Sundance Strategies, Inc. 10-K

Item 8. Financial Statements and Supplementary Data SUNDANCE STRATEGIES, INC. AND SUBSIDIARY INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS Page(s) Report of Independent Registered Public Accounting Firm (PCAOB ID: 3627 ) F-1 Consolidated Balance Sheets as of March 31, 2024, and 2023 F-2 Consolidated Statements of Operations for the Years Ended March 31, 2024, and 2023 F-3 Consolidated Statements of Stockholders’ Deficit for the Years Ended March 31, 2024, and 2023 F-4 Consolidated Statements of Cash Flows for the Years Ended March 31, 2024, and 2023 F-5 Notes to the Consolidated Financial Statements F-6 31 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Sundance Strategies, Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Sundance Strategies, Inc. and Subsidiary (“the Company”) as of March 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended March 31, 2024 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate audit opinion on the critical audit matters or on the accounts or disclosures to which it relates. Evaluation of a Going Concern Description of the Critical Audit Matter As described further in Note 9 to the financial statements, the Company has relied on debt and equity financing to finance operations, as there are not sufficient cash flows from operations, which raises doubt about its ability to continue as a going concern. Management has implemented plans to alleviate the substantial doubt. Management plans to address the concerns, as needed, by (a) utilizing recent financing obtained through notes payable; (b) utilizing current lines of credit. When considering these factors in conjunction with the Company’s operating plan, management believes it has sufficient ability to fund operations and satisfy the Company’s obligations as they come due for at least one year from the financial statement issuance date. We determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and execution uncertainty regarding the Company’s available capital and the risk of bias in management’s judgments and assumptions in their determination. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among others: ● We performed testing procedures such as analytical procedures to identify conditions and events that indicate there could be substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time. ● We reviewed and evaluated management’s plans for dealing with adverse effect of these conditions and events that raised doubt about the Company’s ability to continue as a going concern. ● We tested the reasonableness of management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the financial statement issuance date. ● We assessed whether the Company’s determination that there is substantial doubt about its ability to continue as a going concern was adequately disclosed. /s/ Sadler, Gibb & Associates, LLC We have served as the Company’s auditor since 2018. Draper, UT July 1, 2024 F- 1 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Balance Sheets March 31, March 31, 2024 2023 ASSETS Current Assets Cash and cash equivalents 329,860 $ 553 Prepaid expenses and other assets 9,075 8,295 Total Current Assets 338,935 8,848 Total Current Assets $ 338,935 $ 8,848 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities Accounts payable $ 447,862 $ 753,050 Accrued expenses 433,201 574,558 Current portion of notes payable 300,000 300,000 Current portion of notes payable, related parties 50,000 876,000 Stock repurchase payable 400,000 400,000 Total Current Liabilities 1,631,063 2,903,608 Long-Term Liabilities Accrued expenses 1,357,739 857,685 Notes payable, related parties, net of current portion, net of debt discount 3,290,058 2,281,463 Total Long-Term Liabilities 4,647,797 3,139,148 Total Liabilities 6,278,860 6,042,756 Stockholders’ Deficit Preferred stock, authorized 10,000,000 shares, par value $ 0.001 ; - 0 - shares issued and outstanding - - Common stock, authorized 500,000,000 shares, par value $ 0.001 ; 42,258,441 shares issued and outstanding as of March 31, 2024; and 41,408,441 shares issued and oustanding as of March 31, 2023 42,259 41,409 Additional paid-in capital 30,914,682 28,986,558 Accumulated deficit ( 36,896,866 ) ( 35,061,875 ) Total Stockholders’ Deficit ( 5,939,925 ) ( 6,033,908 ) Total Liabilities and Stockholders’ Deficit $ 338,935 $ 8,848 The accompanying notes are an integral part of these consolidated financial statements. F- 2 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Statements of Operations 2024 2023 Years Ended March 31, 2024 2023 Income from Investments $ - $ - General and Administrative Expenses 531,406 682,283 Loss from Operations ( 531,406 ) ( 682,283 ) Other Income (Expense) Loss on extinguishment of debt ( 1,047,729 ) ( 1,745,808 ) Gain on settlement of liabilities 290,000 - Interest expense ( 410,856 ) ( 329,890 ) Financing expense ( 135,000 ) ( 54,000 ) Total Other Income (Expense) ( 1,303,585 ) ( 2,129,698 ) Loss Before Income Taxes ( 1,834,991 ) ( 2,811,981 ) Income Tax Provision (Benefit) - - Net Loss $ ( 1,834,991 ) $ ( 2,811,981 ) Loss per share - basic and diluted $ ( 0.04 ) $ ( 0.07 ) Weighted average shares outstanding - basic and diluted 41,693,714 41,408,441 The accompanying notes are an integral part of these consolidated financial statements. F- 3 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Statements of Stockholders’ Deficit For the Year Ended March 31, 2024 and 2023 Additional Total Common Stock Paid-In Accumulated Stockholders’ Shares Amount Capital Deficit Deficit Balance, March 31, 2022 41,408,441 $ 41,409 $ 27,181,618 $ ( 32,249,894 ) $ ( 5,026,867 ) Warrants issued in connection with debt issuances - - 126,130 - 126,130 Warrants issued in connection to extinguishment of debt - - 1,678,810 - 1,678,810 Net loss - - - ( 2,811,981 ) ( 2,811,981 ) Balance, March 31, 2023 41,408,441 $ 41,409 $ 28,986,558 $ ( 35,061,875 ) $ ( 6,033,908 ) Balance 41,408,441 $ 41,409 $ 28,986,558 $ ( 35,061,875 ) $ ( 6,033,908 ) Common stock and warrants issued for cash 850,000 850 849,150 - 850,000 Warrants issued in connection with debt issuances - - 114,697 - 114,697 Warrants issued in connection to extinguishment of debt - - 964,277 - 964,277 Net loss - - - ( 1,834,991 ) ( 1,834,991 ) Balance, March 31, 2024 42,258,441 $ 42,259 $ 30,914,682 $ ( 36,896,866 ) $ ( 5,939,925 ) Balance 42,258,441 $ 42,259 $ 30,914,682 $ ( 36,896,866 ) $ ( 5,939,925 ) The accompanying notes are an integral part of these consolidated financial statements. F- 4 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows 2024 2023 Years Ended March 31, 2024 2023 Operating Activities Net Loss $ ( 1,834,991 ) $ ( 2,811,981 ) Adjustments to reconcile net loss to net cash used in operating activities: Loss on extinguishment of debt 1,047,729 1,745,808 Gain on settlement of liabilities ( 290,000 ) - Amortization of debt discount 67,890 22,487 Changes in operating assets and liabilities Prepaid expenses and other assets ( 780 ) ( 128 ) Accounts payable ( 15,188 ) 412,023 Accrued expenses 358,697 172,078 Net Cash used in Operating Activities ( 666,643 ) ( 459,713 ) Financing Activities Proceeds from issuance of common stock and warrants – net of issuance costs 850,000 - Proceeds from issuance of notes payable, related party 180,950 192,300 Repayment of notes payable, related party ( 35,000 ) - Net Cash provided by Financing Activities 995,950 192,300 Net Change in Cash and Cash Equivalents 329,307 ( 267,413 ) Cash and Cash Equivalents at Beginning of Period 553 267,966 Cash and Cash Equivalents at End of Period $ 329,860 $ 553 Supplemental disclosure of cash flow information: Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - Non Cash Financing & Investing Activities, and Other Disclosures Issued warrants as debt issuance costs $ 114,697 $ 126,130 The accompanying notes are an integral part of these audited consolidated financial statements. F- 5 SUNDANCE STRATEGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024, and 2023 (1) ORGANIZATION AND BASIS OF PRESENTATION Sundance Strategies, Inc. (formerly known as Java Express, Inc.) was organized under the laws of the State of Nevada on December 14, 2001, and engaged in the retail selling of beverage products to the general public until these endeavors ceased in 2006; it had no material business operations from 2006, until its acquisition of ANEW LIFE, INC. (“ANEW LIFE”), a subsidiary of Sundance Strategies, Inc. (“Sundance Strategies”, “the Company”, “we” or “our”). Our historical business model has focused on purchasing or acquiring life insurance policies and residual interests in or financial products tied to life insurance policies, including notes, drafts, acceptances, open accounts receivable and other obligations representing part or all of the sales price of insurance, life settlements and related insurance contracts being traded in the secondary marketplace, often referred to as the “life settlements market.” During the latter part of the fiscal year ended March 31, 2021, the Company began developing an additional business offering, providing professional services to specialty structured finance groups, bond issuers and life settlement aggregators. The Company has now assembled an experienced team from the life settlement marketplace, as well as from other areas such as financial services and public financial markets. As a professional services provider, the Company applies industry best practices to advise on the selection of specific portfolios of life insurance policies that are tailored to meet the needs of its clients. The Company’s clients may include bond issuers, bond investors, or other structured finance product issuers. The Company develops strategies and methodologies which include the acquisition of life insurance portfolios, then uses common structured finance techniques and proprietary analytics to structure bonds for issuances, including principal protected bonds. The Company’s goal is to deliver long-term value and profitability to shareholders by growing the Company’s professional services business and asset base, resulting in the ability to pay dividends to its shareholders. During the latter part of the year ended March 31, 2021, the Company began working closely with bond placement agents and aggregators to establish various aspects of a proprietary, investment grade bond offering. In this arrangement, the Company participates as the sole originator in the role of structuring and advising on the structure of the proprietary bond instrument. Included in the role of structuring financial assets, the Company uses proprietary analytics to establish the makeup of the rated instrument, including but not limited to, life settlement assets (life insurance policies) and managed cash, and implements a process of selective assembly of the underlying assets and cash management that will meet the policy requirements and analytics. The Company provides current and ongoing resources for all analytics, as well as advisement support for the investment and non-investment grade ratings for the managed asset pool and the managed cash accounts. In its advisory role, the Company is reimbursed for all expenses associated with the structuring and preparation of any bond offering, will receive an advisory payment upon the closing of any bond offering, and then will hold residual rights on the balance of assets once the bond is retired. On January 1, 2022, the Company entered into a marketing and consulting agreement with Tradability, LLC (“Consultant”) that requires the Company to make an initial $ 100,000 payment and up to an additional $ 400,000 in the future (which will be financed by the Consultant via a promissory note). The $ 400,000 obligation is contingent upon the Consultant and the Company successfully reaching certain milestones. Further, the agreement requires the Company to issue between 1,000,000 and 10,000,000 stock options (which are exercisable into the Company’s common stock at prices between $ 1.00 to $ 2.50 per share) contingent upon the Consultant and the Company successfully reaching certain milestones. The milestones primarily relate to the Consultant finalizing the tokenization of 500 million non-fungible tokens (“NFTs”) and the successful placement of NFTs with proceeds of between $ 100 million and $ 500 million. The proceeds will be used to purchase Life Settlements for which the Company will be an advisor. As of March 31, 2024 and the issuances of these financial statements, none of the milestones related to the potential issuance of equity have been met. This Company has terminated this agreement with Tradability, and no future payments are expected in association with this terminated agreement. F- 6 (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Estimates , The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents , For purposes of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Basic and Diluted Net Loss Per Common Share, Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods presented using the treasury stock method. Diluted net loss per common share is computed by including common shares that may be issued subject to existing rights with dilutive potential, when applicable. Potential dilutive common stock equivalents are primarily comprised of potential dilutive shares resulting from convertible debt agreements and common stock warrants. Potentially dilutive shares resulting from convertible debt agreements are evaluated using the if-converted method. Potentially dilutive securities are not included in the calculation of diluted net loss per share for the years ended March 31, 2024, and 2023, because to do so would be anti-dilutive. Potentially dilutive securities outstanding as of March 31, 2024, and 2023, include warrants convertible into 14,043,573 and 9,403,644 shares of common stock, respectively. Stock-Based Compensation and Financing Cost s , The Company measures stock-based compensation expense related to employee stock-based awards and stock-based expense associated with certain financing costs on the estimated fair value of the awards as determined on the date of grant and is recognized as expense over the remaining requisite service period for options and vesting period for warrants. The Company utilizes the Black-Scholes pricing model to estimate the fair value of stock options issued as compensation and warrants issued as financing costs. The Black-Scholes model requires the input of highly subjective and complex assumptions, including the estimated fair value of the Company’s common stock on the date of grant, the expected term of the stock option and warrant, and the expected volatility of the Company’s common stock over the period equal to the expected term of the grant. The Company estimates forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Income Taxes , The Company accounts for income taxes under FASB ASC 740, “Income Taxes”. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. The tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained if the position were to be challenged by a taxing authority. The Company has examined the tax positions taken in its tax returns and determined that there are no uncertain tax positions. As a result, the Company has recorded no uncertain tax liabilities in its balance sheet. Interest and penalties for uncertain positions, when applicable, would be recognized as a component of income tax expense. The Company files United States Federal and State income tax returns. The income tax returns of the Company are subject to examination by taxing authorities for three to five years from the date they are filed. The Company has tax returns subject to examination for 2017-2022. Principles of Consolidation , The consolidated financial statements include the accounts of the Company and its subsidiary. The subsidiary is wholly owned. All intercompany accounts and transactions are eliminated in consolidation. Fair Value , As defined by ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also requires the consideration of differing levels of inputs in the determination of fair values. F- 7 Those levels of input are summarized as follows: ● Level 1: Quoted prices in active markets for identical assets and liabilities. ● Level 2: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. ● Level 3: Unobservable inputs that are supported by little or no market activity. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques as well as instruments for which the determination of fair value requires significant management judgment or estimation. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company did not have any transfers of assets and liabilities between Levels 1, 2 and 3 of the fair value measurement hierarchy during the years ended March 31, 2024, and 2023. The Company’s recorded values of cash and cash equivalents, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. The recorded values of the Notes Payable, Related Parties and Convertible Debenture approximates the fair values as the interest rate approximates market interest rates. (3) NEW ACCOUNTING PRONOUNCEMENTS The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements. (4) CASH AND CASH EQUIVALENTS Cash and cash equivalents consist principally of currency on hand and demand deposits at commercial banks. The Company had $ 329,860 and $ 553 in cash and cash equivalents as of March 31, 2024, and 2023, respectively. The Company maintains non-interest-bearing accounts at two financial institutions. The accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $ 250,000 . As of March 31, 2024, and 2023, the Company had balances in excess of FDIC insured amounts at these institutions of $ 79,779 and $ 0 , respectively. (5) NOTES PAYABLE On April 6, 2021, the Company borrowed $ 300,000 under an unsecured promissory note with Satco International, Ltd. This promissory note bears interest at a rate of 8 % annually and was due January 6, 2022. In conjunction with this note, the Company issued warrants for 1,000,000 shares of common stock, exercisable at $ 1.00 per share and expiring in 3 years from the date of the promissory note. On June 9, 2023 , the unsecured promissory note with Satco International, Ltd. was amended to extend the due date from April 6, 2023 to August 31, 2024 , or at the immediate time when alternative financing or other proceeds are received. This extension has no bearing on the warrants that were issued in conjunction with the original promissory note. This note is separate from the 8 % convertible debenture agreement that the Company has in place with Satco International, Ltd. (see note 8). As of March 31, 2024 accrued interest on the note totaled $ 71,671 . (6) NOTES PAYABLE, RELATED PARTY As of March 31, 2024, and 2023, the Company had borrowed $ 3,340,058 and $ 3,194,108 respectively, excluding accrued interest, from related parties. Unamortized debt discount with the Notes Payable, Related party was $ 0 and $ 36,645 as of March 31, 2024, and March 31, 2023, respectively. Short-term accrued interest associated with the Notes Payable, Related Party of $ 11,925 and $ 364,908 is recorded on the balance sheet as an Accrued Expense obligation at March 31, 2024, and March 31, 2023, respectively. Long-term accrued interest associated with the Notes Payable, Related Party of $ 1,357,738 and $ 857,684 is recorded on the balance sheet as an Accrued Expense obligation at March 31, 2024, and March 31, 2023, respectively. F- 8 Related Party Promissory Notes As of both March 31, 2024, and 2023 , the Company owed $ 826,000 under the unsecured promissory notes from Mr. Dickman. The promissory notes bear interest at a rate of 8 % annually. On November 10, 2022, the notes were amended to extend the due date from October 31, 2022, to July 31, 2023, or at the immediate time when alternative financing or other proceeds are received, and on June 5, 2023 and again on January 26, 2024, the notes were amended to extend the due date from July 31, 2023, to November 30, 2025, or at the immediate time when alternative financing or other proceeds are received. As per the provision outlined in Note 8, and in conjunction with the extension of the due date of the promissory notes on November 10, 2022, the Company also agreed to provide Mr. Dickman with warrants for 399,749 shares of common stock. In association with the extensions during the fiscal year ended March 31, 2024, the company agreed to provide Mr. Dickman with warrants for 1,106,000 shares of common stock (see Note 8) vested immediately upon issuance, having exercise prices of $ 1.05 and $ 0.41 per share, and a 5 -year exercise window from the dates of issuance. During the years ended March 31, 2024, and March 31, 2023 , the Company neither borrowed any additional funds under this agreement nor made any principal repayments. As of March 31, 2024 , accrued interest on the notes totaled $ 404,087 . In the event the Company completes a successful equity raise all principal and interest on the notes are due in full at that time. The total number of warrants issued to the related party lender was 3,196,332 as of March 31, 2024 (see Note 8 for further details on these warrants). On July 29, 2021, the Company entered into an unsecured promissory note agreement with Radiant Life, LLC. This agreement was in conjunction with the Company borrowing $ 50,000 of Notes Payable, Related Party, and is not part of the existing note payable and lines of credit agreement the Company has with Radiant Life, LLC. The promissory note bears interest at a rate of 8 % annually and is due on July 29, 2024 . In conjunction with this specific loan event, the agreement awards Radiant Life, LLC with 50,000 common stock warrants, which have an exercise price of $ 1.05 , and expire in 5 years (see Note 8). As of March 31, 2024 , accrued interest on the note totaled $ 11,925 . Related Party Note Payable and Line of Credit Agreements As of March 31, 2024, and 2023, the Company owed $ 1,304,550 and $ 1,198,600 , respectively, exclusive of accrued interest, under the note payable and line of credit agreement with Kraig T. Higginson, Chairman of the Board of Directors and a stockholder. On February 2, 2023, and again on January 26, 2024, the related party note payable and line of credit agreement was amended to extend the due date from November 30, 2023 to November 30, 2024 and then to November 30, 2025, or at the immediate time when alternative financing or other proceeds are received . As of March 31, 2024 , the agreement allowed for borrowings of up to $ 4,600,000 . During the year ended March 31, 2023, the Company borrowed $ 132,300 in principal and made no repayments of principal on this agreement. During the year ended March 31, 2024, the Company borrowed $ 140,950 in principal and made repayments of $ 35,000 in principal on this agreement. The note payable and line of credit agreement incurs interest at 7.5 % per annum. As of March 31, 2024 , accrued interest on this note totaled $ 403,361 . As per the provision outlined in Note 8, and in conjunction with the due date extension and the $ 140,950 and $ 132,300 borrowed during the years ended March 31, 2024 and 2023, respectively, the Company also agreed to provide the Chairman of the Board of Directors and a stockholder, with warrants for 1,054,175 shares of common stock and 983,900 shares of common stock, respectively, vested immediately upon issuance, having exercise prices of $ 1.05 and $ 0.41 per share, and a 5 -year exercise window from the dates of issuance. The total number of warrants issued to the related party lender was 4,418,225 as of March 31, 2024 (see Note 8 for further details on these warrants). As of March 31, 2024, and 2023, the Company owed $ 1,159,508 and $ 1,119,508 in principal, respectively, under the note payable and lines of credit agreement with Radiant Life, LLC. The agreement allows for borrowings of up to $ 2,130,000 . On February 2, 2023, and again on February 1, 2024, the related party note payable and line of credit agreement was amended to extend the due date from November 30, 2023 to November 30, 2024, and later to November 30, 2025, or at the immediate time when alternative financing or other proceeds are received. The note payable and line of credit agreement incurs interest at 7.5 % per annum. During the years ended March 31, 2024, and 2023 the Company borrowed $ 40,000 and $ 60,000 , respectively of principal under this agreement and made no repayments. As of March 31, 2024, accrued interest on this agreement totaled $ 550,289 . As per the provision outlined in Note 8, and in conjunction with the due date extensions and the $ 40,000 borrowed under the note payable and lines of credit agreement during the year, the Company also agreed to provide Radiant Life, LLC with warrants for 779,754 shares of common stock, vested immediately upon issuance, a 5 -year exercise window from the dates of issuance, having exercise prices between $ 0.41 and $ 1.05 per share. The total number of warrants issued to the related party lender was 3,229,016 as of March 31, 2024 (see Note 8 for further details). F- 9 (7) CONVERTIBLE DEBENTURE AGREEMENT The Company has entered into an 8 % convertible debenture agreement with Satco International, Ltd., that allows for borrowings of up to $ 3,000,000 . The holder originally had the option to convert the outstanding principal and accrued interest to unregistered, restricted common stock of the Company on June 2, 2016. Per the agreement, the number of shares issuable at conversion shall be determined by the quotient obtained by dividing the outstanding principal and accrued and unpaid interest by 90% of the 90-day average closing price of the Company’s common stock from the date the notice of conversion is received; and the price at which the Debenture may be converted will be no lower than $ 1.00 per share. The original maturity date was June 2, 2016 , but was later extended, through a series of extensions, to November 30, 2023 . On February 9, 2023 the convertible debenture agreement with Satco International, Ltd. was amended to extend the due date from November 30, 2023, to November 30, 2024, or at the immediate time when alternative financing or other proceeds are received. This extension has no bearing on the warrants that were issued in conjunction with the original promissory note. As of March 31, 2024 and March 31, 2023, the Company owed $ 0 under the agreement, excluding accrued interest. The associated interest of $ 124,225 is recorded on the balance sheet as an Accrued Expense obligation at March 31, 2024, and 2023. (8) STOCKHOLDERS’ EQUITY Common Stock On August 15, 2023, the Company issued a private placement memorandum offering to raise up to $ 1,500,000 through the issuance of restricted shares of the Company’s common stock (par value $ 0.001 ) to qualified investors. From September 20, 2023, to October 4, 2023, the Company received subscription agreements from investors, for 850,000 common shares at a purchase price of $ 1 per share, including 1,700,000 warrants exercisable at $ 0.35 per share, vested immediately upon issuance, with a five year expiration. Proceeds to the Company totaled $ 850,000 . Effective December 6, 2018, three existing stockholders have contributed to the Company a portion of their common shares held at a repurchase price to the Company of $ 0.05 per share. The Company has cancelled the acquired shares, which decreased the outstanding common shares on the books of the Company. The total number of common shares canceled/retired was 8,000,000 . The total liability related to the repurchase of these shares is $ 400,000 , with repayment contingent on a major financing event. Warrants to Purchase Common Stock The following table summarizes the changes in warrants outstanding of the Company during years ended March 31, 2024, and 2023: SCHEDULE OF WARRANT OUTSTANDING Number of Warrants Weighted Average Exercise Price ($) Outstanding at March 31, 2022 9,460,611 0.54 Granted 2,153,403 1.05 Outstanding at March 31, 2023 11,614,014 0.87 Granted 4,639,929 0.51 Outstanding at March 31, 2024 14,043,573 0.75 Exercisable at March 31, 2024 16,253,943 0.75 F- 10 The Company’s related party lenders consist of: the Chairman of the Board of Directors and a stockholder, Radiant Life, LLC and Mr. Dickman, a board member and stockholder. These holders of the related party unsecured promissory notes, hold agreements that provide each related party with common stock warrants upon the lender’s extension of a maturity due date or upon the loaning of additional monies. The number of warrants issued for an extension is based on the following formula: 10,000 warrants per month the due date is extended plus 1 warrant for every $2 of the principal balance outstanding (not including interest) at the time of the extension (rounded to the nearest whole warrant). Upon the loaning of additional monies, the lender will also require 2 warrants for each dollar loaned. All warrants issued under these terms vested immediately upon issuance, have an exercise price approximately equivalent to the fair value of the Company’s common stock on the date of grant, and expire 5 years from the date of issuance. During the year ended March 31, 2024 the Company issued 281,900 warrants to the Chairman of the Board of Directors and 80,000 warrants to Radiant Life, LLC in conjunction with monies borrowed during the period (see Note 8 to the financial statements included in this report). The exercise price of these warrants was $ 1.05 . The value of the warrants on the date of grant, as calculated by the Black-Scholes-Merton valuation model was $ 316,756 . The inputs used in this calculation included a fair value of the underlying common stock of $ 1.049 per share, a risk-free between 3.36 % and 4.29 %, volatility between 86.52 % and 89.11 % and a dividend rate of 0 %. During the year ended March 31, 2024, the Company issued 1,106,000 warrants to Mr. Dickman, 772,275 warrants to the Chairman of the Board of Directors, and 699,754 warrants to Radiant Life, LLC in conjunction with an extension of the maturity dates during the period (see Note 8 to the financial statements included in this report) per the terms outlined above. The exercise price of these warrants was between $ 0.41 and $ 1.05 . The value of the warrants on the date of grant, as calculated by the Black-Scholes-Merton valuation model was $ 964,277 . The inputs used in this calculation included a fair value of the underlying common stock between $ 0.409 and $ 1.049 per share, a risk-free between 3.80 % and 4.01 %, volatility between 84.00 % and 89.07 % and a dividend rate of 0 %. During the year ended March 31, 2023 the Company issued 264,600 warrants to the Chairman of the Board of Directors and 120,000 warrants to Radiant Life, LLC in conjunction with monies borrowed during the period (see Note 8) per the terms outlined above. The exercise price of these warrants was $ 1.05 . The value of the warrants on the date of grant, as calculated by the Black-Scholes-Merton valuation model was $ 365,502 . The inputs used in this calculation included a fair value of the underlying common stock of $ 1.049 per share, a risk-free between 3.62 % and 4.31 %, volatility between 142.23 % and 148.56 % and a dividend rate of 0 %. The following table summarizes the warrants issued and outstanding as of March 31, 2024: SCHEDULE OF WARRANTS ISSUED AND OUTSTANDING Exercise Price ($) Warrants Outstanding Warrants Exercisable Weighted Average Remaining Contractual Life (Years) Proceeds to Company if Exercised 0.05 3,708,754 3,708,754 1.20 $ 185,439 0.35 1,700,000 1,700,000 4.50 595,000 0.41 2,035,029 2,035,029 4.83 834,362 1.00 1,000,000 1,000,000 0.02 1,000,000 1.05 5,049,790 5,049,790 3.48 5,302,280 2.00 50,000 50,000 2.34 100,000 5.00 500,000 500,000 2.82 2,500,000 14,043,573 14,043,573 $ 10,517,081 The shares of common stock issuable upon exercise of the warrants are not registered with the Securities and Exchange Commission and the holders of the warrants do not have registration rights with respect to the warrants or the underlying shares of common stock. F- 11 (9) LIQUIDITY REQUIREMENTS AND GOING CONCERN Since the Company’s inception on January 31, 2013, its operations have been primarily financed through sales of equity, debt financing from related parties and the issuance of notes payable and convertible debentures. As of March 31, 2024, the Company had $ 329,890 of cash assets, compared to $ 533 as of March 31, 2023. As of March 31, 2024, the Company had access to draw an additional $ 4,265,942 on the notes payable, related party (see Note 8) and $ 3,000,000 on the Convertible Debenture Agreement (see Note 8). For the year ended March 31, 2024, the Company’s average monthly operating expenses were approximately $ 44,000 , which includes salaries of our employees, consulting agreements and contract labor, general and administrative expenses and legal and accounting expenses. In addition to the monthly operating expenses, the Company continues to pursue other debt and equity financing opportunities, and as a result, financing expenses of $ 135,000 and $ 54,000 were incurred during the years ended March 31, 2024, and 2023, respectively. As management continues to explore additional financing alternatives, beginning April 1, 2024 the Company is expected to spend up to an additional $ 300,000 on these efforts. Outstanding Accounts Payable as of March 31, 2024 totaled $ 447,862 . Management has concluded that its existing capital resources and availability under its existing convertible debentures and debt agreements with related parties will be sufficient to fund its operating working capital requirements for the 12 months from the issuance of the financial statements. Related parties have given assurance that their continued support, by way of either extensions of due dates, or increases in lines-of-credit, can be relied on. As mentioned above, the Company also continues to evaluate other debt and equity financing opportunities. The accompanying financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. (10) INCOME TAXES The Company provides for income taxes under ASC 740, Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The Company recorded $ 0 provision for income taxes for the years ended March 31, 2024, and 2023. The income tax provision differs from the amount of income tax determined by applying the U.S. federal tax rate of 21 % to pretax income from continuing operations for the years ended March 31, 2024, and 2023, due to the following: SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) 2024 2023 Income tax benefit at U. S. federal statutory rates: $ ( 385,348 ) $ ( 590,516 ) State tax, net of federal benefit $ ( 67,408 ) ( 109,962 ) Permanent and other differences 258,483 463,012 Change in valuation allowance 194,273 223,229 Other 14,237 Income Tax $ - $ - The tax effects of significant items comprising the Company’s net deferred taxes as of March 31, 2024, and 2023 were as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2024 2023 Deferred Tax assets: Net operating loss carry forwards $ 7,620,722 $ 7,387,464 Stock and warrant compensation 479,708 479,708 Valuation allowance ( 8,100,430 ) ( 7,867,172 ) Net deferred tax asset $ - $ - The Company assesses the need for a valuation allowance against its deferred income tax assets at March 31, 2024. Factors considered in this assessment include recent and expected future earnings and the Company’s liquidity and equity positions. The Company has placed a 100 % valuation allowance on the deferred tax assets. The deferred tax assets primarily relate to net operating loss carryforwards. As of March 31, 2024, the Company has U.S. federal net operating loss carryforwards of $ 30,822,643 . These carry forwards are available to offset future taxable income, if any, and begin to expire in 2025 . The utilization of the net operating loss carry forwards is dependent upon the tax laws in effect at the time the net operating loss carry forwards can be utilized and may be significantly limited based on ownership changes within the meaning of section 382 of the Internal Revenue Code. Under FASB ASC 740-10-05-6, tax benefits are recognized only for the tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the company’s tax return that do not meet these recognition and measurement standards. The Company had no liabilities for unrecognized tax benefits and the Company has recorded no additional interest or penalties. (11) SUBSEQUENT EVENTS On April 19, 2024, subsequent to year end, the company paid $ 125,000 to a vendor in an effort to help secure bondin g. Between June 24, 2024, and June 25, 2024, the Company issued an additional 180,000 total shares of stock and 360,000 total warrants to five investors for cash. F- 12 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.