{"url_path":"/sec/cik-0001465470/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-07-22","source_url":"https://www.sec.gov/Archives/edgar/data/1465470/0001493152-26-034187-index.html","accession_number":"0001493152-26-034187","cik":"0001465470","ticker":null,"issuer_name":"NaturalShrimp Inc","edgar_url":"https://www.sec.gov/Archives/edgar/data/1465470/0001493152-26-034187-index.html","primary_entity_key":"0001465470","primary_entity_name":"NaturalShrimp Inc"},"word_count":4024,"has_tables":true,"body_markdown":"**ITEM\n8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**\n\n \n\n**NATURALSHRIMP\nINCORPORATED**\n\n**FINANCIAL\nSTATEMENTS AS OF MARCH 31, 2026 AND MARCH 31, 2025**\n\n \n\nTABLE\nOF CONTENTS\n\n \n\n \n**Page**\n\n \n \n\n[REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM](#REP_001) (PCAOB FIRM ID 7158)\nF-1\n\n \n \n\nFINANCIAL\nSTATEMENTS:\n \n\n \n \n\n[Statement of Net Liabilities in Liquidation](#f_001)\nF-2\n\n \n \n\n[Statement of Changes of Net Liabilities in Liquidation](#f_002)\nF-3\n\n \n \n\n[Going Concern Statement of Operations](#f_003)\nF-4\n\n \n \n\n[Going Concern Statement of Changes in Stockholders’ Deficit](#f_004)\nF-5\n\n \n \n\n[Going Concern Statement of Cash Flows](#f_005)\nF-6\n\n \n \n\n[Notes to Liquidation Basis Financial Statements](#f_006)\nF-7\n\n \n\n16\n\n \n\n \n\n**Report of Independent Registered Public Accounting\nFirm**\n\n \n\nTo the Board of Directors\n\nand Stockholders of NaturalShrimp Incorporated\n\n \n\n**Opinion on the Consolidated Financial Statements**\n\n \n\nWe have audited the accompanying consolidated statements\nof net liabilities in liquidation of NaturalShrimp Incorporated and subsidiary (collectively, the “Company”) as of March 31,\n2026 and 2025, the related consolidated statement of changes in net liabilities in liquidation for the year ended March 31, 2026, and\nthe related notes (collectively referred to as the “liquidation basis financial statements”). We have also audited the accompanying\nconsolidated statement of operations, consolidated statement of changes in stockholders’ equity (deficit), and consolidated statement\nof cash flows of the Company for the year ended March 30, 2025, prepared on the going concern basis of accounting, and the related notes\n(collectively referred to as the “going concern basis financial statements”, and together with the liquidation basis financial\nstatements, the “financial statements”).\n\n \n\nIn our opinion, (i) the liquidation basis financial\nstatements present fairly, in all material respects, the net liabilities in liquidation of the Company as of March 31, 2026 and 2025,\nand the changes in its net liabilities in liquidation for the year ended March 31, 2026, on the basis of accounting described in Note\n3 to the financial statements; and (ii) the going concern basis financial statements present fairly, in all material respects, the results\nof the Company’s operations and its cash flows for the year ended March 30, 2025, in conformity with accounting principles generally\naccepted in the United States of America.\n\n \n\n**Basis of Presentation – Liquidation Basis\nof Accounting**\n\n \n\nAs discussed in Note 3 to the financial statements,\nthe Company believes it continued to function as a going concern until March 30, 2025, the date on which the court approved the receiver’s\nmotion to sell substantially all of the Company’s assets, at which point liquidation became imminent. Accordingly, in accordance\nwith ASC 205-30, Liquidation Basis of Accounting, the Company has presented its financial statements as of March 31, 2026 and 2025, and\nfor the year ended March 31, 2026, under the liquidation basis of accounting. Because the going concern basis results of operations for\nthe year ended March 31, 2025 are not comparable to amounts presented under the liquidation basis of accounting, and to comply with the\nfinancial statement requirements of Article 8 of Regulation S-X, the Company has separately presented its consolidated statement of operations,\nconsolidated statement of changes in stockholders’ equity (deficit), and consolidated statement of cash flows for the year ended\nMarch 31, 2025 on the going concern basis of accounting. These going concern basis financial statements should not be read together with,\nor considered comparable to, the liquidation basis financial statements.\n\n \n\n**Basis for Opinion**\n\n \n\nThese financial statements are the responsibility\nof the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our\naudits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)\nand are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable\nrules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the standards\nof the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements\nare free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,\nan audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal\ncontrol over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal\ncontrol over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audits included performing procedures to assess\nthe risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond\nto those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.\nOur audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating\nthe overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\n \n\n**Critical Audit Matters**\n\n \n\nThe critical audit matter communicated below is a\nmatter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit\ncommittee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially\nchallenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on\nthe financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion\non the critical audit matter or on the accounts or disclosures to which it relates.\n\n \n\nAs discussed in Notes to the financial statements,\nin March 2026 the Company entered into an Intellectual Property and Management Transition Agreement with Hydrenesis, Inc. and a related\nparty, which includes a proposed perpetual license and the proposed conversion of approximately $1,034,112 owed to Hydrenesis into equity.\nAs of the date of this report, the related license rights, preferred share issuances, creditor restructuring, and other closing matters\ncontemplated by this agreement had not yet been fully consummated. As a result, significant uncertainty exists regarding the manner and\namount by which the Company will ultimately settle its approximately $8.9 million of remaining net liabilities in liquidation as of March\n31, 2026, of which approximately $3.0 million is owed to related parties.\n\n \n\n/s/ BCRG Group (PCAOB ID 7158)\n\n \n\nWe have served as the Company’s auditor since\n2025.\n\nIrvine, CA\n\nJuly 20,\n2026\n\n \n\nF-1\n\n \n\n \n\n**NATURALSHRIMP\nINCORPORATED**\n\n**STATEMENT\nOF NET LIABILITIES IN LIQUIDATION**\n\n \n\n  \n   \n  \n\n  \nAs of March 31, \n\n  \n2026  \n2025 \n\nCash \n$9,851  \n$101,969 \n\nCurrent assets \n -  \n 193,865 \n\nFixed assets and intangibles \n -  \n 35,800,000 \n\nOther assets \n -  \n 86,330 \n\nAccounts payable and accrued expenses \n (6,888,615) \n (6,809,772)\n\nNotes payable and lines of credit \n (1,179,832) \n (37,200,851)\n\nOther liabilities \n (933,993) \n (962,553)\n\nNet liabilities in liquidation \n$(8,992,589) \n$(8,791,012)\n\n**  **\n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-2\n\n \n\n \n\n**NATURALSHRIMP\nINCORPORATED**\n\n**STATEMENT\nOF CHANGES OF NET LIABILITIES IN LIQUIDATION**\n\n \n\n  \nFor the Year Ended \n\n  \nEnded March 31, 2026 \n\nNet liabilities in liquidation, March 31, 2025 \n$(8,791,012)\n\n  \n   \n\nChanges in assets and liabilities in liquidation: \n   \n\nCash \n (92,118)\n\nWrite-off of assets \n (280,195)\n\nTransfer of fixed assets and intangibles to creditor \n (35,800,000)\n\nIncrease to accounts payable and accrued expenses \n (78,843)\n\nExtinguishment of notes payable and lines of credit \n 36,021,019 \n\nExtinguishment of other liabilities \n 28,560 \n\nNet changes in liabilities in liquidation \n (201,577)\n\nChanges in net assets in liquidation resulting from settlement of assets and liabilities: \n   \n\n  \n   \n\nNet liabilities in liquidation, March 31, 2026 \n$(8,992,589)\n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-3\n\n \n\n \n\n**NATURALSHRIMP\nINCORPORATED**\n\n**CONSOLIDATED\nSTATEMENT OF OPERATIONS**\n\n**(GOING\nCONCERN BASIS)**\n\n \n\n  \nPeriod Ended \n\n  \nMarch 30, 2025 \n\n  \n  \n\nSales \n$202,817 \n\nCost of sales \n 138,890 \n\nNet revenue \n 63,927 \n\n  \n   \n\nOperating expenses: \n   \n\nGeneral and administrative \n 3,406,189 \n\nFacility operations \n 383,829 \n\nDepreciation \n 1,725,480 \n\nAmortization \n 1,470,000 \n\n  \n   \n\nTotal operating expenses \n 6,985,498 \n\n  \n   \n\nNet loss from operations \n (6,921,571)\n\n  \n   \n\nOther income (expense): \n   \n\nInterest expense \n (363,688)\n\nInterest expense - related parties \n (41,996)\n\nInterest expense \n (41,996)\n\nAmortization of debt discount \n - \n\nChange in fair value of warrant liability \n 24,000 \n\nChange in fair value of restructured notes payable \n (3,463,804)\n\nExtension fee \n - \n\nGain on termination of lease \n - \n\nGain on sale of machinery and equipment \n 39,330 \n\n  \n   \n\nTotal other income (expense), net \n (3,806,158)\n\n  \n   \n\nIncome (loss) before income taxes \n (10,727,729)\n\n  \n   \n\nProvision for income taxes \n - \n\n  \n   \n\nNet loss \n (10,727,729)\n\n  \n   \n\nLess net loss attributable to non-controlling interest \n - \n\n  \n   \n\nNet loss attributable to NaturalShrimp Inc. \n (10,727,729)\n\n  \n   \n\nAccretion on Preferred shares \n (180,884)\n\nDividends \n (300,388)\n\n  \n   \n\nNet loss available for common stockholders \n$(11,209,001)\n\n  \n   \n\nLoss per share (Basic and Diluted) \n$(0.01)\n\n  \n   \n\nWEIGHTED AVERAGE SHARES OUTSTANDING (Basic and Diluted) \n 1,236,795,030 \n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-4\n\n \n\n \n\n**NATURALSHRIMP\nINCORPORATED**\n\n**CONSOLIDATED\nSTATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT**\n\n**(GOING\nCONCERN BASIS)**\n\n \n\n  \nShares  \nAmount  \nShares  \nAmount  \nCapital  \nissued  \nreceivable  \ndeficit  \ndeficit \n\n  \nSeries A Preferred stock  \nCommon stock  \nAdditional paid in  \nStock to be  \nSubscription  \nAccumulated  \nTotal stockholders’ \n\n  \nShares  \nAmount  \nShares  \nAmount  \nCapital  \nissued  \nreceivable  \ndeficit  \ndeficit \n\n  \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\nBalance March 31, 2024 \n 5,000,000  \n$500  \n 1,116,482,063  \n$111,712  \n$126,468,749  \n$390,024  \n$(56,250) \n$(183,791,156) \n (56,876,421)\n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nIssuance of common shares under financing agreement \n    \n    \n 141,064,683  \n 14,106  \n 847,562  \n -  \n -  \n -  \n 861,668 \n\nShares issued upon exchange of Partitioned Note \n    \n    \n 20,000,000  \n 2,000  \n 188,000  \n -  \n -  \n -  \n 190,000 \n\nAccretion of Series E Preferred Shares \n    \n    \n -  \n -  \n -  \n -  \n -  \n (58,300) \n (58,300)\n\nAccretion on Series G Preferred shares \n    \n    \n -  \n -  \n -  \n -  \n -  \n (171,584) \n (171,584)\n\nDividends payable on Preferred Shares \n    \n    \n -  \n -  \n -  \n -  \n -  \n (298,405) \n (298,405)\n\nNet loss \n -  \n -  \n    \n    \n    \n    \n    \n (10,727,729) \n (10,727,729)\n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nBalance March 30, 2025 \n 5,000,000  \n$500  \n 1,277,546,746  \n$127,818  \n$127,504,311  \n$390,024  \n$(56,250) \n$(195,047,174) \n (67,080,771)\n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-5\n\n \n\n \n\n**NATURALSHRIMP\nINCORPORATED**\n\n**CONSOLIDATED\nSTATEMENT OF CASH FLOWS**\n\n**(GOING\nCONCERN BASIS)**\n\n \n\n  \nPeriod Ended \n\n  \nMarch 30, 2025 \n\nCASH FLOWS FROM OPERATING ACTIVITIES \n   \n\nNet loss \n$(10,727,729)\n\n  \n   \n\nAdjustments to reconcile net loss to net cash used in operating activities \n   \n\n  \n   \n\nDepreciation expense \n 1,725,480 \n\nAmortization expense \n 1,470,000 \n\nAmortization of debt discount \n - \n\nChange in fair value of warrant liability \n (24,000)\n\nChange in fair value of restructured notes payable \n 3,463,804 \n\nExtension fee \n - \n\nFinancing costs \n 7,300 \n\nGain on sale of machinery and equipment \n 39,330 \n\nShares issued for services \n - \n\nAmortization of operating lease right-of-use assets \n 68,690 \n\nGain on termination of lease \n - \n\nIssuance of Series G Preferred Stock for services \n - \n\n  \n   \n\nChanges in operating assets and liabilities: \n   \n\nAccounts receivable \n 26,035 \n\nInventory \n 37,509 \n\nPrepaid expenses and other current assets \n 8,199 \n\nDeferred offering costs \n - \n\nAccounts payable \n (603,879)\n\nOther accrued expenses \n 1,438 \n\nAccrued expenses - related parties \n 657,724 \n\nAccrued interest \n - \n\nAccrued interest - related parties \n 41,996 \n\nOperating lease liabilities \n (85,054)\n\n  \n   \n\nCash used in operating activities \n (3,893,157)\n\n  \n   \n\nCASH FLOWS FROM INVESTING ACTIVITIES \n   \n\n  \n   \n\nCash paid for fixed assets \n - \n\nCash received for sale of machinery and equipment \n 117,712 \n\n  \n   \n\nCash used in investing activities \n 117,712 \n\n  \n   \n\nCASH FLOWS FROM FINANCING ACTIVITIES \n   \n\n  \n   \n\nProceeds from short-term promissory note and lines of credit \n 2,661,196 \n\nProceeds from sale of stock \n 760,693 \n\nProceeds from promissory note, related parties \n 40,000 \n\nProceeds from sale of Series E Preferred Shares \n - \n\nProceeds from sale of Series G Preferred Shares \n 300,000 \n\n  \n   \n\nCash provided by financing activities \n 3,761,889 \n\n  \n   \n\nNET CHANGE IN CASH \n (13,556)\n\n  \n   \n\nCASH AT BEGINNING OF PERIOD \n 115,525 \n\n  \n   \n\nCASH AT END OF PERIOD \n$101,969 \n\n  \n   \n\nINTEREST PAID \n$616 \n\n  \n   \n\nSupplemental Disclosure of Non-Cash Investing and Financing Activities: \n   \n\nConstruction in process transferred to fixed assets \n$- \n\nShares issued upon conversion of Preferred stock \n$- \n\nShares issued upon exchange of Partitioned Note \n$90,000 \n\nDividends on Series E Preferred stock \n$- \n\nDividends in kind issued \n$300,388 \n\nShares issued/to be issued, for legal settlement \n$- \n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-6\n\n \n\n \n\n**NATURALSHRIMP\nINCORPORATED**\n\n**NOTES\nTO FINANCIAL STATEMENTS**\n\n** **\n\n**NOTE\n1 – NATURE OF THE ORGANIZATION AND BUSINESS**\n\n \n\n*Nature\nof the Historical Business*\n\n \n\nNaturalShrimp\nIncorporated (“NaturalShrimp” or the “Company”), a Nevada corporation, was a biotechnology company that developed\na proprietary technology that allowed it to grow Pacific White shrimp (Litopenaeus vannamei, formerly Penaeus vannamei) in an ecologically\ncontrolled, high-density, low-cost environment, and in fully contained and independent production facilities.\n\n \n\n*Receivership\nand Liquidation*\n\n* *\n\nOn\nSeptember 4, 2024, Streeterville Capital, LLC, a Utah limited liability company, and Bucktown Capital, LLC, a Utah limited liability\ncompany (collectively, “Lenders”), filed a *Verified Emergency Motion for Appointment of Receiver* (the “Motion”)\nunder Civil Case No. 240907138, in the District Court of Salt Lake County, Utah, against NaturalShrimp, Inc. (“NaturalShrimp”).\n\n \n\nThe\nMotion alleged, among other things, that NaturalShrimp had defaulted under the terms of its loan agreements with the Lenders. The Motion\nsought the appointment of a Receiver to immediately take control of NaturalShrimp’s assets to preserve the same.\n\n \n\nAn\norder was entered ex parte by the Utah State Court in the Receivership Case on September 9, 2024 granting the relief requested by Lenders.\nThe Utah State Court duly appointed Amplēo Turnaround and Restructuring, LLC (the “Receiver”) as the receiver over\nNaturalShrimp’s assets. The Utah State Court’s order further scheduled a hearing to be held on September 17, 2024, on a preliminary\ninjunction to address issues raised in the Motion.\n\n \n\nOn\nNovember 20, 2024, the Lenders and NaturalShrimp filed a *Verified Amended and Stipulated Emergency Motion for Immediate Appointment\nof a Receiver* in the Receivership Case.\n\n \n\nOn\nNovember 22, 2024, the Utah State Court entered an order granting the Stipulated Motion and appointed Receiver as the receiver over the\nassets of NaturalShrimp. Under the Amended Receivership Order, the Receiver is the receiver over the Receivership Entities’ assets.\n\n \n\nOn\nFebruary 11, 2025, the Receiver filed a *Motion for Approval to Sell Substantially all of the Receivership Entities’ Assets to\nStreeterville Captial, LLC and Bucktown Captial, LLC (or Their Designees) or Any Other Party With a Higher and Better Offer Free and\nClear of All Liens, Interests, Claims, and Encumbrances*(the “Sale Motion”) in the Receivership Case. The Sale Motion\nsought the Utah State Court’s approval for the Receiver to sell substantially all of the Receivership Entities’ assets free\nand clear of all liens, interests, claims, and encumbrances to Streeterville and Bucktown Capital, through their designated entities,\nNaturalShrimp Farms, Inc. (“NV Purchaser”), a Nevada corporation, Iowa Shrimp Holdings, LLC (“IA Purchaser”),\nan Iowa limited liability company, Texas Shrimp Holdings, LLC (“TX Purchaser” or together with NV Purchaser and IA Purchaser,\nthe “Purchasers”), a Texas limited liability company, for a roughly $35,703,789.87 credit bid (based on a secured and administrative\nclaim basis) and $100,000 cash, pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement (“APA”)\nbetween Trustee and Purchasers. The order to sell the assets was approved on March 30, 2025 and the title to the assets was transferred\nto the lenders on May 14, 2025.\n\n \n\n*Pending Intellectual Property Agreement*\n\n* *\n\n** During March of 2026, NaturalShrimp Incorporated entered into an Intellectual Property Acquisition and Management Transition Agreement (the “Agreement”) with Hydrenesis, Inc., a Florida corporation (“Hydrenesis”), and David Antelo. Pursuant to the agreement:\n\n \n\n● The Company will transition its operations toward the commercialization of aquaculture and water treatment technologies; and\n\n \n\n● Certain governance and control rights were transferred pursuant to the Agreement\n\n \n\n● Hydrenesis will grant the Company a perpetual license to certain intellectual property, technology rights, know-how, and related commercialization rights, subject to the terms and conditions of the agreement\n\n \n\n● The Company’s outstanding obligation to Hydrenesis in the amount of approximately $1,034,112 will be converted into equity at Closing;\n\n \n\n● The Company approved and executed Certificates of Designation for Series P, Series P-2, and Series L Preferred Stock, which are expected to be filed with the Nevada Secretary of State;\n\n \n\n●\nExisting liabilities, obligations, and legacy securities, including Series A Preferred Stock and Series F Preferred Stock, will be restructured,\namended, cancelled, or exchanged into Series L Preferred Stock;\n\n \n\nThe Hydrenesis transaction was consummated on June 25, 2026; however,\nthe related preferred share issuances, creditor restructuring, and accounting recognition of the license rights remained subject to completion\nas of the date of this filing.\n\n \n\nF-7\n\n \n\n \n\n**NOTE\n2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**\n\n \n\n*Basis\nof Presentation*\n\n* *\n\nThe\nconsolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“US\nGAAP”). As the Company’s liquidation became imminent as of March 30, 2025, the Company has presented its financial statements\nunder the liquidation basis of accounting as of both March 31, 2026 and March 31, 2025. To comply with ASC 205-30, *Liquidation Basis\nof Accounting*, the Company has presented a consolidated statement of net liabilities in liquidation as of March 31, 2026 and March\n31, 2025 and a consolidated statement of changes of net liabilities in liquidation for the year ended March 31, 2026. In addition, to\ncomply with the financial statement requirements of Article 8 of Regulation S-X, the Company has also presented a consolidated statement\nof operations, a consolidated statement of changes in shareholders equity and a consolidated statement of cash flows for the year ended\nMarch 31, 2025 under the going concern basis of accounting. The going concern financial statements have been presented separately from\nthe liquidation basis financial statements as the results should not be considered comparable under the two presentation methods.\n\n* *\n\n*Liquidation\nBasis of Accounting*\n\n \n\nIn\naccordance with *ASC 205-30, Liquidation Basis of Accounting*, the Company prepares its financial statements using the liquidation\nbasis of accounting when liquidation is imminent. Liquidation is considered imminent when either of the following occurs-i) A plan for\nliquidation has been approved by the person or persons with the authority to make such a plan effective, and the likelihood is remote\nthat either execution of the plan will be blocked by other parties or the entity will return from liquidation and ii) A plan for liquidation\nis imposed by other forces, and the likelihood is remote that the entity will return from liquidation.\n\n \n\nWhen\nusing the liquidation basis of accounting, the Company will i) recognize other items that it previously had not recognized but it expects\nto sell in liquidation or use to settle liabilities ii) accrue costs and income that it expects to incur or earn through the end of its\nliquidation if and when it has a reasonable basis for estimation iii) measure its assets to reflect the estimated amount of cash or other\nconsideration that it expects to collect in settling or disposing of those assets in carrying out its plan for liquidation and iv) measure\nits liabilities in accordance with the measurement provision of other topics that it would otherwise apply to those liabilities.\n\n* *\n\n*Fair\nValue Measurements*\n\n \n\nASC\nTopic 820, “*Fair Value Measurement”*, requires that certain financial instruments be recognized at their fair values\nat our balance sheet dates. However, other financial instruments, such as debt obligations, are not required to be recognized at their\nfair values, but GAAP provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair\nvalues of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts in our balance\nsheets. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument,\nalong with other information, including changes in the fair values of certain financial instruments recognized in income or other comprehensive\nincome. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under *Financial\nInstruments.*\n\n \n\n*Financial\nInstruments*\n\n \n\nThe\nCompany’s financial instruments include cash and cash equivalents, receivables, payables, and debt and are accounted for under\nthe provisions of ASC Topic 825, “*Financial Instruments”*. The carrying amount of these financial instruments, with\nthe exception of the restructured debt, as reflected in the consolidated balance sheets approximates fair value.\n\n \n\n*Cash\nand Cash Equivalents*\n\n \n\nFor\nthe purpose of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity\nof three months or less to be cash equivalents. There were no cash equivalents as of March 31, 2026.\n\n \n\n*Recently\nIssued Accounting Standards*\n\n \n\nAs\nthe Company is currently reporting under the liquidation basis of accounting, it does not believe that there are any recently issued\naccounting standards that would be material to its financial statements.\n\n \n\nF-8\n\n \n\n \n\n**NOTE\n3 – LIQUIDATION BASIS OF ACCOUNTING**\n\n** **\n\nDuring\nSeptember of 2024, Ampleo Turnaround and Restructuring, LLC was placed as the receiver over the Company’s assets due to its\nsignificant outstanding debt. Subsequently, during February of 2025, the receiver filed a motion to sell all of the Company’s\nassets to Streeterville and Bucktown Capital for an approximate credit bid of $35.7\nmillion and $0.1\nmillion in cash. The motion was approved by the court (overseeing the motion) on March 30, 2025 with title to the assets being\ntransferred to the creditor on May 14, 2025. The Company believes that it continued to function as a going concern until the date\nthe motion to sell its assets was approved by the court at which time its liquidation became imminent. Further, while the Company\nentered into an intellectual property and management agreement during March of 2026, the related license rights, preferred share\nissuances, creditor restructuring, and other closing matters had not yet been consummated as of the balance sheet date. As such, in\naccordance with ASC 205-30, the Company has presented i) a consolidated statement of net liabilities in liquidation as of both March\n31, 2026 and March 31, 2025 and ii) a consolidated statement of changes in net liabilities in liquidation for the year ended March\n31, 2026. The consolidated statements of net liabilities in liquidation and statement of changes of net liabilities in liquidation\nhave been prepared using the liquidation basis of accounting.\n\n \n\nAs\npart of the liquidation, the Company transferred ownership of its revenue generating fixed assets and intangible assets on May 14, 2025\nto two of its creditors (Streeterville and Buckstown) in exchange for the extinguishment of i) the restructured August and Senior notes\nand Buckstown line of credit. As of the date of this filing, the Company had limited assets available and was therefore uncertain as\nto the manner by which it expects to settle its remaining outstanding liabilities. However, in accordance with the intellectual property\nagreement, the Company hopes to settle its remaining outstanding liabilities in exchange for the issuance of newly authorized preferred\nshares.\n\n \n\nOur\nconsolidated statement of net liabilities in liquidation as of March 31, 2026 and March 31, 2025 reflects the following:\n\n \n\n \n●\nNo\nadditional items were recognized, such as trademarks, that the Company might either sell in liquidation or use to settle its liabilities\n\n \n●\nLiabilities\nhave been recognized in accordance with the recognition provisions of other topics that otherwise would apply to those liabilities.\nAs of March 31, 2026, our remaining liabilities were primarily comprised of i) accounts payable and accrued expenses to finance and\nlegal service providers and former employees and ii) outstanding debt. Of the approximately $8.9 million in outstanding liabilities\nas of March 31, 2026 approximately $3.0 million was to related parties and was comprised of i) accrued salaries and ii) outstanding\nloans (including accrued interest).\n\n \n●\nAs\nof March 31, 2025, the intangible assets and fixed assets were recognized based on a settlement amount equal to the credit bid of\napproximately $35,800,000. As of March 31, 2026, intangible assets and fixed assets were fully de-recognized due to ownership of\nthe assets being transferred to our creditors as of May 14, 2025.\n\n \n●\nNo\nadditional costs expected to be incurred through the end of our liquidation were accrued as of March 31, 2026 as there has been limited\nactivity subsequent to the balance sheet date. We do not expect to earn any additional income through the end of the liquidation\nperiod.\n\n** **\n\n**NOTE\n4 STOCK BASED COMPENSATION**\n\n** **\n\nOn\nMarch 17, 2026 the Company entered into advisory agreements with four former employees to provide consulting services to the Company\nover a three-year period. In consideration for the consulting services, the Company issued warrants to purchase 2,450,000 with a three-year\nexercise term and $0.00125 strike price. Due to certain restrictions, the warrants were not currently exercisable. Further, as the Company\ncurrently has approximately 1.3 billion common shares outstanding the fair value of the warrants was not material.\n\n \n\n**NOTE\n5 SUBSEQUENT EVENTS**\n\n** **\n\nThe\nCompany has evaluated subsequent events through the date these financial statements were issued. As disclosed elsewhere in this report,\nthe Hydrenesis transaction was consummated on June 25, 2026; however, the related preferred share issuances, creditor restructuring,\nand accounting recognition of the license rights remained subject to completion. Other than the foregoing, there were no additional material\nsubsequent events requiring recognition or disclosure.\n\n \n\nF-9"}