What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-16 · 154 added, 98 removed, 432 unchanged (37% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2021

September 30, 2021

March 31, 2021

3 unchanged sentences

Construction-in-process

License Agreement

Right of Use asset

6 unchanged sentences

Other accrued expenses

Accrued expenses - related parties

Short-term Promissory Note and Lines of credit

9 unchanged sentences

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 E Redeemable Convertible Preferred stock, $ 0.0001 par value, 10,000 shares authorized, 2,540 and 0 shares issued and outstanding at September 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

Series A Convertible Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at September 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 September 30, 2021 and March 31, 2021, respectively

Common stock, $ 0.0001 par value, 900,000,000 shares authorized, 607,134,014 and 560,745,180 shares issued and 606,821,513 and 560,745,180 shares outstanding at September 30, 2021 and March 31, 2021, respectively

Additional paid in capital

10 unchanged sentences

CONDENSED Consolidated STATEMENTS OF OPERATIONS

For the 3 months Ended

June 30, 2021

June 30, 2020

For the Three Months Ended

For the Six months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Operating expenses:

6 unchanged sentences

( 2,783,972 )

( 5,022,062 )

Other income (expense):

3 unchanged sentences

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)

1 unchanged sentence

( 2,849,635 )

( 5,412,378 )

( 1,068,846 )

Provision for income taxes

( 2,849,635 )

( 5,412,378 )

( 1,068,846 )

Less net loss attributable to non-controlling interest

1 unchanged sentence

( 2,849,635 )

( 5,412,378 )

( 1,065,265 )

Amortization of beneficial conversion feature on Preferred shares

Accretion on Series D Preferred shares

( 1,100,000 )

Redemption and exchange of Series D Preferred shares

3 unchanged sentences

$ ( 1,479,153 )

$ ( 12,022,701 )

$ ( 2,394,017 )

EARNINGS PER SHARE (Basic and diluted)

2 unchanged sentences

NATURALSHRIMP INCORPORATED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT

Series A Preferred Stock

Series B Preferred Stock

Additional Paid In

Additional Paid

Non-controlling

15 unchanged sentences

( 2,534,758 )

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

2 unchanged sentences

Common shares to be issued for Patent acquisition

Common stock vested to consultant

Common stock vested to consultants

( 2,562,743 )

2 unchanged sentences

$ ( 62,856,334 )

Conversion of Series E PS to common stock

Amortization of beneficial conversion feature related to Series E Preferred Shares

( 1,341,948 )

Revision of dividends payable on Series B Preferred Shares (See Note 2)

Dividends payable on Preferred Shares

Common shares to be issued for Technical and Equipment Rights Agreement

Common stock vested to consultants

( 2,849,635 )

Balance September 30, 2021

$ ( 67,408,142 )

Balance March 31, 2020

14 unchanged sentences

$ ( 1,062,394 )

Issuance of common stock upon conversion

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 to consultant

Balance September 30, 2020

$ ( 48,821,413 )

$ ( 215,012 )

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

2 unchanged sentences

For the 6 Months Ended

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

CASH FLOWS FROM OPERATING ACTIVITIES

3 unchanged sentences

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

Depreciation expense

Depreciation and amortization expense

Amortization of debt discount

9 unchanged sentences

Other accrued expenses

Accrued expenses - related parties

Accrued interest

2 unchanged sentences

( 4,153,434 )

( 1,187,035 )

CASH FLOWS FROM INVESTING ACTIVITIES

4 unchanged sentences

( 1,000,000 )

Cash paid for License Agreement

( 2,350,000 )

Cash received from Insurance settlement

Cash paid for construction in process

( 1,297,819 )

( 1,738,661 )

Cash (used in) provided by investing activities

( 7,293,524 )

( 1,563,839 )

CASH FLOWS FROM FINANCING ACTIVITIES

10 unchanged sentences

( 3,513,504 )

Proceeds from sale of Series D PS

Cash received in relation to Vista warrant settlement

11 unchanged sentences

Shares to be issued as consideration for acquisition of remaining NCI

Note payable, related party, issued in place of Settlement Agreement

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2021

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2021

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

3 unchanged sentences

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

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

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

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”).

7 unchanged sentences

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.

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

Going Concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

For the three months ended June 30, 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 .

For the six months ended September 30, 2021, the Company had a net loss available for common stockholders of approximately $ 12,023,000 .

At September 30, 2021, the Company had an accumulated deficit of approximately $ 67,408,000 and a working capital deficit of approximately $ 5,119,000 .

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).

During the six months ended September 30, 2021, the Company received net cash proceeds of approximately $ 17,277,000 from the sale of common shares (See Note 11).

Management believes that private placements of equity capital will be needed to fund the Company’s long-term operating requirements.

5 unchanged sentences

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 – REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

In the Company’s previously issued financial statement for the first quarter of the current fiscal year for the three months ending June 30, 2021, the Company made an incorrect extinguishment of the Dividends payable in relation to the redemption of the Series D Preferred Stock as of April 15, 2021.

However, it was later evaluated that the Dividends payable related to preferred shares that were still outstanding.

The reclassification of the Dividends payable into Accumulated deficit was only presented as of June 30, 2021 on the Consolidated Balance Sheet, and did not impact the Consolidated Statements of Operations or the Consolidated Statement of Cash Flows.

In accordance with SEC Staff Accounting Bulletin No.

99, “Materiality,” and SEC Staff Accounting Bulletin No.

108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements;” the Company evaluated the change and has determined that the related impact was not material to any previously presented financial statements.

As such the Company is reporting the revision to dividends to that period in this Quarterly Report.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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.

The accompanying unaudited financial information as of and for the three months ended September 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.

Operating results for the six months ended September 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.

14 unchanged sentences

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 .

For the six months ended September 30, 2021, the Company had with Redeemable Convertible Preferred stock with approximately 9,842,000 underlying common shares, and 10,000,000 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive.

For the six months ended September 30, 2020, the Company had approximately $ 168,000 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

8 unchanged sentences

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

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 %.

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

Financial Instruments

3 unchanged sentences

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.

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

Concentration of Credit Risk

1 unchanged sentence

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 September 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.

2 unchanged sentences

Estimated useful lives are as follows:

27.5 – 39 years

Machinery and Equipment

2 unchanged sentences

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

18 unchanged sentences

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.

As of September 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.

1 unchanged sentence

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.

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

Based upon the review, other than described in Note 15 – 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 4 – 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

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

September 30,

Machinery and equipment

1 unchanged sentence

Accumulated depreciation

( 1,201,928 )

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.

The consolidated statements of operations reflect depreciation expense of approximately $ 307,000 and $ 9,000 and $ 661,000 and $ 20,000 for the three and six months ended September 30, 2021 and 2020, respectively.

NOTE 5 – PATENT ACQUISITION

1 unchanged sentence

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 .

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 issue 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.

As of September 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.

1 unchanged sentence

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

Amortization expense was $ 97,500 and $ 146,500 for the three and six months ended September 30, 2021

NOTE 6 – RIGHTS AGREEMENTS

On August 25, 2021, the Company, through their 100 % owned subsidiary NAS, entered into an Equipment Rights Agreements with Hydrenesis-Delta Systems, LLC (Hydrenesis-Delta") and a Technology Rights Agreement, in a sub-license agreement with Hydrenesis Aquaculture LLC ("Hydrenesis-Aqua"), The Equipment Rights involve specialized and proprietary equipment used to produce and control, dose, and infuse Hydrogas® and RLS® into both water and other chemical species, while the Technology sublicense pertains to the rights to Hydrogas® and RLS®.

Both Rights agreements are for a 10 year term, which shall automatically renew for ten year successive terms.

The term can be terminated by written notice by mutual consent, or by either party upon a breach of contract, insolvency or filing of bankruptcy.

The agreements accord the exclusive rights to purchase or distribute the technology, or buy or rent the equipment, in the Industry Sector, which is the primary business and revenue stream generated from indoor aquaculture farming of any species in the Territory, defined as anywhere in the world except for the countries in the Gulf Corporation Council.

The consideration for the Equipment Rights consists of the sum of $ 2,500,000 , with $ 500,000 in cash paid at closing, and $ 500,000 to be paid on the first day of the next calendar quarter, plus $ 250,000 to be paid on the first day of each successive calendar quarter until the amount is paid in full.

Per the Terms set forth in the Technology Rights Agreement, the consideration is defined as the sum of $ 10,000,000 , consisting of $ 2,500,000 in cash at closing, and an additional $ 1,000,000 within 60 days after closing, and $ 6,500,000 worth of unrestricted common shares of stock in the parent company, NSI, at a stipulated share price of $ 0.505 .

Determined with this stipulated price, 12,871,287 shares are required to be issued.

Based on the market price on August 25, 2021 of $ 0.37 , is the fair value of the shares is $ 4,762,376 , which results in a fair value total consideration of $ 8,262,376 .

As of September 30, 2021, the shares are not yet issued and are therefore classified in Shares payable.

The common shares are covered by a Lock-Up ad Leak-Out Agreement.

The terms of the Agreements set forth that NAS will pay to Hydrenesis 12.5 % royalty fees.

The royalties are calculated per all customer or sub-license revenue generated by NAS, NSI or any Affiliate, from the sale or rental of either the Technologies or Hydrenesis Equipment, based on gross revenue less returns, rebates and sales taxes.

There are sales milestones for exclusivity, whereby if NAS fails to achieve a sales milestone starting in Year 3, the exclusivity rights in both of the Rights agreements shall revert to non-exclusive rights.

To maintain the exclusivity for the subsequent year, the Company may pay the amount of the royalty fees that would have been due if the Sales Milestone had been meet in the current year.

The Sales Milestones are:

250,000 Royalty

375,000 Royalty

625,000 Royalty

875,000 Royalty

All subsequent years

1,000,000 Royalty

NOTE 7 – SHORT-TERM NOTE AND LINES OF CREDIT

11 unchanged sentences

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 bears an interest rate of prime plus 25.9 basis points, which totaled 29.15% as of September 30, 2021.

The line of credit is unsecured.

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

The balance of the line of credit was $ 9,580 at both September 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 bears an interest rate of prime plus 10 basis points, which totaled 13.25% as of September 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.

The balance of the line of credit is $ 10,237 at September 30, 2021 and March 31, 2021.

NOTE 8 – BANK LOANS

8 unchanged sentences

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.

The balance of the CNB Note is $ 210,738 at September 30, 2021, $ 10,380 of which was in current liabilities, and $ 214,452 at March 31, 2021, of which $ 8,725 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 .

1 unchanged sentence

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.

The balance of the note at March 31, 2021 was $ 3,124 .

Maturities on Bank loan is as follows:

17 unchanged sentences

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 .

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

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

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

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.

2 unchanged sentences

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 11 – STOCKHOLDERS’ DEFICIT

Preferred Stock

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.

As of September 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 2,540 and 0 outstanding, respectively.

27 unchanged sentences

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.

During the three months ended September 30.

2021, 1,200 shares of Series E Preferred Stock were converted into 4,114,286 shares of common stock.

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 .

7 unchanged sentences

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.

62,500 common shares shall vest each quarter through October 1, 2022, at $ 24,275 , with $ 73,126 vested through the September 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.

8 unchanged sentences

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.

The remaining $ 308,250 was expensed in the three months ended September 30, 2021.

Options and Warrants

2 unchanged sentences

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.

Included in other accrued expenses on the accompanying consolidated balance sheet is September 30approximately $ 114,000 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 September 30, 2021 and March 31, 2021.

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

The accrued payroll owing to the President of the Company was paid off in full during July 2021, and was approximately $ 35,000 as of March 31, 2021.

Bonus Compensation – Related Party

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

On August 10, 2021, the Board of Directors awarded the President, the Chief Financial Officer and the Chief Technology Officer compensation bonuses of $ 300,000 each.

On May 11, 2021, the Company paid the Chief Financial Officer the bonus of $ 300,000 , with the other bonuses to be distributed within the next twelve months from the award date, and are included in accrued expenses, related parties as of September 30, 2021.

NaturalShrimp Holdings, Inc.

3 unchanged sentences

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.

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

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

At September 30, 2021 and March 31, 2021, accrued interest payable was approximately $ 70,000 and $ 66,000 , respectively.

Shareholder Notes

2 unchanged sentences

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.

The balance of these notes was $ 356,404 as of both September 30, 2021 and March 31, 2021, and is classified as a current liability on the consolidated balance sheets.

As of September 30, 2021 and March 31, 2021, accrued interest payable was approximately $ 132,000 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.

The balance of these notes at September 30, 2021 and March 31, 2021 was $ 54,647 and is classified as a current liability on the consolidated balance sheets.

NOTE 13 – LEASE

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 Company assessed its new office lease as an operating lease.

At inception, on August 1, 2021 , the ROU and lease liability was calculated as approximately $ 316,000 , based on the net present value of the future lease payments over the term of the lease.

When available, the Company uses the rate implicit in the lease discount payments as the incremental borrowing rate to calculate the net present value;

however, the rate implicit in the lease is not readily determinable for their corporate office lease.

In this case, the Company estimated its incremental borrowing rate of 5.75 % as the interest rate it could have incurred to borrow an amount equal to the lease payments in a similar economic environment on a collateralized basis over a term similar to the lease term .

The Company estimated its rate based on observable risk-free interest rate and credit spreads for commercial debt of a similar duration as to what rate would have been effective for the Company.

On September 8, 2021, the Company entered into an equipment lease agreement for VOIP phone equipment.

The lease term is for sixty months, with a monthly lease payment of approximately $ 300 .

The Company assessed the equipment lease as an operating lease.

The Company determined the Right of Use asset and Lease liability values at inception as approximately $ 17,000 calculated at the present value of all future lease payments for the lease term, using an incremental borrowing rate of 5.75 %.

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

1 unchanged sentence

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

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

The Company determined the Right of Use asset and Lease liability values at inception at a value of $ 275,400 , 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.

10 unchanged sentences

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 Note 10).

RGA Labs, Inc.

4 unchanged sentences

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.

On August 10, 2021, pursuant to a court order, RGA and the Company participated in a mediation wherein a settlement of all claims was reached.

The settlement consisted of the agreement of the Company to pay RGA the sum of $ 8,000 , execution of joint and mutual releases and the execution of a non-competition agreement by RGA and its principals restricting them from competing against the Company in the aquaculture business using electrocoagulation technology.

The settlement has not yet been finalized at this time due to the negotiation of the terms and breadth of the non-competition agreement.

A shareholder of NaturalShrimp Holdings, Inc.

1 unchanged sentence

Shover owns in NSH.

The Company has filed its answer to the complaint and is seeking to settle the matter with Mr.

Shover with the approval of the Federal District Court.

A settlement stipulation has been prepared and approved by the parties and 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.

The federal District Court for the Northern District of Texas, Dallas Division, has set the claims of Gary Shover against the Company for a hearing scheduled for November 15, 2021.

At this hearing, the parties will have the opportunity to present to the Court reasons why the Court should approve the proposed settlement agreed to by all parties.

NOTE 15 – 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.

The lease liability and right of use asset will be recognized upon the commencement of the lease on August 1, 2021.

On October 18, 2021, 600 shares of Series E Preferred Stock were converted into 2,057,143 shares of common stock.

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