• Filing Date: 2016-07-14
  • Form Type: 10-K
  • Description: Annual report
v3.5.0.2
Document and Entity Information - USD ($)
12 Months Ended
Mar. 31, 2016
Jul. 14, 2016
Sep. 30, 2015
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, 2016    
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 Smaller Reporting Company    
Entity Public Float     $ 173,734,170
Entity Common Stock, Shares Outstanding   89,399,012  
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2016    
v3.5.0.2
CONSOLIDATED BALANCE SHEETS - USD ($)
Mar. 31, 2016
Mar. 31, 2015
CURRENT    
Cash and cash equivalents $ 6,158 $ 220,874
Accounts receivable 0 3,203
Total current assets 6,158 224,077
Fixed assets    
Land 202,293 202,293
Buildings 1,328,161 1,328,161
Machinery and equipment 929,214 893,234
Autos and trucks 14,063 14,063
Furniture and fixtures 22,060 22,060
Accumulated depreciation (1,161,144) (1,086,464)
Fixed assets, net 1,334,647 1,373,347
Other assets    
Deposits 11,500 11,500
Total other assets 11,500 11,500
TOTAL ASSET 1,352,305 1,608,924
CURRENT    
Accounts Payable 568,806 181,759
Accrued interest - related parties 320,822 238,010
Other accrued expenses 154,558 149,421
Short-term Promissory Note and Lines of credit 837,469 801,634
Notes payable - related parties 654,906 560,954
Notes payable in default - related party 2,305,953 2,305,953
TOTAL CURRENT LIABILITIES 4,842,514 4,237,731
TOTAL LIABILITIES 4,842,514 4,237,731
Commitments and contingencies (Note 10)   0
STOCKHOLDERS DEFICIT    
Common stock, $0.0001 par value, 300,000,000 shares authorized 89,399,012 and 86,777,382 shares issued and outstanding at March 31, 2016 and March 31, 2015, respectively 8,940 8,678
Additional Paid In Capital 25,342,943 24,078,062
Subscription stock receivable 0 (25,001)
Accumulated deficit (28,842,092) (26,690,546)
Total stockholders' deficit (3,490,209) (2,628,807)
Total liabilities and stockholders' deficiency $ 1,352,305 $ 1,608,924
v3.5.0.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Mar. 31, 2016
Mar. 31, 2015
Statement of Financial Position [Abstract]    
Common Stock, par value per share $ 0.0001 $ 0.0001
Common stock, authorized 100,000,000 100,000,000
Common stock, issued 89,399,012 86,777,382
Common stock, outstanding 89,399,012 86,777,382
v3.5.0.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]    
Sales $ 0 $ 924
Operating expenses    
Facility operations 183,662 158,825
General and Administrative 1,413,665 1,246,090
Depreciation 74,680 82,936
Total operating expenses 1,672,007 1,487,851
Operating (loss) before other income (expense) (1,672,007) (1,486,927)
Other income (expense)    
Interest expense (169,700) (143,898)
Other income 9,530 0
Loss on extinguishment of debt (319,369) 0
Total other income (expense) (479,539) (143,898)
Loss before income taxes (2,151,546) (1,630,825)
Income taxes 0 0
Net loss $ (2,151,546) $ (1,630,825)
EARNINGS PER SHARE (Basic) $ (.02) $ (0.07)
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic) 88,600,101 22,321,191
v3.5.0.2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT - USD ($)
Number of Common Shares/ Share Capital [Member]
Additional Paid-In Capital [Member]
Stock Receivable
Deficit [Member]
Total
Beginning Balance - Shares at Mar. 31, 2014 9,700,000        
Beginning Balance - Amount at Mar. 31, 2014 $ 970 $ 22,442,094 $ (25,059,721) $ (2,628,807)
Effect of the capital transactions in NaturalShrimp Holdings, Inc.: Issuance of shares for cash prior to reverse acquisition   911,101     911,101
Issuance of shares for compensation   304,018     304,018
Issuance of shares for compensation, shares 28,571        
Effect of reverse acquisition on January 29, 2015: Shares issued to Natural Shrimp Holding Inc. $ 7,552 (7,552)    
Effect of reverse acquisition on January 29, 2015: Shares issued to Natural Shrimp Holding Inc., shares 75,520,240        
Effect of reverse acquisition on January 29, 2015: Effect of reverse acquisition MYDR accrued expenses   (124,994)     (124,994)
Issuance of shares for cash $ 149 519,851     520,000
Issuance of shares for cash, shares 1,485,712        
Shares issued but proceeds receivable at March 31, 2015 $ 7 24,994 $ (25,001)  
Shares issued but proceeds receivable at March 31, 2015, shares 71,430        
Dividends   $ 8,550     8,550
Net loss       $ (1,630,825) $ (1,630,825)
Ending Balance, Shares at Mar. 31, 2015 86,777,382 24,078,062 (25,001) (26,690,546) (2,628,807)
Ending Balance, Amount at Mar. 31, 2015 $ 8,678       $ (2,628,807)
Issuance of shares for compensation $ 3 $ 49,996     49,999
Issuance of shares for compensation, shares 28,571        
Issuance of shares for cash $ 239 836,609 $ 25,001   861,849
Issuance of shares for cash, shares 2,939,956        
Issuance of shares debt repayment $ 20 378,276     378,296
Issuance of shares debt repayment, shares 199,103        
Net loss       $ (2,151,546) (2,151,546)
Ending Balance, Shares at Mar. 31, 2016 89,399,012        
Ending Balance, Amount at Mar. 31, 2016 $ 8,940 $ 25,342,943   $ (28,842,092) $ (3,490,209)
v3.5.0.2
CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($)
12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES    
Net Loss $ (2,151,546) $ (1,630,825)
Adjustments to reconcile net loss to net cash used in operating activities    
Stock based compensation 49,999 304,018
Shares issued for dividends 0 8,550
Interest added to long term debt 0 26,670
Depreciation expense 74,680 82,936
Loss on extinguishment of debt 319,369 0
Changes in operating assets and liabilities:    
Accounts receivable 3,203 (72)
Other Assets 0 (11,000)
Accounts payable 387,047 (14,332)
Other accrued expenses 5,137 (7,379)
Accrued interest - related parties 106,739 40,826
CASH USED IN OPERATING ACTIVITIES (1,205,372) (1,200,608)
CASH FLOWS FROM INVESTING ACTIVITIES    
Cash paid for purchase of fixed assets (35,980) (27,105)
CASH USED IN INVESTING ACTIVITIES (35,980) (27,105)
CASH FLOWS FROM FINANCING ACTIVITIES    
Borrowing on debt 50,000 19,550
Borrowing on Notes payable - related party 134,750 0
Payment of related party notes payable (5,798) (16,000)
Repayment of short-term debt (12,407) (8,421)
Line of credit (1,758) 10,608
Proceeds from sale of stock  pre reverse acquisition 0 911,101
Proceeds from sale of stock post reverse acquisition 861,849 520,000
CASH PROVIDED BY FINANCING ACTIVITIES 1,026,636 1,436,838
NET CHANGE IN CASH (214,716) 209,125
CASH AT BEGINNING OF YEAR 220,874 11,749
CASH AT YEAR END 6,158 220,874
INTEREST PAID DURING YEAR 26,384 76,402
NON-CASH TRANSACTIONS    
Accrued interest settled with debt 23,927 0
Shares issued receivable 0 25,001
Notes payable - related party settled with stock $ 35,000 $ 0
v3.5.0.2
1. NATURE OF THE ORGANIZATION AND BUSINESS
12 Months Ended
Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
NATURE OF THE ORGANIZATION AND BUSINESS

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

 

On January 30, 2015, MYDR consummated the acquisition of the Assets pursuant to the Agreement.  In accordance with the terms of the Agreement, MYDR effected a 1 for 10 reverse stock split, decreasing the issued and outstanding shares of our common stock from 97,000,000 to 9,700,000 and MYDR issued 75,520,240 shares of its common stock to NSH as consideration for the Assets.  As a result of the transaction, NSH acquired 88.62% of MYDR’s issued and outstanding shares of common stock, NSC and NS Global became MYDR’s wholly-owned subsidiaries, and MYDR changed its principal business to a global shrimp farming company.  All per share amounts reflected hereafter give effect to the 1-for-10 reverse split.

 

As a result of the controlling financial interest of the former stockholders of NSH, for financial statement reporting purposes, the asset acquisition has been treated as a reverse acquisition with NSH deemed the accounting acquirer and the Company deemed the accounting acquiree under the acquisition method of accounting in accordance with ASC 805-10-55 of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC).  The reverse acquisition is deemed a capital transaction and the net assets of NSH (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the acquisition.  The acquisition process utilizes the capital structure of the Company and the assets and liabilities of NSH which are recorded at their historical cost.  The equity of the Company is the historical equity of NSH.

 

In connection with MYDR’s receipt of approval from the Financial Industry Regulatory Authority (“FINRA”), effective March 3, 2015, MYDR amended its Articles of Incorporation to change its name to “NaturalShrimp Incorporated” (the “Company”).

 

The Company relied on accounting guidance ASC 805-40 “Business Combinations – Reverse Acquisitions” to determine that, for the periods April 1, 2013 through March 31, 2015, NaturalShrimp Holding, Inc. is the accounting acquirer.

 

The Company has two wholly owned subsidiaries including NaturalShrimp Corporation and NaturalShrimp Global, Inc.

 

NaturalShrimp Corporation (NSC) was incorporated on August 12, 2005 under the laws of the State of Delaware and is a wholly-owned subsidiary of the Company.  NSC merged with NaturalShrimp Corporation (a Texas corporation) on September 6, 2005 pursuant to an Agreement and Plan of Merger (NSC Agreement).  Under the NSC Agreement, common stock changed from no par value to $0.01 par value and the number of shares authorized for issuance decreased to 1,000 shares.  On March 24, 2008, NSC merged with NaturalShrimp San Antonio, L.P (NSSA) (a Texas limited partnership) pursuant to an Agreement and Plan of Merger (NSSA Agreement).  NSC continued to exist as the surviving corporation.  NSC is an agro-tech company that grows and sells shrimp in an indoor controlled production facility.

 

NaturalShrimp Global (NSG), formerly NaturalShrimp International Inc., was incorporated on August 12, 2005, under the laws of the State of Delaware and is a wholly-owned subsidiary of the Company.  NSG merged with NaturalShrimp International, Inc. (a Texas Corporation incorporated November 12, 1999, as Quantum Access Corporation) pursuant to an Agreement and Plan of Merger (NSG Agreement) dated September 6, 2005.  Under the NSG Agreement, common stock changed from no par value to $0.01 par value and the number of shares authorized for issuance decreased to 1,000 shares.  NSG continued to exist as the surviving corporation.  NSG was created for the purpose of establishing and maintaining all of the Company’s international joint ventures. 

 

Nature of the Business

 

NaturalShrimp Incorporated is a global shrimp farming company that has developed a technology to produce fresh, gourmet-grade shrimp reliably and economically in an indoor, re-circulating, saltwater facility.  Our eco-friendly, bio-secure design does not rely on ocean water; it recreates the natural ocean environment allowing for high-density production which can be replicated anywhere in the world.

 

Our self-contained shrimp aquiculture system allows for the production of Pacific White (Litopenaeus vannamei, formerly Penaeus vannamei) shrimp in an ecologically controlled fully contained and independent production system without the use of antibiotics or toxic chemicals.

 

The Company has developed several proprietary technology assets, including a knowledge base that allows the production of 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.

 

Our research and development facilities are located outside of San Antonio, Texas, and we hold a minority interest in a Norwegian company that owns and operates a similar shrimp production facility in Medina del Campo, Spain.

 

Vibrio Suppression Technology

 

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

 

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

 

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, 2016, the Company incurred losses from operations of $2,151,546. At March 31, 2016, the Company had an accumulated deficit of $28,842,092 and a working capital deficit of $4,836,356. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. 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 2016 fiscal year, the Company received net cash proceeds of $836,850 from the additional sales of common stock and $134,750 from a borrowing on notes payable - related party. Management believes that private placements of equity capital and/or additional debt financing will be needed to fund our 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 our 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 our 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.

 

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The consolidated financial statements are prepared in conformity with United States generally accepted accounting principles (GAAP).  The Company uses as guidance Accounting Standard Codification (ASC) as established by the Financial Accounting Standards Board (FASB).

 

Consolidation

 

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

 

Reverse Acquisitions

 

Identification of the Accounting Acquirer

 

The Company considers factors in Accounting Standard Codification (ASC) paragraphs 805-10-55-10 through 55-15 in identifying the accounting acquirer.  The Company uses the existence of a controlling financial interest to identify the acquirer—the entity that obtains control of the acquiree.  Other pertinent facts and circumstances also shall be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including the following:  (a) the relative voting rights in the combined entity after the business combination.  The acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity taking into consideration the existence of any unusual or special voting arrangements and options, warrants, or convertible securities; (b) the existence of a large minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest.  The acquirer usually is the combining entity whose single owner or organized group of owners holds the largest minority voting interest in the combined entity; (c) the composition of the governing body of the combined entity.  The acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity; (d) the composition of the senior management of the combined entity.  The acquirer usually is the combining entity whose former management dominates the management of the combined entity; and (e) the terms of the exchange of equity interests.  The acquirer usually is the combining entity that pays a premium over the pre-combination fair value of the equity interests of the other combining entity or entities. The acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities.

 

Pursuant to ASC Paragraph 805-40-05-2, as one example of a reverse acquisition, a private operating entity may arrange for a public entity to acquire its equity interests in exchange for the equity interests of the public entity.  In this situation, the public entity is the legal acquirer because it issued its equity interests, and the private entity is the legal acquiree because its equity interests were acquired.  However, application of the guidance in paragraphs 805-10-55-11 through 55-15 results in identifying: (a) The public entity as the acquiree for accounting purposes (the accounting acquiree); and (b) the private entity as the acquirer for accounting purposes (the accounting acquirer).

 

Measuring the Consideration Transferred and Non-controlling Interest

 

Pursuant to ASC Paragraphs 805-40-30-2 and 30-3 in a reverse acquisition, the accounting acquirer usually issues no consideration for the acquiree.  Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer.  Accordingly, the acquisition-date fair value of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition.  The fair value of the number of equity interests calculated in that way can be used as the fair value of consideration transferred in exchange for the acquiree.  The assets and liabilities of the legal acquiree are measured and recognized in the consolidated financial statements at their pre-combination carrying amounts (see paragraph 805-40-45-2(a)).  Therefore, in a reverse acquisition the non-controlling interest reflects the non-controlling shareholders’ proportionate interest in the pre-combination carrying amounts of the legal acquiree’s net assets even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition date. 

 

Presentation of Consolidated Financial Statements Post Reverse Acquisition

 

Pursuant to ASC Paragraphs 805-40-45-1 and 45-2 consolidated financial statements following a reverse acquisition are issued under the name of the legal parent (accounting acquiree) but described in the notes as a continuation of the financial statements of the legal subsidiary (accounting acquirer), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree.  That adjustment is required to reflect the capital of the legal parent (the accounting acquiree).  Comparative information presented in those consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent (accounting acquiree).  The consolidated financial statements reflect all of the following: (a) The assets and liabilities of the legal subsidiary (the accounting acquirer) recognized and measured at their pre-combination carrying amounts; (b) the assets and liabilities of the legal parent (the accounting acquiree) recognized and measured in accordance with the guidance in Topic 805 "business combinations"; (c) the retained earnings and other equity balances of the legal subsidiary (accounting acquirer) before the business combination; (d) the amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary (the accounting acquirer) outstanding immediately before the business combination to the fair value of the legal parent (accounting acquiree) determined in accordance with the guidance in this topic applicable to business combinations.  However, the equity structure (that is, the number and type of equity interests issued) reflects the equity structure of the legal parent (the accounting acquiree), including the equity interests the legal parent issued to effect the combination.  Accordingly, the equity structure of the legal subsidiary (the accounting acquirer) is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquiree) issued in the reverse acquisition; and (e) the non-controlling interest’s proportionate share of the legal subsidiary’s (accounting acquirer’s) pre-combination carrying amounts of retained earnings and other equity interests as discussed in paragraphs 805-40-25-2 and 805-40-30-3.

 

Pursuant to ASC Paragraphs 805-40-45-4 and 45-5, in calculating the weighted-average number of common shares outstanding (the denominator of the earnings-per-share (“EPS”) calculation) during the period in which the reverse acquisition occurs: (a) The number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement; and (b) the number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period. The basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements following a reverse acquisition shall be calculated by dividing (a) by (b): (a) The income of the legal acquiree attributable to common shareholders in each of those periods; and (b) the legal acquiree’s historical weighted-average number of common shares outstanding multiplied by the exchange ratio established in the acquisition agreement.

 

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.

  

 

Off Balance Sheet Arrangements

 

As of March 31, 2016, the Company did not have any off-balance sheet activities (including the use of structured finance or special purpose entities) or any trading activities in non-exchange traded commodity contracts that have a current or future effect on our financial condition, changes in the financial condition, revenues or expenses, results of operation, liquidity, capital expenditures or capital resources that are material to our investors.

 

Basic Loss per Common Share

 

Basic and diluted earnings or loss per share (“EPS”) amounts in the consolidated financial statements are computed in accordance (ASC 260 – 10 “Earnings per Share”, which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of common shares outstanding.  Diluted EPS is based on the weighted average number of common shares 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 common shares outstanding (denominator) during the period.

 

Fair Value Measurements

 

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

 

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

 

At March 31, 2016 and 2015, the Company did not have any assets or liabilities that would be required to be measured under ASC Topic 820.

 

Financial Instruments

 

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

 

Cash and Cash Equivalents

 

For the purpose of the 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, 2016 and 2015.

 

Inventories

 

Shrimp inventories are stated at the lower of cost (first-in, first-out method) or market.  Purchased shrimp (Post Larvae or “PL”) are carried at purchase costs plus costs of maintenance through the balance sheet dates.  Inventories were not material at March 31, 2016 and 2015. 

 

Fixed Assets

 

Equipment is carried at historical value at the date of the reverse acquisition 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.  MACRS does not materially differ from GAAP.  Estimated useful lives are as follows:

 

Autos and Trucks 5 years
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 $74,680 and $82,936 for the years ended March 31, 2016 and 2015, respectively.

 

Revenue Recognition

 

Revenues for products sold are recorded upon delivery of the products to customers, which is the point at which title to the products is transferred, and when payment has either been received or collection is reasonably assured.  The Company has no warranty or return policy as all sales are final.  The Company extends unsecured credit to its customers for amounts invoiced.

 

Bad Debts

 

Uncollectible accounts receivable are written off at the time amounts are determined to be a loss to the Company.  An allowance for doubtful accounts receivable is maintained as necessary, based upon specific accounts receivable outstanding determined to be uncollectible and the appropriate charge is made to operations.  As of March 31, 2016 and 2015, no allowance for doubtful accounts was deemed necessary.

 

Shipping and Handling

 

The Company reports shipping and handling charges to customers as part of sales and the associated expense as part of cost of sales.

 

Environmental Costs

 

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate.  Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed.  Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated.  Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to a plan of action based on the then known facts.

 

As of March 31, 2016, there have been no environmental expenses incurred by the Company.

 

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.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation to employees in accordance with ASC 718. “Stock-based compensation to employees” is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period.  The Company accounts for stock-based compensation to other than employees in accordance with ASC 505-50 “Equity instruments issued to other than employees” and are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period.  The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances.  Once the stock is issued the appropriate expense account is charged.

 

Impairment

 

The Company utilized the guidance provided by ASC 350-20-35 “Intangibles – Goodwill and Other” to assess value of Goodwill.  Under the guidance Goodwill is excluded from amortization are assessed at least annually to ascertain whether impairment occurred.  Management considers that impairment may be estimated by applying factors based on certain trigger events including historical experience and other data, operating activities and forecasted cash flow.  In addition, management assesses the availability of financing on commercially viable terms in order to finance the development of the property.

 

Recent Accounting Standards

 

During the year ended March 31, 2016, 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.

v3.5.0.2
3. SHORT-TERM DEBTS AND LINES OF CREDIT
12 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
3. SHORT-TERM DEBTS 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.  As of March 31, 2016, the Company has drawn $50,000 on this short-term note.  The short-term note has a stated interest rate of 5.25%, maturity date of November 3, 2016 and an initial interest only payment on February 3, 2016.  The short-term note is guaranteed by an officer and director.

 

The Company has a working capital line of credit with Community National Bank.  On August 28, 2013, the Company renewed the line of credit for $30,000.  The line of credit bears an interest rate of 7.3% and is payable quarterly.  The line of credit matured on February 28, 2014 and was renewed by the Company with a maturity date of June 10, 2017.  It is secured by various assets of the Company’s subsidiaries, and is guaranteed by two directors of the Company.  The balance of the line of credit at March 31, 2016 and March 31, 2015 was $14,129 and $27,009, respectively.

 

The Company also has a working capital line of credit with Extraco Bank.  On March 12, 2015, the Company renewed the line of credit for $475,000.  The line of credit bears an interest rate of 4.0% that is compounded monthly on unpaid balances and is payable monthly.  The line of credit matures on April 30, 2017, 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 $473,029 and $473,029 at March 31, 2016 and March 31, 2015, respectively.

 

The Company has additional lines of credit with Extraco Bank for $100,000 and $200,000, which were renewed on January 19, 2016 and April 30, 2016, with maturity dates of January 19, 2017 and April 30, 2017, respectively.  The lines of credit bear an interest rate of 4.5% 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 $278,470 and $278,470 at March 31, 2016 and March 31, 2015, respectively. 

 

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 25.24% as of March 31, 2016.  The line of credit is unsecured.  The balance of the line of credit was $9,580 and $9,580 at March 31, 2016 and March 31, 2015, respectively.

 

The Company also has a working capital line of credit with Chase Bank for $25,000.  The line of credit bears an interest rate of prime plus 10 basis points, which totaled 13.98% as of March 31, 2016.  The line of credit is secured by assets of the Company’s subsidiaries.  The balance of the line of credit is $12,261 and $13,546 at March 31, 2016 and March 31, 2015, respectively.

v3.5.0.2
4. STOCKHOLDERS’ DEFICIT
12 Months Ended
Mar. 31, 2016
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS’ DEFICIT

Common Stock

 

During the year ended March 31, 2016, the Company reached an agreement with certain vendors in which the Company issued 199,103 shares of common stock in full payment of debt of $35,000, accrued interest of $23,927 and recorded a loss on extinguishment of debt of $319,369.

 

On August 7, 2015, the Company reached an agreement with a professional advisor in which the Company issued 28,571 shares of common stock with a fair value of $49,999.  This amount was recorded as stock compensation cost for the year ended March 31, 2016.

 

On January 30, 2015, the NSH consummated the sale of substantially all of its assets to Multiplayer Online Dragon, Inc. (“MYDR”), a publicly-held Nevada corporation, pursuant to an Asset Purchase Agreement (“Agreement”) dated November 26, 2014 by and between the Company and MYDR.  In accordance with the terms of the Agreement, NSH received 75,520,240 shares of MYDR as consideration for the Assets, which consist primarily of certain real property located near San Antonio, Texas.  As a result of the sale, NSH owns approximately 89% of MYDR’s issued and outstanding shares of common stock.  The Company evaluated this transaction using ASC 805-40 “Business Combinations Reverse Acquisitions”.  Due to the change in control of the Company, this transaction was accounted for as a reverse acquisition in accordance with ASC No. 805-40 whereby NSH was considered the accounting acquirer.

 

For the year ended March 31, 2015 NSH, sold to equity investors $911,101, which has been included in additional paid-in capital.

 

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

 

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

 

There were no material relationships between the MYDR and NSH or between the Company’s or NSH’s respective affiliates, directors, or officers or associates thereof, other than in respect of the Agreement.  Effective March 3, 2015, MYDR amended its Articles of Incorporation to change its name to “NaturalShrimp Incorporated”.

 

Between May 7, 2015 and January 5, 2016, NaturalShrimp Incorporated entered into a form of Subscription Agreement (the “Agreement”) and consummated initial closings of a private placement offering of the Company’s common stock (the “Offering”).  As of March 31, 2016 an aggregate of 2,393,956 shares of common stock had been sold to investors pursuant to the Agreement at a price of $0.35 per share. 

 

Between February 13, 2015 and April 24, 2015, NaturalShrimp Incorporated entered into a form of Subscription Agreement (the “Agreement”) and consummated initial closings of a private placement offering of the Company’s common stock (the “Offering”).  As of March 31, 2015 an aggregate of 1,557,142 shares of common stock had been sold to investors pursuant to the Agreement, 71,430 of those common shares were paid on April 1, 2015, at a price of $0.35 per share.

 

v3.5.0.2
5. OPTIONS AND WARRANTS
12 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
5. OPTIONS AND WARRANTS

The Company has not granted any options or warrants since inception.

v3.5.0.2
6. RELATED PARTY TRANSACTIONS
12 Months Ended
Mar. 31, 2016
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

Notes Payable – Related Parties

 

NaturalShrimp Holdings, Inc.

 

On January 1, 2016 the Company entered into a notes payable agreement with NaturalShrimp Holdings, Inc., a shareholder.  Between January 16, 2016 and March 7, 2016 the Company borrowed $134,750 under this agreement.  The note payable has no set monthly payment or maturity date with a stated interest rate of 2%.

 

Baptist Community Services (BCS)

 

Pursuant to an assignment agreement dated March 26, 2009, Amarillo National Bank sold and transferred a note to Baptist Community Services (BCS), a shareholder of the Company, in the amount of $2,004,820.  The interest rate under the terms of the agreement is 2.25% and is payable monthly.  The note is collateralized by all inventories, accounts, equipment, and all general intangibles related to the Company’s shrimp production facility in La Coste, Texas.  Payment of the note is also guaranteed by High Plains Christian Ministries Foundation, a shareholder of the Company.  The balance of the note at March 31, 2016 and 2015 was $2,004,820 and is classified as a current liability on the consolidated balance sheets.

 

Effective December 31, 2008, the Company entered into a subordinated promissory note agreement with BCS for $70,000 (BCS subordinated note) to provide working capital to pay accrued interest due under the BCS note and other operating expenses.  On April 7, 2009, the BCS subordinated note was increased to $125,000 to provide additional working capital for the Company.  The balance of the BCS subordinated note at March 31, 2016 and 2015 was $2,305,953 and $2,305,953, respectively, and is classified as a current liability on the consolidated balance sheets.  During the years ended March 31, 2016 and 2015, the Company incurred $75,222 and $27,446 in interest expense on the subordinated note.  At March 31, 2016 and 2015, accrued interest payable was $176,982 and $101,760, respectively.

 

On January 25, 2010, the Company received notice from BCS notifying it that the Company was in default of its obligations to BCS and that both the BCS note and the BCS subordinated note, as well as all accrued interest, fees and expenses, were payable in full.  Pursuant to a forbearance agreement dated January 25, 2010, BCS agreed to forbear from exercising any remedies available under the notes until January 25, 2011 or when the Company fails to promptly perform any of its covenants or obligation under the forbearance agreement, whichever occurs first.  In 2015, a fifth forbearance agreement was executed extending the forbearance terms to December 31, 2016.

 

Shareholder Notes

 

The Company has entered into several working capital notes payable to multiple shareholders 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, 2016 and 2015 was $426,404 and $426,404, respectively, and is classified as a current liability on the consolidated balance sheets.  The Company repaid $16,000 during the year ended March 31, 2015.  At March 31, 2016 and 2015, accrued interest payable was $142,296 and $111,784, respectively.

 

Shareholders

 

In 2009, the Company entered into a note payable to Randall Steele, a shareholder of the Company, for $50,000.  The note bears interest at 6.0% and is 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, 2016 and 2015 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 $3,025 during the years ended March 31, 2016 and 2015, respectively.  At March 31, 2016 and 2015, accrued interest payable was $ 1,543 and $795 respectively.

 

Beginning in 2010, the Company started entering into several working capital notes payable with various shareholders of the Company for a total of $290,000 and bearing interest at 8%.  The balance of these notes at March 31, 2016 and 2015 was $30,000, and is classified as a current liability on the consolidated balance sheets.  At March 31, 2016 and 2015, accrued interest payable was $800 and $400, respectively.

 

Beginning in 2009, the Company enter into notes payable with various shareholders of the Company.  The notes bear interest at 15.0% and are payable generally twelve months from the date of the note.  The notes are collateralized by the shrimp crop attributable to the post larvaes (PLs) acquired from the note proceeds.  On May 28, 2015 the Company reached an agreement with these various shareholders in which the Company issued 199,103 shares of common stock in full payment of debt of $35,000, accrued interest of $23,927 and recorded a loss on extinguishment of debt of $319,369.  At March 31, 2015 the balance of these notes totaled $35,000 and is classified as current liabilities on the consolidated balance sheets.  Interest expense on these notes totaled $656 during the year ended March 31, 2016.  At March 31, 2016 and March 31, 2015, accrued interest payable was $0 and $23,271, respectively.

v3.5.0.2
7. FEDERAL INCOME TAX
12 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
7. 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, 2016 and 2015 consist of the following:

 

    2016     2015  
Current tax provision   $ (619,000 )   $ (280,000 )
Deferred tax benefit     (180,000 )     -  
Valuation allowance     799,000       280,000  
Total income tax provision   $ -     $ -  

 

Significant components of the Company's estimated deferred tax assets and liabilities as of March 31, 2016 and 2015 are as follows:

    2016     2015  
Deferred tax assets:            
Net operating loss carryforwards   $ 619,000     $ 280,000  
Deferred tax     180,000          
Total deferred tax asset     799,000       280,000  
Valuation allowance     (799,000 )     (280,000 )
    $ -     $ -  

 

As of March 31, 2016, we had approximately $3,260,000 of federal net operating loss carry forwards.  These carry forwards, if not used, will begin to expire in 2028.  Future utilization of our 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, our ability to utilize our net operating losses generated prior to this date is limited to approximately $10,000 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 we will not realize a portion of the deferred tax assets.  The Company has established a valuation allowance against our 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 $519,000 in the year ended March 31, 2016.

 

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.

v3.5.0.2
8. CONCENTRATION OF CREDIT RISK
12 Months Ended
Mar. 31, 2016
Risks and Uncertainties [Abstract]  
8. 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, 2016 and 2015, the Company’s cash balance did not exceed FDIC coverage.

v3.5.0.2
9. REVERSE ACQUISITION
12 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
9. REVERSE ACQUISITION

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

 

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

 

There were no material relationships between the MYDR and NSH or between the Company’s or NSH’s respective affiliates, directors, or officers or associates thereof, other than in respect of the Agreement.  Effective March 3, 2015, MYDR amended its Articles of Incorporation to change its name to “NaturalShrimp Incorporated”.

 

The Company evaluated this transactions using ASC 805-40 “Business Combinations Reverse Acquisitions”.  Due to the change in control of the Company, this transaction was accounted for as a reverse acquisition in accordance with ASC No. 805-40 whereby NSH was considered the accounting acquirer.

v3.5.0.2
10. COMMITMENTS AND CONTINGENCIES
12 Months Ended
Mar. 31, 2016
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 and 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.

v3.5.0.2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
12 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
Basis of Presentation

The consolidated financial statements are prepared in conformity with United States generally accepted accounting principles (GAAP).  The Company uses as guidance Accounting Standard Codification (ASC) as established by the Financial Accounting Standards Board (FASB).

Consolidation

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

Reverse Acquisitions

Identification of the Accounting Acquirer

 

The Company considers factors in Accounting Standard Codification (ASC) paragraphs 805-10-55-10 through 55-15 in identifying the accounting acquirer.  The Company uses the existence of a controlling financial interest to identify the acquirer—the entity that obtains control of the acquiree.  Other pertinent facts and circumstances also shall be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including the following:  (a) the relative voting rights in the combined entity after the business combination.  The acquirer usually is the combining entity whose owners as a group retain or receive the largest portion of the voting rights in the combined entity taking into consideration the existence of any unusual or special voting arrangements and options, warrants, or convertible securities; (b) the existence of a large minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest.  The acquirer usually is the combining entity whose single owner or organized group of owners holds the largest minority voting interest in the combined entity; (c) the composition of the governing body of the combined entity.  The acquirer usually is the combining entity whose owners have the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity; (d) the composition of the senior management of the combined entity.  The acquirer usually is the combining entity whose former management dominates the management of the combined entity; and (e) the terms of the exchange of equity interests.  The acquirer usually is the combining entity that pays a premium over the pre-combination fair value of the equity interests of the other combining entity or entities. The acquirer usually is the combining entity whose relative size (measured in, for example, assets, revenues, or earnings) is significantly larger than that of the other combining entity or entities.

 

Pursuant to ASC Paragraph 805-40-05-2, as one example of a reverse acquisition, a private operating entity may arrange for a public entity to acquire its equity interests in exchange for the equity interests of the public entity.  In this situation, the public entity is the legal acquirer because it issued its equity interests, and the private entity is the legal acquiree because its equity interests were acquired.  However, application of the guidance in paragraphs 805-10-55-11 through 55-15 results in identifying: (a) The public entity as the acquiree for accounting purposes (the accounting acquiree); and (b) the private entity as the acquirer for accounting purposes (the accounting acquirer).

 

Measuring the Consideration Transferred and Non-controlling Interest

 

Pursuant to ASC Paragraphs 805-40-30-2 and 30-3 in a reverse acquisition, the accounting acquirer usually issues no consideration for the acquiree.  Instead, the accounting acquiree usually issues its equity shares to the owners of the accounting acquirer.  Accordingly, the acquisition-date fair value of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition.  The fair value of the number of equity interests calculated in that way can be used as the fair value of consideration transferred in exchange for the acquiree.  The assets and liabilities of the legal acquiree are measured and recognized in the consolidated financial statements at their pre-combination carrying amounts (see paragraph 805-40-45-2(a)).  Therefore, in a reverse acquisition the non-controlling interest reflects the non-controlling shareholders’ proportionate interest in the pre-combination carrying amounts of the legal acquiree’s net assets even though the non-controlling interests in other acquisitions are measured at their fair values at the acquisition date. 

 

Presentation of Consolidated Financial Statements Post Reverse Acquisition

 

Pursuant to ASC Paragraphs 805-40-45-1 and 45-2 consolidated financial statements following a reverse acquisition are issued under the name of the legal parent (accounting acquiree) but described in the notes as a continuation of the financial statements of the legal subsidiary (accounting acquirer), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree.  That adjustment is required to reflect the capital of the legal parent (the accounting acquiree).  Comparative information presented in those consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent (accounting acquiree).  The consolidated financial statements reflect all of the following: (a) The assets and liabilities of the legal subsidiary (the accounting acquirer) recognized and measured at their pre-combination carrying amounts; (b) the assets and liabilities of the legal parent (the accounting acquiree) recognized and measured in accordance with the guidance in Topic 805 "business combinations"; (c) the retained earnings and other equity balances of the legal subsidiary (accounting acquirer) before the business combination; (d) the amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary (the accounting acquirer) outstanding immediately before the business combination to the fair value of the legal parent (accounting acquiree) determined in accordance with the guidance in this topic applicable to business combinations.  However, the equity structure (that is, the number and type of equity interests issued) reflects the equity structure of the legal parent (the accounting acquiree), including the equity interests the legal parent issued to effect the combination.  Accordingly, the equity structure of the legal subsidiary (the accounting acquirer) is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent (the accounting acquiree) issued in the reverse acquisition; and (e) the non-controlling interest’s proportionate share of the legal subsidiary’s (accounting acquirer’s) pre-combination carrying amounts of retained earnings and other equity interests as discussed in paragraphs 805-40-25-2 and 805-40-30-3.

 

Pursuant to ASC Paragraphs 805-40-45-4 and 45-5, in calculating the weighted-average number of common shares outstanding (the denominator of the earnings-per-share (“EPS”) calculation) during the period in which the reverse acquisition occurs: (a) The number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement; and (b) the number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period. The basic EPS for each comparative period before the acquisition date presented in the consolidated financial statements following a reverse acquisition shall be calculated by dividing (a) by (b): (a) The income of the legal acquiree attributable to common shareholders in each of those periods; and (b) the legal acquiree’s historical weighted-average number of common shares outstanding multiplied by the exchange ratio established in the acquisition agreement.

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.

Off Balance Sheet Arrangements

As of March 31, 2016, the Company did not have any off-balance sheet activities (including the use of structured finance or special purpose entities) or any trading activities in non-exchange traded commodity contracts that have a current or future effect on our financial condition, changes in the financial condition, revenues or expenses, results of operation, liquidity, capital expenditures or capital resources that are material to our investors.

Basic and Fully Diluted Net Loss per Common Share

Basic and diluted earnings or loss per share (“EPS”) amounts in the consolidated financial statements are computed in accordance (ASC 260 – 10 “Earnings per Share”, which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of common shares outstanding.  Diluted EPS is based on the weighted average number of common shares 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 common shares outstanding (denominator) during the period.

Fair Value Measurements

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

 

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

 

At March 31, 2016 and 2015, the Company did not have any assets or liabilities that would be required to be measured under ASC Topic 820.

Financial Instruments

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

Cash and Cash Equivalents

For the purpose of the 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, 2016 and 2015.

Fixed Assets

 

Equipment is carried at historical value at the date of the reverse acquisition 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.  MACRS does not materially differ from GAAP.  Estimated useful lives are as follows:

 

Autos and Trucks 5 years
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 $74,680 and $82,936 for the years ended March 31, 2016 and 2015, respectively.

Revenue Recognition

Revenues for products sold are recorded upon delivery of the products to customers, which is the point at which title to the products is transferred, and when payment has either been received or collection is reasonably assured.  The Company has no warranty or return policy as all sales are final.  The Company extends unsecured credit to its customers for amounts invoiced.

Bad Debts

Uncollectible accounts receivable are written off at the time amounts are determined to be a loss to the Company.  An allowance for doubtful accounts receivable is maintained as necessary, based upon specific accounts receivable outstanding determined to be uncollectible and the appropriate charge is made to operations.  As of March 31, 2016 and 2015, no allowance for doubtful accounts was deemed necessary.

Shipping and Handling

The Company reports shipping and handling charges to customers as part of sales and the associated expense as part of cost of sales.

Environmental Costs

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate.  Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed.  Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated.  Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to a plan of action based on the then known facts.

 

As of March 31, 2016, there have been no environmental expenses incurred by the Company.

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.

Stock-Based Compensation

The Company accounts for stock-based compensation to employees in accordance with ASC 718. “Stock-based compensation to employees” is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period.  The Company accounts for stock-based compensation to other than employees in accordance with ASC 505-50 “Equity instruments issued to other than employees” and are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period.  The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances.  Once the stock is issued the appropriate expense account is charged.

Impairment

The Company utilized the guidance provided by ASC 350-20-35 “Intangibles – Goodwill and Other” to assess value of Goodwill.  Under the guidance Goodwill is excluded from amortization are assessed at least annually to ascertain whether impairment occurred.  Management considers that impairment may be estimated by applying factors based on certain trigger events including historical experience and other data, operating activities and forecasted cash flow.  In addition, management assesses the availability of financing on commercially viable terms in order to finance the development of the property.

Recent Accounting Standards

 

During the year ended March 31, 2016, 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.

v3.5.0.2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
12 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
Useful Life Property, Plant and Equipment
Autos and Trucks 5 years
Buildings 27.5 – 39 years
Other Depreciable Property 5 – 10 years
Furniture and Fixtures 3 – 10 years
v3.5.0.2
1. NATURE OF THE ORGANIZATION AND BUSINESS (Details Narrative) - USD ($)
Mar. 31, 2016
Mar. 31, 2015
Nature Of Organization And Business Details Narrative    
Accumulated deficit $ (28,842,092) $ (26,690,546)
Working Capital $ (4,836,356) $ (3,896,161)
v3.5.0.2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)
12 Months Ended
Mar. 31, 2016
Autos and Trucks  
Estimated useful lives 5 years
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
v3.5.0.2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Summary Of Significant Accounting Policies Details Narrative    
Depreciation expense $ 74,680 $ 82,936
v3.5.0.2
3. LINES OF CREDIT (Details Narrative) - USD ($)
Mar. 31, 2016
Mar. 31, 2015
Line of credit balance $ 837,469 $ 801,634
Community National Bank    
Line of credit balance 14,129 27,009
Extraco Bank    
Line of credit balance 473,029 473,029
Additional Lines of Credit Extraco Bank    
Line of credit balance 278,470 278,470
Capital One Bank    
Line of credit balance 9,580 9,580
Chase Bank    
Line of credit balance $ 12,261 $ 13,687
v3.5.0.2
6. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Baptist Community Services    
Interest expense related parties $ 75,222 $ 27,446
Accrued interest payable 176,892 101,760
Multiple Shareholders    
Accrued interest payable 142,296 111,784
Randall Steele    
Interest expense related parties 3,000 3,025
Accrued interest payable $ 1,543 $ 795