☒~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐ ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” a “smaller reporting company” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No☒

As of ~~November~~August 15, ~~2021,~~2022, there were ~~636,528,901~~745,983,222 shares of the registrant’s common stock outstanding.

								June 30, 2022			March 31, 2022
	September 30, 2021			March 31, 2021			(unaudited)
ASSETS
Current assets
Cash	$	800,531		$	155,795		$	664,424		$	1,734,040
Accounts receivable								38,517			14,385
Escrow account								-			1,500,000
Inventory								104,538			69,170
Prepaid expenses		287,068			655,339			1,993,296			1,511,546

Total current assets		1,087,599			811,134			2,800,775			4,829,141

Fixed assets		12,269,987			12,236,557
Fixed assets, net								15,804,603			14,798,103

Other assets
Construction-in-process		3,171,038			1,873,219			46,484			1,087,101
Patents		6,853,500			0
License Agreement		10,762,376
Patents, net								6,561,000			6,658,500
License Agreement, net								9,952,376			10,222,376
Right of Use asset		320,461			275,400			263,517			282,753
Deposits		20,633			20,633			20,633			20,633

Total other assets		21,128,008			2,169,252			16,844,010			18,271,363

Total assets	$	34,485,594		$	15,216,943		$	35,449,388		$	37,898,607

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	3,821,506		$	963,289		$	3,252,080		$	2,802,787
Accrued interest		73,350			73,350			989,247			500,450
Accrued interest - related parties		187,520			187,520			211,795			203,520
Other accrued expenses		543,972			602,368			218,558			207,418
Accrued expenses - related parties		600,000			0			200,000			200,000
Short-term Promissory Note and Lines of credit		20,044			573,621			20,044			20,044
Bank loan		10,380			8,725
PPP loan		0			103,200
Convertible debentures		0			483,637
Note payable		96,000			96,000			96,000			96,000
Notes payable - related parties		495,412			1,151,162			495,412			495,412
Dividends payable		360,226			182,639			398,857			296,630
Derivative liability								11,787,000			13,101,000
Warrant liability								2,008,000			3,923,000

Total current liabilities		6,208,410			4,425,511			19,676,993			21,846,261

Bank loans, less current maturities		200,358			206,127
Notes payable		5,000,000			5,000,000
Convertible debenture, less unamortized debt discount of $11,900,000								4,669,079			2,629,079
Note payable, less current maturities		167,604			215,604			95,604			119,604
Lease Liability		321,336			275,400			268,330			286,253

Total liabilities		11,897,708			10,122,642			24,710,006			24,881,197

Commitments and contingencies (Note 14)
Series E Redeemable Convertible Preferred stock, $0.0001 par value, 10,000 shares authorized, 2,540 and 0 shares issued and outstanding at September 30, 2021 and March 31, 2021, respectively		3,377,375			0
Commitments and contingencies (Note 9)								-			-

Series D Redeemable Convertible Preferred stock, $0.0001 par value, 20,000 shares authorized, 0 and 6,050 shares issued and outstanding at June 30, 2021 and March 31, 2021, respectively		0			2,023,333
Series E Redeemable Convertible Preferred stock, $0.0001 par value, 20,000 shares authorized, 2,140 and 2,840 shares issued and outstanding at June 30, 2022 and March 31, 2021, respectively								2,020,176			2,539,176

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

Stockholders’ deficit
Series A Convertible Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at September 30, 2021 and March 31, 2021, respectively		500			500
Series B Convertible Preferred stock, $0.0001 par value, 5,000 shares authorized, 345 and 607 shares issued and outstanding at September 30, 2021 and March 31, 2021, respectively		0			0
Common stock, $0.0001 par value, 900,000,000 shares authorized, 607,134,014 and 560,745,180 shares issued and 606,821,513 and 560,745,180 shares outstanding at September 30, 2021 and March 31, 2021, respectively		60,683			56,075
Series A Convertible Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at June 30, 2022 and March 31, 2021								500			500

Common stock, $0.0001 par value, 900,000,000 shares authorized, 740,710,500 shares issued and 740,585,500 shares outstanding at June 30, 2022 and 674,831,624 shares issued and 674,644,124 shares outstanding at March 31, 2022, respectively								74,097			67,500

Additional paid in capital		74,609,294			56,649,491			117,032,233			96,701,607
Stock Payable		11,948,176			136,000
Stock payable								815,052			20,132,650
Subscription receivable								(56,250	)		-
Accumulated deficit		(67,408,142	)		(53,683,268	)		(152,758,426	)		(150,036,023	)
Total stockholders’ deficit attributable to NaturalShrimp Incorporated shareholders		19,210,511			3,158,798

Non-controlling interest in NAS		0			(87,830	)

Total stockholders’ deficit		19,210,511			3,070,968			(34,892,794	)		(33,133,766	)

Total liabilities mezzanine and stockholders’ deficit	$	34,485,594		$	15,216,943
Total liabilities, mezzanine and stockholders’ deficit							$	35,449,388		$	37,898,607

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

CONDENSED Consolidated ~~STATEMENTS OF OPERATIONS~~STATEMENT of CHANGES IN SHAREHOLDERS’ DEFICIT

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

CONDENSED ~~CONSOLIDATED STATEMENT~~Consolidated STATEMENTS OF ~~CHANGES IN SHAREHOLDERS’ DEFICIT~~CASH FLOWS

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

~~Table of Contents~~

~~NATURALSHRIMP INCORPORATED~~

~~CONDENSED Consolidated STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

For the 6 Months Ended

September 30, 2021

September 30, 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss attributable to NaturalShrimp Incorporated

$ (5,412,378 )

$ (1,065,265 )

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

Depreciation and amortization expense

758,775

19,677

Amortization of debt discount

236,364

0

Change in fair value of derivative liability

0

29,000

Financing costs

109,953

0

Default penalty

41,112

Net loss attributable to non-controlling interest

0

(3,581 )
Forgiveness of PPP loan

(103,200 )

0

Shares issued for services

122,926

128,750

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

(281,729 )

(25,424 )
Accounts payable

(138,766 )

168,448

Other accrued expenses

(58,396 )

(174,926 )
Accrued expenses - related parties

600,000

0

Accrued interest

13,018

13,000

Accrued interest - related parties

0

18,096

Cash used in operating activities

(4,153,434 )

(851,113 )

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for machinery and equipment

(645,705 )

(742,388 )
Cash paid for patent acquisition with F & T

(2,000,000 )

0

Cash paid for acquisition of shares of NCI

(1,000,000 )

0

Cash paid for License Agreement

(2,350,000 )

0

Cash received from Insurance settlement

0

917,210

Cash paid for construction in process

(1,297,819 )

(1,738,661 )

Cash (used in) provided by investing activities

(7,293,524 )

(1,563,839 )

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on bank loan

(4,114 )

(15,794 )
Payment of note payable

(48,000 )

(24,000 )
Payment of note payable, related party

(655,750 )

0

Repayment of short-term promissory note and lines of credit

(553,577 )

7,656

Proceeds from PPP loan

0

103,200

Proceeds from issuance of common shares

17,277,123

0

Shares issued upon exercise of warrants

11,000

0

Proceeds from sale of Series B Convertible Preferred stock

0

2,500,000

Payments on convertible debentures

(421,486 )

0

Redemption of Series D PS

(3,513,504 )

0

Cash received in relation to Vista warrant settlement

0

50,000

Cash provided by financing activities

12,091,692

2,621,062

NET CHANGE IN CASH

644,736

206,110

CASH AT BEGINNING OF PERIOD

155,795

109,491

CASH AT END OF PERIOD

$ 800,531

$ 315,601

INTEREST PAID

$ 147,199

$ 41,420

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Shares issued upon conversion

$ 421,486

$ 336,437

Cancellation of Right of Use asset and Lease liability

$ 275,400

$ 0

Dividends in kind issued

$ 0

$ 134,443

Shares issued on Vista Warrant settlement

$ 0

$ 610,000

Shares to be issued as consideration for Patent acquisition

$ 5,000,000

$ 0

Shares to be issued as consideration for acquisition of remaining NCI

$ 2,000,000

$ 0

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

$ 0

$ 383,604

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

FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER 30,~~DECEMBER 31, 2021

NaturalShrimp Incorporated (“NaturalShrimp” or the “Company”), a Nevada corporation, is a biotechnology company and has developed a proprietary technology that allows it 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. The Company’s system uses technology which allows it to produce a naturally-grown shrimp “crop” weekly and accomplishes this without the use of antibiotics or toxic chemicals. The Company has developed several proprietary technology assets, including a knowledge base that allows it to produce commercial quantities of shrimp in a closed system with a computer monitoring system that automates, monitors and maintains proper levels of oxygen, salinity and temperature for optimal shrimp production. The Company’s production facilities are located in La Coste, Texas and Webster City, Iowa.

On December 15, 2020, the Company entered into an Asset Purchase Agreement (“APA”) between VeroBlue Farms USA, Inc., a Nevada corporation (“VBF”), VBF Transport, Inc., a Delaware corporation (“Transport”), and Iowa’s First, Inc., an Iowa corporation (“Iowa’s First”) (each a “Seller” and collectively, “Sellers”). Transport and Iowa’s First were wholly-owned subsidiaries of VBF. The agreement called for the Company to purchase all of the tangible assets of VBF, the motor vehicles of Transport and the real property (together with all plants, buildings, structures, fixtures, fittings, systems and other improvements located on such real property) of Iowa’s First. The facility was originally designed as an aquaculture facility, with the company having production issues. The Company began a modification process to convert the plant to produce shrimp, which will allow them to scale faster without having to build new facilities. The three Iowa facilities contain the tanks and infrastructure that will be used to support the production of shrimp with the incorporation of the ~~Company's~~Company’s patented EC platform technology. On May 19, 2021, the Company entered into a Securities Purchase Agreement (the “SPA”) with F&T Water Solutions, LLC (“F&T”), for F&T’s owned shares of Natural Aquatic Systems, Inc. (“NAS”). Prior to entering into the SPA, the Company owned fifty-one percent ~~(51%~~(51%) and F&T owned forty-nine percent ~~(49%~~(49%) of the issued and outstanding shares of common stock of NAS. After the SPA, NAS is a ~~100%~~100% owned subsidiary of the Company ~~(See Note 8)~~.

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

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the ~~six~~three months ended ~~September~~June 30, ~~2021,~~2022, the Company had a net loss available for common stockholders of approximately ~~$12,023,000.~~$2,722,000. At ~~September~~June 30, ~~2021,~~2022, the Company had an accumulated deficit of approximately ~~$67,408,000~~$152,758,000 and a working capital deficit of approximately ~~$5,119,000.~~$16,876,000. These factors raise substantial doubt about the Company’s ability to continue as a going concern, within one year from the issuance date of this filing. The Company’s ability to continue as a going concern is dependent on its ability to raise the required additional capital or debt financing to meet short and long-term operating requirements. During the ~~six~~three months ended ~~September~~June 30, ~~2021,~~2022, the Company received ~~net cash~~the $1,500,000 remaining escrow amount related to the proceeds ~~of approximately $17,277,000~~ from the ~~sale~~issuance of ~~common shares (See Note 11).~~a convertible debenture in December 2021. Subsequent to the period end, the Company received $250,000 in a loan agreement with related parties. Management believes 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 Company raises additional funds through the issuance of equity, the percentage ownership of its current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to our 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 our operations. The Company continues to pursue external financing alternatives to improve its working capital position. If the Company is unable to obtain the necessary capital, the Company may be unable to develop its facilities and enter in production.

In the Company’s previously issued financial statement for the first quarter of the current fiscal year for the three months ending June 30, 2021, the Company made an incorrect extinguishment of the Dividends payable in relation to the redemption of the Series D Preferred Stock as of April 15, 2021. However, it was later evaluated that the Dividends payable related to preferred shares that were still outstanding. The reclassification of the Dividends payable into Accumulated deficit was only presented as of June 30, 2021 on the Consolidated Balance Sheet, and did not impact the Consolidated Statements of Operations or the Consolidated Statement of Cash Flows.

In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements;” the Company evaluated the change and has determined that the related impact was not material to any previously presented financial statements. As such the Company is reporting the revision to dividends to that period in this Quarterly Report.

The accompanying unaudited financial information as of and for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 has been prepared in accordance with GAAP in the U.S. for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the ~~six~~three months ended ~~September~~June 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended March 31, ~~2021~~2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on June 29, ~~2021.~~2022.

The condensed consolidated balance sheet at March 31, ~~2021~~2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements.

The unaudited condensed consolidated financial statements include the accounts of NaturalShrimp Incorporated and its wholly-owned subsidiaries, NaturalShrimp USA Corporation, NaturalShrimp Global, Inc. and Natural Aquatic Systems, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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 ~~six~~three months ended ~~September~~June 30, ~~2021,~~2022, the Company had ~~with~~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 ~~stock with~~shares whose approximately ~~9,842,000~~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 177,771,000 underlying common shares, approximately $18,768,000 in a convertible debenture whose approximately 164,177,000 underlying shares are convertible at the holders’ option at conversion price of 90% of the average of the two lowest market prices over the last 10 days and ~~10,000,000~~18,506,429 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. For the ~~six~~three months ended ~~September~~June 30, ~~2020,~~2021, the Company had approximately $168,000 in convertible debentures whose approximately 1,560,000 underlying shares are convertible at the holders’ option at conversion prices ranging from $0.124 to $0.25 for fixed conversion rates10,000,000 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive.

ASC Topic 820, “Fair Value Measurement”, requires that certain financial instruments be recognized at their fair values at our balance sheet dates. However, other financial instruments, such as debt obligations, are not required to be recognized at their fair values, but GAAP provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair values of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts in our balance sheets. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument, along with other information, including changes in the fair values of certain financial instruments recognized in income or other comprehensive income. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under “Financial Instruments.”

Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred.

The Company did not have any Level 1 or Level 2 assets and liabilities at ~~September~~June 30, ~~2021~~2022 and March 31, ~~2021.~~2022.

The ~~Derivative~~derivative and ~~Warrant~~warrant liabilities are Level 3 fair value measurements. ~~There were no~~

The following is a summary of activity of Level 3 ~~fair value measurements~~derivatives during the three months ended ~~September 30. 2021.~~June 30, 2022 and the year ended March 31, 2022:

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.

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 ~~September~~June 30, ~~2021~~2022 and March 31, ~~2021.~~2022.

The Company maintains cash balances at two financial institutions. Accounts at this institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to ~~$250,000.~~ $250,000. As of ~~September~~June 30, ~~2021~~2022 and March 31, 2022, the Company’s cash balance exceeded FDIC coverage. ~~As of March 31, 2021, the Company’s cash balance did not exceed 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.

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:

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.

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.

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 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 months ended June 30, 2022, the amortization of the patents was $97,500 and the license rights was $270,000. There was 0 amortization in the three months ended June 30, 2021. The accumulated amortization of the patents was $439,000 and $341,500 as of June 30, 2022 and March 31, 2022, respectively. The accumulated amortization of the license rights was $810,000 and $540.000 as of June 30, 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 June 30, 2022, the Company believes the carrying value of the intangible assets are still recoverable, and there is no impairment to be recognized.

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.

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.

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.

As of ~~September~~June 30, ~~2021,~~2022, 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.

The Company evaluates events that have occurred after the balance sheet date of ~~September~~June 30, ~~2021,~~2022, through the date which the unaudited condensed consolidated financial statements were issued. Based upon the review, other than described in Note 1510 – 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.

A summary of the fixed assets as of ~~September~~June 30, ~~2021~~2022 and March 31, ~~2021~~2022 is as follows:

The unaudited condensed consolidated statements of operations reflect depreciation expense of approximately ~~$307,000~~$525,000 and ~~$9,000 and $661,000 and $20,000~~$355,000 for the three ~~and six~~ months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

On May 19, 2021, the Company entered into a Patents Purchase Agreement (the “Patents Agreement”) with F&T. The Company and F&T had previously jointly developed and patented a water treatment technology used or useful in growing aquatic species in re-circulating and enclosed environments (the “Patent”) with each party owning a fifty percent (50%) interest. Upon the closing of the Patents Agreement, the Company would purchase F&T’s interest in the Patent, F&T’s 100% interest in a second patent associated with the first Patent issued to F&T in March 2018, and all other intellectual property rights owned by F&T for a purchase price of $2,000,000 in cash and issue 9,900,990 shares of the Company’s common stock with a market value of $0.505 per share for a total fair value of $5,000,000, for a total acquisition price of $7,000,000. The Company paid the cash purchase price on May 20, 2021 and the closing of the Patents Agreement took place on May 25, 2021. As of September 30, 2021, the shares of common stock have not been issued and are therefore classified in Shares payable.

In accordance with ASC 805-10-55-5A, as substantially all the assets acquired are concentrated in a single identifiable asset, the patents, the acquisition has been determined to not be considered a business combination but an asset acquisition. The consideration will be allocated to the two patents, which were both approved in December, 2018, and will be amortized through the earliest of their useful life or December, 2038. Amortization over the next five years is expected to be $390,000 per year, for a total of $1,950,000. Amortization expense was $97,500 and $146,500 for the three and six months ended September 30, 2021

On August 25, 2021, the Company, through their 100% owned subsidiary NAS, entered into an Equipment Rights Agreements with Hydrenesis-Delta Systems, LLC (Hydrenesis-Delta") and a Technology Rights Agreement, in a sub-license agreement with Hydrenesis Aquaculture LLC ("Hydrenesis-Aqua"), The Equipment Rights involve specialized and proprietary equipment used to produce and control, dose, and infuse Hydrogas® and RLS® into both water and other chemical species, while the Technology sublicense pertains to the rights to Hydrogas® and RLS®. Both Rights agreements are for a 10 year term, which shall automatically renew for ten year successive terms. The term can be terminated by written notice by mutual consent, or by either party upon a breach of contract, insolvency or filing of bankruptcy. The agreements accord the exclusive rights to purchase or distribute the technology, or buy or rent the equipment, in the Industry Sector, which is the primary business and revenue stream generated from indoor aquaculture farming of any species in the Territory, defined as anywhere in the world except for the countries in the Gulf Corporation Council.

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

Per the Terms set forth in the Technology Rights Agreement, the consideration is defined as the sum of $10,000,000, consisting of $2,500,000 in cash at closing, and an additional $1,000,000 within 60 days after closing, and $6,500,000 worth of unrestricted common shares of stock in the parent company, NSI, at a stipulated share price of $0.505. Determined with this stipulated price, 12,871,287 shares are required to be issued. Based on the market price on August 25, 2021 of $0.37, is the fair value of the shares is $4,762,376, which results in a fair value total consideration of $8,262,376. As of September 30, 2021, the shares are not yet issued and are therefore classified in Shares payable. The common shares are covered by a Lock-Up ad Leak-Out Agreement.

The terms of the Agreements set forth that NAS will pay to Hydrenesis 12.5% royalty fees. The royalties are calculated per all customer or sub-license revenue generated by NAS, NSI or any Affiliate, from the sale or rental of either the Technologies or Hydrenesis Equipment, based on gross revenue less returns, rebates and sales taxes. There are sales milestones for exclusivity, whereby if NAS fails to achieve a sales milestone starting in Year 3, the exclusivity rights in both of the Rights agreements shall revert to non-exclusive rights. To maintain the exclusivity for the subsequent year, the Company may pay the amount of the royalty fees that would have been due if the Sales Milestone had been meet in the current year.

The Company has a working capital line of credit with Extraco Bank. On April 30, 2020, the line of credit was renewed with a maturity date of April 30, 2021 for a balance of $372,675. The line of credit bore an interest rate of 5.0%, that was compounded monthly and to be paid with the principal on the maturity date. The line of credit matured on April 30, 2021 and was secured by certificates of deposit and letters of credit owned by directors and shareholders of the Company. On May 5, 2021, the Company paid off the line of credit. The balance of the line of credit was $372,675 at March 31, 2021.

The Company also had an additional line of credit with Extraco Bank for $200,000, which was renewed with a maturity date of April 30, 2021, for a balance of $177,778. The line of credit bore interest at a rate of 5%, that was compounded monthly and to be paid with the principal on the maturity date. The line of credit was secured by certificates of deposit and letters of credit owned by directors and shareholders of the Company. On April 15, 2021, the line of credit was paid off in full. The balance of the line of credit was $177,778 at March 31, 2021.

~~The Company also has a working capital line of credit with~~ Capital One Bank for ~~$50,000.~~ $50,000. The line of credit bears an interest rate of prime plus 25.9 basis points, which totaled ~~29.15%~~30.65% as of ~~September~~June 30, ~~2021.~~2022. The line of credit is unsecured. The balance of the line of credit was ~~$9,580~~$9,580 at both ~~September~~June 30, ~~2021~~2022 and March 31, ~~2021.~~2022.

The Company also has a working capital line of credit with Chase Bank for ~~$25,000.~~$25,000. The line of credit bears an interest rate of prime plus 10 basis points, which totaled ~~13.25%~~14.75% as of ~~September~~June 30, ~~2021.~~2022. The line of credit is secured by assets of the Company’s subsidiaries. The balance of the line of credit is ~~$10,237~~$10,237 at ~~September~~June 30, ~~2021~~2022 and March 31, ~~2021.~~2022.

On April 10, 2020, the Company obtained a Paycheck Protection Program (“PPP”) loan in the amount of $103,200 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). On April 16, 2021, the Company filed for the forgiveness of the PPP loan and was approved for forgiveness of such loan on April 26, 2021.

~~On January 10, 2017, the~~The Company entered into a securities purchase agreement (the “SPA”) with an investor (the “Investor”) on December 15, 2021. Pursuant to the SPA, the Investor purchased a secured promissory note ~~with Community National Bank for $245,000, at~~(the “Note”) in the aggregate principal amount totaling approximately $16,320,000 (the “Principal Amount”). The Note has an ~~annual~~ interest rate of ~~5% and~~12% per annum, with a maturity date 24 months from the issuance date of ~~January 10, 2020~~the Note (the ~~“CNB Note”~~“Maturity Date”). The ~~CNB~~ Note ~~is secured by certain real property owned by the Company~~carried an original issue discount totaling $1,300,000 and a transaction expense amount of $20,000, both of which are included in LaCoste, Texas, and is also personally guaranteed by the Company’s President, as well as certain shareholders of the Company. On January 10, 2020, the loan was modified, with certain terms amended. The modified note is for the principal balance of ~~$222,736,~~the Note. The Note had $2,035,000 in debt issuance costs, including fees paid in cash of $1,095,000 and 3,000,000 warrants issued to placement agents with ~~initial monthly payments~~a fair value of ~~$1,730 through~~$940.000. The warrant fair value was estimated using the Black Scholes Model, with the following inputs: the price of the Company’s common stock of $0.32; a risk-free interest rate of 1.19%, the expected volatility of the Company’s common stock of 209.9%; the estimated remaining term, a dividend rate of 0%. The warrants were classified as a liability, as it is not known if there will be sufficient authorized shares to be issued upon settlement, based on the conversion terms of the convertible debt.

Beginning on the date that is 6 months from the issuance date of the Note, the Investor has the right to redeem up to $1,000,000 of the outstanding balance per month. Payments may be made by the Company, at the Company’s option, (a) in cash, or (b) by paying the redemption amount in the form of shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), per the following formula: the number of redemption shares equals the portion of the applicable redemption amount divided by the Redemption Repayment Price. The “Redemption Repayment Price” equals 90% multiplied by the average of the two lowest volume weighted average price per share of the Common Stock during the ten (10) trading days immediately preceding the date that the Investor delivers notice electing to redeem a portion of the Note. The redemption amount shall include a premium of 15% of the portion of the outstanding balance being paid (the “Exit Fee”). As the Exit Fee is to be included in every settlement of the Note, an additional 15% of the principal balance, which totals $2,448,000, was recognized along with the principal balance, and offset by a contra account in a manner similar to a debt discount. In addition to the Investor’s right of redemption, the Company has the option to prepay the Notes at any time prior to the Maturity Date by paying a premium of 15% plus the principal, interest, and fees owed as of the prepayment date.

Within 180 days of the issuance date of the Note, the Company will obtain an effective registration statement or a supplement to any existing registration statement or prospectus with the SEC registering at least $15,000,000 in shares of Common Stock for the Investor’s benefit such that any redemption using shares of Common Stock could be done using registered Common Stock. Additionally, as soon as reasonably possible following the issuance of the Note, the Company will cause the Common Stock to be listed for trading on either of (a) NYSE, or (b) NASDAQ (in either event, an “Uplist”). In the event the Company has not effectuated the Uplist by March 1, 2022, the then-current outstanding balance will be increased by 10%. On February ~~1, 2037, when all unpaid~~7, 2022, the Company and the Lender 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 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 ~~interest~~again to November 15, 2022, with no additional fee included. The Company will make a one-time payment to the Investor equal to 15% of the gross proceeds the Company receives from the offering expected to be effected in connection with the Uplist (whether from the sale of shares of its Common Stock and / or preferred stock) within ten (10) days of receiving such amount. In the event Borrower does not make this payment, the then-current outstanding balance will be increased by 10%. In addition, the Company has 30 days in which to secure the Note and grant the Lender a first position security interest in the real property in Texas and Iowa, and if it is not effectuated within the 30 days the outstanding balance will be increased by 15%. The Company is required to reserve 65,000,000 shares of common stock from its authorized and unissued common stock and to add 100,000,000 shares of common stock to the Share Reserve on or before March 10, 2022.

The Note also contains certain negative covenants and Events of Default, which in addition to common events of default, include a failure to deliver conversion shares, the Company fails to maintain the share reserve, the occurrence of a Fundamental Transaction without the Lenders written consent, the Company effectuates a reverse split of its common stock without 20 trading days written notice to Lender, fails to observe or perform or breaches any covenant, and, the Company or any of its subsidiaries, breaches any covenant or other term or condition contained in any Other Agreements in any material. Upon an Event of a Default, at its option and sole discretion, the Investor may consider the Note immediately due and payable. ~~The loan has~~Upon such an ~~initial yearly rate~~Event of interest of 5.75% , which may change beginning on February 1, 2023 and each 36 months thereafter, to the Wall Street Journal Prime Rate plus 1%, but never below 4.25%. The monthly payments may change on the same dates asDefault, the interest ~~changes. The Company is also allowed~~rate increases to ~~make payments against the principal at any time. The balance of the CNB Note~~ ~~is $210,738~~ ~~at September 30, 2021, $10,380 of which was in current liabilities,~~18% per annum and ~~$214,452 at March 31, 2021, of which $8,725 was in current liabilities.~~

On November 3, 2015, the Company entered into a short-term note agreement with Community National Bank for a total value of $50,000, with a maturity date of December 15, 2017. On July 18, 2018, the short-term note was replaced by a promissory note for the outstanding balance of ~~$25,298, which bears interest at 8% with a maturity date~~the Note increases from 5% to 15%, depending upon the specific Event of ~~July 18, 2021. The note~~Default. As of June 30, 2022, the Company is ~~guaranteed by an officer and director. The note was paid off~~ in full ~~in July~~compliance with the covenants and Events of ~~2021. The balance of the note at March 31, 2021 was $3,124.~~Default.

On February 26, 2021, the Company entered into a convertible note for the principal amount of $720,000, with an original issue discount of $120,000, convertible into shares of common stock of the Company. The note bears interest of 12% and is due six months from the date of issuance. The note is convertible from the date of issuance, at a fixed conversion rate of $0.36. The conversion rate shall change to $0.10 upon the event of default. The conversion feature ~~at issuance~~ meets the definition of ~~conventional convertible debt~~a derivative and therefore ~~qualifies for the scope exception in ASC 815-10-15-74(a)~~requires bifurcation and ~~would not be bifurcated and~~was accounted for ~~separately~~ as a derivative liability. As of June 30, 2022 the fair value of the derivative is $11,787,000, with a change in fair value of $1,314,000 recognized in the three months ended June 30, 2022.

As of June 30, 2022 and March 31, 2022, 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 2,140 and 2,840 outstanding, respectively, and 750,000 shares of Series F preferred stock are authorized with 750,000 outstanding, respectively.

On June 16, 2022, 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 ~~on the date of funding~~ as compared to the conversion price, determined there was ~~an approximately $164,000~~a $99,000 beneficial conversion feature to recognize, which ~~will be~~was fully amortized over the term of the note using the effective interest method. The amortization of the beneficial conversion feature was $27,273 and the original issuance discount was $20,000, for the year ended March 31, 2021. On April 16, 2021, the Company settled the convertible note, consisting of $720,000 in principal, approximately $13,000 in accrued interest, and approximately $110,000 in redemption fee, for a total of $842,972. The Company paid $421,486 in cash, and settled the remaining balance through the conversion into the issuance of 1,303,982 common shares.

On May 19, 2021, the Company entered into a Securities Purchase Agreement (“SPA”) with F&T, for the shares owned by F&T of NAS. Upon the closing of the SPA, the Company purchased the 980,000 shares of NAS’ common stock owned by F&T for a total acquisition price of $3,000,000, consisting of $1,000,000 paid in cash and 3,960,396 shares of the Company’s common stock to be issued at a market value of $0.505 per share for a total fair value of $2,000,000,. The Company paid the cash purchase price on May 20, 2021 and the purchase of the NAS shares closed on May 25, 2021. As of September 30, 2021, the shares of common stock have not been issued and are therefore classified in Shares payable. Prior to entering into the SPA, the Company owned fifty-one percent (51%) and F&T owned forty-nine percent (49%) of the issued and outstanding shares of common stock of NAS, and therefore, NAS was included in the consolidated financial statements of the Company, with F&T’s ownership accounted for as a non-controlling interest. After the SPA, the non-controlling interest was no longer in existence and NAS became a 100% owned subsidiary of the Company. In accordance with ASC 810-10-45, when the parent’s ownership interest changes while the parent retains its controlling interest in a subsidiary, it is accounted for as an equity transaction and there is no gain or loss recognized in the consolidated net loss. The difference between the fair value of the consideration paid and the amount of the non-controlling interest as of the acquisition of NAS shares held by F&T is recognized in equity attributableremaining redemption date to the Company. The carrying amount of the non-controlling interest prior to the acquisition was a deficit of $87,830, and as a result, a deduction of $3,087,830 was recognized in additional paid in capital in the Consolidated Statement of Changes in Equity, intheir Series E Preferred Stock.

As of September 30, 2021 and March 31, 2021, the Company had 200,000,000 shares of preferred stock authorized with a par value of $0.0001. Of this amount, 5,000,000 shares of Series A preferred stock are authorized and outstanding, 5,000 shares Series B preferred stock are authorized and 345 and 607 outstanding, respectively, 5,000 shares Series D preferred stock are authorized and 0 and 6,050 outstanding, respectively and 5,000 shares Series E preferred stock are authorized and 2,540 and 0 outstanding, respectively.

On April 14, 2021, the Board authorized the issuance of 10,000 shares of the Company’s Series E Preferred Stock and has filed a Certificate of Designation of Preferences of the Series E Convertible Preferred Stock with the State of Nevada. The shares of Series E Preferred Stock have a stated value of $1,200 per share and are convertible into shares of common stock at the election of the holder of the Series E Preferred Stock at any time at a price of $0.35 per share, subject to adjustment (the “Conversion Price”). The Series E Preferred Stock is convertible into that number of shares of common stock determined by dividing the Series E Stated Value (plus any and all other amounts which may be owing in connection therewith) by the Conversion Price, subject to certain beneficial ownership limitations. Each holder of Series E Preferred Stock shall be entitled to receive, with respect to each share of Series E Preferred Stock then outstanding and held by such holder, dividends at the rate of twelve percent (12%) per annum, payable quarterly. Each share of Series E Preferred Stock shall be redeemed by the Company on the date that is no later than one calendar year from the date of its issuance. The Series D PS are also redeemable at the Company's option, at percentages ranging from 115% to 125% for the first 180 days, based on the passage of time. The holders of Series E Preferred Stock rank senior to the Common Stock and Common Stock Equivalents (as defined in the Series E Designation) with respect to payment of dividends and rights upon liquidation and will vote together with the holders of the Common Stock on an as-converted basis, subject to beneficial ownership limitations, on each matter submitted to a vote of holders of Common Stock (whether at a meeting of shareholders or by written consent). Upon any liquidation, dissolution or winding-up of the Company, the holders shall be entitled to receive out of the assets of the Company an amount equal to the stated value, plus any accrued and unpaid dividends and any other fees or liquidated damages then due and owing for each share of Preferred Stock, before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the holders shall be ratably distributed among the holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.

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

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

On April 14, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Purchaser”), for the offering (the “Offering”) of (i) $5,000,000 worth of common stock (“Shares”), par value $0.0001 per share, of the Company (“Common Stock”); at a per share purchase price of $0.55 per Share (ii) common stock purchase warrants (“Warrants”) to purchase up to an aggregate of 10,000,000 shares of Common Stock, which are exercisable for a period of five years after issuance at an initial exercise price of $0.75 per share, subject to certain adjustments, as provided in the Warrants; and (iii) 1,000,000 shares of Common Stock (the “Commitment Shares”). Pursuant to the Purchase Agreement, on April 15, 2021, the Company received net proceeds of $4,732,123 from the Purchaser.

Further, pursuant to the terms of the Purchase Agreement, from the date thereof until the date that is the twelve-month anniversary of the closing of the Offering, upon any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), each Purchaser shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.

Pursuant to the Purchase Agreement, on May 5, 2021, the Purchaser purchased an additional 15,454,456 shares of common stock at a per share purchase price of $0.55 per share (the “Second Closing”), for net proceeds of approximately $8,245,000.

Additionally, on May 20, 2021, the Purchaser purchased an additional 2,727,272 shares of common stock at a price per share of $0.55 per share (“Third Closing”), for net proceeds of approximately $1,455,000.

On June 28, 2021, the Company entered into a securities purchase agreement with GHS (the “June GHS Purchase Agreement”) for the offering of up to (i) $3,000,000 worth of common stock of the Company at a per share purchase price of $0.40 and (ii) $11,000 worth of prefunded common stock purchase warrants to purchase an aggregate of up to 1,100,000 shares of common stock, which are exercisable upon issuance and shall not expire prior to exercise, and are subject to certain adjustments, as provided in the warrants. Pursuant to the June GHS Purchase Agreement, on June 28, 2021, GHS purchased 7,500,000 shares of common stock and 1,100,000 shares of common stock underlying the prefunded warrants, for an aggregate purchase price of $3,011,000, less offering expenses of $90,330, for net proceeds of $2,909,670.

On April 14, 2021, the Company, entered into a share exchange agreement (the “Exchange Agreement”) with a holder of the Series D Preferred Stock, whereby, at the closing of the Offering, the Holder agreed to exchange an aggregate of 3,600 shares of the Company’s Series D Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”) into 3,739.63 shares of the Company’s Series E Convertible Preferred stock, par value $0.0001 (the “Series E Preferred Stock”). The exchange was completed on April 15, 2021. In accordance with ASC 260-10-S99-2, exchanges of preferred stock that are considered to be extinguishments are to be accounted for as a redemption. Therefore, the difference between the fair value of the Series E Preferred Stock transferred to the holder of the Series D Preferred Stock and the carrying amount of the Series D Preferred Stock immediately prior to the exchange, which was $3,258,189, was accounted for in a manner similar to a dividend. During the three months ended September 30. 2021, 1,2002022, 700 shares of Series E Preferred Stock were converted into ~~4,114,286~~4,537,240 shares of common stock.

~~In addition, in relation to~~During the ~~Offering, on April 15, 2021,~~three months ended June 30, 2022, the ~~Company redeemed~~amortization of the ~~remaining 2,450~~beneficial conversion feature of the Series ~~D PS for $3,513,504. In accordance with ASC 260-10-S99-2,~~E preferred stock was $141,500. The Company is accreting the ~~difference between the fair~~carrying value, of the ~~consideration transferred to the holder of the~~ Series DE Preferred Stock ~~and the carrying amount of the Series D Preferred Stock immediately prior~~in temporary equity up to the redemption ~~which~~value over the period until its redemption. For the three months ended June 30, 2022, $278,500 was ~~$2,719,538, was accounted for in a manner similar~~accreted, and approximately $637,000 to ~~a dividend.~~date as of June 30, 2022.

In connection with the issuance of a total of 13,861,386 shares of the Company’s common stock pursuant to the SPA (Note 10) and the Patents Agreement (Note 5) (the “Shares”), the Company and F&T, on May 19, 2021, entered into two separate leak-out agreements (the “Leak-Out Agreements”). Pursuant to the Leak-Out Agreements, F&T agreed that it would not sell or transfer the Shares for six months following the closing of the SPA and Patents Agreement and that, following these six months, each shareholder of F&T who was issued a portion of the Shares could sell up to one-sixth of their portion of the Shares every thirty-day period occurring thereafter for the next six months. Following the one-year anniversary of the closings, there will be no further restrictions regarding the sale or transfer of the Shares.

On April 14, 2021, 500,000 shares of common stock were issued to a consultant per an agreement entered into on January 20, 2021 for advisory services for a two-year period. The shares had a fair value of ~~$195,000,~~$195,000, based on the market price of ~~$0.39~~$0.39 on the grant date. 62,500 common shares shall vest each quarter through October 1, 2022, at ~~$24,275,~~$24,275, with ~~$73,126~~$146,750 vested through ~~the September~~June 30, ~~2021.~~2022.

As of June 22, 2022, 250,000 common 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 ~~entered into an agreement with a consultant, with a three-month term, that shall automatically renew each three months unless one~~withholding sufficient profits from the sale by the other party ~~terminates~~of the agreement. The compensation shall be $12,500 in cash per month for the first six months and $15,000 per month thereafter. Also included in compensation are 200,000 shares of common stock, with a fair value of $99,600 based upon the market price of $0.50 upon the grant date. The shares of common stock will vest in quarterly installments, with 50,000 to vest immediately. The shares of common stock have not yet been issued, and therefore the 50,000 vested shares, at $24,900, are included in Shares payable.live shrimp.

On August 24, 2020, the Company issued 1,500,000 shares of common stock to a consultant per an agreement entered into on June 25, 2020. On December 25, 2020, the Company renewed the agreement for an additional six months. As consideration for the agreement the Company issued 1,500,000 shares of common stock to the consultant. The agreement has a six-month term, and therefore the fair value of $616,500, based on the market value of $0.041 on the grant date, was recognized in Prepaid expense to be amortized over the six-month term. As of the year end March 31, 2021, $308,250 remained in Prepaid expense with $308,250 recognized in consulting expense for the year end March 31, 2021. The remaining $308,250 was expensed in the three months ended September 30, 2021.

The 18,506,429 warrants outstanding as of June 30, 2022, were revalued as of period end for a fair value of $2,008,000, with a decrease in the fair value of $1,915,000 recognized on the Statement of Operations. The fair value was estimated using Black Scholes Model, with the following inputs: the price of the Company’s common stock of $0.12; a risk-free interest rate of 3.01%, the expected volatility of the Company’s common stock ranging from 182.4% to197.5%; the estimated remaining term, a dividend rate of 0%,

Included in other accrued expenses on the accompanying unaudited condensed consolidated balance sheet ~~is September 30approximately $114,000 and $154,000,~~approximately $119,000, owing to a key employee (which includes ~~$50,000~~$50,000 in both fiscal years, from consulting services prior to his employment) as of ~~September~~both June 30, ~~2021~~2022 and March 31, ~~2021.~~2022. These amounts include both accrued payroll and accrued allowances and expenses. ~~The accrued payroll owing to the President of the Company was paid off in full during July 2021, and was approximately $35,000 as of March 31, 2021.~~

~~On August 10, 2021, the Board of Directors awarded the President, the Chief Financial Officer and the Chief Technology Officer compensation bonuses of $300,000 each.~~ On May 11, 2021, the Company paid the Chief Financial Officer a bonus of $300,000. On August 10, 2021, the Board of Directors ratified the bonus payment to the CFO and awarded the President and the Chief Technology Officer compensation bonuses of ~~$300,000, with~~$300,000 each. The bonuses to the ~~other bonuses~~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 ~~September~~June 30, ~~2021.~~2022. As of June 30, 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.

On January 1, 2016 the Company entered into a notes payable agreement with NaturalShrimp Holdings, Inc.(“NSH”), a shareholder. ~~Between January 16, 2016 and March 7, 2016, the Company borrowed $134,750 under this agreement. An additional $601,361 was borrowed under this agreement in the year ended March 31, 2017.~~ The note payable has no set monthly payment or maturity date with a stated interest rate of 2%2%. During the ~~three months~~year ended ~~September 30, 2021,~~March 31, 2022, the Company paid off ~~$655,750~~$655,750 of the note payable. The outstanding balance is approximately ~~$77,000 and $735,000,~~$77,000 as of ~~September~~both June 30, ~~2021~~2022 and March 31, ~~2021, respectively. At September~~2022. As of June 30, ~~2021~~2022 and March 31, ~~2021,~~2022, accrued interest payable was approximately ~~$70,000~~$74,000 and ~~$66,000,~~$74,000, respectively.

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.~~$486,500. The notes are unsecured and bear interest at 8%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~~$356,404 as of both ~~September~~June 30, ~~2021~~2022 and March 31, ~~2021,~~2022, and is classified as a current liability on the unaudited condensed consolidated balance sheets. As of ~~September~~June 30, ~~2021~~2022 and March 31, ~~2021,~~2022, accrued interest payable was approximately ~~$132,000~~$154,000 and ~~$118,000,~~$146,000, respectively.

Beginning in 2010, the Company started entering into several working capital notes payable with various shareholders of NSH for a total of ~~$290,000~~$290,000 and bearing interest at 8%8%. The balance of these notes at ~~September~~June 30, ~~2021~~2022 and March 31, ~~2021~~2022 was ~~$54,647~~$54,647 and is classified as a current liability on the unaudited condensed consolidated balance sheets.

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

At inception, on August 1, 2021, the ROU and lease liability was calculated as approximately ~~$316,000,~~$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%~~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.~~$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~~$17,000 calculated at the present value of all future lease payments for the lease term, using an incremental borrowing rate of ~~5.75%~~5.75%.

On June 24, 2019, the Company entered into a service and equipment lease agreement for water treatment services, consumables and equipment. The lease term was for five years, with a renewal option of an additional five years, with a monthly lease payment of $5,000. The Company analyzed the classification of the lease under ASC 842, and as it did not meet any of the criteria for a financing lease it has been classified as an operating lease. The Company determined the Right of Use asset and Lease liability values at inception at a value of $275,400, calculated at the present value of all future lease payments for the lease term, using an incremental borrowing rate of 5%. As of March 31, 2021, the lease was on hold while the Company waited for new equipment to be delivered and installed. During the first quarter of fiscal 2022, the Company has cancelled the lease. As the lease was on hold there has been no lease expense or amortization of the Right of Use asset since inception of the lease and recognition of the Lease liability and Right of Use asset, and therefore there is no gain or loss recognized upon cancellation of the lease.NOTE 9 – COMMITMENTS AND CONTINGENCIES

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.~~$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.~~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.

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.

On ~~February 18, 2020, RGA Labs, Inc. (“RGA”) filed suit against~~July 3, 2022, the ~~Company in the Illinois Circuit Court (23rd District) alleging that the Company owed RGA money pursuant to a written contract for the design and manufacture of certain~~Company’s building containing its water treatment ~~equipment commissioned by~~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 ~~Company.~~production building which was not damaged. The Company ~~disputed~~has filed a claim with the allegations and has counterclaimed against RGA for additional costs and expenses incurred by the Company in correcting, repairing and retro-fitting the equipment to enable it to work in the Company’s facilities. As a resultinsurance company which, as of RGA’s failure to respond to written discovery served by the Company and failure of RGA to satisfy requirements imposed by an order compelling response, the court issued an order prohibiting RGA from introducing any evidence at the time of trial other than the original agreement between RGA and the Company. Further, the Court sustained the Company’s objection to RGA’s written discovery obviating the Company’s obligation to respond. On August 10, 2021, pursuant to a court order, RGA and the Company participated in a mediation wherein a settlement of all claims was reached. The settlement consisted of the agreement of the Company to pay RGA the sum of $8,000, execution of joint and mutual releases and the execution of a non-competition agreement by RGA and its principals restricting them from competing against the Company in the aquaculture business using electrocoagulation technology. The settlementthis filing, has not yet been ~~finalized at this time due~~completed. Due to the ~~negotiation~~damage caused by the fire, the Company has written off approximately $1,764,000 of the ~~terms~~fixed assets, and ~~breadth~~$325,000 of the ~~non-competition agreement.~~

On ~~October 18, 2021, 600 shares of Series E Preferred Stock were converted into 2,057,143~~August 1, 2022, the Company issued 250,000 shares of common ~~stock.~~stock to a consultant per the terms of an agreement from June 2021, to be issued upon the approval of a patent.

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

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, ~~2021,~~2022, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 29, ~~2021,~~2022, 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:

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.

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”) and NaturalShrimp Global, Inc. (“NS Global”) and Natural Aquatic Systems, Inc. (“NAS”). Unless otherwise specified, all dollar amounts are expressed in United States Dollars.

We were incorporated in the State of Nevada on July 3, 2008 under the name “Multiplayer Online Dragon, Inc.” Effective November 5, 2010, we effected an 8-for-1 forward stock split, increasing the issued and outstanding shares of our common stock from 12,000,000 shares to 96,000,000 shares. On October 29, 2014, we effected a 1-for-10 reverse stock split, decreasing the issued and outstanding shares of our common stock from 97,000,000 to 9,700,000.

On November 26, 2014, we entered into an Asset Purchase Agreement (the “Agreement”) with NaturalShrimp Holdings, Inc. a Delaware corporation (“NSH”), pursuant to which we agreed to acquire substantially all of the assets of NSH which assets consisted primarily of all of the issued and outstanding shares of capital stock of NSC and NS Global, and certain real property located outside of San Antonio, Texas (the “Assets”).

On January 30, 2015, we consummated the acquisition of the Assets pursuant to the Agreement. In accordance with the terms of the Agreement, we issued 75,520,240 shares of our common stock to NSH as consideration for the Assets. As a result of the transaction, NSH acquired 88.62% of our issued and outstanding shares of common stock; NSC and NS Global became our wholly-owned subsidiaries, and we changed our principal business to a global shrimp farming company.

~~In connection with our receipt of approval from the Financial Industry Regulatory Authority (“FINRA”), effective March 3, 2015, we amended our Articles of Incorporation to change~~ We changed our name to “NaturalShrimp ~~Incorporated.”~~Incorporated” in 2015.

We are a biotechnology company and ~~has~~have developed proprietary platform technologies that allow us to grow Pacific White shrimp (Litopenaeus vannamei, formerly Penaeus vannamei) in an ecologically controlled, high-density, low-cost environment, and in fully contained and independent production facilities. Our system uses technology which allows us to produce a naturally grown shrimp “crop” weekly and accomplishes this without the use of antibiotics or toxic chemicals. We have developed several proprietary technology assets, including a knowledge base that allows us to produce commercial quantities of shrimp in a closed system with a computer monitoring system that automates, monitors, and maintains proper levels of oxygen, salinity, and temperature for optimal shrimp production. The Company’s production facilities are located in La Coste, Texas and Webster City, Iowa.

NS Global, one of our wholly-owned subsidiaries, owns less than 1% of Norway Seafood A.S, (formerly NaturalShrimp International A.S.) in Oslo, Norway. This entity was our original European-based partner and was responsible for the construction cost of its facility and initial operating capital.

The first facility built in Spain for NaturalShrimp International A.S. is GambaNatural de España, S.L. The land for the first facility was purchased in Medina del Campo, Spain, and construction of the 75,000 sq. ft. facility was completed in 2016. Medina del Campo is approximately seventy-five miles northwest of Madrid, Spain.

On October 16, 2015, we formed ~~Natural Aquatic Systems, Inc. (“NAS”).~~NAS. The purpose of NAS is to formalize the business relationship between our Company and F&T Water Solutions LLC (“F&T”) for the joint development of certain water technologies. The technologies shall include, without limitation, any and all inventions, patents, intellectual property, and know-how dealing with enclosed aquatic production systems worldwide. This includes construction, operation, and management of enclosed aquatic production, other than shrimp, facilities throughout the world, co-developed by both parties at our facility located outside of La Coste, Texas. On December 25, 2018, we were awarded U.S. Patent “Recirculating Aquaculture System and Treatment Method for Aquatic Species” covering all indoor aquatic species that utilizes proprietary art.

On December 15, 2020, we entered into an Asset Purchase Agreement (“APA”) between VeroBlue Farms USA, Inc., a Nevada corporation (“VBF”), VBF Transport, Inc., a Delaware corporation (“Transport”), and Iowa’s First, Inc., an Iowa corporation (“Iowa’s First”) (each a “Seller” and collectively, “Sellers”). Transport and Iowa’s First were wholly-owned subsidiaries of VBF. The agreement called for us to purchase all of the tangible assets of VBF, the motor vehicles of Transport and the real property (together with all plants, buildings, structures, fixtures, fittings, systems, and other improvements located on such real property) of Iowa’s First. The consideration was $10,000,000, consisting of $5,000,000 in cash, paid at closing on December 17, 2020, (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 to VBF 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 to VBF as a balloon payment on the maturity date. The Company also agreed to issue 500,000 shares of Common Stock as a finder’s ~~fee, with a fair value of $135,000 based on the market value of the Common Stock as of the closing date of the acquisition.~~fee.

The facility was originally designed as an aquaculture facility, with the company having production issues. The Company’s has begun a modification process to convert the plant to produce shrimp, which will allow them to scale faster without having to build new facilities. The three Iowa facilities contain the tanks and infrastructure that will be used to support the production of shrimp with the incorporation of the Company’s Electrocoagulation (EC) platform technology.

On May 19, 2021, the Company entered into a Patents Purchase Agreement (the “Patents Agreement”) with F&T. The Company and F&T had previously jointly developed and patented a water treatment technology used or useful in growing aquatic species in re-circulating and enclosed environments (the “Patent”) with each party owning a fifty percent (50%) interest. Upon the closing of the Patents Agreement, the Company would purchase F&T’s interest in the Patent, F&T’s 100% interest in a second patent associated with the first Patent issued to F&T in March 2018, and all other intellectual property rights owned by F&T for a purchase price of $2,000,000 in cash and issue 9,900,990 shares of the Company’s common stock with a market value of $0.505 per share for a total fair value of $5,000,000, for a total acquisition price of $7,000,000. The Company paid the cash purchase price on May 20, 2021 and the closing of the Patents Agreement took place on May 25, 2021. ~~As of September 30, 2021, the shares of common stock have not been issued and are therefore classified in shares payable.~~

On August 25, 2021, the Company, through ~~their~~its 100% owned subsidiary NAS, entered into an Equipment Rights Agreements with Hydrenesis-Delta Systems, LLC ~~(Hydrenesis-Delta"~~(“Hydrenesis-Delta”) and a Technology Rights Agreement, in a sub-license agreement with Hydrenesis Aquaculture LLC ~~("Hydrenesis-Aqua"~~(“Hydrenesis-Aqua”), The Equipment Rights involve specialized and proprietary equipment used to produce and control, dose, and infuse Hydrogas® and RLS® into both water and other chemical species, while the Technology sublicense pertains to the rights to Hydrogas® and RLS®. Both Rights agreements are for a 10 year term, which shall automatically renew for ten year successive terms. The term can be terminated by written notice by mutual consent, or by either party upon a breach of contract, insolvency or filing of bankruptcy. The agreements accord the exclusive rights to purchase or distribute the technology, or buy or rent the equipment, in the Industry Sector, which is the primary business and revenue stream generated from indoor aquaculture farming of any species in the Territory, defined as anywhere in the world except for the countries in the Gulf Corporation Council.

The Company has three wholly-owned ~~subsidiaries including~~subsidiaries: NSC, ~~and~~ NS Global, and NAS.

Historically, efforts to raise shrimp in a high-density, closed system at the commercial level have been met with either modest success or outright failure through “BioFloc Technology.” Infectious agents such as parasites, bacteria and viruses are the most damaging and most difficult to control. Bacterial infection can in some cases be combated through the use of antibiotics (although not always), and in general, the use of antibiotics is considered undesirable and counter to “green” cultivation practices. Viruses can be worse, in that they are immune to antibiotics. Once introduced to a shrimp population, viruses can wipe out entire farms and shrimp populations, even with intense probiotic applications.

Our primary solution against infectious agents is our “Vibrio Suppression Technology.” We believe this system creates higher sustainable densities, consistent production, improved growth and survival rates and improved food conversion without the use of antibiotics, probiotics, or unhealthy anti-microbial chemicals. Vibrio Suppression Technology helps to exclude and suppress harmful organisms that usually destroy “BioFloc” and other enclosed technologies.

In 2001, 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, fifty-two 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 continued to refine this technology, eliminating bacteria and other problems that affect enclosed systems, and now have a successful shrimp growing process. We have produced thousands of 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. However, there were further enhancements needed to our process and technology in order to begin production of shrimp on a commercially viable scale and to generate revenues.

Our current system consists of a nursery tank where the shrimp are acclimated, then moved to a larger grow-out tank for the rest of the ~~twenty-four-week~~twenty-week cycle. During 2016, we engaged in additional engineering projects with third parties to further enhance our indoor production capabilities. For example, through our relationship with Trane, Inc., a division of Ingersoll-Rand Plc (“Trane”), Trane provided a detailed audit to use data to build and verify the capabilities of then initial Phase 1 prototype of a Trane-proposed three tank system at our La Coste, Texas facility. The Company working with F&T Water Solutions contracted RGA Labs, Inc. (“RGA Labs”) to build the initial NaturalShrimp patented Electrocoagulation system for the grow-out, harvesting and processing of fully mature, antibiotic-free Pacific White Leg shrimp. The design provided a viable pathway to begin generating revenue and producing shrimp on a commercially viable scale. The equipment was installed in early June 2018 by RGA Labs, and final financing for the system was provided by one of the Company’s institutional investors. The first post larvae (PL) arrived from the hatchery on July 3, 2018. The Company used the shrimp for sampling to key potential customers and special events such as the Texas Restaurant Association trade show. The Company also received two production PL lots from Global Blue Technologies on March 21, 2019 and April 17, 2019 and from American Penaeid, Inc. on August 7, 2019. Because the shrimp displayed growth that was slower than normal, the Company had a batch tested by an independent lab at the University of Arizona. The shrimp tested positive for Infectious hypodermal and hematopoietic necrosis (“IHHNV”) and the Texas Parks and Wildlife Department was notified that the facility was under quarantine. On August 26, 2019, the Company was forced to terminate all lots due to the infection. On August 30, 2019, the Company received notice that it was in compliance again and the quarantine had been lifted and the Company began restocking shrimp in the refurbished facility sections. During the aforementioned quarantine, the Company decided to begin an approximately $2,000,000 facility renovation demolishing the interior 16 wood structure lined tanks (720,000 gallons). The Company began replacing the previous tanks with 40 new fiberglass tanks (600,000 gallons) at a cost of approximately $400,000 allowing complete production flexibility with more smaller tanks.

On ~~March 18, 2020,~~July 3, 2022, a building containing our ~~research~~water treatment and ~~development plant~~purification system in La Coste, Texas (the “Water Treatment Plant”) was completely destroyed byin a fire. The ~~Company believed that it~~Water Treatment Plant is a separate building consisting of approximately 8,000 square feet located apart from the production building which was not damaged. We have filed a claim with our insurance company which, as of this filing, has not yet been completed. Due to the damage caused by ~~a natural gas leak, but~~ the fire, ~~was so extensive that the cause was undetermined. No one was injured as a result~~we have written off approximately $1,764,000 of the ~~fire. The majority~~fixed assets and $325,000 of the ~~damage was~~accumulated depreciation, for a net impairment to ~~our pilot production plant, which comprised approximately 35,000 square feet~~be recognized of the total size of all facilities at the La Coste location of approximately 53,000 square feet, but the fire did not impact the separate greenhouse, reservoirs, or utility buildings. We received total insurance proceeds in the amount of $917,210, the full amount of our claim. These funds were utilized to rebuild a 40,000 square foot production facility at the La Coste facility and to repurchase the equipment needed to replace what was lost in the fire. The Company continues to work towards full capacity at this plant in LaCoste and expects that sales will be generated from the facility in the fourth calendar quarter of 2021. While we have experienced supply chain issues due to COVID-19, we do expect ramping up full production of 3,000 pounds per week by the end of the first calendar quarter of 2022. Also, the Company is expecting to break ground on an 80,000 square foot expansion in LaCoste within the next sixty days.$1,439,000.

Comparison of the Three Months Ended ~~September~~June 30, ~~2021~~2022 to the Three Months Ended ~~September~~June 30, ~~2020~~

We have not earned any significant revenues since our inception and, although we ~~expect revenues to begin~~had revenue of approximately $36,000 in the three ~~to six~~ months ended June 30, 2022, we can provide no assurances as to how significant ~~they~~our revenue will be ~~at that time.~~in the next one to two fiscal quarters.

Our expenses for the three months ended ~~September~~June 30, ~~2021~~2022 are summarized as follows, in comparison to our expenses for the three months ended ~~September~~June 30, ~~2020:~~2021:

Operating expenses for the three months ended ~~September~~June 30, ~~2021~~2022 were ~~$2,783,972,~~$2,923,140, which is a ~~399%~~31% increase over operating expenses of ~~$557,749~~$2,238,090 for the same period in ~~2020.~~2021. The overall change in expenses is mainly the result of ~~a ramp up~~increases in facility operations relating to the progress of ~~costs based on~~ the ~~increase~~planning of the commercial operations in the ~~activity~~new plant in ~~planning operations,~~Iowa as well as ~~the acquisition and addition~~in Texas. Additionally, there is quarterly amortization of ~~the Iowa facility. Salaries increased by approximately $919,000, due to~~$367,500 for the new ~~employees,~~patents and License rights, as well as research and development arising from conducting trials of Atlantic salmon productions in Norway, neither of which existed in the prior period. Salaries decreased by approximately $189,000, as there was a $300,000 bonus paid to one of the ~~CFO, and~~executives in the ~~$600,000 bonus to the President and Chief Technology Officer in accrued expenses, related parties.~~three months ended June 30, 2021. Professional fees ~~increased~~decreased by approximately ~~$120,000,~~$163,000, due to increased attorneys work with the Company on acquisitions and equity offerings and SEC filings, as well as consultant and accounting ~~fees. The approximately $457,644 increase in other general and administrative expenses includes maintenance work being done~~fees, in the Texas and Iowa facilities and property taxes paid in Iowa. Additionally, it is the result of the fact that the operating costs in 2020 were decreased due to the slowdown of the progressing of testing and planning to begin commercial operations due to the fire at the Texas plant.prior period. The depreciation in the three months ended ~~September~~June 30, ~~2021,~~2022, increased due to the ~~new~~progressed fixed assets ~~acquired from Vero Blue, and the amortization in the current period is the result of the patent acquisition on May 19, 2021 and the License Agreements entered into on August 25, 2021.~~

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

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

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

Operating expenses for the six months ended September 30, 2021 were $5,022,062, which is a 448% increase over operating expenses of $915,878 for the same period in 2020. The overall change in expenses is mainly the result of a ramp up of costs based on the increase in the activity in planning operations, as well as the ~~acquisition and addition~~movement of ~~the Iowa facility, especially~~construction in ~~general and administrative expenses and facility operations. Salaries increased by approximately $1,441,000, due~~process to the new employees, as well as the $300,000 bonus paid to the CFO, and the $600,000 bonus to the President and Chief Technology Officer in accrued expenses, related parties. Professional fees increased by approximately $689,000, due to attorneys work with the Company on acquisitions and equity offerings and SEC filings, as well as consultant and accounting fees. The increase in other general and administrative expenses of approximately $775,000 includes maintenance work being donefixed assets, in the Texas and Iowa facilities and property taxes paid in Iowa. Additionally, it is the result of the fact that the operating costs in 2020 were decreased due to the slowdown of the progressing of testing and planning to begin commercial operations due to the fire at the Texas plant. The depreciation in the six months ended September 30, 2021, increased due to the new fixed assets acquired from Vero Blue, and the amortization in the current period is the result of the patent acquisition on May 19, 2021 and the License Agreements entered into on August 25, 2021.two plants.

As of ~~September~~June 30, ~~2021,~~2022, we had cash on hand of approximately ~~$801,000~~$664,000 and working capital deficiency of approximately ~~$5,121,000.~~$16,876,000, as compared to cash on hand of approximately ~~$156,000~~$1,734,000 and a working capital deficiency of approximately ~~$3,614,000~~$17,017,000 as of March 31, ~~2021.~~2022. The decrease in working capital for the ~~six~~three months ended ~~September~~June 30, ~~2021,~~2022, is mainly due to the decrease in cash on-hand, including the escrow account and increase in accounts payable and accrued expenses, offset by a decrease in ~~notes payable – related parties.~~fair value of the derivative and warrant liabilities.

Our working capital as of ~~September~~June 30, ~~2021,~~2022, in comparison to our working capital deficiency as of March 31, 2021, can be summarized as follows:

Current assets ~~increased~~decreased mainly because of the ~~addition to~~use of the cash on hand, as a result of the equity offerings during April through June 30, 2021, of approximately ~~$17,274,000, a portion of which was then used in the patent and NAS acquisitions, the License agreements,~~$17,277,000, as well as ~~redemption of Series D Preferred shares,~~the $1,500,000 escrow account which was transferred to the Company’s cash. This was offset by ~~a decrease~~an increase in prepaid expenses, ~~due~~relating mainly to prepaid deposits for construction and equipment in the ~~amortization.~~Iowa plant. The ~~increase~~decrease in current liabilities is primarily due to the ~~$3 million~~decrease in ~~cash payments owed on~~ the ~~License agreements recorded~~fair value of the derivative liability and warrant liability, off set by the increase in accounts payable and the ~~$600,000 in~~ accrued ~~bonuses for~~interest arising from the ~~President and Chief Technology Officer (“CTO”), off set by the payoff of bank loans and lines of credit,~~ convertible ~~debt, notes payable to related parties, and the forgiveness of the PPP loan.~~debenture.

Our cash flows for the ~~six~~three months ended ~~September~~June 30, ~~2021,~~2022, in comparison to our cash flows for the ~~six~~three months ended ~~September~~June 30, ~~2020,~~2021, can be summarized as follows:

The ~~increase in~~ net cash used in operating activities in the ~~six~~three months ended ~~September~~June 30, ~~2021,~~2022 is similar compared to the same period in ~~2020 is largely attributable to~~2021. However, the ~~increase~~three months ended June 30, 2022 has the change in fair value of the ~~net loss, plus the increase in accounts payable,~~derivative and warrant liabilities of $3,228,000 offset by the increase in amortization of the ~~depreciation~~debt discount and amortization of $2,407,500, and accounts receivable and inventory, none of which occurred in the prior period. Additionally, there are increases in prepaid expenses and accounts payable and accrued ~~bonuses for the President and CTO.~~interest.

The net cash used in investing activities in the ~~six~~three months ended ~~September~~June 30, ~~2021 includes~~2022 decreased by approximately $3,670,000 compared to the same period in the prior fiscal year. During the current period cash was only used to purchase consists of approximately $491,000 for machinery and equipment . The prior year’s cash spent on investing activities consisted of the $2,000,000 of cash in the patent acquisition and $1,000,000 in the acquisition of shares of the non-controlling interest, ~~the $2,350,000 for the License agreement,~~ as well as approximately ~~$646,000~~$411,000 for machinery and equipment and ~~$1,298,000~~$750,000 for construction in process. The prior year’s cash spent on investing activities consisted mainly of the cash paid for machinery and equipment and construction in process, offset by $917,210 of cash proceeds received from the insurance settlement for the fire to the pilot production plant.

The net cash provided by financing activities ~~increased~~decreased by approximately ~~$9,471,000~~$10,642,000 between periods. For the current period, the Company received $1,500,000 that had been held in escrow from the convertible note they entered into in December of 2021. In the same period in the prior year, the Company received approximately $17,277,000 from the sale of common stock and warrants, offset by amounts paying off the convertible note, notes payable with related parties and bank loans, and the amount paid on the redemption of Series D Preferred Shares. In the same period in the prior year, the financing activities primarily arose from the proceeds received from the sale of Series B convertible Preferred Shares and the $103,200 received from the PPP loan.

Our cash position was approximately ~~$801,000~~$664,000 as of ~~September~~June 30, ~~2021.~~2022. 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.

The Company also has a working capital line of credit with Capital One Bank for $50,000. The line of credit bears an interest rate of prime plus 25.9 basis points, which totaled ~~29.15%~~30.65% as of June 30, ~~2021.~~2022. The line of credit is unsecured. The balance of the line of credit was $9,580 at both ~~September~~June 30, ~~2021~~2022 and March 31, 2021.

The Company also has a working capital line of credit with Chase Bank for $25,000. The line of credit bears an interest rate of prime plus 10 basis points, which totaled ~~13.25%~~14.75% as of June 30, ~~2021.~~2022. The line of credit is secured by assets of the Company’s subsidiaries. The balance of the line of credit is $10,237 at ~~September~~June 30, ~~2021~~2022 and March 31, ~~2021.~~

On January 10, 2017, the Company entered into a promissory note with Community National Bank for $245,000, at an annual interest rate of 5% and a maturity date of January 10, 2020 (the “CNB Note”). The CNB Note is secured by certain real property owned by the Company in LaCoste, Texas, and is also personally guaranteed by the Company’s President, as well as certain shareholders of the Company. On January 10, 2020, the loan was modified, with certain terms amended. The modified note is for the principal balance of $222,736, with initial monthly payments of $1,730 through February 1, 2037, when all unpaid principal and interest will be due and payable. The loan has an initial yearly rate of interest of 5.75% , which may change beginning on February 1, 2023 and each 36 months thereafter, to the Wall Street Journal Prime Rate plus 1%, but never below 4.25%. The monthly payments may change on the same dates as the interest changes. The Company is also allowed to make payments against the principal at any time. The balance of the CNB Note is ~~$210,738~~ ~~at September 30, 2021, $10,380 of which was in current liabilities, and $214,452 at March 31, 2021, of which $8,725 was in current liabilities.~~

On November 3, 2015, the Company entered into a short-term note agreement with Community National Bank for a total value of $50,000, with a maturity date of December 15, 2017. On July 18, 2018, the short-term note was replaced by a promissory note for the outstanding balance of $25,298, which bears interest at 8% with a maturity date of July 18, 2021. The note is guaranteed by an officer and director. The note was paid off in full in July of 2021. The balance of the note at March 31, 2021 was $3,124.

On February 26, 2021, the Company entered into a convertible note for the principal amount of $720,000, with an original issue discount of $120,000, convertible into shares of common stock of the Company. The note bears interest of 12% and is due six months from the date of issuance. The note is convertible from the date of issuance, at a fixed conversion rate of $0.36. The conversion rate shall change to $0.10 upon the event of default. Based on the market price of the common stock of the Company on the date of funding as compared to the conversion price, determined there was an approximately $164,000 beneficial conversion feature to recognize, which will be amortized over the term of the note using the effective interest method. The amortization of the beneficial conversion feature was $27,273 and the original issuance discount was $20,000, for the year ended March 31, 2021. On April 16, 2021, the Company settled the convertible note, consisting of $720,000 in principal, approximately $13,000 in accrued interest, and approximately $110,000 in redemption fee, for a total of $842,972. The Company paid $421,486 in cash, and settled the remaining balance through the conversion into the issuance of 1,303,982 common shares.

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

~~On April 14, 2021, the~~ Company entered into a securities purchase agreement (the ~~“Purchase Agreement”~~“SPA”) with an ~~accredited~~ investor (the ~~“Purchaser”), for the offering (the “Offering”~~“Investor”) of (i) $5,000,000 worth of common stock (“Shares”), par value $0.0001 per share, of the Company (“Common Stock”); at a per share purchase price of $0.55 per Share (ii) common stock purchase warrants (“Warrants”) to purchase up to an aggregate of 10,000,000 shares of Common Stock, which are exercisable for a period of five years after issuance at an initial exercise price of $0.75 per share, subject to certain adjustments, as provided in the Warrants; and (iii) 1,000,000 shares of Common Stock (the “Commitment Shares”).on December 15, 2021. Pursuant to the ~~Purchase Agreement, on April 15, 2021,~~SPA, the ~~Company received net proceeds~~Investor purchased a secured promissory note (the “Note”) in the aggregate principal amount totaling approximately $16,320,000 (the “Principal Amount”). The Note has an interest rate of ~~$4,732,123~~12% per annum, with a maturity date 24 months from the ~~Purchaser.~~

~~Further, pursuant~~issuance date of the Note (the “Maturity Date”). The Note carried an original issue discount totaling $1,300,000 and a transaction expense amount of $20,000, both of which are included in the principal balance of the Note. The Note had $2,035,000 in debt issuance costs, including fees paid in cash of $1,095,000 and 3,000,000 warrants issued to placement agents with a fair value of $940.000. The warrant fair value was estimated using the Black Scholes Model, with the following inputs: the price of the Company’s common stock of $0.32; a risk-free interest rate of 1.19%, the expected volatility of the Company’s common stock of 209.9%; the estimated remaining term, a dividend rate of 0%. The warrants were classified as a liability, as it is not known if there will be sufficient authorized shares to be issued upon settlement, based on the conversion terms of the ~~Purchase Agreement, from the date thereof until~~convertible debt.

Beginning on the date that is 6 months from the ~~twelve-month anniversary~~issuance date of the ~~closing~~Note, the Investor has the right to redeem up to $1,000,000 of the ~~Offering, upon any issuance~~outstanding balance per month. Payments may be made by the Company, at the Company’s option, (a) in cash, or ~~any of its subsidiaries of Common Stock or Common Stock Equivalents for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), each Purchaser shall have~~(b) by paying the ~~right to participate in up to an~~redemption amount ~~of the Subsequent Financing equal to 100% of the Subsequent Financing on the same terms, conditions and price provided for~~ in the ~~Subsequent Financing.~~

~~Pursuant to the Purchase Agreement, on May 5, 2021, the Purchaser purchased an additional 15,454,456 shares~~form of ~~common stock at a per share purchase price of $0.55 per share (the “Second Closing”), for net proceeds of approximately $8,245,000.~~

On April 14, 2021, the Company, entered into a share exchange agreement (the “Exchange Agreement”) with a holder of the Series D Preferred Stock, whereby, at the closing of the Offering, the Holder agreed to exchange an aggregate of 3,600 shares of the Company’s ~~Series D Preferred Stock,~~common stock, par value $0.0001 per share (the ~~“Series D Preferred~~“Common Stock”) ~~into 3,739.63~~, per the following formula: the number of redemption shares equals the portion of the applicable redemption amount divided by the Redemption Repayment Price. The “Redemption Repayment Price” equals 90% multiplied by the average of the two lowest volume weighted average price per share of the Common Stock during the ten (10) trading days immediately preceding the date that the Investor delivers notice electing to redeem a portion of the Note. The redemption amount shall include a premium of 15% of the portion of the outstanding balance being paid (the “Exit Fee”). In addition to the Investor’s right of redemption, the Company has the option to prepay the Notes at any time prior to the Maturity Date by paying a premium of 15% plus the principal, interest, and fees owed as of the prepayment date.

Within 180 days of the issuance date of the Note, the Company will obtain an effective registration statement or a supplement to any existing registration statement or prospectus with the SEC registering at least $15,000,000 in shares of Common Stock for the ~~Company’s Series E Convertible Preferred stock, par value $0.0001 (the “Series E Preferred Stock”~~Investor’s benefit such that any redemption using shares of Common Stock could be done using registered Common Stock. Additionally, as soon as reasonably possible following the issuance of the Note, the Company will cause the Common Stock to be listed for trading on either of (a) NYSE, or (b) NASDAQ (in either event, an “Uplist”). In the event the Company has not effectuated the Uplist by March 1, 2022, the then-current outstanding balance will be increased by 10%. On February 7, 2022, the Company and the Lender 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 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 Investor equal to 15% of the gross proceeds the Company receives from the offering expected to be effected in connection with the Uplist (whether from the sale of shares of its Common Stock and / or preferred stock) within ten (10) days of receiving such amount. In the event Borrower does not make this payment, the then-current outstanding balance will be increased by 10%. The ~~exchange was completed on April 15, 2021. In accordance with ASC 260-10-S99-2, exchanges~~Note also contains certain negative covenants and Events of ~~preferred stock that are considered~~Default. Upon an Event of a Default, at its option and sole discretion, the Investor may consider the Note immediately due and payable. Upon such an Event of Default, the interest rate increases to ~~be extinguishments are to be accounted for as a redemption. Therefore,~~18% per annum and the ~~difference between the fair value~~outstanding balance of the Note increases from 5% to 15%, depending upon the specific Event of Default.

Series E Preferred Stock transferred to the holder of the Series D Preferred Stock and the carrying amount of the Series D Preferred Stock immediately prior to the exchange, which was $3,258,189, was accounted for in a manner similar to a dividend.

During the three months ended ~~September 30. 2021, 1,200~~June 30, 2022, 700 shares of Series E Preferred Stock were converted into ~~4,114,286~~4,537,240 shares of common stock.

On April 14, 2021, 500,000 shares of common stock were issued to a consultant per an agreement entered into on January 20, 2021 for advisory services for a two-year period. The shares had a fair value of $195,000, based on the market price of $0.39 on the grant date. 62,500 common shares shall vest each quarter through October 1, 2022, at $24,275, with ~~$73,126~~$146,750 vested through ~~the three months ended~~ June 30, ~~2021.~~2022.

As of June 22, 2022, 250,000 common 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 ~~entered into an agreement with a consultant, with a three-month term, that shall automatically renew each three months unless one~~withholding sufficient profits from the sale by the other party terminates the agreement. The compensation shall be $12,500 in cash per month for the first six months and $15,000 per month thereafter. Also included in compensation are 200,000 shares of common stock, with a fair value of $99,600 based upon the market price of $0.50 upon the grant date. The shares of common stock will vest in quarterly installments, with 50,000 to vest immediately. The shares of common stock have not yet been issued, and therefore the 50,000 vested shares, at $24,900, are included in Shares payable.

On August 24, 2020, the Company issued 1,500,000 shares of common stock to a consultant per an agreement entered into on June 25, 2020. On December 25, 2020, the Company renewed the agreement for an additional six months. As consideration for the agreement the Company issued 1,500,000 shares of common stock to the consultant. The agreement has a six-month term, and therefore the fair value of $616,500, based on the market value of $0.041 on the grant date, was recognized in Prepaid expense to be amortized over the six-month term. As of the year end March 31, 2021, $308,250 remained in Prepaid expense with $308,250 recognized in consulting expense for the year end March 31, 2021. The remaining $308.250 was expensed in the three months ended June 30, 2021.live shrimp.

The ~~audited~~unaudited condensed consolidated financial statements contained in this quarterly report on Form 10-Q have been prepared, assuming that the Company will continue as a going concern. The Company has accumulated losses through the period to June 30, ~~2021~~2022 of approximately ~~$67,408,000~~$152,758,000 as well as negative cash flows from operating activities of approximately ~~$5,119,000.~~$2,055,000. Presently, the Company does not have sufficient cash resources to meet its plans in the twelve months following the date of issuance of this filing. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is in 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 funds through public or private equity markets and either through institutional or retail investors. Although there is no assurance that the Company will be successful with our fund-raising initiatives, management believes that the Company will be able to secure the necessary financing as a result of ongoing financing discussions with third party investors and existing shareholders.

The unaudited condensed consolidated financial statements 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 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. 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.

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 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.

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.

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

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. We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations.

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 ~~Company did not have any Level 1, Level 2 or~~Derivative and warrant liabilities are Level 3 ~~assets and liabilities at September 30, 2021 and March 31, 2021.~~fair value measurements.

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~~period. For the ~~six~~three months ended ~~September~~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 177,771,000 underlying common shares, approximately $18,768,000 in a convertible debenture whose approximately 164,177,000 underlying shares are convertible at the holders’ option at conversion price of 90% of the average of the two lowest market prices over the last 10 days and 18,506,429 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. For the three months ended June 30, 2021, the Company had ~~with Redeemable Convertible Preferred stock with approximately 9,842,000 underlying common shares, and~~ 10,000,000 warrants outstanding which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. For the six months ended September 30, 2020, the Company had approximately $168,000 in convertible debentures whose approximately 1,560,000 underlying shares are convertible at the holders’ option at conversion prices ranging from $0.124 to $0.25 for fixed conversion rates which were not included in the calculation of diluted EPS as their effect would be anti-dilutive.

Our recently adopted accounting pronouncements are more fully described in Note 2 to our financial statements included herein for the quarter ended ~~September~~June 30, ~~2021.~~2022.

During the period ending ~~September~~June 30, ~~2021,~~2022, 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.

~~ITEM~~Item 3. ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~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.

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 ~~ensure~~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, ~~our~~ management ~~necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of~~recognizes that any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable ~~not absolute,~~ 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.

~~Our~~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.~~ Report.

Based upon that evaluation ~~and subject to the foregoing,~~, our principal executive officer and principal financial officer concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective due to the material weaknesses ~~below~~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 June 30, 2022.

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

Management of and its consolidated subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of its principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2021 based on the framework established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company’s internal control over financial reporting as of September 30, 2021 was not effective.

A material weakness, as defined in the standards established by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

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. 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.

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 ~~our first~~the fiscal quarter ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Except as described below, 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.

On February 18, 2020, RGA Labs, Inc. (“RGA”) filed suit against the Company in the Illinois Circuit Court (23rd District) alleging that the Company owed RGA money pursuant to a written contract for the design and manufacture of certain water treatment equipment commissioned by the Company. The Company disputed the allegations and has counterclaimed against RGA for additional costs and expenses incurred by the Company in correcting, repairing and retro-fitting the equipment to enable it to work in the Company’s facilities. As a result of RGA’s failure to respond to written discovery served by the Company and failure of RGA to satisfy requirements imposed by an order compelling response, the court issued an order prohibiting RGA from introducing any evidence at the time of trial other than the original agreement between RGA and the Company. Further, the Court sustained the Company’s objection to RGA’s written discovery obviating the Company’s obligation to respond. On August 10, 2021, pursuant to a court order, RGA and the Company participated in a mediation wherein a settlement of all claims was reached. The settlement consisted of the agreement of the Company to pay RGA the sum of $8,000, execution of joint and mutual releases and the execution of a non-competition agreement by RGA and its principals restricting them from competing against the Company in the aquaculture business using electrocoagulation technology. The settlement has not yet been finalized at this time due to the negotiation of the terms and breadth of the non-competition agreement.

A shareholder of NaturalShrimp Holdings, Inc. (“NSH”), Gary Shover, filed suit against the Company on August 11, 2020 in the Northern District of Texas, Dallas Division, alleging breach of contract for the Company’s failure to exchange common shares of the Company for shares Mr. Shover owns in NSH. ~~The federal~~On November 15, 2021, a hearing was held before the US District Court for the Northern District of Texas, Dallas Division ~~has set the claims of Gary~~at which time Mr. Shover ~~against~~and the Company ~~for a hearing scheduled for November 15, 2021. At this hearing, the parties will have the opportunity~~presented arguments as to ~~present to the Court reasons~~ why the Court should approve a joint motion for settlement. After considering the ~~proposed~~argument of counsel and taking questions from those NSH Shareholders who were present through video conferencing link, the Court approved the motion of the parties to allow Mr. Shover and all like and similarly situated NSH Shareholders to exchange each share of NSH held by a NSH Shareholder for a share of the Company. A final Order was signed on December 6, 2021 and the case was closed by an Order of the Court of the same date. The Company is to issue approximately 93 million shares in settlement, ~~agreed to by all parties.~~which as of December 6, 2021 was recognized as stock payable on the Company’s balance sheet, and its fair value of $29,388,000, based on the market value of the Company’s common shares of $0.316 on the date the case was closed, has been recognized in the Company’s statement of operations as legal settlement. As of March 31, 2022, 28,494,706 of the shares presented in Stock Payable have been issued, with the fair value of $9,415,950 reclassified out of Stock Payable. In April of 2022, an additional 60,841,649 of shares of common stock were issued out of the Stock Payable.

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.

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, ~~2021.~~2022. 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, ~~2021,~~2022, filed with SEC on June 29, ~~2021, other than the following:~~2022.

~~We face risks related to Novel Coronavirus (COVID-19) which could significantly disrupt our research~~Item 2. Unregistered Sales of Equity Securities and ~~development, operations, sales, and financial results.~~

Our business could be adversely impacted by the effects of the Novel Coronavirus (COVID-19). In addition to global macroeconomic effects, the Novel Coronavirus (COVID-19) outbreak and any other related adverse public health developments could cause disruption to our operations and manufacturing activities. Our third-party equipment manufacturers, third-party raw material suppliers, and consultants have been and will 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. In addition, we have experienced and will 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.

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~Use Of Proceeds

There were no unregistered sales of the Company’s equity securities during the ~~quarter~~three months ended June 30, ~~2021~~2022 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 the three months ended June 30, 2022, 700 shares of Series E Preferred Stock were converted into 4,537,240 shares of common stock.

A shareholder of NaturalShrimp Holdings, Inc. (“NSH”), Gary Shover, filed suit against the Company on August 11, 2020 in the Northern District of Texas, Dallas Division, alleging breach of contract for the Company’s failure to exchange common shares of the Company for shares Mr. Shover owns in NSH. On November 15, 2021, a hearing was held before the US District Court for the Northern District of Texas, Dallas Division at which time Mr. Shover and the Company presented arguments as to why the Court should approve a joint motion for settlement. After considering the argument of counsel and taking questions from those NSH Shareholders who were present through video conferencing link, the Court approved the motion of the parties to allow Mr. Shover and all like and similarly situated NSH Shareholders to exchange each share of NSH held by a NSH Shareholder for a share of the Company. A final Order was signed on December 6, 2021 and the case was closed by an Order of the Court of the same date. As of March 31, 2022, 28,494,706 of the shares presented in Stock Payable have been issued, ~~1,500,000~~with the fair value of $9,415,950 reclassified out of Stock Payable. In April of 2022, an additional 60,841,649 of shares of common stock ~~to a consultant per an agreement entered into on June 25, 2020. On December 25, 2020,~~were issued out of the ~~Company renewed~~Stock Payable. All of the ~~agreement for an additional six months. As consideration for the agreement the Company~~shares issued ~~1,500,000 shares of common stock~~pursuant to the ~~consultant.~~final Order have been issued in reliance on the exemption under Section 3(a)(10) of the Securities Act.

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~~Item 3. ~~DEFAULTS UPON SENIOR SECURITIES~~Defaults upon Senior Securities

# 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.

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.

~~Nevada~~		~~74-3262176~~
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

5501 LBJ Freeway, Suite ~~450Dallas~~450 Dallas, Texas		75240
(Address of Principal Executive Offices)		(Zip Code)


	For the 3 Months Ended
	June 30, 2022			June 30, 2021

Sales	$	36,336		$	-

Operating expenses:
General and administrative		1,326,032			1,644,262
Research and development		172,643			-
Facility operations		531,736			239,325
Depreciation		525,229			354,503
Amortization		367,500			-

Total operating expenses		2,923,140			2,238,090

Net loss from operations		(2,886,804	)		(2,238,090	)

Other income (expense):
Interest expense		(502,372	)		(81,536	)
Amortization of debt discount		(2,040,000	)		(236,364	)
Financing costs		-			(109,953	)
Change in fair value of derivative liability		1,314,000			-
Change in fair value of warrant liability		1,915,000			-
Forgiveness of PPP loan		-			103,200

Total other income (expense)		686,628			(324,653	)

Loss before income taxes		(2,200,176	)		(2,562,743	)

Provision for income taxes		-			-

Net loss		(2,200,176	)		(2,562,743	)

Amoritzation of beneficial conversion feature on Preferred shares		(141,500	)		(817,376	)
Accretion on Preferred shares		(278,500	)		-
Redemption and exchange of Series D Preferred shares		-			(5,792,947	)
Dividends		(102,227	)		-

Net loss available for common stockholders	$	(2,722,403	)	$	(9,173,066	)

EARNINGS PER SHARE (Basic and diluted)	$	(0.00	)	$	(0.02	)

WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and diluted)		665,999,390			501,477,593

	For the Three Months Ended						For the Six months Ended
	September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020

Sales	$	0		$	0		$	0		$	0

Operating expenses:
General and administrative		2,010,397			401,029			3,654,659			737,008
Research and development		196,872			79,550			196,872			79,550
Facility operations		172,431			68,271			411,756			79,643
Depreciation and amortization		404,272			8,896			758,775			19,677

Total operating expenses		2,783,972			557,746			5,022,062			915,878

Net loss from operations		(2,783,972	)		(557,746	)		(5,022,062	)		(915,878	)

Other income (expense):
Interest expense		(65,663	)		(29,490	)		(147,199	)		(59,516	)
Amortization of debt discount		0			0			(236,364	)		0
Financing costs		0			(2,643	)		(109,953	)		(64,452	)
Change in fair value of derivative liability		0						0			(29,000	)
Forgiveness of PPP loan		0						103,200			0

Total other income (expense)		(65,663	)		(32,133	)		(390,316	)		(152,968	)

Loss before income taxes		(2,849,635	)		(589,879	)		(5,412,378	)		(1,068,846	)

Provision for income taxes		0			0			0			0

Net loss		(2,849,635	)		(589,879	)		(5,412,378	)		(1,068,846	)

Less net loss attributable to non-controlling interest		0			(1,686	)		0			(3,581	)

Net loss attributable to NaturalShrimp Incorporated		(2,849,635	)		(588,193	)		(5,412,378	)		(1,065,265	)

Amortization of beneficial conversion feature on Preferred shares		0			(807,000	)		(817,376	)		(1,100,000	)
Redemption and exchange of Series D Preferred shares					0			(5,792,947	)		0
Dividends		0			(83,960	)		0			(228,752	)

Net loss available for common stockholders	$	(2,849,635	)	$	(1,479,153	)	$	(12,022,701	)	$	(2,394,017	)

EARNINGS PER SHARE (Basic and diluted)	$	(0.00	)	$	(0.00	)	$	(0.02	)	$	(0.01	)

WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and diluted)		603,775,024			451,549,772			594,359,747			419,177,832



	Series A Preferred stock				Series B Preferred stock					Common stock				Additional paid in			Stock			Subscription			Accumulated			Non-controlling			Total stockholders’
	Shares		Amount		Shares			Amount		Shares		Amount		Capital			Payable			receivable			deficit			interest			deficit

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	)

Common stock issued for legal settlement to NSH shareholders		-		-		-			-		61,154,136		6,112		19,311,486			(19,317,598	)		-			-			-			-
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	)		-			-
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		-		-		-			-		-		-		-			-			-			(102,227	)		-			(102,227	)
Common stock issued in business agreement, to be paid from revenue earned		-		-		-			-		250,000		25		56,225			-			(56,250	)		-			-			-
Common stock vested to consultants		-		-		-			-		-		6		24,369			-			-			-			-			24,375
																														-
Net loss																								(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	)

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 PS to Series E PS		-		-		-			-		-		-		-			-			-			(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		$	-		601,315,481	$	60,132	$	74,163,982		$	7,160,900		$	-		$	(62,856,334	)	$	-		$	18,950,668

~~NATURALSHRIMP INCORPORATED~~Nevada		74-3262176
~~(Exact name of registrant as specified in its charter)~~

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

		Page

PART I.	FINANCIAL INFORMATION		3

ITEM 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2021~~2022 (unaudited) and March 31, ~~2021~~2022	3

	Condensed Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ (unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Deficit for the ~~Six~~Three Months Ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Three ~~and Six~~ Months Ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ (unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19	17

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	30	26

ITEM 4.	Controls and Procedures	30	26

PART II.	OTHER INFORMATION		28

ITEM 1.	Legal Proceedings	32	28

ITEM 1A.	Risk Factors	32	28

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33	28

ITEM 3.	Defaults Upon Senior Securities	33	28

ITEM 4.	Mine Safety Disclosures	33	28

ITEM 5.	Other Information	33	28

ITEM 6.	Exhibits	34	29

SIGNATURES		35	30

	For the 6 Months Ended
	September 30, 2021			September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss attributable to NaturalShrimp Incorporated	$	(5,412,378	)	$	(1,065,265	)

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

Depreciation and amortization expense		758,775			19,677
Amortization of debt discount		236,364			0
Change in fair value of derivative liability		0			29,000
Financing costs		109,953			0
Default penalty					41,112
Net loss attributable to non-controlling interest		0			(3,581	)
Forgiveness of PPP loan		(103,200	)		0
Shares issued for services		122,926			128,750

Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(281,729	)		(25,424	)
Accounts payable		(138,766	)		168,448
Other accrued expenses		(58,396	)		(174,926	)
Accrued expenses - related parties		600,000			0
Accrued interest		13,018			13,000
Accrued interest - related parties		0			18,096

Cash used in operating activities		(4,153,434	)		(851,113	)

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for machinery and equipment		(645,705	)		(742,388	)
Cash paid for patent acquisition with F & T		(2,000,000	)		0
Cash paid for acquisition of shares of NCI		(1,000,000	)		0
Cash paid for License Agreement		(2,350,000	)		0
Cash received from Insurance settlement		0			917,210
Cash paid for construction in process		(1,297,819	)		(1,738,661	)

Cash (used in) provided by investing activities		(7,293,524	)		(1,563,839	)

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on bank loan		(4,114	)		(15,794	)
Payment of note payable		(48,000	)		(24,000	)
Payment of note payable, related party		(655,750	)		0
Repayment of short-term promissory note and lines of credit		(553,577	)		7,656
Proceeds from PPP loan		0			103,200
Proceeds from issuance of common shares		17,277,123			0
Shares issued upon exercise of warrants		11,000			0
Proceeds from sale of Series B Convertible Preferred stock		0			2,500,000
Payments on convertible debentures		(421,486	)		0
Redemption of Series D PS		(3,513,504	)		0
Cash received in relation to Vista warrant settlement		0			50,000

Cash provided by financing activities		12,091,692			2,621,062

NET CHANGE IN CASH		644,736			206,110

CASH AT BEGINNING OF PERIOD		155,795			109,491

CASH AT END OF PERIOD	$	800,531		$	315,601

INTEREST PAID	$	147,199		$	41,420

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Shares issued upon conversion	$	421,486		$	336,437
Cancellation of Right of Use asset and Lease liability	$	275,400		$	0
Dividends in kind issued	$	0		$	134,443
Shares issued on Vista Warrant settlement	$	0		$	610,000
Shares to be issued as consideration for Patent acquisition	$	5,000,000		$	0
Shares to be issued as consideration for acquisition of remaining NCI	$	2,000,000		$	0
Note payable, related party, issued in place of Settlement Agreement	$	0		$	383,604

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

	September 30, 2021			March 31, 2021
Land	$	324,293		$	324,293
Buildings		5,002,712			4,702,063
Machinery and equipment		7,897,554			7,580,873
Autos and trucks		247,356			213,849
		13,471,915			12,891,078
Accumulated depreciation		(1,201,928	)		(4,52158	)
Fixed assets, net	$	12,269,987		$	12,236,557

~~Year 3~~	$	~~250,000 Royalty~~
~~Year 4~~	$	~~375,000 Royalty~~
~~Year 5~~	$	~~625,000 Royalty~~
~~Year 6~~	$	~~875,000 Royalty~~
~~All subsequent years~~	$	~~1,000,000 Royalty~~

Years ended:
March 31, 2022	$	10,380
March 31, 2023		20,760
March 31, 2024		20,760
March 31, 2025		20,760
March 31, 2025		20,760
Thereafter		117,318
	$	210,738

	·	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 ~~once our research and development plant is rebuilt,~~ 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 ~~through institutional investors~~ 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 or any of its variants)~~COVID-19);
	·	intellectual property claims brought by third parties; and
	·	the impact of any industry regulation.

	Three Months Ended September 30,				Three Months Ended June 30,
	2021		2020		2022		2021

Salaries and related expenses	$	1,023,206	$	103,818	$	443,303	$	632,321
Professional fees		378,853		159,178		433,970		597,246
Other general and administrative expenses		591,468		133,824		422,137		410,610
Rent		16,870		4,209		26.622		4,085
Facility operations		172,431		68,271		531,736		239,325
Research and development		196,872		79,550		172,643		-
Depreciation and amortization		404,272		8,896
Depreciation						525,229		354,503
Amortization						367,500		-
Total	$	2,783,972	$	557,746	$	2,923,140	$	2,238,090

	Six Months Ended September 30,
	2021		2020

Salaries and related expenses	$	1,655,527	$	214,533
Professional fees		976,099		287,486
Other general and administrative expenses		1,002,098		227,146
Rent		20,955		7,843
Facility operations		411,756		79,643
Research and development		196,872		79,550
Depreciation and amortization		758,775		19,667
Total	$	5,022,062	$	915,878

	September 30,			March 31,			June 30,			March 31,
	2021			2021			2022			2022
Current assets	$	1,087,599		$	811,134		$	2,800,775		$	4,829,141
Current liabilities		6,208,410			4,425,511			19,676,993			21,846,261
Working capital/(deficiency)	$	(5,120,811	)	$	(3,614,377	)
Working capital deficiency							$	(16,876,218	)	$	(17,017,120	)

	·	~~inadequate~~Inadequate segregation of duties consistent with control objectives;
	·	~~lack~~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~~Lack of risk assessment procedures on internal controls to detect financial reporting risks in a timely manner; and
	·	~~lack~~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 second fiscal quarter that will end on September 30, 2022) 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.

				Incorporated by Reference
33Exhibit Number
	Exhibit Description		Form		Exhibit	Filing Date/Period End Date
31.1*		~~Table~~Rule 13a-14(a) / 15d-14(a) Certification of ~~Contents~~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)

		Incorporated by Reference
Exhibit Number	Exhibit Description		Form	Exhibit	Filing Date
3.1	Certificate of Designation of Series E Preferred Stock		8-K	3.1	4/15/2021
4.1	Form of Warrant Issued April 2021.		8-K	4.1	4/15/2021
10.1	Form of Securities Purchase Agreement, dated as of April 14, 2021, by and between the Company and the Purchaser		8-K	10.1	4/15/2021
10.2	Form of Exchange Agreement, dated as of April 14, 2021 by and between the Company and a holder of the Series D Preferred Stock		8-K	10.2	4/15/2021
10.3	Securities Purchase Agreement by and between NaturalShrimp Incorporated and F&T Water Solutions, LLC, dated May 19, 2021		8-K	10.1	6/1/2021
10.4	Patents Purchase Agreement by and between NaturalShrimp Incorporated and F&T Water Solutions, LLC, dated May 19, 2021.		8-K	10.2	6/1/2021
10.5	Form of Leak-Out Agreement by and between NaturalShrimp Incorporated and F&T Water Solutions, LLC, dated May 19, 2021.		8-K	10.3	6/1/2021
10.6	Form of Securities Purchase Agreement, dated as of April 14, 2021, by and between the Company and the Purchaser, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the SEC on April 15, 2021.		8-K	10.1	7/2/2021
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*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

NATURALSHRIMP INCORPORATED

By:	/s/ Gerald Easterling
	Gerald Easterling
	Chief Executive Officer
	(Principal Executive Officer)
Date:	~~Date: November 15, 2021~~ August 18, 2022

~~By:~~
By:	/s/ William Delgado
	William Delgado
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)
	~~Date: November 15, 2021~~