In August 2014, the FASB issued ASU 2014-15 Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard provides guidance around management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial statements.SUNDANCE STRATEGIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2020

In January 2016,New Accounting Pronouncements

Adopted During the FASB issued ASU 2016-01 regarding Financial Instruments, which amended guidance on the classification and measurement of financial instruments. Under the new guidance, entities will be required to measure equity investments that are not consolidated or accounted for under the equity method at fair value with any changes in fair value recorded in net income, unless the entity has elected the new practicability exception. For financial liabilities measured using the fair value option, entities will be required to separately present in other comprehensive income the portion of the changes in fair value attributable to instrument-specific credit risk. Additionally, the guidance amends certain disclosure requirements associated with the fair value of financial instruments. The standard will be effective for the Company’s fiscal year beginning April 1, 2018, including interim reporting periods within that fiscal year. The Company is currently evaluating the effect of the adoption of this guidance on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 related to the accounting for leases. This pronouncement requires lessees to record most leases on their balance sheet, while expense recognition on the income statement remains similar to current lease accounting guidance. The guidance also eliminates real estate-specific provisions and modifies certain aspects of lessor accounting. Under the new guidance, lease classification as either a finance lease or an operating lease will determine how lease-related revenue and expense are recognized. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the effect of the adoption of this guidance on the consolidated financial statements.

In March 2016, the FASB issued ASU 2016-06 related to the embedded derivative analysis for debt instruments with contingent call or put options. This pronouncement clarifies that an exercise contingency does not need to be evaluated to determine whether it relates only to interest rates or credit risk. Instead, the contingent put or call option should be evaluated for possible bifurcation as a derivative in accordance with the four-step decision sequence detailed in FASB ASC 815-15, without regard to the nature of the exercise contingency. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. The Company does not believe the adoption of this guidance will have a material effect on the consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The new standard is designed to simplify the areas of share based payments relating to income tax consequences. ASU 2016-09 is effective for the Company for its fiscal year beginning April 1, 2017. The Company is currently evaluating the effect of the adoption of this guidance on the consolidated financial statements.Three months Ended June 30, 2020

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. The amendments arebecame effective for the Company’s fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and results of operations.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. Historically, there has been a diversity in practice in how certain cash receipts/payments are presented and classified in the statement of cash flows. To reduce the existing diversity in

practice, this update addresses the eight cash flow issues as listed in the pronouncement. The amendments in this update are effective for fiscal yearsyear beginning April 1, 2018, and interim periods within that fiscal year. Early adoption is permitted.2020. The Company is currently evaluating the effect of the adoption of this guidancestandard did not have an impact on the consolidated financial statements.statements because the Company does not hold financial instruments subject to credit losses.

In October 2016, the FASB issued ASU 2016-17, Consolidation - Interests held through Related Parties that are under Common Control, which alters how a decision maker needs to consider indirect interests in a variable interest entity (VIE) held through an entity under common control. Under the new ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The amendments in this Update are effective for fiscal years beginning April 1, 2017, including interim periods within that fiscal year. The Company is currently evaluating the effect of the adoption of this guidance on the consolidated financial statements.Not Yet Adopted

The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.

(3) ADVANCE FOR INVESTMENT IN NET INSURANCE BENEFITS

On June 7, 2013, the Company entered into an Asset Transfer Agreement (the “Del Mar ATA”) with Del Mar Financial, S.a.r.l. (“Del Mar”). As part of the Del Mar ATA, the Company entered into a Structuring and Consulting Agreement with Europa Settlement Advisors Ltd. (respectively, the “Europa Agreement” and “Europa”).(2) LIQUIDITY REQUIREMENTS

The Del Mar ATA involvedaccompanying financial statements have been prepared on a going concern basis under which the purchaseCompany is expected to be able to realize its assets and satisfy its liabilities in the normal course of certain life settlement assets consisting of the legal and net beneficial ownership interest in a portfolio of life insurance policies (the “NIBs”), among other assets that are consideration and collateral for certain cash advances and expense payments made by the Company. Accordingbusiness. Due to the Del Mar ATA, Del Mar, with the assistance of Europa, was obligated to convert the NIBs and other newly acquired NIBs into “Qualified NIBS.” As soon as Del Mar met its obligation to provide Qualified NIBs tofact that the Company any remaining NIBs and any other consideration and collateral would be returned or released to Del Mar. The original due date for the conversion was December 31, 2013, which date was subsequently extended several times. On April 30, 2015, the Company finalized an amendment to the Del Mar ATA and the related Europa Agreement to extend the deadline until August 31, 2015.

The remaining consideration and collateral under the Del Mar ATA, as of September 1, 2015, primarily consisted of approximately 72.2% of the NIBs associated with a portfolio of life settlement policies having a face value that originally totaled $94,000,000. The remaining 27.8% interestedis in the NIBs were held by other parties. During June 2015, oneprocess of the life settlement policies matured for $10,000,000 (the “Matured Policy”), lowering the remaining face value of such life settlement policiesseeking NIB investments to $84,000,000. The premiums and expenses related to the maintenance of these life insurance policies are financed by a loan from a lender.

As Del Mar was unable to provide the required amount of Qualified NIBs by the extended due date of August 31, 2015, effective September 1, 2015, the agreements with Del Mar and Europa were cancelled and the Company obtained full ownership and control of the collateral, which included theacquire as mentioned above, mentioned approximately 72.2% of the NIBs associated with the $84,000,000 face value of life settlement policies and certain rights to net proceeds relating to the Matured Policy.

On September 30, 2015, the Company transferred to Investment in NIBs the remaining balance of advances and expense payments to Del Mar, totaling $3,368,380, which approximates fair value. This amount was residing in advance for investment in NIBs before being transferred to investment in NIBs (see Note 4).

The bulk of the $10,000,000 proceeds paid in connection with the Matured Policy were used to repay loans secured by such Matured Policy. However, on September 10, 2015, the Company received $1,094,335 as a result of the rights associated with the Matured Policy. These proceeds were allocated $239,415 to pay off a note receivable (including interest), $547,308 to reimburse the Company for expense payments made to or on behalf of Del Mar and $307,612 as a refund of advance payments previously made to or on behalf of Del Mar as part of the Del Mar ATA.

The $547,308 and $307,612 proceeds, which together total $854,920, were applied to reduce Advance for Investment in NIBs.

In addition to obtaining full and unrestricted rights to the NIBs upon termination of the Del Mar ATA and Europa Agreement, the Company also is entitled to receive liquidated damages from Del Mar in an amount equal to 100% of any cash advances made under the Del Mar ATA. The Company is currently determining the extent of the liquidated damages claim and Del Mar’s ability to pay any such liquidated damages. The liquidated damages are computed pro rata, based upon the percentage of Qualified NIBs delivered by Del Mar under the Del Mar ATA. The Company received $90,600,000 in Qualified NIBs or approximately 22.65% of the $400,000,000 in Qualified NIBs due under the Del Mar ATA. Accordingly, once 22.65% of its costs and expenses are deducted, the Company would be entitled to receive the remaining amount of its costs and expenses, times two, as liquidated damages. As a result of the termination, the Company has no further payment obligationscurrent source of operating revenues. In order to Del Marpurchase NIBs, the Company will need to raise additional capital or fee obligations to Europa.secure alternative sources of debt financing.

(4) INVESTMENT IN NET INSURANCE BENEFITS

Investment in NIBs forSince the six months ended September 30, 2016,Company’s inception on January 31, 2013, its operations have been primarily financed through sales of equity, debt financing from related parties and the fiscal year ended March 31, 2016 were as follows:

issuance of notes payable and convertible debentures. As explained in Note 3,of June 30, 2020, the Company transferred $3,368,380 from advance for investment in NIBs into investment in NIBs on September 30, 2015.  

The estimated fair valuehad $11,862 of the Company’s investment in NIBs approximated carrying value at September 30, 2016, with fair value calculated using level 3 inputs as there is little observable market data available and management is requiredcash assets, compared to use significant judgment in its estimates.  

During April 2016, the Company received $1,417,870 in cash proceeds associated with the $10,000,000 maturity explained in Note 3 and miscellaneous adjustments to other underlying policies. The cash proceeds had the effect of reducing accrued interest on NIBs.

The investment in NIBs is a residual economic beneficial interest in a portfolio of life insurance policies that have been financed by an independent third party via a loan from a senior lender and insured via a mortality risk insurance product or mortality re-insurance (“MRI”).  Future expected cash flow is defined as the net insurance proceeds from death benefits after senior debt repayment, mortality risk repayment and service provider or other third-party payments. The Company is not responsible for maintaining premiums or other expenses related to maintaining the underlying life insurance contracts. Therefore, the investment in NIBs balance on the Company’s balance sheet does not increase when premiums or other expenses are paid.   The Company held a 100% interest in the NIBs relating to the underlying life insurance policies$28,784 as of March 31, 2015. During the year ended March 31, 2016 we acquired NIBs in which the holders2020. As of the underlying policies only owned 72%. Therefore, as of SeptemberJune 30, 20162020, the Company holds between 72%had access to draw an additional $4,980,492 on the notes payable, related party (see Note 5) and 100% in$3,000,000 on the NIBs relatingConvertible Debenture Agreement (See Note 6). For the three months ended June 30, 2020, the Company’s average monthly operating expenses were approximately $45,000, which includes salaries of our employees, consulting agreements and contract labor, general and administrative expenses and legal and accounting expenses. In addition to the underlying life insurance policies.

The Company accounts for its investment in NIBs at the initial investment value increased for interest income and decreased for cash receipts received by the Company.  At the time of transfer or purchase of an investment in NIBs,monthly operating expenses, the Company estimates the future expected cash flowscontinues to pursue other debt and determines the effective interest rate based on these estimated cash flowsequity financing opportunities, and our initial investment. Based on this effective interest rate, the Company calculates accretable income, which is recorded as interest income on investment in NIBs in the statement of

operations.  Our current projections are based off of various assumptions including, but not limited to, the amount and timing of projected net cash receipts, expected maturity events, changes in discount rates, life expectancy estimates and their relation to premiums, interest, and other costs incurred, among other items. These uncertainties and contingencies are difficult to predict and are subject to future events that may impact our estimates and interest income. As a result, actual results could differ significantly from these projections. Therefore, subsequent to the purchase and on a regular basis, these future estimated cash flows are evaluated for changes. If the determination is made that the future estimated cash flows should be significantly adjusted, a revised effective yield is calculated prospectively based on the current amortized costfinancing expense of the investment, including accrued accretion. Any positive or adverse change in cash flows that does not result in the recognition of an “other-than-temporary impairment” (“OTTI”) results in a prospective increase or decrease in the effective interest rate used to recognize interest income.

During July 2015 a group of persons located in the United States (the “Purchasers”) acquired the entities that owned all of the portfolios of life insurance policies underlying the Company’s NIBs.  In connection with this purchase, the Purchasers and the respective owners of these portfolios entered into a settlement agreement releasing such owners and their managers from liability related to their ownership and management of the entities that owned the respective portfolios of life insurance contracts.  The Company and Purchasers agreed to indemnify the prior owners of such portfolios against future claims in connection with the issuance of the NIBs or their ownership or management of the entities sold, based on actions that occurred prior to this sale to the Purchasers. The Company and Purchasers further agreed to maintain certain liquidity requirements of the entities underlying the NIBs for a period of 15 months following the acquisition by the Purchasers, which 15 month period expired in October 2016. If such liquidity$74,500 was not provided, the Company and Purchasers were obligated to indemnify the prior owners and managers of the entities against third party claims for unpaid expenses. Neither the purchase of these entities nor the Settlement Agreement resulted in any material change in the Company’s NIBs ownership interest. The Company was supportive of the Purchasers acquiring the entities that owned the portfolios of life insurance contracts underlying the Company’s NIBs and was willing to provide the indemnification because it believed this ownership change would result in a reduction of costs and expenses associated with ownership of the NIBs, which would increase their intrinsic value. The Company was made aware by the Purchasers that credit was presently no longer available to pay certain costs to maintain the structure of the underlying life insurance policies. The Company’s obligations to provide liquidity under the Settlement Agreement have now expired and the Company is not legally obligated for costs incurred by the entities underlying the NIBs. However, if credit does not become available, whether it be by proceeds from a future maturity or other negotiations, the Company may provide such liquidity to protect its investment in the NIBs. The total historical unpaid costs incurred prior to the ownership transition and potential unpaid cost incurred after the ownership transition approximates $370,000 and $580,000, respectively, for an estimated total of $950,000. The Company believes the probable amount it will ultimately pay is approximately $316,667. Therefore, the Company has accrued $316,667 during the three months ended SeptemberJune 30, 2016,2020. As management continues to accountexplore additional financing alternatives, the Company is expected to spend an additional $350,000 over the next 12 months related to these efforts. Outstanding Accounts Payable as of June 30, 2020 totaled $499,817, and other accrued liabilities totaled $489,559. Management has concluded that its existing capital resources and availability under its existing convertible debentures and debt agreements with related parties will be sufficient to fund its operating working capital requirements for this uncertainty.at least the next 12 months from the issuance of these financial statements. Related parties have given assurance that their continued support, by way of either extensions of due dates, or increases in lines-of-credit, can be relied on. As mentioned above, the Company also continues to evaluate other debt and equity financing opportunities.

The recent outbreak of COVID-19 originated in Wuhan, China, in December 2019 and has since spread to multiple countries, including the United States and several European countries. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. The COVID-19 pandemic is affecting the United States and global economies and may affect the Company’s operations and those of third parties on which the Company relies. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce the Company’s ability to access capital, which could negatively impact the Company’s short-term and long-term liquidity. The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. The Company anticipatesdoes not yet know the full extent of potential delays or impacts on its business, financing or other activities or on healthcare systems or the global economy as a whole. However, these effects could have a material impact on the Company’s liquidity, capital resources, operations and business and those of the third parties on which we rely.

SUNDANCE STRATEGIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2020

(3) FAIR VALUE MEASUREMENTS

As defined by ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also requires the consideration of differing levels of inputs in the determination of fair values.

Those levels of input are summarized as follows:

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company did not have any transfers of assets and liabilities between Levels 1, 2 and 3 of the fair value measurement hierarchy during the three months ended June 30, 2020 and 2019.

Other Financial Instruments

The Company’s recorded values of cash and cash equivalents, prepaid expenses and other assets, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. The recorded values of the notes payable and convertible debenture approximate the fair values as the interest rate approximates market interest rates.

(4) STOCKHOLDERS’ EQUITY

Common Stock

Effective December 6, 2018, three existing stockholders have contributed to the Company a portion of their common shares held at a repurchase price to the Company of $0.05 per share. The Company has cancelled the acquired shares, which decreased the outstanding common shares on the books of the Company. The total $316,667number of common shares canceled/retired was 8,000,000. The total liability related to the repurchase of these shares is $400,000, with repayment contingent on a major financing event.

Warrants to Purchase Common Stock

Effective April 3, 2020, the related party, note payable and line of credit agreement with the Chairman of the Board of Directors and a stockholder (see Note 5) was amended to include a formal provision that provides the related party lender with common stock warrants upon the lenders extension of a maturity due date or upon the loaning of additional monies. The number of warrants issued will be paid by March 31, 2017, and therefore this amount has been recorded as current accrued expense. The Company will assess this uncertainty throughoutbased on the year ended March 31, 2017, and will adjustfollowing formula: 10,000 warrants per month the amount accrued as more information becomes available.due date is extended plus 1 warrant for every $2 of the principal balance outstanding (not including interest) at the time of the extension (rounded to the nearest whole warrant). Effective April 3, 2020, the number of warrants to be issued upon the loaning of additional monies is 2 warrants for each dollar loaned.

SUNDANCE STRATEGIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2020

(5) NOTES PAYABLE AND LINES-OF-CREDIT, RELATED PARTYIn addition, Mr. Dickman, the holder of the related party, unsecured promissory notes (see Note 5) has informed the Company that, at such time the Company requests either an extension or additional monies from the lender, in addition to interest, the lender will require 10,000 warrants per month the due date is extended plus 1 warrant for every $2 of the principal balance outstanding (not including interest) at the time of the extension (rounded to the nearest whole warrant). Upon the loaning of additional monies, the lender will also require 2 warrants for each dollar loaned.

As of SeptemberJune 30, 2016,2020 and March 31, 2020, the Company held outstanding warrants to related parties totaling 1,952,000 and 1,702,000, respectively. All warrants have an exercise price of $0.05 per share, a five-year life as of the date of grant and expire between November 2024 and June 2025. The value of the warrants on the date of grant, as calculated by the Black-Scholes-Merton valuation model, was not significant. The inputs used in this calculation included a risk-free rate of 0.32% to 0.39%, volatility of 85% to 123% and a dividend rate of 0%. The average remaining outstanding life of the warrants as of June 30, 2020, was 4.71 years. The common stock issued upon exercise of the warrants are not registered with the Securities and Exchange Commission and do not have registration rights.

(5) NOTES PAYABLE, RELATED PARTY

As of June 30, 2020, and March 31, 2020, the Company had borrowed $4,438,753,$2,575,508 and $2,450,508 respectively, excluding accrued interest, from related partiesparties. The interest associated with the Notes Payable, Related Party of $340,613 and $288,369 is recorded on the balance sheet as an Accrued Expense obligation at June 30, 2020 and March 31, 2020, respectively.

Related Party Promissory Notes

As of both June 30, 2020 and March 31, 2020, the Company owed $826,000 under the unsecured promissory notes payablefrom Mr. Glenn S. Dickman, a stockholder and lines-of-credit agreements that allow for borrowingsmember of up to $5,230,000. Of the $4,438,753Board of Directors. The promissory notes payable and lines-of-credit currently owed asbear interest at a rate of September 30, 2016, $1,500,000 is8% annually. The notes are due on November 30, 2017. The remaining $2,938,753 is due August2021, or at the immediate time when alternative financing or other proceeds are received. In addition, as mentioned in Note 4, prior to March 31, 2018.2020, the Company had provided Mr. Dickman warrants for 1,202,000 shares of common stock. During the three months ended June 30, 2020, the Company neither borrowed any additional funds under this agreement nor made any principal repayments. As of June 30, 2020, accrued interest on the notes totaled $85,755. In the event the Company completes a successful equity raise all principal and interest on boththe notes payable are due in full at that time. The notes

Related Party Note Payable and Line of Credit Agreements

As of June 30, 2020 and March 31, 2020, the Company owed $920,000 and $795,000, respectively, exclusive of accrued interest, under the note payable and lines-of-credit incur interest at 7.5%, allow for origination fees and are collateralized by Investment in NIBs. During the six months ended September 30, 2016, the Company borrowed an additional $768,575 under these agreements and repaid $150,000. Asline of November 9, 2016 the Company can still borrow up to $1,125,247 on these lines-of-credit. The associated interest is recorded on the balance sheet as a Long Term Accrued Expense obligation. The related parties include a person who iscredit agreement with the Chairman of the Board of Directors and a stockholder,stockholder. The agreement allows for borrowings of up to $4,600,000, with principal and interest due on August 31, 2021, or at the immediate time when alternative financing or other proceeds are received. During the three months ended June 30, 2020 the Company borrowed $125,000 of principal under this agreement and made no repayments. As discussed in Note 4, effective April 3, 2020, a provision to the lending agreement provides the related party lender with common stock warrants upon the lenders extension of a maturity due date or upon the loaning of additional monies. Under this provision, additional warrants for 250,000 shares of common stock were issued in conjunction with the $125,000 borrowed during the three months ended June 30, 2020, bringing the total number of warrants issued to the related party lender to 750,000 as of June 30, 2020 (see Note 4 for further details on these warrants). The note payable and line of credit agreement incurs interest at 7.5% per annum and are collateralized by the Company’s NIBS, if any. As of June 30, 2020, accrued interest on this note totaled $84,938.

As of June 30, 2020 and March 31, 2020, the Company owed $829,508 in principle under the note payable and lines of credit agreement with Radiant Life, LLC, an entity partially owned by the Chairman of the Board of Directors.

(6) NOTES PAYABLE TRANSFERRED TO REDEEMED COMMON STOCK PAYABLE

At March The agreement allows for borrowings of up to $2,130,000. The principal and interest on the note are due August 31, 2014,2021 or at the Company owed $1,455,904, including accrued interest, for notes payable. During the year ended March 31, 2015, the Company had accrued an additional $37,350 in interest.immediate time when alternative financing or other proceeds are received. The note incurred interest at 4%, was collateralized by NIBs and was due in April 2015. During June 2015, the note payable and relatedline of credit agreement incurs interest at 7.5% per annum and is collateralized by the Company’s NIBS, if any. During the three months ended June 30, 2020 the Company neither borrowed nor repaid any principal under this agreement. As of June 30, 2020, accrued interest were converted to equity through the issuance of 187,500 shares of common stock and the holder was granted the right to require the Company to redeem the common stock for $8.00 per share. On on this agreement totaled $169,920.

SUNDANCE STRATEGIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 9, 2015, the holder exercised a portion of the redemption right relating to 93,750 shares and, as a result, the Company paid the holder $750,000 to redeem the shares. On March 25, 2016, the holder exercised the redemption right in relation to the remaining shares and on April 12, 2016, the Company paid the holder an additional $750,000 to redeem the remaining shares. At March 31, 2016, the $750,000 associated with the redemption had been classified on the balance sheet as Mandatorily Redeemable Common Stock.30, 2020

(7)(6) CONVERTIBLE DEBENTURE AGREEMENT

The Company has entered into an 8% convertible debenture agreement with Satco International, Ltd., that allows for borrowings of up to $3,000,000. The holder originally had the option to convert the outstanding principal and accrued interest to unregistered, restricted common stock of the Company on June 2, 2016. Per the agreement, the number of shares issuable at conversion shall be determined by the quotient obtained by dividing the outstanding principal and accrued and unpaid interest by 90% of the 90 day average closing price of the Company’s common stock from the date the notice of conversion is received; and the price at which the Debenture may be converted will be no lower than $1.00 per share. The original maturity date was June 2, 2016, but was later extended, through a series of extensions, to August 31, 2017. On October 25, 2016, the Company agreed to amend the 8% Convertible Debenture Agreement that extended the due date and conversion rights to February 28, 2018.December 1, 2020. As of SeptemberJune 30, 2016,2020 and March 31, 2020, the Company owed $700,000$0 under the agreement, excluding accrued interest. The associated interest of $124,225 is recorded on the balance sheet as a Long Terman Accrued Expense obligation. As of November 9, 2016,obligation at June 30, 2020 and March 31, 2020.

(7) OTHER DEBT

On April 20, 2020, the Company received funding under a Paycheck Protection Program (“PPP”) loan (the “PPP Loan”) from CCBank (the “Lender”). The principal amount of the PPP Loan is still able$26,458. The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (the “SBA”). The PPP Loan has a two-year term, maturing on April 20, 2022. The interest rate on the PPP Loan is 1.0% per annum. Principal and interest are payable in monthly installments, beginning on November 20, 2020, until maturity with respect to borrow upany portion of the PPP Loan which is not forgiven as described below. The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any facility charge to $2,300,000obtain the PPP Loan. The PPP Loan provides for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects. The PPP Loan may be partially or fully forgiven if the Company complies with the provisions of the CARES Act, including the use of PPP Loan proceeds for payroll costs, rent, utilities and other expenses, provided that such amounts are incurred during a 24-week period that commenced on this agreement.

(8)  LIQUIDITY AND CAPITAL REQUIREMENTSApril 20, 2020, and at least 60% of any forgiven amount has been used for covered payroll costs as defined by the CARES Act. Any forgiveness of the PPP Loan will be subject to approval by the SBA and the Lender and will require the Company to apply for such treatment in the future.

Since the Company’s inception on January 31, 2013, its operations have been primarily financed through sales of equity, debt financing, lines of credit from related parties and the issuance of notes payable and convertible debentures. As of September 30, 2016, the Company had $34,348 of cash assets, compared to $24,717 as of March 31, 2016. As of November 9, 2016, the Company has access to draw an additional $1,125,247 on the notes payable and lines-of-credit, related party (see Note 5) and $2,300,000 on the Convertible Debenture Agreement (See Note 7). The Company’s average monthly expenses are expected to be approximately $262,000, which includes salaries of our employees, consulting agreements and contract labor, general and administrative expenses and estimated legal and accounting expenses. The Company believes that its existing capital resources, together with the issuance of additional notes payable and convertible debentures and availability under its existing lines of credit with related parties, will be sufficient to fund its operating working capital requirements for at least the next 12 months, or through November 15, 2017. It is to be noted that $1,500,000 of notes payable and lines-of-credit currently owed as of September 30, 2016 is due November 30, 2017 (see Notes 5 and 7 for debt maturity dates). The Company continues to evaluate other debt and equity financing opportunities and in August 2016 paid a financing advance of $100,000 to a group for a potential line-of-credit offering. While the Company believes it has sufficient liquidity and capital resources to fund its projected operating requirements through November 15, 2017, it does not anticipate having adequate cash flows from operations for three to four years, and until a revenue stream has been established, it will require debt or equity financing to fund its current and intended business and any future purchases of NIBs.

(8) SUBSEQUENT EVENTS

IfSubsequent to June 30, 2020, the Company is unable to raise sufficient capital through the planned securities and debt offerings or other alternative sources of financing, management will curtail NIB purchases. Under this plan, expenditures for NIBs will be curtailed. following events transpired:

The accompanying financial statements have been prepared on a going concern basis under whichCompany agreed to amend the Company is expected8% convertible debenture agreement with Satco International, Ltd., to be ableextend the due date and conversion rights from December 1, 2020 to realize its assets and satisfy its liabilities in the normal course of business. To continue as a going concern beyond the period ended SeptemberNovember 30, 2017, and in order to continue to purchase NIBs, the Company will need to raise additional capital to fund operations and purchase NIBs. Absent additional financing, the Company will not have the resources to execute its current business plan and continue operations.

(9) COMMITMENTS AND CONTINGENCIES2021.

As explained in Note 1, the Company is focused on the purchase and sale of NIB’s based on life settlements or life insurance policies. The Company does not take possession or control of the policies. The Holder of the life settlements or life insurance policies acquires such policies at a discount to their face value. The Holder has available credit to pay forecasted premiumsborrowed an additional $48,500 on Notes Payable, Related Party and expenses on the underlying policies until settlement. On settlement, the Company receives the net insurance benefit after all borrowings, interest and expenses have been paid by the Holder out of the settlement proceeds. However, in the event of default of the Holder, the Company may be required to expend funds on premiums, interest and servicing costs over the next five years to protect its interest in NIBs, though the Company has no legal responsibility nor adequate funds for these payments. In the event that neither party fulfils the financial obligations pertaining to the premiums, interest and servicing costs, the Company would be required to evaluate its investment in NIBs for possible adverse impairment. In addition, see Note 4 relating to associated commitments and contingencies affiliated with life settlements or life insurance policies.issued 97,000 warrants.

(10) SUBSEQUENT EVENTS

Management has considered subsequent events through November 9, 2016, the date these financial statements were issued. No events have occurred subsequent to September 30, 2016 which would have a material effect on the financial statements of the Company.

Item 2. Management’s Discussions and Analysis of Financial Condition and Results of Operations.

This discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and capital resources at and during the three months ended June 30, 2020 and six month periods ended September 30, 2016 and 2015.2019. For a complete understanding, this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Financial Statements and Notes to the Financial Statements contained in this quarterly report on Form 10-Q and our annual report on Form 10-K for the year ended March 31, 2016.2020.

Forward-looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are based on management’s beliefs and assumptions and on information currently available to management. For this purpose any statement contained in this report that is not a statement of historical fact may be deemed to be forward-looking, including, but not limited to, statements relating to our future actions, intentions, plans, strategies, objectives, results of operations, cash flows and the adequacy of or need to seek additional capital resources and liquidity. Without limiting the foregoing, words such as “may”, “should”, “expect”, “project”, “plan”, “anticipate”, “believe”, “estimate”, “intend”, “budget”, “forecast”, “predict”, “potential”, “continue”, “should”, “could”, “will” or comparable terminology or the negative of such terms are intended to identify forward-looking statements, however, the absence of these words does not necessarily mean that a statement is not forward-looking. These statements by their nature involve known and unknown risks and uncertainties and other factors that may cause actual results and outcomes to differ materially depending on a variety of factors, many of which are not within our control. Such factors include, but are not limited to, economic conditions generally and in the industry in which we and our customers participate; competition within our industry; legislative requirements or changes which could render our products or services less competitive or obsolete; our failure to successfully develop new products and/or services or to anticipate current or prospective customers’ needs; price increases; employee limitations; or delays, reductions, or cancellations of contracts we have previously entered into; sufficiency of working capital, capital resources and liquidity and other factors detailed herein and in our other filings with the United States Securities and Exchange Commission (the “SEC” or “Commission”). Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.

Forward-looking statements are predictions and not guarantees of future performance or events. Forward-looking statements are based on current industry, financial and economic information which we have assessed but which by its nature is dynamic and subject to rapid and possibly abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements and we hereby qualify all our forward-looking statements by these cautionary statements.

These forward-looking statements speak only as of their dates and should not be unduly relied upon. We undertake no obligation to amend this report or revise publicly these forward-looking statements (other than pursuant to reporting obligations imposed on registrants pursuant to the Exchange Act) to reflect subsequent events or circumstances, whether as the result of new information, future events or otherwise.

The following discussion should be read in conjunction with our financial statements and the related notes contained elsewhere in this report and in our other filings with the Commission.

Overview

We are engaged incurrently focused on the business of purchasing residual economic interests in a portfolio of life settlements. A life settlement is the sale of an existing life insurance policy to a third party for more than the policy’s cash surrender value, but less than the face value of the policy benefit. After the sale, the new policy holder will pay the premiums due on the policy until maturity and then collect the settlement proceeds at maturity.

We currently do not purchase or hold life settlement or life insurance policies but, rather, holdpreviously held a contractual right to receive the net insurance benefits, or NIBs, from a portfolio of life insurance policies held by a third party.party (“the Owners” or “the Holders”). These NIBs represent an indirect, residual ownership interest in a portfolio of individual life insurance policies and they allowallowed us to receive a portion of the settlement proceeds from such policies, after expenses related to the acquisition, financing, insuring and servicing of the policies underlying our NIBs have been paid.

We arewere not responsible for maintaining premiums or other expenses related to maintaining the underlying life settlement or life insurance policies. Ownership of the underlying life settlement or life insurance policies, and the related obligation to maintain such policies, remains with the entity that holds such policies. However, in the event of default of the owner, the Company may choose to expend funds on premiums, interest and servicing costs to protect its interest in NIBs, though the Company has no legal responsibility nor adequate funds for these payments.

NIBs are generally sold by an entity that holds the underlying life settlement or life insurance policies, either directly or indirectly through a subsidiary, such an entity being referred to herein as a “Holder.” A Holder, either directly or through a wholly owned subsidiary, purchases life insurance policies either from the insured or on the secondary market and aggregates them into a portfolio of policies. At the time of purchase, the Holder also (i) contracts with a service provider to manage the servicing of the policies until maturity, (ii) purchasesconsider purchasing mortality re-insurance (“MRI”) coverage under which payments will be made to the Holder in the event the insurance policies do not mature according to actuarial life expectancies, and (iii) arranges financing to cover the initial purchase of the insurance policies, the servicing of the life insurance policies until maturity and the payment of the MRI premiums. The financing obtained by the Holder for a portfolio of life settlement or life insurance policies is secured by the insurance policies for which the financing was obtained. After a Holder purchases policies, aggregates them into a portfolio and arranges for the servicing, MRI coverage and financing, the Holder contracts to sell NIBs related to the policies, which gives the holder of the NIBs the right to receive the proceeds from the settlement of the insurance policies after all of the expenses related to such policies have been paid. When an insurance policy underlying our NIBs comes to maturity, the insurance proceeds are first used to pay expenses associated with such policy. Once all of the expenses have been paid, the Holder will retain a small percentage of the proceeds and then will pay the remaining insurance proceeds to us in satisfaction of our related NIBs.us.

We began purchasing NIBs during our fiscal year ended March 31, 2013.

Plan of Operations

Our plan of operation for the next 12 months is to continue the acquisition and possible sale of NIBs. ThisLife Settlements is not a market sector without competition and, at present, we are a minor competitor. We will need substantial additional funds to effectively compete in this industry and no assurance can be given that we will be able to adequately fund our current and intended operations whether through revenues generated from our current interest in our NIBs or through debt or equity financing. WeThe Company has no current source of operating revenues. When we hold NIBs we may be required to expend funds on premiums, interest and servicing costs over the next five years to protect our interest in NIBs, though we have no legal responsibility nor adequate funds for these payments. In the event that neither party fulfils the financial obligations pertaining to the premiums, interest and servicing costs, we would be required to evaluate our investment in NIBs for possible adverse impairment. These payments are currently being made through an unrelated senior lending facility.

 We currently estimate proceeds of approximately $106.6 million on theWhen we hold NIBs, we owned as of September 30, 2016, and acquired from PCH Financial S.a.r.l., a société à responsabilité limitée incorporated and existing under the laws of the Grand Duchy of Luxembourg (“PCH”), Del Mar Financial S.a.r.l., a société à responsabilité limitée incorporated and existing under the laws of the Grand Duchy of Luxembourg (“Del Mar”), and HFII Assets Solutions, LLC, a Delaware limited liability company (“HFII”).  This amount is based on the estimated proceeds from polices of $402.5 million in face value, which includes estimated return of premiums; less the senior loan debt and MRI repayments outstanding of approximately $121.6 million, expected premium payments of $104.6 million over the life expectancies of the insured persons in these portfolios and estimated expenses and interest of approximately $69.7 million over the term of the senior loans.

We use an estimation methodology to project cash flows and returns as presented. The estimation model requires many assumptions, including, but not limited to the following: (i) an assumption that the distinct number of lives in our portfolio would exhibit similar experience to a statistically diverse portfolio from which mortality tables have been created; (ii) an assumption that the life expectancies (the “LE” or “LEs”) provided by LE providers represent the actuarial mean of the life expectancies of the insureds in our portfolio, (iii) the weighted average of the LEs provided by the LE providers represents an appropriate method for adjusting for discrepancies in the LEs; (iv) life expectancy tables and projections are accurate; (v) the minimum premiums calculated based on the in-force illustrations provided by life insurance carriers are accurate and will not change over the course of the lifetime of our portfolio; and (vi) the Holders’ Lender fees, MRI fees, and insurance, servicing and custodial fees will not change materially over time. While this method of modeling cash flows is helpful in providing a theoretical expectation of potential returns that might be produced from our NIBs portfolio, actual cash flows and returns inevitably will be different (possibly materially) due to the fact that predicting the exact date of death of any individual is virtually impossible. The provision of a theoretical cash flow model is by no means any guarantee of any results. The actual performance of these NIB interests (as well as our future expectations as to what such performance might be) may differ substantially from our expectations, especially if any of the assumptions change or differ from our initial assumptions. These portfolios currently contain only 130 fractionalized policies on 71 individual insureds, though insurance rating agencies have stated that at least 1,000 lives are required to achieve actuarial stability. Many risk factors beyond these assumptions may result in our expectations being incorrect; therefore, no assurance can be given that these estimated results will occur.

Results of Operations

Results of Operations

Income Recognition

At the time of transfer or purchase of an investment in NIBs, we estimate the future expected cash flows from such NIBs and determine the effective interest rate that, when applied to our initial investment in such NIBs, would yield these estimated cash flows. We accrue income on a monthly basis by applying this interest rate to our investment in the related NIBs, and such income is recorded as interest income on investment in NIBs in the statement of operations. This accretable income is based on the effective yield method and effectively represents the total amount of cash flows we expect to receive over the life of each pool of NIBs less the amount of our initial investment in such NIBs. Subsequent to the purchase of a given pool of NIBs and on a regular basis, these future estimated cash flows are evaluated for changes. If we determine that the future estimated cash flows should be significantly adjusted, a revised effective yield is calculated and applied prospectively. Any positive or adverse change in cash flows that does not result in the recognition of an “other-than-temporary impairment” (“OTTI”) results in a prospective increase or decrease in the effective interest rate used to recognize interest income.

Three-Months Ended SeptemberJune 30, 20162020, Compared with Three-Months Ended SeptemberJune 30, 20152019

Interest Income

InterestDue to the Company not holding NIBs, no interest income on investment in NIBs totaled $1,419,427 and $863,439was recorded for the three months ended September 30, 2016, and 2015 respectively.  The increase is primarily due to the acquisition of additional NIBs during September 2015, and adjustments to the cash flow models during the quarter ended June 30, 2016, which resulted in an increase to the effective interest rate used to recognize income on the NIBs.2020 or 2019.

General & Administrative Expenses

General and administrative expenses totaled $885,493$124,341 and $897,637$282,978 during the three months ended SeptemberJune 30, 2016,2020, and 2015,2019, respectively. A significant portion of these expenses were professional fees and payroll travel expenses,costs.

Other Income and policy servicing expenses. We were made aware that credit was presently no longer available to pay certain costs to maintain the structure of the underlying life insurance policies. Although we are not legally obligated for costs incurred by the entities underlying the NIBs, if credit does not become available, whether it be by proceeds from a future maturity or other negotiations, we may opt to pay certain fees to protect our investment in the NIBs. We believe the probable amount of fees we will pay will approximate $316,667. Therefore, we have accrued $316,667 duringExpenses

For the three months ended SeptemberJune 30, 2016,2020 and 2019, other expenses related to account for this uncertainty. We will assess this uncertainty throughout the year ended March 31, 2017,pursuing potential financing alternatives were $74,500 and will adjust the amount accrued as more information becomes available. 

Other Income and Expenses

Other income and expenses primarily consist of interest on the note payable related-party and convertible debenture, as well as interest income. During the three months ended September 30, 2016, and 2015, interest expense has accrued in the amount of $92,946 and $51,390$50,000, respectively. The increase is attributable to higher balances on the notes payable related-party.  

Income Taxes

During the three months ended SeptemberJune 30, 2016, we recorded net income before income taxes2020, and 2019, interest expense accrued in the amount of $440,988$52,245 and also recorded an income tax$36,871, respectively. The increased interest expense of $261,862. was due to higher principal balances during the three months ended June 30, 2020.

Income Taxes

During the three months ended SeptemberJune 30, 2015, we2020, the Company recorded a net loss before income taxes of $251,086 and had no income tax expense.expense or benefit as a result of a full valuation allowance on the net deferred tax asset.

Six-Months Ended September 30, 2016 Compared with Six-Months Ended September 30, 2015

Interest Income

Interest income on investment in NIBs totaled $2,873,298 and $1,687,469 for the six months ended September 30, 2016, and 2015 respectively.  The increase is primarily due to the acquisition of additional NIBs in September 2015, and adjustments to the cash flow models during the quarter ended June 30, 2016, which resulted in an increase to the effective interest rate used to recognize income on the NIBs.

General & Administrative Expenses

General and administrative expenses totaled $1,612,935 and $1,493,591 during the six months ended September 30, 2016, and 2015, respectively.  A significant portion of these expenses were professional fees, payroll travel expenses, and policy servicing expenses. We were made aware that credit was presently no longer available to pay certain costs to maintain the structure of the underlying life insurance policies. Although we are not legally obligated for costs incurred by the entities underlying the NIBs, if credit does not become available, whether it be by proceeds from a future maturity or other negotiations, we may opt to pay certain fees to protect our investment in the NIBs. We believe the probable amount of fees we will pay will approximate $316,667. Therefore, we have accrued $316,667 during the six months ended September 30, 2016, to account for this uncertainty. We will assess this uncertainty throughout the year ended March 31, 2017, and will adjust the amount accrued as more information becomes available.

Other Income and Expenses

Other income and expenses primarily consist of interest on the note payable related-party and convertible debenture, as well as interest income. During the six months ended September 30, 2016, and 2015, interest expense

has accrued in the amount of $178,828 and $90,592 respectively. The increase is attributable to higher balances on the notes payable related-party.  

Income Taxes

During the six months ended September 30, 2016, we recorded net income before income taxes of $1,081,535, and also recorded an income tax expense of $261,862. During the six months ended September 30, 2015, we recorded a net income before income taxes of $108,527, but had no income tax expense due to the existence of net operating loss carryforwards which are fully reserved with a valuation allowance.

Liquidity and Capital Resources

Since our inception our operations have been primarily financed through sales of equity instruments, debt financing, lines of credit and notes payable from related parties and the issuance of convertible debentures. As of SeptemberJune 30, 2016,2020, we had $34,348$11,862 of cash, compared to $24,717$28,784 as of March 31, 2016.2020. As of June 30, 2020, the Company had access to draw an additional $4,980,492 on the notes payable, related party and $3,000,000 on the Convertible Debenture Agreement. Our monthly expenses are betweenanticipated to be approximately $215,000 and $309,000,$70,000, which includes salaries of our employees, policy servicing expenses, consulting agreements and contract labor, general and administrative expenses, estimated legal and accounting expenses,expenses. Outstanding Accounts Payable as of June 30, 2020 totaled $499,817, and accruals for certain costs associated with the underlying life insurance policies, mentioned above.other accrued liabilities totaled $489,559. We believe that our availability under our existing lines of credit with related parties, our existing capital resources, together with the issuance of additional notes payable and convertible debentures and availability under our existing lines of credit with related parties will be sufficient to fund our operating working capital requirements for at least the next 12 months, or through November 15, 2017. While we believe we have sufficient liquidity and capital resources to fund our projected operating requirements through November 15, 2017, we do not anticipate having adequate cash flows from operations for three to four years, and until a cash flow stream from NIBs has been established. We will require debt or equity financing to fund our current and intended business and any future purchases of NIBs.

As a result, we believe that we will need to raise approximately $45 million in additional funds through equity or debt financing to fully expand on our business model during 2017 and beyond. Although we are actively pursuing opportunities to raise additional equity and debt capital, funding may not be available to us on acceptable terms, or at all. Also, market conditions may prevent us from accessing the debt and equity capital markets. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences or other terms that adversely affect our stockholders’ rights or further complicate raising additional capital in the future. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable, for any reason, to raise needed capital, we may need to reduce, or discontinue, operations.August 2021.

We raised $11,942,500 (gross) in our private placement that commenced in April 2013. During the six months ended September 30, 2016, we used $231,425 in financing activities compared to $582,000 net cash provided by financing activities during the six months ended September 30, 2015. During the six months ended September 30, 2016, we borrowed an additional $768,575 under the Notes Payable and Lines of Credit, Related Party agreements. We also repaid $150,000 during the six months ended September 30, 2016. In addition, during the six months ended September 30, 2016, we paid out the $750,000 Mandatorily Redeemable Common Stock Payable recorded on the balance sheet as of March 31, 2016, and we also paid $100,000 as a financing advance.Debt

During March 2015, we agreed to pay $150,000 in cash, issue 1,130,000 shares of common stock and forgive a note receivable with an outstanding amount of $150,000 in exchange for relief of a $1,493,254 note payable and the receipt of NIBs. The net consideration given for the relief of the note payable and receipt of NIBs totaled $1,493,254 and $7,846,746 respectively, for a total of $9,340,000. The holder of the shares issued pursuant to the transaction was given the right to require us to redeem 187,500 shares for $8.00 per share ($1,500,000 in total). OnAt June 9, 2015, the holder exercised a portion of the redemption right relating to 93,750 shares and, as a result, we paid the holder $750,000 to redeem the shares. On March 25, 2016, the holder exercised the redemption right in relation to the remaining shares and on April 12, 2016, we paid the holder an additional $750,000 to redeem the remaining shares. At March 31, 2016, the $750,000 associated with the redemption had been classified on the balance sheet as Mandatorily Redeemable Common Stock.

For the six months ended September 30, 2016 we recorded net cash provided by operating activities of $241,056, compared to $1,036,133 used in operating activities during the six months ended September 30, 2015. The increase in operating cash flows was primarily due to the receipt of approximately $1,400,000, which was an approved distribution from the policy holders as a return on our interest in NIBs. During the six month period ended September 30, 2016, we had an unusual net inflow of cash from operating activities. However, because we are in the early stages of our accretion model, we typically expect to use cash from operating activities during most reporting periods. 

The accompanying financial statements have been prepared on a going concern basis under which we are expected to be able to realize our assets and satisfy our liabilities in the normal course of business. To continue as a going concern beyond the period ending November 15, 2017, and to continue to acquire NIBs we will need to complete securities and debt offerings or obtain alternative sources of financing. Absent additional financing, we will not have the necessary resources to execute our business plan.

Debt

At September 30, 2016,2020, we owed $5,364,068,$3,066,855, including accrued interest, for debt obligations, including $4,438,753, excluding accrued interest,obligations. We owed $2,575,508 in principal pursuant to notes payable and lines-of-credits from related parties and $700,000, excluding accrued interest, pursuant to anhad fully paid off the principal owing on the 8% Convertible Debenture. Of the $4,438,753As of notesJune 30, 2020, one note payable and lines-of-credit currently owed asline-of-credit had a principal balance of September 30, 2016, $1,500,000$829,508 and is due November 30, 2017. The remaining $2,938,753 is dueon August 31, 2018. In2021, or when the event we completeCompany completes a successful equity raise, at which time principal and interest on bothis due in full. The second note payable and line-of-credit had a principal balance of $920,000, and the line of credit is currently extended through August 31, 2021. At June 30, 2020, unsecured promissory notes payablehad principal balances totaling $826,000 and are due in full at that time.November 30, 2021. The convertible debenture agreement, which has no principal balance due as of June 30, 2020 is due February 28, 2018.open through November 30, 2021. As of November 9, 2016,August 19, 2020, there was $1,125,247$4,931,992 available under the notes payable and lines-of-credit we currently have with related parties and $2,300,000$3,000,000 available under the 8% convertible debenture agreement. We may borrow money inDuring the future3 months ended June 30, 2020, we received $26,458 funding under a Paycheck Protection Program loan which is currently due April 20, 2022, but is subject to finance our operations, but can make no guarantees that such credit will be made available to us. Any such borrowing will increasepartial or full forgiveness if we comply with the riskprovisions of lossthe CARES Act (see Note 7 of the Notes to the debt holder in the event we are unsuccessful in repaying such loans.Condensed Consolidated Financial Statements for more detail).

The notes payable and lines-of-credit incur interest at 7.5 percent and are collateralized by Investment in NIBs. During the six months ended September 30, 2016, we borrowed an additional $768,576 under these agreements. We also repaid $150,000 during the six months ended September 30, 2016. The related parties include a person who is the Chairman of the Board of Directors and a stockholder, and Radiant Life, LLC, an entity partially owned by the Chairman of the Board of Directors.

Critical Accounting Policies and Estimates

The preparation of our financial statements requires that we make estimatesSee Consolidated Financial Statements and judgments. We base thesefootnotes thereto included in the Company’s Annual Report on historical experience andForm 10-K for the fiscal year ended March 31, 2020, which was filed with the SEC on other assumptions that we believe to be reasonable.August 10, 2020.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Our exposure to market risk for changes in interest rates relates primarily to the valuation of investment in NIBs and related income recognition. Increases in general interest rates would similarly increase the interest rates used in our financial models. Such increases would result in decreases in the present value of expected future cash flows from our NIBs and, as a result, decrease income accrued on our investment in NIBs. The Company’s assessment of market risk as of September 30, 2016 indicates there have been no material changes in the quantitative and qualitative disclosures from those in our Annual Report on Form 10-K for the year ended March 31, 2016 filed with the SEC.Not Applicable.

Item 4. Controls and Procedures

Limitation on the Effectiveness of Controls

The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be disclosed timely, is accumulated and communicated to management in a timely fashion. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily required to use judgment in evaluating controls and procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to the issuer’s management, including its Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our President who is also deemed to be our acting CFO,principal executive and principal financial officer has concluded that our disclosure controls and procedures as of the end of the period covered by the Quarterly Report were effective and that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our President and our acting CFO, as appropriate to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.effective.

Changes in Internal Control Over Financial Reporting

We madeThere were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act)that occurred during the fiscalfirst quarter ended September 30, 2016of 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

To the best of our knowledge, there are no legal proceedings pending or threatened against us; and there are no actions pending or threatened against any of our directors or officers that are adverse to us.

Item 1A. Risk Factors

In addition to the other information set forth in this quarterly report on Form10-Q, you should carefully consider the risks discussed in our Annual Report on Form 10-K for the year ended March 31, 2016,2020, which risks could materially affect our business, financial condition or future results. There were no material changes during the quarter ended SeptemberJune 30, 20162020 to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2016.2020. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales by us of unregistered securities during the quarter ended September 30, 2016.None.

Purchases of Equity Securities by the Issuer

There were no repurchases of equity during the quarter ended SeptemberJune 30, 2016.2020.

Item 3. Defaults upon Senior Securities.

None; not applicable.

Item 4. Mine Safety Disclosures.

None; not applicable.

Item 5. Other Information.

On October 25, 2016, the Company agreed to amend its 8% Convertible Debenture Agreement with Satco International, Ltd. to extend the due date and conversion rights to February 28, 2018 from its amended maturity date of August 31, 2017. As of September 30, 2016, the Company owed $700,000 under the agreement, excluding accrued interest. As of November 9, 2016, the Company is still able to borrow up to $2,300,000 on this agreement.None; not applicable.

Item 6. Exhibits

Exhibits. The following exhibits are included as part of this report:

* Previously filed as an Exhibit to the registrant’s Annual Report on Form 10-K for the year ended March 31, 2020, filed with the Securities and Exchange Commission on August 10, 2020, and incorporated by reference herein.

** Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.