| Nature of Operations and Summary of Significant Accounting Policies | Note
1. Nature of Operations and Summary of Significant Accounting Policies Background Omni
Shrimp, Inc. ("Omni" or the "Company" or “we”) was organized on September 22, 2015 with executive offices located
in Madeira Beach, Florida on the Gulf of Mexico. Omni is a wholesaler of locally caught wild American shrimp, predominantly the
highly popular Key West pink variety. Customers are large distributors in the US, who then resell the product to grocery store
chains, restaurants and other retail stores in the Florida, Boston and New York markets. Omni
does not own vessels nor have employees who are involved with the catching, transporting or processing of shrimp. Omni’s
business model is as follows:
We purchase shrimp
from incoming vessels
Through brokers,
we arrange for sales to distributors.
We refrigerate as
inventory that we cannot immediately sell
We process at a
facility in Louisiana if purchasers require certain needs (e.g.- shrimp are to be headless)
We send directly
to customers the remainder Material
Definitive Agreement Issuance
of Series E Preferred Stock for outstanding shares of Omni Shrimp, Inc. On
June 23, 2016 (the "Effective Date"), all of the shareholders of Omni entered into a Share Exchange Agreement (the "Exchange Agreement")
with NaturalNano, Inc. (OTC PK: NNAN) , pursuant to which the shareholders exchanged with the Company all of the outstanding shares
of stock of Omni and Omni thereupon became a wholly owned subsidiary of NNAN. In consideration for the exchange of those OMNI
shares, the Company issued 28,500 shares of a newly created Series E Preferred Stock of NNAN (the "Series E Preferred
Stock"). The
transaction closed on the Effective Date. The Period between the Effective Date and December 31, 2016 shall heretofore been referred
to as the “Acquisition Period.” The
Exchange Agreement is being accounted for as a reverse-merger and recapitalization. The Company is the acquirer for financial
reporting purposes, and Omni is the acquired company. Consequently, the assets, liabilities and operations that will be reflected
in the historical financial statements prior to the Merger will be those of the Company and will be recorded at the historical
cost basis of the Company, and the consolidated financial statements after completion of the Merger will include the assets, liabilities
and results of operations of the Company up to the day prior to the closing of the Merger and the assets, liabilities and results
of operations of the combined company from and after the closing date of the Merger. The annexed unaudited pro forma combined
financial information is based on individual historical financial statements of the Company and Omni prepared under U.S. GAAP
as adjusted to give effect to the Merger. Assumption
of Liabilities upon Acquisition The
Company agreed to assume approximately $2.8 million in liabilities from the predecessor entity. Please see Note 11. Commitments
and Contingencies for details of these liabilities. Cancellation
of Series B Preferred Stock and Series D Preferred Stock The
Company cancelled the following shares of Preferred Stock owned by the former Chief Executive of NaturalNano, Inc., James Wemett:
5,000 shares of
Series B Preferred Stock
100 shares of Series
D Preferred stock In
consideration for this cancellation, the Company issued 2,000,000 warrants at $.05 per share for a period of six years. Mr.
Wemett exercised these warrants on a cashless exercise basis and these shares were issued and included in the share count at December
31, 2016. For the year, Mr. Wemett received approximately $63,000 in stock based compensation through warrant exercise. Liquidity
and Going Concern Going
Concern - The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course of business. The Company generated a net loss for
the year ended December 31, 2016 of approximately $3,433,000, had negative working capital of $3,441,687 and a stockholders’
deficiency of $3,441,687 at December 31, 2016. Since inception the Company’s growth has been funded through a combination
of convertible and non-convertible debt from private investors and from cash advances under its outstanding lines of credit. These
factors, among others, may indicate that the Company will be unable to continue as a going concern for a reasonable period of
time. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet
its obligations, to obtain additional financing, renegotiate the terms of existing financing obligations and ultimately to attain
successful operations. The ability to successfully achieve those items is uncertain. The financial statements do not include any
adjustments that might result from the uncertainty. The
Company’s management and Board of Directors continue to actively assess the Company's operating structure with an objective
to reduce ongoing expenses, increase sources of recurring revenue as well as seeking additional debt or equity financing.
The Company will continually evaluate funding options including additional offerings of its securities to private and institutional
investors and other credit facilities as they become available. There can be no assurance as to the availability or terms upon
which such financing alternatives might be available. Basis
of Presentation As
a result of the reverse acquisition, the accompanying consolidated financial statements include the operations and results of
Omni Shrimp, Inc. These are the Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statement
of Shareholders’ Deficiency and the Consolidated Statement of Cash Flows. In
the opinion of Management, the information furnished in these financial statements reflects all activity, including adjustments,
necessary for a fair reflection of the Company’s financial position and activity for the years audited. Information
for 2016 reflects all activity at Omni Shrimp, Inc. from January 1, 2016 through December 31, 2016. Information for 2015
reflects all activity at Omni Shrimp, Inc. from the Date of Inception (September 22, 2015) through December 31, 2015. Year
End The
Company follows the accrual basis of accounting in accordance with accounting principles generally accepted in the United States
of America (“US GAAP”) and has adopted a year-end of December 31. Use
of Estimates and Assumptions and Critical Accounting Estimates and Assumptions The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses
during the reporting period(s). Critical
accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and
judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact
of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimate(s)
and assumption(s) affecting the financial statements were:
(iii) Assumption as
a going concern
(iv) Valuation allowance
for deferred tax assets Those
significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached
to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value. Management
bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the
financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from other sources. Management
regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes
in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those
estimates are adjusted accordingly. Actual
results could differ from those estimates. Cash
and Cash Equivalents Allowance
for Doubtful Accounts: Inventories Inventories
are stated at the lower of cost or market. All of our other inventories are valued using the first-in, first-out (“FIFO”)
method. The Company evaluates inventory quarterly for reserves for obsolescence. The
Company uses the First-In First Out method of accounting for its inventory cost-flow assumption. There
was no inventory at December 31, 2015. Property,
Plant and Equipment Property,
plant, and equipment are stated at acquisition cost, plus capitalized interest on borrowings during the actual construction period
of major capital projects. At this time, the Company has not Property Plant and Equipment. Start-Up
Costs: Start-up Costs”, Valuation
of Long-Lived Assets Revenue
Recognition Income
Taxes The
Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition
of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the
financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the
differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes
it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
Statements of Operations in the period that includes the enactment date. The
Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards
to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to
be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize
the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements
from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of
being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest
and penalties on income taxes, accounting in interim periods and requires increased disclosures. The
estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying
balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred
tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary. Management
makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous
estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in
these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual
taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. Fair
Value of Financial Instruments: Fair
Value Measurements: Level
1 Level
2
· Quoted prices for
similar assets or liabilities in active markets;
· Quoted prices for
identical or similar assets or liabilities in inactive markets;
· Inputs other than
quoted prices that are observable for the asset or liability;
· Inputs that are
derived principally from or corroborated by observable market data by correlation or other means. If
the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term
of the asset or liability. Level
3 The
asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input
that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and
minimize the use of unobservable inputs. When
the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in
current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy
based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur.
For the period from January 1, 2016 through December 31, 2016, there were no transfers of financial assets or financial liabilities
between the hierarchy levels. There
were no assets and liabilities remeasured at fair value on a recurring basis as of December 31, 2016. Earnings
per Common Share Earning per Share As
of December 31, 2016 there were 259,973,097 shares underlying preferred stock, convertible debt, outstanding options and warrants
that could potentially dilute future earnings. These potentially dilutive shares have been limited by certain debt and equity
agreements with lenders. Some of these agreements provide limitations on the conversion of the dilutive instruments such that
the number of shares of Common Stock that may be acquired by the holder upon conversion of such instruments shall be limited to
ensure that following such conversion the total number of shares of Common Stock then beneficially owned by the holder does not
exceed 9.99% of the total number of issued and outstanding shares of Common Stock. The Company does not have sufficient authorized
shares to satisfy conversion of all the potentially dilutive instruments. Recent
Accounting Pronouncement: |
