Annual report pursuant to Section 13 and 15(d)

6. RELATED PARTY TRANSACTIONS

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6. RELATED PARTY TRANSACTIONS
12 Months Ended
Mar. 31, 2015
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

Notes Payable – Related Parties

 

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, 2015 and 2014 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, 2015 and 2014 was $2,305,953 and $2,279,283, respectively, and is classified as a current liability on the consolidated balance sheets.  During the years ended March 31, 2015 and 2014, the Company incurred $27,446 and $25,478 in interest expense on the subordinated note.  At March 31, 2015 and 2014, accrued interest payable was $101,760 and $76,984, 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 since inception.  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, 2015 and 2014 was $426,404 and $442,404, 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, 2015 and 2014, accrued interest payable was $111,784 and $76,984, respectively.

 

NSSA Partners

 

In 2005, the Company entered into a working capital note payable to the partners of NSSA for $500,084.  Pursuant to a merger agreement dated March 19, 2008 between the Company and NSSA partners, the company converted the note into common stock of NaturalShrimp Holdings, Inc. at $1.00 per share.  The accrued interest payable on that note was converted into a new note in the amount of $113,312.  This note matured on March 19, 2013 and bore interest at 6.0% compounded annually on unpaid balances.  The NSSA Partners loan is outstanding and accruing interest as recorded on the consolidated statement of operations.

 

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, 2015 and 2014 was $50,000, respectively, and is classified as a current liability on the consolidated balance sheets.  Interest expense on the note was $3,025 and $2,770 during the years ended March 31, 2015 and 2014, respectively.  At March 31, 2015 and 2014, accrued interest payable was $795.

 

Beginning in 2009, the Company started entering 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.  At March 31, 2015 and 2014 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 $5,250 during the years ended March 31, 2015 and 2014.  At March 31, 2015 and 2014, accrued interest payable was $23,271 and $18,021, 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, 2015 and 2014 was $49,550 and $30,000, respectively, and is classified as a current liability on the consolidated balance sheets.  At March 31, 2015 and 2014, accrued interest payable was $400 and $400, respectively.