6. RELATED PARTY TRANSACTIONS |
6 Months Ended |
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Sep. 30, 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 September 27, 2016 the Company borrowed $595,815 under this agreement. The note payable has no set monthly payment or maturity date with a stated interest rate of 2% and accrued interest of $2,341 at September 30, 2016.
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 September 30, 2016 and March 31, 2016 was $2,004,820 and 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 September 30, 2016 and March 31, 2015 was $301,133 and $301,133, respectively, and classified as a current liability on the consolidated balance sheets. During the six months ended September 30, 2016 and 2015, the Company incurred $37,611 and $37,611 in interest expense on the subordinated note. At September 30, 2016 and March 31, 2016, accrued interest payable was $214,593 and $176,982, 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, the parties executed a fifth forbearance agreement which extended 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 September 30, 2016 and March 31, 2016 was $426,404 and $426,404, respectively, and is classified as a current liability on the consolidated balance sheets. At September 30, 2016 and March 31, 2016, accrued interest payable was $156,952 and $142,296, 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 September 30, 2016 and March 31, 2016 was $50,000, respectively, and is classified as a current liability on the consolidated balance sheets. Interest expense on the note was $1,500 and $1,500 during the six months ended September 30, 2016 and 2015, respectively. At September 30, 2016 and March 31, 2016, accrued interest payable was $ 2,287 and $1,543 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 September 30, 2016 and March 31, 2016 was $30,000, and is classified as a current liability on the consolidated balance sheets. At September 30, 2016 and March 31, 2016, accrued interest payable was $1,000 and $800, respectively. |