materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed further below under “Trends and Uncertainties,” and also include general economic factors and conditions that may directly or indirectly impact our financial condition or results of operations. Reference is also made to the caption “Forward-Looking Statements” at the forepart of this Annual Report, which information is incorporated herein by reference.
significant adverse change in the cash flows may result in the recognition of an “other-than-temporary impairment” (“OTTI”), and would be evaluated by the Company accordingly.
Other income and expenses primarily consist of interest expense on the notes payable and lines-of-credit due to related-parties and a convertible debenture. During the years ended March 31, 2017, and 2016, interest expense accrued in the amount of $390,625 and $233,244, respectively. The increase in interest expense from 2016 to 2017 was primarily due to higher principal balances during the year ended March 31, 2017. Also included in other expenses for the year ended March 31, 2017 is a $100,000 as a financing advance, which we subsequently determined we would not be pursuing the opportunity related to the advance, and therefore ultimately expensed the $100,000 as a Financing Expense during the year ended March 31, 2017.
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, we estimate the future expected cash flows and determine the effective interest rate based on these estimated cash flows 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 that are subject to uncertainties and contingencies including, but not limited to, the amount and timing of projected net cash receipts, expected maturity events, counter party performance risk, changes to applicable regulation of the investment, shortage of funds needed to maintain the asset until maturity, 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
In December 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The new standard is designed to simplify the presentation of deferred income taxes, and requires all deferred tax liabilities and assets of the same tax jurisdiction or a tax filing group, as well as any related valuation allowance, be offset and presented as a single noncurrent amount in a classified balance sheet. The amendments are effective for the Company’s fiscal year beginning April 1, 2017, and for interim periods within that fiscal year. The Company does not believe the adoption of this guidance will have a material effect on the consolidated financial statements as the Company presents an unclassified balance sheet.
On February 1, 2017, the note payable, related party agreement that allowed for borrowings of up to $2,130,000 was amended to extend the due date from November 30, 2017 to November 30, 2018. Also on February 1, 2017, the note payable, related party agreement that allowed for borrowings of up to $3,600,000 at December 31, 2016, was amended to increase the borrowings from $3,600,000 to $4,600,000. See Note 16 for a detail of activity on the Notes Payable, Related Party subsequent to March 31, 2017.
During February 2018, management engaged consultants to explore and analyze financing alternatives available to the Company. The approximately $362,000 paid to the consultants was capitalized as a Financing Advance on the Company’s consolidated balance sheet prepared subsequent to March 31, 2017.