Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Dec. 31, 2017 | Apr. 25, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Sundance Strategies, Inc. | |
Entity Central Index Key | 0001171838 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 37,828,441 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Mar. 31, 2017 |
Current Assets | ||
Cash and Cash Equivalents | $ 58,307 | $ 4,364 |
Prepaid Expenses and Other Assets | 7,205 | 4,705 |
Investment in Net Insurance Benefits | 1,969,688 | 34,156,005 |
Total Current Assets | 2,035,200 | 34,165,074 |
Current Liabilities | ||
Accounts Payable | 332,423 | 508,071 |
Deferred Income Taxes | 758,972 | |
Notes Payable, Related Parties | 929,508 | 5,214,753 |
Convertible Debenture | 700,000 | |
Accrued Expenses | 144,472 | 753,780 |
Total Current Liabilities | 1,406,403 | 7,935,576 |
Commitments and Contingencies (Note 8) | ||
Stockholders' Equity | ||
Preferred Stock, authorized 10,000,000 shares, par value $0.001; -0- shares issued and outstanding | ||
Common Stock, authorized 500,000,000 shares, par value $0.001; 44,128,441 shares issued and outstanding | 44,129 | 44,129 |
Additional Paid In Capital | 24,547,014 | 24,547,014 |
Retained Earnings (Accumulated Deficit) | (23,962,346) | 1,638,355 |
Total Stockholders' Equity | 628,797 | 26,229,498 |
Total Liabilities and Stockholders' Equity | $ 2,035,200 | $ 34,165,074 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Mar. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, par value per share | $ 0.001 | $ 0.001 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, par value per share | $ 0.001 | $ 0.001 |
Common Stock, shares issued | 44,128,441 | 44,128,441 |
Common Stock, shares outstanding | 44,128,441 | 44,128,441 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||||
Interest Income on Investment in Net Insurance Benefits | $ 1,271,737 | $ 4,145,036 | ||
General and Administrative Expenses | 281,275 | 410,120 | 1,231,639 | 2,023,056 |
Impairment of Accrued Interest Receivable on Net Insurance Benefits | 1,936,311 | |||
Income (Loss) from Operations | (281,275) | 861,617 | (3,167,950) | 2,121,980 |
Other Expense | ||||
Impairment of Investment in Net Insurance Benefits | (22,950,126) | |||
Interest Expense | (27,576) | (103,154) | (241,597) | (281,982) |
Total Other Expense | (27,576) | (103,154) | (23,191,723) | (281,982) |
Income (Loss) Before Income Taxes | (308,851) | 758,463 | (26,359,673) | 1,839,998 |
Income Tax Provision (Benefit) | 149,741 | (758,972) | 411,603 | |
Net Income (Loss) | $ (308,851) | $ 608,722 | $ (25,600,701) | $ 1,428,395 |
Basic and Diluted: | ||||
Basic Earnings (Loss) Per Share | $ (0.01) | $ 0.01 | $ (0.58) | $ 0.03 |
Diluted Earnings (Loss) Per Share | $ (0.01) | $ 0.01 | $ (0.58) | $ 0.03 |
Basic Weighted Average Number of Shares Outstanding | 44,128,441 | 44,128,441 | 44,128,441 | 44,132,517 |
Diluted Weighted Average Number of Shares Outstanding | 44,128,441 | 45,509,192 | 44,128,441 | 45,513,268 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Activities | ||
Net Income (Loss) | $ (25,600,701) | $ 1,428,395 |
Adjustments to reconcile to net cash from operating activities: | ||
Share Based Compensation - Options | 182,572 | |
Impairment of Net Insurance Benefits | 24,886,437 | |
Deferred Income Taxes | (758,972) | 411,603 |
Accrued Interest on Net Insurance Benefits | (4,145,036) | |
Changes in Operating Assets and Liabilities | ||
Cash Received on Net Insurance Benefits | 7,299,880 | 1,417,870 |
Prepaid Expenses and Other Assets | (2,500) | (5,330) |
Accounts Payable | (175,648) | 132,742 |
Accrued Expenses | (609,308) | 452,979 |
Net Cash from Operating Activities | 5,039,188 | (124,205) |
Financing Activities | ||
Proceeds from Convertible Debenture | 200,000 | |
Repayment of Convertible Debenture | (900,000) | |
Proceeds from Issuance of Notes Payable, Related Party | 400,000 | 1,129,575 |
Repayment of Notes Payable, Related Party | (4,685,245) | (150,000) |
Redemption of Mandatorily Redeemable Common Stock | (750,000) | |
Financing Advance | (100,000) | |
Net Cash from Financing Activities | (4,985,245) | 129,575 |
Net Change in Cash and Cash Equivalents | 53,943 | 5,370 |
Cash and Cash Equivalents at Beginning of Period | 4,364 | 24,717 |
Cash and Cash Equivalents at End of Period | 58,307 | 30,087 |
Non Cash Financing & Investing Activities, and Other Disclosures | ||
Cash Paid for Interest | 534,238 | |
Cash Paid for Income Taxes |
Organization and Basis of Prese
Organization and Basis of Presentation, Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation, Organization and Summary of Significant Accounting Policies | (1) ORGANIZATION AND BASIS OF PRESENTATION, ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, the condensed consolidated unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the Company’s consolidated financial position, results of operations, and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s financial statements and the accompanying notes. Actual results could materially differ from those estimates. Organization and Nature of Operations Sundance Strategies, Inc. (formerly known as Java Express, Inc.) was organized under the laws of the State of Nevada on December 14, 2001, and engaged in the retail selling of beverage products to the general public until these endeavors ceased in 2006; it had no material business operations from 2006, until its acquisition of ANEW LIFE, INC. (“ANEW LIFE”), a subsidiary of Sundance Strategies, Inc. (“Sundance Strategies”, “the Company”, “we” or “our”). The Company is engaged in the business of purchasing or acquiring life insurance policies and residual interests in or financial products tied to life insurance policies, including notes, drafts, acceptances, open accounts receivable and other obligations representing part or all of the sales price of insurance, life settlements and related insurance contracts being traded in the secondary marketplace, often referred to as the “life settlements market.” Since the Company’s inception its operations have been primarily financed through sales of equity, debt financing from related parties and the issuance of notes payable and convertible debentures. Currently, the Company is focused on the purchase of net insurance benefit contracts (“NIBs”) based on life settlements or life insurance policies. The Company does not take possession or control of the policies. The owners of the life settlements or life insurance policies (the “Owners” or “the Holders”) acquire such policies at a discount to their face value. On settlement, the Company receives the net insurance benefit after all borrowings, interest and expenses have been paid by the Owners out of the settlement proceeds. The Owners are variable interest entities (VIEs), for which the Company has a variable interest, but is not the primary beneficiary. The Company’s investment in NIBs (see Note 3) were issued by the Owners (i.e. the VIEs). The Company’s maximum exposure to loss in the variable interest entities is limited to the investment in NIBs balance. The Company does not have the power to direct activities of the VIEs. Further, the Company does not have the contractual obligation to absorb losses of the VIE. The investment in NIBs is a residual economic beneficial interest in a portfolio of life insurance contracts that have been financed by an independent third party via a loan from a lender and, in certain cases, insured via a mortality risk insurance product or mortality re-insurance (“MRI”). Future expected cash flow and positive profits are defined as the net insurance proceeds from death benefits after senior debt repayment, mortality risk repayment, and service provider or other third-party payments. NIBs are generally in the form of participating debt certificates (“PDC”), and although the two terms are interchangeable, the Company typically refers to them as NIBs. According to the terms of the PDCs, the PDCs provide both variable and fixed interest return to the Company from the Owners of the policies in the form of accrued yield. The variable interest varies by individual PDC, and is calculated as 99% to 100% (depending on the PDC) of the positive profits from the life insurance assets held by the Owners of the policies. The fixed interest also varies by individual PDC, and is either 1% or 2% per annum of the par value of the PDCs held by the Company. The par value of the PDCs held by the Company is approximately $36.8 million. The NIBs agreements between the Company and the Owners of the policies contain a provision that allows for the Owners to redeem the NIBs at any point, conditional upon paying to the Company the par value of the NIBs, as well as any unpaid accrued yield relating to fixed and variable interest. In aggregate, the sum of the par value plus unpaid accrued interest is in excess of the Company’s initial investment. The Company holds between 72.2% and 100% in the NIBs relating to the underlying life insurance policies as of December 31, 2017 and 2016. The Company is not responsible for maintaining premiums or other expenses related to maintaining the underlying life insurance contracts. Therefore, the investment in NIBs balance on the Company’s balance sheet does not increase when premiums or other expenses are paid. At March 31, 2017, and during the nine months ended December 31, 2017, the Company accounted for its investment in NIBs at the initial investment value increased for interest income and decreased for cash receipts received by the Company. At the time of transfer or purchase of an investment in NIBs, we estimated the future expected cash flows and determine the effective interest rate based on these estimated cash flows and our initial investment. Based on this effective interest rate, the Company calculated accretable income, which was recorded as interest income on investment in NIBs in the statement of operations. Our projections were based on various assumptions that are subject to uncertainties and contingencies including, but not limited to, the amount and timing of projected net cash receipts, expected maturity events, counter party performance risk, changes to applicable regulation of the investment, shortage of funds needed to maintain the asset until maturity, changes in discount rates, life expectancy estimates and their relation to premiums, interest, and other costs incurred, among other items. These uncertainties and contingencies are difficult to predict and are subject to future events that may impact our estimates and interest income. As a result, actual results could differ significantly from these projections. Therefore, subsequent to the purchase and on a regular basis, these future estimated cash flows were evaluated for changes. If the determination was made that the future estimated cash flows should be adjusted to the point of a material change in revenue, a revised effective yield was calculated prospectively based on the current amortized cost of the investment, including accrued accretion. Any positive or adverse change in cash flows would result in a prospective increase or decrease in the effective interest rate used to recognize interest income. Any significant adverse change in the cash flows that may have resulted in the recognition of an “other-than-temporary impairment” (“OTTI”), and would be evaluated by the Company accordingly. At March 31, 2017, and during the nine months ended December 31, 2017, the Company’s investment in NIBs was treated as a debt security, which was classified as a hold-to-maturity asset. We evaluate the carrying value of our investment in NIBs for impairment on a regular basis and, if necessary, adjust our total basis in the NIBs using new or updated information that affects our assumptions. We recognize impairment on a NIB contract if the fair value of the beneficial interest is less than the carrying amount of the investment, plus anticipated undiscounted future premiums and direct external costs, if any, and if there are adverse changes in cash flow. We had not recognized any impairment on our investment in NIBs from inception, through the year ended March 31, 2017. However, between May 2018 and July 2018, the Owners entered into agreements that completed a strict foreclosure transaction that transferred these policies from the owners to the lenders in full satisfaction of the loan obligation. As part of the original agreement, the Chairman of the Company helped secure the loan by including a personal guarantee for a portion of the debt, if needed. The owners and other parties to the Agreements are diligently working to secure alternative financing, although no such positive outcome can be assured. As a result of the foreclosure, the Company has lost its position in the residual benefits of the policies and has reduced the carrying value of the NIBs as of December 31, 2017 to $1,969,688, which is equal to the actual cash received by the Company from distributions subsequent to June 30, 2017. This carrying value is less than the accretion receivable as of March 31, 2017, and as such, is considered accretion receivable and not part of the Company’s original investment. Significant Accounting Policies There have been no changes to the significant accounting policies of the Company from the information provided in Note 2 of the Notes to Consolidated Financial Statements in the Company’s most recent Form 10-K, except as discussed in the remaining Notes below. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Dec. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | (2) NEW ACCOUNTING PRONOUNCEMENTS Adopted During the Nine-Months Ended December 31, 2017 In December 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The new standard is designed to simplify the presentation of deferred income taxes, and requires all deferred tax liabilities and assets of the same tax jurisdiction or a tax filing group, as well as any related valuation allowance, be offset and presented as a single noncurrent amount in a classified balance sheet. The amendments are effective for the Company’s fiscal year beginning April 1, 2017, and for interim periods within that fiscal year. The adoption of this guidance did not have a material effect on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-06 related to the embedded derivative analysis for debt instruments with contingent call or put options. This pronouncement clarifies that an exercise contingency does not need to be evaluated to determine whether it relates only to interest rates or credit risk. Instead, the contingent put or call option should be evaluated for possible bifurcation as a derivative in accordance with the four-step decision sequence detailed in FASB ASC 815-15, without regard to the nature of the exercise contingency. The pronouncement is effective for the Company’s fiscal year beginning April 1, 2017, and for interim periods within that fiscal year. The adoption of this guidance did not have a material effect on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The new standard simplifies certain aspects of the accounting for share-based payment award transactions by allowing entities to continue to use current GAAP by estimating the number of awards that are expected to vest or, alternatively, entities can elect to account for forfeitures as they occur. Another aspect of the standard requires an entity to recognize all excess tax benefits and deficiencies associated with stock-based compensation as a reduction or increase to tax expense in the income statement. Previously, such amounts were recognized in additional paid-in capital. ASU 2016-09 is effective for the Company for its fiscal year beginning April 1, 2017. The adoption of this guidance did not have a material effect on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, Consolidation - Interests held through Related Parties that are under Common Control, which alters how a decision maker needs to consider indirect interests in a variable interest entity (VIE) held through an entity under common control. Under the new ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The amendments in this Update are effective for fiscal years beginning April 1, 2017, including interim periods within that fiscal year. The adoption of this guidance did not have a material effect on the consolidated financial statements, as the Company has no related parties under common control that have the characteristics of a primary beneficiary of a variable interest entity. Not Yet Adopted The Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, 2015-14, 2016-8, 10,11 and 12 and 2017-13 – Revenue from Contracts with Customers, which provides a single, comprehensive revenue recognition model for all contracts with customers. The core principal of the ASUs is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASUs also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB deferred the effective date of this standard. As a result, the standard and related amendments will be effective for the Company for its fiscal year beginning April 1, 2018, including interim periods within that fiscal year. Early application is permitted, but not before the original effective date of April 1, 2017. Entities are allowed to transition to the new standard by either retrospective application or recognizing the cumulative effect. The ASUs are not applicable to securitized beneficial interests that derive accreted yields and, therefore the Company will continue to follow the guidance in ASC 325-40. The adoption of this standard will not have an impact on the consolidated financial statements. In January 2016, the FASB issued ASU 2016-01 regarding Financial Instruments, which amended guidance on the classification and measurement of financial instruments. Under the new guidance, entities will be required to measure equity investments that are not consolidated or accounted for under the equity method at fair value with any changes in fair value recorded in net income, unless the entity has elected the new practicability exception. For financial liabilities measured using the fair value option, entities will be required to separately present in other comprehensive income the portion of the changes in fair value attributable to instrument-specific credit risk. Additionally, the guidance amends certain disclosure requirements associated with the fair value of financial instruments. The standard will be effective for the Company’s fiscal year beginning April 1, 2018, including interim reporting periods within that fiscal year. The Company is currently evaluating the effect of the adoption of this guidance on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 related to the accounting for leases. This pronouncement requires lessees to record most leases on their balance sheet, while expense recognition on the income statement remains similar to current lease accounting guidance. The guidance also eliminates real estate-specific provisions and modifies certain aspects of lessor accounting. Under the new guidance, lease classification as either a finance lease or an operating lease will determine how lease-related revenue and expense are recognized. The pronouncement is effective for the Company’s fiscal year beginning April 1, 2019, and for interim periods within that fiscal year. The Company does not believe the adoption of this guidance will have a material effect on the consolidated financial statements because leases are month-to-month and not material to the Company’s financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. The amendments are effective for the Company’s fiscal year beginning April 1, 2020, including interim periods within that fiscal year. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and results of operations. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. Historically, there has been a diversity in practice in how certain cash receipts/payments are presented and classified in the statement of cash flows. To reduce the existing diversity in practice, this update addresses the eight cash flow issues as listed in the pronouncement. The amendments in this update are effective for fiscal years beginning April 1, 2018, and interim periods within that fiscal year. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial statements. On May 10, 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. For all entities, the ASU is effective for the Company’s fiscal year beginning April 1, 2018, including interim periods within that annual reporting period. Early adoption is permitted, including adoption in any interim period. The adoption of this standard is not expected to have material impact on the Company’s financial statements as the Company does not expect to make future modifications to existing share based payment awards. The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements. |
Investment in Net Insurance Ben
Investment in Net Insurance Benefits | 9 Months Ended |
Dec. 31, 2017 | |
Investments, All Other Investments [Abstract] | |
Investment in Net Insurance Benefits | (3) INVESTMENT IN NET INSURANCE BENEFITS The balance in Investment in NIBs at December 31, 2017 and March 31, 2017, and related activity for the periods then ended were as follows: December 31, 2017 March 31, 2017 Beginning Balance $ 34,156,005 $ 29,822,186 Accretion of interest income - 5,751,689 Cash received (7,299,880 ) (1,417,870 ) Impairment of investments (24,886,437 ) - Ending Balance $ 1,969,688 $ 34,156,005 As outlined in Note 1, between May 2018 and July 2018, the Owners entered in agreements that completed a strict foreclosure transaction that transferred these policies to the lenders in full satisfaction of the loan obligation. As a result of the foreclosure the Company reduced the carrying value of the NIBs by $24,886,437 at June 30, 2017, to $7,769,568, which is the estimated fair value of the NIBs calculated as the actual cash received subsequent to June 30, 2017, from distributions by the Owners to the Company. During the period ended December 31, 2017, the Company received $7,299,880 ($1,500,000 in May 2017, $2,500,000 in September 2017 and $3,299,880 in October 2017) from maturities and miscellaneous other adjustments to the underlying policies, thus reducing the carrying value of the NIBs at December 31, 2018 to $1,969,688. Our Investment in NIBs are classified as held-to-maturity investments at March 31, 2017 and as available-for-sale investments at December 31, 2017. The NIBs have a contractual maturity date of 25 years from inception, and the inception dates ranged from December 2011 to January 2013. The amortized cost, aggregate fair value and gross unrecognized holding gains and losses at December 31, 2017 and March 31, 2017 were as follows: December 31, 2017 March 31, 2017 Amortized Cost Basis/Net Carrying Amount $ 1,969,688 $ 34,156,005 Aggregate Fair Value (See Note 4) 1,969,688 45,643,224 Gross Unrecognized Holding Gains $ - $ 11,487,219 |
Liquidity Requirements
Liquidity Requirements | 9 Months Ended |
Dec. 31, 2017 | |
LIQUIDITY AND CAPITAL REQUIREMENTS [Abstract] | |
Liquidity Requirements | (4) LIQUIDITY REQUIREMENTS Since the Company’s inception, its operations have been primarily financed through sales of equity, debt financing from related parties and the issuance of notes payable and convertible debentures. As of December 31, 2017, the Company had $58,307 of cash assets, compared to $4,364 as of March 31, 2017. As of April 25, 2019, the Company had access to draw an additional $5,507,991 on the notes payable, related party (see Note 6 and Note 12) and $3,000,000 on the Convertible Debenture Agreement (See Note 7 and Note 12). The Company’s average monthly expenses are expected to be approximately $90,000, which includes salaries of our employees, consulting agreements and contract labor, general and administrative expenses and estimated legal and accounting expenses. Outstanding Accounts Payable as of December 31, 2017, totaled $332,423, and other accrued liabilities totaled $144,472. Management has concluded that its existing capital resources, and availability under its existing convertible debentures and debt agreements with related parties will be sufficient to fund its operating working capital requirements for at least the next 12 months, or through April 2020. Related parties have given assurance that their continued support, by way of either extensions of due dates, or increases in lines-of-credit, can be relied on. The Company also continues to evaluate other debt and equity financing opportunities. The accompanying financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Due to the foreclosure on the NIBs mentioned above, the company has no current source of future revenues. In order to continue to purchase additional NIBs or remove the NIBs out of foreclosure, the Company will need to raise additional capital. Management is currently engaged in obtaining long term financing and believes that it will secure the needed additional capital within one year from the date of this filing. As management believes that additional capital is a probable outcome, the Company has the ability to continue as a going concern for a period of one year from the date of issuance of these financial statements. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | (5) FAIR VALUE MEASUREMENTS As defined by ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also requires the consideration of differing levels of inputs in the determination of fair values. Those levels of input are summarized as follows: ● Level 1: Quoted prices in active markets for identical assets and liabilities. ● Level 2: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. ● Level 3: Unobservable inputs that are supported by little or no market activity. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques as well as instruments for which the determination of fair value requires significant management judgment or estimation. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. In accordance with the disclosure requirements of ASC Topic 825, “Financial Instruments” (“ASC 825”), the tables below summarize fair value estimates for the Company’s Investment in NIBs, which both are (at December 31, 2017) and are not (at March 31, 2017) required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company. In estimating the fair value of the Company’s Investment in NIBs, the rate of return that a market participant would be willing to pay for each portfolio is used to recalculate the discounted estimated future cash flows. This present value is used to represent the fair value of the Investment in NIBs using level 3 inputs. Financial Instruments Required To Be Carried at Fair Value at December 31, 2017 Fair Value Measurements at December 31, 2017 Description Level 1 Level 2 Level 3 Total Investment in Net Insurance Benefits $ - $ - $ 1,969,688 $ 1,969,688 Financial Instruments Not Required To Be Carried at Fair Value at March 31, 2017 Fair Value Measurements at March 31, 2017 Description Level 1 Level 2 Level 3 Total Investment in Net Insurance Benefits $ - $ - $ 45,643,224 $ 45,643,224 The Company did not have any transfers of assets and liabilities between Levels 1, 2 and 3 of the fair value measurement hierarchy during the year ended March 31, 2017 and the nine months ended December 31, 2017. At March 31, 2017, the fair value of our investment in NIBs was determined by evaluating the sum of present value of the future cash flows expected from the NIBs. Therefore, subsequent to the purchase and on a regular basis, these future estimated cash flows were evaluated for changes. If the determination was made that the future estimated cash flows should be adjusted to the point of a material change in revenue, a revised effective yield would be calculated prospectively based on the current amortized cost of the investment, including accrued accretion. At December 31, 2017, the fair value of our investment in NIBs is calculated as the actual cash received (discounted) subsequent to December 31, 2017, from distributions by the Owners to the Company. Other Financial Instruments The Company’s recorded values of cash and cash equivalents, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. The recorded values of the notes payable and convertible debenture approximates the fair values as the interest rate approximates market interest rates. |
Notes Payable, Related Party
Notes Payable, Related Party | 9 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable, Related Party | (6) NOTES PAYABLE, RELATED PARTY As of December 31, 2017 and March 31, 2017, the Company had borrowed $929,508 and $5,214,753, respectively, excluding accrued interest, from related parties under notes payable agreements that allow for borrowings of up to $6,730,000, exclusive of accrued interest. There are no covenants associated with these agreements. On December 6, 2017, the note payable, related party agreement that allowed for borrowings of up to $4,600,000 at December 31, 2017, was amended to extend the due date from August 31, 2018 to August 31, 2019. At the time of the extension, the Company had no outstanding principal owing on that agreement. The $929,508 of notes payable owed as of December 31, 2017 was due November 30, 2018, and was later extended, through a series of amendments, to November 30, 2020. In the event the Company completes a successful equity raise, principal and interest on notes payable totaling $949,755 are due in full at that time. The notes payable incur interest at 7.5%, and are collateralized by Investment in NIBs. During the three months ended December 31, 2017, the Company did not borrow any funds under these agreements and repaid $2,082,474 in principal. Additionally, $59,038 in accrued interest was paid out during the three months ended December 31, 2017. As of December 31, 2017, the Company had availability to borrow up to $5,800,492 under these agreements. The interest associated with these notes of $20,247 and $334,626 is recorded on the balance sheet as an Accrued Expense obligation at December 31, 2017 and March 31, 2017, respectively. The related parties include a person who is the Chairman of the Board of Directors and a stockholder, and Radiant Life, LLC, an entity partially owned by the Chairman of the Board of Directors. At December 31, 2017 the Company also owed $56,773 to the Chairman of the Board and a shareholder, which is included in accounts payable on the balance sheet. See Note 12 for a detail of activity on the Notes Payable, Related Party subsequent to December 31, 2017. |
Convertible Debenture Agreement
Convertible Debenture Agreement | 9 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Debenture Agreement | (7) CONVERTIBLE DEBENTURE AGREEMENT The Company has entered into an 8% convertible debenture agreement with Satco International, Ltd., that allows for borrowings of up to $3,000,000. The holder originally had the option to convert the outstanding principal and accrued interest to unregistered, restricted common stock of the Company on June 2, 2016. Per the agreement, the number of shares issuable at conversion shall be determined by the quotient obtained by dividing the outstanding principal and accrued and unpaid interest by 90% of the 90 day average closing price of the Company’s common stock from the date the notice of conversion is received; and the price at which the Debenture may be converted will be no lower than $1.00 per share. The original maturity date was June 2, 2016, but was later extended, through a series of extensions, to August 31, 2019. These extensions applied to both the due date and the conversion rights. See Note 12 for a detail of activity on the Convertible Debenture subsequent to December 31, 2017. As of December 31, 2017 the Company had fully paid off the outstanding principal under the agreement. During the three months ending December 31, 2017, the Company did not borrow on the agreement, and repaid the remaining $700,000 of principal owed. The outstanding interest of $124,225 and $102,488 at December 31, 2017 and March 31, 2017, respectively, is recorded on the balance sheet as an Accrued Expense obligation. |
Commitments, Contingencies and
Commitments, Contingencies and Legal Matters | 9 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Legal Matters | (8) COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS As explained in Note 1, the Company is engaged in the business of purchasing or acquiring life insurance policies and residual interests in or financial products tied to life insurance policies, including notes, drafts, acceptances, open accounts receivable and other obligations representing part or all of the sales price of insurance, life settlements and related insurance contracts being traded in the secondary marketplace, often referred to as the “life settlements market”. The Company does not take possession or control of the policies. The owners of the life settlements or life insurance policies acquired such policies at a discount to their face value. The life insurance portfolios underlying our NIBs typically involve loans originated with 4-5 year terms. The Company has always assumed that the Holders will be able to refinance their loans at the end of the respective loan terms. However, the Holders’ Lender’s ability to offer replacement loans has always been governed by factors that are beyond the Company’s control or the control of the Holders. At December 31, 2017, the entities that own the policies maintained a total of 13 separate loan agreements with the senior lending facility, all with separate expiration dates. As of December 31, 2017, 11 of these loans had expiration dates that had lapsed, with the remaining 2 loans having maturity dates ranging from July 2017 to January 2018. During October 2017, the entities completed a refinancing of the loans that had matured and were about to mature. The agreements were with a new senior lending facility who previously provided MRI for the underlying policies. During December 2017, these new loans were extended through April 15, 2018, and did not require MRI coverage. The Holders had available credit to pay forecasted premiums and expenses on a portion of the policies until April 15, 2018, which was the renewal date of the loans on these life insurance policies. The Holders have worked with the lender to extend the loans multiple times and now, after the last loan extension expired, between May 2018 and July 2018, the lenders foreclosed on the loans associated with the underlying life insurance policies and the Company has recorded a $24,886,437 impairment on the NIBs. As of September 30, 2017, the Company had remaining accrued expenses of $220,601 relating to the costs to maintain the structure of the life insurance policies. During October 2017, the Company made a final payment of $31,438, after which the Company received notification from the Holders that the remaining $189,163 had been paid in full by the Holders. During the quarter ended December 31, 2017, the Company has reversed the effects of the remaining $189,163 accrued liability on its balance sheet. |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 9 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Common Share | (9) EARNINGS (LOSS) PER COMMON SHARE Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the periods. Diluted net income per common share is computed by including common shares that may be issued subject to existing rights with dilutive potential, when applicable. Dilutive common stock equivalents are primarily comprised of stock options and warrants. Potentially dilutive shares resulting from convertible debt agreements are evaluated using the if-converted method, and such amounts were not dilutive. As of December 31, 2017 there were 2,162,086 potentially dilutive common stock equivalents. |
Stock Options
Stock Options | 9 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options | (10) STOCK OPTIONS During the year ended March 31, 2014, the Company issued common stock options to certain directors, officers, consultants and employees. The Company has recorded stock-based compensation expense of $182,572 and $508,503 related to these options for year ended March 31, 2017 and 2016, respectively. At March 31, 2017, all stock options had vested and all expenses relating to the outstanding options had been recognized as stock-based compensation expense. On the date of grant, the contractual option terms were all 5 years, with all options have an expiration date between April and October of 2018. The number of options outstanding and exercisable at December 31, 2017 is 2,106,875. If all vested options as of December 31, 2017 were to be exercised, the Company could expect to receive $3,314,294. |
Income Taxes
Income Taxes | 9 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (11) INCOME TAXES On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Reform Act”) was signed into law by the President of the United States. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. federal corporate tax rate from 35% to 21% effective for the Company’s fiscal year ended March 31, 2018. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. The Company will recognize the effects of the Tax Reform Act for the re-measurement of its net deferred tax liabilities during the third quarter ended December 31, 2017. This will be done in accordance with Staff Accounting Bulletin No. 118 (“SAB 118”), which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes At March 31, 2017, the Company had recorded a net deferred tax liability totaling $758,972. Due to net losses being recognized during the three months ended June 30, 2017, the Company’s deferred tax asset balance surpassed the deferred tax liability balance, resulting in the recording of an income tax benefit for the reduction of the previously recorded net deferred tax liability balance at March 31, 2017, of $758,972. For the period ended September 30, 2017, the Company continues to record net losses resulting in the accumulation of deferred tax assets relating to the net operating loss carryforwards. At September 30, 2018, management had recorded a 100% valuation allowance on the amount the Company’s deferred tax assets exceeding the Company’s deferred tax liabilities. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | (12) SUBSEQUENT EVENTS Subsequent to December 31, 2017, the following events transpired: Effective January 1, 2018, Matthew Pearson resigned his position as the Company’s Chief Operations Officer to pursue other opportunities. As of the date of this filing, no replacement has been designated to fill his position. During February 2018, management engaged consultants to explore and analyze financing alternatives available to the Company. From February 2018 through March 2019 approximately $1,320,581 has been paid to the consultants. Effective December 5, 2018, Ty D. Mattingly resigned his position on the Company’s Board of Directors. On December 6, 2018, Glenn S. Dickman and Stephen E. Quesenberry were named to the Company’s Board of Directors. Effective December 6, 2018, three existing stockholders have contributed to the Company a portion of their common shares held at a repurchase price to the Company of USD $0.05 per share The Company has cancelled the acquired shares, which decreased the outstanding common shares on the books of the Company. The total number of common shares canceled/retired was 8,000,000, reducing the amount of outstanding common shares from approximately 44,128,441 to 36,128,441. The Company anticipates paying the $0.05 per share repurchase price upon a major financing event, as agreed upon between the Company and the stockholders. As of the date of this filing, the shares have been cancelled, but have not yet been repurchased by the Company. On December 6, 2018, the Company awarded three of its directors 300,000 shares each of the Company’s stock, in lieu of director compensation. The shares granted include a vesting period. On July 11, 2018, the Company issued 800,000 common shares in return for obtaining the remaining 27.8% ownership of certain NIBs (see Note 3). The transaction was recorded at $40,000, the estimated fair value of the common stock issued (which management believes approximated the fair value of the NIBs received on the date of the transaction). From July 25, 2018 to April 10, 2019, Mr. Dickman loaned the Company $535,000 through an unsecured promissory note, which bears interest at a rate of 8% annually. To date, the Company has not made any principal or interest payments under this note. As of the date hereof, the full $535,000 of principal is recorded as Notes Payable, Related Party, and the Company has accrued $18,909 of unpaid interest. In January 2018, the Company received $1,969,688 in cash proceeds associated with maturities and miscellaneous adjustments to other underlying policies. The cash proceeds reduced the carrying value of the Company’s Investment in NIBs to $0. Subsequent to December 31, 2017, the Company has repaid $100,000 in principal on the Notes Payable, Related Party. The Company has also paid out accrued interest totaling $15,404 on the Notes Payable, Related Party. Subsequent to December 31, 2017, the Company has borrowed an additional $392,500 on the Notes Payable, Related Party (exclusive of the $535,000 loaned by Mr. Dickman). As of April 25, 2019, the outstanding principal balances of all Notes Payable, Related Party totaled $1,672,008 and the outstanding principal balance of the Convertible Debenture is $0. On February 8, 2019 note payable, related party agreement that allowed for borrowings of up to $4,600,000 was extended from August 31, 2019 to November 30, 2020. Subsequent to December 31, 2017, the note payable, related party agreement that allowed for borrowings of up to $2,130,000 was amended to extend the due dates from November 30, 2018 to November 30, 2020, respectively. On December 7, 2017, the Company agreed to amend the agreement to extend the due date and conversion rights on the Convertible Debenture from February 28, 2018 to August 31, 2019. |
Organization and Basis of Pre_2
Organization and Basis of Presentation, Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, the condensed consolidated unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the Company’s consolidated financial position, results of operations, and cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s financial statements and the accompanying notes. Actual results could materially differ from those estimates. |
Organization and Nature of Operations | Organization and Nature of Operations Sundance Strategies, Inc. (formerly known as Java Express, Inc.) was organized under the laws of the State of Nevada on December 14, 2001, and engaged in the retail selling of beverage products to the general public until these endeavors ceased in 2006; it had no material business operations from 2006, until its acquisition of ANEW LIFE, INC. (“ANEW LIFE”), a subsidiary of Sundance Strategies, Inc. (“Sundance Strategies”, “the Company”, “we” or “our”). The Company is engaged in the business of purchasing or acquiring life insurance policies and residual interests in or financial products tied to life insurance policies, including notes, drafts, acceptances, open accounts receivable and other obligations representing part or all of the sales price of insurance, life settlements and related insurance contracts being traded in the secondary marketplace, often referred to as the “life settlements market.” Since the Company’s inception its operations have been primarily financed through sales of equity, debt financing from related parties and the issuance of notes payable and convertible debentures. Currently, the Company is focused on the purchase of net insurance benefit contracts (“NIBs”) based on life settlements or life insurance policies. The Company does not take possession or control of the policies. The owners of the life settlements or life insurance policies (the “Owners” or “the Holders”) acquire such policies at a discount to their face value. On settlement, the Company receives the net insurance benefit after all borrowings, interest and expenses have been paid by the Owners out of the settlement proceeds. The Owners are variable interest entities (VIEs), for which the Company has a variable interest, but is not the primary beneficiary. The Company’s investment in NIBs (see Note 3) were issued by the Owners (i.e. the VIEs). The Company’s maximum exposure to loss in the variable interest entities is limited to the investment in NIBs balance. The Company does not have the power to direct activities of the VIEs. Further, the Company does not have the contractual obligation to absorb losses of the VIE. The investment in NIBs is a residual economic beneficial interest in a portfolio of life insurance contracts that have been financed by an independent third party via a loan from a lender and, in certain cases, insured via a mortality risk insurance product or mortality re-insurance (“MRI”). Future expected cash flow and positive profits are defined as the net insurance proceeds from death benefits after senior debt repayment, mortality risk repayment, and service provider or other third-party payments. NIBs are generally in the form of participating debt certificates (“PDC”), and although the two terms are interchangeable, the Company typically refers to them as NIBs. According to the terms of the PDCs, the PDCs provide both variable and fixed interest return to the Company from the Owners of the policies in the form of accrued yield. The variable interest varies by individual PDC, and is calculated as 99% to 100% (depending on the PDC) of the positive profits from the life insurance assets held by the Owners of the policies. The fixed interest also varies by individual PDC, and is either 1% or 2% per annum of the par value of the PDCs held by the Company. The par value of the PDCs held by the Company is approximately $36.8 million. The NIBs agreements between the Company and the Owners of the policies contain a provision that allows for the Owners to redeem the NIBs at any point, conditional upon paying to the Company the par value of the NIBs, as well as any unpaid accrued yield relating to fixed and variable interest. In aggregate, the sum of the par value plus unpaid accrued interest is in excess of the Company’s initial investment. The Company holds between 72.2% and 100% in the NIBs relating to the underlying life insurance policies as of December 31, 2017 and 2016. The Company is not responsible for maintaining premiums or other expenses related to maintaining the underlying life insurance contracts. Therefore, the investment in NIBs balance on the Company’s balance sheet does not increase when premiums or other expenses are paid. At March 31, 2017, and during the nine months ended December 31, 2017, the Company accounted for its investment in NIBs at the initial investment value increased for interest income and decreased for cash receipts received by the Company. At the time of transfer or purchase of an investment in NIBs, we estimated the future expected cash flows and determine the effective interest rate based on these estimated cash flows and our initial investment. Based on this effective interest rate, the Company calculated accretable income, which was recorded as interest income on investment in NIBs in the statement of operations. Our projections were based on various assumptions that are subject to uncertainties and contingencies including, but not limited to, the amount and timing of projected net cash receipts, expected maturity events, counter party performance risk, changes to applicable regulation of the investment, shortage of funds needed to maintain the asset until maturity, changes in discount rates, life expectancy estimates and their relation to premiums, interest, and other costs incurred, among other items. These uncertainties and contingencies are difficult to predict and are subject to future events that may impact our estimates and interest income. As a result, actual results could differ significantly from these projections. Therefore, subsequent to the purchase and on a regular basis, these future estimated cash flows were evaluated for changes. If the determination was made that the future estimated cash flows should be adjusted to the point of a material change in revenue, a revised effective yield was calculated prospectively based on the current amortized cost of the investment, including accrued accretion. Any positive or adverse change in cash flows would result in a prospective increase or decrease in the effective interest rate used to recognize interest income. Any significant adverse change in the cash flows that may have resulted in the recognition of an “other-than-temporary impairment” (“OTTI”), and would be evaluated by the Company accordingly. At March 31, 2017, and during the nine months ended December 31, 2017, the Company’s investment in NIBs was treated as a debt security, which was classified as a hold-to-maturity asset. We evaluate the carrying value of our investment in NIBs for impairment on a regular basis and, if necessary, adjust our total basis in the NIBs using new or updated information that affects our assumptions. We recognize impairment on a NIB contract if the fair value of the beneficial interest is less than the carrying amount of the investment, plus anticipated undiscounted future premiums and direct external costs, if any, and if there are adverse changes in cash flow. We had not recognized any impairment on our investment in NIBs from inception, through the year ended March 31, 2017. However, between May 2018 and July 2018, the Owners entered into agreements that completed a strict foreclosure transaction that transferred these policies from the owners to the lenders in full satisfaction of the loan obligation. As part of the original agreement, the Chairman of the Company helped secure the loan by including a personal guarantee for a portion of the debt, if needed. The owners and other parties to the Agreements are diligently working to secure alternative financing, although no such positive outcome can be assured. As a result of the foreclosure, the Company has lost its position in the residual benefits of the policies and has reduced the carrying value of the NIBs as of December 31, 2017 to $1,969,688, which is equal to the actual cash received by the Company from distributions subsequent to June 30, 2017. This carrying value is less than the accretion receivable as of March 31, 2017, and as such, is considered accretion receivable and not part of the Company’s original investment. |
Significant Accounting Policies | Significant Accounting Policies There have been no changes to the significant accounting policies of the Company from the information provided in Note 2 of the Notes to Consolidated Financial Statements in the Company’s most recent Form 10-K, except as discussed in the remaining Notes below. |
New Accounting Pronouncements | NEW ACCOUNTING PRONOUNCEMENTS Adopted During the Nine-Months Ended December 31, 2017 In December 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The new standard is designed to simplify the presentation of deferred income taxes, and requires all deferred tax liabilities and assets of the same tax jurisdiction or a tax filing group, as well as any related valuation allowance, be offset and presented as a single noncurrent amount in a classified balance sheet. The amendments are effective for the Company’s fiscal year beginning April 1, 2017, and for interim periods within that fiscal year. The adoption of this guidance did not have a material effect on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-06 related to the embedded derivative analysis for debt instruments with contingent call or put options. This pronouncement clarifies that an exercise contingency does not need to be evaluated to determine whether it relates only to interest rates or credit risk. Instead, the contingent put or call option should be evaluated for possible bifurcation as a derivative in accordance with the four-step decision sequence detailed in FASB ASC 815-15, without regard to the nature of the exercise contingency. The pronouncement is effective for the Company’s fiscal year beginning April 1, 2017, and for interim periods within that fiscal year. The adoption of this guidance did not have a material effect on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The new standard simplifies certain aspects of the accounting for share-based payment award transactions by allowing entities to continue to use current GAAP by estimating the number of awards that are expected to vest or, alternatively, entities can elect to account for forfeitures as they occur. Another aspect of the standard requires an entity to recognize all excess tax benefits and deficiencies associated with stock-based compensation as a reduction or increase to tax expense in the income statement. Previously, such amounts were recognized in additional paid-in capital. ASU 2016-09 is effective for the Company for its fiscal year beginning April 1, 2017. The adoption of this guidance did not have a material effect on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, Consolidation - Interests held through Related Parties that are under Common Control, which alters how a decision maker needs to consider indirect interests in a variable interest entity (VIE) held through an entity under common control. Under the new ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The amendments in this Update are effective for fiscal years beginning April 1, 2017, including interim periods within that fiscal year. The adoption of this guidance did not have a material effect on the consolidated financial statements, as the Company has no related parties under common control that have the characteristics of a primary beneficiary of a variable interest entity. Not Yet Adopted The Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, 2015-14, 2016-8, 10,11 and 12 and 2017-13 – Revenue from Contracts with Customers, which provides a single, comprehensive revenue recognition model for all contracts with customers. The core principal of the ASUs is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASUs also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB deferred the effective date of this standard. As a result, the standard and related amendments will be effective for the Company for its fiscal year beginning April 1, 2018, including interim periods within that fiscal year. Early application is permitted, but not before the original effective date of April 1, 2017. Entities are allowed to transition to the new standard by either retrospective application or recognizing the cumulative effect. The ASUs are not applicable to securitized beneficial interests that derive accreted yields and, therefore the Company will continue to follow the guidance in ASC 325-40. The adoption of this standard will not have an impact on the consolidated financial statements. In January 2016, the FASB issued ASU 2016-01 regarding Financial Instruments, which amended guidance on the classification and measurement of financial instruments. Under the new guidance, entities will be required to measure equity investments that are not consolidated or accounted for under the equity method at fair value with any changes in fair value recorded in net income, unless the entity has elected the new practicability exception. For financial liabilities measured using the fair value option, entities will be required to separately present in other comprehensive income the portion of the changes in fair value attributable to instrument-specific credit risk. Additionally, the guidance amends certain disclosure requirements associated with the fair value of financial instruments. The standard will be effective for the Company’s fiscal year beginning April 1, 2018, including interim reporting periods within that fiscal year. The Company is currently evaluating the effect of the adoption of this guidance on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 related to the accounting for leases. This pronouncement requires lessees to record most leases on their balance sheet, while expense recognition on the income statement remains similar to current lease accounting guidance. The guidance also eliminates real estate-specific provisions and modifies certain aspects of lessor accounting. Under the new guidance, lease classification as either a finance lease or an operating lease will determine how lease-related revenue and expense are recognized. The pronouncement is effective for the Company’s fiscal year beginning April 1, 2019, and for interim periods within that fiscal year. The Company does not believe the adoption of this guidance will have a material effect on the consolidated financial statements because leases are month-to-month and not material to the Company’s financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. The amendments are effective for the Company’s fiscal year beginning April 1, 2020, including interim periods within that fiscal year. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and results of operations. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. Historically, there has been a diversity in practice in how certain cash receipts/payments are presented and classified in the statement of cash flows. To reduce the existing diversity in practice, this update addresses the eight cash flow issues as listed in the pronouncement. The amendments in this update are effective for fiscal years beginning April 1, 2018, and interim periods within that fiscal year. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial statements. On May 10, 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. For all entities, the ASU is effective for the Company’s fiscal year beginning April 1, 2018, including interim periods within that annual reporting period. Early adoption is permitted, including adoption in any interim period. The adoption of this standard is not expected to have material impact on the Company’s financial statements as the Company does not expect to make future modifications to existing share based payment awards. The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements. |
Investment in Net Insurance B_2
Investment in Net Insurance Benefits (Tables) | 9 Months Ended |
Dec. 31, 2017 | |
Investments, All Other Investments [Abstract] | |
Summary of Investments in Net Insurance Benefits | The balance in Investment in NIBs at December 31, 2017 and March 31, 2017, and related activity for the periods then ended were as follows: December 31, 2017 March 31, 2017 Beginning Balance $ 34,156,005 $ 29,822,186 Accretion of interest income - 5,751,689 Cash received (7,299,880 ) (1,417,870 ) Impairment of investments (24,886,437 ) - Ending Balance $ 1,969,688 $ 34,156,005 |
Amortized Cost, Aggregate Fair Value and Gross Unrecognized Holding Gains and Losses | The amortized cost, aggregate fair value and gross unrecognized holding gains and losses at December 31, 2017 and March 31, 2017 were as follows: December 31, 2017 March 31, 2017 Amortized Cost Basis/Net Carrying Amount $ 1,969,688 $ 34,156,005 Aggregate Fair Value (See Note 4) 1,969,688 45,643,224 Gross Unrecognized Holding Gains $ - $ 11,487,219 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Investment in NIBs | In accordance with the disclosure requirements of ASC Topic 825, “Financial Instruments” (“ASC 825”), the tables below summarize fair value estimates for the Company’s Investment in NIBs, which both are (at December 31, 2017) and are not (at March 31, 2017) required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company. In estimating the fair value of the Company’s Investment in NIBs, the rate of return that a market participant would be willing to pay for each portfolio is used to recalculate the discounted estimated future cash flows. This present value is used to represent the fair value of the Investment in NIBs using level 3 inputs. Financial Instruments Required To Be Carried at Fair Value at December 31, 2017 Fair Value Measurements at December 31, 2017 Description Level 1 Level 2 Level 3 Total Investment in Net Insurance Benefits $ - $ - $ 1,969,688 $ 1,969,688 Financial Instruments Not Required To Be Carried at Fair Value at March 31, 2017 Fair Value Measurements at March 31, 2017 Description Level 1 Level 2 Level 3 Total Investment in Net Insurance Benefits $ - $ - $ 45,643,224 $ 45,643,224 |
Organization and Basis of Pre_3
Organization and Basis of Presentation, Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | |||
Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | |
Variable interest rate description | The variable interest varies by individual PDC, and is calculated as 99% to 100% (depending on the PDC) of the positive profits from the life insurance assets held by the Owners of the policies. The fixed interest also varies by individual PDC, and is either 1% or 2% per annum of the par value of the PDCs held by the Company. | |||
Par value of PDCs held | $ 36,800,000 | |||
Investment in net insurance benefits | $ 1,969,688 | $ 34,156,005 | $ 29,822,186 | |
Minimum [Member] | ||||
Variable interest rate by individual PDC | 99.00% | |||
Percentage of NIBs held | 72.20% | 72.20% | ||
Maximum [Member] | ||||
Variable interest rate by individual PDC | 100.00% | |||
Percentage of NIBs held | 100.00% | 100.00% |
Investment in Net Insurance B_3
Investment in Net Insurance Benefits (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |||
Oct. 31, 2017 | Sep. 30, 2017 | May 31, 2017 | Dec. 31, 2017 | Jun. 30, 2017 | |
Proceeds from maturities and miscellaneous | $ 3,299,880 | $ 2,500,000 | $ 1,500,000 | $ 7,299,880 | |
NIB [Member] | December 31, 2018 [Member] | |||||
Carrying value | $ 1,969,688 | ||||
NIB [Member] | |||||
Carrying value | $ 24,886,437 | ||||
Period of contractual maturity | 25 years | ||||
NIB [Member] | Subsequent to June 30, 2017 [Membe] | |||||
Carrying value | $ 7,769,568 |
Investment in Net Insurance B_4
Investment in Net Insurance Benefits - Summary of Investments in Net Insurance Benefits (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2017 | |
Investments, All Other Investments [Abstract] | |||||
Beginning Balance | $ 34,156,005 | $ 29,822,186 | $ 29,822,186 | ||
Accretion of interest income | $ 1,271,737 | 4,145,036 | 5,751,689 | ||
Cash received | (7,299,880) | (1,417,870) | |||
Impairment of investments | (24,886,437) | ||||
Ending Balance | $ 1,969,688 | $ 1,969,688 | $ 34,156,005 |
Investment in Net Insurance B_5
Investment in Net Insurance Benefits - Amortized Cost, Aggregate Fair Value and Gross Unrecognized Holding Gains and Losses (Details) - USD ($) | Dec. 31, 2017 | Mar. 31, 2017 |
Investments, All Other Investments [Abstract] | ||
Amortized Cost Basis/Net Carrying Amount | $ 1,969,688 | $ 34,156,005 |
Aggregate Fair Value (See Note 4) | 1,969,688 | 45,643,224 |
Gross Unrecognized Holding Gains | $ 11,487,219 |
Liquidity Requirements (Details
Liquidity Requirements (Details Narrative) - USD ($) | 9 Months Ended | |||
Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | |
Cash assets | $ 58,307 | $ 4,364 | $ 30,087 | $ 24,717 |
Monthly expenses incurred by company | 90,000 | |||
Accounts payable | 332,423 | 508,071 | ||
Other accrued liabilities | 144,472 | $ 753,780 | ||
April 25, 2019 [Member] | ||||
Additional borrowing capacity from related party notes payable | 5,507,991 | |||
Additional borrowing capacity from Convertible Debenture Agreement | $ 3,000,000 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value of Investment in NIBs (Details) - USD ($) | Dec. 31, 2017 | Mar. 31, 2017 |
Investment in Net Insurance Benefits | $ 1,969,688 | $ 45,643,224 |
Level 1 [Member] | ||
Investment in Net Insurance Benefits | ||
Level 2 [Member] | ||
Investment in Net Insurance Benefits | ||
Level 3 [Member] | ||
Investment in Net Insurance Benefits | $ 1,969,688 | $ 45,643,224 |
Notes Payable, Related Party (D
Notes Payable, Related Party (Details Narrative) - USD ($) | Dec. 06, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2017 |
Notes payable, related parties | $ 929,508 | $ 929,508 | $ 5,214,753 | ||
Line of credit facility, maximum borrowing capacity | 6,730,000 | $ 6,730,000 | |||
Debt due date | Nov. 30, 2018 | ||||
Extended maturity date | Nov. 30, 2020 | ||||
Principal and interest on notes payable | 949,755 | $ 949,755 | |||
Related party note interest rate | 7.50% | ||||
Proceeds from issuance of notes payable, related party | $ 400,000 | $ 1,129,575 | |||
Repayment of notes payable, related party | 2,082,474 | 4,685,245 | $ 150,000 | ||
Accrued interest paid | 59,038 | ||||
Remaining borrowing capacity | 5,800,492 | 5,800,492 | |||
Long term accrued expense obligation | 20,247 | 20,247 | $ 334,626 | ||
Board of Directors and Stockholder [Member] | |||||
Due to related parties | $ 56,773 | $ 56,773 | |||
Notes Payable, Related Party Agreement [Member] | |||||
Notes payable, related parties | $ 4,600,000 | ||||
Debt term description | Amended to extend the due date from August 31, 2018 to August 31, 2019 | ||||
Debt due date | Aug. 31, 2019 |
Convertible Debenture Agreeme_2
Convertible Debenture Agreement (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2017 | |
Face amount of debt instrument | $ 949,755 | $ 949,755 | ||
Maturity date | Nov. 30, 2018 | |||
Extended maturity date | Nov. 30, 2020 | |||
Proceeds from convertible debt | $ 200,000 | |||
Repayments of convertible debt | 900,000 | |||
Accrued interest | 124,225 | $ 124,225 | $ 102,488 | |
8% Convertible Debenture Agreement [Member] | ||||
Proceeds from convertible debt | ||||
Repayments of convertible debt | $ 700,000 | |||
8% Convertible Debenture Agreement [Member] | Satco International, Ltd., [Member] | ||||
Interest rate | 8.00% | 8.00% | ||
Convertible debenture, terms of conversion | Per the agreement, the number of shares issuable at conversion shall be determined by the quotient obtained by dividing the outstanding principal and accrued and unpaid interest by 90% of the 90 day average closing price of the Company’s common stock from the date the notice of conversion is received; and the price at which the Debenture may be converted will be no lower than $1.00 per share. | |||
Debt conversion price per share | $ 1 | $ 1 | ||
Maturity date | Jun. 2, 2016 | |||
Extended maturity date | Aug. 31, 2019 | |||
8% Convertible Debenture Agreement [Member] | Satco International, Ltd., [Member] | Maximum [Member] | ||||
Face amount of debt instrument | $ 3,000,000 | $ 3,000,000 |
Commitments, Contingencies an_2
Commitments, Contingencies and Legal Matters (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Oct. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2017 | Sep. 30, 2017 | |
Loan description | At December 31, 2017, the entities that own the policies maintained a total of 13 separate loan agreements with the senior lending facility, all with separate expiration dates. As of December 31, 2017, 11 of these loans had expiration dates that had lapsed, with the remaining 2 loans having maturity dates ranging from July 2017 to January 2018.During October 2017, the entities completed a refinancing of the loans that had matured and were about to mature. The agreements were with a new senior lending facility who previously provided MRI for the underlying policies. During December 2017, these new loans were extended through April 15, 2018, and did not require MRI coverage. The Holders had available credit to pay forecasted premiums and expenses on a portion of the policies until April 15, 2018, which was the renewal date of the loans on these life insurance policies. The Holders have worked with the lender to extend the loans multiple times and now, after the last loan extension expired, between May 2018 and July 2018. | |||||
Impairment on NIBs | $ 24,886,437 | |||||
Accrued expense relating to life insurance policies | $ 220,601 | |||||
Final payment of life insurance policies | $ 31,438 | |||||
Accrued liability paid | $ 189,163 | |||||
Reversal of prior accrual for certain unpaid costs to maintain the structure of the life insurance policies | $ 189,163 | |||||
Minimum [Member] | ||||||
Loan originate term | 4 years | |||||
Maximum [Member] | ||||||
Loan originate term | 5 years |
Earnings (Loss) Per Common Sh_2
Earnings (Loss) Per Common Share (Details Narrative) | 9 Months Ended |
Dec. 31, 2017shares | |
Earnings Per Share [Abstract] | |
Potentially dilutive common stock equivalents | 2,162,086 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Stock-based compensation expense | $ 182,572 | $ 182,572 | $ 508,503 | |
Stock option term | 5 years | |||
Stock option expiration period | The contractual option terms were all 5 years, with all options have an expiration date between April and October of 2018. | |||
Number of options outstanding | 2,106,875 | |||
Number of options exercisable | 2,106,875 | |||
Stock option exercised that are vested, expected to receive | $ 3,314,294 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | |
Dec. 31, 2017 | Mar. 31, 2017 | |
U.S. federal corporate tax rate | 34.00% | |
Net deferred tax liability | $ 758,972 | |
March 31, 2018 [Member] | ||
U.S. federal corporate tax rate | 21.00% | |
September 30, 2018 [Member] | ||
Percentage of deferred tax, valuation allowance | 100.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Feb. 08, 2019 | Dec. 06, 2018 | Jul. 11, 2018 | Dec. 07, 2017 | Feb. 28, 2018 | Oct. 31, 2017 | Sep. 30, 2017 | May 31, 2017 | Dec. 31, 2017 | Jan. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Apr. 25, 2019 | Dec. 06, 2017 | Mar. 31, 2017 |
Common Stock, shares outstanding | 44,128,441 | 44,128,441 | 44,128,441 | ||||||||||||
Notes payable, related party | $ 929,508 | $ 929,508 | $ 5,214,753 | ||||||||||||
Cash proceeds associated with maturities and miscellaneous adjustments | $ 3,299,880 | $ 2,500,000 | $ 1,500,000 | 7,299,880 | |||||||||||
Repayment of notes payable, related party | 2,082,474 | 4,685,245 | $ 150,000 | ||||||||||||
Convertible debenture | $ 700,000 | ||||||||||||||
Proceeds from related party debt | $ 400,000 | $ 1,129,575 | |||||||||||||
Debt, maturity date | Nov. 30, 2018 | ||||||||||||||
Convertible Debenture [Member] | |||||||||||||||
Debt, maturity date | Aug. 31, 2019 | Feb. 28, 2018 | |||||||||||||
Notes Payable, Related Party Agreement [Member] | |||||||||||||||
Notes payable, related party | $ 4,600,000 | ||||||||||||||
Debt, maturity date | Aug. 31, 2019 | ||||||||||||||
July 25, 2018 to April 10, 2019 [Member] | Mr. Dickman [Member] | |||||||||||||||
Unsecured promissory notes, amount | $ 535,000 | $ 535,000 | |||||||||||||
Interest rate | 8.00% | 8.00% | |||||||||||||
Notes payable, related party | $ 535,000 | $ 535,000 | |||||||||||||
Unpaid interest | 18,909 | ||||||||||||||
Subsequent to December 31, 2017 [Member] | |||||||||||||||
Repayment of notes payable, related party | 100,000 | ||||||||||||||
Payments for accrued interest on notes payable, related party | 15,404 | ||||||||||||||
Proceeds from additional borrowings on notes payable, related party | 392,500 | ||||||||||||||
Proceeds from related party debt | $ 2,130,000 | ||||||||||||||
Debt, maturity date | Nov. 30, 2020 | ||||||||||||||
Subsequent to December 31, 2017 [Member] | Mr. Dickman [Member] | |||||||||||||||
Proceeds from additional borrowings on notes payable, related party | $ 535,000 | ||||||||||||||
Subsequent Event [Member] | |||||||||||||||
Notes payable, related party | $ 1,672,008 | ||||||||||||||
Cash proceeds associated with maturities and miscellaneous adjustments | $ 1,969,688 | ||||||||||||||
Convertible debenture | $ 0 | ||||||||||||||
Subsequent Event [Member] | Notes Payable, Related Party Agreement [Member] | |||||||||||||||
Proceeds from related party debt | $ 4,600,000 | ||||||||||||||
Debt, maturity date | Nov. 30, 2020 | ||||||||||||||
Subsequent Event [Member] | Net Insurance Benefit Contracts [Member] | |||||||||||||||
Ownership percentage | 27.80% | ||||||||||||||
Carrying value of investment | $ 0 | ||||||||||||||
Subsequent Event [Member] | Net Insurance Benefit Contracts [Member] | |||||||||||||||
Number of shares issued related to acquisition | 800,000 | ||||||||||||||
Number of shares issued related to acquisition, value | $ 40,000 | ||||||||||||||
Subsequent Event [Member] | Three Existing Stockholders [Member] | |||||||||||||||
Repurchase price per share | $ 0.05 | ||||||||||||||
Number of shares cancelled/retired | 8,000,000 | ||||||||||||||
Common Stock, shares outstanding | 36,128,441 | ||||||||||||||
Repurchase of shares, description | The Company anticipates paying the $0.05 per share repurchase price and cancelling the repurchased common shares upon a major financing event, as agreed upon between the Company and the stockholders. As of the date of this filing, the shares have been cancelled, but have not yet been repurchased by the Company | ||||||||||||||
Subsequent Event [Member] | Three Directors [Member] | |||||||||||||||
Number of shares awarded as director compensation | 300,000 | ||||||||||||||
Subsequent Event [Member] | February 2018 through March 2019 [Member] | |||||||||||||||
Payments to consultants for services | $ 1,320,581 |