What changed in this filing

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Item 1. Financial Statements

2022-02-17 compared with 2021-11-15 · 235 added, 105 removed, 481 unchanged (41% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2021

March 31, 2021

Current assets

Escrow account

Prepaid expenses

4 unchanged sentences

Total other assets

LIABILITIES AND STOCKHOLDERS’ DEFICIT

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

5 unchanged sentences

Short-term Promissory Note and Lines of credit

Convertible debentures

Convertible debenture

Notes payable - related parties

Dividends payable

Derivative liability

Warrant liability

Total current liabilities

Bank loans, less current maturities

Convertible debenture, less unamortized debt discount of $ 15,400,000

Notes payable

3 unchanged sentences

Commitments and contingencies (Note 14)

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 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

Series E Redeemable Convertible Preferred stock, $ 0.0001 par value, 10,000 shares authorized, 2,840 and 0 shares issued and outstanding at December 31, 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 December 31, 2021 and March 31, 2021, respectively

Stockholders' equity

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

Series B Convertible Preferred stock, $ 0.0001 par value, 5,000 shares authorized, 67 and 607 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively

Common stock, $ 0.0001 par value, 900,000,000 shares authorized, 642,222,044 and 560,745,180 shares issued and 641,822,043 and 560,745,180 shares outstanding at December 31, 2021 and March 31, 2021, respectively

Additional paid in capital

3 unchanged sentences

( 53,683,268 )

Total stockholders’ deficit attributable to NaturalShrimp Incorporated shareholders

Total stockholders' equity attributable to NaturalShrimp Incorporated shareholders

Non-controlling interest in NAS

Total stockholders’ deficit

Total liabilities mezzanine and stockholders’ deficit

Total stockholders' equity

Total liabilities mezzanine and stockholders' equity

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

2 unchanged sentences

For the Three Months Ended

For the Six months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

For the Nine months Ended

Operating expenses:

2 unchanged sentences

Facility operations

Depreciation and amortization

Total operating expenses

2 unchanged sentences

( 7,537,616 )

( 1,483,175 )

Other income (expense):

2 unchanged sentences

Financing costs

( 1,393,000 )

( 1,502,953 )

Change in fair value of derivative liability

Change in fair value of warrant liability

Forgiveness of PPP loan

Gain on Vero Blue note settlement

Legal Settlement

( 29,400,000 )

Total other income (expense)

( 30,850,991 )

( 31,241,307 )

Loss before income taxes

27 unchanged sentences

Series B Preferred Stock

Additional Paid

Additional Paid In

Non-controlling

Total Stockholders'

Total Stockholders' Equity/

Balance March 31, 2021

25 unchanged sentences

( 1,341,948 )

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

6 unchanged sentences

$ ( 67,408,142 )

Conversion of Series B PS to common stock

Conversion of Series E PS to common stock

Amortization of beneficial conversion feature related to Series E Preferred Shares

Beneficial conversion feature related to the Series E Preferred Shares

Accretion of Series E Preferred Shares

Dividends payable on Preferred Shares

Common shares issued for Technical and Equipment Rights Agreement

( 11,762,376 )

Common stock vested to consultants

Common stock issued to consultants

Common stock issued to employees

Reclassification of warrants to liability

( 2,935,000 )

Common stock to be issued for legal settlement to NSH shareholders

( 33,366,545 )

Balance December 31, 2021

$ ( 101,798,974 )

Balance March 31, 2020

24 unchanged sentences

$ ( 215,012 )

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 Preferred Shares

Conversion of Series B Preferred Shares to common stock

Beneficial conversion feature related to the Series D Preferred Shares

Amortization of beneficial conversion feature related to Series D Preferred Shares

Commitment shares issued with Series D Preferred Shares

Common stock issued to consultant

Common stock to be issued as finder's fees related to asset acquisition

Balance December 31, 2020

$ ( 49,961,843 )

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

2 unchanged sentences

For the 9 Months Ended

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 and amortization expense

Depreciation expense

Amortization expense

Amortization of debt discount

Change in fair value of derivative liability

Change in fair value of warrant liability

Financing costs

2 unchanged sentences

Forgiveness of PPP loan

Gain on Vero Blue note settlement

Legal settlement

Shares issued for services

2 unchanged sentences

Accounts payable

( 5,637,796 )

Other accrued expenses

4 unchanged sentences

( 12,201,031 )

( 1,013,719 )

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for machinery and equipment

( 2,116,124 )

( 1,481,558 )

Cash paid for asset acquisition with VeroBlue Farms, Inc.

( 5,000,000 )

Cash paid for patent acquisition with F & T

7 unchanged sentences

( 1,562,380 )

( 1,738,661 )

Cash (used in) provided by investing activities

10 unchanged sentences

Proceeds from sale of Series B Convertible Preferred stock

Proceeds from convertible debentures

Escrow account in relation to the proceeds from convertible debenture

Payments on convertible debentures

Payments on notes payable

( 4,500,000 )

Redemption of Series D PS

( 3,513,504 )

Proceeds from sale of Series E Preferred Stock

Cash received in relation to Vista warrant settlement

9 unchanged sentences

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

Shares issued as consideration for Patent acquisition

Shares issued as consideration for acquisition of remaining NCI

Notes payable, issued as consideration in VeroBlue Farms, Inc.

asset acquisition

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

asset acquisition

Shares issued as consideration for Rights Agreement

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

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2021

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2021

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

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

For the six months ended September 30, 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 .

For the nine months ended December 31, 2021, the Company had a net loss available for common stockholders of approximately $ 33,367,000 .

At December 31, 2021, the Company had an accumulated deficit of approximately $ 101,799,000 and a working capital deficit of approximately $ 16,332,000 .

These factors raise substantial doubt about the Company’s ability to continue as a going concern, within one year from the issuance date of this filing.

The Company’s ability to continue as a going concern is dependent on its ability to raise the required additional capital or debt financing to meet short and long-term operating requirements.

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

During the nine months ended December 31, 2021, the Company received net cash proceeds of approximately $ 17,277,000 from the sale of common shares (See Note 11), $ 1,348,000 from the sale of Series E Preferred Stock and $ 8,905,000 proceeds from the issuance of a convertible debenture.

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

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Basis of Presentation

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.

The accompanying unaudited financial information as of and for the three months ended December 31, 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 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.

Operating results for the nine months ended December 31, 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.

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Consolidation

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

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

and Natural Aquatic Systems, Inc.

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

2 unchanged sentences

Actual results could differ from those estimates.

Basic and Diluted Earnings/Loss per Common Share

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

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

For the six months ended September 30, 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 .

For the nine months ended December 31, 2021, the Company had Redeemable Convertible Preferred stock with approximately 9,842,000 underlying common shares, approximately $ 18,768,000 in a convertible debenture whose approximately 67,816,000 underlying shares are convertible at the holders’ option at conversion price of 90 % of the average of the two lowest market prices over the last 10 days and 18,506,429 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive.

For the nine months ended December 31, 2020, the Company had 1,920 shares of Series B Preferred Stock 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 shares of Series D Preferred Stock 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.

Fair Value Measurements

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In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred.

The Company did not have any Level 1 or Level 2 assets and liabilities at September 30, 2021 and March 31, 2021.

The Company did not have any Level 1 or Level 2 assets and liabilities at December 31, 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 September 30.

There were no Warrant liabilities in Level 3 fair value measurements during the three months ended December 31, 2021.

The following is a summary of activity of Level 3 derivatives during the nine months ended December 31, 2021 and the year ended March 31, 2021:

Derivative liability balance at beginning of period

Reclass to equity upon conversion or redemption

Additions to derivatives

Change in fair value

Balance at end of period

At December 31, 2021, the fair value of the derivative liabilities of convertible notes was estimated using the following inputs:

the price of the Company’s common stock of $0.3075;

a risk-free interest rate of 0.69% and expected volatility of the Company’s common stock of 125.90%, and the various estimated reset exercise prices weighted by probability.

Warrant liability

Warrant liability balance at beginning of period

Additions to warrant liability

Reclass to equity upon cancellation or exercise

Change in fair value

Balance at end of period

At December 31, 2021, the fair value of the warrant liability was estimated using the following inputs:

the price of the Company’s common stock of $0.337;

a risk-free interest rate of 1.33 % and expected volatility of the Company’s common stock ranging of 209.9 %.

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 September 30, 2021 and March 31, 2021.

There were no cash equivalents at December 31, 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 September 30, 2021 the Company’s cash balance exceeded FDIC coverage.

As of December 31, 2021 the Company’s cash balance exceeded FDIC coverage.

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

6 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.

Commitments and Contingencies

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

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

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

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

14 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 September 30, 2021, there were several new accounting pronouncements issued by the Financial Accounting Standards Board.

As of December 31, 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 September 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 December 31, 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.

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

NOTE 4 – FIXED ASSETS

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

September 30,

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

Machinery and equipment

3 unchanged sentences

Fixed assets, net

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.

The consolidated statements of operations reflect depreciation expense of approximately $218,000 and $ 18,000 and $ 830,000 and $ 38,000 for the three and nine months ended December 31, 2021 and 2020, respectively.

NOTE 5 – PATENT ACQUISITION

3 unchanged sentences

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

Amortization expense was $ 97,500 and $ 244,000 for the three and nine months ended December 31, 2021

NOTE 6 – RIGHTS AGREEMENTS

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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.

Determined with this stipulated price, 12,871,287 shares were issued.

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

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

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

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

8 unchanged sentences

$ 1,000,000 Royalty

For the three months ended December 31, 2021, the amortization of the Rights was $ 270,000 .

The amortization is approximately $ 1,076,000 per year, and approximately $ 5,381,000 over the next five years.

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 September 30, 2021.

The line of credit bears an interest rate of prime plus 25.9 basis points, which totaled 29.15% as of December 31, 2021.

The line of credit is unsecured.

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

The balance of the line of credit was $ 9,580 at both December 31, 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 September 30, 2021.

The line of credit bears an interest rate of prime plus 10 basis points, which totaled 13.25% as of December 31, 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 September 30, 2021 and March 31, 2021.

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

NOTE 8 – BANK LOANS

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

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 .

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 was paid off in full on December 20, 2021.

The balance of the CNB Note was $ 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 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.

1 unchanged sentence

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

Maturities on Bank loan is as follows:

March 31, 2022

March 31, 2023

March 31, 2024

March 31, 2025

NOTE 9 – CONVERTIBLE DEBENTURES

December 15, 2021 Debenture

The Company entered into a securities purchase agreement (the “SPA”) with an investor (the “Investor”) on December 15, 2021.

Pursuant to the SPA, the Investor purchased a secured promissory note (the “Note”) in the aggregate principal amount totaling approximately $ 16,320,000 (the “Principal Amount”).

The Note has an interest rate of 12 % per annum, with a maturity date 24 months from the issuance date of the Note (the “Maturity Date”).

The Note carried an original issue discount totaling $ 1,300,000 and a transaction expense amount of $ 20,000 , both of which are included in the principal balance of the Note.

The Note had $ 2,035,000 in debt issuance costs, including fees paid in cash of $ 1,095,000 and 3,000,000 warrants issued to placement agents with a fair value of $ 940,000 .

The warrant fair value was estimated using the Black Scholes Model, with the following inputs:

the price of the Company’s common stock of $ 0.32 ;

a risk-free interest rate of 1.19 %, the expected volatility of the Company’s common stock of 209.9 %;

the estimated remaining term, a dividend rate of 0 %.

The warrants were classified as a liability, as it is not known if there will be sufficient authorized shares to be issued upon settlement, based on the conversion terms of the convertible debt.

Beginning on the date that is 6 months from the issuance date of the Note, the Investor has the right to redeem up to $ 1,000,000 of the outstanding balance per month.

Payments may be made by the Company, at the Company’s option, (a) in cash, or (b) by paying the redemption amount in the form of shares of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”), per the following formula:

the number of redemption shares equals the portion of the applicable redemption amount divided by the Redemption Repayment Price.

The “Redemption Repayment Price” equals 90% multiplied by the average of the two lowest volume weighted average price per share of the Common Stock during the ten ( 10 ) trading days immediately preceding the date that the Investor delivers notice electing to redeem a portion of the Note.

The redemption amount shall include a premium of 15% of the portion of the outstanding balance being paid (the “Exit Fee”).

As the Exit Fee is to be included in every settlement of the Note, an additional 15% of the principal balance, which totals $ 2,448,000 , was recognized along with the principal balance, and offset by a contra account in a manner similar to a debt discount.

In addition to the Investor’s right of redemption, the Company has the option to prepay the Notes at any time prior to the Maturity Date by paying a premium of 15% plus the principal, interest, and fees owed as of the prepayment date.

Within 180 days of the issuance date of the Note, the Company will obtain an effective registration statement or a supplement to any existing registration statement or prospectus with the SEC registering at least $ 15,000,000 in shares of Common Stock for the Investor’s benefit such that any redemption using shares of Common Stock could be done using registered Common Stock.

Additionally, as soon as reasonably possible following the issuance of the Note, the Company will cause the Common Stock to be listed for trading on either of (a) NYSE, or (b) NASDAQ (in either event, an “Uplist”).

In the event the Company has not effectuated the Uplist by March 1, 2022, the then-current outstanding balance will be increased by 10%.

The Company will make a one-time payment to the Investor equal to 15% of the gross proceeds the Company receives from the offering expected to be effected in connection with the Uplist (whether from the sale of shares of its Common Stock and / or preferred stock) within ten (10) days of receiving such amount.

In the event Borrower does not make this payment, the then-current outstanding balance will be increased by 10%.

In addition, the Company has 30 days in which to secure the Note and grant the Lender a first position security interest in the real property in Texas and Iowa, and if it is not effectuated within the 30 days the outstanding balance will be increased by 15%.

The Company is required to reserve 65,000,000 shares of common stock from its authorized and unissued common stock and to add 100,000,000 shares of common stock to the Share Reserve on or before March 10, 2022.

The Note also contains certain negative covenants and Events of Default, which in addition to common events of default, include a failure to deliver conversion shares, the Company fails to maintain the share reserve, the occurrence of a Fundamental Transaction without the Lenders written consent, the Company effectuates a reverse split of its common stock without 20 trading days written notice to Lender, fails to observe or perform or breaches any covenant, and, the Company or any of its subsidiaries, breaches any covenant or other term or condition contained in any Other Agreements in any material.

Upon an Event of a Default, at its option and sole discretion, the Investor may consider the Note immediately due and payable.

Upon such an Event of Default, the interest rate increases to 18% per annum and the outstanding balance of the Note increases from 5% to 15%, depending upon the specific Event of Default.

The conversion feature meets the definition of a derivative and therefore requires bifurcation and will be accounted for as a derivative liability.

The Company estimated the fair value of the conversion feature derivative embedded in the debenture at issuance at $12,985,000, based on assumptions used in the Binomial Option Pricing model.

The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $

0.305 at issuance date;

a risk-free interest rate of 0.69 % and expected volatility of the Company’s common stock, of 125.90 %, and the strike price of $ 0.3075 .

February 26, 2021 Debenture

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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 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 ,.

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 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.

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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, in the three months ended June 30, 2021.

NOTE 11 – STOCKHOLDERS’ DEFICIT

NOTE 11 – STOCKHOLDERS’ EQUITY

Preferred Stock

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 .

As of December 31, 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 67 and 607 outstanding, respectively, 5,000 shares Series D preferred stock are authorized and 0 and 6,050 outstanding, respectively and 10,000 shares Series E preferred stock are authorized and 2,840 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.

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 (“COD”) 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”).

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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 Series E Preferred Stock 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).

Based upon a subsequent financing, the holder has the option to exchange (in lieu of conversion), all or some of the shares of Series E Preferred Stock then held for any securities or units issued in a subsequent financing on a $1.00 for $1.00 basis.

In the event of a Fundamental Transaction, the holder has the option to request that the Company or the successor entity shall purchase the Preferred Stock from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Black Scholes value.

Upon any triggering event as set forth in the COD, including a change in control or the Company shall fail to have available a sufficient number of authorized and unreserved shares of common stock to issue to such holder upon a conversion, each holder shall have the right, exercisable at the sole option of such holder, to require the Company to redeem all of the Series E Preferred Stock then held by such holder for a redemption price, in cash, equal to the Triggering Redemption Amount ( 150 % of the Stated Value and all accrued but unpaid dividends and all liquidated damages, late fees and other costs), and increase the dividend rate on all of the outstanding Preferred Stock held by such Holder to 18% per annum thereafter.

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.

On August 30, 2021, 1,200 shares of Series E Preferred Stock were converted into 4,114,286 shares of common stock.

On both dates of October 18, 2021 and November 12, 2021, 600 shares of Series E Preferred Stock were converted into 2,057,143 shares of common stock.

On November 22, 2021, the Company entered into a securities purchase agreement (“SPA”) for 1,500 shares of the Company’s Series E Preferred Stock, at a price of $1,000 per share and (ii) a warrant to purchase up to 1,500,000 shares of the Company’s common stock, with an exercise price equal to $0.75, which expires in five years, for a purchase price of $ 1,500,000 .

The warrant has a fair value of $ 561,000 , estimated using the Black Scholes Model, with the following inputs:

the price of the Company’s common stock of $ 0.38 ;

a risk-free interest rate of 1.33%, the expected volatility of the Company’s common stock of 209.9%;

the estimated remaining term, a dividend rate of 0%.

The Company also issued 267,429 warrants as placement agent fees, with a fair value of $ 101,000 , estimated with the same assumptions.

All of the warrants were classified as a liability, as it is not known if there will be sufficient authorized shares to be issued upon settlement, based on the conversion terms of the convertible debt.

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 beneficial conversion feature of approximately $ 170,000 to recognize, which will be amortized over the term of the note using the effective interest method.

During the nine months ended December 31, 2021, the amortization was $ 42,500 .

The Company will accrete the carrying value, reflecting the discount of $ 300,000 between the stated value and purchase price and the fair value of the warrants issued of $ 662,000 , of the Series E Preferred Stock in temporary equity up to the redemption value over the period until its redemption.

For the three months ended December 31, 2021, approximately $ 80,000 was accreted.

Series B Preferred Equity Offering

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

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 Preferred Stock 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 Preferred Stock 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”);

On December 23, 2021, the Company converted 278 Series B into 3,336,000 shares of the Company’s common stock.

April and May Securities Purchase Agreements with GHS

On April 14, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with GHS 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 .

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

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”), GHS 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, GHS 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, GHS 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 .

On November 22, 2021, in relation to the SPA with a different holder for 1,500 shares of the Company’s Series E Preferred Stock, GHS entered into a waiver, whereby they waived their right to participate in a subsequent filing.

Additionally, the exercise price on the existing warrants to purchase 10,000,000 shares of common stock was reduced to $0.35, as well as the issuance of warrants to purchase 3,739,000 shares of common stock warrants, with an exercise price of $ 0.75 .

The modification on the change in the exercise price of the warrants was estimated on November 22, 2021, by comparison of the fair value of the warrants with the original exercise price to the fair value with the new exercise price, using Black Scholes Model, with the following inputs:

the price of the Company’s common stock of $0.38;

a risk-free interest rate of 1.33 %, the expected volatility of the Company’s common stock of 209.9 %;

the estimated remaining term, a dividend rate of 0 %, with a essentially no change in fair value.

The newly issued warrants had a fair value of $ 1,373,000 , which was estimated using the Black Scholes Model, with the same inputs, including the exercise price of $0.75.

The warrants fair value has been recognized as a liability, based on the fact it as it is not known if there will be sufficient authorized shares to be issued upon settlement, based on the conversion terms of the existing convertible debt, with the April 12, 2021 warrants reclassed from equity to warrant liability, and the newly issued warrants liability recognized as financing costs.

GHS Purchase Agreement

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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 .

In addition, in relation to the Offering, on April 15, 2021, the Company redeemed the remaining 2,450 of the Series D Preferred Stock 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.

The Company analyzed the conversion feature of the Series E Convertible Preferred Stock issued in the exchange 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 beneficial conversion feature of approximately $ 3,270,000 , to recognize, which will be amortized over the term of the note using the effective interest method.

During the nine months ended December 31, 2021, including the amortization of the related beneficial conversion feature as of the conversion of the Series E Convertible Preferred Stock, the amortization totaled approximately $ 2,948,367 .

Leak-Out Agreements

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Common Shares Issued to Consultants

During the three months ended December 31, 2021, three consultants were issued a total of approximately 430,000 shares of common stock, with a total fair value of approximately $ 158,000 , based on the market price of $ 0.36 on the grant date.

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 $ 73,126 vested through the September 30, 2021.

62,500 common shares shall vest each quarter through October 1, 2022, at $ 24,275 , with $ 97,500 vested through December 31, 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.

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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.

The shares of common stock will vest in quarterly installments, with 50,000 to vest immediately, and 50,000 each quarter at $ 24,900 , with $ 74,700 vested through December 31, 2021.

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.

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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 September 30, 2021.

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

Common Shares Issued to Employees

During the three months ended December 31, 2021, a number of new employees were issued a total of 175,000 shares of common stock as signing bonuses, with a total fair value of $ 68,300 , based on the market price of $ 0.395 on the grant date.

Options and Warrants

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Accrued Payroll – Related Parties

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.

Included in other accrued expenses on the accompanying consolidated balance sheet approximately $ 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 December 31, 2021 and March 31, 2021.

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

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Bonus Compensation – Related Party

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.

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

On August 10, 2021, the Board of Directors ratified the bonus payment to the CFO and awarded the President and the Chief Technology Officer compensation bonuses of $ 300,000 each.

The bonuses to the President and CTO are to be distributed within the next twelve months from the award date, and are included in accrued expenses, related parties as of December 31, 2021.

During the three months ended December 31, 2021, $ 200,000 was paid each to the President and Chief Technology Officer, with a total of $ 200,000 remaining in accrued expenses, related parties.

NaturalShrimp Holdings, Inc.

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

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.

During the three months ended December 31, 2021, the Company paid off $ 655,750 of the note payable.

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

At December 31, 2021 and March 31, 2021, accrued interest payable was approximately $ 72,000 and $ 66,000 , respectively.

Shareholder Notes

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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 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.

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

As of December 31, 2021 and March 31, 2021, accrued interest payable was approximately $ 139,000 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 September 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 December 31, 2021 and March 31, 2021 was $ 54,647 and is classified as a current liability on the consolidated balance sheets.

NOTE 13 – LEASE

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

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.

On December 31, 2021, a settlement was finalized for the sum of $ 12,000 .

A shareholder of NaturalShrimp Holdings, Inc.

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Shover owns in NSH.

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.

On November 15, 2021, a hearing was held before the US District Court for the Northern District of Texas, Dallas Division at which time Mr.

Shover and the Company presented arguments as to why the Court should approve a joint motion for settlement.

After considering the argument of counsel and taking questions from those NSH Shareholders who were present through video conferencing link, the Court approved the motion of the parties to allow Mr.

Shover and all like and similarly situated NSH Shareholders to exchange each share of NSH held by a NSH Shareholder for a share of the Company.

A final Order was signed on December 6, 2021 and the case was closed by an Order of the Court of the same date.

The Company is to issue approximately 93 million shares in settlement, which has been recognized as stock payable on the company's balance sheet, and its fair value of $ 29,388,000 , based on the market value of the Company’s common shares of $ 0.316 on the date the case was closed, has been recognized in the Company's statement of operations as legal settlement.

NOTE 15 – SUBSEQUENT EVENTS

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

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statement was issued.

Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement.

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