteholder.

note is convertible into shares of the Company’s common stock

at a price per share equal to 57% of the lowest closing bid price

for the last 20 days.

The discount is increased an additional 10%,

to 47%, upon a “DTC chill".

During the fourth fiscal quarter

of 2019, in three separate conversions, the holder converted

$57,164 of principal into 9,291,354 shares of common stock of the

On May 5, 2020, the remaining outstanding balance of

$29,057 was converted into 2,039,069 shares of common stock of the

Company, at a conversion rate of $0.014.

September 14, 2018, the Company entered into a 12% convertible

promissory note for $112,500, with an OID of $10,250, which matures

on March 14, 2019.

On January 25, 2019 the outstanding principal of

$101,550, plus an additional $81,970 of default principal and

$13,695 in accrued interest of the note, resulting in a new balance

of $197,215, was purchased from the noteholder by a third party,

who extended the maturity date.

Per the agreement, the Company is

required at all times to have authorized and reserved three times

the number of shares that is actually issuable upon full conversion

The interest rate increases to a default rate of 24%

for events as set forth in the agreement, including if the market

capitalization is below $5 million, or there are any dilutive

There is also a cross default provision to all other

In the event of default, the outstanding principal balance

increases to 150%, and if the Company fails to maintain the

required authorized share reserve, the outstanding principal

increases to 200%.

Additionally, If the Company enters into a

3(a)(9) or 3(a)(10) issuance of shares there are liquidation

damages of 25% of principal, not to be below $15,000.

must also obtain the noteholder's written consent before issuing

any new debt.

Additionally, if the note is not repaid by the

maturity date the principal balance increases by $15,000.

market capitalization has been below $5 million and therefore the

note was in default, however, the holder has issued a waiver to the

Company on this default provision.

note is convertible into shares of the Company’s common stock

at a variable conversion rate that is equal to the lesser of 60% of

the lowest trading price for the last 20 days prior to the issuance

of the note or 60% of the lowest market price over the 20 days

prior to conversion.

The conversion price shall be adjusted upon

subsequent sales of securities at a price lower than the original

conversion price.

There are additional 10% adjustments to the

conversion price for events set forth in the agreement, including

if the conversion price is less than $0.01, if the Company is not

DTC eligible, the Company is no longer a reporting company, or the

note cannot be converted into free trading shares on or after nine

months from issue date.

On December 13, 2018 the holder converted

$11,200 of principal into 4,000,000 shares of common stock of the

On three separate dates during the first quarter of the

fiscal year ending March 31, 2021, the remaining outstanding

balance was converted into 35,887,170 shares of common stock of the

Company, at a conversion rate of $0.006.

March 1, 2019, the Company entered into a 10% convertible

promissory note for $168,000, with an OID of $18,000, for a

purchase price of $150,000, which originally matured on November 1,

The maturity date has been extended to September 1, 2020,

with the noteholders waiving the default penalties through December

During the first 180 days the convertible redeemable note

is in effect, the Company may redeem the note at a prepayment

percentage of 100% to 130% of the outstanding principal and accrued

interest based on the redemption date’s passage of time

ranging from 60 days to 180 days from the date of issuance of the

Per the agreement, the Company is required at all times

to have authorized and reserved three times the number of shares

that is actually issuable upon full conversion of the note.

event of default, as set forth in the agreement, the outstanding

principal balance increases to 150%.

In addition to standard events

of default, an event of default occurs if the common stock of the

Company shall lose the “bid”

price for its Common

Stock, on trading markets, including the OTCBB, OTCQB or an

equivalent replacement exchange.

If the Company enters into a 3

(a)(9) or 3(a)(10) issuance of shares there are liquidation damages

of 25% of principal, not to be below $15,000.

The Company must also

obtain the noteholder’s written consent before issuing any

The note is convertible at a fixed conversion price of

If an event of default occurs, the fixed conversion price is

extinguished and replaced by a variable conversion rate that is 70%

of the lowest trading prices during the 20 days prior to

The fixed conversion price shall reset upon any future

dilutive issuance of shares, options or convertible securities.

On December 21,

2020, the outstanding balance of $168,000 and accrued interest of

$30,847 was converted into 795,387 shares of common stock of the

Company, at a conversion rate of $0.25.

April 17, 2019, the Company entered into a 10% convertible

promissory note for $110,000, with an OID of $10,000, for a

purchase price of $100,000, which matures on January 23, 2020.

maturity date has been extended to September 1, 2020.

first 180 days the convertible redeemable note is in effect, the

Company may redeem the note at a prepayment percentage of 120% to

130% of the outstanding principal and accrued interest based on the

redemption date’s passage of time ranging from 60 days to 180

days from the date of issuance of the debenture.

Per the agreement,

the Company is required at all times to have authorized and

reserved three times the number of shares that is actually issuable

upon full conversion of the note.

In the event of default, as set

forth in the agreement, the outstanding principal balance increases

In addition to standard events of default, an event of

default occurs if the common stock of the Company shall lose the

"bid" price for its Common Stock, on trading markets, including the

OTCBB, OTCQB or an equivalent replacement exchange.

If the Company

enters into a 3 (a)(9) or 3(a)(10) issuance of shares there are

liquidation damages of 25% of principal, not to be below $15,000.

The Company must also obtain the noteholder's written consent

before issuing any new debt.

The note is convertible at a fixed

conversion price of $0.124.

If an event of default occurs, the

fixed conversion price is extinguished and replaced by a variable

conversion rate that is 70% of the lowest trading prices during the

20 days prior to conversion.

On September 14, 2020, the outstanding

balance of $110,000 was converted into 1,014,001 shares of common

stock of the Company, at a conversion rate of $0.124.

Sale and Issuance of Common Stock

the nine months ended December 31, 2020, the Company issued

39,735,627 shares of the Company’s common stock upon

conversion of approximately $564,000 of their outstanding

convertible debt and accrued interest.

the nine months ended December 31, 2020, the Company has converted

3,554 Series B PS plus 141 Series B PS dividends-in-kind into

97,761,030 shares of the Company’s common stock.

Common Shares Issued to Consultants

August 24, 2020, the Company issued 1,500,000 shares of common

stock to a consultant per an agreement entered into on June 25,

The agreement has a six month term, and therefore the fair

value of $67,500, based on the market value of $0.045 on the grant

date, will be recognized over the term of the agreement, with

$32,500 and $67,500 expensed during the three and nine months ended

December 31, 2020.

On December 25, 2020, the Company renewed the

agreement for an additional six months.

As consideration for the

agreement the Company issued 1,500,000 shares of common stock to

the consultant.

The agreement has a six month term, and therefore

the fair value of $616,500, based on the market value of $0.041 on

the grant date, is recognized in Prepaid expense as of the period

end December 31, 2020, and will be expensed over the term of the

12, 2020, the Company issued 1,250,000 shares of common stock to a

consultant, with the fair value of $61,250 based on the market

price of $0.049 on the date issued and which was recognized as

professional services in the three months ended June 30,

Series B Preferred Equity Offering

September 5, 2019, the Board authorized the issuance of 5,000

preferred shares to be designated as Series B Preferred Stock.

Series B PS have a par value of $0.0001, a stated value of $1,200

and no voting rights.

The Series B PS are redeemable at the

Company's option, at percentages ranging from 120% to 135% for the

first 180 days, based on the passage of time.

The Series B are also

redeemable at the holder’s option, upon the occurrence of a

triggering event which includes a change of control, bankruptcy,

and the inability to deliver Series B PS requested under conversion

The triggering redemption amount is at the greater of (i)

135% of the stated value or (ii) the product of the volume-weighted

average price (“VWAP”) on the day proceeding the

triggering event multiplied by the stated value divided by the

conversion price.

As the redemption feature at the holder’s

option is contingent on a future triggering event, the Series B PS

is considered contingently redeemable, and as such the preferred

shares are classified in equity until such time as a triggering

event occurs, at which time they will be classified as

Series B PS is convertible, at the discounted market price which is

defined as the lowest VWAP over last 20 days.

The conversion price

is adjustable based on several situations, including future

dilutive issuances.

As the Series B PS does not have a redemption

date and is perpetual preferred stock, it is considered to be an

equity host instrument and as such the conversion feature is not

required to be bifurcated as it is clearly and closely related to

the equity host instrument.

the nine months ended December 31, 2020, the Company received

$3,250,000 for the issuance of 3,250 Series B PS.

Series D Preferred Equity Offering

December 18, 2020, the Company entered into securities purchase

agreements (the “Purchase Agreement”) with GHS

Investments LLC, Platinum Point Capital LLC and BHP Capital NY

(collectively, the “Purchaser”) , whereby, at the

closing, each Purchaser agreed to purchase from the Company, up to

5,000 shares of the Company’s Series D Convertible Preferred

Stock, par value $0.0001 per share (the “Series D Preferred

Stock”), at a purchase price of $1,000 per share of Series D

Preferred Stock.

The aggregate purchase price per Purchaser for the

Series D Preferred Stock is $5,000,000.

In connection with the sale

of the Series D Preferred Stock, the Purchasers received 6,000,000

shares of the Company’s common stock, par value $0.0001 (the

“Commitment Shares”), which have a fair value of

$1,616,250 based on the market price of the common shares of $0.27

on the date of the Series D PS purchase.

holder of Series D Preferred Stock shall be entitled to receive,

with respect to each share of Series D Preferred Stock then

outstanding and held by such holder, dividends at the rate of

twelve percent (12%) per annum (the “Preferred

Dividends”).

Dividends may be paid in cash or in shares of

Preferred Stock at the discretion of the Company.

Series D PS are convertible into Common Stock at the election of

the holder of the Series D PS at any time following five days after

a qualified offering (as defined in the Purchase Agreement) at a

35% discount to the offering price, or, if a qualified offering has

not occurred, at a price of $0.10 per share, subject to adjustment

as set forth in the designation.

Series BD PS shall be redeemed by the Corporation on the date that

is no later than one calendar year from the date of its issuance.

The Series D PS are also redeemable at the Company's option, at

percentages ranging from 115% to 125% for the first 180 days, based

on the passage of time.

The Company shall redeem the Series D PS in

cash upon a three business days prior notice to the holder or the

holder may convert the Series D PS within such three business days

period prior to redemption.

Additionally, the holder shall have the

right to either redeem for cash or convert the Preferred Stock into

Common Stock within three business days following the consummation

of a qualified offering.

The Series D PS are also redeemable at the

holder’s option, upon the occurrence of a triggering event

which includes a change of control, bankruptcy, and the inability

to deliver shares of the Company’s common stock requested

under conversion notices.

The triggering redemption amount is 150%

of the stated value.

Going Concern

audited consolidated financial statements contained in this

quarterly report on Form 10-Q have been prepared, assuming that the

Company will continue as a going concern.

The Company has

accumulated losses through the period to December 31, 2020 of

approximately $49,962,000 as well as negative cash flows from

operating activities of approximately $1,014,000.

Presently, the

Company does not have sufficient cash resources to meet its plans

in the twelve months following the date of issuance of this filing.

These factors raise substantial doubt about the Company’s

ability to continue as a going concern.

Management is in the

process of evaluating various financing alternatives in order to

finance the continued build-out of our equipment and for general

and administrative expenses.

These alternatives include raising

funds through public or private equity markets and either through

institutional or retail investors.

Although there is no assurance

that the Company will be successful with our fund raising

initiatives, management believes that the Company will be able to

secure the necessary financing as a result of ongoing financing

discussions with third party investors and existing

shareholders.

consolidated financial statements do not include any adjustments

that may be necessary should the Company be unable to continue as a

going concern.

The Company’s continuation as a going concern

is dependent on its ability to obtain additional financing as may

be required and ultimately to attain profitability.

If the Company

raises additional funds through the issuance of equity, the

percentage ownership of current shareholders could be reduced, and

such securities might have rights, preferences or privileges senior

to the rights, preferences and privileges of the Company’s

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 future plans for developing its business and achieving

commercial revenues.

If the Company is unable to obtain the

necessary capital, the Company may have to cease

Future Financing

require additional funds to implement our growth strategy for our

In addition, while we have received capital from various

private placements that have enabled us to fund our operations,

these funds have been largely used to develop our processes,

although additional funds are needed for other corporate

operational and working capital purposes.

However, not including

funds needed for capital expenditures or to pay down existing debt

and trade payables, we anticipate that we will need to raise an

additional $2,500,000 to cover all of our operational expenses over

the next 12 months, not including any capital expenditures needed

as part of any commercial scale-up of our equipment.

may be raised through equity financing, debt financing, or other

sources, which may result in further dilution in the equity

ownership of our shares.

There can be no assurance that additional

financing will be available to us when needed or, if available,

that such financing can be obtained on commercially reasonable

If we are not able to obtain the additional necessary

financing on a timely basis, or if we are unable to generate

significant revenues from operations, we will not be able to meet

our other obligations as they become due, and we will be forced to

scale down or perhaps even cease our operations.

Off-Balance Sheet Arrangements

no off-balance sheet arrangements that have or are reasonably

likely to have a current or future effect on our financial

condition, changes in financial condition, revenues or expenses,

results of operations, liquidity, capital expenditures or capital

resources that is material to stockholders.

Effects of Inflation

not believe that inflation has had a material impact on our

business, revenues or operating results during the periods

Critical Accounting Policies and Estimates

significant accounting policies are more fully described in the

notes to our financial statements included in this Quarterly Report

on Form 10-Q and in our Annual Report on Form 10-K for the fiscal

year ended March 31, 2020.

We believe that the accounting policies

below are critical for one to fully understand and evaluate our

financial condition and results of operations.

Fair Value Measurement

fair value measurement guidance clarifies that fair value is an

exit price, representing the amount that would be received to sell

an asset or paid to transfer a liability in an orderly transaction

between market participants.

As such, fair value is a market-based

measurement that should be determined based on assumptions that

market participants would use in the valuation of an asset or

It establishes a fair value hierarchy that prioritizes

the inputs to valuation techniques used to measure fair value.

hierarchy gives the highest priority to unadjusted quoted prices in

active markets for identical assets or liabilities (Level 1

measurements) and the lowest priority to unobservable inputs (Level

3 measurements).

The three levels of the fair value hierarchy under

the fair value measurement guidance are described

- Unadjusted quoted prices in active markets that are accessible at

the measurement date for identical assets or

- Quoted prices in markets that are not active, or inputs that are

observable, either directly or indirectly, for substantially the

full term of the asset or liability;

- Prices or valuation techniques that require inputs that are both

significant to the fair value measurement and unobservable

(supported by little or no market activity).

Company did not have any Level 1 or Level 2 assets and liabilities

as of December 31, 2020 and March 31, 2020.

Derivative and warrant liabilities are Level 3 fair value

measurements.

Basic and Diluted Earnings/Loss per Common Share

and diluted earnings or loss per share (“EPS”) amounts

in the consolidated financial statements are computed in accordance

with ASC 260 –

10 “Earnings per Share”, which

establishes the requirements for presenting EPS.

Basic EPS is based

on the weighted average number of shares of common stock

Diluted EPS is based on the weighted average number of

shares of common stock outstanding and dilutive common stock

Basic EPS is computed by dividing net income or loss

available to common stockholders (numerator) by the weighted

average number of shares of common stock outstanding (denominator)

during the period.

For the nine months ended December 31, 2020, the

Company had a 1,920 shares of Series B PS whose approximately

12,308,000 underlying shares are convertible at the

investors’

option at a conversion price based on the lowest

market price over the last 20 trading days, and 5,000 of Series B

PS whose approximately 50,000,000 underlying shares are convertible

at the investors’

option at a fixed conversion price of

$0.10, which were not included in the calculation of diluted EPS as

their effect would be anti-dilutive.

For the nine months ended

December 31, 2019, the Company had approximately $709,000 in

principal on convertible debentures whose approximately 22,895,000

underlying shares are convertible at the holders’

conversion prices  ranging from

$0.01 to $0.30 for fixed conversion rates, and 57% - 60% of the

defined trading price for variable conversion rates and

approximately 848,000 warrants 

with an exercise price

of 45% of the market price of the Company’s common stock,

which were not included in the calculation of diluted EPS as their

effect would be anti-dilutive.

Impairment of Long-lived Assets and Long-lived Assets

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.

Recently Adopted Accounting Pronouncements

recently adopted accounting pronouncements are more fully described

in Note 2 to our financial statements included herein for the

quarter ended December 31, 2020.

Recently Issued Accounting Standards

the year ended March 31, 2020, there were several new accounting

pronouncements issued by the Financial Accounting Standards Board.

Each of these pronouncements, as applicable, has been or will be

adopted by the Company.

Management does not believe the adoption of

any of these accounting pronouncements has had or will have a

material impact on the Company’s consolidated financial

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

As a smaller reporting company, we are not required to

provide the information required by this Item.

The Company has filed its answer to the complaint and is seeking to settle the matter with Mr.

Shover with the approval of the Federal District Court.

A settlement stipulation has been prepared and approved by the parties and has been filed with the Court along with a proposed order.

After a conference call between counsel for the parties, counsel for the Company agreed to amend the stipulation, motion to approve stipulation and the declarations filed in support of the motion to provide a more detailed statement of fact to assist the court in its determination, although as of the date of this filing, the Company is not aware of the date of such determination.

NOTE 13 – SUBSEQUENT EVENTS

On May 26, 2021, the Company entered into a sublease for a new office space in Texas, on two floors.

The lease will commence on August 1, 2021 for a monthly rent of $ 7,000 , and 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 consolidated condensed balance sheet.

The lease liability and right of use asset will be recognized upon the commencement of the lease on August 1, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements