Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2019 | Jun. 28, 2019 | Sep. 30, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NaturalShrimp Inc | ||
Entity Central Index Key | 0001465470 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2019 | ||
Current Fiscal Year End Date | --03-31 | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 689,785 | ||
Entity Common Stock, Shares Outstanding | 313,254,149 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2019 | Mar. 31, 2018 |
Current assets | ||
Cash | $ 137,499 | $ 24,280 |
Notes receivable | 1,700 | 207,200 |
Inventory | 4,200 | 0 |
Prepaid expenses | 35,286 | 28,699 |
Total current assets | 178,685 | 260,179 |
Fixed assets | ||
Land | 202,293 | 202,293 |
Buildings | 1,328,161 | 1,328,161 |
Machinery and equipment | 934,621 | 929,245 |
Autos and trucks | 14,063 | 14,063 |
Furniture and fixtures | 22,060 | 22,060 |
Accumulated depreciation | (1,322,609) | (1,292,313) |
Fixed assets, net | 1,178,589 | 1,203,509 |
Other assets | ||
Construction-in-process | 377,504 | 171,050 |
Deposits | 10,500 | 10,500 |
Total other assets | 388,004 | 181,550 |
Total assets | 1,745,278 | 1,645,238 |
Current liabilities | ||
Accounts payable | 576,028 | 528,538 |
Accrued interest - related parties | 295,184 | 240,377 |
Other accrued expenses | 609,243 | 497,321 |
Short-term Promissory Note and Lines of credit | 139,418 | 143,523 |
Current maturities of bank loan | 228,725 | 7,497 |
Current maturities of convertible debentures, less debt discount of $511,640 and $691,558 | 494,451 | 516,597 |
Convertible debentures, related party | 87,600 | 87,600 |
Notes payable - related parties | 1,271,162 | 1,271,162 |
Derivative liability | 157,000 | 3,455,000 |
Warrant liability | 93,000 | 277,000 |
Total current liabilities | 3,951,811 | 7,024,615 |
Bank loan, less current maturities | 0 | 228,916 |
Line of credit | 650,453 | 651,453 |
Convertible debentures, less current maturities | 0 | 0 |
Total liabilities | 4,602,264 | 7,904,984 |
Commitments and contingencies (Note 11) | ||
STOCKHOLDERS DEFICIT | ||
Series A Convertible Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 and 0 shares issued and outstanding at March 31, 2019 and March 31, 2018, respectively | 500 | 0 |
Common stock, $0.0001 par value, 900,000,000 and 300,000,000 shares authorized, 301,758,293 and 97,656,095 shares issued and outstanding at March 31, 2019 and March 31, 2018, respectively | 30,177 | 9,766 |
Additional paid in capital | 38,335,782 | 27,743,352 |
Accumulated deficit | (41,223,445) | (34,012,864) |
Total stockholders' deficit | (2,856,986) | (6,259,746) |
Total liabilities and stockholders' deficit | $ 1,745,278 | $ 1,645,238 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2019 | Mar. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Current maturities of convertible debentures, debt discount | $ 511,640 | $ 691,558 |
Series A convertible preferred stock, par value per share | $ .0001 | $ 0.0001 |
Series A convertible preferred stock, authorized | 5,000,000 | 5,000,000 |
Series A convertible preferred stock, issued | 5,000,000 | 0 |
Series A convertible preferred stock, outstanding | 5,000,000 | 0 |
Common stock, par value per share | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 900,000,000 | 300,000,000 |
Common stock, issued | 301,758,293 | 97,656,095 |
Common stock, outstanding | 301,758,293 | 97,656,095 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Sales | $ 0 | $ 0 |
Operating expenses | ||
Facility operations | 100,596 | 27,789 |
General and administrative | 200,595 | 443,508 |
Rent | 12,134 | 11,197 |
Salaries and wages | 422,160 | 352,757 |
Stock compensation | 0 | 0 |
Professional services | 234,932 | 278,037 |
General and administrative | 869,821 | 1,085,499 |
Depreciation and amortization | 30,296 | 70,894 |
Total operating expenses | 1,000,713 | 1,184,182 |
Net loss before other income (expense) | (1,000,713) | (1,184,182) |
Other income (expense) | ||
Interest expense | (223,350) | (171,065) |
Amortization of debt discount | (1,613,984) | (775,091) |
Financing costs | (1,899,935) | (1,310,751) |
Change in fair value of derivative liability | 1,319,500 | (1,600,000) |
Change in fair value of warrant liability | (47,000) | (244,000) |
Loss on exercise of warrants | (3,745,099) | 0 |
Total other income (expense) | (6,209,868) | (4,100,907) |
Loss before income taxes | (7,210,581) | (5,285,089) |
Provision for income taxes | 0 | 0 |
Net loss | $ (7,210,581) | $ (5,285,089) |
EARNINGS PER SHARE (Basic and diluted) | $ (0.04) | $ (0.05) |
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and diluted) | 171,325,837 | 97,656,095 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance - shares at Mar. 31, 2017 | 0 | 92,408,298 | |||
Beginning balance - amount at Mar. 31, 2017 | $ 0 | $ 9,242 | $ 26,681,521 | $ (28,727,775) | $ (2,037,012) |
Issuance of shares in connection with debt, shares | 1,004,260 | ||||
Issuance of shares in connection with debt, amount | $ 100 | 146,951 | 147,051 | ||
Issuance of shares for services, shares | 1,000,000 | ||||
Issuance of shares for services, amount | $ 100 | 99,900 | 100,000 | ||
Issuance of shares for cash, shares | 100,000 | ||||
Issuance of shares for cash, amount | $ 10 | 24,990 | 25,000 | ||
Issuance of shares upon conversion, shares | 2,820,204 | ||||
Issuance of shares upon conversion, amount | $ 282 | 119,022 | 119,304 | ||
Conversion of common shares into Series A Preferred shares, amount | 79,304 | ||||
Beneficial conversion feature | 28,000 | 28,000 | |||
Reclass of derivative liability upon conversion or redemption of related convertible debentures | 576,000 | 576,000 | |||
Issuance of shares upon exercise of warrants, shares | 323,333 | ||||
Issuance of shares upon exercise of warrants, amount | $ 32 | 66,968 | 67,000 | ||
Net loss | (5,285,089) | (5,285,089) | |||
Ending balance, shares at Mar. 31, 2018 | 0 | 97,656,095 | |||
Ending balance, amount at Mar. 31, 2018 | $ 0 | $ 9,766 | 27,743,352 | (34,012,864) | (6,259,746) |
Issuance of shares in connection with debt, shares | 3,225,000 | ||||
Issuance of shares in connection with debt, amount | $ 323 | 106,628 | 106,951 | ||
Issuance of shares for cash, shares | 220,000 | ||||
Issuance of shares for cash, amount | $ 22 | 15,378 | 15,400 | ||
Issuance of shares upon conversion, shares | 226,217,349 | ||||
Issuance of shares upon conversion, amount | $ 22,623 | 1,338,275 | 1,360,898 | ||
Issuance of shares under equity financing agreement, shares | 22,131,893 | ||||
Issuance of shares under equity financing agreement, amount | $ 2,213 | 462,303 | 464,516 | ||
Conversion of common shares into Series A Preferred shares, shares | 5,000,000 | (75,000,000) | |||
Conversion of common shares into Series A Preferred shares, amount | $ 500 | $ (7,500) | 7,000 | 0 | |
Beneficial conversion feature | 620,977 | 620,977 | |||
Reclass of derivative liability upon conversion or redemption of related convertible debentures | 4,068,500 | 4,068,500 | |||
Issuance of shares upon exercise of warrants, shares | 27,307,955 | ||||
Issuance of shares upon exercise of warrants, amount | $ 2,731 | 3,973,369 | 3,976,099 | ||
Net loss | (7,210,581) | (7,210,581) | |||
Ending balance, shares at Mar. 31, 2019 | 5,000,000 | 301,758,293 | |||
Ending balance, amount at Mar. 31, 2019 | $ 500 | $ 30,177 | $ 38,335,782 | $ (41,223,445) | $ (2,856,986) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ (7,210,581) | $ (5,285,089) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation expense | 30,296 | 70,894 |
Amortization of debt discount | 1,613,984 | 775,091 |
Change in fair value of derivative liability | (1,319,500) | 1,600,000 |
Change in fair value of warrant liability | 47,000 | 244,000 |
Financing costs related to convertible debentures | 1,899,935 | 1,310,751 |
Loss on exercise of warrants | 3,745,099 | 0 |
Shares issued for services | 0 | 100,000 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other current assets | (6,585) | 145,301 |
Accounts payable | 47,489 | 31,982 |
Other accrued expenses | 111,922 | 179,822 |
Accrued interest - related parties | 54,807 | 61,455 |
CASH USED IN OPERATING ACTIVITIES | (990,334) | (765,793) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash paid for machinery and equipment | (5,376) | 0 |
Cash paid for construction in progress | (206,454) | (171,050) |
CASH USED IN INVESTING ACTIVITIES | (211,830) | (171,050) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments on bank loan | (7,688) | (6,587) |
Repayment line of credit short-term | (5,105) | (2,486) |
Notes receivable | 239,500 | (76,000) |
Proceeds from sale of stock | 15,400 | 25,000 |
Proceeds from issuance of common shares under equity agreement | 464,516 | 0 |
Proceeds from convertible debentures | 977,060 | 1,072,901 |
Proceeds from convertible debentures, related party | 0 | 180,000 |
Payments on convertible debentures | (368,300) | (227,500) |
Payments on convertible debentures, related party | 0 | (92,400) |
CASH PROVIDED BY FINANCING ACTIVITIES | 1,315,383 | 872,928 |
NET CHANGE IN CASH | 113,219 | (63,915) |
CASH AT BEGINNING OF YEAR | 24,280 | 88,195 |
CASH AT YEAR END | 137,499 | 24,280 |
INTEREST PAID | 168,543 | 109,610 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Shares issued upon conversion | 1,360,898 | 79,304 |
Notes receivable for convertible debentures | $ 90,000 | $ 131,200 |
1. NATURE OF THE ORGANIZATION A
1. NATURE OF THE ORGANIZATION AND BUSINESS | 12 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF THE ORGANIZATION AND BUSINESS | Nature of the Business NaturalShrimp Incorporated (“NaturalShrimp” “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. Its initial production facility is located outside of San Antonio, Texas. The Company has three wholly-owned subsidiaries including NaturalShrimp Corporation, NaturalShrimp Global, Inc. and Natural Aquatic Systems, Inc. Going Concern The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, 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 year ended March 31, 2019, the Company had a net loss of approximately $7,211,000. At March 31, 2019, the Company had an accumulated deficit of approximately $41,223,000 and a working capital deficit of approximately $3,773,000. 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 2019 fiscal year, the Company received net cash proceeds of approximately $1,125,000 from the issuance of convertible debentures (including amount received on notes receivable which were issued as collateralization for back end notes), approximately $465,000 from issuance of the Company’s common stock through an equity financing agreement and $15,000 from the sale of the Company’s common stock. Subsequent to March 31, 2019, the Company received $100,000 in net proceeds from one convertible debentures, and $1,500,000 from the issuance of approximately 11,483,000 common shares under the equity financing agreement. (See Note 12). Management believes that private placements of equity capital and/or additional debt financing 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 or convertible debt securities, 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 have to cease operations. The Company plans to improve the growth rate of the shrimp and the environmental conditions of its production facilities. Management also plans to acquire a hatchery in which the Company can better control the environment in which to develop the post larvaes. If management is unsuccessful in these efforts, discontinuance of operations is possible. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Consolidation The consolidated financial statements include the accounts of NaturalShrimp Incorporated and its wholly-owned subsidiaries, NaturalShrimp Corporation, NaturalShrimp Global and Natural Aquatic Systems, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates 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/Loss per Common Share Basic and diluted earnings or loss per share (“EPS”) amounts in the 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 year ended March 31, 2019, the Company had approximately $1,097,000 in convertible debentures whose approximately 66,376,000 underlying shares are convertible at the holders’ option at conversion prices ranging from $0.01 to $0.30 for fixed conversion rates, and 34% - 60% of the defined trading price for variable conversion rates and approximately 444,000 warrants with an exercise price of 45% of the market price of the Company’s common stock, which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. Included in the diluted EPS for the year ended March 31, 2018, the Company had approximately $1,293,000 in convertible debentures whose approximately 46,170,000 underlying shares are convertible at the holders’ option at conversion prices ranging from 34 - 60% of the defined trading price and approximately 4,625,000 warrants with an exercise price of 45% to 57% of the market price of the Company’s common stock, which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. Fair Value Measurements ASC Topic 820, “ Fair Value Measurement” “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 March 31, 2019 and 2018. The Derivative liabilities are Level 3 fair value measurements. The following is a summary of activity of Level 3 liabilities during the years ended March 31, 2019 and 2018: Derivatives 2019 2018 Derivative liability balance at beginning of period $ 3,455,000 $ 218,000 Additions to derivative liability for new debt 2,090,000 2,213,000 Reclass to equity upon conversion or redemption (4,068,500 ) (576,000 ) Change in fair value (1,319,500 ) 1,600,000 Balance at end of period $ 157,000 $ 3,455,000 At March 31, 2019, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.21; a risk-free interest rate ranging from 2.41% to 2.63%, and expected volatility of the Company’s common stock ranging from 335.68% to 478.31%, and the various estimated reset exercise prices weighted by probability. At March 31, 2018, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.06; a risk-free interest rate ranging from 1.73% to 2.09%, and expected volatility of the Company’s common stock ranging from 272.06% to 375.93%, and the various estimated reset exercise prices weighted by probability. Warrant liability 2019 2018 Warrant liability balance at beginning of period $ 277,000 $ 28,000 Additions to warrant liability for new warrants - 493,000 Reclass to equity upon exercise (231,000 ) - Change in fair value 47,000 (244,000 ) Balance at end of period $ 93,000 $ 277,000 At March 31, 2019, the fair value of the warrant liability was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.21; a risk-free interest rate of 2.21%, and expected volatility of the Company’s common stock ranging of 285.32%. At March 31, 2018, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.06 a risk-free interest rate ranging from 2.22% to 2.56%, and expected volatility of the Company’s common stock of 358.6%. Financial Instruments The Company’s financial instruments include cash and cash equivalents, receivables, payables, and debt and are accounted for under the provisions of ASC Topic 825, “ Financial Instruments” Cash and Cash Equivalents For the purpose of the 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 March 31, 2019 and 2018. Fixed Assets Equipment is carried at historical value or cost and is depreciated over the estimated useful lives of the related assets. Depreciation on buildings is computed using the straight-line method, while depreciation on all other fixed assets is computed using the Modified Accelerated Cost Recovery System (MACRS) method, which does not materially differ from GAAP. Estimated useful lives are as follows: Buildings 27.5 – 39 years Other Depreciable Property 5 – 10 years Furniture and Fixtures 3 – 10 years Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations. The consolidated statements of operations reflect depreciation expense of approximately $30,000 and $71,000 for the years ended March 31, 2019 and 2018, respectively. Income Taxes Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. In addition, the Company’s management performs an evaluation of all uncertain income tax positions taken or expected to be taken in the course of preparing the Company’s income tax returns to determine whether the income tax positions meet a “more likely than not” standard of being sustained under examination by the applicable taxing authorities. This evaluation is required to be performed for all open tax years, as defined by the various statutes of limitations, for federal and state purposes. On December 22, 2017, the President of the United States signed and enacted into law H.R. 1 (the “Tax Reform Law”). The Tax Reform Law, effective for tax years beginning on or after January 1, 2018, except for certain provisions, resulted in significant changes to existing United States tax law, including various provisions that are expected to impact the Company. The Tax Reform Law reduces the federal corporate tax rate from 35% to 21% effective January 1, 2018, and the 2019 fiscal year for the Company. The Company will continue to analyze the provisions of the Tax Reform Law to assess the impact on the Company’s consolidated financial statements. Stock-Based Compensation The Company accounts for stock-based compensation to employees in accordance with ASC 718. “ Stock-based Compensation to Employees “Equity Instruments Issued to Other than Employees” Impairment of Long-lived Assets and Long-lived Assets The Company will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose. Commitments and Contingencies Certain conditions may exist as of the date the 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 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. Recently Issued Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers: Topic 606, or ASU 2014-09. ASU 2014-09 establishes the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In applying the new revenue recognition model to contracts with customers, an entity: (1) identifies the contract(s) with a customer; (2) identifies the performance obligations in the contract(s); (3) determines the transaction price; (4) allocates the transaction price to the performance obligations in the contract(s); and (5) recognizes revenue when (or as) the entity satisfies a performance obligation. The accounting standards update applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification. The accounting standards update also requires significantly expanded quantitative and qualitative disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted Topic 606 as of April 1, 2018, using the modified retrospective transition method. Under the modified retrospective method, the Company would recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application; however, the Company did not have any material adjustment as of the date of the adoption and adoption had no impact on the Company's consolidated balance sheet, results of operations, equity or cash flows as of the adoption date. The comparative periods have not been restated. During the year ended March 31, 2019, 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. Management’s Evaluation of Subsequent Events The Company evaluates events that have occurred after the balance sheet date of March 31, 2019, through the date which the consolidated financial statements were issued. Based upon the review, other than described in Note 12 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements. |
3. SHORT-TERM NOTE AND LINES OF
3. SHORT-TERM NOTE AND LINES OF CREDIT | 12 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
SHORT-TERM NOTE AND LINES OF CREDIT | On November 3, 2015, the Company entered into a short-term note agreement with Community National Bank for a total value of $50,000. The short-term note had a stated interest rate of 5.25%, maturity date of December 15, 2017 and had an initial interest only payment on February 3, 2016. 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 short-term note is guaranteed by an officer and director. The balance of the line of credit at both March 31, 2019 and 2018 was $20,193 and $25,298, respectively. The Company also has a working capital line of credit with Extraco Bank. On April 30, 2019, the Company renewed the line of credit for $372,675. The line of credit bears an interest rate of 5.0% that is compounded monthly on unpaid balances and is payable monthly. The line of credit matures on April 30, 2020 and is secured by certificates of deposit and letters of credit owned by directors and shareholders of the Company. The balance of the line of credit is $472,675 and $473,029 at March 31, 2019 and March 31, 2018, respectively, included in non-current liabilities. On April 12, 2019, prior to the renewal, the Company paid $100,000 on the loan. The Company also has additional lines of credit with Extraco Bank for $100,000 and $200,000, which were renewed on January 19, 2019 and April 30, 2019, respectively, with maturity dates of January 19, 2020 and April 30, 2020, respectively. The $200,000 line of credit is included in non-current liabilities as of March 31, 2019 and March 31, 2018, with an outstanding balance of $178,778. The lines of credit bear an interest rate of 6.5% and 5%, respectively, that is compounded monthly on unpaid balances and is payable monthly. They are secured by certificates of deposit and letters of credit owned by directors and shareholders of the Company. The balance of the lines of credit was $276,958 at both March 31, 2019 and March 31, 2018. 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 31.4% as of March 31, 2019. The line of credit is unsecured. The balance of the line of credit was $9,580 at both March 31, 2019 and March 31, 2018. 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 15.50% as of March 31, 2019. The line of credit is secured by assets of the Company’s subsidiaries. The balance of the line of credit is $10,237 at March 31, 2019 and March 31, 2018. |
4. BANK LOAN
4. BANK LOAN | 12 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
BANK LOAN | 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. The balance of the CNB Note is $228,759 at March 31, 2019 and $236,413 at March 31, 2018, $7,497 of which was in current liabilities. |
5. CONVERTIBLE DEBENTURES
5. CONVERTIBLE DEBENTURES | 12 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBENTURES | January 2017 Debentures On January 23, 2017, the Company entered into a Securities Purchase Agreement (“January SPA”) for the sale of a convertible debenture (“January debenture”) with an original principal amount of $262,500, for consideration of $250,000, with a prorated five percent original issue discount (“OID”). The debenture has a one-time interest charge of twelve percent applied on the issuance date and due on the maturity date, which is two years from the date of each payment of consideration. The January SPA included a warrant to purchase 350,000 shares of the Company’s common stock. The warrants have a five year term and vest such that the buyer shall receive 1.4 warrants for every dollar funded to the Company under the January debenture. The Company received $50,000 at closing, with additional consideration to be paid at the holder’s option. Upon the closing the buyer was granted a warrant to purchase 70,000 shares of the Company’s common stock. The January debenture is convertible at an original conversion price of $0.35, subject to adjustment if the Company’s common stock trades at a price lower than $0.60 per share during the forty-five day period immediately preceding August 15, 2017, in which case the conversion price is reset to sixty percent of the lowest trade occurring during the twenty-five days prior to the conversion date. Additionally, the conversion price, as well as other terms including interest rates, original issue discounts, warrant coverage, adjusts if any future financings have more favorable terms. The January debenture also has piggyback registration rights. The conversion feature of the January debenture meets the definition of a derivative and due to the adjustment to the conversion price to occur upon subsequent sales of securities at a price lower than the original conversion price, requires bifurcation and is accounted for as a derivative liability. The derivative was initially recognized at an estimated fair value of $85,000 and created a discount on the January debentures that will be amortized over the life of the debentures using the effective interest rate method. The fair value of the embedded derivative is measured and recognized at fair value each subsequent reporting period and the changes in fair value are recognized in the Consolidated Statement of Operations as a change in fair value of derivative liability. The Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.46 at issuance date; a risk free interest rate of 1.16% and expected volatility of the Company’s common stock, of 384.75%, and the various estimated reset exercise prices weighted by probability. This resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $35,000 was immediately expensed as Financing costs. As the discount was in excess of the face amount of the debenture, the effective interest rate is not determinable, and as such, all of the discount was immediately expensed. The derivative was remeasured as of March 31, 2017, resulting in an estimated fair value of $74,000, for a decrease in fair value of $11,000. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.40; a risk free interest rate of 1.16% and expected volatility of the Company’s common stock, of 388.06%, and the various estimated reset exercise prices weighted by probability. During the three months ended September 30, 2017, the holder converted $40,000 of the January debentures to common shares of the Company, leaving outstanding principal of $10,000 as of September 30, 2017. As a result of the conversion the derivative liability was remeasured immediately prior to the conversion with a fair value of $55,000, with an increase of $2,000 recognized, with the fair value of the derivative liability related to the converted portion, of $44,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.17; a risk-free interest rate of 1.12% and expected volatility of the Company’s common stock, of 190.70%, and the various estimated reset exercise prices weighted by probability. During the three months ended December 31, 2017, the holder converted the remaining $10,000 of the January debentures to shares of common stock of the Company. As a result of the conversion the derivative liability was remeasured immediately prior to the conversion with a fair value of $16,000, with an increase of $4,000 recognized, with the fair value of the derivative liability related to the converted portion being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.10; a risk-free interest rate of 1.46% and expected volatility of the Company’s common stock, of 200.17%, and the various estimated reset exercise prices weighted by probability. The warrants have an original exercise price of $0.60, which adjusts for any future dilutive issuances. As a result of the dilutive issuance adjustment provision, the warrants have been classified out of equity as a warrant liability. The Company estimated the fair value of the warrant liability using the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.46 at issuance date; a risk free interest rate of 1.88% and expected volatility of the Company’s common stock, of 309.96%, resulting in a fair value of $32,000. As noted above, the calculated fair value of the discount is greater than the face amount of the debt, and therefore, the excess amount of $32,000 was immediately expensed as Financing costs. March 2017 Debentures On March 28, 2017, the Company entered into a Securities Purchase Agreement (“SPA”) for the purchase of up to $400,000 in convertible debentures (“March debentures”), due 3 years from issuance. The SPA consists of three separate convertible debentures, the first purchase which occurred at the signing closing date on March 28, 2017, for $100,000 with a purchase price of $90,000 (an OID of $10,000). The second closing is to occur by mutual agreement of the buyer and Company, at any time sixty to ninety days following the signing closing date, for $150,000 with a purchase price of $135,000 (an OID of $15,000). The third closing is to occur sixty to ninety days after the second closing for $150,000 with a purchase price of $135,000 (an OID of $15,000). The SPA also includes a commitment fee to include 100,000 restricted shares of common stock of the Company upon the signing closing date. The commitment shares fair value was calculated as $34,000, based on the market value of the shares of common stock of the Company at the closing date of $0.34, and was recognized as a debt discount. The conversion price is fixed at $0.30 for the first 180 days. After 180 days, or in the event of a default, the conversion price becomes the lower of $0.30 or 60% (or 55% based on certain conditions) of the lowest closing bid price for the past 20 days. On July 5, 2017, the March Debenture was amended. The total principal amount of the convertible debentures issuable under the SPA was reduced to $325,000, for a total purchase price of $292,500, and the second closing was reduced to $75,000 with a purchase price of $67,500. The second closing occurred on July 5, 2017. As a fee in connection with the second closing, the Company issued 75,000 of its restricted shares of common stock of the Company to the debenture holder. The fair value of the fee shares was calculated as $26,625, based on the market value of the shares of common stock of the Company at the closing date of $0.36, which will be recognized as a debt discount and amortized over the life of the note with a 34.4% effective interest rate. The conversion feature of the March debenture meets the definition of a derivative as it would not be classified as equity were it a stand-alone instrument, and therefore requires bifurcation and is accounted for as a derivative liability. The derivative was initially recognized at an estimated fair value of $170,000 and created a discount on the March debentures that will be amortized over the life of the debentures using the effective interest rate method. The fair value of the embedded derivative is measured and recognized at fair value each subsequent reporting period and the changes in fair value are recognized in the Consolidated Statement of Operations as Change in fair value of derivative liability. The Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.40 at issuance date; a risk free interest rate of 1.56% and expected volatility of the Company’s common stock, of 333.75%, and the various estimated reset exercise prices weighted by probability. This resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $104,000, including the commitment fees, was immediately expensed as financing costs. The debenture is also redeemable at the option of the Company, at amounts ranging from 105% to 140% of the principal and accrued interest balance, based on the redemption date’s passage of time ranging from 90 days to 180 days from the date of issuance of each debenture. On September 22, 2017, the Company exercised its option to redeem the first closing of the March debenture, for a redemption price at $130,000, 130% of the principal amount. The principal of $100,000 was derecognized with the additional $30,000 paid upon redemption recognized as a financing cost. As a result of the redemption, the unamortized discount related to the converted balance of $91,667 was immediately expensed. Additionally, the derivative was remeasured upon redemption of the debenture, resulting in an estimated fair value of $189,000, for an increase in fair value of $45,000. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.17; a risk-free interest rate of 1.58% and expected volatility of the Company’s common stock, of 290.41%, and the various estimated reset exercise prices weighted by probability. On December 28, 2017, the Company exercised its option to redeem the second closing of the March debenture, for a redemption price at $97,500, 130% of the principal amount. Upon redemption, the principal of $75,000 was relieved, with the additional $22,500 paid recognized as a financing cost. As a result of the redemption, the unamortized discount related to the converted balance of $68,750 was immediately expensed. Additionally, the derivative was remeasured upon redemption of the debenture, resulting in an estimated fair value of $151,000, for an increase in fair value of $63,000. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.15; a risk-free interest rate of 1.89% and expected volatility of the Company’s common stock, of 260.54%, and the various estimated reset exercise prices weighted by probability. July 2017 Debenture On July 31, 2017, the Company entered into a 5% Securities Purchase Agreement. The agreement calls for the purchase of up to $135,000 in convertible debentures, due 12 months from issuance, with a $13,500 OID (“the “July Debentures”). The first closing was for principal of $45,000 with a purchase price of $40,500 (an OID of $4,500), with additional closings at the sole discretion of the holder. On October 2, 2017, the Company entered into a second closing of the July 31, 2017 debenture, in the principal amount of $22,500 for a purchase price of $20,250, with $1,500 deducted for legal fees, resulting in net cash proceeds of $18,750. The July 31 debenture is convertible at a conversion price of 60% of the lowest trading price during the twenty-five days prior to the conversion date, and is also subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company. A further adjustment occurs if the trading price at any time is equal to or lower than $0.10, whereby an additional 10% discount to the market price shall be factored into the conversion rate, as well as an adjustment to occur upon subsequent sales of securities at a price lower than the original conversion price. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. On February 5, 2018, the Company entered into an amendment to the July Debenture, whereby in exchange for a payment of $6,500 the note holder, except for a conversion of up to 125,000 shares of the Company’s shares of common stock of the Company, would be only entitled to effectuate a conversion under the note on or after March 2, 2018. The Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures at issuance at $61,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.33 at issuance date; a risk-free interest rate of 1.23% and expected volatility of the Company’s common stock, of 192.43%, and the various estimated reset exercise prices weighted by probability. This resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $45,500, including the commitment fees, was immediately expensed as financing costs. On February 20, 2018, the holder converted $4,431 of the January debentures into 125,000 shares of common stock of the Company. As a result of the conversion the derivative liability relating to the portion converted was remeasured immediately prior to the conversion with a fair value of $11,000, with an increase of $4,000 recognized, with the fair value of the derivative liability related to the converted portion being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.12; a risk-free interest rate of 1.87% and expected volatility of the Company’s common stock, of 353.27%, and the various estimated reset exercise prices weighted by probability. During March 2018, the holder converted an additional $17,113 of the July debentures into 630,000 shares of common stock of the Company. As a result of the conversion the derivative liability was remeasured immediately prior to the conversion with a fair value of $138,000, with an increase of $74,000 recognized, with the fair value of the derivative liability related to the converted portion being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.11; a risk-free interest rate of 1.77% and expected volatility of the Company’s common stock, of 375.93%, and the various estimated reset exercise prices weighted by probability. Subsequent to year end the remainder of the two notes were fully converted. During April 2018, in three separate conversions, the remainder of the first closing was fully converted into 1,225,627 shares of common stock of the Company. As a result of the conversions the derivative liability was remeasured immediately prior to the conversions with an overall decrease of $25,000 recognized, with the fair value of the derivative liability related to the converted portion, of $66,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the date of conversion, of $0.07 to $0.09; a risk-free interest rate of 1.73% to 1.87% and expected volatility of the Company’s common stock, of 248.71%, and the various estimated reset exercise prices weighted by probability. During May and June 2018, in two separate conversions, the remainder of the second closing was fully converted into 2,810,725 shares of common stock of the Company. As a result of the conversions the derivative liability was remeasured immediately prior to the conversions with an overall decrease of $25,000 recognized, with the fair value of the derivative liability related to the converted portion of $67,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the date of conversion, of $0.03 to $0.04; a risk-free interest rate of 1.91% to 1.93% and expected volatility of the Company’s common stock, of 248.71%, and the various estimated reset exercise prices weighted by probability. Additionally, with each tranche under the note, the Company shall issue a warrant to purchase an amount of shares of its common stock equal to the face value of each respective tranche divided by $0.60 as a commitment fee. The Company issued a warrant to purchase 75,000 shares of the Company’s common stock with the first closing, with an exercise price of $0.60. The warrant has an anti-dilution provision for future issuances, whereby the exercise price would reset. The exercise price was adjusted to $0.15 and the warrants issued increased to 300,000, upon a warrant issuance related to a new convertible debenture on September 11, 2017. The warrants exercise price was subsequently reset to 50% of the market price during the third quarter of fiscal 2018, and the warrants issued increased accordingly. Due to the conversion features on specified notes containing variable conversion prices with no stated floor the warrants were required to be classified out of equity as a warrant liability. The Company estimated the fair value of the warrant liability using the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.33 at issuance date; a risk-free interest rate of 1.84% and expected volatility of the Company’s common stock, of 316.69%, resulting in a fair value of $25,000. The Company issued 6,719,925 shares of their common stock on July 17, 2018, upon cashless exercise of the warrants granted in connection with the first closing of the July Debenture, and on August 28, 2018, 4,494,347 shares were issued upon cashless exercise of the warrants granted in connection with the second closing. As a result of the exercise, the fair value of the warrants at the date of exercise were reclassed into equity. The Company estimated the fair value of the warrants using the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.02 at both exercise dates; a risk-free interest rate of 2.73 and 2.77% and expected volatility of the Company’s common stock, of 351.29 and 342.70%, resulting in an aggregate fair value of $150,000. August 2017 Debenture On August 28, 2017, the Company entered into a 12% convertible promissory note for $110,000, with an OID of $10,000, which matures on February 28, 2018. The note is convertible at a variable conversion rate that is the lesser of 60% of the lowest trading price for last 20 days prior to issuance of the note or 60% of the lowest market price over the 20 days prior to conversion. The conversion price shall be adjusted upon subsequent sales of securities at a price lower than the original conversion price. There are additional adjustments to the conversion price for events set forth in the agreement, including if the Company is not DTC eligible, the Company is no longer a reporting company, or the note cannot be converted into free trading shares on or after nine months from issue date. Per the agreement, the Company is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the note. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The note was sold to the holder of the January 29, 2018 note (below) on February 8, 2018, with an amendment entered into to extend the note until March 5, 2018. In exchange for a cash payment of $5,000 and the issuance of 50,000 shares of common stock, on March 5, 2018, the holder agreed to not convert any of the outstanding debt into common stock of the Company until April 8, 2018. The new holder issued a waiver as to the maturity date of the note and a technical default provision. The Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures at issuance at $150,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.17 at issuance date; a risk-free interest rate of 1.12% and expected volatility of the Company’s common stock, of 190.70%, and the various estimated reset exercise prices weighted by probability. This resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $116,438, was immediately expensed as financing costs. During April through June 2018, in a number of separate conversions, the August debenture was fully converted into 8,332,582 shares of common stock of the Company. As a result of the conversions the derivative liability was remeasured immediately prior to the conversions with an overall decrease of $112,000 recognized, with the fair value of the derivative liability related to the converted portion, of $316,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the date of conversion, of $0.09 to $0.02; a risk-free interest rate of 1.72% to 1.94% and expected volatility of the Company’s common stock of 248.71% to 375.93%, and the various estimated reset exercise prices weighted by probability. In connection with the note, the Company issued 50,000 warrants, exercisable at $0.20, with a five-year term. The exercise price is adjustable upon certain events, as set forth in the agreement, including for future dilutive issuance. The exercise price was adjusted to $0.15 and the warrants outstanding increased to 66,667, upon a warrant issuance related to a new convertible debenture on September 11, 2017. The warrants exercise price was subsequently reset to 50% of the market price during the third quarter of fiscal 2018, and the warrants issued increased accordingly. As a result of the dilutive issuance adjustment provision, the warrants have been classified out of equity as a warrant liability. The Company estimated the fair value of the warrant liability using the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.17 at issuance date; a risk-free interest rate of 1.74% and expected volatility of the Company’s common stock, of 276.90%, resulting in a fair value of $8,000. Additionally, in connection with the debenture the Company also issued 343,750 shares of common stock of the Company as a commitment fee. The commitment shares fair value was calculated as $58,438, based on the market value of the shares of common stock of the Company at the closing date of $0.17, and was recognized as part of the debt discount. The shares are to be returned to the Treasury of the Company in the event the debenture is fully repaid prior to the date which is 180 days following the issue date. On February 22, 2018, in connection with the sale of the note to the January 29, 2019 note holder, 171,965 of the shares were returned to the Company and cancelled. The remaining shares are not required to be returned to the Company, as the note was not redeemed prior to the date 180 days following the issue date. On October 31, 2017, there was a second closing to the August debenture, in the principal amount of $66,000, maturing on April 30, 2018. The second closing has the same conversion terms as the first closing, however there were no additional warrants issued with the second closing. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. Subsequent to year end the holder issued a waiver as to the maturity date of the note and a technical default provision. The Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures at issuance at $94,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.11 at issuance date; a risk-free interest rate of 1.28% and expected volatility of the Company’s common stock, of 193.79%, and the various estimated reset exercise prices weighted by probability. This resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $69,877, was immediately expensed as financing costs. Additionally, in connection with the second closing, the Company also issued 332,500 shares of common stock of the Company as a commitment fee. The commitment shares fair value was calculated as $35,877, based on the market value of the shares of common stock of the Company at the closing date of $0.11, and was recognized as part of the debt discount. The shares are to be returned to the Treasury of the Company in the event the debenture is fully repaid prior to the date which is 180 days following the issue date. During May 2018, the second closing was fully converted into 5,072,216 shares of common stock of the Company. As a result of the conversion the derivative liability was remeasured immediately prior to the conversions with an overall decrease of $42,000 recognized, with the fair value of the derivative liability related to the converted portion, of $196,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the date of conversion, of $0.03; a risk-free interest rate of 1.87% and expected volatility of the Company’s common stock, of 248.71%, and the various estimated reset exercise prices weighted by probability. September 11, 2017 Debenture On September 11, 2017, the Company entered into a 12% convertible promissory note for $146,000, with an OID of $13,500, which matures on June 11, 2018. The note is convertible at a variable conversion rate that is the lower of the trading price for last 25 days prior to issuance of the note or 50% of the lowest market price over the 25 days prior to conversion. Furthermore, the conversion rate may be adjusted downward if, within three business days of the transmittal of the notice of conversion, the common stock has a closing bid which is 5% or lower than that set forth in the notice of conversion. There are additional adjustments to the conversion price for events set forth in the agreement, if any third party has the right to convert monies at a discount to market greater than the conversion price in effect at that time then the holder, may utilize such greater discount percentage. Per the agreement, the Company is required at all times to have authorized and reserved seven times the number of shares that is actually issuable upon full conversion of the note. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures at issuance at $269,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.17 at issuance date; a risk-free interest rate of 1.16% and expected volatility of the Company’s common stock, of 190.70%, and the various estimated reset exercise prices weighted by probability. This resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $168,250, was immediately expensed as financing costs. In connection with the note, the Company issued 243,333 warrants, exercisable at $0.15, with a five-year term. The exercise price is adjustable upon certain events, as set forth in the agreement, including for future dilutive issuance. The warrants exercise price was subsequently reset to 50% of the market price during the third quarter of fiscal 2018, and the warrants issued increased accordingly. Due to the conversion features on specified notes containing variable conversion prices with no stated floor, the warrants were required to be classified out of equity as a warrant liability. The Company estimated the fair value of the warrant liability using the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.13 at issuance date; a risk-free interest rate of 1.71% and expected volatility of the Company’s common stock, of 276.90%, resulting in a fair value of $32,000. During April and June 2018, in three separate conversions, $85,000 of the note was converted into 9,200,600 shares of common stock of the Company. As a result of the conversions in the first quarter of 2019, the derivative liability was remeasured immediately prior to the conversions with an overall decrease of $124,000 recognized, with the fair value of the derivative liability related to the converted portion, of $263,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the date of conversion, of $0.03 to $0.10; a risk-free interest rate of 1.73% to 1.94% and expected volatility of the Company’s common stock, of 248.71% to 375.93%, and the various estimated reset exercise prices weighted by probability. During July and September 2018, in two separate conversions, an additional $20,654 of principal and $3,700 accrued interest of the note was converted into 5,436,049 shares of common stock of the Company. As a result of the conversions in the second quarter of 2019, the derivative liability was remeasured immediately prior to the conversions with an overall decrease of $82,000 recognized, with the fair value of the derivative liability related to the converted portion, of $61,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the date of conversion, $0.01; a risk-free interest rate of 2.00% and expected volatility of the Company’s common stock, of 248.71%, and the various estimated reset exercise prices weighted by probability.. During the third fiscal quarter of 2019, in five separate conversions, the remaining principal was fully converted, along with $1,475 accrued interest of the note into 27,186,186 shares of common stock of the Company. As a result of the conversions in the third quarter of 2019, the derivative liability was remeasured immediately prior to the conversions with an overall increase of $15,000 recognized, with the fair value of the derivative liability related to the converted portion, of $131,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.01 and $0.02; a risk-free interest rate of 2.36% to 2.41% and expected volatility of the Company’s common stock, of 193.06% to 448.43%, and the various estimated reset exercise prices weighted by probability. September 12, 2017 Debenture On September 12, 2017, the Company entered into a 12% convertible promissory note for principal amount of $96,500 with a $4,500 OID, which matures on June 12, 2018. The note is able to be prepaid prior to the maturity date, at a cash redemption premium, at various stages as set forth in the agreement. The note is convertible commencing 180 days after issuance date (or upon an event of Default), or March 11, 2018, with a variable conversion rate at 60% of market price, defined as the lowest trading price during the twenty days prior |
6. STOCKHOLDERS' DEFICIT
6. STOCKHOLDERS' DEFICIT | 12 Months Ended |
Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' DEFICIT | Preferred Stock On August 15, 2018, the Company authorized 5,000,000 of their Preferred Stock to be designated as Series A Convertible Preferred Stock (“Series A PS”), with a par value of $0.0001. The Series A PS shall have 60 to 1 voting rights such that each share shall vote as to 60 shares of common stock. The Series A PS holders shall not be entitled to receive dividends, if and when declared by the Board. Upon the dissolution, liquidation or winding up of the Company, the holders of Series A PS shall be entitled to receive out of the assets of the Company the sum of $0.00l per share before any payment or distribution shall be made on the common stock, or any other class of capital stock of the Company ranking junior to the Series A PS. The Series A PS is convertible, after two years from the date of issuance, with the consent of a majority of the Series A PS holders, into the same number of shares of common stock of the Company as are outstanding at the time. On August 21, 2018, the NaturalShrimp Holdings, Inc.(“NSH”) shareholders exchanged 75,000,000 of the shares of common stock of the Company which they held, into 5,000,000 newly issued Series A PS. The shares of common stock were returned to the treasury and cancelled. The Series A PS do not have any redemption feature and are therefore classified in permanent equity. The conversion feature was evaluated, and as at the commitment date the fair value of the shares of common stock exchanged was greater than the fair value of the shares into which they would be converted, it was determined there was no beneficial aspect to the conversion feature. Common Stock On September 20, 2018, the Company increased their authorized common shares to 900,000,000. For shares of common stock issued upon conversion of outstanding convertible debentures see Note 5. On April 12, 2018, the Company sold 220,000 shares of its common stock at $0.077 per share, for a total financing of $15,400. On February 14, 2019, the Company issued 225,000 shares of its common stock to the original noteholder of the March 20, 2018 convertible debenture. The fair value of the shares of $72,450 based on the market price of $0.32 on the date of issuance, have been recognized as a financing cost. On May 2, 2017, the Company sold 100,000 shares of its common stock at $0.25 per share, for a total financing of $25,000. On January 10, 2017, the Company issued 1,000,000 shares to a consultant for services to be rendered over six months. The fair value of the shares of $440,000, based on the market value of the common stock on the date of issuance, was recognized over the term of the agreement, with $220,000 expensed in the year ending March 31, 2018. The Company issued 6,719,925 shares of their common stock on July 17, 2018, upon cashless exercise of the warrants granted in connection with the first closing of the July Debenture, and on August 28, 2018, 4,494,347 shares were issued upon cashless exercise of the warrants granted in connection with the second closing. (Note 7) The Company issued 10,000,000 and 6,093,683 shares of their common stock on January 11, 2019 and February 8, 2019, respectively, upon cashless exercise of the warrants granted in connection with the September 11, 2017 Debenture (Note 7). Equity Financing Agreement On August 21, 2018, the Company entered into an Equity Financing Agreement (“Equity Financing Agreement”) and Registration Rights Agreement (“Registration Rights Agreement”) with GHS Investments LLC, a Nevada limited liability company (“GHS”). Under the terms of the Equity Financing Agreement, GHS agreed to provide the Company with up to $7,000,000 upon effectiveness of a registration statement on Form S-1 (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “Commission”). The Registration Statement was filed and deemed effective on September 19, 2018. Following effectiveness of the Registration Statement, the Company has the discretion to deliver puts to GHS and GHS will be obligated to purchase shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to GHS in each put notice shall not exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s Common Stock during the ten (10) trading days preceding the put, so long as such amount does not exceed $300,000. Pursuant to the Equity Financing Agreement, GHS and its affiliates will not be permitted to purchase, and the Company may not put shares of the Company’s Common Stock to GHS that would result in GHS’s beneficial ownership equaling more than 9.99% of the Company’s outstanding Common Stock. The price of each put share shall be equal to eighty percent (80%) of the Market Price (as defined in the Equity Financing Agreement). Puts may be delivered by the Company to GHS until the earlier of thirty-six (36) months after the effectiveness of the Registration Statement or the date on which GHS has purchased an aggregate of $7,000,000 worth of Common Stock under the terms of the Equity Financing Agreement. Additionally, in accordance with the Equity Financing Agreement, the Company shall issue GHS a promissory note in the principal amount of $15,000 to offset transaction costs (the “Note”). The Note bears interest at the rate of 8% per annum, is not convertible and is due 180 days from the issuance date of the Note. On October 3, 2018, the Company put to GHS for the issuance of 2,814,682 shares of common stock, at $0.0088, for a total of $24,769. On October 22, 2018, the Company put to GHS for the issuance of 3,525,917 shares of common stock, at $0.0048, for a total of $16,924. On November 13, 2018, the Company put to GHS for the issuance of 6,779,397 shares of common stock, at $0.0046, for a total of $31,456. On December 10, 2018, the Company put to GHS for the issuance of 6,880,004 shares of common stock, at $0.0133, for a total of $91,366. On March 25, 2019, the Company put to GHS for the issuance of 2,131,894 shares of common stock, at $0.141, for a total of $300,000. |
7. OPTIONS AND WARRANTS
7. OPTIONS AND WARRANTS | 12 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
OPTIONS AND WARRANTS | The Company has not granted any options since inception. The Company has granted approximately 424,000 warrants (prior to adjustments based on subsequent dilutive issuances) in connection with convertible debentures (Note 5). The Company issued 10,000,000 and 6,093,683 shares of their common stock on January 11, 2019 and February 8, 2019, respectively, upon cashless exercise of the warrants granted in connection with the September 11, 2017 Debenture. The Company issued approximately 13,078,000 additional shares upon the cashless exercise, and as such, based on the fair value of the common shares of the Company, recognized a loss on exercise of approximately $3,745,000. The Company issued 6,719,925 and 4,494,347 shares of their common stock on July 17, 2018 and August 28, 2018, respectively, with a fair value of $150,000, upon cashless exercise of the warrants granted in connection with the July 31, 2017 Debenture. In the year ended March 31, 2018, 323,333 (after adjustment) common shares of the Company were exercised, with a fair value of $67,000 upon exercise. As of March 31, 2019, there are 444,000 (after adjustment) remaining warrants outstanding, which expire on January 31, 2022, with an exercise price of 45% of the market value of the common shares of the Company on the date of exercise. |
8. RELATED PARTY TRANSACTIONS
8. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Accrued Payroll – Related Parties Included in other accrued expenses on the accompanying consolidated balance sheet as of March 31, 2019 is approximately $217,000 owing to the Chief Executive Officer of the Company, approximately $69,000 owing to the President of the Company, and approximately $96,000, owing to a key employee . Notes Payable – Related Parties On April 20, 2017, the Company entered into a convertible debenture with an affiliate of the Company whose managing member is the Treasurer, Chief Financial Officer, and a director of the Company (the “affiliate”), for $140,000. The convertible debenture matures one year from date of issuance, and bears interest at 6%. Upon an event of default, as defined in the debenture, the principal and any accrued interest becomes immediately due, and the interest rate increases to 24%. The convertible debenture is convertible at the holder’s option at a conversion price of $0.30. As of March 31, 2018, the Company has paid $52,400 on this note, with $87,600 remaining outstanding as of March 31, 2019 and March 31, 2018. On January 20, 2017 and on March 14, 2017, the Company entered into convertible debentures with an affiliate of the Company whose managing member is the Treasurer, Chief Financial Officer, and a director of the Company. The convertible debentures are each in the amount of $20,000, mature one year from date of issuance, and bear interest at 6%. Upon an event of default, as defined in the debenture, the principal and any accrued interest becomes immediately due, and the interest rate increases to 24%. The convertible debentures are convertible at the holder’s option at a conversion price of $0.30. As of March 31, 2018, the notes have been paid off in full. NaturalShrimp Holdings, Inc. 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%. As of March 31, 2019 and March 31, 2018 the outstanding balance is approximately $736,000. Shareholder Notes The Company has entered into several working capital notes payable to multiple shareholders of NSH and Bill Williams, an officer, a director, and a shareholder of the Company, for a total of $486,500. These notes had stock issued in lieu of interest and have no set monthly payment or maturity date. The balance of these notes at March 31, 2019 and 2018 was $426,404 and $426,404, respectively, and is classified as a current liability on the consolidated balance sheets. At March 31, 2019 and 2018, accrued interest payable was $241,032 and $206,920, respectively. Shareholders In 2009, the Company entered into a note payable to Randall Steele, a shareholder of NSH, for $50,000. The note bears interest at 6.0% and was payable upon maturity on January 20, 2011. In addition, the Company issued 100,000 shares of common stock for consideration. The shares were valued at the date of issuance at fair market value. The value assigned to the shares of $50,000 was recorded as increase in common stock and additional paid-in capital and was limited to the value of the note. The assignment of a value to the shares resulted in a financing fee being recorded for the same amount. The note is unsecured. The balance of the note at March 31, 2019 and 2018 was $50,000, respectively, and is classified as a current liability on the consolidated balance sheets. Interest expense on the note was $3,000 and $3,000 during the years ended March 31, 2019 and 2018, 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 and bearing interest at 8%. The balance of these notes at March 31, 2019 and 2018 was $104,647 and is classified as a current liability on the consolidated balance sheets. |
9. FEDERAL INCOME TAX
9. FEDERAL INCOME TAX | 12 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
FEDERAL INCOME TAX | The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes. The components of income tax expense for the years ended March 31, 2019 and 2018 consist of the following: 2019 2018 Federal Tax statutory rate 21.00 % 34.00 % Permanent differences 10.23 % 7.86 % Valuation allowance (31.23 )% (41.86 )% Effective rate 0.00 % 0.00 % Significant components of the Company’s deferred tax assets as of March 31, 2019 and 2018 are summarized below. The calculations presented below at March 31, 2019 reflect the new U.S. federal statutory corporate tax rate of 21% effective January 1, 2018 (see Note 2). 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 1,126,000 $ 637,000 Deferred tax benefit 287,000 408,000 Total deferred tax asset 1,413,000 1,045,000 Valuation allowance (1,413,000 ) (1,045,000 ) $ - $ - As of March 31, 2019, the Company had approximately $5,645,000 of federal net operating loss carry forwards. These carry forwards, if not used, will begin to expire in 2028. Future utilization of the net operating loss carry forwards is subject to certain limitations under Section 382 of the Internal Revenue Code. The Company believes that the issuance of its common stock in exchange for Multiplayer Online Dragon, Inc. January 30, 2015 resulted in an “ownership change” under the rules and regulations of Section 382. Accordingly, the Company’s ability to utilize their net operating losses generated prior to this date is limited to approximately $282,000 annually. To the extent that the tax deduction is included in a net operating loss carry forward and is in excess of amounts recognized for book purposes, no benefit will be recognized until the loss carry forward is recognized. Upon utilization and realization of the carry forward, the corresponding change in the deferred asset and valuation allowance will be recorded as additional paid-in capital. The Company provides for a valuation allowance when it is more likely than not that it will not realize a portion of the deferred tax assets. The Company has established a valuation allowance against the net deferred tax asset due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, we have not reflected any benefit of such deferred tax assets in the accompanying financial statements. Our net deferred tax asset and valuation allowance increased by $368,000 in the year ended March 31, 2019. The Company reviewed all income tax positions taken or that we expect to be taken for all open years and determined that our income tax positions are appropriately stated and supported for all open years. The Company is subject to U.S. federal income tax examinations by tax authorities for years after 2012 due to unexpired net operating loss carryforwards originating in and subsequent to that year. The Company may be subject to income tax examinations for the various taxing authorities which vary by jurisdiction. |
10. CONCENTRATION OF CREDIT RIS
10. CONCENTRATION OF CREDIT RISK | 12 Months Ended |
Mar. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION OF CREDIT RISK | The Company maintains cash balances at one financial institution. Accounts at this institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of March 31, 2019, and 2018, the Company’s cash balance did not exceed FDIC coverage. |
11. COMMITMENTS AND CONTINGENCI
11. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Executive Employment Agreements – Bill Williams and Gerald Easterling On April 1, 2015, the Company entered into employment agreements with each of Bill G. Williams, as the Company’s Chief Executive Officer, and Gerald Easterling as the Company’s President, effective as of April 1, 2015 (the “Employment Agreements”). The Employment Agreements are each terminable at will and each provide for a base annual salary of $96,000. In addition, the Employment Agreements each provide that the employee is entitled, at the sole and absolute discretion of the Company’s Board of Directors, to receive performance bonuses. Each employee will also be entitled to certain benefits including health insurance and monthly allowances for cell phone and automobile expenses. Each Employment Agreement provides that in the event employee is terminated without cause or resigns for good reason (each as defined in their Employment Agreements), 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. Each 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. |
12. SUBSEQUENT EVENTS
12. SUBSEQUENT EVENTS | 12 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Subsequent to year end, the Company has converted approximately $19,000 of their outstanding convertible debt as of March 31, 2019 and approximately $11,000 of accrued interest, into 3,000,000 shares of the Company’s common stock. On April 9, 2019, the Company put to GHS for the issuance of 2,118,645 shares of common stock, at $0.14, for a total of $300,000. On April 23, 2019, the Company put to GHS for the issuance of 2,071,824 shares of common stock, at $0.14, for a total of $300,000. On May 6, 2019, the Company put to GHS for the issuance of 2,192,983 shares of common stock, at $0.14, for a total of $300,000. On May 21, 2019, the Company put to GHS for the issuance of 2,038,044 shares of common stock, at $0.15, for a total of $300,000. On May 31, 2019, the Company put to GHS for the issuance of 3,061,225 shares of common stock, at $0.10, for a total of $300,000. On April 17, 2019, the Company entered into an 10% convertible promissory note for $110,000, with an OID of $10,000, for a purchase price of $100,000, which matures on January 23, 2020. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at a prepayment percentage of 120% to 130% of the outstanding principal and accrued interest based on the redemption date’s passage of time ranging from 60 days to 180 days from the date of issuance of the debenture. Per the agreement, the Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note. In the event of default, as set forth in the agreement, the outstanding principal balance increases to 150%. In addition to standard events of default, an event of default occurs if the common stock of the Company shall lose the "bid" price for its Common Stock, on trading markets, including the OTCBB, OTCQB or an equivalent replacement exchange. If the Company enters into a 3 (a)(9) or 3(a)(10) issuance of shares there are liquidation damages of 25% of principal, not to be below $15,000. The Company must also obtain the noteholder's written consent before issuing any new debt. The note is convertible at a fixed conversion price of $0.124. If an event of default occurs, the fixed conversion price is extinguished and replaced by a variable conversion rate that is 70% of the lowest trading prices during the 20 days prior to conversion. The fixed conversion price shall reset upon any future dilutive issuance of shares, options or convertible securities. The conversion feature at issuance meets the definition of conventional convertible debt and therefore qualifies for the scope exception in ASC 815-10-15-74(a) and would not be bifurcated and accounted for separately as a derivative liability. 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 $59,000 beneficial conversion feature to recognize, which will be amortized over the term of the note using the effective interest method. |
2. SUMMARY OF SIGNIFICANT ACC_2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Consolidation | The consolidated financial statements include the accounts of NaturalShrimp Incorporated and its wholly-owned subsidiaries, NaturalShrimp Corporation, NaturalShrimp Global and Natural Aquatic Systems, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | 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/Loss per Common Share | Basic and diluted earnings or loss per share (“EPS”) amounts in the 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 year ended March 31, 2019, the Company had approximately $1,097,000 in convertible debentures whose approximately 66,376,000 underlying shares are convertible at the holders’ option at conversion prices ranging from $0.01 to $0.30 for fixed conversion rates, and 34% - 60% of the defined trading price for variable conversion rates and approximately 444,000 warrants with an exercise price of 45% of the market price of the Company’s common stock, which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. Included in the diluted EPS for the year ended March 31, 2018, the Company had approximately $1,293,000 in convertible debentures whose approximately 46,170,000 underlying shares are convertible at the holders’ option at conversion prices ranging from 34 - 60% of the defined trading price and approximately 4,625,000 warrants with an exercise price of 45% to 57% of the market price of the Company’s common stock, which were not included in the calculation of diluted EPS as their effect would be anti-dilutive. |
Fair Value Measurements | ASC Topic 820, “ Fair Value Measurement” “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 March 31, 2019 and 2018. The Derivative liabilities are Level 3 fair value measurements. The following is a summary of activity of Level 3 liabilities during the years ended March 31, 2019 and 2018: Derivatives 2019 2018 Derivative liability balance at beginning of period $ 3,455,000 $ 218,000 Additions to derivative liability for new debt 2,090,000 2,213,000 Reclass to equity upon conversion or redemption (4,068,500 ) (576,000 ) Change in fair value (1,319,500 ) 1,600,000 Balance at end of period $ 157,000 $ 3,455,000 At March 31, 2019, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.21; a risk-free interest rate ranging from 2.41% to 2.63%, and expected volatility of the Company’s common stock ranging from 335.68% to 478.31%, and the various estimated reset exercise prices weighted by probability. At March 31, 2018, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.06; a risk-free interest rate ranging from 1.73% to 2.09%, and expected volatility of the Company’s common stock ranging from 272.06% to 375.93%, and the various estimated reset exercise prices weighted by probability. Warrant liability 2019 2018 Warrant liability balance at beginning of period $ 277,000 $ 28,000 Additions to warrant liability for new warrants - 493,000 Reclass to equity upon exercise (231,000 ) - Change in fair value 47,000 (244,000 ) Balance at end of period $ 93,000 $ 277,000 At March 31, 2019, the fair value of the warrant liability was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.21; a risk-free interest rate of 2.21%, and expected volatility of the Company’s common stock ranging of 285.32%. At March 31, 2018, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.06 a risk-free interest rate ranging from 2.22% to 2.56%, and expected volatility of the Company’s common stock of 358.6%. |
Financial Instruments | The Company’s financial instruments include cash and cash equivalents, receivables, payables, and debt and are accounted for under the provisions of ASC Topic 825, “ Financial Instruments” |
Cash and Cash Equivalents | For the purpose of the 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 March 31, 2019 and 2018. |
Fixed Assets | Equipment is carried at historical value or cost and is depreciated over the estimated useful lives of the related assets. Depreciation on buildings is computed using the straight-line method, while depreciation on all other fixed assets is computed using the Modified Accelerated Cost Recovery System (MACRS) method, which does not materially differ from GAAP. Estimated useful lives are as follows: Buildings 27.5 – 39 years Other Depreciable Property 5 – 10 years Furniture and Fixtures 3 – 10 years Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations. The consolidated statements of operations reflect depreciation expense of approximately $30,000 and $71,000 for the years ended March 31, 2019 and 2018, respectively. |
Income Taxes | Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. In addition, the Company’s management performs an evaluation of all uncertain income tax positions taken or expected to be taken in the course of preparing the Company’s income tax returns to determine whether the income tax positions meet a “more likely than not” standard of being sustained under examination by the applicable taxing authorities. This evaluation is required to be performed for all open tax years, as defined by the various statutes of limitations, for federal and state purposes. On December 22, 2017, the President of the United States signed and enacted into law H.R. 1 (the “Tax Reform Law”). The Tax Reform Law, effective for tax years beginning on or after January 1, 2018, except for certain provisions, resulted in significant changes to existing United States tax law, including various provisions that are expected to impact the Company. The Tax Reform Law reduces the federal corporate tax rate from 35% to 21% effective January 1, 2018, and the 2019 fiscal year for the Company. The Company will continue to analyze the provisions of the Tax Reform Law to assess the impact on the Company’s consolidated financial statements. |
Stock-Based Compensation | The Company accounts for stock-based compensation to employees in accordance with ASC 718. “ Stock-based Compensation to Employees “Equity Instruments Issued to Other than Employees” |
Impairment of Long-Lived Assets and Long-Lived Assets | The Company will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose. |
Commitments and Contingencies | Certain conditions may exist as of the date the 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 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. |
Recently Issued Accounting Standards | In February 2016, the FASB issued ASU No. 2016-02, Leases In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers: Topic 606, or ASU 2014-09. ASU 2014-09 establishes the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In applying the new revenue recognition model to contracts with customers, an entity: (1) identifies the contract(s) with a customer; (2) identifies the performance obligations in the contract(s); (3) determines the transaction price; (4) allocates the transaction price to the performance obligations in the contract(s); and (5) recognizes revenue when (or as) the entity satisfies a performance obligation. The accounting standards update applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification. The accounting standards update also requires significantly expanded quantitative and qualitative disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted Topic 606 as of April 1, 2018, using the modified retrospective transition method. Under the modified retrospective method, the Company would recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application; however, the Company did not have any material adjustment as of the date of the adoption and adoption had no impact on the Company's consolidated balance sheet, results of operations, equity or cash flows as of the adoption date. The comparative periods have not been restated. During the year ended March 31, 2019, 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. |
Management's Evaluation of Subsequent Events | The Company evaluates events that have occurred after the balance sheet date of March 31, 2019, through the date which the consolidated financial statements were issued. Based upon the review, other than described in Note 12 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements. |
2. SUMMARY OF SIGNIFICANT ACC_3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Level 3 liabilities | Derivatives 2019 2018 Derivative liability balance at beginning of period $ 3,455,000 $ 218,000 Additions to derivative liability for new debt 2,090,000 2,213,000 Reclass to equity upon conversion or redemption (4,068,500 ) (576,000 ) Change in fair value (1,319,500 ) 1,600,000 Balance at end of period $ 157,000 $ 3,455,000 Warrant liability 2019 2018 Warrant liability balance at beginning of period $ 277,000 $ 28,000 Additions to warrant liability for new warrants - 493,000 Reclass to equity upon exercise (231,000 ) - Change in fair value 47,000 (244,000 ) Balance at end of period $ 93,000 $ 277,000 |
Useful life property, plant and equipment | Buildings 27.5 – 39 years Other Depreciable Property 5 – 10 years Furniture and Fixtures 3 – 10 years |
9. FEDERAL INCOME TAX (Tables)
9. FEDERAL INCOME TAX (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income tax expense | 2019 2018 Federal Tax statutory rate 21.00 % 34.00 % Permanent differences 10.23 % 7.86 % Valuation allowance (31.23 )% (41.86 )% Effective rate 0.00 % 0.00 % |
Deferred tax assets and liabilities | 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 1,126,000 $ 637,000 Deferred tax benefit 287,000 408,000 Total deferred tax asset 1,413,000 1,045,000 Valuation allowance (1,413,000 ) (1,045,000 ) $ - $ - |
1. NATURE OF THE ORGANIZATION_2
1. NATURE OF THE ORGANIZATION AND BUSINESS (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Net loss | $ (7,210,581) | $ (5,285,089) |
Accumulated deficit | (41,223,445) | $ (34,012,864) |
Working capital | $ (3,773,000) |
2. SUMMARY OF SIGNIFICANT ACC_4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounting Policies [Abstract] | ||
Derivative liability, beginning | $ 3,455,000 | $ 218,000 |
Additions to derivative liability for new debt | 2,090,000 | 2,213,000 |
Reclass to equity upon conversion or redemption | (4,068,500) | (576,000) |
Change in fair value | (1,319,500) | 1,600,000 |
Derivative liability, ending | 157,000 | 3,455,000 |
Warrant liability, beginning | 277,000 | 28,000 |
Additions to warrant liability for new warrants | 0 | 493,000 |
Reclass to equity upon exercise | (231,000) | 0 |
Change in fair value | (47,000) | (244,000) |
Warrant liability, beginning | $ 93,000 | $ 277,000 |
2. SUMMARY OF SIGNIFICANT ACC_5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 12 Months Ended |
Mar. 31, 2019 | |
Buildings | |
Estimated useful lives | 27.5 - 39 years |
Other Depreciable Property | |
Estimated useful lives | 5 - 10 years |
Furniture and Fixtures | |
Estimated useful lives | 3 - 10 years |
2. SUMMARY OF SIGNIFICANT ACC_6
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounting Policies [Abstract] | ||
Depreciation expense | $ 30,296 | $ 70,894 |
3. SHORT-TERM NOTE AND LINES _2
3. SHORT-TERM NOTE AND LINES OF CREDIT (Details Narrative) - USD ($) | Mar. 31, 2019 | Mar. 31, 2018 |
Line of credit balance | $ 650,453 | $ 651,453 |
Community National Bank | ||
Line of credit balance | 20,193 | 25,298 |
Extraco Bank | ||
Line of credit balance | 472,675 | 473,029 |
Additional Lines of Credit Extraco Bank | ||
Line of credit balance | 276,958 | 276,958 |
Capital One Bank | ||
Line of credit balance | 9,580 | 9,580 |
Chase Bank | ||
Line of credit balance | $ 10,237 | $ 10,237 |
4. BANK LOAN (Details Narrative
4. BANK LOAN (Details Narrative) - USD ($) | Mar. 31, 2019 | Mar. 31, 2018 |
Debt Disclosure [Abstract] | ||
Current maturities of bank loan | $ 228,725 | $ 7,497 |
Bank loan, less current maturities | $ 0 | $ 228,916 |
8. RELATED PARTY TRANSACTIONS (
8. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Convertible debentures, related party | $ 87,600 | $ 87,600 |
NaturalShrimp Holdings, Inc. | ||
Note payable related party | 736,000 | 736,000 |
Multiple Shareholders | ||
Note payable related party | 426,404 | 426,404 |
Accrued interest payable | 241,032 | 206,920 |
Randall Steele | ||
Note payable related party | 50,000 | 50,000 |
Interest expense related parties | $ 3,000 | $ 3,000 |
9. FEDERAL INCOME TAX (Details)
9. FEDERAL INCOME TAX (Details) | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Federal tax statutory rate | 21.00% | 34.00% |
Permanent differences | 10.23% | 7.86% |
Valuation allowance | (31.23%) | (41.86%) |
Effective rate | 0.00% | 0.00% |
9. FEDERAL INCOME TAX (Details
9. FEDERAL INCOME TAX (Details 1) - USD ($) | Mar. 31, 2019 | Mar. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 1,126,000 | $ 637,000 |
Deferred tax benefit | 287,000 | 408,000 |
Total deferred tax asset | 1,413,000 | 1,045,000 |
Valuation allowance | (1,413,000) | (1,045,000) |
Total | $ 0 | $ 0 |
9. FEDERAL INCOME TAX (Detail_2
9. FEDERAL INCOME TAX (Details Narrative) | 12 Months Ended |
Mar. 31, 2019USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss carry forwards | $ 5,645,000 |
Change in net deferred tax asset and valuation allowance | $ 368,000 |