The derivative liability does not exist as of December 31, 2022, as the convertible note removed the conversion feature upon its restructuring and there is no longer an embedded derivative to be bifurcated (Note 6).

~~At March 31, 2022, 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 $0.225; the conversion price of $0.19; a risk-free interest rate of~~ ~~2.28% and expected volatility of the Company’s common stock of~~ ~~109.47~~%.

At ~~December 31, 2022,~~June 30, 2023, the fair value of the warrant liability was estimated using the following inputs: the price of the Company’s common stock of $~~0.079~~0.05; a risk-free interest rate ranging from ~~4.11~~3.89% to ~~4.22~~4.49%; and expected volatility of the Company’s common stock ranging from ~~125.3~~108.4% to ~~145.6~~121.5% and the remaining terms of each warrant issuance.

At March 31, ~~2022,~~2023, the fair value of the warrant liability was estimated using a Black Sholes model with the following weighted-average inputs: the price of the Company’s common stock of $~~0.225~~0.05; a risk-free interest rate of ~~2.42~~3.81% and expected volatility of the Company’s common stock ranging from ~~185.9~~113.6% to ~~205.9~~121.0% and the remaining terms of each warrant issuance.

SCHEDULE OF ~~DERIVATIVE AND WARRANT AND PROMISSORY~~RESTRUCTURED NOTE AT FAIR VALUE

~~Promissory Note~~

Restructured August and Senior Notes Payable

December 31, 2022
(unaudited) March 31, 2022
Promissory Notes fair value at beginning of period $ - $ -
Fair value of Promissory Note upon Restructuring Agreement 20,847,867 -
Change in fair value (1,594,515 ) -
Promissory Note fair value at end of period $ 22,442,382 $ -

	June 30, 2023			March 31, 2023
Restructured notes payable fair value at beginning of period	$	23,690,000		$	-
Reclass of accrued interest		907,634			-
Fair value of restructured notes payable upon Restructuring Agreement		-			20,847,867
Change in fair value		(137,634	)		2,842,133
Restructured notes payable fair value at end of period	$	24,460,000		$	23,690,000

On November 4, 2022, when the Company entered into a Restructuring Agreement for an Amended and Restated Secured Promissory Note for two of their outstanding debentures (Note 6 and Note 7), which were accounted for as debt extinguishment, the Company elected to recognize the new debt under ASC 825 fair value option. The fair value for both periods is based on the maturity dates, the interest of 12%, the 15% exit fee, the 2% appreciation fee for an estimated period, and a 40% present value factor. In accordance with ASC 825, the Company chose to present the component for the accrued interest in the same line item on the Balance Sheet with the fair value option, .and as of April 1, 2023, reclassed the accrued interest to not be presented as a separate line item.

Financial Instruments

The Company’s financial instruments include cash and cash equivalents, receivables, payables, and debt and are accounted for under the provisions of ASC Topic 825, “Financial Instruments”. The carrying amount of these financial instruments, with the exception of discounted debt, as reflected in the unaudited condensed consolidated balance sheets approximates fair value.

Cash and Cash Equivalents

For the purpose of the unaudited condensed 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 ~~December 31, 2022~~June 30, 2023 and March 31, ~~2022.~~2023.

Concentration of Credit Risk

The Company maintains cash balances at two financial institutions. Accounts at this institution are insured by the Federal Deposit Insurance Corporation ~~(FDIC)~~(“FDIC”) up to $250,000. As of ~~December 31, 2022, the Company’s cash balance did not exceed FDIC coverage. As of~~June 30, 2023 and March 31, ~~2022,~~2023, the Company’s cash balance exceeded FDIC coverage. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible.

Fixed Assets

Equipment is carried at historical value or cost and is depreciated using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives are as follows:

SCHEDULE OF ESTIMATED USEFUL LIVES

Buildings			39 years
Machinery and Equipment			7 – 10 years
Vehicles			10 years
Furniture and Fixtures			3 – 10 years

Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

Stock-Based Compensation

The Company accounts for stock-based compensation to employees and non-employees in accordance with ASC 718. “Stock-based Compensation to Employees” is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances. Once the stock is issued the appropriate expense account is charged.

Intangible Assets

The Company has intangible assets, which were acquired in a patent acquisition, and license rights agreements. The Company’s patents represent definite lived intangible assets and will be amortized over the ~~twenty-year~~twenty year duration of the patent, unless at some point the useful life is determined to be less than the protected life of the patent. The Company’s license rights will be amortized on a straight-line basis over the expected term of the agreements of ten years. For the three ~~and nine~~ months ended ~~December 31,~~June 30, 2023 and June 30, 2022, the amortization of the patents was $97,500 and $~~292,500~~97,500 and in the license rights was $270,000 and $~~810,000~~270,000.

~~Amortization expense for the patents was $~~

~~97,500~~ ~~and $244,000~~ ~~for the three and nine months ended December 31, 2021.~~ ~~The accumulated amortization of the patents was $633,500,000~~ ~~and $341,500~~ ~~as of December 31, 2022 and March 31, 2022, respectively. The accumulated amortization of the license rights was $1,350,000~~ ~~and $540,000~~ ~~as of December 31, 2022 and March 31, 2022, respectively.~~

The Company periodically evaluates the remaining useful lives of its finite-lived intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. As of ~~December 31, 2022,~~June 30, 2023, the Company believes the carrying value of the intangible assets are still recoverable, and there is no impairment to be recognized.

License agreements

On August 25, 2021, the Company, through their 100% owned subsidiary NAS, entered into an Equipment Rights Agreements with Hydrenesis-Delta Systems, LLC (“Hydrenesis-Delta”) and a Technology Rights Agreement, in a sub-license agreement with Hydrenesis Aquaculture LLC (“Hydrenesis-Aqua”), Both Rights agreements are for a 10-year term, which shall automatically renew for ten-year successive terms. The agreements accord the exclusive rights to purchase or distribute the technology, or buy or rent the equipment, which is the primary business and revenue stream generated from indoor aquaculture farming of any species in the territory.

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. There are sales milestones for exclusivity, whereby if NAS fails to achieve a sales milestone starting in Year 3, the exclusivity rights in both of the Rights agreements shall revert to non-exclusive rights. To maintain the exclusivity for the subsequent year, the Company may pay the amount of the royalty fees that would have been due if the Sales Milestones had been meet in the current year.

Impairment of Long-lived Assets

The Company will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.

Commitments and Contingencies

Certain conditions may exist as of the date the unaudited condensed 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 unaudited condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

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

Revenue Recognition

The Company recognizes revenue in accordance with ~~Accounting Standards Codification (ASC)~~ASC 606, ~~Revenue~~“Revenue from Contracts with ~~Customers, and~~Customers”, as such, the Company records revenue when its customers obtain control of the promised goods or services in an amount that reflects the consideration ~~that~~which the Company expects to receive in exchange for those goods or services. The Company will sell primarily to food service distributors, as well as to wholesalers, retail establishments and seafood distributors. Additionally, the Company will sell or rent either the Hydrenesis Technologies or Equipment.

To determine revenue recognition for the arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (1) identify the contract(s) with a customer by receipt of purchase orders and confirmations sent by the Company which includes a required line of credit approval process, (2) identify the performance obligations in the contract which includes shipment of goods to the customer FOB shipping point or destination, (3) determine the transaction price which initiates with the purchase order received from the customer and confirmation sent by the Company and will include discounts and allowances by customer if any, (4) allocate the transaction price to the performance obligations in the contract which is the shipment of the goods to the customer and transaction price determined in step 3 above and (5) recognize revenue when (or as) the ~~Company~~entity satisfies a performance obligation which is when the Company transfers control of the goods to the customers by shipment or delivery of the products.

In the future, if the Company has customers with long-term contracts for multiple shipments of live shrimp, the Company will elect the right-to-invoice practical expedient and any variable consideration estimate will be excluded from the transaction price and the revenue will be recognized directly when the goods are delivered.

SCHEDULE OF REVENUE RECOGNITION

	June 30, 2023		June 30, 2022
	Three months ended
	June 30, 2023		June 30, 2022

Shrimp sales	$	55,872	$	36,336
Technology and equipment services		150,000		—
Total revenues	$	205,872	$	36,336

On May 21, 2023, the Company entered into a six month agreement with a company for the use of the Hydrenesis Technology and Equipment. Per the agreement, the customer is to pay a total of $300,000 comprised of an initial payment equal to $150,000 and then $25,000 per month for the combined total of the Service Fee.

Recently Issued Accounting Standards

In August 2020, the ~~Financial Accounting Standards Board~~FASB issued ASU 2020-06, “~~Debt~~“Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own ~~Equity~~”Equity” (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, ~~Debt:~~“Debt: Debt with Conversion and Other ~~Options,~~Options”, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, “Earnings Per Share,”, to require entities to calculate diluted ~~EPS~~earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.

As of ~~December 31, 2022,~~June 30, 2023, there were several new accounting pronouncements issued by the ~~Financial Accounting Standards Board.~~FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

Management’s Evaluation of Subsequent Events

The Company evaluates events that have occurred after the balance sheet date of ~~December 31, 2022,~~June 30, 2023, through the date which the unaudited condensed consolidated financial statements were issued. Based upon the review, other than described in Note 1112 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.

NOTE 3 – FIXED ASSETS

A summary of the fixed assets as of ~~December 31, 2022~~June 30, 2023 and March 31, ~~2022~~2023 is as follows:

SCHEDULE OF FIXED ASSETS

	(unaudited)
	December 31, 2022			March 31, 2022			June 30, 2023			March 31, 2023
	(unaudited)						(unaudited)
Land	$	324,293		$	324,293		$	324,293		$	324,293
Buildings		5,439,365			5,611,723			5,509,918			5,495,150
Machinery and equipment		12,210,036			10,524,343			12,297,284			12,293,112
Autos and trucks		307,227			247,356			307,227			307,227
Fixed assets,gross		18,280,921			16,707,715			18,438,722			18,419,782
Accumulated depreciation		(2,930,478	)		(1,909,612	)		(3,803,723	)		(3,376,067	)
Fixed assets, net	$	15,350,443		$	14,798,103		$	14,634,999		$	15,043,715

The unaudited condensed consolidated statements of operations reflect depreciation expense of approximately $~~416,000~~435,000 and $~~218,000, and $1,350,000~~ ~~and $830,000~~525,000 for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2023 and 2022, ~~and 2021,~~ respectively.

On July 3, 2022, the Company’s building containing its water treatment and purification system in La Coste, Texas (the “Water Treatment Plant”) was completely destroyed in a fire. The Water Treatment Plant is a separate building consisting of approximately ~~8,000~~ ~~square feet located apart from the production building which was not damaged. The Company received $700,000~~ ~~from the insurance company for the claim filed for the fire damage. Due to the damage caused by the fire, the Company has written off approximately $1,764,000~~ ~~of the fixed assets, and $325,000~~ ~~of the accumulated depreciation, which, less the $700,000~~ ~~insurance settlement, has resulted in the recognition of a Loss due to fire in the condensed consolidated statement of operations.~~

NOTE 4 – SHORT-TERM NOTE AND LINES OF CREDIT

The Company 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 ~~33.17~~34.15% as of ~~December 31, 2022.~~June 30, 2023. The line of credit is unsecured. The balance of the line of credit was $9,580 at both ~~December 31, 2022~~June 30, 2023 and March 31, ~~2022.~~2023.

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 ~~17.27~~18.25% as of ~~December 31, 2022.~~June 30, 2023. The line of credit is secured by assets of the Company’s subsidiaries. The balance of the line of credit is $10,237 at ~~December 31, 2022~~June 30, 2023 and March 31, ~~2022.~~2023.

NOTE 5 –~~PROMISSORY NOTE~~NOTES PAYABLE

January 2023 Note

On January 20, 2023, the Company entered into a secured promissory note (“January 2023 Note”) with an investor (the “Investor”). The January 2023 Note is in the aggregate principal amount of $631,968. The Note has an interest rate of 10% per annum, with a maturity date nine months from the issuance date of the Note. The Note carried an original issue discount totaling $56,868, whereby the purchase price is $575,100. All payments made by the Company under the terms in the note, including upon repayment of this Note at maturity, shall be subject to an exit fee of 15% of the portion of the Outstanding Balance being paid (the “Exit Fee”). The cash was not transferred to the Company’s bank account, but instead to the merger entity, Yotta Acquisition Corporation (Note 11), for a contribution to a required extension fee for the business combination.

April 2023 Promissory Note

On April 21, 2023, the Company entered into a $60,000 promissory note with Yotta Investment LLC (“Yotta”), with no interest to accrue on the principal balance. The promissory note is to be settled on the date of closing of the business combination contemplated by the Merger Agreement with Yotta (“Merger Agreement”). Upon the occurrence of an event of default, including the termination of the Merger Agreement, the unpaid principal balance of this note, and all other sums payable with regard to this note, shall automatically and immediately become due and payable, in all cases without any action on the part of the Company. As discussed in Note 12, the Merger Agreement was terminated subsequent to the period end.

May 2023 Promissory Note

On May 17, 2023, the Company entered into an additional $60,000 promissory note with Yotta, with no interest to accrue on the principal balance. The promissory note is to be settled on the date of closing of the business combination contemplated by the Merger Agreement with Yotta. Upon the occurrence of an event of default, including the termination of the Merger Agreement, the unpaid principal balance of this note, and all other sums payable with regard to this note, shall automatically and immediately become due and payable, in all cases without any action on the part of the Company. As discussed in Note 12, the Merger Agreement was terminated subsequent to the period end.

Ms. Williams Promissory Note

On July 15, 2020, the Company issued a promissory note to Ms. Williams in the amount of $383,604 to settle the amounts that had been recognized per the separation agreement with the late Mr. Bill Williams dated August 15, 2019, for his portion of the related party notes and related accrued interest discussed above, and accrued compensation and allowances. The note bears interest at one percent per annum and calls for monthly payments of $8,000 until the balance is paid in full. The balance as of June 30, 2023 and March 31, 2023 was $95,604 and $119,604, respectively, with the balance as of June 30, 2023 and $96,000 for the year end March 31, 2023, classified in current liabilities, on the condensed consolidated balance sheets.

NOTE 6 – RESTRUCTURED AUGUST NOTE PAYABLE

The Company entered into a securities purchase agreement (the “SPA”) with an investor (the “Investor”) on August 17, 2022. Pursuant to the SPA, the Investor purchased a secured promissory note (the “Note”) in the aggregate principal amount totaling approximately $5,433,333. The Note has an interest rate of 12% per annum, with a maturity date nine months from the issuance date of the Note. The Note carried an original issue discount totaling $433,333 and a transaction expense amount of $10,000, both of which are included in the principal balance of the Note. On the ~~Closing Date~~closing date the Company received $1,100,000, with $3,900,000 put into escrow to be held until certain terms ~~are~~were to be met, which ~~includes~~included $3,400,000 upon the completion of a successful uplist to NYSE or NASDAQ. The SPA includes a Security Agreement, whereby the note is secured by the collateral set forth in the agreement, covering all of the assets of the Company. All payments made by the Company under the terms in the note, including upon repayment of this Note at maturity, shall be subject to an exit fee of 15% of the portion of the ~~Outstanding Balance~~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 $816,500, was recognized along with the principal balance, and offset by a contra account in a manner similar to a debt discount.

As soon as reasonably possible, the Company will cause the ~~Common Stock~~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 November 15, 2022, the then-current outstanding balance will be increased by 10%. Following the Uplist, while the Note is still outstanding, ten days after the Company may have a sale of any of its shares of common stock or preferred stock, there shall be a Mandatory Prepayment equal to the greater of $3,000,000 or thirty-three percent of the gross proceeds of the equity sale.

In conjunction with the Merger Agreement, entered into on October 24, 2022, with Yotta Acquisition Corporation (Note ~~10)~~11), on November 4, 2022, the Company entered into a Restructuring Agreement for an Amended and Restated Secured Promissory Note (the “August Note”), through which the August Note was amended and restated in its entirety. The Restructured August Note decreased the principal to $1,748,667, less an OID of $138,667, and the amount in escrow was returned to the investor, The Restructuring Agreement included key modifications, in which i) the Uplist terms were removed, ii) in the event that the ~~Closing~~closing of the Merger does not occur on or before December 31, 2022, the then-current Outstanding Balance will be increased by 2% and shall increase by 2% every 30 days thereafter until the ~~Closing~~closing or termination of the Merger Agreement, and iii) the outstanding balance of the Convertible Note may be increased by 5% to 15% upon the occurrence of an event of default or failure to obtain the Lender’s consent or notify the Lender for certain major equity related transactions (“Trigger Events”). The Merger has not yet closed, and therefore the 2% of the outstanding balance was increased as of ~~December 31, 202~~2,June 30, 2023, in the amount of approximately $~~35,000~~272,000. On July 20, 2023, the Company sent Yotta notice of the Company’s termination of the Merger Agreement. (See Note 12)

The Restructured August Note was analyzed under ASC 470-50 as to if the change in terms qualified as a modification or an extinguishment of the note. The changes in terms were considered an extinguishment as the present value of the cash flows under the terms of the new debt instrument was evaluated to be a substantial change, as over 10%10% difference from the present value of the remaining cash flows under the terms of the original instrument. As such, with the removal of the original note and its debt discount and accrued interest as compared to the restructured note with a fair value of approximately $1,933,000, there was a loss in extinguishment of approximately $157,000. As a result of the extinguishment and at the Company’s election of the fair value option under ASC 825, the August Note will be accounted for at fair value until they are settled. In accordance with ASC 815- 15-25-1(b) a hybrid instrument that is measured at fair value under ASC 825 fair value option each period with changes in fair value reported in earnings as they occur should not be evaluated for embedded derivatives. Therefore, the provisions in the August Note were not evaluated as to if they fell under the guidance of embedded derivatives and were required to be bifurcated. The August Note was revalued as of ~~December 31, 2022~~June 30, 2023 at approximately $~~2,219,000~~2,590,000, with a change in fair value of approximately $~~286,000~~190,000 recognized in the Statement of Operations. The August Note was revalued as of March 31, 2023 at approximately $2,400,000, with a change in fair value of approximately $467,000. As of June 30, 2023, the accrued interest from the restructuring date, which is included in the fair value is approximately $203,000.

NOTE 67 – ~~CONVERTIBLE DEBENTURES~~RESTRUCTURED SENIOR NOTE PAYABLE

December 15, 2021 Debenture

The Company entered into a securities purchase agreement (the ~~“December 2021 SPA”~~“SPA”) with an investor (the ~~“December 2021 Investor”~~“Investor”) on December 15, 2021. Pursuant to the ~~December 2021~~ SPA, the ~~December 2021~~ Investor purchased a secured promissory note (the ~~“December 2021 Note”~~“Note”) in the aggregate principal amount totaling approximately $16,320,000 (the “Principal Amount”). The ~~December 2021~~ Note has an interest rate of 12% per annum, with a maturity date 24 months from the issuance date of the ~~December 2021~~ Note (the “Maturity Date”). ~~The December 2021 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 December 2021 Note. The December 2021 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 ~~December 2021~~ Note, the ~~December 2021~~ Investor ~~has~~had the right to redeem up to $1,000,000 of the outstanding balance per month. Payments ~~may be~~could have been 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~~$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~~equaled 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 ~~December 2021~~ Investor delivers notice electing to redeem a portion of the ~~December 2021~~ Note. The redemption amount shall include an Exit Fee, consisting of a premium of 15% of the portion of the outstanding balance being ~~paid (the “Exit Fee”).~~paid. As the Exit Fee is to be included in every settlement of the ~~December 2021~~ Note, an additional 15% of the principal balance, which totals $~~2,448,000~~,$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 ~~December 2021~~ Investor’s right of redemption, the Company has the option to prepay the ~~December 2021~~ 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.~~date

Within 180 days of the issuance date of the December 2021 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 December 2021 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 December 2021 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%. On February 7, 2022, the Company and the December 2021 Investor entered into an amendment to the December 2021 SPA, which extended the date by which the Uplist must be completed to April 15, 2022. In consideration of the grant of the extension there was an extension fee of $~~249,079~~ ~~added to the principal balance, which has been recognized as a financing cost in the accompanying unaudited condensed consolidated financial statement.~~ Subsequently, the date by which the Uplist had to be completed was further extended to June 15, 2022, and again to November 15, 2022, with no additional fee included. The Company will make a one-time payment to the December 2021 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 the Company 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 December 2021 Note and grant the December 2021 Investor 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 December 2021 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 December 2021 Investor’s written consent, the Company effectuates a reverse split of its common stock without 20 trading days written notice to the December 2021 Investor, 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 December 2021 Investor may consider the December 2021 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 December 2021 Note increases from 5% to 15%, depending upon the specific Event of Default. As of December 31, 2022, the Company is in full compliance with the covenants and Events of Default.~~

The conversion feature meets the definition of a derivative and therefore requires bifurcation and was accounted for as a derivative liability. As of December 31, 2022 the fair value of the derivative is $~~30,028,000, with a change in fair value of $16,927,000~~ ~~recognized in the nine months ended December 31, 2022.~~

On November 4, 2022, the Company entered into a Restructuring Agreement for an Amended and Restated Secured Promissory Note (the “Senior Note”) with the December 2021 Investor through which the December 2021 Note was amended and restated in its entirety. These amendments were made in conjunction with the Merger Agreement, entered into on October 24, 2022, with Yotta Acquisition Corporation (Note ~~10)~~11), The main modification of the terms of the Senior Note was that the conversion feature was eliminated. Second, a Mandatory Payment was added whereby within 3 trading days of the closing upon the Merger an amount equal to the lesser of (A) one-third of the amount retained in the Trust Account at the Effective Time or (B) $10,000,000, in order to repay a portion of the outstanding balance of the ~~Convertible~~Senior Note; after which the remaining balance of the ~~Convertible~~Senior Note is to be repaid in equal monthly installments over a 12-month period beginning on a date after the Merger Agreement closing date (“Closing ~~Date~~Date”) or the termination of such agreement. All payments made shall be subject to an Exit Fee of 15% of the portion of the outstanding balance being paid. Additionally, if the Closing Date is after December 31, 2022, the outstanding balance of all indebtedness owed by the Company to December 2021 Investor will be increased automatically by 2% and will automatically increase by 2% every 30 days thereafter until the Closing, or substantially similar terms as approved by the Board of Directors of the Company. Additional key modifications include i) uplist terms in which the ~~Uplist terms~~Company was to cause the common stock to be listed for trading on either of (a) NYSE, or (b) NASDAQ, were removed, ii) Maturity date was modified from December 15, 2023 to ~~December 4, 2023,~~12 months from the Closing or termination of the Merger Agreement, provided not to be later than June 30, 2024, and iii) the outstanding balance of the ~~Convertible~~Senior Note may be increased by 5% to 15% upon the occurrence of an event of default or failure to obtain the Lender’s consent or notify the Lender for certain major equity related transactions (“Trigger Events”). As of ~~December 31, 2022,~~June 30, 2023, the Merger has not yet closed, and therefore the 2% of the outstanding balance was increased as of ~~December 31, 2022~~June 30, 2023, in the amount of approximately $~~1,309,000~~2,675,000. On July 20, 2023, the Company sent Yotta notice of the Company’s termination of the Merger Agreement. (See Note 12)

The Note also contains certain negative covenants and Events of Default, which in addition to common events of default, include 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. As of June 30, 2023, the Company is in full compliance with the covenants and Events of Default.

The Restructured Senior Note was analyzed under ASC 470-50 as to if the change in terms qualified as a modification or an extinguishment of the note. The changes in terms were considered an extinguishment as the conversion feature has been eliminated and therefore the modified ~~August~~Senior Note is determined to be fundamentally different from the original convertible note. As such, with the removal of the original note and its debt discount and accrued interest as compared to the restructured note with a fair value of approximately $18,914,000, there was a gain in extinguishment of approximately $2,540,000. As of the restructuring date the derivative had a fair value of $12,290,000, based on assumptions used in a bi-nomial option pricing model, which resulted in a change in fair value of $17,738,000 as of the restructuring date, from its previous fair value of $30,028,000. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.16 at issuance date; a risk-free interest rate of 3.73% and expected volatility of the Company’s common stock, of 117.77%, and the strike price of $0.1017.

As a result of the extinguishment and at the Company’s election of the fair value option under ASC 825, the Company will account for the Restructured Senior Note ~~will be accounted for~~ at fair value every period end until it is settled. In accordance with ASC 815- 15-25-1(b) a hybrid instrument that is measured at fair value under ASC 825 fair value option each period with changes in fair value reported in earnings as they occur should not be evaluated for embedded derivatives. Therefore, the Company did not evaluate the provisions in the Restructured Senior Note ~~were not evaluated~~ as to ifwhether they fell under the guidance of embedded derivatives and were required to be bifurcated. The Restructured Senior Note was revalued as of ~~December 31, 2022~~June 30, 2023 at approximately $~~20,223,000~~21,870,000, with a change in fair value of approximately $~~1,309,000~~580,000 recognized in the Company’s accompanying condensed consolidated Statement of Operations. The Senior Note was revalued as of March 31, 2023, at approximately $21,290,000, with a change in fair value of approximately $2,376,000 recognized in the accompanying condensed consolidated Statement of Operations. As of June 30, 2023, the accrued interest from the restructuring date, which is included in the fair value is approximately $3,487,000.

NOTE 78 – STOCKHOLDERS’ EQUITY

Preferred Stock

As of ~~December 31, 2022~~June 30, 2023 and March 31, ~~2022,~~2023, 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 no shares outstanding, 5,000 shares Series D preferred stock are authorized with no shares outstanding 10,000 shares Series E preferred stock are authorized and ~~1,670~~1,500 and ~~2,840~~1,670 outstanding, respectively, and 750,000 shares of Series F preferred stock are authorized with 750,000 outstanding, respectively.

Series E Preferred Stock

On ~~June 16, 2022,~~May 1, 2023, one of the holders of our Series E Convertible Preferred Stock chose to exercise their right, pursuant to the Certificate of Designation relating to the Series E Convertible Preferred Stock, to receive the rights extended to the convertible noteholder, of 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 of conversion. As the exercise of the conversion price adjustment was similar to a down round, and the Company has not yet adopted ASU 2020-06, the accounting treatment of ASU 2017-11 was applied, whereby the adjustment was treated as a contingent beneficial conversion feature recognized as of the triggering date. As of June 16, 2022, this holder held 940 shares of the Series E preferred stock. 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 as compared to the conversion price, determined there was a $converted ~~99,000~~ beneficial conversion feature to recognize, which was fully amortized as there is no remaining redemption date to their Series E Preferred Stock. The additional rights of the convertible note which were applied include the 10~~% increase in the outstanding balance if an uplist to a national exchange was not consummated by the Company by March 1, 2022, for an increase of~~ ~~130~~600 Series E Preferred Stock into 23,989,570shares ~~with a stated value~~ of $~~156,000, as well as an exit fee of~~ 15~~% to be recognized upon conversions of the~~common stock. The conversion represented their remaining Series E Preferred ~~shares into shares~~Stock, including the 10% increase, accrued dividends in kind of ~~common stock.~~$516,000 and the 15% Exit Fee of $108,000.

~~During the nine months ended December 31,~~GHS 2022~~1,300~~ ~~shares of Series E Preferred Stock were converted into~~ ~~14,458,127~~ ~~shares of common stock.~~

~~During the three and nine months ended December 31, 2022, the amortization of the beneficial conversion feature of the Series E preferred stock was approximately $28,000~~ ~~and $113,000~~, and the Series E beneficial conversion feature was fully amortized. The Company is accreting the carrying value, of the Series E Preferred Stock in temporary equity up to the redemption value over the period until its redemption. For the three and nine months ended December 31, 2022, approximately $~~198,000~~ ~~and $755,000~~ ~~was accreted, and $1,114,000~~ ~~was fully amortized to date as of December 31, 2022.~~

~~On November 5, 2022, the Company entered a restructuring agreement with GHS, whereby the Series E Preferred Stock and the warrants outstanding (13,739,000~~ warrants of the warrants discussed below) as of the Closing date shall have their terms adjusted. The outstanding warrants shall be a) cancelled in exchange for a cash payment equal to the fair value of the warrants based on the Black Scholes model, with the exercise price to be adjusted to equal 80% of the average volume weighted average price of the Company common stock during the five trading day period immediately prior to the Closing Date (the “Adjusted Exercise Price”); or (b) as of the Effective Time, canceled and treated as if exercised for that number of shares of the Company’s common stock calculated using the Black Scholes model fair value, the number of Warrant Shares on the Closing Date and the Adjusted Exercise Price, with the shares of the Company’s common stock that would have been due to Holder as a result of such exercise of the Warrant treated as if issued to Holder and then converted into the right to receive (i) the Closing Per Share Merger Consideration (as defined in the Merger Agreement) plus (ii) the Additional Per Share Merger Consideration (as defined in the Merger Agreement), if any, at the time and subject to the contingencies set forth in the Merger Agreement. For the Series E Preferred Stock that shall be outstanding immediately prior to the Effective Time, they shall be canceled and treated as if converted into that number of shares of the Company’s common stock equal to (i) the stated value of $1,200 per share plus any unpaid dividends, multiplied by 1.25, divided by (ii) 80% of the average volume weighted average price of the Company’s common stock during the five trading day period immediately prior to the Closing Date. The shares of the Company’s common stock that would have been due to the holder as a result of the conversion of such shares of Series E Convertible Preferred Stock shall be treated as issued to holder and converted, as of the Effective Time, into the right to receive (y) the Closing Per Share Merger Consideration plus (z) the Additional Per Share Merger Consideration, if any, at the time and subject to the contingencies set forth in the Merger Agreement.

~~GHS~~ Purchase Agreement

On November 4, 2022, the Company entered into a purchase agreement (the “GHS Purchase Agreement”) with GHS Investments LLC (“GHS”), an accredited investor, pursuant to which, the Company may require GHS to purchase a maximum of up to 64,000,000 shares of the Company’s common stock (“GHS Purchase Shares”) based on a total aggregate purchase price of up to $5,000,000 over a one-year term that ends on November 4, 2023. Notwithstanding the foregoing dollar limitations, the Company and GHS may, from time to time, mutually agree in writing to waive the aforementioned limitations for a relevant Purchase Notice, which waiver, shall not exceed the 4.99% beneficial ownership limitation contained in the GHS 2022 Purchase Agreement. The Company is to control the timing and amount of any sales of GHS Purchase Shares to GHS. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes.

The “Purchase Price” means, with respect to a purchase made pursuant to the GHS Purchase Agreement, 90% of the lowest VWAP during the 10 consecutive business days immediately preceding, but not including, the applicable purchase date. The Company shall deliver a number of GHS Purchase Shares equal to 112.5% of the aggregate purchase amount for such GHS Purchase divided by the Purchase Price per share for such GHS ~~Purchase.~~Purchase.

If there are any default events, as set forth in the GHS Purchase Agreement, has occurred and is continuing, the Company shall not deliver to GHS any Purchase Notice.

Further, pursuant to the terms of the GHS Purchase Agreement, from November 4, 2022 until the date that is the later of (i) the closing of the transactions whereby Yotta Merger Sub, Inc. will merge with and into the Company, with the Company as the surviving company (the “Merger”); and (ii) the 12 month anniversary of the first delivery of GHS Purchase Shares, 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 any financing, up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. Following the Merger, the Participation Maximum shall be 50% of the Subsequent Financing.

In the three months ended ~~December 31, 2022,~~June 30, 2023, the Company sold ~~17,175,675~~40,187,311 shares of common stock at a gross amount of approximately $1,299,000, at share prices ranging from $0.03 to $0.04.

In the year ended March 31, 2023, the Company sold 52,018,294 shares of common stock at a net amount of approximately $~~1,378,000~~3,076,000, at share prices ranging from $~~0.08~~0.04 to $0.10. ~~There were~~

~~11,306.351~~

10,000,000 Common Stock Equity Financing

On April 28, 2023, the Company entered into an Equity Financing Agreement (“Equity Financing Agreement”) and Registration Rights Agreement with GHS. Under the terms of the Equity Financing Agreement, GHS agreed to provide the Company with up to $10,000,000 ~~additional~~upon effectiveness of a registration statement on Form S-1 (the “Registration Statement”) filed with the SEC. The Registration Statement was filed on July 20, 2023 and the SEC declared it effective on August 14, 2023.

With the effectiveness of the Registration Statement, the Company now has the discretion to deliver puts to GHS and GHS will be obligated to purchase shares of the Company’s common stock, ~~sold~~par value $0.0001 per share (the “Common Stock”) based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to GHS in each put notice shall not exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s Common Stock during the ten (10) trading days preceding the put, so long as such amount does not equal less than ten thousand dollars ($10,000) or greater than one million dollars ($1,000,000). Pursuant to the Equity Financing Agreement, GHS and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s Common Stock to GHS that would result in GHS’s beneficial ownership equaling more than 4.99% of the Company’s outstanding Common Stock. The price of each put share shall be equal to eighty percent (80%) of the Market Price (as defined in the Equity Financing Agreement). Following an up-list to the NASDAQ or equivalent national exchange, the price of each put share shall be equal to ninety percent (90%) of the Market Price, subject to a floor price of $1.00 per share. Puts may be delivered by the Company to GHS until the earlier of twenty-four (24) months after the ~~period end (see Note 11)~~effectiveness of the Registration Statement or the date on which GHS has purchased an aggregate of $10,000,000 worth of Common Stock under the terms of the Equity Financing Agreement.

GHS Purchase Agreement

On May 9, 2023, the Company entered into a purchase agreement (the “GHS Purchase Agreement”) with GHS pursuant which the Company may require GHS to purchase a maximum of up to 45,923,929 shares of the Company’s common stock (“GHS Purchase Shares”) based on a total aggregate purchase price of up to $6,000,000 over a one-year term that ends on May 9, 2024. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes.

The GHS Purchase Agreement provides that, upon the terms and subject to the conditions and limitations set forth in the agreement, the Company has the right from time to time during the term of the agreement, in its sole discretion, to deliver to GHS a purchase notice (a “Purchase Notice”) directing GHS to purchase (each, a “GHS Purchase”) a specified number of GHS Purchase Shares. A GHS Purchase will be made in a minimum amount of $10,000 and up to a maximum of $1,500,000 and provided that, the purchase amount for any purchase will not exceed 200% of the average of the daily trading dollar volume of the Company’s common stock during the 10 business days preceding the purchase date. Notwithstanding the foregoing dollar limitations, the Company and GHS may, from time to time, mutually agree (in writing) to waive the aforementioned limitations for a relevant Purchase Notice, which waiver, for the avoidance of doubt, shall not exceed the 4.99% beneficial ownership limitation contained in the GHS Purchase Agreement. The “Purchase Price” means, with respect to a purchase made pursuant to the GHS Purchase Agreement, 90% of the lowest VWAP (as defined in the GHS Purchase Agreement) during the Valuation Period (the ten (10) consecutive business days immediately preceding, but not including, the applicable purchase date). The Company shall deliver a number of GHS Purchase Shares equal to 112.5% of the aggregate purchase amount for such GHS Purchase divided by the Purchase Price per share for such GHS Purchase, against payment by GHS to the Company of the purchase amount with respect to such Purchase (less documented deposit and clearing fees, if any), as full payment for such GHS Purchase Shares via wire transfer of immediately available funds.

If there are any default events, as set forth in the GHS Purchase Agreement, has occurred and is continuing, the Company shall not deliver to GHS any Purchase Notice.

Further, pursuant to the terms of the GHS Purchase Agreement, from May 9, 2023 until the date that is the later of (i) the closing of the transactions whereby Yotta Merger Sub, Inc. will merge with and into the Company, with the Company as the surviving company (the “Merger”); and (ii) the 12 month anniversary of the initial closing pursuant to the Section 2(a) of GHS Purchase Agreement, 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 any financing, up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. Following the Merger, the Participation Maximum shall be 50% of the Subsequent Financing.

Common Shares Issued to Consultant

On ~~August 1, 2022, the Company issued~~June 19, 2023, ~~250,000~~ ~~shares of common stock to a consultant per the terms of an agreement from June 2021, to be issued upon the approval of a patent.~~

~~On April 14, 2021,~~ ~~500,000~~100,000 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.~~consultant. The shares had a fair value of $~~195,000~~4,700, based on the market price of $~~0.39~~0.047 on the grant date. ~~A total of~~ ~~62,500~~ ~~common shares shall vest each quarter through October 1, 2022, at $24,275, with the it fully vested through December 31, 2022.~~

~~Common Stock Issued in Relation to Business Agreement~~

~~As of June 22, 2022,~~ ~~250,000~~ common shares were issued in relation to a trial distribution agreement entered into with a consultant who was to introduce the Company to customers. Additionally, the consultant was also to assist the Company in the set-up of ancillary materials used or useful in the delivery of live shrimp, including installation of necessary equipment and facilities, logistical support, training of staff and packaging necessary for shipment of live shrimp. After the result of the trial period, the parties could have, but decided not to, negotiate and execute a long-term distribution agreement. The shares will be paid for by the Company withholding sufficient profits from the sale of the live shrimp to the customers introduced by the consultant.

Options and Warrants

The Company has not granted any options since inception.

All of the warrants issued have been recognized as a liability, as of the issuance of the convertible debenture on December 15, 2021, 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.

The 18,573,116 warrants outstanding as of ~~December 31,~~June 30, 2023, were revalued as of period end for a fair value of $305,000, with a decrease in the fair value of $50,000 recognized on the accompanying condensed consolidated Statement of Operations. The fair value of the warrant liability was estimated using Black Scholes Model, with the following inputs: the price of the Company’s common stock of $0.05; a risk-free interest rate ranging from 3.89% to 4.49%; and expected volatility of the Company’s common stock ranging from 108.4% to 121.5% and the remaining terms of each warrant issuance.

The 18,506,429 warrants outstanding as of June 30, 2022, were revalued as of period end for a fair value of $~~892,000~~2,008,000, with a decrease in the fair value of $~~3,031,000~~1,915,000 recognized on the ~~unaudited~~accompanying condensed consolidated ~~statement~~Statement of ~~operations.~~Operations. The fair value was estimated using Black Scholes Model, with the following inputs: the price of the Company’s common stock of $~~0.079~~0.12; a risk-free interest rate of ~~4.11% to~~ ~~4.22~~3.01%, the expected volatility of the Company’s common stock ranging from ~~125.3~~182.4% to~~145.6~~197.5%; the estimated remaining term, a dividend rate of 0%,

NOTE 89 – RELATED PARTY TRANSACTIONS

~~Accrued Payroll – Related Parties~~

~~Included in other accrued expenses on the accompanying unaudited condensed consolidated balance sheets approximately $119,000, owing to a key employee (which includes $50,000~~ ~~in both fiscal years, from consulting services prior to his employment) as of both December 31, 2022 and March 31, 2022. These amounts include both accrued payroll and accrued allowances and expenses.~~

Bonus Compensation – Related Party

On May 11, 2021, the Company paid the Chief Financial Officer (“CFO”) 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~~CTO 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, ~~2022. As of December 31, 2022, $200,000~~ ~~has been paid each to the President and Chief Technology Officer, with a total of $200,000~~ ~~remaining in accrued expenses, related parties.~~

~~NaturalShrimp Holdings, Inc.~~

On January 1, 2016 the Company entered into a notes payable agreement with NaturalShrimp Holdings, Inc.(“NSH”), a shareholder. The note payable has no set monthly payment or maturity date with a stated interest rate of 2%.2021. During the year ended March 31, 2022, $200,000 was paid each to the ~~Company paid off $655,750~~President and CTO, with a total of ~~the note payable. The outstanding balance is approximately~~ $~~77,000~~200,000 remaining in accrued expenses, related parties, as of ~~both December 31, 2022~~June 30, 2023 and March 31, ~~2022. As of December 31, 2022 and March 31, 2022, accrued interest payable was approximately $74,000~~ ~~and $74,000, respectively.~~2023.

Promissory Note

On August 10, 2022, the Company issued a loan agreement for $300,000, with related parties, which is to be considered priority debt of the Company. As of this filing, five of the related parties have entered into promissory notes under the loan agreement for $50,000 each, for a total of cash received of $250,000. The notes bear interest at a 10% per annum and are due in one year from the issuance date of the ~~note.~~notes. For the three months ended June 30, 2023, the interest expense was $3,500. As of June 30, 2023 and March 31, 2023, the accrued interest was approximately $26,000 and $22,000, respectively.

NaturalShrimp Holdings, Inc.

On January 1, 2016 the Company entered into a notes payable agreement with NaturalShrimp Holdings, Inc.(“NSH”), a shareholder. The note payable has no set monthly payment or maturity date with a stated interest rate of 2%. During the year ended March 31, 2022, the Company paid off $655,750 of the note payable. The outstanding balance is approximately $77,000 as of both June 30, 2023 and March 31, 2023. As of both June 30, 2023 and March 31, 2023, accrued interest payable was approximately $74,000.

Shareholder Notes

The Company has entered into several working capital notes payable to multiple shareholders of NSH and Bill Williams, a former officer and director, and a shareholder of the Company, for a total of $486,500. The notes are unsecured and bear interest at 8%. 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 ~~December 31, 2022~~June 30, 2023 and March 31, ~~2022~~2023, and is classified as a current liability on the unaudited condensed consolidated balance sheets. As of ~~December 31, 2022~~June 30, 2023 and March 31, ~~2022,~~2023, accrued interest payable was approximately $~~161,000~~ ~~and $~~146,000~~, respectively.~~.

Shareholders

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 ~~December 31, 2022~~June 30, 2023 and March 31, ~~2022~~2023 was $54,647 and is classified as a current liability on the unaudited condensed consolidated balance sheets.

NOTE 910 – ~~LEASES~~LEASE

On May 26, 2021, the Company entered into a sublease for a new office space in Texas, on two floors. The lease commenced on August 1, 2021 for a monthly rent of $7,000, and will terminate on October 31, 2025, for one of the spaces, and commence in the second half of 2022 for monthly rent of $1,727, and terminate on October 31, 2025, for the second space. On June 2, 2021, the Company paid a deposit of $52,362 which shall be applied to the last ~~nine~~six months of the sublease term, and $17,454 security deposit, which is included in Prepaid expenses on the accompanying ~~unaudited~~ condensed consolidated balance ~~sheets.~~sheet. The Company assessed its new office lease as an operating lease.

At inception, on August 1, 2021, the ROU and lease liability was calculated as approximately $316,000, based on the net present value of the future lease payments over the term of the lease. When available, the Company uses the rate implicit in the lease discount payments as the incremental borrowing rate to calculate the net present value; however, the rate implicit in the lease is not readily determinable for their corporate office lease. In this case, the Company estimated its incremental borrowing rate of 5.75% as the interest rate it could have incurred to borrow an amount equal to the lease payments in a similar economic environment on a collateralized basis over a term similar to the lease ~~term.~~term . The Company estimated its rate based on observable risk-free interest rate and credit spreads for commercial debt of a similar duration as to what rate would have been effective for the Company.

On September 8, 2021, the Company entered into an equipment lease agreement for VOIP phone equipment. The lease term is for sixty months, with a monthly lease payment of approximately $300. The Company assessed the equipment lease as an operating lease. The Company determined the Right of Use asset and Lease liability values at inception as approximately $17,000 calculated at the present value of all future lease payments for the lease term, using an incremental borrowing rate of 5.75%.

The following is a schedule of maturities of lease liabilities as of June 30, 2023:

SCHEDULE OF MATURITIES OF LEASE LIABILITIES

2024 $ 65,856
2025 87,808
2026 54,709
Total future minimum lease payments 208,373
Less: imputed interest 14,361
Total $ 194,012
20
NOTE 1011 – COMMITMENTS AND CONTINGENCIES

Executive Employment Agreements –Gerald Easterling

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

The Employment Agreement is terminable at will and each provide for a base annual salary of $96,000. On May 4, 2021, the Company’s Board of Directors approved a salary for Mr. Easterling of $180,000 per annum. In addition, the Employment Agreement provides that the employee is entitled, at the sole and absolute discretion of the Company’s Board of Directors, to receive performance bonuses. Mr. Easterling will also be entitled to certain benefits including health insurance and monthly allowances for cell phone and automobile expenses.

The Employment Agreement provides that in the event the employee is terminated without cause or resigns for good reason (as defined in their Employment Agreement), the employee will receive, as severance the employee’s base salary for a period of 60 months following the date of termination. In the event of a change of control of the Company, the employee may elect to terminate the Employment Agreement within 30 days thereafter and upon such termination would receive a lump sum payment equal to 500% of the employee’s base salary.

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

20
Merger Agreement

On October 24, 2022, the Company entered into a Merger Agreement (as it may be amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among the Company, Yotta Acquisition Corporation, a Delaware corporation (“Yotta”), and Yotta Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Yotta (“Merger Sub”). The Merger Agreement and the transactions contemplated thereby (the “Transactions”) were approved by the ~~board~~Board of ~~directors~~Directors of each of the Company, Yotta, and Merger Sub.

The Merger Agreement ~~provides,~~provided, among other things, that Merger Sub will merge with and into the Company, with the Company as the surviving company (the “Surviving Company”) in the merger and, after giving effect to such merger, the Company ~~shall~~was to be a wholly-owned subsidiary of Yotta (the ~~“Merger~~”“Merger”). In addition, Yotta ~~will~~was to be renamed “NaturalShrimp, Incorporated” or such other name as shall be designated by the Company. ~~Other capitalized terms used, but not defined, herein have the respective meanings given to such terms in the Merger Agreement.~~
~~The Merger Agreement provides for aggregate consideration to be issued to securityholders of the Company of~~ ~~17,500,000~~ ~~shares (the “Closing Merger Consideration Shares”) of Yotta’s common stock, par value $0.0001~~ ~~per share (“Yotta Shares”), to be issued at the effective time of the Merger (the “Effective Time”), plus an additional~~ (i) 5,000,000 Yotta Shares if the Surviving Corporation has at least $15,000,000 in revenue during the fiscal year ended March 31, 2024 and (ii) 5,000,000 Yotta Shares if the Surviving Corporation has at least $30,000,000 in revenue during the fiscal year ended March 31, 2025 (collectively, the “Contingent Merger Consideration Shares”).
In accordance with the terms and subject to the conditions of the Merger Agreement, at the Effective Time each share of Common Stock outstanding or deemed outstanding pursuant to the provisions discussed immediately below as of immediately prior to the Effective Time will be converted into the right to receive its allocable portion of the Closing Merger Consideration Shares and the Contingent Merger Consideration Shares (to the extent the required revenue thresholds are met).
Pursuant to the terms of the Merger Agreement and agreements that, pursuant to the Merger Agreement, the Company will enter into with holders of such convertible securities, such convertible securities will be canceled prior to the closing of the Merger in exchange (except for the Series A Convertible Preferred Stock of the Company, par value $~~0.0001~~ per share (the “Series A Preferred”) for a cash payment or Yotta Shares as follows: (i) at the option of the holder thereof, each outstanding warrant to purchase shares of Common Stock will be canceled in exchange for a cash payment based on the value thereof or treated as exercised for shares of Common Stock, in each case based on an adjusted exercise price and as otherwise set forth in the Merger Agreement and/or the individual agreements, and if treated as exercised, converted into the right to receive such deemed shares of Common Stock’s allocable portion of the Closing Merger Consideration Shares and the Contingent Merger Consideration Shares; (ii) each outstanding share of Series F Convertible Preferred Stock of the Company, par value $~~0.0001~~ per share, will be canceled and treated as if converted into shares of Common Stock at an adjusted conversion rate as set forth in the Merger Agreement and/or such individual agreements, and converted into the right to receive such deemed shares of Common Stock’s allocable portion of the Closing Merger Consideration Shares and the Contingent Merger Consideration Shares; and (iii) each outstanding share of Series E Convertible Preferred Stock of the Company, par value $~~0.0001~~ per share (the “Series E Preferred”), will be canceled and treated as if converted into shares of Common Stock at an adjusted conversion rate as set forth in the Merger Agreement and/or such individual agreements, and converted into the right to receive such deemed shares of Common Stock’s allocable portion of the Closing Merger Consideration Shares and the Contingent Merger Consideration Shares. In addition, each holder of Series E Preferred will be entitled to receive at the Effective Time an additional number of Closing Merger Consideration Shares as are necessary to ensure that the per-share value of the Yotta Shares that such stockholder is entitled to receive is not less than the per-share value (based on the effective purchase price) of the aggregate Yotta Shares then held by any Yotta stockholder after taking into account any newly-issued Yotta Shares that such Yotta stockholder acquires directly from Yotta prior to the closing of the Merger (the “Closing”) (which will reduce the number of Closing Merger Consideration Shares that will be issued to the Company’s other securities holders). The Series A Preferred will be cancelled and retired without any conversion thereof and for no consideration.

As noted in Notes 56 and 6,7, the Company entered into Restructuring Agreements ~~with the December 2021 Investor~~ as required in the Merger Agreement.
21
~~The Business Combination is expected to be accounted for as a reverse merger and recapitalization of NaturalShrimp into~~ On July 20, 2023, the Company sent Yotta in accordance with GAAP because NaturalShrimp has been determined to be the accounting acquirer under ASC 805 under the no-redemption and full redemption scenarios. Under this method of accounting, Yotta will be treated as the “acquired” company for financial reporting purposes. Accordingly, the combined assets, liabilities and results of operations of NaturalShrimp will become the historical financial statements of NaturalShrimp Incorporated, and Yotta’s assets, liabilities and results of operations will be consolidated with NaturalShrimp beginning on the acquisition date. For accounting purposes, the financial statements of NaturalShrimp Incorporated will represent a continuationnotice of the ~~financial statements~~Company’s termination of ~~NaturalShrimp with~~ the transaction being treated as the equivalent of NaturalShrimp issuing stock for the net assets of Yotta, accompanied by a recapitalization. The net assets of Yotta will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be presented as those of NaturalShrimp in future reports of NaturalShrimp Incorporated. Merger Agreement. (See Note 12)

NOTE 1112 – SUBSEQUENT EVENTS
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.
~~After the period end, there were three purchases of a total of~~ ~~14,880,460~~ ~~shares of common stock for a net amount of $878,365, with share price ranging from $0.060~~ ~~to $0.065~~.

On ~~January~~July 20, 2023, the Company sent Yotta notice of the Company’s termination of the Merger Agreement pursuant to Section 10.2(b) thereof based on breaches by Yotta of certain representations in the Merger Agreement that would render impossible the satisfaction of certain conditions to the Company’s obligations to consummate the transactions contemplated by the Merger Agreement. In particular, Yotta will not be able to comply with the provision of its Amended and Restated Certificate of Incorporation that prohibits Yotta from consummating an initial business combination unless it has net tangible assets of at least $5,000,001 upon consummation of such initial business combination. This conflicts with Yotta’s representation in the Merger Agreement that its consummation of the transactions contemplated by the Merger Agreement will not conflict with its organizational documents. The Company also cited delays in the SEC registration process that are attributable to Yotta, which breached its covenant pursuant to the Merger Agreement to use its reasonable best efforts to take all actions reasonably necessary or advisable to consummate the transactions contemplated by Merger Agreement as promptly as reasonably practicable. As of August 16, 2023, Yotta has not responded to the Company’s notice of termination.
On July 10 through July 17, 2023, the Company received $140,000 in proceeds from the issuance of three promissory notes with related parties. The notes bear interest at 10% and have maturity dates one year from the issuance date.
On July 24, 2023, the Company entered into a ~~secured promissory note (“January 2023 Note”) with an investor (the “Investor”). The January 2023 Note is in~~Securities Purchase Agreement for the ~~aggregate principal amount~~additional sale of 156 shares of Series E Preferred Stock at a price of $~~631,968~~1,000 per share of Preferred Stock, for a total of $156,000. The ~~January 23 Note has an interest rate~~Series E Preferred Stock will earn a dividend of 1012% per annum, ~~with a maturity date nine months from~~for as long as the ~~issuance date of~~relevant Preferred Stock has not been redeemed or converted. Dividends are to be paid quarterly, and at the ~~January 23 Note. The January 23 Note carried an original issue discount totaling $56,868, whereby~~Company’s discretion, in cash or Preferred Stock calculated at the purchase ~~price is $575,100. All payments made by the Company under the terms in the January 23 Note, including upon repayment of the January 23 Note at maturity, shall be subject to an exit fee of~~ 15~~% of the portion of the Outstanding Balance being paid (the “Exit Fee”).~~price.

22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes a number of forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2022,~~2023, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on June ~~29, 2022,~~27, 2023, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements. These risks and factors include, by way of example and without limitation:

● our ability on a timely basis to successfully rebuild our water treatment plant and replace our filtration equipment that was destroyed by fire on July 3, 2022 at our La Coste, Texas facility;
● our ability to continue developing and expanding our research and development plant in La Coste, Texas and our production facility in Webster City, Iowa;
● our ability to successfully commercialize our equipment and shrimp farming operations to produce a market-ready product in a timely manner and in enough quantity;
● absence of contracts with customers or suppliers;
● our ability to maintain and develop relationships with customers and suppliers;
● our ability to successfully integrate acquired businesses or new brands;
● the impact of competitive products and pricing;
● supply constraints or difficulties;
● the retention and availability of key personnel;
● general economic and business conditions;
● substantial doubt about our ability to continue as a going concern;
● our continued ability to raise funding at the pace and quantities required to scale our plant needs to commercialize our products;
● our ability to successfully recruit and retain qualified personnel in order to continue our operations;
● our ability to successfully implement our business plan;
● our ability to successfully acquire, develop or commercialize new products and equipment;
● the commercial success of our products;
● business interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks (such as the outbreak of COVID-19);
● intellectual property claims brought by third parties; and
● the impact of any industry regulation.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.

2321

As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to NaturalShrimp Incorporated and its wholly-owned ~~subsidiaries: NaturalShrimp USA Corporation (“NSC”)~~subsidiaries NSC, NS Global and ~~NaturalShrimp Global, Inc. (“NS Global”) and Natural Aquatic Systems, Inc. (“NAS”).~~NAS. The Company also owns 51% of NaturalShrimp/Hydrenesis LLC, a Texas limited liability company. Unless otherwise specified, all dollar amounts are expressed in United States Dollars.

~~Corporate History~~Use of Generally Accepted Accounting Principles (“GAAP”) Financial Measures

~~The Company was~~We use United States GAAP financial measures, unless otherwise noted. All of the GAAP financial measures used by us in this report relate to the inclusion of financial information. This discussion and analysis should be read in conjunction with our financial statements and the notes thereto included elsewhere in this annual report. All references to dollar amounts in this section are in United States dollars, unless expressly stated otherwise.
This discussion and analysis should be read in conjunction with our financial statements and the notes thereto included elsewhere in this annual report.
Overview
We are an aquaculture technology company that has developed proprietary, patented platform technologies to allow for the production of aquatic species in an ecologically controlled, high-density, low-cost environment, and in fully contained and independent production facilities without the use of antibiotics or toxic chemicals. We own and operate indoor recirculating Pacific White shrimp production facilities in Texas and Iowa using these technologies.
We were incorporated in ~~the State of Nevada on~~ July 3, 2008 ~~under the name “Multiplayer Online Dragon, Inc.” On January 30, 2015, we~~and acquired substantially all of the assets of ~~NaturalShrimp Holdings, Inc. a Delaware corporation (“NSH”),~~NSH, the company that ~~had~~ developed the proprietary technology to grow and sell shrimp potentially anywhere in the world that is now the basis of our business. ~~Such assets consisted primarily of all~~In 2015 NSH acquired 88.62% of the issued and outstanding shares of ~~capital stock of its subsidiaries~~ NaturalShrimp USA Corporation (“NSC”) and NaturalShrimp Global (“NS Global”), and certain real property located outside of San Antonio, Texas, in exchange for our issuance of 75,520,240 shares of our common stock to NSC. As a result of the transaction, NSH acquired 88.62% of our issued and outstanding shares of common stock,Common Stock, NSC and NS Global became our wholly-owned subsidiaries, and we changed our principal business to a global shrimp farming company. ~~We changed our name to “NaturalShrimp Incorporated” in 2015.~~

~~Business Overview~~
~~We are a biotechnology company and have developed proprietary platform technologies that allow us~~On October 5, 2015, we formed NAS with F&T, the purpose of which was 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 that allows us to produce a naturally grown shrimp “crop” weekly without the use of antibiotics or toxic chemicals. We have developed several proprietary technology assets, including a knowledge base that allows us to produce commercial quantities of shrimp in a closed systemjointly develop with a computer monitoring system that automates, monitors, and maintains proper levels of oxygen, salinity, and temperature for optimal shrimp production. The Company’s production facilities are located in La Coste, Texas and Webster City, Iowa.F&T certain water technologies.

On December 17, 2020, we acquired for $10.0 million certain assets from VeroBlue Farms USA, Inc. and its subsidiaries, ~~VBF Transport, Inc. and Iowa’s First, Inc., including a facility that was designed for the growth of barramundi fish that we are~~which assets included our three current facilities located in the process of converting so that it can produce shrimp using the Company’s propriety technology. The consideration for the purchase of these assets was (i) $10,000,000, consisting of (i) $5,000,000 in cash paid at closing, (ii) $3,000,000 payable in 36 months with interest thereon at the rate of 5% per annuum, interest only payable quarterly on the first day of the quarter, with the remaining balance to be paid as a balloon payment on the maturity date, and (iii) $2,000,000 payable in 48 months with interest thereon at the rate of 5% per annuum, interest only payable quarterly on the first day of the quarter, with the remaining balance to be paid as a balloon payment on the maturity date. The Company also issued 500,000 shares of common stock as a finder’s fee in connection with the transaction.
The facility was originally designed as an aquaculture facility. The Company has begun a modification process to convert the plant to produce shrimp, which will allow us to scale faster without having to build new facilities. The Iowa facility contains the tanks and infrastructure that the Company will use to support the production of shrimp with the incorporation of the Company’s electrocoagulation platform technology. The Company also plans to convert additional square footage currently used as storage to its planned shrimp processing plant. The development of the facility is 40% completed with full development of the facility expected by December 31, 2022.Iowa.

On May 25, 2021, ~~the Company~~we purchased certain parent and intellectual property rights from F&T ~~Water Solutions LLC (“F&T”)~~and acquired all of its ~~50% ownership interest~~outstanding shares in a water treatment technology used or useful in growing aquatic species in re-circulating and enclosed environments that the Company and F&T had previously jointly developed and patented (the “Patent”), as well as F&T’s 100% interest in a second patent associated with the Patent issued to F&T in March 2018 and all other intellectual property rights owned by F&TNAS, thereby making NAS our wholly-owned subsidiary, for ~~a purchase price of $2,000,000~~$3.0 million in cash and ~~9,900,990~~13,861,386 shares of ~~the Company’s common stock.~~NaturalShrimp Common Stock.

24
On August 25, 2021, through NAS, we entered into an Equipment Rights Agreements with Hydrenesis-Delta Systems, LLC and a Technology Rights Agreement with Hydrenesis Aquaculture LLC. The Equipment Rights Agreement relates to 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 Rights Agreement provides us with a sublicense to the rights to Hydrogas^® and RLS^®.

The Company has three wholly-owned subsidiaries: NSC, NS Global, and ~~NAS.~~NAS, and owns 51% of NaturalShrimp/Hydrenesis LLC, a Texas limited liability company.

~~Evolution~~Most of ~~Technology~~the shrimp consumed in the world today come from shrimp farms that can only produce crops between one and four times per year. Consequently, the shrimp from these farms requires freezing between crops until consumed. Our system is designed to harvest different tanks each week, which provides for fresh shrimp throughout the year. We strive to create a niche market of “Always Fresh, Always Natural” shrimp. As opposed to many of the foreign shrimp farms, we can also claim that our product is 100% free of antibiotics. The ability to grow shrimp locally and year-round allows us to provide this high-end product to upscale restaurant and grocery stores throughout the world. We rotate the stocking and harvesting of our tanks each week, which allows for weekly shrimp harvests. Our product is free of pollutants and is fed only the highest-quality feeds.

22
~~In 2001,~~
We began making regular weekly sales of live shrimp from our Iowa production facility in November 2021 and from our Texas production facility in June 2022. Although our revenues were initially limited, our gross sales for the fiscal year ended March 31, 2023 increased significantly as compared to the fiscal year ended March 31, 2022. The Company is using its aforementioned platform technologies to retrofit 344,000 square feet of its existing Iowa facilities that we began research and development of a high density, natural aquaculture system that is not dependent on ocean water to provide quality, fresh shrimp every week, 52 weeks a year. Our initial system was successful, but we determined that it would not be economically feasible due to high operating costs. Over the next several years, using the knowledge we gained from developing the first system, we developed a shrimp production system that eliminated the high costs associated with the previous system. We have produced thousands ofexpect will, once fully operational, produce 18,000 pounds of shrimp over the last few years in order to develop a design that will consistently produce quality shrimp that grow to a large size at a specific rate of growth. This included experimenting with various types of natural live and synthesized feed supplies before selecting the most appropriate nutritious and reliable combination. It also included utilizing monitoring and control automation equipment to minimize labor costs and to provide the necessary oversight for proper regulation of the shrimp environment.
~~Production and Sales~~
On July 3, 2022, the La Coste, Texas shrimp production facility experienced a fire that damaged the Water Treatment Plant (WTP) including the filtration equipment within the building. The initial investigation indicated that the fire started at an external source near the WTP building. No one was hurt and this did not cause any damage to the main production building containing the shrimp. The Company immediately engaged its Emergency Response Team comprised of management, engineering, production, and sales personnel organized to quickly respond and deal with potential situations such as this. Fortunately, the Company has the necessary backup equipment to replace the damaged equipment which will allow continued production and sales in Texas. The Company received $700,000 from the insurance company for the claim filed for the fire damage. Due to the damage caused by the fire, the Company has written off approximately $1,764,000 of the fixed assets, and $325,000 of the accumulated depreciation, which, less the $700,000 insurance settlement, has resulted in the recognition of a loss due to fire in the unaudited condensed consolidated statement of operations.
Texas began selling live shrimp in late June, and Iowa has been selling since November of 2021. The initial live shrimp sales were limited in size to establish and train customers in shipping and handling procedures. These sales are targeted presently in the Chicago and San Antonio areas. As previously announced, the Company has established a partnership with US Foods, a leading foodservice distributor, to deliver the Company’s fresh never frozen shrimp to US Foods in the South Texas area. The Company expects sales to begin in November 2022 with sales of approximately 1,000 pounds per month with expected expansion of sales to 4,000 pounds per month in the first calendar quarter of 2023. Total sales have also recently included the selling of shrimp at the downtown Webster City, Iowa market for the local Chamber of Commerce.
We expect the combined output from the La Coste, Texas, and Webster City, Iowa facilities should result in a total of 20,000 pounds of shrimp production for the calendar quarter that will end on December 31, 2022 and 40,000 pounds of shrimp production for the first calendar quarter of 2023.week. We believe that the combined output from our La Coste, Texas and Iowa facilities will be approximately 24,000 pounds of shrimp production per week by the third or fourth calendar quarter of 2023. ~~Also,~~We can, however, provide no assurances as to how significant our revenue will be in the ~~Company is expecting~~next one to ~~break ground on an 80,000 square foot expansion in La Coste prior to December 31, 2022.~~two fiscal quarters.

~~The Merger Agreement and the Merger~~
On October 24, 2022, the Company entered into a Merger Agreement (as it may be amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among the Company, Yotta Acquisition Corporation, a Delaware corporation (“Yotta”), and Yotta Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Yotta (“Merger Sub”).
~~The Merger Agreement and the transactions contemplated thereby (the “Transactions”) were approved by the board of directors of each of the Company, Yotta, and Merger Sub.~~
25
The Merger Agreement provides, among other things, that Merger Sub will merge with and into the Company, with the Company as the surviving company (the “Surviving Company”) in the merger and, after giving effect to such merger, the Company shall be a wholly-owned subsidiary of Yotta (the “Merger”). In addition, Yotta will be renamed “NaturalShrimp, Incorporated” or such other name as shall be designated by the Company. Other capitalized terms used, but not defined, herein have the respective meanings given to such terms in the Merger Agreement.
The Merger Agreement provides for aggregate consideration to be issued to securityholders of the Company of 17,500,000 shares (the “Closing Merger Consideration Shares”) of Yotta’s common stock, par value $0.0001 per share (“Yotta Shares”), to be issued at the effective time of the Merger (the “Effective Time”), plus an additional (i) 5,000,000 Yotta Shares if the Surviving Corporation has at least $15,000,000 in revenue during the fiscal year ended March 31, 2024 and (ii) 5,000,000 Yotta Shares if the Surviving Corporation has at least $30,000,000 in revenue during the fiscal year ended March 31, 2025 (collectively, the “Contingent Merger Consideration Shares”).
In accordance with the terms and subject to the conditions of the Merger Agreement, at the Effective Time each share of Common Stock outstanding or deemed outstanding pursuant to the provisions discussed immediately below as of immediately prior to the Effective Time will be converted into the right to receive its allocable portion of the Closing Merger Consideration Shares and the Contingent Merger Consideration Shares (to the extent the required revenue thresholds are met).
Pursuant to the terms of the Merger Agreement and agreements that, pursuant to the Merger Agreement, the Company will enter into with holders of such convertible securities, such convertible securities will be canceled in exchange (except for the Series A Convertible Preferred Stock of the Company, par value $0.0001 per share (the “Series A Preferred”) for a cash payment or Yotta Shares as follows: (i) at the option of the holder thereof, each outstanding warrant to purchase shares of Common Stock will be canceled in exchange for a cash payment based on the value thereof or treated as exercised for shares of Common Stock, in each case based on an adjusted exercise price and as otherwise set forth in the Merger Agreement and/or the individual agreements, and if treated as exercised, converted into the right to receive such deemed shares of Common Stock’s allocable portion of the Closing Merger Consideration Shares and the Contingent Merger Consideration Shares; (ii) each outstanding share of Series F Convertible Preferred Stock of the Company, par value $0.0001 per share, will be canceled and treated as if converted into shares of Common Stock at an adjusted conversion rate as set forth in the Merger Agreement and/or such individual agreements, and converted into the right to receive such deemed shares of Common Stock’s allocable portion of the Closing Merger Consideration Shares and the Contingent Merger Consideration Shares; and (iii) each outstanding share of Series E Convertible Preferred Stock of the Company, par value $0.0001 per share (the “Series E Preferred”), will be canceled and treated as if converted into shares of Common Stock at an adjusted conversion rate as set forth in the Merger Agreement and/or such individual agreements, and converted into the right to receive such deemed shares of Common Stock’s allocable portion of the Closing Merger Consideration Shares and the Contingent Merger Consideration Shares. In addition, each holder of Series E Preferred will be entitled to receive at the Effective Time an additional number of Closing Merger Consideration Shares as are necessary to ensure that the per-share value of the Yotta Shares that such stockholder is entitled to receive is not less than the per-share value (based on the effective purchase price) of the aggregate Yotta Shares then held by any Yotta stockholder after taking into account any newly-issued Yotta Shares that such Yotta stockholder acquires directly from Yotta prior to the closing of the Merger (the “Closing”) (which will reduce the number of Closing Merger Consideration Shares that will be issued to the Company’s other securities holders). The Series A Preferred will be cancelled and retired without any conversion thereof and for no consideration.
In addition, the Merger Agreement provides that, pursuant to an agreement to be entered into between the Company and Streeterville Capital, LLC (“Streeterville”) as the holder of the Secured Convertible Promissory Note in the initial amount of $16,320,000.00 issued by the Company to Streeterville with an effective date of December 15, 2021 (the “Convertible Note”), contingent on and effective as of the Effective Time, the Convertible Note will be amended to eliminate the conversion feature thereof. Also, such agreement will provide for: (i) for the payment to Streeterville of an amount equal to the lesser of (A) one-third of the amount retained in the Trust Account at the Effective Time or (B) $10,000,000, in order to repay a portion of the outstanding balance of the Convertible Note; (ii) that the remaining balance of the Convertible Note be repaid in equal monthly installments over a 12-month period beginning on a date after the Closing Date or the termination of such agreement; and (iii) that if the Closing Date is after December 31, 2022, the outstanding balance of all indebtedness owed by the Company to Streeterville will be increased automatically by 2% and will automatically increase by 2% every 30 days thereafter until the Closing, or substantially similar terms as approved by the Board of Directors of the Company.
26
The Company is required to enter into all of the above-described agreements with the holders of the warrants, preferred stockholders, and Streeterville within 14 days of the date of the Merger Agreement, or November 7, 2022 (the “Convertible Instrument Agreements”).
The Merger is expected to close in the first calendar quarter of 2023, following the receipt of the required approvals by the stockholders of the Company and Yotta, conditional approval by the Nasdaq Stock Market of Yotta’s initial listing application filed in connection with the Merger, and the fulfillment of other customary closing conditions.
~~Termination~~
The Merger Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including, without limitation: (i) by the mutual written consent of the parties; (ii) by either Yotta or the Company if the Closing does not occur on or prior to July 22, 2023 or, if an Additional Extension Period has been approved, at the expiration of such period (the “Outside Termination Date”), unless the breach of any covenants or obligations under the Merger Agreement by the party seeking to terminate (or, in the case of Yotta, by Merger Sub) proximately caused the failure to consummate the Transactions by the applicable date; (iii) by either Yotta or the Company if any governmental authority shall have issued an order, enacted a law, or taken any other action that has the effect of making the Transactions illegal or permanently restraining, enjoining, or otherwise prohibiting the consummation of the Transactions and such law or order or other action shall have become final and nonpeelable, unless the failure by such party or its affiliates to comply with any provision of the Merger Agreement was a substantial cause of, or substantially resulted in, such action by such governmental authority; (iv) by Yotta, subject to certain exceptions, if the Company has breached any of its representations, warranties, covenants, or agreements in the Merger Agreement and such breach cannot be cured at all or within the earlier of (A) 30 days after written notice thereof and (B) the Outside Termination Date; (v) by Yotta, subject to certain exceptions, if the Company does not receive the required stockholder approval of the Merger Agreement within five business days after the effective date of the Form S-4; (vi) by Yotta, subject to certain exceptions, if the Company fails to enter into the Convertible Instrument Agreements by November 7, 2022; and (vii) by the Company, subject to certain exceptions, if Yotta or Merger Sub has breached any of its representations, warranties, covenants, or agreements in the Merger Agreement and such breach cannot be cured at all or within the earlier of (A) 30 days after written notice thereof and (B) the Outside Termination Date.
If the Merger Agreement is validly terminated, none of the parties to the Merger Agreement will have any liability or any further obligation under the Merger Agreement other than customary confidentiality obligations, except in the case of a willful breach of any covenant or agreement under the Merger Agreement or fraud, provided, that (A) if Yotta terminates the Merger Agreement pursuant to clauses (iv), (v), or (vi) of the preceding paragraph, the Company must pay to Yotta, within two business days of such termination, a termination fee in the amount of $3,000,000, and (B) if the Company terminates the Merger Agreement pursuant to clause (vii) of the preceding paragraph, Yotta shall pay to the Company, within two business days of such termination, a termination fee in the amount of $3,000,000.
Results of Operations

Comparison of the Three Months Ended ~~December 31, 2022~~June 30, 2023 to the Three Months Ended ~~December 31, 2021~~June 30, 2022

Revenue

We had gross sales revenue of ~~$97,943 in~~$205,872 and $36,336, respectively, during the three months ended ~~December 31,~~June 30, 2023 and 2022, ~~compared to $16,640~~an increase of approximately $170,000, or 467%.
Our increase in gross sales revenue during the ~~quarter~~three months ended ~~December 31, 2021. Revenues during~~June 30, 2023 over the ~~2022~~prior period ~~were the~~was a result of our sale of shrimp to ~~customers. At the beginning of~~two customers directly during fiscal 2023 ~~these sales were~~that had been made ~~to two customers of~~exclusively through a consultant to the Company under the terms of a trial distribution agreement between the consultant and the Company pursuant to which the consultant was to introduce the Company to customers and assist it in the set-up of ancillary materials used or useful in the delivery of live shrimp, including installation of necessary equipment and facilities, logistical support, training of staff and packaging necessary for shipment of live shrimp. After the trial period, the parties could have, but decided not to, negotiate and execute a long-term distribution agreement. We began receiving orders and billing one of these customers directly in Juneduring fiscal 2022 and the ~~other~~increased production of shrimp available for sale, which resulted in ~~September 2022.~~us being able to sell more shrimp to meet existing demand. Additionally, the Company entered into a six month agreement with a company for the use of the Hydrenesis Technology and Equipment on May 21, 2023, and received the initial payment of $150,000.

27
We had net revenues of $156,131 and $36,336, respectively, during the three months ended June 31, 2023 and 2022. The increase in net revenues for the first quarter of fiscal 2024 is the result of the increase in gross sales revenue, the inclusion of the contract for the use of the Hydrenesis Technology and Equipment, offset by the cost of sales in the first quarter of fiscal 2024.
Cost of Sales
Cost of sales includes direct costs related to the production and sale of our products, primarily the cost of the post-larva shrimp that we purchase to grow into our shrimp product at our facilities and the costs of shipping purchase orders to customers. Cost of sales were $49,741 and $0, respectively, during the three months ended June 30, 2023 and 2022.

Operating Expenses

The following table summarizes the various components of our operating expenses for each of the three months ended ~~December 31, 2022~~June 30, 2023 and ~~December 31, 2021:~~2022:

Three Months Ended December 31, Three Months Ended June 30,
2022 2021 2023 2022

Salaries and related expenses $ 530,167 $ 332,393 $ 512,725 $ 443,303
Professional fees 351,053 544,684
Professional services 310,540 433,970
Other general and administrative expenses 546,302 621,809 452,873 422,137
Rent 53,673 28,813 22,313 26,622
Facility operations 875,194 398,504 358,258 531,736
Research and development 14,212 20,357 - 172,643
Depreciation 416,377 218,134 434,809 525,229
Amortization 367,500 367,500 367,500 367,500
Total $ 3,154,478 $ 2,532,194 $ 2,459,018 $ 2,923,140
23

Operating expenses for the three months ended ~~December 31, 2022, increased approximately $622,000, or 24.6%, compared to~~June 30, 2023 were $2,459,018, which is a 15.9% decrease over operating expenses of $2,923,140 for the same period in ~~2021, primarily due to increases~~2022. The overall change in expenses is mainly the result of decreases in facility operations expense, depreciation, and salaries and related expenses partially offset by decreases in professional fees and other general and administrative expenses. Facility operations expenses increased $476,690, or 119.6%, during the three months ended December 31, 2022 comparedrelating to the ~~same period~~progress of the commercial operations in ~~2021,~~the new plant in Iowa as well as in Texas, and the fact that some facility operations now being considered as cost of revenue. Additionally, as a result of the ~~progress~~production of the ~~planning of~~shrimp there was not any research and development in the ~~commercial operations~~current period. Salaries increased by approximately $69,000 for additional employees. Professional fees decreased by approximately $123,000, due to increased attorneys work with the Company on equity offerings and SEC filings, as well as consultant and accounting fees, in ~~our Iowa and Texas facilities. Depreciation increased $198,243, or 90.9%, quarter over quarter~~the prior period. The depreciation in the three months ended June 30, 2023, decreased due to the progressed fixed assets as well as the movement of construction in process to fixed assets, in the two plants. Salaries and related expenses increased by $197,774, or 86.3%, during the quarter ended December 31, 2022 compared to the same period of 2021, primarily due to the Company’s increase in the number of employees and normal salary increases. Finally, professional fees during the quarter ended December 31, 2022, decreased by $193,631 compared to the same period of 2021, due to greater than normal levels of attorneys’ work with the Company on acquisitions and equity offerings and SEC filings, as well as consultant and accounting fees, in the 2021 period.

Other ~~income (expense)~~Income (Expense)

The following table summarizes the various components of our ~~Other income(expenses)~~other income (expenses) for each of the three months ended ~~December 31, 2022~~June 30, 2023 and ~~December 31, 2021:~~2022:

Three Months Ended December 31,
2022 2021

Interest expense $ (593,331 ) $ (80,991 )
Interest expense - related parties (6,250 ) -
Amortization of debt discount (843,494 ) (340,000 )
Financing costs - (1,393,000 )
Change in fair value of derivative liability 17,738,000 -
Change in fair value of warrant liability 1,155,000 (137,000 )
Change in fair value of restructured notes (1,594,515 ) -
Gain on Vero Blue note settlement - 500,000
Gain on extinguishment of debt 2,383,088 -
Legal settlement - (29,400,000 )
Loss due to fire (6,262 ) -
Total $ 18,232,236 $ (30,850,991 )
28
Other (income) expense for the three months ended December 31, 2022 changed significantly from the three months ended December 31, 2021, the majority of which is a result of the restructuring of the December 2021 note, with the removal of the conversion feature resulting in a “decrease” in the fair value of the derivative liability, as well as a legal settlement expense in December of 2021. As part of the restructuring on November 4, 2021, the conversion feature was removed, and therefore the bifurcated derivative was valued as of the restructuring date at $12,290,000, with a decrease in fair value of $17,738,000, resulting in the change in fair value being income. There was no derivative liability in the prior period. Therefore, the change in fair value is a new recognition in the current period. The interest expense increases in the current period, based on the two new notes issued in December of 2021 and August of 2022. The interest rate on both notes is 12%, so the interest expense on it is approximately $592,000 for the three months ended December 31, 2022, which is the cause of the increase in interest expense for the current period as compared to the prior period. Additionally, prior to the restructuring and accounting treatment as an extinguishment, so a removal of the original debt discounts for the two notes, there was amortization of the recognized debt discounts on the original issuance of the notes through November 4, 2022. The amortization of the debt discount during the three months ended December 31, 2021 was only for approximately 15 days, upon issuance of the December 2021 note.
On December 6, 2021 a final order was signed and a case was closed for a suit filed against the Company on August 11, 2020, alleging breach of contract for the Company’s failure to exchange common shares of the Company to shareholders of NaturalShrimp Holdings, Inc. The Company was to issue approximately 93 million shares in settlement, which had a fair value of $29,400,000, 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. The fair value of the shares was recognized as an expense in the three months ended December 31. 2021.
As a result of the restructuring of the December 2021 and August Note, which was determined to be accounted for as an extinguishment of debt, there was a gain on the extinguishment of debt for $2,383,088, between the two notes, as other income in the three months ended December 31, 2021. Additionally, as the Company elected the fair value option under ASC 825 for the restructured notes to be accounted for at fair value until settled, the fair value was revalued as of the period end, with a decrease in fair value of the two notes of $1,594,515, recognized as an expense in the three months ended December 31, 2022.
~~Comparison of the Nine Months Ended December 31, 2022 to the Nine Months Ended December 31, 2021~~
~~Revenue~~
Revenues were $186,004 during the nine months ended December 31, 2022, compared to $16,640 of revenue during the nine months ended December 31, 2021. Revenues during the 2022 period were the result of our sale of shrimp to customers, as discussed under “— Comparison of the Three Months Ended December 31, 2022 to the Three Months Ended December 31, 2021 — Revenues.”
~~Operating Expenses~~
~~The following table summarizes the various components of our operating expenses for each of the nine months ended December 31, 2022 and December 31, 2021:~~
Nine Months Ended December 31,
2022 2021

Salaries and related expenses $ 1,514,243 $ 1,987,920
Professional fees 1,097,493 1,520,783
Other general and administrative expenses 1,509,155 1,623,887
Rent 135,928 49,768
Facility operations 1,895,357 810,260
Research and development 190,855 217,229
Depreciation 1,349,838 830,260
Amortization 1,102,500 514,000
Total $ 8,795,369 $ 7,554,256
29
~~Operating expenses for the nine months ended December 31, 2022 increased $1,241,113, or 16.4%, compared to the same period in 2021,~~ ~~primarily due to increases in facility operations expense, depreciation, and amortization partially offset by decreases in salaries and related expenses and professional fees. Facility operations expenses~~ increased $1,085,097, or 133.9%, during the nine months ended December 31, 2022 compared to the same period in 2021, primarily as a result of the progress of the planning of the commercial operations in our Iowa and Texas facilities~~. Depreciation~~ ~~increased $519,429, or 62.6%, during the nine months ended December 31, 2022, compared to the same period in 2021, as a result~~ of the fixed assets from the new plant and the construction in process moved to fixed assets. Amortization increased $588,500, or 114.5%, during the nine months ended December 31, 2022, compared to the same period of 2021, as a result of the quarterly amortization for the new patent and license rights as discussed above with respect to the results for the quarter ended December 31, 2022, which we began to recognize in August 2021. While there were additional employees and normal salary increases, salaries and related expenses decreased $473,677, or 23.8%, during the nine months ended December 31, 2022 compared to the same period of 2021, primarily due to the Company’s payment of $700,000 in bonuses to its executive officers during the 2021 period~~. Professional fees decreased during the 2022 period due to greater than normal levels of legal work, as well as consultant and accounting fees, during the nine months ended December 31, 2021.~~
~~Other income (expense)~~
~~The following table summarizes the various components of our Other income(expenses) for each of the nine months ended December 31, 2022 and December 31, 2021:~~
Nine Months Ended December 31,
2022 2021

Interest expense $ (1,674,994) $ (228,190 )
Interest expense - related parties (9,772 ) -
Amortization of debt discount (5,019,883 ) (576,364 )
Financing costs - (1,502,953 )
Change in fair value of derivative liability 811,000 -
Change in fair value of warrant liability 3,031,000 (137,000 )
Change in fair value of restructured notes (1,594,515 ) -
Forgiveness of PPP loan - 103,200
Gain on Vero Blue note settlement - 500,000
Gain on extinguishment of debt 2,383,088 -
Legal settlement - (29,400,000 )
Loss due to fire (869,379 ) -
Total $ (2,953,455) $ (31,241,307 )

Three Months Ended
June 30,
2023 2022
Interest expense $ (2,713 ) $ (502,372 )
Interest expense – related parties (6,250 ) -
Amortization of debt discount - (2,040,000 )
Change in fair value of derivative liability - 1,314,000
Change in fair value of warrant liability 50,000 1,915,000
Change in fair value of restructured notes 137,634 -
Extension fee (180,000 ) -
Gain on sale of machinery and equipment 5,785 -
Total $ 4,456 $ 686,628

Other expense for the ~~nine~~three months ended ~~December 31, 2022,~~June 30, 2023, decreased ~~significantly~~approximately $682,000, or 99.4%, from the same period in ~~2021,~~ the ~~majority~~prior year, almost entirely restructuring of ~~which is~~the convertible and August note, due to the removal of the derivative related to the conversion feature and the debt discount as a result of the ~~legal settlement expense~~accounting treatment as an extinguishment of ~~$29,400,000 in December of 2021, as noted~~debt. Further, due to the election to account for the restructured notes under the fair value option, in the ~~three month~~current period there is a change ~~above. Additionally, as noted in the three-month activity above, the restructuring of the December 2021 and August notes, resulted in recognition in income for the nine months ended December 31, 2022.~~
~~As part of the restructuring on November 4, 2021, the conversion feature was removed, and therefore the bifurcated derivative was valued as of the restructuring date at $12,290,000, with a decrease~~ in fair value of ~~$17,738,000, resulting~~the restructured notes, and the interest expense is not recognized separately in the statement of operations but included in the change in fair value of ~~$811,000 for~~ the ~~nine months ending December 31, 2022 being income. There~~restructured notes. Additionally, there was ~~no derivative liability~~an extension fee related to the delay in the ~~prior period. Therefore, the change in fair value is a new recognition~~Merger Agreement closing in the current period.
The ~~interest expense increases~~Company originally recognized the warrant liability in December 2021 and revaluates it at each period-end. The decrease in the ~~current period, based on the two new notes issued in December of 2021 and August of 2022. The interest rate on both notes is 12%, so the interest expense on it is approximately $1,666,000~~fair value for the ~~nine~~three months ended ~~December 31, 2022, which is the cause of the increase in interest expense for the current period~~June 30, 2023, as compared to the prior period. Additionally, prior to the restructuring and accounting treatment as an extinguishment, so a removal of the original debt discounts for the two notes, there was amortization of the recognized debt discounts on the original issuance of the notes through November 4, 2022. As a result, the amortization of the debt discount is approximately $5,020,000 in the nine months ended December 31, 2022, compared to approximately $576,000 of amortization of the debt discount during the nine months ended December 31, 2021 based on only for approximately 15 days upon issuance of the December 2021 note.
~~The warrant liability was originally recognized in December 2021, and is revalued each period~~year end, ~~with a decrease in the fair value as of December 31, 2022, resulting~~resulted in a ~~$3,031,000~~$50,000 recognition as income during the three months ended June 30, 2023, compared to ~~an increase~~a decrease in fair value as of ~~December 31, 2021,~~June 30, 2022, which resulted in ~~a $137,000 expense.~~
30
~~On July 3, 2022,~~$1,915,000 in income during the ~~Company’s building containing its water treatment and purification system in La Coste, Texas was completely destroyed in a fire. This resulted in the $869,379 loss due to fire recognized in the nine~~three months ended ~~December 31,~~June 30, 2022.

On November 22, 2021, the Company entered into a waiver with a shareholder who had the rights to participate in a subsequent filing, in which warrants to purchase 3,739,000 shares of common stock warrants were issued with a fair value of $1,373,000 recognized as financing costs. Additionally, in April of 2021, the Company settled a convertible note, with a redemption fee of $109,953, recognized as financing costs. This resulted it the recognition of a financing cost expense of approximately $1,483,000.
~~The Company’s Paycheck Protection Program (“PPP”) loan was approved for forgiveness on April 26, 2021 and, therefore, was recognized in the nine months ended December 31, 2021.~~
Liquidity, Financial Condition and Capital Resources

As of ~~December 31, 2022,~~June 30, 2023, we had cash on hand of approximately ~~$142,000~~$70,000 and working capital ~~deficit~~deficiency of approximately ~~$8,191,000,~~$8,781,000, as compared to cash on hand of approximately ~~$1,734,000~~$216,000 and a working capital deficiency of approximately ~~$17,017,000~~$9,339,000 as of March 31, ~~2022.~~2023. The ~~increase in~~ working capital for the ~~nine~~three months ended ~~December~~June 30, 2023, as compared to the March 31, ~~2022,~~2023 year end is not significantly different, with solely an increase (a reduced working capital deficiency) of 6.0%. This is mainly due to the decrease in cash on-hand, ~~as well as~~and slight increases in other current assets , offset by a decrease in current liabilities from the ~~decrease~~reclass of the accrued interest into the inclusion in the line item for the fair value of the ~~derivative liability due to the removal of the conversion feature in the~~ restructured ~~December 2021 Note, and a decrease in fair value of the warrant liability. This is offset by the new promissory notes and related party notes, and an increase in accounts payable.~~notes.

24
Working ~~Capital/(Deficit)~~Capital Deficiency

~~Our working capital as of December 31, 2022, in comparison to~~The following table summarizes our working capital deficiency asat of June 30, 2023 and March 31, ~~2021, can be summarized as follows:~~2023:

December 31, March 31, June 30, March 31,
2022 2022 2023 2023
Current assets $ 868,398 $ 4,829,141 $ 1,798,654 $ 1,882,371
Current liabilities 9,059,549 21,846,261 10,579,743 11,221,783
Working capital deficiency $ (8,191,151 ) $ (17,017,120 ) $ (8,781,089 ) $ (9,339,412 )

Current assets decreased mainly because of the release of the $1,500,000 escrow account as of March 31, 2022 related to the proceeds from the issuance of a convertible debenture in December 2021, which was transferred to the Company’s cash. Then there was a decrease in cash based on the use of the cash on ~~hand, and a decrease of approximately $1,020,000~~hand. This was offset by an increase in ~~prepaid expenses.~~deferred offering costs, relating to the Merger Agreement. The decrease in current liabilities is primarily due to the ~~$13,101,000, decrease in~~reclass of the accrued interest on the restructured notes into the line item for the fair value of the ~~derivative liability, related to~~restructured notes, which only the ~~removal of the conversion feature~~Restructured August note payable is in the ~~restructuring of the December 2021 Note, as well as the~~current liabilities, off set by the ~~decrease~~increase in accrued expenses to related parties and the fair value of the warrant liability. This is offset by the new promissory note, which upon its restructuring was treated as an extinguishment and then recognized at its fair value under ASC 825, at approximately $2,219,000 and the $250,000 notes payable-related party.Restructured August note.

Cash Flows

~~Our cash flows for the nine months ended December 31, 2022, in comparison to~~The following table summarizes our cash flows for the ~~nine~~three months ended ~~December 31, 2021, can be summarized as follows:~~June 30, 2023 and 2022:

Nine months Ended December 31, Three months Ended June 30,
2022 2021 2023 2022
Net cash used in operating activities $ (3,884,764 ) $ (12,201,031 ) $ (1,400,898 ) $ (2,054,504 )
Net cash used in investing activities (1,730,186 ) (7,899,513 ) (20,308 ) (491,112 )
Net cash provided by financing activities 4,022,773 22,609,954 1,274,512 1,476,000
Net change in cash $ (1,592,176 ) $ 2,509,411 $ (146,694 ) $ (1,069,616 )
31

~~The net~~Net cash used in operating activities induring the ~~nine~~three months ended ~~December 31, 2022 is~~June 30 2023, was approximately ~~$8,316,000~~$654,000 less as compared to the same period in ~~2021.~~2022. The decrease in cash used is ~~based mainly on the increase in accounts payable in the current period compared~~primarily due to the ~~decrease in accounts payable in the prior period. Additionally, there is a~~ decrease in prepaid expenses and an increase in accrued ~~interest~~expense for related parties, which is accrued payroll. Additionally, there was less of an increase in accounts payable during the three months ended June 30, 2023 compared to the ~~August note as well as~~same period in the ~~addition for the current period’s nine~~three months ~~on the December 2021 note.~~ended June 30, 2022, which reflects an additional use of cash during 2022.

The net cash used in investing activities in the ~~nine~~three months ended ~~December 31, 2022~~June 30, 2023 decreased by approximately ~~$6,169,000~~$471,000 compared to the same period in the prior ~~nine-month period.~~fiscal year. During the current period cash was only used to purchase approximately $39,000, as compared to cash used to purchase fixed assets which consists of ~~the purchase of~~ approximately ~~$2,430,000 for machinery and equipment, offset by the $700,000 received from the insurance company~~$491,000 for the ~~fixed assets destroyed by the July 3, 2022 fire. The~~ prior year’s cash spent on investing activities consisted of the $2,000,000 of cash in the patent acquisition, $2,350,000 for the License Agreement and $1,000,000 in the acquisition of shares of the non-controlling interest, as well as approximately $2,116,000 for machinery and equipment and $433,000 for construction in process.year period.

The net cash provided by financing activities decreased by approximately ~~$18,587,000~~$201,000 between periods. For the current period, the Company received ~~$1,380,000 from the financing agreement~~approximately $1,299,000 for the sale of shares of common ~~stock, as well as $1,465,000 net proceeds on a new promissory note, and $250,000 from a promissory note with related parties. Additionally,~~stock. In the same period in the prior year the Company received $1,500,000 that had been held in escrow from the convertible note ~~the Company~~they entered into in December of 2021 has been transferred into its cash on hand. In the same period in the prior year, the Company received approximately $17,277,000 from the sale of common stock and warrants, and $8,905,000 of net proceeds from entering into the December 2021 note, offset by amounts paying off the previous convertible note, notes payable with related parties and bank loans, and the amount paid on the redemption of Series D Preferred Shares.2021.

Our cash position was approximately ~~$142,000~~$70,000 as of ~~December 31, 2022.~~June 30, 2023. 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 .~~months.

Recent Financing Arrangements and Developments During the Period

Short-Term Debt and Lines of Credit

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 ~~33.17%~~34.15% as of ~~December 31, 2022.~~June 30, 2023. The line of credit is unsecured. The balance of the line of credit was $9,580 at both ~~December 31,~~June 30, 2022 and March 31, 2021.
25

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 ~~17.27%~~18.25% as of ~~December 31, 2022.~~June 30, 2023. The line of credit is secured by assets of the Company’s subsidiaries. The balance of the line of credit is $10,237 at ~~December 31,~~June 30, 2022 and March 31, 2022.

~~Promissory Note~~GHS Purchase Agreement
On November 4, 2022, the Company entered into a purchase agreement (the “GHS Purchase Agreement”) with GHS pursuant to which the Company may require GHS to purchase a maximum of up to 64,000,000 shares of NaturalShrimp Common Stock (“GHS Purchase Shares”) based on a total aggregate purchase price of up to $5,000,000 over a one-year term that ends on November 4, 2023. Notwithstanding the foregoing dollar limitations, the Company and GHS may, from time to time, mutually agree in writing to waive the aforementioned limitations for a particular purchase of GHS Purchase Shares, which waiver may not exceed the 4.99% beneficial ownership limitation contained in the GHS Purchase Agreement. NaturalShrimp will control the timing and amount of any sales of GHS Purchase Shares to GHS. The Company intends to use the net proceeds from the sale of any GHS Purchase Shares for working capital and general corporate purposes.

The purchase price for the GHS Purchase Shares is 90% of the lowest volume-weighted average price during the 10 consecutive business days immediately preceding, but not including the applicable purchase date. The Company must deliver a number of GHS Purchase Shares equal to 112.5% of the aggregate purchase amount for any such purchase of GHS Purchase Shares divided by the applicable purchase price per share.
If any default events, as set forth in the GHS Purchase Agreement, has occurred and is continuing, the Company may not require GHS to purchase any GHS Purchase Shares.
Further, pursuant to the terms of the GHS Purchase Agreement, from November 4, 2022 until the later of the Closing and the 12-month anniversary of the first delivery of GHS Purchase Shares, upon any issuance by the Company or any of its subsidiaries of shares of NaturalShrimp Common Stock or NaturalShrimp Common Stock equivalents for cash, indebtedness, or a combination of units thereof (a “Subsequent Financing”), GHS will have the right to participate in any such financing in an amount equal to 100% or, following the Merger, up to 50% of such financing, on the same terms, conditions and price otherwise provided for in such subsequent financing.
In the three months ended June 30, 2023, the Company sold 40,187,311 shares of common stock at a gross amount of approximately $1,299,000, at share prices ranging from $0.03 to $0.04.
10,000,000 Common Stock Equity Financing
On April 28, 2023, the Company entered into an Equity Financing Agreement (“Equity Financing Agreement”) and Registration Rights Agreement with GHS. Under the terms of the Equity Financing Agreement, GHS agreed to provide the Company with up to $10,000,000 upon effectiveness of a registration statement on Form S-1 (the “Registration Statement”) filed with the SEC. The Registration Statement was filed on July 20, 2023 and the SEC declared it effective on August 14, 2023.
With the effectiveness of the Registration Statement, the Company now has the discretion to deliver puts to GHS and GHS will be obligated to purchase shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to GHS in each put notice shall not exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s Common Stock during the ten (10) trading days preceding the put, so long as such amount does not equal less than ten thousand dollars ($10,000) or greater than one million dollars ($1,000,000). Pursuant to the Equity Financing Agreement, GHS and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s Common Stock to GHS that would result in GHS’s beneficial ownership equaling more than 4.99% of the Company’s outstanding Common Stock. The price of each put share shall be equal to eighty percent (80%) of the Market Price (as defined in the Equity Financing Agreement). Following an up-list to the NASDAQ or equivalent national exchange, the price of each put share shall be equal to ninety percent (90%) of the Market Price, subject to a floor price of $1.00 per share. Puts may be delivered by the Company to GHS until the earlier of twenty-four (24) months after the effectiveness of the Registration Statement or the date on which GHS has purchased an aggregate of $10,000,000 worth of Common Stock under the terms of the Equity Financing Agreement.
26
GHS Purchase Agreement
On May 9, 2023, the Company entered into a ~~securities~~ purchase agreement (the ~~“SPA”~~“GHS Purchase Agreement”) with GHS pursuant which the Company may require GHS to purchase a maximum of up to 45,923,929 shares of the Company’s common stock (“GHS Purchase Shares”) based on a total aggregate purchase price of up to $6,000,000 over a one-year term that ends on May 9, 2024. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes.
The GHS Purchase Agreement provides that, upon the terms and subject to the conditions and limitations set forth in the agreement, the Company has the right from time to time during the term of the agreement, in its sole discretion, to deliver to GHS a purchase notice (a “Purchase Notice”) directing GHS to purchase (each, a “GHS Purchase”) a specified number of GHS Purchase Shares. A GHS Purchase will be made in a minimum amount of $10,000 and up to a maximum of $1,500,000 and provided that, the purchase amount for any purchase will not exceed 200% of the average of the daily trading dollar volume of the Company’s common stock during the 10 business days preceding the purchase date. Notwithstanding the foregoing dollar limitations, the Company and GHS may, from time to time, mutually agree (in writing) to waive the aforementioned limitations for a relevant Purchase Notice, which waiver, for the avoidance of doubt, shall not exceed the 4.99% beneficial ownership limitation contained in the GHS Purchase Agreement. The “Purchase Price” means, with respect to a purchase made pursuant to the GHS Purchase Agreement, 90% of the lowest VWAP (as defined in the GHS Purchase Agreement) during the Valuation Period (the ten (10) consecutive business days immediately preceding, but not including, the applicable purchase date). The Company shall deliver a number of GHS Purchase Shares equal to 112.5% of the aggregate purchase amount for such GHS Purchase divided by the Purchase Price per share for such GHS Purchase, against payment by GHS to the Company of the purchase amount with respect to such Purchase (less documented deposit and clearing fees, if any), as full payment for such GHS Purchase Shares via wire transfer of immediately available funds.
If there are any default events, as set forth in the GHS Purchase Agreement, has occurred and is continuing, the Company shall not deliver to GHS any Purchase Notice.
Further, pursuant to the terms of the GHS Purchase Agreement, from May 9, 2023 until the date that is the later of (i) the closing of the transactions whereby Yotta Merger Sub, Inc. will merge with and into the Company, with the Company as the surviving company (the “Merger”); and (ii) the 12 month anniversary of the initial closing pursuant to the Section 2(a) of GHS Purchase Agreement, 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 any financing, up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. Following the Merger, the Participation Maximum shall be 50% of the Subsequent Financing.
January 2023 Note
On January 20, 2023, the Company entered into a secured promissory note (“January 2023 Note”) with an investor (the “Investor”) ~~on August 17, 2022. Pursuant to the SPA, the Investor purchased a secured promissory note (the “Note”)~~. The January 2023 Note is in the aggregate principal amount ~~totaling approximately $5,433,333 (the “Principal Amount”).~~of $631,968. The Note has an interest rate of ~~12%~~10% per annum, with a maturity date nine months from the issuance date of the ~~Note (the “Maturity Date”).~~Note. The Note carried an original issue discount totaling $433,333 and a transaction expense amount of $10,000, both of which are included in the principal balance of the Note. On the Closing Date the Company received $1,100,000, with $3,900,000 put into escrow to be held until certain terms are met, which includes $3,400,000 upon the completion of a successful uplist to NYSE or NASDAQ. The SPA includes a Security Agreement,$56,868, whereby the ~~note~~purchase price is ~~secured by the collateral set forth in the agreement, covering all of the assets of the Company.~~$575,100. All payments made by the Company under the terms in the note, including upon repayment of this Note at maturity, shall be subject to an exit fee of 15% of the portion of the ~~Outstanding Balance~~outstanding balance being ~~paid (the “Exit Fee”).~~paid. The cash was not transferred to the Company’s bank account, but instead to the merger entity, Yotta, for a contribution to a required extension fee for the Business Combination.

3227

~~As soon as reasonably possible,~~April 2023 Promissory Note
On April 21, 2023, the Company ~~will cause~~entered into a $60,000 promissory note with Yotta Investment LLC (“Yotta”), with no interest to accrue on the principal balance. The promissory note is to be settled on the date of closing of the business combination contemplated by the Merger Agreement with Yotta (“Merger Agreement”). Upon the occurrence of an event of default, including the termination of the Merger Agreement, the unpaid principal balance of this note, and all other sums payable with regard to this note, shall automatically and immediately become due and payable, in all cases without any action on the part of the Company. As discussed in Note 12, the termination was entered into subsequent to the period end.
May 2023 Promissory Note
On May 17, 2023, the Company entered into an additional $60,000 promissory note with Yotta, with no interest to accrue on the principal balance. The promissory note is to be settled on the date of closing of the business combination contemplated by the Merger Agreement with Yotta. Upon the occurrence of an event of default, including the termination of the Merger Agreement, the unpaid principal balance of this note, and all other sums payable with regard to this note, shall automatically and immediately become due and payable, in all cases without any action on the part of the Company. As discussed in Note 12, the termination was entered into subsequent to the period end.
Secured Promissory Note
On August 17, 2022, Streeterville purchased from us the August Note. The August Note has an annual interest rate of 12% and was to mature on May 17, 2023. The August Note carried an original issue discount (“OID”) totaling $433,333 and a transaction expense amount of $10,000, both of which are included in its principal balance. At issuance the Company received $1.1 million, with $3.9 million put into escrow to be held until certain terms are met, which includes $3.4 million upon the listing of the NaturalShrimp Common Stock ~~to be listed for trading~~ on ~~either of (a) NYSE,~~the New York Stock Exchange (“NYSE”) or ~~(b) NASDAQ (in either event, an “Uplist”). In the event~~Nasdaq. The August Note also provided that if the Company ~~has~~did not ~~effectuated~~effect the ~~Uplist~~listing of the NaturalShrimp Common Stock by November 15, 2022, the then-current outstanding balance ~~will be~~on the August Note increased by 10%~~. Following the Uplist,~~, and that following such listing, while the August Note iswas still outstanding, ~~ten~~10 days after the Company ~~may have a sale of~~sold any ~~of its~~ shares of ~~common stock~~NaturalShrimp Common Stock or ~~preferred stock, there shall be~~NaturalShrimp Preferred Stock, it would have been required to make a ~~Mandatory Prepayment~~mandatory prepayment on the August Note equal to the greater of ~~$3,000,000~~$3.0 million or ~~thirty-three percent~~33% of the gross proceeds of ~~the~~such equity sale. The August Note is secured by all of the assets of the Company. All payments made by the Company on the note, including upon repayment at maturity, is subject to an exit fee of 15% of the portion of the outstanding balance being paid.

In conjunction with the Merger Agreement, ~~entered into on October 24, 2022, with Yotta Acquisition Corporation (Note 10), on November 4, 2022,~~ the Company entered into a Restructuring Agreement ~~for an Amended and Restated Secured Promissory~~with respect to the August Note ~~(the “August Note”),~~ through which the August Note was amended and restated in its entirety. The Restructuring Agreement included key modifications, in which i)(i) the ~~Uplist~~uplist terms were removed, ~~ii)~~(ii) in the event that the Closing ~~of the Merger~~ does not occur on or before December 31, 2022, the then-current ~~Outstanding Balance~~outstanding balance will be increased by 2% and ~~shall~~will increase by 2% every 30 days thereafter until the Closing or termination of the Merger Agreement, and ~~iii)~~(iii) the outstanding balance of the ~~Convertible~~August Note may be increased by 5% to 15% upon the occurrence of an event of default or failure to obtain ~~the Lender’s~~Streeterville’s consent or notify ~~the Lender~~Streeterville for certain major equity related ~~transactions (“Trigger Events��).~~transactions. The ~~Merger has not yet closed, and therefore the 2% of the outstanding balance~~August Note was ~~increased~~revalued as of ~~December 31, 2022,~~June 30, 2023 at approximately $2,590,000, with a change in fair value of approximately $190,000 recognized in the ~~amount~~Statement of ~~approximately $35,000.~~Operations.

~~The Restructured~~We analyzed the restructured August Note ~~was analyzed~~ under ASC 470-50 as to ifwhether the change in terms qualified as a modification or an extinguishment of the note. The changes in terms were considered an extinguishment as the present value of the cash flows under the terms of the new debt instrument was evaluated to be a substantial change, as over 10% difference from the present value of the remaining cash flows under the terms of the original instrument. As such, with the removal of the original note and its debt discount and accrued interest as compared to the restructured note with a fair value of approximately ~~$1,933,000,~~$1.9 million, there was a loss in extinguishment of approximately $157,000. As a result of the extinguishment and at the Company’s election of the fair value option under ASC 825, the August Note will be accounted for at fair value until ~~they are~~it is settled. In accordance with ASC 815- 15-25-1(b), a hybrid instrument that is measured at fair value under ASC 825 fair value option each period with changes in fair value reported in earnings as they occur should not be evaluated for embedded derivatives. Therefore, we did not evaluate the provisions in the August Note ~~were not evaluated~~ as to ~~if they~~whether it fell under the guidance of embedded derivatives and ~~were~~was required to be bifurcated. ~~The August Note was revalued as of December 31, 2022 at approximately $2,219,000, with a change in fair value of approximately $286,000 recognized in the Statement of Operations.~~
28

Promissory Note –— related parties
On August 10, 2022, the Company ~~issued~~entered into a loan agreement for an aggregate of $300,000 with six related parties, which is to be considered priority debt of the Company. As of the date of this ~~filing,~~report, five of the related parties have entered into promissory notes under the loan agreement for $50,000 each, for a total of cash received of $250,000. The notes bear interest at a 10% per annum and are due in one year from the date of the note. For the year ended March 31, 2023, the interest expense was $22,270.

Convertible ~~Debentures~~Note
We issued the Convertible Note in December 2021. The ~~Company entered into a securities purchase agreement (the “December 2021 SPA”) with~~Convertible Note had an investor (the “December 2021 Investor”) on December 15, 2021. Pursuant to the December 2021 SPA, the December 2021 Investor purchased a secured promissory note (the “December 2021 Note”) in the aggregate principal amount totaling approximately $16,320,000. The December 2021 Note has anannual interest rate of 12% ~~per annum, with a maturity date 24 months from the issuance date of the~~and matured on December ~~2021 Note (the “Maturity Date”).~~15, 2023. The ~~December 2021~~Convertible Note carried an ~~original issue discount~~OID totaling ~~$1,300,000~~$1.3 million and a transaction expense amount of $20,000, both of which ~~are~~were included in the principal balance of the ~~December 2021~~Convertible Note. The ~~December 2021~~Convertible Note had ~~$2,035,000~~$2.0 million in debt issuance costs, including fees paid in cash of ~~$1,095,000~~$1.1 million and warrants to purchase 3,000,000 ~~warrants~~shares of the Company’s common stock that we issued to the placement agents with a fair value of ~~$940.000.~~$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,~~term; and a dividend rate of 0%. ~~The~~We classified the warrants ~~were classified~~ as a liability, as it iswas not known if there ~~will~~would be sufficient authorized shares to be issued upon settlement, based on the conversion terms of the convertible debt.

33
~~Beginning on the date that is 6 months from the issuance date of the December 2021 Note, the December 2021 Investor has the right~~The Company was required 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 December 2021 Investor delivers notice electing to redeem a portion of the December 2021 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 December 2021 Investor’s right of redemption, the Company has the option to prepay the December 2021 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 December 2021 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~~$15.0 million in shares of ~~Common Stock~~NaturalShrimp common stock for ~~the December 2021 Investor’s~~Streeterville’s benefit such that any redemption using shares of ~~Common Stock~~NaturalShrimp common stock could be done using registered ~~Common Stock.~~shares of NaturalShrimp common stock. Additionally, the Company was required, as soon as reasonably possible following the issuance of the ~~December 2021~~Convertible Note, ~~the Company will~~to cause the ~~Common Stock~~Company’s common stock to be listed for trading on either ~~of (a)~~ NYSE or ~~(b) NASDAQ (in either event, an “Uplist”).~~Nasdaq. In the event the Company ~~has~~did not ~~effectuated the Uplist~~effectuate such listing by March 1, 2022, the then-current outstanding balance ~~will~~would be increased by 10%. On February 7, 2022, the Company and ~~the December 2021 Investor~~Streeterville entered into an amendment to the SPA, which extended the date by which the Uplist must be completed to April 15, 2022. In consideration of the grant of the extension ~~there was~~ an extension fee of $249,079 was added to the principal balance, which ~~has been~~we recognized as a financing ~~cost in the accompanying unaudited condensed consolidated financial statement.~~cost. Subsequently, the date by which the ~~Uplist~~listing had to be completed was further extended to June 15, 2022, and again to November 15, 2022, with no additional fee included. The Company ~~will~~must make a one-time payment to ~~the December 2021 Investor~~Streeterville equal to 15% of the gross proceeds that the Company receives from the offering expected to be effected in connection with the ~~Uplist~~listing (whether from the sale of shares of its ~~Common Stock~~common stock and / or preferred stock) within ~~ten (10)~~10 days of receiving such amount. In the event ~~Borrower~~that the Company does not make this payment, the then-current outstanding balance will be increased by 10%. The ~~December 2021~~Convertible Note also contains certain negative covenants and ~~Events~~events of ~~Default.~~default. Upon the occurrence of an ~~Event~~event of ~~a Default,~~default, at its option and sole discretion, ~~the December 2021 Investor~~Streeterville may consider the ~~December 2021~~Convertible Note immediately due and payable. Upon such an ~~Event~~event of ~~Default,~~default, the annual interest rate ~~increases~~on the Convertible Note will increase to 18% ~~per annum~~ and the outstanding balance ~~of the December 2021 Note increases~~will increase from 5% to 15%, depending upon the specific ~~Event~~event of ~~Default.~~default.

OnIn accordance with the terms of the Merger Agreement, the Company and Streeterville entered into Restructuring Agreement dated as of November 4, 2022, pursuant to which the Convertible Note was amended and restated, and the Company ~~entered into a Restructuring Agreement for an~~issued to Streeterville and Amended and Restated Secured Promissory Note ~~(the “Senior Note”) with the December 2021 Investor through which the December 2021 Note was~~that amended and ~~restated in its entirety. These amendments were made in conjunction with~~replaced the ~~Merger Agreement, entered into on October 24, 2022, with Yotta Acquisition Corporation (Note 10)~~Convertible Note (the “Restructured Senior Note”), ~~The main modification of the terms of the Senior Note was that~~that: (i) eliminated the conversion feature ~~was eliminated. Second, a Mandatory Payment was added whereby~~of the Convertible Note; (ii) provides that within 3three trading days of the closing ~~upon~~of the Business Combination, NaturalShrimp as the surviving entity in its merger with Merger Sub as a wholly-owned subsidiary of Yotta will pay Streeterville an amount equal to the lesser of (A) one-third of the amount (calculated prior to any deductions for any broker, underwriter, legal, accounting or other fees) retained in ~~the~~Yotta’s Trust Account (the “Trust Account”) at the ~~Effective Time~~effective time of the Business Combination or (B) $10,000,000, in order to repay a portion of the outstanding balance of the ~~Convertible~~Restructured Senior Note; ~~after which~~(iii) provide that the remaining balance of the ~~Convertible~~Restructured Senior Note ~~is to~~must be repaid in equal monthly installments over a 12-month period beginning on athe second month immediately following either the closing date ~~after~~of the ~~Closing Date~~Business Combination or the termination of ~~such agreement. Additionally,~~the Merger Agreement, but in no case later than June 30, 2024; and (iv) provides that if the ~~Closing Date~~closing date of the Business Combination is after December 31, 2022, the outstanding balance of all indebtedness owed by ~~the Company~~NaturalShrimp to ~~December 2021 Investor~~Streeterville will be increased automatically by 2% and will automatically increase by 2% every 30 days thereafter until the ~~Closing, or substantially similar terms as approved by the Board of Directors~~closing of the ~~Company. Additional key modifications include i)~~Business Combination or the ~~Uplist terms were removed, ii) Maturity date was modified from December 15, 2023 to December 4, 2023, and iii) the outstanding balance~~termination of the Convertible Note may be increased by 5% to 15% upon the occurrence of an event of default or failure to obtain the Lender’s consent or notify the Lender for certain major equity related transactions (“Trigger Events”). Merger Agreement.
29
As of ~~December 31, 2022,~~June 30, 2023, the Merger has not yet closed, and therefore the 2% of the outstanding balance was increased as of ~~December 31, 2022,~~June 30, 2023, in the amount of approximately ~~$1,309,000.~~$2,675,000. On July 20, 2023, the Company sent Yotta notice of the Company’s termination of the Merger Agreement. As of August 16, 2023, Yotta has not responded to the Company’s notice of termination. As of August 16, 2023, Yotta has not responded to the Company’s notice of termination.

34
~~The~~We analyzed the Restructured Senior Note ~~was analyzed~~ under ASC 470-50 as to if the ~~change~~changes in terms qualified as a modification or an extinguishment of the note. The changes in terms were considered an extinguishment as the conversion feature has been eliminated and therefore the ~~modified August~~Restructured Senior Note is determined to be fundamentally different from the original ~~convertible note.~~Convertible Note. As such, with the removal of the ~~original note~~Convertible Note and its debt discount and accrued interest as compared to the ~~restructured note~~Restructured Senior Note with a fair value of approximately ~~$18,914,000,~~$18.9 million, there was a gain in extinguishment of approximately ~~$2,540,000.~~$2.5 million. As a result of the extinguishment and at the Company’s election of the fair value option under ASC 825, we will account for the Restructured Senior Note ~~will be accounted for~~ at fair value every period end until it is settled. In accordance with ASC 815- 15-25-1(b) a hybrid instrument that is measured at fair value under ASC 825 fair value option each period with changes in fair value reported in earnings as they occur should not be evaluated for embedded derivatives. Therefore, we did not evaluate the provisions in the Restructured Senior Note ~~were not evaluated~~ as to ifwhether they fell under the guidance of embedded derivatives and were required to be bifurcated. ~~The~~We revalued the Restructured Senior Note ~~was revalued~~ as of ~~December 31, 2022~~June 30, 2023 at approximately ~~$20,223,000,~~$21,870,000, with a change in fair value of approximately ~~$1,309,000~~$580,000 recognized in the Company’s Statement of Operations.

~~GHS Purchase Agreement~~Series E Preferred Stock and Warrant
On November 22, 2021, we sold to an accredited investor 1,500 shares of Series E Preferred at a price of $1,000 per share and a warrant to purchase up to 1,500,000 shares of NaturalShrimp common stock at an exercise price of $0.75 per share, subject to adjustment as set forth therein, for an aggregate purchase price of $1.5 million. We received approximately $1.4 million in net proceeds after deducting the commission of Joseph Gunnar & Co., LLC (the placement agent) and other estimated offering expenses payable by the Company. We issued warrants to purchase 334,116 shares of our common stock to the placement agent as placement agent fees.

On November 4, 2022, the Company entered into a purchase agreement (the “GHS Purchase Agreement”) with GHS Investments LLC (“GHS”), an accredited investor, pursuant to which, the Company may require GHS to purchase a maximum of up to 64,000,000 shares of the Company’s common stock (“GHS Purchase Shares”) based on a total aggregate purchase price of up to $5,000,000 over a one-year term that ends on November 4, 2023. ~~Notwithstanding the foregoing dollar limitations, the Company~~Share Exchange Agreement and GHS may, from time to time, mutually agree in writing to waive the aforementioned limitations for a relevant Purchase Notice, which waiver, shall not exceed the 4.99% beneficial ownership limitation contained in the GHS Purchase Agreement. The Company is to control the timing and amount of any sales of GHS Purchase Shares to GHS. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes.
The “Purchase Price” means, with respect to a purchase made pursuant to the GHS Purchase Agreement, 90% of the lowest VWAP during the 10 consecutive business days immediately preceding, but not including, the applicable purchase date. The Company shall deliver a number of GHS Purchase Shares equal to 112.5% of the aggregate purchase amount for such GHS Purchase divided by the Purchase Price per share for such GHS Purchase.
~~If there are any default events, as set forth in the GHS Purchase Agreement, has occurred and is continuing, the Company shall not deliver to GHS any Purchase Notice.~~
Further, pursuant to the terms of the GHS Purchase Agreement, from November 4, 2022 until the date that is the later of (i) the closing of the transactions whereby Yotta Merger Sub, Inc. will merge with and into the Company, with the Company as the surviving company (the “Merger”); and (ii) the 12 month anniversary of the first delivery of GHS Purchase Shares, 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 any financing, up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. Following the Merger, the Participation Maximum shall be 50% of the Subsequent Financing.
In the three months ended December 31, 2022, the Company sold 17,175,675 shares of common stock at a net amount of approximately $1,378,000, at share prices ranging from $0.08 to $0.10. There were 11,306.351 additional shares of common stock sold after the period end (see Note 11).
~~Common Shares Issued to Consultant~~Redemption

On April 14, 2021 ~~500,000~~the Company, entered into a share exchange agreement (the “Exchange Agreement”) with a holder of the Company’s Series D Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”), whereby, at the closing of the Offering, the Holder agreed to exchange an aggregate of 3,600 shares of ~~common~~the Series D Preferred Stock into 3,739.63 shares of the Company’s Series E Convertible Preferred Stock, par value $0.0001 (the “Series E Preferred Stock”). The exchange was completed on April 15, 2021. In accordance with ASC 260-10-S99-2, exchanges of preferred stock ~~were issued~~that are considered to be extinguishments are to be accounted for as a ~~consultant per an agreement entered into on January 20, 2021 for advisory services for a two-year period. The shares had a~~redemption. Therefore, the difference between the fair value of ~~$195,000,~~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.
On June 16, 2022, one of the holders of the Series E Convertible Preferred Stock chose to exercise their right, pursuant to the Certificate of Designation relating to the Series E Convertible Preferred Stock, to receive the rights extended to the convertible noteholder of 90% multiplied by the average of the two lowest volume weighted average price per share of the Company’s common stock during the 10 trading days immediately preceding the date of conversion. As the exercise of the conversion price adjustment was similar to a down round, and the Company has not yet adopted ASU 2020-06, the accounting treatment of ASU 2017-11 was applied, whereby the adjustment was treated as a contingent beneficial conversion feature recognized as of the triggering date. As of June 16, 2022, this holder held 940 shares of the Series E Preferred Stock. The Company analyzed the conversion feature under ASC 470-20, “Debt with conversion and other options,” and based on the market price of ~~$0.39 on~~ the ~~grant date. 62,500~~common stock of the Company as compared to the conversion price, determined there was a $99,000 beneficial conversion feature to recognize, which was fully amortized as there is no remaining redemption date to their Series E Preferred Stock. The additional rights of the convertible note that were applied include the 10% increase in the outstanding balance if an uplist to a national exchange was not consummated by the Company by March 1, 2022, for an increase of 130 shares of Series E Preferred Stock with a stated value of $156,000, as well as an exit fee of 15% to be recognized upon conversions of the shares of Series E Preferred Stock into shares of common ~~stock shall vest each quarter through October~~stock. On May 1, ~~2022, at $24,275, with approximately $171,000 vested through December 31, 2022.~~
~~Common~~2023, the holder converted 600 Series E Preferred Stock ~~Issued in Relation to Business Agreement~~
~~On August 1, 2022, the Company issued 250,000~~into 23,989,570 shares of common ~~stock to a consultant per~~stock. The conversion represented their remaining Series E Preferred Stock, including the ~~terms~~10% increase, accrued dividends in kind of ~~an agreement from June 2021, to be issued upon~~$516,000 and the ~~approval~~15% Exit Fee of ~~a patent.~~$108,000.

3530

As of June ~~22, 2022, 250,000 common~~30, 2023 there were 1,500 shares ~~were issued in relation to a trial distribution agreement, which after the result~~ of the trial period, both parties may negotiate and execute a long-term distribution agreement. The shares will be paid by the Company withholding sufficient profits from the sale by the other party of the live shrimpSeries E Preferred Stock remaining outstanding.

On November 5, 2022, the Company entered a restructuring agreement with the holders of the Series E Preferred Stock whereby the Series E Preferred Stock and the warrants outstanding, including all holders of the warrants (in Note 13 in the consolidated financial statement footnotes) as of the closing date of the Business Combination will have their terms adjusted. The outstanding warrants will be (i) cancelled in exchange for a cash payment equal to the fair value of the warrants based on the Black Scholes model, with the exercise price to be adjusted to equal 80% of the average volume weighted average price of the Company’s common stock during the five trading day period immediately prior to the closing date of the Business Combination (the “Adjusted Exercise Price”) or (ii) as of the effective time of the Business Combination, canceled and treated as if exercised for that number of shares of the Company’s common stock calculated using the Black Scholes model fair value, the number of shares of common stock underlying the warrants on the closing date of the Business Combination and the Adjusted Exercise Price, with the shares of the Company’s common stock that would have been due to the holder as a result of such exercise of the warrant treated as if issued to the holder and then converted into the right to receive (A) the Closing Per Share Merger Consideration (as defined in the Merger Agreement) plus (B) the Additional Per Share Merger Consideration (as defined in the Merger Agreement), if any, at the time and subject to the contingencies set forth in the Merger Agreement. The shares of Series E Preferred Stock that are outstanding immediately prior to the effective time of the Business Combination will be canceled and treated as if converted into that number of shares of the Company’s common stock equal to (i) the stated value of $1,200 per share plus any unpaid dividends, multiplied by 1.25, divided by (ii) 80% of the average volume weighted average price of the Company’s common stock during the five trading day period immediately prior to the closing date of the Business Combination. The shares of the Company’s common stock that would have been due to the holder as a result of the conversion of such shares of Series E Convertible Preferred Stock will be treated as issued to holder and converted, as of the effective time of the Business Combination, into the right to receive (y) the Closing Per Share Merger Consideration plus (z) the Additional Per Share Merger Consideration, if any, at the time and subject to the contingencies set forth in the Merger Agreement.
Waiver
On April 14, 2021, NaturalShrimp entered into a securities purchase agreement with GHS to sell to GHS: (i) 9,090,909 shares of NaturalShrimp common stock at a price per share of $0.55; (ii) warrants to purchase up to 10,000,000 shares of NaturalShrimp common stock, at an exercise price of $0.75 per share; and (iii) 1,000,000 shares of NaturalShrimp common stock with a value (although no purchase price will be paid) of $0.65 per share, pursuant to which, until April 14, 2022, GHS had a right to participate in any subsequent financing that we conducted.
On November 22, 2021, NaturalShrimp and GHS entered into a waiver whereby GHS agreed to waive its right to participate in the above-described offering and to participate in a possible debt financing. GHS also agreed to waive its right, pursuant to the Certificate of Designation for the Series E Preferred Stock, to exchange its shares of Series E Preferred Stock for securities issued in the debt financing, if the Company enters into such financing.
In consideration for GHS entering into the waiver, we lowered the exercise price of the warrants we had previously issued to GHS to $0.35 per share and issued to GHS warrants to purchase 3,739,000 shares of NaturalShrimp Common Stock at an exercise price of $0.75 per share.
Going Concern and Management Liquidity Plans

The ~~unaudited condensed~~ consolidated financial statements ~~contained in this quarterly report on Form 10-Q~~ have been prepared assuming that ~~the Company~~it will continue as a going concern. ~~The~~For the three months ended June 30, 2023, the Company ~~has accumulated losses through the period to December 31, 2022~~had a net loss available for common stockholders of approximately ~~$163,038,000 as well as negative cash flows from operating activities~~$2,703,000. As of June 30, 2023, the Company had an accumulated deficit of approximately ~~$4,754,000. Presently, the Company does not have sufficient cash resources to meet its plans in the twelve months following the date~~$170,237,000 and a working capital deficit of ~~issuance of this filing.~~approximately $8,781,000. These factors raise substantial doubt about the Company’s ability to continue as a going ~~concern.~~ concern, within one year from the issuance date of this filing. The Company’s ability to continue as a going concern is dependent on its ability to raise the required additional capital or debt financing to meet short and long-term operating requirements. During the three months ended June 30, 2023, the Company received net cash proceeds of approximately $1,299,000 from the sale of common shares. Subsequent to period end, the Company received $140,000 proceeds from the issuance of promissory notes, related parties.
31
Management isbelieves that private placements of equity capital will be needed to fund the Company’s long-term operating requirements. The Company may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. If the ~~process of evaluating various financing alternatives in order to finance the continued build-out of our equipment and for general and administrative expenses. These alternatives include raising~~Company raises additional funds through ~~public~~the issuance of equity, the percentage ownership of its current shareholders could be reduced, and such securities might have rights, preferences or ~~private equity markets and either through institutional~~privileges senior to its common stock. Additional financing may not be available upon acceptable terms, or ~~retail investors. Although there is no assurance that~~at all. If adequate funds are not available or are not available on acceptable terms, the Company ~~will be successful with our fund-raising initiatives, management believes that the Company will~~may not be able to ~~secure~~take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict its operations. The Company continues to pursue external financing alternatives to improve its working capital position. If the Company is unable to obtain the necessary ~~financing as a result of ongoing financing discussions with third party investors~~capital, the Company may be unable to develop its future planned facilities and, ~~existing shareholders.~~ concomitantly, increase its shrimp production.

The ~~unaudited condensed~~Company’s consolidated financial statements included in this report do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing as may be required and ultimately to attain profitability. If the Company raises additional funds through the issuance of equity, the percentage ownership of current ~~shareholders~~stockholders could be reduced, and such securities might have rights, preferences, or privileges senior to the rights, preferences, and privileges of the ~~Company’s common stock.~~NaturalShrimp Common Stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict its future plans for developing its business and achieving commercial revenues. ~~If the Company is unable to obtain the necessary capital, the Company may have to cease operations.~~

Future Financing

We will require additional funds to implement our growth strategy for our business. In addition, while we have received capital from various private placements that have enabled us to fund our operations, these funds have been largely used to develop our processes, although additional funds are needed for other corporate operational and working capital purposes. However, not including funds needed for capital expenditures or to pay down existing debt and trade payables, we anticipate that we will need to raise an additional ~~$2,500,000~~$2.5 million to cover all of our capital and operational expenses over the next 12 months, not including any capital expenditures needed as part of any commercial scale-up of our equipment. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There can be no assurance that additional financing will be available to us when needed or, if available, that such financing can be obtained on commercially reasonable terms. If we are not able to obtain the additional necessary financing on a timely basis, or if we are unable to generate significant revenues from operations, we will not be able to meet our other obligations as they become due, and we will be forced to scale down or perhaps even cease our operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Effects of Inflation

We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.

3632

Critical Accounting Policies and Estimates

Our significant accounting policies are more fully described in the notes to our financial statements included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2020.~~2023 and 2022. We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations.

Fair Value Measurement

The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in the valuation of an asset or liability. It establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

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 ~~Derivative~~warrant liabilities and ~~warrant liabilities~~fair value option on Restructured notes, are Level 3 fair value measurements.

Basic and Diluted Earnings/Loss per Common Share

Basic and diluted earnings or loss per share (“EPS”) amounts in the unaudited condensed consolidated financial statements are computed in accordance with ASC 260 – 10 “Earnings per Share”, which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of shares of common stock outstanding. Diluted EPS is based on the weighted average number of shares of common stock outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of shares of common stock outstanding (denominator) during the period. For the three months ended ~~December 31, 2022,~~June 30, 2023, the Company had 5,000,000 ~~shares of~~ Series A Convertible Preferred Stock which would be converted at the holder’s option into approximately ~~751,385,000~~868,264,000 underlying common shares, ~~170 shares~~1,500 of Series E Redeemable Convertible Preferred shares whose approximately ~~2,775,000~~5,143,000 underlying shares are convertible at the investors’ option at a fixed conversion price of $0.35, 750,000 shares of Series F Preferred Stock which would be converted at the holders’ option into approximately 208,383,000 underlying common shares, and 18,573,116 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. For the three months ended June 30, 2022, the Company had 5,000,000 Series A Convertible Preferred Stock which would be converted at the holder’s option into approximately 740,711,000 underlying common shares, 1,500 of Series E Redeemable Convertible Preferred shares whose approximately 5,143,000 underlying shares are convertible at the investors’ option at a fixed conversion price of $0.35, and 640 of Series E Redeemable Convertible Preferred shares whose approximately 7,676,000 underlying shares are convertible at the investors’ option at conversion price of 90% of the average of the two lowest market prices over the last 10 days, 750,000 shares of Series F Preferred Stock which would be converted at the holders’ option into approximately ~~180,333,000~~177,771,000 underlying common shares, ~~whose shares were included in the calculation of diluted EPS. For the three months ended December 31, 2022, the Company had 1,500 shares of Series E Redeemable Convertible Preferred shares whose~~ approximately 5,143,000 underlying shares are convertible at the investors’ option at a fixed conversion price of $0.35, and 18,573,116 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive as their conversion and exercise prices were greater than the market price of the Company’s common shares. For the nine months ended December 31, 2022, the Company had 5,000,000 shares of Series A Convertible Preferred Stock which would be converted at the holder’s option into approximately 768,561,000 underlying common shares, 1,500 shares of Series E Redeemable Convertible Preferred shares whose approximately 5,143,000 underlying shares are convertible at the investors’ option at a fixed conversion price of $0.35, and 170 shares of Series E Redeemable Convertible Preferred shares whose approximately 2,775,000 underlying shares are convertible at the investors’ option at conversion price of 90% of the average of the two lowest market prices over the last 10 days, 750,000 shares of Series F Preferred Stock which would be converted at the holders’ option into approximately 184,387,000 underlying common shares, and 18,573,116 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. For the three and nine months ended December 31, 2021, the Company had Redeemable Convertible Preferred stock with approximately 9,842,000 underlying common shares, $18,768,000 in a convertible debenture whose approximately ~~67,816,000~~164,177,000 underlying shares are convertible at the holders’ option at conversion price of ~~90 %~~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.
3733

Impairment of Long-lived Assets and Long-lived Assets

The Company will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.

Revenue Recognition
The Company recognizes revenue in accordance with ~~Accounting Standards Codification (ASC)~~ASC 606, Revenue from Contracts with Customers, and, as such, the Company records revenue when ~~their~~its customers obtain control of the promised goods or services in an amount that reflects the consideration ~~which~~that the Company expects to receive in exchange for those goods or services. The Company will sell primarily to food service distributors, as well as to wholesalers, retail establishments and seafood distributors. Additionally, the Company will sell or rent either the Hydrenesis Technologies or Equipment.

To determine revenue recognition for the arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (1) identify the contract(s) with a customer by receipt of purchase orders and confirmations sent by the Company, which includes a required line of credit approval process, (2) identify the performance obligations in the contract, which includes shipment of goods to the customer FOB shipping point or destination, (3) determine the transaction price which initiates with the purchase order received from the customer and confirmation sent by the Company and will include discounts and allowances by customer if any, (4) allocate the transaction price to the performance obligations in the contract which is the shipment of the goods to the customer and transaction price determined in step 3 above and (5) recognize revenue when (or as) the ~~entity~~Company satisfies a performance obligation, which is when the Company transfers control of the goods to the customers by shipment or delivery of the products.

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 ~~December 31, 2022.~~June 30, 2023.

Recently Issued Accounting Standards

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options,, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share,, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.

38
During the period ending ~~December 31, 2022,~~June 30, 2023, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

34
Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable. As a smaller reporting company, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

The Company’s management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this Report.

Based upon that evaluation , our principal executive officer and principal financial officer concluded that, as of ~~December 31, 2022,~~June 30, 2023, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below. Thus, there remains a reasonable possibility that a material misstatement of the Company’s interim financial statements will not be prevented or detected on a timely basis. This does not include an evaluation by the Company’s registered public accounting firm regarding the Company’s internal control over financial reporting. Accordingly, we cannot provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, to allow our principal financial and executive officers to make timely decisions regarding required disclosures as of ~~December 31, 2022.~~June 30, 2023.

Management’s evaluation was based on the following material weaknesses in our internal control over financial reporting which existed as of March 31, ~~2022,~~2023, and which continue to exist, as discussed in the Company’s Annual Report on Form 10-K:

● Inadequate segregation of duties consistent with control objectives;
● Lack of independent Board of Directors (as of the balance sheet date) and absence of Audit Committee to exercise oversight responsibility related to financial reporting and internal control;
● Lack of risk assessment procedures on internal controls to detect financial reporting risks in a timely manner; and
● Lack of documentation on policies and procedures that are critical to the accomplishment of financial reporting objectives.
39

Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

35
Remediation Plan

Management continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively.

The remediation actions planned include:

● Identify gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company;
● Establish an independent Board of Directors (which we expect to establish in our fourth fiscal quarter that will end on March 31, 2023) and an Audit Committee to provide oversight for remediation efforts and ongoing guidance regarding accounting, financial reporting, overall risks and the internal control environment;
● Retain additional accounting personnel with public company financial reporting, technical accounting, SEC compliance, and strategic financial advisory experience to achieve adequate segregation of duties; and
● Continue to develop formal policies and procedures on accounting and internal control over financial reporting and monitor the effectiveness of existing controls and procedures.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended ~~December 31, 2022~~June 30, 2023 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. The Company has resolved all outstanding litigation involving the Company and there are no suits or cases pending in which the Company is a party.

Item 1A. Risk Factors

Factors that could cause or contribute to differences in our future financial and operating results include those discussed in the risk factors set forth in Item 1 of our Annual Report on Form 10-K for the year ended March 31, ~~2022.~~2023. The risks described in our Form 10-K and this Report are not the only risks that we face. Additional risks not presently known to us or that we do not currently consider significant may also have an adverse effect on the Company. If any of the risks actually occur, our business, results of operations, cash flows or financial condition could suffer.

There have been no material changes to the risk factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended March 31, ~~2022,~~2023, filed with SEC on June ~~29, 2022 other than the following:~~
~~In this document:~~
~~● “Business Combination” means the merger and the other transactions contemplated by the Merger Agreement.~~
40
~~● “Merger Agreement” means that certain Merger Agreement, dated as of October 24, 2022, by and among Yotta, Merger Sub and NaturalShrimp, as it may be amended or supplemented.~~
~~● “Merger Sub” means Yotta Merger Sub, Inc., a Nevada corporation and wholly-owned subsidiary of Yotta.~~
~~● “New NaturalShrimp” means the combined company after the Business Combination.~~
~~● “New NaturalShrimp Common Stock” means the common stock, par value $0.0001 per share, of New NaturalShrimp.~~
~~● “Yotta” means Yotta Acquisition Corporation, a Delaware corporation.~~
New NaturalShrimp will issue shares of New NaturalShrimp Common Stock as consideration in the Business Combination and may issue additional shares of New NaturalShrimp Common Stock or other equity or convertible debt securities without approval of the holders of New NaturalShrimp Common Stock, which would dilute then-existing ownership interests and may depress the market price of the New NaturalShrimp Common Stock.
We anticipate that, following the Business Combination, (i) former NaturalShrimp securityholders will own approximately 51.6% of the outstanding shares of New NaturalShrimp Common Stock, (ii) former Yotta stockholders will own approximately 46.9% of the outstanding shares of New NaturalShrimp Common Stock, and (iii) the representative of the underwriters in Yotta’s initial public offering will own 1.5% of the outstanding shares of New NaturalShrimp Common Stock. These percentages are based on the pro forma ownership of New NaturalShrimp Common Stock as of September 30, 2022, and assume, among other things, that no shares of Yotta’s common stock are redeemed in connection with the Business Combination or any further extensions of the date by which Yotta must consummate an initial business combination. If the actual facts differ from these assumptions, these percentages will differ.
New NaturalShrimp may continue to require capital investment to support its business and may issue additional shares of New NaturalShrimp Common Stock or other equity or convertible debt securities of equal or senior rank in the future without approval of its stockholders in certain of circumstances.
New NaturalShrimp’s issuance of additional shares of New NaturalShrimp Common Stock or other equity or convertible debt securities would have the following effects: (i) New NaturalShrimp’s existing stockholders’ proportionate ownership interest in New NaturalShrimp would decrease; (ii) the amount of cash available per share, including for payment of dividends in the future, may decrease; (iii) the relative voting power of each previously outstanding shares of New NaturalShrimp Common Stock may be diminished; and (iv) the market price of New NaturalShrimp Common Stock may decline.
~~Yotta may be subject to the Excise Tax included in the Inflation Reduction Act of 2022 in connection with redemptions of its Common Stock after December 31, 2022.~~
On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which, among other things, imposes a 1% excise tax on any publicly traded domestic corporation that repurchases its stock after December 31, 2022 (the “Excise Tax”). The Excise Tax is imposed on the fair market value of the repurchased stock, with certain exceptions. Because Yotta is are a Delaware corporation and because its securities trade on Nasdaq, it is a “covered corporation” within the meaning of the Inflation Reduction Act. While not free from doubt, absent any further guidance from the U.S. Department of the Treasury (the “Treasury”), who has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the Excise Tax, the Excise Tax may apply to any redemptions of Yotta’s common stock after December 31, 2022, including redemptions in connection with the Business Combination, unless an exemption is available. Generally, issuances of securities in connection with an initial business combination transaction (including any PIPE transaction at the time of an initial business combination) are expected to reduce the amount of the Excise Tax in connection with redemptions occurring in the same calendar year. In addition, because the Excise Tax would be payable by Yotta and not by the redeeming holder, the mechanics of any required payment of the Excise Tax have not been determined.
41
Future resales of shares of New NaturalShrimp Common Stock issued to NaturalShrimp stockholders and other significant stockholders may cause the market price of the New NaturalShrimp Common Stock to drop significantly, even if New NaturalShrimp’s business is doing well.
Pursuant to the Merger Agreement, immediately after the closing of the Business Combination NaturalShrimp’s securityholders will hold approximately 51.6% of the outstanding shares of New NaturalShrimp Common Stock, approximately [●]% of which will be eligible for sale immediately after the consummation of the Business Combination. These percentages are based on the pro forma ownership of New NaturalShrimp Common Stock as of September 30, 2022, and assume among other things, and that no shares of Yotta’s common stock are redeemed in connection with the Business Combination or any further extensions of the date by which Yotta must consummate an initial business combination. If the actual facts differ from these assumptions, these percentages will differ. Pursuant to Lock-Up Agreements entered into in connection with the execution of the Merger Agreement, certain New NaturalShrimp stockholders will be restricted, subject to certain exceptions, from selling any of the New NaturalShrimp Common Stock that they receive in or hold at the effective time of the Business Combination, which restrictions will expire, and therefore additional shares of New NaturalShrimp Common Stock will be eligible for resale six months after the effective time of the Business Combination.
Subject to the Lock-Up Agreements, the NaturalShrimp stockholders that are a party thereto (which are NaturalShrimp’s three executive officers and directors) may sell New NaturalShrimp Common Stock pursuant to Rule 144 under the Securities Act (“Rule 144”), if available. In these cases, the resales must meet the criteria and conform to the requirements of that rule, including, because Yotta is currently a shell company, waiting until one year after New NaturalShrimp’s filing with the SEC of Form 10-type information reflecting the Business Combination.
Upon expiration of the lock-up periods set forth in the Lock-Up Agreements, and upon effectiveness of the registration statement that New NaturalShrimp will be required to file pursuant to the Amended and Restated Registration Rights Agreement to be entered into prior to the closing of the Business Combination by Yotta, certain stockholders of Yotta and certain stockholders of NaturalShrimp who will be affiliates of New NaturalShrimp immediately after the closing, or upon satisfaction of the requirements of Rule 144, certain former Yotta stockholders and certain other significant stockholders of New NaturalShrimp may sell large amounts of New NaturalShrimp Common Stock in the open market or in privately-negotiated transactions, which could have the effect of increasing the volatility in New NaturalShrimp’s share price or putting significant downward pressure on the price of the New NaturalShrimp Common Stock.
~~New NaturalShrimp may be unable to maintain the listing of its securities in the future.~~
~~If New NaturalShrimp fails to meet the continued listing requirements and Nasdaq delists its securities, it could face significant material adverse consequences, including:~~
● ~~a limited availability of market quotations for its securities;~~
● ~~a limited amount of news and analyst coverage for New NaturalShrimp; and~~
● ~~a decreased ability to issue additional securities or obtain additional financing in the future~~
We face risks related to the COVID-19 pandemic that could significantly disrupt our research and development, operations, sales, and financial results, and other epidemics or outbreaks of infectious diseases may have a similar impact.
In March 2020, the World Health Organization categorized COVID-19 as a pandemic. The spread of the outbreak has caused significant disruptions in the global economy, and the impact may continue to be significant. While the threat level has declined to a significant extent in the United States and globally, and our operations have not been materially and negatively impacted by the pandemic to date, our business could be adversely impacted by the effects of the COVID-19 pandemic as well as government efforts to control or combat it, particularly if there is a resurgence in infections, including as a result of the emergence of new variants of the virus that causes COVID-19. In addition to global macroeconomic effects, the COVID-19 outbreak and any other related adverse public health developments could cause disruption to our operations and manufacturing activities. For example, if governments re-implement restrictions in an attempt to combat any resurgence of COVID-19, we may experience disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to develop and design our products and services in a timely manner or meet required milestones. Further, our third-party equipment manufacturers, third-party raw material suppliers, and consultants have been and may continue to be disrupted by worker absenteeism, quarantines, and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions, which could adversely affect our business and operations. Other epidemics or outbreaks of infectious diseases could have similar impacts on NaturalShrimp as well.27, 2023.

Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds

There were no unregistered sales of the Company’s equity securities during the three months ended ~~December 31, 2022~~June 30, 2023 that were not previously reported in an Annual Report on Form 10-K, a Quarterly Report on Form 10-Q, or a Current Report on Form 8-K except as follows:

~~During~~On May 1, 2023, GHS converted 600 shares of Series E Preferred Stock into 23,989,570 shares of common stock.
Pursuant to the settlement of a lawsuit filed by Gary Shover, a shareholder of NSH, in the three months ended ~~December 31, 2022, the Company sold 17,175,675~~June 30, 2023, 863,110 shares of common stock, atwith a ~~net amount~~fair value of ~~approximately $1,378,000, at share prices ranging from $0.08~~$272,743, were issued out of the Stock Payable. All of the shares issued pursuant to ~~$0.10.~~the December 6, 2021 final Order were issued in reliance on the exemption under Section 3(a)(10) of the Securities Act.
On June 19, 2023, 100,000 shares of common stock were issued to a consultant. The shares had a fair value of $4,700, based on the market price of $0.047 on the grant date.
36

Unless otherwise specified, the above securities were issued in reliance on the exemption under Section 4(a)(2) of the Securities Act. The issuance of the shares to the consultant qualified for exemption under Section 4(a)(2) since the issuance by us did not involve a public offering. The offering was not a “public offering” as defined in 4(a)(2) due to the insubstantial number of persons involved in the transactions, manner of the issuance and number of securities issued. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, the investor had the necessary investment intent as required by Section 4(a)(2) since they agreed to and received securities bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering”. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(a)(2) of the Securities Act.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

4237

Item 6. Exhibits

EXHIBIT INDEX

Incorporated by Reference
Exhibit Number Exhibit Description Form Exhibit
Filing
Date/Period
End Date
10.1 Equity Financing Agreement dated April 28, 2023 by and between NaturalShrimp Incorporated and GHS Investments, LLC 8-K 10.1 5/10/2023
10.2 Registration Rights Agreement dated April 28, 2023 by and between NaturalShrimp Incorporated and GHS Investments, LLC 8-K 10.2 5/10/2023
10.3# Purchase Agreement, dated as of May 9, 2023, by and between NaturalShrimp Incorporated and GHS Investments LLC 8-K 10.3 5/10/2023
10.4 Licensing Agreement dated May 24, 2023 by and between Niterra Co., Ltd. and NaturalShrimp Incorporated 8-K 10.1 6/8/2023
31.1* Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.
31.2* Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.
32.1** Section 1350 Certification of Chief Executive Officer.
32.2** Section 1350 Certification of Chief Financial Officer.
101.INS* Inline XBRL Instance Document
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
~~Incorporated by Reference~~* Filed herewith.
~~Exhibit Number~~ ~~Exhibit Description~~ ~~Form~~ ~~Exhibit~~
~~Filing~~
~~Date/Period~~
~~End Date~~
~~2.1#~~
~~Merger Agreement by and among NaturalShrimp Incorporated, Yotta Acquisition Corporation, and Yotta Merger Sub, Inc., dated as of October 24, 2022~~
~~8-K/A~~ ~~2.1~~ ~~10/27/2022~~
~~10.1#~~ ~~Purchase Agreement, dated as of November 4, 2022, by and between the Company and GHS Investments LLC~~ ~~8-K~~ ~~10.1~~ ~~11/08/2022~~
31.1* ~~Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.~~
31.2* ~~Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.~~
32.1** ~~Section 1350 Certification of Chief Executive Officer.~~
32.2** ~~Section 1350 Certification of Chief Financial Officer.~~
101.INS* ~~Inline~~ ~~XBRL Instance Document~~
101.SCH* ~~Inline~~ ~~XBRL Taxonomy Extension Schema Document~~
101.CAL* ~~Inline~~ ~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF* ~~Inline~~ ~~XBRL Taxonomy Extension Definition Linkbase Document~~
101.LAB* ~~Inline~~ ~~XBRL Taxonomy Extension Label Linkbase Document~~
101.PRE* ~~Inline~~ ~~XBRL Taxonomy Extension Presentation Linkbase Document~~
~~104~~ ~~Cover Page Interactive Data File (embedded within the Inline XBRL document)~~
* Filed herewith.
** Furnished herewith.
# Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish supplementally copies of omitted schedules and exhibits to the Securities and Exchange Commission or its staff upon its request.

4338

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NATURALSHRIMP INCORPORATED

By: /s/ Gerald Easterling
Gerald Easterling
Chief Executive Officer
(Principal Executive Officer)
~~Gerald Easterling~~Date: August 18, 2023
By: ~~Chief Executive Officer~~
~~(Principal Executive Officer)~~
~~Date: February 16, 2023~~
~~By:~~ /s/ William Delgado
William Delgado
Chief Financial Officer
~~William Delgado~~
~~Chief Financial Officer~~
(Principal Financial Officer and Principal Accounting Officer)
Date: ~~February 16,~~August 18, 2023

4439


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

		Page

PART I. FINANCIAL INFORMATION		3

ITEM 1.	Financial Statements	33

	Condensed Consolidated Balance Sheets as of ~~December 31, 2022~~June 30, 2023 (unaudited) and March 31, ~~2022~~2023	3

	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~December 31,~~June 30, 2023 and 2022 ~~and 2021~~ (unaudited)	4

	Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three ~~and Nine~~ Months Ended ~~December 31,~~June 30, 2023 and 2022 ~~and 2021~~ (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~December 31,~~June 30, 2023 and 2022 ~~and 2021~~ (unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	3935

ITEM 4.	Controls and Procedures	3935

PART II. OTHER INFORMATION		4036

ITEM 1.	Legal Proceedings	4036

ITEM 1A.	Risk Factors	4036

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4236

ITEM 3.	Defaults Upon Senior Securities	4237

ITEM 4.	Mine Safety Disclosures	4237

ITEM 5.	Other Information	4237

ITEM 6.	Exhibits	4338

SIGNATURES		4439

	December 31, 2022			March 31, 2022
	(unaudited)						June 30, 2023			March 31, 2023
ASSETS
Current assets
Cash	$	141,864		$	1,734,040		$	69,771		$	216,465
Accounts receivable		7,502			14,385			36,329			17,325
Escrow account		-			1,500,000
Inventory		101,929			69,170			46,657			25,725
Prepaid expenses		490,140			1,511,546			254,131			286,593
Deferred offering costs		126,963			-			1,391,766			1,336,263

Total current assets		868,398			4,829,141			1,798,654			1,882,371

Fixed assets, net		15,350,443			14,798,103			14,634,999			15,043,715

Other assets
Construction-in-process		45,730			1,087,101			25,130			25,130
Patents, net		6,366,000			6,658,500			6,171,000			6,268,500
License Agreement, net		9,412,376			10,222,376			8,872,376			9,142,376
Right of Use asset		224,266			282,753			183,950			204,243
Deposits		20,633			20,633			20,633			20,633

Total other assets		16,069,005			18,271,363			15,273,089			15,660,882

Total assets	$	32,287,846		$	37,898,607		$	31,706,742		$	32,586,968

LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES, MEZZANINE AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	3,523,210		$	2,802,787		$	3,545,400		$	3,510,206
Accrued interest		336,102			500,450			15,753			923,387
Accrued interest - related parties		213,292			203,520			225,792			219,542
Accrued interest
Other accrued expenses		299,978			207,418			1,326,993			1,314,961
Accrued expenses - related parties		200,000			200,000			571,996			400,306
Short-term Promissory Note and Lines of credit		19,817			20,044
Note payable		96,000			96,000
Accrued expenses
Short-term Note and Lines of credit								19,817			19,817
Notes payable								790,704			671,100
Restructured August note payable		2,219,347			-			2,590,000			2,400,000
Notes payable - related parties		745,412			495,412			740,412			740,412
Notes payable
Dividends payable		514,391			296,630			360,072			579,248
Derivative liability		-			13,101,000
Warrant liability		892,000			3,923,000			305,000			355,000
Lease Liability, current								87,804			87,804

Total current liabilities		9,059,549			21,846,261			10,579,743			11,221,783

Convertible debenture, less unamortized debt discount of $9,680,000		-			2,629,079
Restructured Senior note payable		20,223,035			-			21,870,000			21,290,000
Note payable, less current maturities		47,604			119,604			-			23,604
Lease Liability		231,704			286,253
Lease Liability, non-current								106,208			125,189

Total liabilities		29,561,892			24,881,197			32,555,951			32,660,576

Commitments and contingencies (Note 10)		-			-
Commitments and contingencies (Note 11)								-			-

Series E Redeemable Convertible Preferred stock, $0.0001 par value, 20,000 shares authorized, 1,670 and 2,840 shares issued and outstanding at December 31, 2022 and March 31, 2021, respectively		2,003,557			2,539,176
Series E Redeemable Convertible Preferred stock, $0.0001 par value, 20,000 shares authorized, 1,500 and 1,670 shares issued and outstanding at June 30, 2023 and March 31, 2023, respectively								1,800,000			2,003,557

Series F Redeemable Convertible Preferred stock, $0.0001 par value, 750,000 shares authorized, 750,000 and 0 shares issued and outstanding at December 31, 2022 and March 31, 2021, respectively		43,612,000			43,612,000
Series F Redeemable Convertible Preferred stock, $0.0001 par value, 750,000 shares authorized, 750,000 shares issued and outstanding at June 30, 2023 and March 31, 2023, respectively								43,612,000			43,612,000
Temporary equity, value

Stockholders’ deficit
Series A Convertible Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at December 31, 2022 and March 31, 2021		500			500
Series A Convertible Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at June 30, 2023 and March 31, 2023								500			500

Common stock, $0.0001 par value, 900,000,000 shares authorized, 768,561,129 shares issued and 751,322,954 shares outstanding at December 31, 2022 and 674,831,624 shares issued and 674,644,124 shares outstanding at March 31, 2022, respectively		76,894			67,500
Common stock, $0.0001 par value, 900,000,000 shares authorized, 868,263,739 and 803,123,748 shares issued and outstanding at June 30, 2023 and March 31, 2023, respectively								86,891			80,377

Additional paid in capital		119,464,471			96,701,607			123,554,174			121,156,733
Stock payable		662,767			20,132,650
Stock to be issued								390,024			662,767
Subscription receivable		(56,250	)		-			(56,250	)		(56,250	)
Accumulated deficit		(163,037,985	)		(150,036,023	)		(170,236,548	)		(167,533,292	)
Total stockholders' deficit		(42,889,603	)		(33,133,766	)
Total stockholders’ deficit								(46,261,209	)		(45,689,165	)

Total liabilities, mezzanine and stockholders’ deficit	$	32,287,846		$	37,898,607		$	31,706,742		$	32,586,968

																																Shares		Amount		Shares		Amount		Capital		issued			receivable			deficit			deficit
	Series A Preferred stock				Series B Preferred stock					Common stock				Additional paid in			Stock			Subscription			Accumulated			Non-controlling			Total stockholders'			Series A Preferred stock				Common stock				Additional paid in		Stock to be			Subscription			Accumulated			Total stockholders’
	Shares		Amount		Shares			Amount		Shares		Amount		Capital			Payable			receivable			deficit			interest			deficit			Shares		Amount		Shares		Amount		Capital		issued			receivable			deficit			deficit
Balance March 31, 2023																																	5,000,000	$	500		803,123,748	$	80,377	$	121,156,733	$	662,767		$	(56,250	)	$	(167,533,292	)		(45,689,165	)

Common stock issued for legal settlement to NSH shareholders																																	-		-		863,110		86		272,657		(272,743	)		-			-			-
Issuance of common shares under financing agreement																																	-		-		40,187,311		4,019		1,294,493		-			-			-			1,298,512
Conversion of Series E Preferred Shares to common stock																																	-		-		23,989,570		2,399		825,601		-			-			(350,825	)		477,175
Dividends payable on Preferred Shares																																	-		-		-		-		-		-			-			(54,000	)		(54,000	)
Common stock issued to consultants																																	-		-		100,000		10		4,690		-			-			-			4,700

Net loss																																																	(2,298,431	)		(2,298,431	)

Balance June 30, 2023																																	5,000,000	$	500		868,263,739	$	86,891	$	123,554,174	$	390,024		$	(56,250	)	$	(170,236,548	)		(46,261,209	)

Balance March 31, 2022		5,000,000	$	500		-		$	-		674,644,124	$	67,500	$	96,701,607		$	20,132,650		$	-		$	(150,036,023)		$	-		$	(33,133,766	)		5,000,000	$	500		674,644,124	$	67,500	$	96,701,607	$	20,132,650		$	-		$	(150,036,023	)	$	(33,133,765	)
Balance,																																	5,000,000	$	500		674,644,124	$	67,500	$	96,701,607	$	20,132,650		$	-		$	(150,036,023	)	$	(33,133,765	)

Common stock issued for legal settlement to NSH shareholders		-		-		-			-		61,154,136		6,112		19,311,486			(19,317,598	)		-			-			-			-			-		-		61,154,136		6,112		19,311,486		(19,317,598	)		-			-			-
Conversion of Series E Preferred Shares to common stock		-		-		-			-		4,537,240		454		839,546			-			-			-			-			840,000
Conversion of Series E PS to common stock																																	-		-		4,537,240		454		839,546		-			-			-			840,000
Contingent beneficial conversion feature related to the Series E Preferred Shares, fully amortized		-		-		-			-		-		-		99,000			-			-			(99,000	)		-			-			-		-		-		-		99,000		-			-			(99,000	)		-
Amortization of beneficial conversion feature related to Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(42,500	)		-			(42,500	)		-		-		-		-		-		-			-			(42,500	)		(42,500	)
Accretion of Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(278,500	)		-			(278,500	)		-		-		-		-		-		-			-			(278,500	)		(278,500	)
Dividends payable on Preferred Shares		-		-		-			-		-		-		-			-			-			(102,227	)		-			(102,227	)		-		-		-		-		-		-			-			(102,227	)		(102,227	)
Common stock issued in business agreement, to be paid from revenue earned		-		-		-			-		250,000		25		56,225			-			(56,250	)		-			-			-			-		-		250,000		25		56,225		-			(56,250	)		-			-
Common stock vested to consultants		-		-		-			-		-		6		24,369			-			-			-			-			24,375			-		-		-		6		24,369		-			-			-			24,375

Net loss																								(2,200,176	)		-			(2,200,176	)																		(2,200,176	)		(2,200,176	)

Balance June 30, 2022		5,000,000	$	500		-		$	-		740,585,500	$	74,097	$	117,032,233		$	815,052		$	(56,250	)	$	(152,758,426	)		-		$	(34,892,794	)		5,000,000	$	500		740,585,500	$	74,097	$	117,032,233	$	815,052		$	(56,250	)	$	(152,758,426	)		(34,892,793	)

Common stock issued for legal settlement to NSH shareholders		-		-		-			-		404,067		40		127,646			(127,686	)		-			-			-			-
Conversion of Series E Preferred Shares to common stock		-		-		-			-		9,920,887		992		827,008			-			-			(108,000	)		-			720,000
Increase of 10% in Series E Preferred Shares to one holder based on certain rights																								(156,000	)					(156,000	)
Amortization of beneficial conversion feature related to Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(42,500	)		-			(42,500	)
Accretion of Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(278,500	)		-			(278,500	)
Dividends payable on Preferred Shares		-		-		-			-		-		-		-			-			-			(55,427	)		-			(55,427	)
Common stock issued in business agreement		-		-		-			-		250,000		25		25,975			-						-			-			26,000
Common stock issued from shares payable		-		-		-			-		100,000		10		24,590			(24,600	)					-			-			-
Common stock vested to consultants		-		-		-			-		62,500		6		24,369			-			-			-			-			24,375

Net loss																								(24,528,345	)		-			(24,528,345	)

Balance September 30, 2022		5,000,000	$	500		-		$	-		751,322,954	$	75,170	$	118,061,820		$	662,767		$	(56,250	)	$	(177,927,198	)		-		$	(59,183,191	)

Issuance of common shares under financing agreement											17,175,675		1,718		1,378,282															1,380,000
Amortization of beneficial conversion feature related to Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(28,048	)		-			(28,048	)
Accretion of Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(198,333	)		-			(198,333	)
Dividends payable on Preferred Shares		-		-		-			-		-		-		-			-			-			(60,107	)		-			(60,107	)
Common stock vested to consultants		-		-		-			-		62,500		6		24,369			-			-			-			-			24,375

Net income																								15,175,701			-			15,175,701

Balance December 31, 2022		5,000,000	$	500		-		$	-		768,561,129	$	76,894	$	119,464,471		$	662,767		$	(56,250	)	$	(163,037,985	)		-		$	(42,889,603	)

Balance March 31, 2021		5,000,000	$	500		607		$	-		560,745,180	$	56,075	$	56,649,491		$	136,000		$	-		$	(53,683,268	)	$	(87,830	)	$	3,070,969

Issuance of common stock upon conversion		-		-		-			-		1,329,246		133		421,353			-			-			-			-			421,486
Conversion of Series B PS to common stock		-		-		(262	)		-		3,144,000		314		(314	)		-			-			-			-			-
Conversion of Series D PS to common stock		-		-		-			-		428,572		43		(43	)		-			-			-			-			-
Exchange of Series D Preferred Shares to Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(3,258,189	)		-			(3,258,189	)
Sale of common shares and warrants for cash, less offering costs and commitment shares		-		-		-			-		35,772,729		3,577		17,273,546			-			-			-			-			17,277,123
Exercise of warrants related to the sale of common shares		-		-		-			-		1,100,000		110		10,890			-			-			-			-			11,000
Beneficial conversion feature related to the Series E Preferred Shares		-		-		-			-		-		-		3,269,505			-			-			-			-			3,269,505
Amortization of beneficial conversion feature related to Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(817,376	)		-			(817,376	)
Redemption of Series D Preferred shares		-		-		-			-		-		-		-			-			-			(2,534,758	)		-			(2,534,758	)
Common shares to be issued for the acquisition of the non-controlling interest subsidiary's remaining equity		-		-		-			-		-		-		(3,087,830	)		2,000,000			-			-			87,830			(1,000,000	)
Common shares to be issued for Patent acquisition		-		-		-			-		-		-		-			5,000,000			-			-			-			5,000,000
Common stock vested to consultants		-		-		-			-		125,000		13		48,738			24,900			-			-			-			73,651

Net loss		-		-		-			-		-		-		-			-			-			(2,562,743	)		-			(2,562,743	)

Balance June 30, 2021		5,000,000	$	500		345		$	-		602,644,727	$	60,265	$	74,585,336		$	7,160,900		$	-		$	(62,856,334	)	$	-		$	18,950,668

Conversion of Series E PS to common stock											4,114,286		411		(411	)														-
Amortization of beneficial conversion feature related to Series E Preferred Shares																								(1,341,948	)					(1,341,948	)
Revision of dividends payable on Series B Preferred Shares (See Note 2)																								(182,639	)					(182,639	)
Dividends payable on Preferred Shares																								(177,586	)					(177,586	)
Common shares to be issued for Technical and Equipment Rights Agreement																		4,762,376												4,762,376
Common stock vested to consultants											62,500		6		24,369			24,900												49,275
																														-
Net loss		-		-		-			-		-		-		-			-			-			(2,849,635	)		-			(2,849,635	)

Balance September 30, 2021		5,000,000	$	500		345		$	-		606,821,513	$	60,683	$	74,609,294		$	11,948,176			-		$	(67,408,142	)	$	-		$	19,210,511

Conversion of Series B Preferred Shares to common stock		-		-		(278	)		-		3,336,000		334		(334	)		-			-			-			-			(334	)
Conversion of Series E Preferred Shares to common stock		-		-		-			-		4,114,286		411		2,879,589			-			-			-			-			2,880,000
Amortization of beneficial conversion feature related to Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(831,543	)		-			(831,543	)
Beneficial conversion feature related to the Series E Preferred Shares		-		-		-			-		-		-		169,714			-			-			-			-			169,714
Accretion of Series E Preferred Shares		-		-		-			-		-		-		-			-			-			(80,167	)		-			(80,167	)
Dividends payable on Preferred Shares		-		-		-			-		-		-		-			-			-			(112,577	)		-			(112,577	)
Common shares issued for Technical and Equipment Rights Agreement		-		-		-			-		26,732,673		2,673		11,759,706			(11,762,376	)		-			-			-			-
Common stock vested to consultants		-		-		-			-		112,500		21		99,054			(49,800	)		-			-			-			49,275
Common stock issued to consultants		-		-		-			-		430,071		43		158,285			-			-			-			-			158,328
Common stock vested to employees		-		-		-			-		175,000		18		68,286			-			-			-			-			68,304
Reclassification of warrants to liability		-		-		-			-		-		-		(2,935,000	)		-			-			-			-			(2,935,000	)
Common stock to be issued for legal settlement to NSH shareholders		-		-		-			-		-		-		-			29,388,000			-			-			-			29,388,000
																														-
Net loss		-		-		-			-		-		-		-			-			-			(33,366,545	)		-			(33,366,545	)
Net income (loss)		-		-		-			-		-		-		-			-			-			(33,366,545	)		-			(33,366,545	)

Balance December 31, 2021		5,000,000	$	500		67		$	-		641,722,043	$	64,183	$	86,808,594		$	29,524,000		$	-		$	(101,798,974	)	$	-		$	14,597,966
Balance,																																	5,000,000	$	500		740,585,500	$	74,097	$	117,032,233	$	815,052		$	(56,250	)	$	(152,758,426	)		(34,892,793	)

							June 30, 2023			June 30, 2022
	For the Nine Months Ended						For the 3 Months Ended
	December 31, 2022			December 31, 2021			June 30, 2023			June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(11,552,820	)	$	(38,778,923	)	$	(2,298,431	)	$	(2,200,176	)

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

Depreciation expense		1,349,838			586,409			434,809			525,229
Amortization expense		1,102,500			514,000			367,500			367,500
Amortization of debt discount		5,019,883			576,364			-			2,040,000
Change in fair value of derivative liability		(811,000	)		-			-			(1,314,000	)
Change in fair value of warrant liability		(3,031,000	)		137,000			(50,000	)		(1,915,000	)
Change in fair value of promissory notes		1,594,515			-			(137,634	)		-
Financing costs		-			1,502,953			120,000			-
Gain on extinguishment of debt		(1,883,089	)		-
Loss due to fire		869,379			-
Forgiveness of PPP loan		-			(103,200	)
Gain on Vero Blue note settlement		-			(500,000	)
Legal settlement		-			29,388,000
Gain on sale of machinery and equipment								(5,785	)		-
Shares issued for services		99,124			398,831			4,700			24,375
Amortization of operating lease right-of-use assets								20,293			-

Changes in operating assets and liabilities:
Accounts receivable		6,883			-			(19,004	)		(24,132	)
Inventory		(32,759	)		(28,128	)		(20,932	)		(35,368	)
Prepaid expenses and other current assets		1,021,406			(321,162	)		32,462			(481,750	)
Deferred offering costs		(126,963	)		-			(55,503	)		-
Accounts payable		724,360			(5,637,796	)		35,636			450,606
Other accrued expenses		92,560			(101,896	)		12,032			11,140
Accrued expenses - related parties		-			200,000			171,690			-
Accrued interest		1,662,647			(49,482	)		-			488,797
Accrued interest - related parties		9,772			16,000			6,250			8,275
Operating lease liabilities								(18,981	)		-

Cash used in operating activities		(3,884,764	)		(12,201,031	)		(1,400,898	)		(2,054,504	)

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for fixed assets		(2,430,186	)		(2,116,124	)		(39,308	)		(491,112	)
Cash received for fire damage to fixed assets		700,000			-
Cash paid for patent acquisition with F & T		-			(2,000,000	)
Cash paid for acquisition of shares of NCI		-			(1,000,000	)
Cash paid for License Agreement		-			(2,350,000	)
Cash paid for construction in process		-			(433,389	)
Cash received for sale of machinery and equipment								19,000			-

Cash used in investing activities		(1,730,186	)		(7,899,513	)		(20,308	)		(491,112	)

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on bank loan		-			(214,852	)
Payments of notes payable		(72,000	)		(72,000	)		(24,000	)		(24,000	)
Payments on notes payable, related party		-			(655,750	)
Repayment of short-term promissory note and lines of credit		(227	)		(553,577	)
Proceeds from issuance of common shares under equity agreement		-			17,277,123
Proceeds from sale of stock		1,380,000			-			1,298,512			-
Proceeds from promissory note		1,465,000			-
Proceeds from promissory note, related parties		250,000			-
Proceeds from convertible debentures		-			8,905,000
Proceeds from convertible debentures, receipt from escrow		1,500,000			-			-			1,500,000
Escrow account in relation to the proceeds from promissory notes		(500,000	)		5,000,000
Payments on convertible debentures		-			(421,486	)
Payments on notes payable		-			(4,500,000	)
Proceeds from sale of Series E Preferred Shares		-			1,348,000
Redemption of Series D Preferred Shares		-			(3,513,504	)
Shares issued upon exercise of warrants		-			11,000

Cash provided by financing activities		4,022,773			22,609,954			1,274,512			1,476,000

NET CHANGE IN CASH		(1,592,176	)		2,509,411			(146,694	)		(1,069,616	)

CASH AT BEGINNING OF YEAR		1,734,040			155,795
CASH AT BEGINNING OF PERIOD								216,465			1,734,040

CASH AT END OF YEAR	$	141,864		$	2,665,206
CASH AT END OF PERIOD							$	69,771		$	664,424

INTEREST PAID	$	1,829,570		$	212,190		$	616		$	5,300

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Construction in process transferred to fixed assets	$	1,041,371		$	-		$	-		$	1,040,617
Shares issued upon conversion of convertible debentures	$	-		$	421,486
Shares issued upon conversion of Preferred stock	$	1,560,000			-		$	828,000			840,000
Cancellation of Right of Use asset and Lease liability	$	-		$	275,400
Shares issued as consideration for Rights Agreement	$	-		$	4,762,376
Shares issued as consideration for Patent acquisition	$	-		$	5,000,000
Shares issued as consideration for acquisition of remaining NCI	$	-		$	2,000,000
Dividends on Series E Preferred stock							$	404,825		$	-
Dividends in kind issued							$	516,000		$	-
Shares issued/to be issued, for legal settlement							$	272,743		$	-


	For the Three Months Ended						For the Nine Months Ended
	December 31, 2022			December 31, 2021			December 31, 2022			December 31, 2021

Sales	$	97,943		$	16,640		$	186,004		$	16,640

Operating expenses:
General and administrative		1,481,195			1,527,699			4,256,819			5,182,358
Research and development		14,212			20,357			190,855			217,229
Facility operations		875,194			398,504			1,895,357			810,260
Depreciation		416,377			218,134			1,349,838			830,409
Amortization		367,500			367,500			1,102,500			514,000

Total operating expenses		3,154,478			2,532,194			8,795,369			7,554,256

Net loss from operations		(3,056,535	)		(2,515,554	)		(8,609,365	)		(7,537,616	)
											14.2	%
Other income (expense):
Interest expense		(593,331	)		(80,991	)		(1,674,994	)		(228,190	)
Interest expense - related parties		(6,250	)		-			(9,772	)		-
Amortization of debt discount		(843,494	)		(340,000	)		(5,019,883	)		(576,364	)
Financing costs		-			(1,393,000	)		-			(1,502,953	)
Change in fair value of derivative liability		17,738,000			-			811,000			-
Change in fair value of warrant liability		1,155,000			(137,000	)		3,031,000			(137,000	)
Change in fair value of restructured notes		(1,594,515	)		-			(1,594,515	)		-
Forgiveness of PPP loan		-			-			-			103,200
Gain on Vero Blue note settlement		-			500,000						500,000
Gain on extinguishment of debt		2,383,088			-			2,383,088			-
Legal Settlement		-			(29,400,000	)		-			(29,400,000	)
Loss due to fire		(6,262	)		-			(869,379	)		-

Total other income (expense)		18,232,236			(30,850,991	)		(2,943,455	)		(31,241,307	)

Income (loss) before income taxes		15,175,701			(33,366,545	)		(11,552,820	)		(38,778,923	)

Provision for income taxes		-			-			-			-

Net income (loss)		15,175,701			(33,366,545	)		(11,552,820	)		(38,778,923	)

Amortization of beneficial conversion feature on Preferred shares		(28,048	)		-			(212,048	)		(817,376	)
Accretion on Preferred shares		(198,333	)		-			(755,333	)		-
Redemption and exchange of Series D Preferred shares		-			-			-			(5,792,947	)
Dividends		(60,107	)		-			(481,761	)		-

Net income (loss) available for common stockholders	$	14,889,213		$	(33,366,545	)	$	(13,001,961	)	$	(45,389,246	)

EARNINGS PER SHARE (Basic)	$	0.02		$	(0.05	)	$	(0.02	)	$	(0.07	)

EARNINGS PER SHARE (Diluted)	$	0.01		$	(0.05	)	$	(0.02	)	$	(0.07	)

WEIGHTED AVERAGE SHARES OUTSTANDING (Basic)		697,586,776			635,536,459			682,750,957			608,191,555

WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted)		1,629,304,739			635,536,459			682,750,957			608,191,555


2024	$	65,856
2025		87,808
2026		54,709
Total future minimum lease payments		208,373
Less: imputed interest		14,361
Total	$	194,012

	●	our ability on a timely basis to successfully rebuild our water treatment plant and replace our filtration equipment that was destroyed by fire on July 3, 2022 at our La Coste, Texas facility;
	●	our ability to continue developing and expanding our research and development plant in La Coste, Texas and our production facility in Webster City, Iowa;
	●	our ability to successfully commercialize our equipment and shrimp farming operations to produce a market-ready product in a timely manner and in enough quantity;
	●	absence of contracts with customers or suppliers;
	●	our ability to maintain and develop relationships with customers and suppliers;
	●	our ability to successfully integrate acquired businesses or new brands;
	●	the impact of competitive products and pricing;
	●	supply constraints or difficulties;
	●	the retention and availability of key personnel;
	●	general economic and business conditions;
	●	substantial doubt about our ability to continue as a going concern;
	●	our continued ability to raise funding at the pace and quantities required to scale our plant needs to commercialize our products;
	●	our ability to successfully recruit and retain qualified personnel in order to continue our operations;
	●	our ability to successfully implement our business plan;
	●	our ability to successfully acquire, develop or commercialize new products and equipment;
	●	the commercial success of our products;
	●	business interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks (such as the outbreak of COVID-19);
	●	intellectual property claims brought by third parties; and
	●	the impact of any industry regulation.

	Three Months Ended December 31,				Three Months Ended June 30,
	2022		2021		2023		2022

Salaries and related expenses	$	530,167	$	332,393	$	512,725	$	443,303
Professional fees		351,053		544,684
Professional services						310,540		433,970
Other general and administrative expenses		546,302		621,809		452,873		422,137
Rent		53,673		28,813		22,313		26,622
Facility operations		875,194		398,504		358,258		531,736
Research and development		14,212		20,357		-		172,643
Depreciation		416,377		218,134		434,809		525,229
Amortization		367,500		367,500		367,500		367,500
Total	$	3,154,478	$	2,532,194	$	2,459,018	$	2,923,140

	Nine Months Ended December 31,
	2022		2021

Salaries and related expenses	$	1,514,243	$	1,987,920
Professional fees		1,097,493		1,520,783
Other general and administrative expenses		1,509,155		1,623,887
Rent		135,928		49,768
Facility operations		1,895,357		810,260
Research and development		190,855		217,229
Depreciation		1,349,838		830,260
Amortization		1,102,500		514,000
Total	$	8,795,369	$	7,554,256

	Three Months Ended June 30,
	2023			2022
Interest expense	$	(2,713	)	$	(502,372	)
Interest expense – related parties		(6,250	)		-
Amortization of debt discount		-			(2,040,000	)
Change in fair value of derivative liability		-			1,314,000
Change in fair value of warrant liability		50,000			1,915,000
Change in fair value of restructured notes		137,634			-
Extension fee		(180,000	)		-
Gain on sale of machinery and equipment		5,785			-
Total	$	4,456		$	686,628

	December 31,			March 31,			June 30,			March 31,
	2022			2022			2023			2023
Current assets	$	868,398		$	4,829,141		$	1,798,654		$	1,882,371
Current liabilities		9,059,549			21,846,261			10,579,743			11,221,783
Working capital deficiency	$	(8,191,151	)	$	(17,017,120	)	$	(8,781,089	)	$	(9,339,412	)

●		Inadequate segregation of duties consistent with control objectives;
●		Lack of independent Board of Directors (as of the balance sheet date) and absence of Audit Committee to exercise oversight responsibility related to financial reporting and internal control;
●		Lack of risk assessment procedures on internal controls to detect financial reporting risks in a timely manner; and
●		Lack of documentation on policies and procedures that are critical to the accomplishment of financial reporting objectives.

	●	Identify gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company;
	●	Establish an independent Board of Directors (which we expect to establish in our fourth fiscal quarter that will end on March 31, 2023) and an Audit Committee to provide oversight for remediation efforts and ongoing guidance regarding accounting, financial reporting, overall risks and the internal control environment;
	●	Retain additional accounting personnel with public company financial reporting, technical accounting, SEC compliance, and strategic financial advisory experience to achieve adequate segregation of duties; and
	●	Continue to develop formal policies and procedures on accounting and internal control over financial reporting and monitor the effectiveness of existing controls and procedures.

	●	~~a limited availability of market quotations for its securities;~~

	●	~~a limited amount of news and analyst coverage for New NaturalShrimp; and~~

	●	~~a decreased ability to issue additional securities or obtain additional financing in the future~~

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date/Period End Date
10.1	Equity Financing Agreement dated April 28, 2023 by and between NaturalShrimp Incorporated and GHS Investments, LLC	8-K	10.1	5/10/2023
10.2	Registration Rights Agreement dated April 28, 2023 by and between NaturalShrimp Incorporated and GHS Investments, LLC	8-K	10.2	5/10/2023
10.3#	Purchase Agreement, dated as of May 9, 2023, by and between NaturalShrimp Incorporated and GHS Investments LLC	8-K	10.3	5/10/2023
10.4	Licensing Agreement dated May 24, 2023 by and between Niterra Co., Ltd. and NaturalShrimp Incorporated	8-K	10.1	6/8/2023
31.1*	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.
32.1**	Section 1350 Certification of Chief Executive Officer.
32.2**	Section 1350 Certification of Chief Financial Officer.
101.INS*	Inline XBRL Instance Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

		~~Incorporated by Reference~~* Filed herewith.
~~Exhibit Number~~	~~Exhibit Description~~	~~Form~~	~~Exhibit~~	~~Filing~~ ~~Date/Period~~ ~~End Date~~

~~2.1#~~	~~Merger Agreement by and among NaturalShrimp Incorporated, Yotta Acquisition Corporation, and Yotta Merger Sub, Inc., dated as of October 24, 2022~~	~~8-K/A~~	~~2.1~~	~~10/27/2022~~
~~10.1#~~	~~Purchase Agreement, dated as of November 4, 2022, by and between the Company and GHS Investments LLC~~	~~8-K~~	~~10.1~~	~~11/08/2022~~
31.1*	~~Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.~~
31.2*	~~Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.~~
32.1**	~~Section 1350 Certification of Chief Executive Officer.~~
32.2**	~~Section 1350 Certification of Chief Financial Officer.~~
101.INS*	~~Inline~~ ~~XBRL Instance Document~~
101.SCH*	~~Inline~~ ~~XBRL Taxonomy Extension Schema Document~~
101.CAL*	~~Inline~~ ~~XBRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF*	~~Inline~~ ~~XBRL Taxonomy Extension Definition Linkbase Document~~
101.LAB*	~~Inline~~ ~~XBRL Taxonomy Extension Label Linkbase Document~~
101.PRE*	~~Inline~~ ~~XBRL Taxonomy Extension Presentation Linkbase Document~~
~~104~~	~~Cover Page Interactive Data File (embedded within the Inline XBRL document)~~

By:	/s/ Gerald Easterling
	Gerald Easterling
	Chief Executive Officer
	(Principal Executive Officer)
	~~Gerald Easterling~~Date: August 18, 2023

By:	~~Chief Executive Officer~~
	~~(Principal Executive Officer)~~
	~~Date: February 16, 2023~~

~~By:~~	/s/ William Delgado
	William Delgado
	Chief Financial Officer
	~~William Delgado~~
	~~Chief Financial Officer~~
	(Principal Financial Officer and Principal Accounting Officer)
	Date: ~~February 16,~~August 18, 2023