What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-02-17 compared with 2021-11-15 · 94 added, 55 removed, 287 unchanged (34% of the section changed)

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Business Overview

We are a biotechnology company and has developed proprietary platform technologies that allow us to grow Pacific White shrimp (Litopenaeus vannamei, formerly Penaeus vannamei) in an ecologically controlled, high-density, low-cost environment, and in fully contained and independent production facilities.

We are a biotechnology company and have developed proprietary platform technologies that allow us to grow Pacific White shrimp (Litopenaeus vannamei, formerly Penaeus vannamei) in an ecologically controlled, high-density, low-cost environment, and in fully contained and independent production facilities.

Our system uses technology which allows us to produce a naturally grown shrimp “crop” weekly and accomplishes this without the use of antibiotics or toxic chemicals.

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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.

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®.

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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 Company has three wholly-owned subsidiaries including NSC and NS Global and NAS.

The Company has three wholly-owned subsidiaries:

NSC, NS Global, NAS.

Evolution of Technology

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These funds were utilized to rebuild a 40,000 square foot production facility at the La Coste facility and to repurchase the equipment needed to replace what was lost in the fire.

The Company continues to work towards full capacity at this plant in LaCoste and expects that sales will be generated from the facility in the fourth calendar quarter of 2021.

While we have experienced supply chain issues due to COVID-19, we do expect ramping up full production of 3,000 pounds per week by the end of the first calendar quarter of 2022.

Also, the Company is expecting to break ground on an 80,000 square foot expansion in LaCoste within the next sixty days.

As of the date of this report, this facility is production-ready and, while we have experienced supply chain issues due to COVID-19, we expect the combined output from the La Coste, Texas, and Webster City, Iowa should result in a total of 25,000 pounds of shrimp production for the calendar quarter that will end on March 31, 2022.

Also, the Company is expecting to break ground on an 80,000 square foot expansion in La Coste prior to March 31, 2022.

Results of Operations

Comparison of the Three Months Ended September 30, 2021 to the Three Months Ended September 30, 2020

We have not earned any significant revenues since our inception and, although we expect revenues to begin in three to six months, we can provide no assurances as to how significant they will be at that time.

Our expenses for the three months ended September 30, 2021 are summarized as follows, in comparison to our expenses for the three months ended September 30, 2020:

Three Months Ended September 30,

Comparison of the Three Months Ended December 31, 2021 to the Three Months Ended December 31, 2020

We have not earned any significant revenues since our inception and, although we had revenue of $16,640 in the three months ended December 31, 2021, we can provide no assurances as to how significant our revenue will be in the next one to two fiscal quarters.

Our expenses for the three months ended December 31, 2021 are summarized as follows, in comparison to our expenses for the three months ended December 31, 2020:

Three Months Ended

Salaries and related expenses

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Research and development

Depreciation and amortization

Operating expenses for the three months ended September 30, 2021 were $2,783,972, which is a 399% increase over operating expenses of $557,749 for the same period in 2020.

Operating expenses for the three months ended December 31, 2021 were $2,532,194, which is a 346% increase over operating expenses of $567,297 for the same period in 2020.

The overall change in expenses is mainly the result of a ramp up of costs based on the increase in the activity in planning operations, as well as the acquisition and addition of the Iowa facility.

Salaries increased by approximately $919,000, due to the new employees, as well as the $300,000 bonus paid to the CFO, and the $600,000 bonus to the President and Chief Technology Officer in accrued expenses, related parties.

Salaries increased by approximately $235,000, due to the new employees.

Professional fees increased by approximately $316,000, due to attorneys work with the Company on acquisitions and equity offerings and SEC filings, as well as consultant and accounting fees.

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Additionally, it is the result of the fact that the operating costs in 2020 were decreased due to the slowdown of the progressing of testing and planning to begin commercial operations due to the fire at the Texas plant.

The depreciation in the three months ended September 30, 2021, increased due to the new fixed assets acquired from Vero Blue, and the amortization in the current period is the result of the patent acquisition on May 19, 2021 and the License Agreements entered into on August 25, 2021.

Comparison of the Six Months Ended September 30, 2021 to the Six Months Ended September 30, 2020

Our expenses for the six months ended September 30, 2021 are summarized as follows, in comparison to our expenses for the six months ended September 30, 2020:

Six Months Ended September 30,

The depreciation in the three months ended December 31, 2021, increased due to the new fixed assets acquired from Vero Blue, and the amortization in the current period is the result of the patent acquisition on May 19, 2021 and the License Agreements entered into on August 25, 2021.

Comparison of the Nine months Ended December 31, 2021 to the Nine months Ended December 31, 2020

We have not earned any significant revenues since our inception and, although we had revenue of $16,640 in the nine months ended December 31, 2021, we can provide no assurances as to how significant our revenue will be in the next one to two fiscal quarters.

Our expenses for the nine months ended December 31, 2021 are summarized as follows, in comparison to our expenses for the nine months ended December 31, 2020:

Nine months Ended

Salaries and related expenses

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Research and development

Depreciation and amortization

Operating expenses for the six months ended September 30, 2021 were $5,022,062, which is a 448% increase over operating expenses of $915,878 for the same period in 2020.

Operating expenses for the nine months ended December 31, 2021 were $7,554,256, which is a 409% increase over operating expenses of $1,483,175 for the same period in 2020.

The overall change in expenses is mainly the result of a ramp up of costs based on the increase in the activity in planning operations, as well as the acquisition and addition of the Iowa facility, especially in general and administrative expenses and facility operations.

Salaries increased by approximately $1,441,000, due to the new employees, as well as the $300,000 bonus paid to the CFO, and the $600,000 bonus to the President and Chief Technology Officer in accrued expenses, related parties.

Salaries increased by approximately $1,676,000, due to the new employees, as well as the $300,000 bonus paid to the CFO, and the $600,000 bonus to the President and Chief Technology Officer, of which $200,000 remains in accrued expenses, related parties, as of December 31, 2021.

Professional fees increased by approximately $1,004,000, due to attorneys work with the Company on acquisitions and equity offerings and SEC filings, as well as consultant and accounting fees.

The increase in other general and administrative expenses of approximately $775,000 includes maintenance work being done in the Texas and Iowa facilities and property taxes paid in Iowa.

The increase in other general and administrative expenses of approximately $1,332,000 includes maintenance work being done in the Texas and Iowa facilities, including travel costs and property taxes paid in Iowa.

The depreciation in the six months ended September 30, 2021, increased due to the new fixed assets acquired from Vero Blue, and the amortization in the current period is the result of the patent acquisition on May 19, 2021 and the License Agreements entered into on August 25, 2021.

The depreciation in the nine months ended December 31, 2021, increased due to the new fixed assets acquired from Vero Blue, and the amortization in the current period is the result of the patent acquisition on May 19, 2021 and the License Agreements entered into on August 25, 2021.

Liquidity, Financial Condition and Capital Resources

As of September 30, 2021, we had cash on hand of approximately $801,000 and working capital of approximately $5,121,000.

As of December 31, 2021, we had cash on hand of approximately $2,665,000 and working capital deficiency of approximately $16,332,000.

as compared to cash on hand of approximately $156,000 and a working capital deficiency of approximately $3,614,000 as of March 31, 2021.

The decrease in working capital for the six months ended September 30, 2021, is mainly due to the decrease in cash on-hand and increase in accounts payable and accrued expenses, offset by a decrease in notes payable – related parties.

The decrease in working capital for the nine months ended December 31, 2021, is mainly due to the decrease in cash on-hand and increase in accounts payable and accrued expenses, offset by a decrease in notes payable – related parties.

Working Capital/(Deficiency)

Our working capital as of September 30, 2021, in comparison to our working capital deficiency as of March 31, 2021, can be summarized as follows:

September 30,

Our working capital as of December 31, 2021, in comparison to our working capital deficiency as of March 31, 2021, can be summarized as follows:

Current assets

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$ (3,614,377 )

Current assets increased mainly because of the addition to cash as a result of the equity offerings during April through June 2021, of approximately $17,274,000, a portion of which was then used in the patent and NAS acquisitions, the License agreements, as well as redemption of Series D Preferred shares, offset by a decrease in prepaid expenses, due to the amortization.

The increase in current liabilities is primarily due to the $3 million in cash payments owed on the License agreements recorded in accounts payable and the $600,000 in accrued bonuses for the President and Chief Technology Officer (“CTO”), off set by the payoff of bank loans and lines of credit, convertible debt, notes payable to related parties, and the forgiveness of the PPP loan.

Our cash flows for the six months ended September 30, 2021, in comparison to our cash flows for the six months ended September 30, 2020, can be summarized as follows:

Six Months Ended September 30,

Current assets increased mainly because of the addition to cash as a result of the equity offerings during April through December 31, 2021, of approximately $17,277,000, a portion of which was then used in the patent and NAS acquisitions, the License agreements, as well as redemption of Series D Preferred shares, plus the $5,000,000 in escrow related to the new long term convertible note.

This was offset by a decrease in prepaid expenses, due to the amortization.

The increase in current liabilities is primarily due to the $12,985,000 new deriviative liability related to the long term convertible note, which also resulted in the $6,047,000 warrant liability;

the $3 million in cash payments owed on the License agreements recorded in accounts payable and the $200,000 remaining in accrued bonuses for the President and Chief Technology Officer (“CTO”), off set by the payoff of bank loans and lines of credit, convertible debt, notes payable to related parties, and the forgiveness of the PPP loan.

Our cash flows for the nine months ended December 31, 2021, in comparison to our cash flows for the nine months ended December 31, 2020, can be summarized as follows:

Nine months Ended

Net cash used in operating activities

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Net change in cash

The increase in net cash used in operating activities in the six months ended September 30, 2021, compared to the same period in 2020 is largely attributable to the increase in the net loss, plus the increase in accounts payable, offset by the increase in the depreciation and amortization and the accrued bonuses for the President and CTO.

The net cash used in investing activities in the six months ended September 30, 2021 includes $2,000,000 in the patent acquisition and $1,000,000 in the acquisition of shares of the non-controlling interest, the $2,350,000 for the License agreement, as well as approximately $646,000 for machinery and equipment and $1,298,000 for construction in process.

The prior year’s cash spent on investing activities consisted mainly of the cash paid for machinery and equipment and construction in process, offset by $917,210 of cash proceeds received from the insurance settlement for the fire to the pilot production plant.

The increase in net cash used in operating activities in the nine months ended December 31, 2021, compared to the same period in 2020 is largely attributable to the increase in the net loss, the gain on the Vero Blue note settlement, plus the increase in accounts payable, offset by the legal settlement with the NSH shareholders for the future issuance of common shares with a fair value of $29.388,000, the increase in the depreciation and amortization and the accrued bonuses for the President and CTO.

The net cash used in investing activities in the nine months ended December 31, 2021 includes $2,000,000 in the patent acquisition and $1,000,000 in the acquisition of shares of the non-controlling interest, the $2,350,000 for the License agreement, as well as approximately $2,116,000 for machinery and equipment and $434,000 for construction in process.

The prior year’s cash spent on investing activities consisted mainly of the cash paid for the asset acquisiton of VeroBlue Farms, as well as machinery and equipment and construction in process, offset by $917,210 of cash proceeds received from the insurance settlement for the fire to the pilot production plant.

The net cash provided by financing activities increased by approximately $9,471,000 between periods.

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In the same period in the prior year, the financing activities primarily arose from the proceeds received from the sale of Series B convertible Preferred Shares and the $103,200 received from the PPP loan.

Our cash position was approximately $801,000 as of September 30, 2021.

Management believes that our cash on hand and working capital are not sufficient to meet our current anticipated cash requirements for additional anticipated capital expenditures, operating expenses and scale-up of operations for the next twelve months.

Our cash position was approximately $2,665,000 as of December 31, 2021.

Management believes that our cash on hand and working capital deficit are not sufficient to meet our current anticipated cash requirements for additional anticipated capital expenditures, operating expenses and scale-up of operations for the next twelve months.

Recent Financing Arrangements and Developments During the Period

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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.

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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.

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

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

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

The balance of the CNB Note is $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.

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

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.

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Convertible Debentures

Tthe 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”).

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%.

The Note also contains certain negative covenants and Events of Default.

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.

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

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

On December 23, 2021, the Company converted 278 Series B into 3,336,000 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 April 14, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with GHS Investments LLC, a Nevada limited liability company (“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 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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Pursuant to the June GHS Purchase Agreement, on June 28, 2021, GHS purchased 7,500,000 shares of common stock and 1,100,000 shares of common stock underlying the prefunded warrants, for an aggregate purchase price of $3,011,000, less offering expenses of $90,330, for net proceeds of $2,909,670.

Share Exchange Agreement and Redemption

Share Exchange Agreement and Redemption and Series E Preferred Stock

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

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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.

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.

During the three months ended December 31.

2021, an additional 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 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.

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%.

Common Shares Issued to Consultants

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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.

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 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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The audited consolidated financial statements contained in this quarterly report on Form 10-Q have been prepared, assuming that the Company will continue as a going concern.

The Company has accumulated losses through the period to June 30, 2021 of approximately $67,408,000 as well as negative cash flows from operating activities of approximately $5,119,000.

The Company has accumulated losses through the period to December 31, 2021 of approximately $101,799,000 as well as negative cash flows from operating activities of approximately $12,201,000.

Presently, the Company does not have sufficient cash resources to meet its plans in the twelve months following the date of issuance of this filing.

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Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The Company did not have any Level 1, Level 2 or Level 3 assets and liabilities at September 30, 2021 and March 31, 2021.

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

Basic and Diluted Earnings/Loss per Common Share

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

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

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

For the nine months ended December 31, 2021, the Company had with 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 a 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 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.

Impairment of Long-lived Assets and Long-lived Assets

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Recently Adopted Accounting Pronouncements

Our recently adopted accounting pronouncements are more fully described in Note 2 to our financial statements included herein for the quarter ended September 30, 2021.

Our recently adopted accounting pronouncements are more fully described in Note 2 to our financial statements included herein for the quarter ended December 31, 2021.

Recently Issued Accounting Standards

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The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.

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

During the period ending 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.

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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 2. Management’s Discussion and Analysis