Trans American Aquaculture, Inc 10-Q for FY2024 Q2
Trans American Aquaculture, Inc (GRPS)
About this 10-Q
Trans American Aquaculture, Inc filed this 10-Q on August 19, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).
Headline figures
Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $330.31K
- compared with a net loss of $296.07K a year earlier
- Diluted EPS
- -$0.00
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
| For the quarterly period ended |
Or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
| For the transition period from ________________ to ________________ |
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State of other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| (Address of Principal Executive Offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Not applicable | Not applicable | Not applicable |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of the registrant’s common stock, $0.000001 par value per share, outstanding as of August 16, 2024, was .
TABLE OF CONTENTS
| 2 |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
| 3 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Trans American Aquaculture, Inc.
(formerly Gold River Productions, Inc.)
Results of Review of Interim Financial Information
We have reviewed the consolidated balance sheet of Trans American Aquaculture, Inc. (formerly Gold River Productions, Inc.) and Subsidiary (the Company) as of June 30, 2024 and the related consolidated statements of operations, consolidated statement of stockholders’ equity for the three-months and six-months ended June 30, 2024 and 2023, and the statements of cash flows for the six-months ended June 30, 2024 and 2023 and the related notes (collectively referred to as the interim financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2023, and the related consolidated statements of operations, stockholder’s equity, and cash flows for the year then ended (not presented herein); and in our report dated July 2, 2024, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2023, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.
Basis for Review Results
These interim financial statements are the responsibility of the Company’s management. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Brownsville, Texas August 19, 2024
| 4 |
| Trans American Aquaculture, Inc. |
| (Formerly Gold River Productions, Inc.) |
| Consolidated Balance Sheets |
| (Unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Receivable from factor | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| PROPERTY AND EQUIPMENT | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| NET PROPERTY AND EQUIPMENT | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Overdraft | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued interest expense | ||||||||
| Other accrued expenses | ||||||||
| Due to related parties | ||||||||
| Current portion of notes payable | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Notes payable, net of current portion | ||||||||
| TOTAL LONG-TERM LIABILITIES | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding | ||||||||
| Preferred Stock, Series A, par value and shares authorized, issued and outstanding | ||||||||
| Preferred Stock, Series B, par value and shares authorized, issued and outstanding | ||||||||
| Preferred Stock, Series C, $ par value, and shares authorized, issued and outstanding | ||||||||
| Preferred Stock, Series D, par value, shares authorized, and issued and outstanding | ||||||||
| Additional paid in capital - common stock | ||||||||
| Additional paid in capital - preferred stock (Series C) | ||||||||
| Additional paid in capital - preferred stock (Series D) | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS' EQUITY | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
| Trans American Aquaculture, Inc. |
| (Formerly Gold River Productions, Inc.) |
| Consolidated Statements of Operations |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| For the three months ended | For the six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| REVENUES | ||||||||||||||||
| Sales and service | $ | $ | $ | $ | ||||||||||||
| COST OF REVENUES | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| GENERAL AND ADMINISTRATIVE EXPENSES | ||||||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Other income | ||||||||||||||||
| Other expense | ( | ) | ( | ) | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| TOTAL OTHER INCOME (EXPENSE) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET INCOME (LOSS) BEFORE TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCOME TAX (EXPENSE) BENEFIT | ( | ) | ||||||||||||||
| NET INCOME (LOSS) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and Diluted Net loss per common share | ) | ) | ||||||||||||||
| Weighted average common shares outstanding - basic | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
| Trans American Aquaculture, Inc. |
| (Formerly Gold River Productions, Inc.) |
| Consolidated Statements of Stockholders' Equity |
| For the three months and six months ended June 30, 2024 and 2023 |
| Common Stock | Preferred Stock, Series A | Preferred Stock, Series B | Preferred Stock, Series C | Preferred Stock, Series D | Accumulated | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Deficit | Total | |||||||||||||||||||||||
| Balance December 31, 2022 | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Issuance of common shares | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Issuance of preferred stock | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Net loss | 0 | 0 | 0 | 0 | 0 | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance March 31, 2023 (Unaudited) | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Issuance of common shares | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Stock dividends | 0 | 0 | 0 | 0 | ( | ) | ||||||||||||||||||||||||||||
| Net loss | 0 | 0 | 0 | 0 | 0 | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance June 30, 2023 (Unaudited) | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Balance December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Issuance of common shares | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Issuance of preferred stock | 0 | 0 | 0 | 0 | ( | ) | ||||||||||||||||||||||||||||
| Net loss | 0 | 0 | 0 | 0 | 0 | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance March 31, 2024 (Unaudited) | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Issuance of common shares | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
| Issuance of preferred stock | 0 | 0 | 0 | 0 | ( | ) | ||||||||||||||||||||||||||||
| Net loss | 0 | 0 | 0 | 0 | 0 | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance June 30, 2024 (Unaudited) | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 7 |
| Trans American Aquaculture, Inc. |
| (Formerly Gold River Productions, Inc.) |
| Consolidated Statements of Cash Flows |
| (Unaudited) | (Unaudited) | |||||||
| For the six months ended | ||||||||
| June 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Noncash items included in net loss: | ||||||||
| Depreciation expense | ||||||||
| Common stock issued for professional services | ||||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Deferred taxes | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Increase (decrease) in: | ||||||||
| Accounts payable | ( | ) | ||||||
| Other accrued expenses | ||||||||
| Income tax payable | ||||||||
| Accrued interest expense | ||||||||
| CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash paid for the purchase of fixed assets | ( | ) | ( | ) | ||||
| CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payment of bank overdraft | ( | ) | ||||||
| Bank overdraft | ||||||||
| Proceeds from shareholder notes payable | ||||||||
| Payments on shareholder notes payable | ( | ) | ( | ) | ||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Proceeds from notes payable | ||||||||
| Issuance of common shares | ||||||||
| Stock dividends | ( | ) | ||||||
| Issuance of preferred shares | ||||||||
| CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET INCREASE (DECREASE) | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| NON-CASH | ||||||||
| Preferred series D stock dividends | $ | $ | ||||||
| Common stock issued for services rendered | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 8 |
Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 1 – BUSINESS ORGANIZATION
Business Organization
Trans American Aquaculture, Inc. formerly Gold River Productions, Inc. (GRP), (“the Company”) was incorporated in the State of Delaware on September 18, 2006, as Polythene Metro Corp before being acquired by Gold River Productions, Inc. on January 25, 2007. The Company was re-incorporated in the State of Colorado in July 2018. In February 2023, pursuant to shareholder and Board approval, the Company changed its name to Trans American Aquaculture, Inc., reflective of its new management and operations, and applied to the Financial Industry Regulatory Authority (“FINRA”) to change its ticker symbol from GRPS to TAAQ.
On August 28, 2022, Richard Goulding, executive and selling party of Gold River Productions, Inc. and Adam Thomas, purchaser, executed a Stock Purchase Agreement (“SPA”). Under the terms of the SPA, Mr. Goulding, agreed to sell to Adam Thomas, CEO of TAA, 9,078,000 shares of the Company’s Series A Preferred Stock, and to retain 640,000 shares for later conversion to the Company’s common stock. Each share of Series A Preferred Stock is convertible into 100 shares of the Company’s common stock. In addition, Mr. Thomas agreed to purchase all the Company’s outstanding shares of Series B Preferred Stock from Mr. Goulding for a cash payment of $5,000.
In further consideration for the sale of the shares of Series A and Series B Preferred Stock, Mr. Goulding agreed to:
| 1. | Increase the authorized shares of the Company’s common stock to three billion () shares; | |
| 2. | Convert his retained shares of Series A Preferred Stock, to shares of common stock; | |
| 3. | Issue to various former employees and consultants of the Company an aggregate amount of shares of the Company’s common stock; and | |
| 4. | Complete the assignment of assets and assumption of liabilities as they existed immediately prior to the closing of the stock purchase agreement on August 29, 2022. |
Following the purchase of the shares of Class A and Class B Preferred Stock, Mr. Thomas and TAA agreed to:
| 1. | To have the Company issue shares of a Class C Preferred Stock to the former members of TAA, such shares to be convertible into 85% of the Company’s common stock, but limited as to this conversion for a minimum of 12 months from the date of issuance; and | |
| 2. | To cancel and withdraw the shares of Series A Preferred Stock. |
| 9 |
Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 1 – BUSINESS ORGANIZATION (CONTINUED)
As of June 30, 2024, the parties are contemplating an amendment to the SPA; however, no terms have been agreed.
On August 29, 2022, Gold River Productions, Inc. and Goulding executed an Assignment of Rights and Assumption of Liabilities Agreement whereby Gold River Productions, Inc. assigned all of its assets and liabilities to Mr. Richard Goulding (Mr. Goulding), Chairman of the Board and CEO of GRP, resulting in GRP becoming a public shell company without any assets or liabilities and became the accounting acquiree.
On September 13, 2022, Gold River Productions, Inc. and Trans American Aquaculture, LLC (“TAA”) executed a Definitive Equity Exchange Agreement in a transaction accounted for as a reverse acquisition, whereby TAA became the accounting acquiror. TAA operates a large land-based shrimp farming and technology company located in South Texas. The Company produces premium quality, farm-raised white shrimp, 100% free of antibiotics and hormones, and cultivated using safe and sustainable practices. Its principal markets consist of seafood distributors, restaurants, and grocery store chains in the United States. Using decades of experience in the shrimp aquaculture industry, products are grown with our superior technology and our proprietary genetics which results in a superior fresh product always grown in the United States.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying consolidated financial statements include the accounts of Trans American Aquaculture, Inc and its wholly owned subsidiary Trans American Aquaculture, LLC, a Texas Limited Liability Company. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared on the accrual basis of accounting.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.
Inventory
Inventory is valued at lower of cost or the net realizable value on a first-in, first-out basis. Depending on the development and growth stage of shrimp, the Company’s inventory is comprised of 1) broodstock held for restocking the next harvest cycle, 2) broodstock held for sale, and shrimp held for sale. The Company evaluates realization of shrimp based on market prices at the end of each period.
| 10 |
Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment are stated at cost. Maintenance and repairs are expensed while expenditures for renewals which prolong the lives of the assets are capitalized. When items are disposed of, the cost and accumulated depreciation are eliminated from the accounts and any net gain or loss is included in the consolidated statement of income.
For financial reporting purposes, depreciation of property and equipment is provided for by using the straight-line method based on the estimated service lives of the property as follows:
| Schedule of estimated service lives of the property | |
| Land improvements | |
| Buildings and structures | |
| Farm equipment | |
| Autos and trucks |
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an asset has been impaired, the amount of the impairment is charged to operations. No impairments were recognized for the periods ended June 30, 2024 and 2023.
Income Taxes
The Company uses an asset and liability approach to financial accounting and reporting for income taxes. The difference between the financial statement and tax basis of assets and liabilities is determined annually.
Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the periods in which they are expected to affect taxable income. Valuation allowances are established, if necessary, to reduce the deferred tax asset to the amount that will more likely than not be realized. Income tax expense is the current tax payable or refundable for the period, plus or minus the net change in the deferred tax assets and liabilities.
The Company's income tax returns are subject to examination
by the appropriate tax jurisdictions. As of June 30, 2024, the Company needs to file federal and state income tax returns for 2020, 2021,
2022 and 2023. During 2020, the Company had taxable income primarily as a result of a short-term capital gain of $
| 11 |
Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenues according to the Financial Accounting Standard Board (“FASB”) Accounting Standard Codification (“ASC 606”) and Accounting Standard Update ASU 2014-09 “Revenues from Contracts with Customers.” Under the ASC 606, revenues are recognized when the customer obtains control of promised goods or services in amounts that reflect the consideration which the entity expected to receive in exchange of goods and service. The Company does not collect sales, value-add and other taxes collected on behalf of third parties. To determine revenue recognition, the Company performs the following five steps: (1) identify the contract with customer; (2) identify the performance obligations in contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligation in the contract; and (5) recognize revenues when (or as) the entity satisfies a performance obligation.
The Company recognizes revenue as a single performance obligation when it transfers its products to customers, being when the goods are shipped and transfers to a buyer and when performance obligation under contracted sales are completed.
Advertising and Promotion
All costs associated with advertising and promoting the Company's goods and services are expensed in the year incurred.
Concentrations of Credit Risk
The Company's financial instruments that are exposed to credit risk consist primarily of temporary cash investments and accounts receivable.
The Company maintains its cash
balances at a large financial institution. At times such balances may exceed federally insured limits. The Company has not experienced
any losses in an account. The Company believes it is not exposed to any significant credit risk on cash and had no balances in excess
of the $
For the six months ended June 30, 2024 and 2023, two
and one customer accounted for
The Company’s sole source of expected future revenue consists of the sale of a single live product which requires substantial care. Production risks such as weather, disease and other factors could affect the Company’s ability to realize revenue from its inventory stock.
| 12 |
Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Subsequent Events
In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through August 19, 2024, the date the consolidated financial statements were issued.
Basic net loss per share is calculated by dividing the net loss available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is calculated by using the weighted-average number of common shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares of common stock had been issued. The dilutive effect of the Company is reflected in diluted net loss per share by application of the treasury stock method. The dilutive securities are excluded from the computation of diluted net loss per share when net loss is recorded for the period as their effect would be anti-dilutive.
NOTE 3 – ACCOUNTS RECEIVABLE
On
December 11, 2023, the Company entered into an accounts receivable factoring agreement in the amount of $
NOTE 4 – INVENTORY
The inventory at June 30, 2024, consists of shrimp in the larvae stage of development held for sale, broodstock held for sale, and broodstock held for restocking. Included in this amount is the broodstock cost basis reclassified to shrimp held for sale as those costs are applicable expenditures and charges directly and indirectly incurred in bringing shrimp inventory to its existing condition and location as noted in FASB ASC 330-10-30. Although, these animals will eventually come to end of life, their costs are considered part of the necessary costs to birthing and raising shrimp held for sale.
Just prior to harvest, the Company segregates and
retains selected premium shrimp to become broodstock for the following shrimp harvest cycle. Upon identification and segregation, the
selected animals are transferred from outdoor ponds to specialized indoor tanks. These tanks are highly regulated with respect to temperature,
lighting and salinity levels. Costs allocated to broodstock animals at June 30, 2024 and December 31, 2023 totaled $
| 13 |
Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 4 – INVENTORY (CONTINUED)
Total inventory is as follows at:
| Schedule of inventory | ||||||||
| (Unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Held for Sale | ||||||||
| Shrimp | $ | $ | ||||||
| Broodstock | ||||||||
| Total Held for Sale | ||||||||
| Broodstock - Restocking | ||||||||
| Total inventory | $ | $ | ||||||
NOTE 5 – PROPERTY AND EQUIPMENT
As of June 30, 2024, and December 31, 2023, the Company had the following property and equipment:
| Schedule of property and equipment | ||||||||
| (Unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Autos and trucks | $ | $ | ||||||
| Building and improvements | ||||||||
| Farm equipment | ||||||||
| Other equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Land | ||||||||
| Net property and equipment | $ | $ | ||||||
Depreciation expense for the six months ended June
30, 2024 and 2023, totaled approximately $
| 14 |
Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 6 –NOTES PAYABLE
Notes payable as of June 30, 2024 and December 31, 2023, consisted of the following:
| Schedule of notes payable | ||||||||
| (Unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Note to an entity by the former owner of farm property, interest at | $ | $ | ||||||
| Unsecured Promissory Note to 1800 Diagonal Lending LLC, a commercial lender, with one-time interest of | ||||||||
| Note to a bank, interest at | ||||||||
| Secured Promissory Note to Arcadia Funding LLC, a commercial
lender, accrued fixed interest at the rate of $ | ||||||||
| Less Current Portion | ( | ) | ( | ) | ||||
| Net Long-Term Debt | $ | $ | ||||||
The estimated notes payable maturities as of June 30, 2024 are as follows:
| Schedule of estimated notes payable maturities | ||||
| June 30, 2025 | $ | |||
| June 30, 2026 | ||||
| June 30, 2027 | ||||
| June 30, 2028 | ||||
| June 30, 2029 | ||||
| Thereafter | ||||
| Total notes payable | $ |
In February
2024, the Company signed an unsecured promissory note with a lender for $
| 15 |
Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 6 –NOTES PAYABLE (CONTINUED)
In May 2024, the Company signed a Secured Promissory
Note with a lender for $
At March 31, 2024, the Company was in default on the
farm property note for $
NOTE 7 – RELATED PARTY NOTES PAYABLE
As of June 30, 2024, shareholders have loaned the Company approximately $ in notes which accrue interest ranging from % and % per annual period. Maturities between April 1, 2024, and July 1, 2024, have been extended to December 31, 2024. Accrued interest related to these notes totaled $ and $ as of June 30, 2024 and December 31, 2023, respectively.
NOTE 8 – INCOME TAX
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be covered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. An allowance has been recorded as of June 30, 2024 due to uncertainty of the realization of deferred tax asset in future periods.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.
In accordance with FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, included in ASC Topic 740, Income Taxes, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. There were no uncertain tax positions that required recognition by the Company. As of the date of these consolidated financial statements, the Company’s federal and various state tax returns will generally remain open for the last three years.
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Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 8 – INCOME TAX – (CONTINUED)
The Company’s provision for income taxes attributable to income before income taxes for the periods ended June 30, 2024 and December 31, 2023, consisted of the following:
| Schedule of provision for income taxes | ||||||||
| (Unaudited) | ||||||||
| June 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Deferred tax assets related to: | ||||||||
| NOL Carryover | $ | $ | ||||||
| Deferred tax liability related to: | ||||||||
| Property and equipment | ( | ) | ( | ) | ||||
| Deferred Tax Assets, Gross | ||||||||
| Less: allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset (liability) | $ | $ | ||||||
| Current expense | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| $ | $ | |||||||
| Deferred income tax expense (benefit) | $ | $ | ( | ) | ||||
NOTE 9 – EQUITY FINANCING AND SECURITIES PURCHASE AGREEMENT
Equity Financing Agreement
On January 20, 2023, the Company entered into an Equity Financing Agreement (“the EFA”) and Registration Rights Agreement (the “Registration Rights Agreement”) with GHS Investments, LLC, pursuant to which GHS agreed to purchase up to $10,000,000 in shares of the Company common stock, from time to time over the course of 24 months after effectiveness of a registration statement on Form S-1 of the underlying shares of the Company’s common stock.
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Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 9 – EQUITY FINANCING AND SECURITIES PURCHASE AGREEMENT – (CONTINUED)
The EFA grants the Company the right, to direct GHS to purchase shares of the Company’s common stock on any business day (a “Put”), provided that at least ten trading days (as defined in the EFA) have passed since the closing of the most recent Put. The purchase price of the shares of common stock contained in a Put shall be 80% of the lowest traded price of the Company common stock during the ten consecutive Trading Days preceding the date of the Put notice. In the event The Company up lists to Nasdaq or an equivalent national exchange, the purchase price will be 90%. No Put will be made in an amount less than $10,000 or greater than $500,000 and any single drawdown may not exceed 200% of the average daily trading dollar volume of the Company’s common stock during the ten trading days preceding the Put. In no event is the Company entitled to make a Put or is GHS entitled to purchase and own cumulative shares greater than 4.99% of the Company’s shares of common stock outstanding on such date.
The EFA will terminate upon any of the following events: when GHS has purchased an aggregate of $10,000,000 in the common stock of the Company pursuant to the EFA; or on the date that is 24 months from the date of the EFA.
Actual sales of shares of common stock to GHS under the EFA will depend on a variety of factors, including, the number of public shares the Company has available for trading on the open market (excluding closely held and restricted stock), market conditions, the trading price of the common stock, the number of shares outstanding, and the Company’s determinations as to the appropriate sources of funding for the Company and its operations. The net proceeds under the EFA to the Company will depend on the frequency and prices at which the Company sells shares of stock to GHS.
The Registration Rights Agreement provides that the Company shall (i) use its best efforts to file with the SEC the Registration Statement within 60 calendar days of the date of the Registration Rights Agreement; and (ii) have the Registration Statement declared effective by the SEC within 60 calendar days after the date the Registration Statement is filed with the SEC, but in no event more than calendar 120 days after the Registration Statement is filed.
The Company will use the proceeds from the Puts for general corporate and working capital purposes and acquisitions or assets, businesses, or operations or for purposes the Board of Directors deems to be in the best interests of the Company.
On February 27, 2024, the
Company put shares of common stock to GHS at a purchase price of $ under the EFA for net proceeds of $
On May 29, 2024, the Company
put shares of common stock to GHS at the purchase price of $ under EFA for a net proceeds of $
Securities Purchase Agreement
On January 20, 2023, The
Company entered into a Securities Purchase Agreement with GHS (the “GHS SPA”) pursuant to which shares of Series D Preferred
Stock for $
| 18 |
Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 9 – EQUITY FINANCING AND SECURITIES PURCHASE AGREEMENT – (CONTINUED)
On April 18, 2023, the Company entered into an
Amended Securities Purchase Agreement with GHS (the “Amended SPA”) pursuant to which the Company sold to GHS shares
of Series D Preferred Stock for $
On May 22, 2023, the Company
entered into an Amended Securities Purchase Agreement with GHS (the “Amended SPA”) pursuant to which the Company sold to GHS
shares of Series D Preferred Stock for $
On July 6, 2023, the Company
entered into an Amended Securities Purchase Agreement with GHS (the “Amended SPA”) pursuant to which the Company sold to GHS
shares of Series D Preferred Stock for $
On September 26, 2023,
the Company entered into a Securities Purchase Agreement with GHS (the “September 2023 SPA”) pursuant to which the
Company agreed to sell GHS shares of Series D Preferred Stock for $
NOTE 10 – LITIGATION
From time to time the Company is involved in lawsuits against the Company involving general liability or various contractual matters. In the opinion of the Company’s management, the potential claims against the Company not covered by insurance resulting from such litigation will not materially affect the financial position of the Company.
NOTE 11 – GOING CONCERN
The Company follows FASB ASU 2014-10 – Development Stage Entities because its principal operations have commenced, but there has been no significant revenue therefrom. To date, the Company's activities since inception have consisted principally of acquiring property, equipment, and other operating assets, raising capital, starting up production, recruiting and training personnel and raising capital.
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Trans American Aquaculture, Inc.
(Formerly Gold River Productions, Inc.)
Notes to Consolidated Financial Statements
June 30, 2024 and 2023
NOTE 11 – GOING CONCERN – (CONTINUED)
The Company's ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan as well as continuing to develop its brood stock in order to fulfill recently signed contracts. The financial statements do not include any adjustments that might be necessary if the business plan cannot be implemented or if additional capital cannot be raised, either of which could result in the Company not being able to continue as a going concern.
The Company is in the process of raising additional capital to support the completion of the developmental stage activities and ramp up ongoing full shrimp harvest cycles and establish its customer base. Therefore, the Company's activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company's current technology.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events; are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on July 2, 2024. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.
Critical Accounting Policies
The following discussions are based upon our financial statements and accompanying notes, which have been prepared in accordance with GAAP Financial Measures of the United States.
The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingencies. We continually evaluate the accounting policies and estimates used to prepare the financial statements. We base our estimates on historical experiences and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management.
Accounting for Our Shrimp Inventory
Our inventory of shrimp is divided into shrimp held for sale and broodstock shrimp. Broodstock are shrimp that are used for breeding purposes; selected for their genetic, disease-free and size attributes they can be more valuable than shrimp held for sale. We collect broodstock from the biomass just before the harvest and segregate them from the shrimp that will be harvested and sold. Broodstock, because of their higher value, may be sold to other shrimp farmers in the United States and overseas. We also keep a number of broodstock for our own restocking purposes. So, during the year, our inventory can consist of shrimp held for sale, broodstock held for sale and broodstock used for restocking purposes.
Shrimp farming is a seasonal business. On a calendar year basis, we typically use the broodstock to breed our larvae shrimp during the first quarter so that by spring the shrimp are held in large post-larvae tanks for development. Later, in early summer, the shrimp are transferred to ponds where they complete the grow out process over the next five to six months. This can vary if we have more than one cycle of shrimp. Grow out may begin in the second in the second quarter, with a second cycle grow out beginning in early summer. The first harvest cycle can occur in early fall with the second harvest cycle occurring in November or December. During 2023, we had one cycle and harvest occurred in early November 2023. During 2024, we have not stocked, nor have we had a harvest; however, we are in process of larval development with a planned stocking in August 2024.
Our shrimp inventory is valued at lower of cost or the net realizable value on a first-in, first-out basis.
The inventory at June 30, 2024 consists of live broodstock animals. Included in this amount are costs and charges directly and indirectly incurred in bringing shrimp inventory to its existing condition and location as noted in FASB ASC 330-10-30.
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At June 30, 2024, the broodstock shrimp for the 2024 harvest had been identified and segregated from consumable shrimp in outdoor ponds to indoor tanks. The table below summarizes inventory at June 30, 2024 and 2023.
| June 30, 2024 | December 31, 2023 | |||||||
| Held for Sale | ||||||||
| Shrimp | $ | 12,234 | $ | 187,437 | ||||
| Broodstock | – | – | ||||||
| Total Held for Sale | 12,234 | 4,026 | ||||||
| Broodstock - Restocking | 358,429 | 53,362 | ||||||
| Total inventory | $ | 370,663 | $ | 247,825 | ||||
Shown separately in the above schedule is approximately 17,000 broodstock shrimp selected for their enhanced genetics and segregated from the larger biomass at the time of harvest before December 31, 2023. Approximately 1,000 animals of this broodstock will be sold to foreign markets for between $75 and $80 per animal, while the balance is being used to populate our next harvest in 2024. The initial cost of the 17,000 broodstock was reclassified to broodstock held for restocking on a pro rata basis of cost per pound of the total biomass of shrimp held for sale. Subsequent costs will be allocated in accordance with ASC 330-10-30.
Business Overview
Founded in 2017, we are a leading aquaculture company that provides premium quality, farm-raised pacific white shrimp, 100% free of antibiotics and hormones, to the U.S. domestic seafood market. We believe we are a leading aquaculture company due to Best Aquaculture Practices (“BAP”) guidelines,1 considering the rarity of the standards in the U.S. Although we are not currently in full compliance with BAP guidelines, we are working towards full compliance. At the moment, we adhere to BAP guidelines as part of our operating and production model. Grown at our 1,880-acre farm located in Rio Hondo, Texas, on the largest scale aquaculture farm in the U.S., our shrimp are meticulously raised to exceed in line with industry best practices according to BAP guidelines2 using only authentic, sustainable practices. Within our controlled facility, each harvest is responsibly raised and cultivated onsite with minimal ecological footprint, promising our customers a superior product developed from the highest standard of care.
We have and will continue to utilize superior genetic linage broodstock for cultivation of own post larvae in our onsite genetics, maturation and hatchery facilities. These facilities allow us to continually develop animals with increasing growth rates, lower mortality, and stronger disease resistance. We began formal production runs in 2018 and to date have produced almost one million lbs. of shrimp for consumption.
Recent trends in the shrimp industry, including that, according to preliminary 2023 data from the National Marine Fisheries Service, shrimp prices have dropped as much as 44% since 2022.3 Our business, prospects, revenues, profitability, and future growth are highly dependent upon the prices of and demand for shrimp. Our ability to borrow and to obtain additional capital on attractive terms is also substantially dependent upon shrimp prices. These prices have been and are likely to continue to be extremely volatile for seasonal, cyclical, and other reasons. Any substantial or extended decline in the price of shrimp will have a material adverse effect on our financing capacity and our prospects for commencing and sustaining any economic commercial production. In addition, increased availability of imported shrimp can affect our business by lowering commodity prices. This could reduce the value of inventories, held both by us and by our customers, and cause many of our customers to reduce their orders for new products until they can dispose of their higher-cost inventories.
_____________________________
| 1 | https://www.bapcertification.org/Downloadables/pdf/BAP%20-%20BAP%20Farm%20Standard%20-%20Issue%203.1%20-%2007-February-2023.pdf |
| 2 | https://www.bapcertification.org/Downloadables/pdf/BAP%20-%20BAP%20Farm%20Standard%20-%20Issue%203.1%20-%2007-February-2023.pdf |
| 3 | https://civileats.com/2023/06/20/cheap-imports-leave-us-shrimpers-struggling-to-compete/#:~:text=The%20U.S.%20Food%20and%20Drug,before%20entering%20the%20U.S.%20market |
| 22 |
Going Concern Uncertainty
As shown in the accompanying financial statements, during the three-months ended June 30, 2024, we reported a net loss of $330,311. As of June 30, 2024, our current liabilities exceeded its current assets by $4,175,913. As of June 30, 2024, we had $0 cash. During the year ended December 31, 2023, we reported a net loss of $1,971,551. As of December 31, 2023, our current liabilities exceeded its current assets by $3,554,981. As of December 31, 2023, we had $6,600 cash.
We will require additional funding to finance the growth of our operations and achieve our strategic objectives. These factors, as relative to capital raising activities, create doubt as to our ability to continue as a going concern. We are seeking to raise additional capital and are targeting strategic partners to accelerate the sales and marketing of our products and begin generating revenues. Our ability to continue as a going concern is dependent upon the success of future capital offerings or alternative financing arrangements, expansion of our operations and generating sales. The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. Management is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations; however, management cannot make any assurances that such financing will be secured.
Results of Operations for the Three-Months Ended June 30, 2024 and 2023
Revenues
For the three-months ended June 30, 2024, total revenues were $5,019 compared to $0 for the same period in 2023, an increase of $5,019 or 5,019%. This increase consisted entirely of our production of shrimp for consumption sales. In 2023, the Company focused efforts primarily on the development of genetic lines in the first half of the year and did not produce a meaning full harvest until the end of the year.
Cost of Goods Sold and Gross Profit
For the three-months ended June 30, 2024, cost of goods sold was $1,771 compared to $0 for the same period in 2023, an increase of $1,771 or 1,771%. This was the result of selling shrimp during the current three months ended June 30, 2024.
The gross profit for the three-months ended June 30, 2024 was $3,248 for an operating profit of 64% compared to no gross margin for the same period in 2023.
Operating Expenses
General and administrative expenses for three-months ended June 30, 2024 decreased by $48,479, or 27.6%, to $126,993 from $175,472 for the three-months ended June 30, 2023. This decrease in expenses resulted from less legal and professional fees and payroll wages, the primary components, being approximately the same.
Other Income (Expense)
For the three-months ended June 30, 2024, we had interest expenses of $141,238 compared to interest expenses of $121,296 for the same period in 2023, an increase in interest expense of $19,942. This increase in interest expense was due primarily to two new notes.
Net Income (Loss)
As a result of the above, we reported a net loss of $330,311 for the three-months ended June 30, 2024 compared to a net loss of $296,068 for the three-months ended June 30, 2023.
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Results of Operations for the Six-Months Ended June 30, 2024 and 2023
Revenues
For the six-months ended June 30, 2024, total revenues were $315,145 compared to $0 for the same period in 2023, an increase of $315,145 or 315,145%. This increase consisted entirely of our production of shrimp for consumption sales. In 2023, the Company was able to produce a harvest and was sold for sale in 2024
Cost of Goods Sold and Gross Profit
For the six-months ended June 30, 2024, cost of goods sold was $223,299 compared to $0 for the same period in 2023, an increase of $223,299 or 223,299 %. This was the result of sales of shrimp during the current six months ended June 30, 2024.
The gross profit for the six-months ended June 30, 2024 was $91,846 for an operating profit of 29.1% compared to no gross margin for the same period in 2023.
Operating Expenses
General and administrative expenses for six-months ended June 30, 2024 decreased by $24,192, or 7%, to $321,383 from $345,575 for the six-months ended June 30, 2023. These nearly equivalent expenses resulted from legal and professional fees and payroll wages, the primary components, being approximately the same.
Other Income (Expense)
For the six-months ended June 30, 2024, we had interest expenses of $273,520 compared to interest expenses of $237,375 for the same period in 2023, an increase in interest expense of $36,145. This increase in interest expense was due primarily to two new notes.
Net Income (Loss)
As a result of the above, we reported a net loss of $568,332 for the six-months ended June 30, 2024 compared to a net loss of $554,263 for the six-months ended June 30, 2023.
Liquidity and Capital Resources
As of June 30, 2024, we had a cash balance of $0, compared to a balance of $6,600 at December 31, 2023. We currently do not have sufficient cash to fund our operations for the next 12 months and we will require working capital to complete development and production, testing and marketing of our products and to pay for ongoing operating expenses. We anticipate adding management positions for corporate development and the corresponding operations of the Company, but this will not occur prior to obtaining additional capital. Currently, competitively priced loans from banks or other lending sources for lines of credit or similar short-term borrowings are not available to us. We have been able to raise working capital to fund operations through the issuances of convertible preferred stock to GHS, factoring our receivables, and borrowing funds from employees of the Company. As of June 30, 2024, our current liabilities exceeded our current assets by $4,175,913 as compared to December 31, 2023, when current liabilities exceeded current assets by $3,554,981, an increase of $786,600.
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Our liquidity is significantly impacted by the farm note to King’s Aqua Farm LLC, dated June 15, 2017, in the original amount of $5,600,000 bearing interest at 6.0% per annum, due in 2039, yielding a monthly payment of $38,687. Secured by the farm property, the outstanding principal balance at both June 30, 2024 and December 31, 2923, was $4,707,902. On May 31, 2024, the Company entered into a Forbearance and Modification Agreement with the lender. Under the agreement, the lender agreed that it would not exercise or enforce its rights or remedies against the Company to which it would be entitled under the terms of the Real Estate Lien Note dated June 15, 2017 in the original principal amount of $5,600,000, and the Deed of Trust executed by the Company as grantor in favor of Jizhong Wang, as trustee, for the benefit of the lender by occurrence of the failure by the Company to pay principal and interest installments from May 1, 2023 through May 31, 2024 before August 6, 2024. The forbearance was conditioned on the obligation of the Company to pay the lender $77,375, which was paid.
The Company is also a party to an SBA Loan through a bank in the original amount of $150,000 bearing interest at 3.75% per annum, due in 2050, yielding a monthly payment amount of $731.
Liquidity is also affected by notes to our shareholders. At June 30, 2024, shareholders have loaned the Company approximately $1,629,138 which notes accrue interest at ranging from 12.0% to 18% per annum and were due March 31, 2024. The Company extended this due date to July 1, 2024, and plans to extend it again to January 1, 2025. Current discussions with noteholders are underway and, although an extension is not certain, we expect the noteholders to agree to this extension. Until an extension is agreed, the notes are in default.
In February 2024, the Company signed an unsecured promissory note with a lender for $111,600, bearing one-time interest at the rate of 13%, and maturing on four dates beginning on August 30, 2024 and ending on November 30, 2024. The proceeds of this note were issued with an original issue discount of $18,600, yielding net proceeds of $88,000. Upon full maturity, the Company will have paid a total of $126,108 of principal and interest on this note.
Cash Flows from Operating Activities
During the six-months ended June 30, 2024, net cash used in operating activities was $389,780, due mainly to a net loss of $568,332, an decrease in accounts receivable of $30,526 due sales of consumable shrimp, offset by a decrease of $122,838 in inventory levels, combined decrease in accounts payable and accrued expense of $44,793 due to increased operations, and a $38,468 increase in accrued interest expense due mainly to falling into arrears on the note payable covering our farm property and increased interest expense on notes payable to shareholders.
By comparison, during the six-months ended June 30, 2023, net cash used in operating activities was $-494,877 resulting mainly from a net operating loss of $554,263 and increased inventory levels of $336,672, offset by increases in accrued interest of $177,735.
Cash Flows from Investing Activities
During the three-months ended June 30, 2024, we had $0 net cash used in investing activities. During the three-months ended June 30, 2023, we had $0 of net cash used in investing activities..
During the six-months ended June 30, 2024, we had $12,216 net cash used in investing activities. During the six-months ended June 30, 2023, we had $15,132 of net cash used in investing activities. These decrease in expenditures is due to less capital equipment purchases
| 25 |
Cash Flows from Financing Activities
During the three-months ended June 30, 2024, net cash provided by financing activities was $338,672 which was mainly comprised of proceeds from notes payable of $350,000, offset by payments due related parties of $103,355. During the three-months ended June 30, 2023, net cash provided by financing activities was $241,303, which was mainly comprised of proceeds from shareholder notes of $13,700 and $294000 of issued Series D Preferred Stock to GHS, offset by $58,398 in payments on related party notes and in notes payable.
During the six-months ended June 30, 2024, net cash provided by financing activities was $395,397 which was mainly comprised of proceeds from notes payable of $443,000, offset by payments due to shareholders of $70,850, and notes payable of $32,505. During the six-months ended June 30, 2023, net cash provided by financing activities was $510,010, which was mainly comprised of proceeds from shareholder notes of $88,700 and $544,000 of issued Series D Preferred Stock to GHS, offset by $77,684 in payments on related party notes and $41,260 in notes payable.
Factors That May Affect Future Results
Management’s Discussion and Analysis contains information based on management’s beliefs and forward-looking statements that involve several risks, uncertainties, and assumptions. There can be no assurance that actual results will not differ materially from the forward-looking statements as a result of various factors, including but not limited to, our ability to obtain the equity/debt funding or borrowings necessary to produce, market and launch our products, our ability to successfully serially produce and market our products; our success establishing and maintaining production lines; the acceptance of our products by customers; our continued ability to pay operating costs; our ability to meet demand for our products; the amount and nature of competition from our competitors; the effects of technological changes on products and product demand; and our ability to successfully adapt to market forces and technological demands of our customers.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.
Recent Accounting Pronouncements
We have provided a discussion of recent accounting pronouncements in NOTE 2 to the Quarterly Consolidated Financial Statements for June 30, 2024 and 2023.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.
| 26 |
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and, as such, is accumulated and communicated to our Chief Executive Officer and Fractional Chief Financial Officer, Adam Thomas and Malcolm McNeill, respectively, who serve as our principal executive officer and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Messrs. Thomas and McNeill, have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of June 30, 2024. Based on their evaluation, Messrs. Thomas and McNeill concluded that, due to a material weakness in our internal control over financial reporting, our disclosure controls and procedures were not effective as of June 30, 2024. In light of the material weakness in internal control over financial reporting, we completed substantive procedures, including validating the completeness and accuracy of the underlying data used for accounting prior to filing this Form 10-Q.
These additional procedures have allowed us to conclude that, notwithstanding the material weakness in our internal control over financial reporting, the consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during our quarter ended June 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 27 |
PART II—OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On May 29, 2024, the Company sold 11,683,300 shares of common stock to GHS at the purchase price of $0.0012 under EFA for a net proceeds of $12,715.
The shares above were issued in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act, based in part on the representations of the investor. There were $280 in sales commissions paid to Icon Capital Group LLC.
Item 5. Other Information
On July 21,2024, Malcolm McNeill resigned as our Fractional Chief Financial Officer and Principal Financial and Accounting Officer.
During the quarter ended
June 30, 2024, no director or officer
Item 6. Exhibits
*Filed with this Report.
**Furnished with this Report.
| 28 |
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.
| TRANS AMERICAN AQUACULTURE, INC. | ||
| By: | /s/ Adam Thomas | |
| Adam Thomas | ||
| Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
| Date: | August 19, 2024 | |
| 29 |
Exhibit 4.1
SECURED PROMISSORY NOTE
| DATE: | May 16, 2024 | ||
| MAKER: | Trans American Aquaculture, Inc. | ||
| 1022 Shadyside Lane | |||
| Dallas, Texas 75223 | |||
| PAYEE: | IG Holdings, Inc. | ||
| 7000 N. 16th Street, Suite 120, #503 | |||
| Phoenix, Arizona 85020-5547 | |||
| Iron Rings Holdings, LLC, a Delaware LLC | |||
| 26 Milton Avenue | |||
| Alpharetta, Georgia 30009 | |||
| principal amount of note: | $350,000.00 |
FOR VALUE RECEIVED, Maker promises and agrees to pay to Payee at the mailing address of Payee, or at such other place as Payee or any other holder hereof (collectively, the “Holder”) may from time to time designate, the principal sum of Three Hundred Fifty Thousand Dollars and Zero Cents ($350,000.00) with interest, as follows:
1. Interest Rate/Payments. Commencing on May 16, 2024 and continuing for so long as any portion of the principal amount of this Note is outstanding, the unpaid principal due under this Note shall accrue fixed interest at the rate of $12,500.00 per month. Maker shall make monthly interest only payments in arrears in the amount of $12,500.00 commencing on June 16, 2024. Maker shall pay the Three Hundred Fifty Thousand Dollar and Zero Cents ($350,000.00) principal amount of this Note along with any accrued but unpaid interest on or before the Maturity Date. To the extent that Maker fails to pay the monthly interest only payments or the $350,000.00 principal amount on the Maturity Date as and when due, the unpaid amounts shall bear interest at the default rate of sixty percent (60%) per annum. This loan can be paid off at any time without penalty. The first payment is due thirty (30) days after receipt of the net loan proceeds.
2. Maturity Date. The Note shall mature and all unpaid principal together with any accrued but unpaid interest shall become due and payable in full on December 16, 2024 (the “Maturity Date”).
3. Legal Limits.
(a) Maker agrees to an effective rate of interest, which is the rate stated herein plus any additional rate of interest resulting from any other payments in the nature of interest, including without limitation, any fees or other charges to the extent that such charges may be deemed ineluctable in interest for any purpose.
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(b) All agreements between Maker and Payee are hereby expressly limited so that in no event whatsoever, whether by reason of deferment in accordance with this Note or under any agreement or by virtue of acceleration of maturity of the obligation evidenced by this Note, or otherwise, shall the amount paid or agreed to be paid to Payee for the advance, use, forbearance or detention of the money represented by this Note or to compensate Payee for damages to be suffered by reason of a late payment or default under this Note, exceed the maximum permissible under applicable law. If from any circumstances whatsoever, fulfillment of any provision of this Note, or of any provision in the security for this Note at the time performance of such provision shall be due, shall involve exceeding the limit of validity prescribed by law, from the date of this Note, the obligations to be fulfilled shall be reduced to the limit of such validity. This provision shall never be superseded or waived and shall control every other provision of all agreements between Maker and Payee.
(c) Maker represents and acknowledges that this is a business loan and the loan proceeds will be utilized exclusively for business purposes.
4. Late Charge. In the event that Maker fails to make any payment of principal and/or interest within three (3) calendar days of the due date for the same, then in addition to such payment due, Maker shall be obligated to pay a late payment charge to Payee in the amount of $100.00 per day (the "Late Charge").
5. Form of Payments. Principal and interest shall be payable in lawful money of the United States of America in immediately available funds.
6. Events of Default and Remedies.
(a) The existence or occurrence of the following events shall constitute an event of default ("Event of Default") under this Note: (i) the failure by Maker to make any payment of principal, interest, or any other cost or expense due under this Note in accordance with the terms of this Note; (ii) the occurrence of any default under the Security Agreement of even date herewith; (iii) the occurrence of any default under any other loan agreements or promissory notes to which Maker is a party, (iv) the filing of bankruptcy or assignment for the benefit of creditors by Maker; or (v) if any representation or warranty made by Maker to Payee is materially false or misleading.
(b) Upon the occurrence of any Event of Default: (i) the entire unpaid principal balance, any unpaid accrued interest, and any other amounts owing under this Note shall, at the option of the Holder and without further notice or demand of any kind to Maker or any other person, immediately become due and payable; and (ii) the Holder shall have and may exercise any and all rights and remedies available at law or in equity and any and all rights and remedies provided in any security for this Note under the terms of the loan agreement, security agreement or other loan documents executed in connection herewith.
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(c) In addition, upon the occurrence of any Event of Default and at any time following an Event of Default, the Holder shall have the right- to convert (a "Conversion") all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock of Maker at $0.0039 per share (the "Conversion Price"); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Maker subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. The number of shares of Common Stock to be issued upon each Conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the Conversion Price in the form attached hereto as Exhibit A (the "Notice of Conversion"), delivered to the Maker by the Holder; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Maker before 6:00 p.m., New York, New York time on such conversion date (the "Conversion Date"); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. The term "Conversion Amount" means, with respect to any Conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such Conversion plus (2) at the Holder's option, accrued and unpaid interest,·if any, on such principal amount at the interest rate provided in this Note to the Conversion Date.
7. Share Reservation. The Maker is required at all times to have authorized and reserved 179,487,179 (two times the number of shares that would be issuable upon full conversion of the principal of the Note (the "Reserved Amount''). The Maker represents that upon issuance, such shares will be duly and validly issued, fully paid, and non-assessable. In addition, if the Maker shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Note shall be convertible at the Conversion Price, the Maker shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for a full conversion of the outstanding principal and interest due on the Note.
8. Attorneys' Fees in the Event of Collection. In the Event of Default under this Note or in the event the Holder seeks legal advice in order to enforce the provisions of this Note after an Event of Default, Maker agrees to pay Holder's reasonable attorneys' fees. If any action is brought to enforce or interpret the provisions of this Note, the prevailing party shall be _entitled to an award of its reasonable attorneys' fees.
9. Governing Law, Jurisdiction and Severability. This Note is made pursuant to and shall be construed, governed, and enforced under the laws of the State of Arizona without regard to any conflict of law provisions. Exclusive jurisdiction and venue over any legal action brought by any of the parties hereto relating in any way to the terms of this Note and the related Security Agreement of even date herewith shall reside in the state and federal courts located in Maricopa County, Arizona, and Maker hereby consents to such exclusive jurisdiction and venue. If any provision of this Note or any security for this Note is construed or interpreted by a court of competent jurisdiction to be void, invalid or unenforceable, such decision shall affect only those provisions so construed or interpreted and shall not affect the remaining provisions of this Note or any security for this Note.
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10. Time of Essence. Time is of the essence regarding Maker's obligation with respect to this Note.
11. Payment Without Offset. Principal and accrued interest shall be paid without deduction or offset.
12. Calendar Days. Unless otherwise provided in this Note to the contrary, calendar days, and not business days, shall be used in calculating any time periods set forth in this Note.
13. Notices. Any notices which any party may be required, or may desire, to give, unless otherwise specified, shall be in writing and shall be (a) hand-delivered, effective upon receipt, (b) transmitted by telecopier, effective upon receipt, with the original mailed the same date by first class mail, postage prepaid, (c) sent by United States Express Mail or by private overnight courier, effective upon receipt, or (d) served by certified mail, postage prepaid, return receipt requested and addressed to such party at the addresses set forth above, or to such other address(es) or addressee(s) as the party to be served with notice may have furnished in writing to the other party, effective three (3) days after mailing.
14. Assignment. Payee or any other Holder of this Note may assign all or a portion of its rights, title and interest in this Note and security to any person, firm, corporation or other entity without the consent of Maker.
15. Relationship. The relationship of the parties hereto is that of borrower and lender and it is expressly understood and agreed that nothing contained in this Note or in any security for this Note shall be interpreted or construed to make Maker and Payee partners, joint venturers or participants in any other legal relationship except that of borrower and lender. Maker represents that this is a business loan, not a loan for personal or household purposes, and that all of the proceeds of the loan shall be used exclusively for business purposes.
16. Waiver. Except as otherwise expressly provided to the contrary in this Note or other loan documents relating to this Note, Maker for itself and for its successors, transferees and assigns and all guarantors, endorsers and signers, hereby waives all valuation and appraisement privileges, preser:itment and demand for payment, protest, notice of protest and nonpayment, dishonor and notice of dishonor, bringing of suit, lack of diligence or delays in collection or enforcement of this Note and notice of the intention to accelerate, the release of any party liable, the release of any security for this Note, the taking of any additional security and any other indulgence or forbearance. Maker agrees that this Note and any or all payments coming due hereunder may be extended or renewed from time to time without in any way affecting or diminishing Maker's liability under this Note. The acceptance by Holder of a partial amount of a payment due from Maker to Holder under this Note shall not constitute a waiver of the requirement of Maker to make a full payment to Holder and shall not constitute a waiver by Holder of the time of the essence provision of this Note.
17. Headings. The subject headings of the paragraphs of this Note are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions.
18. Security. As security for the loan represented by this Note, Maker agrees that the Security Agreement of even date herewith shall remain in full force and effect, and shall secure repayment of the loan evidenced by this Note, until such time as the loan is repaid in full.
19. Payment of Lender's Attorneys' Fees. Maker hereby agrees to pay Payee's legal fees and costs incurred in connection with the drafting and negotiation of this Note and the related loan documents, with such fees and costs to be deducted from the loan proceeds prior to disbursement and remitted directly by Holder to Holder's counsel, Glenn B. Hotchkiss, Esq.
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20. Entire Agreement. This Note and the related Security Agreement of even date herewith, and the documents and papers executed in accordance therewith, constitute the entire transaction between the parties hereto, and there have been no representations, warranties, covenants, or conditions except those specified in such documents and in the documents and papers executed in accordance therewith.
21. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which, when taken together, shall constitute one and the same instrument.
22. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors, and assigns, except as otherwise expressly provided herein.
23. Capacity to Execute. By affixing his signature hereto, Adam Thomas represents and warrants that he has the authority to execute this Note on behalf of Maker, and that execution of this Note does not breach any existing contract, agreement, promissory note, or other obligation of Maker.
IN WITNESS WHEREOF, Maker has duly executed this Note as of the day and year first above written.
| MAKER: | |
| TRANS AMERICAN AQUACULTURE, INC. | |
| /s/ Adam Thomas | |
| Adam Thomas, CEO |
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Exhibit 10.1
SECURITY AGREEMENT
This Security Agreement (the “Agreement”) is made as of this 16th day of April 2024 (the “Effective Date”), by, between, and among IG Holdings, Inc., an Arizona corporation, whose mailing address is 7000 N. 15th Street, Suite 120, #503, Phoenix, Arizona 85020-5547, Iron Rings Holdings, LLC, a Delaware limited liability company, whose address is 26 Milton Avenue, Alpharetta, Georgia 30009 (collectively, “Lender”), and Trans American Aquaculture, Inc., a Colorado corporation, whose mailing address is 1022 Shadyside Lane, Dallas, Texas 75223 (the “Grantor”).
WHEREAS, Lender has agreed to loan to Grantor the principal sum of Three Hundred Fifty Thousand Dollars and Zero Cents ($350,000.00) as evidenced by that certain Secured Promissory Note of even date herewith (the “Note”);
WHEREAS, Grantor represents that it is the sole owner of that certain real property whose address is 16455 F.M. 1847, Rio Hondo, Cameron County, Texas 78583 (the “Farm Property”);
WHEREAS, Grantor represents that the Farm Property is encumbered by a first Deed of Trust in favor Kings Aqua Farm, LLC with a current loan balance of $4,707,902.30 and 2 Tax Lien Contrasts with a total balance of $124,384.
WHEREAS, Grantor represents that it is the sole owner of that certain real property whose address is 35467 Marshall Hutts Road, Rio Hondo, Texas (the “Hutts Property”);
WHEREAS, Grantor represents that there are no liens on the Hutts Property;
WHEREAS, Grantor represents that the Farm Property is operated as a shrimp farm.
WHEREAS, Grantor represents that it is a public company whose Common Stock is traded on the OTC Markets under the ticker symbol “GRPS.”
NOW, THEREFORE, in consideration of the mutual promises, covenants, and agreements set forth in this Agreement, Lender and Grantor agree as follows:
1. Deliveries of Grantor. Upon execution of the Note, Grantor shall execute and deliver to Lender the Note, this Agreement, and Deeds of Trust on the Farm Property and the Hutts Property (collectively, the “Deeds of Trust”). Grantor shall deliver to Lender any other documents reasonably required by Lender, including but not limited to National UCC financing statements, to evidence and perfect the security interests granted in the Collateral (as that term is defined below).
2. Lender’s Security Interest. To secure the payment and performance of the Note by Grantor: (a) Grantor hereby conveys, transfers, assigns, sets over, hypothecates and grants to Lender a first deed of trust interest in the Hutts Property and a second deed of trust interest the Farm Property, which security interests shall be reflected in a standard form Deed of Trust to be delivered prior to loan closing (hereinafter collectively, the “Collateral”). Grantor agrees to execute from time to time such documents as Lender may reasonably require to evidence and perfect and continue the perfection of such security interests in the Collateral. Grantor hereby designates and appoints Lender as its attorney in fact with full power of substitution to act in its name, place, and stead for the purpose of executing on its behalf any National UCC financing statements or continuations thereof necessary to evidence, perfect, or continue the perfection of the security interest therein granted in the Collateral to Lender. Grantor hereby authorizes Lender, and appoints Lender as its attorney-in-fact, to execute and file or record, if necessary, any financing statement, instrument, document, notice or agreement on its behalf to perfect or continue the security interests created hereby. This power, being coupled with an interest, shall be irrevocable until all amounts secured hereby have been paid, satisfied and discharged in full.
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3. Events of Default. The following events shall be deemed events of default (an “Event of Default”) under the terms of this Agreement:
(a) Default in the payment or performance of any of the installments to be paid pursuant to the Note; and
(b) Default in the performance of any of the covenants, warranties, representations, or obligations under the terms of the Note or this Agreement.
4. Remedies Upon Default. If Granter defaults in any of its undertakings set forth in the Note and/or this Agreement, and the default is not cured by Granter as provided in the respective document, then the entire unpaid principal and accrued and unpaid interest thereon shall thereby become immediately due and payable, Lender shall have the right to immediate possession of the Collateral, and Lender may exercise any and all rights and privileges in connection therewith.
5. Restrictions on Grantors’ Rights. Until such time as the Note shall have been paid in full, Grantor shall not pledge, sell, hypothecate, encumber or otherwise assign the Collateral.
6. Termination. Upon the satisfaction in full of all of Grantor’s obligations under the Note, this Agreement (and the security interests created hereby) shall terminate and all rights to the Collateral shall revert to Grantor. Lender shall, upon Grantor’s request and at its expense, return to Grantor such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof.
7. Further Actions. The parties hereto shall execute such documents and take such actions as may be reasonably requested by the other parties to carry out the provisions and purposes of this Agreement.
8. Entire Agreement. This Agreement, the Note, and the Deeds of Trust, along with any documents and papers executed in accordance therewith, constitute the entire transaction between the parties hereto, and there have been no representations, warranties, covenants, or conditions except those specified in such agreements and in the documents and papers executed in accordance therewith.
9. Attorneys’ Fees. In the Event of Default under the Note and/or this Agreement, or in the event Lender seeks legal advice in order to enforce the provisions of the Note and/or this Agreement after an Event of Default, Grantor agrees to pay Lender’s reasonable attorneys’ fees. If any action is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to an award of its reasonable attorneys’ fees.
10. Governing Law, Jurisdiction and Severability. This Agreement is made pursuant to and shall be construed, governed and enforced under the laws of the State of Arizona without regard to any conflict of law provisions. Exclusive jurisdiction and venue over any legal action brought by any of the parties hereto relating in any way to the terms of this Agreement and/or the Note shall reside in the state and federal courts located in Maricopa County, Arizona, and Grantor hereby consents to such exclusive jurisdiction and venue. If any provision of this Agreement is construed or interpreted by a court of competent jurisdiction to be void, invalid or unenforceable, such decision shall affect only those provisions so construed or interpreted and shall not affect the remaining provisions of this Agreement.
11. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which, when taken together, shall constitute one and the same instrument.
12. Headings. The subject headings of the paragraphs of this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions.
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13. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors, and assigns, except as otherwise expressly provided herein.
14. Notices. Any notices which any party may be required, or may desire, to give, unless otherwise specified, shall be in writing and shall be (a) hand-delivered, effective upon receipt, (b) transmitted by telecopier, effective upon receipt, with the original mailed the same date by first class mail, postage prepaid, (c) sent by United States Express Mail or by private overnight courier, effective upon receipt, or (d) served by certified mail, postage prepaid, return receipt requested and addressed to such party at the addresses set forth in the Note, or to such other address(es) or addressee(s) as the party to be served with notice may have furnished in writing to the other party, effective three (3) days after mailing.
15. Assignment. Lender may assign all or a portion of its rights, title and interest in this Agreement to any person, firm, corporation or other entity without the consent of Grantor.
16. Relationship. The relationship of the parties hereto is that of lender and granter and it is expressly understood and agreed that nothing contained in this Agreement shall be interpreted or construed to make Lender and Granter partners, joint venturers or participants in any other legal relationship except that of lender and grantor.
17. Waiver. Except as otherwise expressly provided to the contrary in this Agreement or the other loan documents relating to this Agreement, Grantor for itself and for its successors, transferees and assigns and all guarantors, endorsers and signers, hereby waive all valuation and appraisement privileges, presentment and demand for payment, protest, notice of protest and nonpayment, dishonor and notice of dishonor, bringing of suit, lack of diligence or delays in collection or enforcement of this Agreement and notice of the intention to accelerate, the release of any party liable, the release of any security for the Note, the taking of any additional security and any other indulgence or forbearance. Granter agrees that the Note and any or all payments coming due thereunder may.be extended or renewed from time to time without in any way affecting or diminishing Grantor’s under this Agreement. The acceptance by Lender of a partial amount of a payment due from Granter to Lender under the Note shall not constitute a waiver of the requirement for Granter to perform all of its obligations under this Agreement.
18. Capacity to Execute. By affixing his signature hereto on behalf of Granter, Adam Thomas represents and warrants that he has the capacity to execute this Agreement on behalf of Granter, and that execution of this Agreement does not breach any existing contract, agreement, promissory note of Granter.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.
| LENDER | |
| IG Holdings, Inc. | |
| /s/ Ira J. Gaines | |
| Ira J. Gaines, President | |
| Iron Ring Holdings, LLC | |
| /s/ Jack Rose | |
| Jack Rose, Authorized Representative | |
| GRANTOR | |
| TRANS AMERICAN AQUACULTURE, INC. | |
| /s/ Adam Thomas | |
| Adam Thomas, CEO |
| 3 |
EXHIBIT “A”
LEGAL DESCRIPTION
File No.: 2319830
TRACT 1:
Field notes of an 1879.947 acre tract of land being comprised of a 535.3454 acre tract, called Tract 1, 1074.601 acres, called Tract 2, and a 270.00 acre tract, called Tract 3 in Assumption Warranty Deed from Jizhong Wang to King’s Aqua Farm, L.L.C., a Texas limited liability company, recorded in Volume 19293 Page 140 of the Official Records of Cameron County, Texas.
Said 1879.947 acre tract is comprised of a portion Tract Fifty (50), Share Nineteen (19) of the ESPIRITU SANTO GRANT of Cameron County, Texas, and is out of the J. S. De La Garza Survey, Abstract 2, is situated in Cameron County, approximately 10.5 miles northeast of the town of Rio Hondo, and is described by metes and bounds as follows:
Beginning at a point in the approximate centerline of F. M. Highway 1847, the west line of said Tract 50, Share 19, and at the northwest corner of said 270.00 acre tract and the southwest corner of said 535.3454 acre tract, for an angle corner of this tract; whence a 5/8” iron rod found 33.34’ east of line bears S 86* 34’ 45” E;
Thence N 03* 59’ 39” E along the approximate centerline of said F. M. Highway 1847, the west line of said Tract 50, Share 19, the west line of said 535.3454 acre tract, and the west line of this tract, a distance of 5038.10 feet to a point for the northwest corner of said 535.3454 acre tract and the northwest corner of this tract;
Thence N 04* 02’ 30” E, a distance of 46.61 feet to a 1/2” iron rod found for a corner of this tract;
Thence S 73* 43’ 58” E, a distance of 104.51 feet to a 1/2” iron rod found at the point of curvature of a curve to the left having a central angle of 1* 47’ 50” and a radius of 1927.11 feet for a corner of this tract;
Thence alongthe said curve to the left; a distance of 60.45 feet, with a chord bearing of S 73* 31’ 52” E, and distance of 60.44 feet, to a 1/2” iron rod found at the end of said curve, for a corner of this tract;
Thence S 80* 29’ 32” E, a distance of 7.60 feet to a 1/2” iron rod found at a point of curvature of a curve to the left having a central angle of 13* 06’ 30” and a radius of 1642.40 feet, for a corner of this tract;
Thence along said curve to the left; a distance of 375.75 feet, with a chord bearing of S 78* 52’ 42” E, and distance of 374.93 feet, to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907’’ found at the end of said curve, in the south line of Lot 11 of the Arroyo City Vista Subdivision as shown on map recorded in Cabinet 1, Slots 163-B, 164-A,164-B, and 165-A of the Map Records of Cameron County, Texas; for a corner of a 4.8626 acre tract of land described in Tract 2 of the save and except portion of said Exhibit “A”, for a corner of this tract;
Thence S 02* 57’ 12” W along a west line of said 4.8626 acre tract and an interior line of this tract, a distance of 297.60 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found for the southwest corner of said 4.8626 acre tract and a corner of this tract;
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Thence S 86* 53’ 49” E along the south line of said 4.8626 acre tract and an interior line of this tract, a distance of 666.78 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found for the southeast corner of said 4.8626 acre tract and a corner of this tract;
Thence N 08* 09’ 52” E along the east line of said 4.8626 acre tract and an interior line of this tract, a distance of 297.58 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found for the northeast corner of said 4.8626 acre tract and a corner of this tract;
Thence N 05* 04’ 46” W, a distance of 38.48 feet to a 1/2” iron rod found for a corner of this tract;
Thence N 88* 28’ 49” E, a distance of 217.00 feet to a 1/2” iron rod found at a point of curvature of a curve to the left, having a central angle of 15* 50’ 35” and a radius of 1742.26 feet, for a corner of this tract;
Thence along said curve to the left; a distance of 481.76 feet, with a chord bearing of N 80* 29’ 54” E, and distance of 480.22 feet, to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907’’ found at the end of said curve, for a corner of this tract;
Thence N 72* 40’ 46” E, a distance of 6.07 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found at a point of curvature of a curve to the left having a central angle of 13* 26’ 03” and a radius of 1857.03 feet, for a corner of this tract;
Thence along said curve to the left; a distance of 435.42 feet, with a chord bearing of N 65* 57’ 44” E, and distance of 434.42 feet, to a 1/2” iron rod found at the end of said curve, for a corner of this tract;
Thence N 59* 35’ 52” E, a distance of 167.97 feet to a 1/2” iron rod found at a point of curvature of a curve to the right, having a central angle of 50* 41’ 44” and a radius of 2644.81 feet, for a corner of this tract;
Thence along said curve to the right; a distance of 262.92 feet, with a chord bearing of N 61* 51’ 30” E, and distance of 262.81 feet, to ” iron rod found at the end of said curve, for a corner of this tract;
Thence N 65* 24’ 35” E, a distance of 136.23 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found for a corner of this tract;
Thence S 25* 04’ 17” E, a distance of 10.00 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found for a corner of this tract:
Thence N 64* 55’ 42” E, a distance of 34.50 feet to a 1/2” iron rod found for a corner of this tract;
Thence N 59* 50’ 43” E, a distance of 162.40 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907’’ found for a corner of this tract;
Thence N 30* 09’ 18” W, a distance of 6.89 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found at a point of curvature of a curve to the left, having a central angle of 53* 54’ 1O” and a radius of 1375.73 feet, for a corner of this tract;
Thence along said curve to the left; a distance of 1294.26 feet, with a chord bearing of N 30* 36’ 37” E, and distance of 1247.06 feet, to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found at the end of said curve, for a corner of this tract;
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Thence N 03* 48’ 46” E, a distance of 254.41 feet to a 1/2” iron rod found at a point of curvature of a curve to the right, having a central angle of 11* 40’ 29” and a radius of 1202.40 feet, for a corner of this tract;
Thence, along said curve to the right; a distance of 245.01 feet, with a chord bearing of N 09* 15’ 50” E, a distance of 244.58 feet, to a 1/2” iron rod found at the end of said curve, for a corner of this tract;
Thence S 86* 44’ 29” E, a distance of 448.74 feet to a 1/2” iron rod found in the east line of said Tract 50, Share 19 for the northeast corner of this tract;
Thence S 03* 19’ 39” W along the east line of said Tract 50, Share 19, the east line of said 535.3454 acre tract, and the east line of this tract, a distance of 7362.98 feet to a 5/8” iron rod in concrete found at the northeast corner of said 270.00 acre tract, for the southeast corner of said 535.3454 acre tract and an angle corner of this tract;
Thence S 03* 20’ 1O” W continuing along the east line of said Tract 50, Share 19, the east line of said 270.00 acre tract, and the east line of this tract, a distance of 2727.32 feet to a 5/8” iron rod in concrete found at the northeast corner of said 1524.93 acre tract and the southeast corner of said 270.00 acre tract, for an angle corner of this tract;
Thence S 03* 18’ 54” W continuing along the east line of said Tract 20, Share 19, the east line of said 1524.93 acre tract, and the east line of this tract, a distance of 11,314.85 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found at the easterly northeast corner of a 450 acre tract of land described in Special Warranty Deed with Vendor’s Lien from Texas AgFinance, FLCA to Jorge Luis Castillo, et ux, recorded in Vol. 17443, Page 264 of the Official Records of Cameron County, Texas; for the southeast corner of this tract;
Thence N 81* 56’ 21” W over said 1524.93 acre tract, along the easterly north line of said 450 acre tract, and the easterly south line of this tract, a distance of 3999.97 feet to a 5/8” iron rod found with surveyor’s cap stamped “RPLS 1907” found at an interior corner of said 450 acre tract, for the easterly southwest corner of this tract;
Thence N 03* 18’ 53” E continuing over said 1524.93 acre tract, along the northerly east line of said 450 acre tract and the southerly west line of this tract, a distance of 4972.55 feet to a 5/8” iron rod with surveyor’s cap stamped “RPLS 1907” found at the westerly northeast corner of said 450 acre tract, for an interior corner of this tract;
Thence N 82* 06’ 05” W continuing over said 1524.93 acre tract, along the westerly north line of said 450 acre tract and the westerly south line of this tract, at 377.71 pass a 5/8” iron rod found for a line marker, in all a distance of 411.74 feet to a point in the approximate centerline of said F. M. Highway 1847, the west line of said Tract 50, Share 19, and the west line of said 1524.93 acre tract, at the northwest corner of said 450 acre tract, for the westerly southwest corner of this tract;
Thence N 03* 58’ 07’’ E along the approximate centerline of said F. M. Highway 1847, the west line of said Tract 50, Share 19, the west line of said 1524.93 acre tract, and a west line of this tract, a distance of 6029.99 feet to a point at the southwest corner of said 270.00 acre tract and the northwest corner of said 1524.93 acre tract, for an angle corner of this tract;
Thence N 03* 59’ 20” E continuing along the approximate centerline of said F. M. Highway 1847, the west line of said Tract 50, Share 19, and the west line of said 270.00 acre tract, a distance of 2726.98 feet to the point of beginning, containing 1879.947 acres of land, more or less.
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TRACT II:
BEING a 0.23 acre of land consisting of all of Lot 13, of the Unrecorded Resubdivision of Unit 1 of Private Survey of the North 26.42 acres of the North 2422.5 acres ofTract Fifty (50), in Share 19, of the Espiritu Santo Grant, Cameron County, Texas, and further being that same property recorded as Tract II in Volume 4372. Page 46 of the Official Records, Cameron County, Texas; Said 0.23 acre tract being more particularly described as follows: ..
COMMENCING at a point on the intersection of the North right of way line of Marshall Hutt Road (120.00 feet of right of way) and the East right of way line of Paredes Line Road being the Southwest corner of said Resubdivision;
THENCE, along the East right of way line of said Paredes Line Road and the West line of said Resubdivision, North 04 degrees 15 minutes 00 seconds East, a distance of 163.00 feet to a point for the Northwest corner of said Resubdivision;
THENCE, departing the East right of way line of said Paredes Line Road, South 74 degrees 39 minutes 00 seconds East, along a North line of said Resubdivision, a distance of 556.30 feet to a point;
THENCE, continuing along a North line of said Resubdivision, South 89 degrees 35 minutes 00 seconds East, a distance of 172.27 feet to the POINT OF BEGINNING and the Northwest corner of the herein described tract;
THENCE, continuing along a North line of said Resubdivision, South 89 degrees 35 minutes 00 seconds East, a distance 55.05 feet to a point for the Northeast corner of the herein described tract;
THENCE, departing the North line of said Resubdivision, South 04 degrees 40 minutes 40 seconds West, at a distance of 15.00 feet passing a 1/2 inch iron rod set for reference, and continuing in all a total distance of 170.20 feet to a 1/2 inch iron rod set on the arc of a curve to the right, being the North right of way line of the aforementioned Marshall Hutt Road, for the Southeast corner of the herein described tract;
THENCE, along the North right of way line of said Marshall Hutt Road, being said curve to the left having a Radius of 1627.10 feet and an interior angle of 02 degrees 12 minutes 50 seconds (Chord: North 87 degrees 47 minutes 48 seconds West, distance of 62.88 feet), are distance of 62.88 feet (Called: 62.8 feet) to a 1/2 inch iron rod found for the Southwest corner of the herein described tract;
THENCE, departinng said curve being the North right of way line of said Marshall Hutt Road, North 07 degrees 21 minutes 50 seconds East, at a distance of 154.01 feet passing a 1/2 inch iron rod set for reference, and continuing in all a total distance of 169.01 feet (Called: 169.0 feet) to the POINT OF BEGINNING and CONTAINING 0.23 acre of land.
NOTE: This Company does not represent that the acreage or square footage calculations on said Exhibit “A” are correct.
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Exhibit 10.2
HONOR
ENTERPRISE FUNDING
“Where your deal gets done”
WARRANT COVERAGE AGREEMENT
THIS AGREEMENT is entered into this 15th day of May, 2024 (the “Effective Date”) by and between Honor Enterprise Funding, LLC (“Broker” or the “Holder”), and Trans American Aquaculture, Inc (“Principal”). In consideration of the mutual covenants contained herein, it is agreed as follows:
Warrant coverage is hereby granted in the sum of $350,000( approximately 1,200,000 shares) based on a closing stock price of the Principal of the date of funding for the loan granted by IG Holdings and partnered parties to the IG Holdings loan.
Warrants are cashless if they are in the money and exercised. “Cashless” means the holder does not have to do a pay swap at strike and then be reimbursed at strike value and premium. The Principal will be obligated to send the premium above the strike price directly to the Holder within three (3) business days.
Warrants are transferable at the request of the holder if requested. Warrants are not exercisable for three (3) months after execution of the loan.
All Warrants shall not be exercisable and shall terminate three (3) years after the date of issuance.
The Broker represents that is an “accredited investor,” as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended.
/s/ Kirk Gill
Honor Enterprise Funding LLC
Principal, Kirk Gill
/s/ Adam Thomas
Trans American Aquaculture, Inc.
CEO, Adam Thomas
Honor Enterprise Funding LLC | 1-800-749-8545 | www.honorenterprise.fund | info@honorenterprise.fund CMB#0948122 NMLS#1744105
All logos and trademarks are copyrighted by Honor Enterprise Funding, LLC. All rights reserved.
Exhibit 10.3
FORBEARANCE AND MODIFICATION AGREEMENT
This Forbearance and Modification Agreement (this “Agreement”) is made as of May 31, 2024, by and between TRANS AMERICAN AQUACULTURE, LLC ("Borrower") and KINGS AQUA FARM, LLC (“Lender'”).
SECTION 1 – DEFINITIONS
1.1 For purposes of this Agreement the following terms shall have the following meanings:
a. “Note” means that certain Real Estate Lien Note dated June 15, 2017, executed by Borrower and payable to Lender in the original principal amount of $5,600,000.000, as amended, restated, supplemented or otherwise modified from time to time, pursuant to which Lender has agreed to make a certain loan and other financial accommodations to Borrower.
b. “Deed of Trust” means that certain Deed of Trust executed by Borrower as Grantor in favor of Jizhong Wang, as Trustee, for the benefit of KINGS AQUA FARM, LLC and was recorded in Volume 22675, Page 193, Official Records of Cameron County, Texas.
c. The “Property” means that certain real property, with all improvements thereon, described as 1880.2754 acres ofN. 2209 acre tract 50, Abstract 2, Espiritu Santo Grant, Share 19, Cameron County, Texas. (CAD GEO, No. 79-1900-0500-0102-03
d. “Event of Termination” means each and every event specified in Section 6 of this Agreement or any other event described herein that is designated an Event of Termination.
e. “Forbearance Termination Date” means the earlier of (a) August 5, 2024, or (b) the date of the occurrence of any one or more Events of Termination.
f. “Obligations” means the obligations due under the terms of the Note and Deed of Trust.
1.2 All capitalized terms used in this Agreement which are not defined herein, but which are defined in or by reference in the Note or Deed of Trust, shall have the same meanings herein as therein.
1.3 To the extent not defined in this Section 1, unless the context otherwise requires, all accounting terms used in this Agreement shall be construed in accordance with GAAP, as of the date of this Agreement, to the extent that same are used or defined therein.
SECTION 2 – BACKGROUND
2.1 Borrower acknowledges and agrees that as of May 31, 2024, the outstanding amount due under the terms of the Note is $4,832,808.32. The foregoing amount does not include all fees and expenses to which Lender is entitled under the terms and provisions of the Note. Borrower acknowledges and agrees that the Obligations are due and owing and they have no right of offset, defense, or counterclaim with respect to such Obligations.
2.2 To secure repayment of the Obligations, Borrower granted Lender, a Lien on and security interest in the Property. Borrower hereby acknowledges, confirms and agrees that Lender has and shall continue to have valid, enforceable and duly perfected first-priority lien upon and security interests in ilie Property heretofore granted to Lender pursuant to the Deed of Trust or otherwise granted to or held by Lender.
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2.3 Borrower acknowledges and agrees that the following Events of Default (the “Designated Defaults”) have occurred and are continuing as of the date hereof as a result of Borrower's failure to comply with certain terms of the Note and Deed of Trust:
a. failure to pay Principal and Interest installments for the period May 1, 2022 through May 31, 2024.
2.4 Borrower acknowledges and agrees that, as a result of the existence of the Designated Defaults,( i) payment of the Obligations are capable of being accelerated and, in such case, the Obligations will become due and owing in full and (ii) Lender will have the right to exercise its rights and remedies, including, without limitation, the right to initiate foreclosure proceedings against the Property. Borrower has requested that Lender forbear from otherwise exercising certain of its rights and remedies under the Note, Deed of Trust, and under applicable law. Borrower acknowledges that such request is in the best interests of Borrower.
2.5 In response to Borrower's request, Lender is willing to forebear until the Forbearance Termination Date from exercising Lender's rights and remedies under the Note, Deed of Trust, and under applicable law as a result of the existence of the Designated Defaults (other than as specifically provided in Section 4.1 below), provided that such forbearance is on the terms and conditions set forth in this Agreement (and, for the sake of clarity, in no event shall such forbearance extend beyond August 5, 2024 and, further provided, that such forbearance does not waive the Designated Defaults or any oilier Default or Event of Default that has arisen or may arise in the future or otherwise prejudice the rights and remedies of Lender.
SECTION 3 – CONDITIONS PRECEDENT
Lender's forbearance obligations hereunder shall be subject to the satisfaction of the following conditions precedent:
a. Borrower shall have paid to Lender (i) $77,374.56 representing only two of the past due payments of Principal and Interest
SECTION 4 – FORBEARANCE BY LENDER
4.1 Subject to the satisfaction of the terms and conditions set forth herein, and further subject to the provisions of Section 4.2 below or any other limitation set forth in this Agreement, except as provided below, Lender will not exercise or enforce its rights or remedies, against Borrower to which it would be entitled under the terms of the Note and Deed of Trust by reason of the occurrence of the Designated Defaults; provided, that such forbearance shall not act as a waiver of Lender's right to enforce any of its rights or remedies, including but not limited to foreclosure on August 6, 2024, after the Forbearance Termination Date, it being agreed to and understood that on the Forbearance Termination Date, Lender's agreement to forbear shall automatically and without further action terminate and be of no force and effect, and as a result thereof Lender shall be permitted to immediately exercise any and all of its rights and remedies it may have as a result of the existence of the Designated Defaults in accordance with the Note, Deed of Trust or applicable law. Furthermore, nothing contained herein shall be construed as requiring Lender to extend the Forbearance Termination Date. On the Forbearance Termination Date, all of the Obligations shall thereupon be immediately due and payable in full. Notwithstanding anything to the contrary contained in this Agreement, Lender shall be entitled to continue the non-judicial foreclosure proceeding against the Property previously initiated by Lender, including, without limitation, at Lender's sole option, the appointment of a substitute trustee, the scheduling of a sale and the posting and delivery of all notices required by the Note, Deed of Trust, and applicable law, provided, that prior to the Forbearance Termination Date, Lender shall not conduct a sale of the Property.
4.2 Notwithstanding anything to the contrary contained in Section 4.1:
a the Designated Defaults shall constitute existing Events of Default for the purpose of determining whether or not certain actions or failures to act may be taken or otherwise acquiesced to by or on behalf of Borrower, as set forth in the Note and Deed of Trust, and, accordingly, any actions or failures to act by Borrower in violation of such provisions while any Event of Default (including any Designated Default) exists will constitute additional Events of Default under the Note and Deed of Trust, as well as a breach of the terms of this Agreement;
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b. under no circumstances shall the forbearance by Lender under this Agreement be deemed to extend to any of Lender's rights and remedies under any Subordination Agreements to which it is a party, it being agreed to and understood that Lender shall be entitled to enforce any and all provisions of any subordination agreements to the fullest extent provided therein in accordance with the terms thereof; including, without limitation, invoking any rights that arise as a result of the existence of the Designated Defaults to block payments by Borrower to any subordinated creditor party thereto on account of any debt owing to such subordinated creditor; and
c. under no circumstances shall the forbearance by Lender under this Agreement be deemed to extend to any rights of Lender under the Note to charge a default rate of interest on account of the Obligations due to the existence of the Designated Defaults or any other Event of Default, it being agreed to and understood that Lender shall retain all rights to charge such default interest in accordance with the terms of the Note, including, without limitation, the right to retroactively impose such default interest.
4.3 Borrower acknowledges receipt of notices of default with respect to the Designated Defaults. Notwithstanding anything to the contrary contained in any of the Note or Deed of Trust, Borrower: (i) waives the right to any other or further notice of default with respect to the Designated Defaults; (ii) waives notice of intention to accelerate and acknowledge receipt of notice of acceleration of the Obligations as provided in Section 2.4 hereof; and (iii) waives any further demand, presentment for payment, protest, notice of protest, notice of acceleration, notice of intent to accelerate, and any other notice of any kind whatsoever.
SECTION 5 – COVENANTS OF BORROWER
Borrower agrees that it shall comply with the following covenants, any breach of which shall constitute an immediate Event of Termination:
a. Borrower shall fully comply with all of its obligations under the Note, Deed of Trust and this Agreement; or
b. Borrower shall fail to satisfy all the Obligations under the Note by the Forbearance
c. Termination Date.
SECTION 6 – EVENTS OF TERMINATION
The occurrence of any one or more of the following events shall constitute an "Event of Termination" hereunder, it being expressly acknowledged and agreed that TIME IS OF THE ESSENCE to the payment and performance by Borrower of their obligations under this Agreement and the Note or Deed of Trust:
6.1 Failure of Borrower to perform or observe any term, covenant, warranty or agreement contained in this Agreement or the Note or Deed of Trust (except (to the extent curable) as cured within the applicable cure periods contained in the Note or Deed of Trust or waived or modified in this Agreement), on Borrower's part to be performed or observed.
6.2 If Borrower repudiates or asserts a defense to any obligation or liability under this Agreement, the Note or the Deed of Trust, or makes or pursues a claim against Lender.
6.3 The existence of any Default or Event of Default, other than the Designated Defaults, or of any breach or default by Borrower of any term, covenant, condition, representation or warranty set forth in this Agreement, in each case whether now existing or hereafter occurring.
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6.4 Any of the representations or warranties of Borrower contained herein shall have been false or incorrect in any material respect as of the date of this Agreement.
6.5 The provision of Section 9.1, or any portion thereof are alleged to be invalid or unenforceable by any claim or proceeding initiated or commenced in favor of, through, or by Borrower.
SECTION 7 - RIGHTS AND REMEDIES
7.1 Upon the occurrence of any Event of Termination, Lender may, at its option and without notice to Borrower, exercise any and all rights and remedies pursuant to the Note, Deed of Trust or applicable law as a result of the existence of the Designated Defaults in such manner as Lender in its sole and exclusive discretion shall determine; including, without limitation, pursuing foreclosure of the property, filing suit for the collection of the Obligations, or any other action or remedy available to Lender under the Note, Deed of Trust or applicable law.
7.2 All of Borrower's obligations and liabilities to Lender hereunder and under the Note and Deed of Trust (including, without limitation, Borrower's payment obligations)· shall survive the Forbearance Termination Date, and all of such obligations are secured under the Note, Deed of Trust and any other documents, instruments or agreements pursuant to which Borrower may, from time to time, grant to Lender as collateral security for Borrower's obligations to Lender.
SECTION 8 - BANKRUPTCY RELIEF
In the event that Borrower (a) files any voluntary petition under any chapter of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”), or in any manner seeks any relief under any other state, federal or other insolvency law or laws providing for relief of debtors, or directly or indirectly causes a filing of any such petition or to seek any such .relief; or (b) is named as a debtor or alleged debtor in any involuntary petition filed under any chapter of the Bankruptcy Code, or directly or indirectly causes any involuntary petition under any chapter of the Bankruptcy Code to be filed against Borrower, or directly or indirectly causes Borrower to become the subject of any proceeding pursuant to any other state, federal or other insolvency law or laws providing for the relief of debtors; or (c) directly or indirectly causes the Property or any interest of Borrower in the Property to become the property of any bankruptcy estate or the subject of any state, federal or other bankruptcy, dissolution, liquidation or insolvency proceeding, Borrower agrees to the lifting of the automatic stay by the appropriate Bankruptcy Court "for cause" pursuant to section 362(d)(l) of the Bankruptcy Code (11 U.S.C. § 362(d)(l)). Said Bankruptcy Court shall be authorized to enter an order lifting the automatic stay without the necessity of an evidentiary hearing and without the necessity of Lender establishing the lack of adequate protection of its interests in the applicable Property or the lack of equity in the applicable Property and lack of necessity of the Property for an effective bankruptcy reorganization.
SECTION 9 - GENERAL PROVISIONS
9.1 By execution of this Agreement, Borrower acknowledges and confirms that they do not have any offsets, defenses or claims against Lender, or any of its subsidiaries, affiliates, officers, directors, employees, agents, attorneys, predecessors, successors or assigns whether asserted or unasserted. Borrower, and their successors, assigns, parents, subsidiaries, affiliates, predecessors, employees, agents, heirs, executors, as applicable, jointly and severally, release and forever discharge Lender, its subsidiaries, affiliates, officers, directors, employees, agents, attorneys, predecessors, successors and assigns, both present and former (collectively the "Lender Affiliates") of and from any and all manner of action and actions, cause and causes of action, suits, debts, controversies, damages, judgments, executions, claims and demands whatsoever, asserted or unasserted, in law or in equity which they ever had, now have or which any of Borrower's successors, assigns, parents, subsidiaries, affiliates, predecessors, employees, agents, heirs and executors, as applicable, both present and former ever had or now has, upon or by reason of any manner, cause, causes or thing whatsoever, including, without limitation, any presently existing claim or defense whether or not presently suspected, contemplated or anticipated. The provisions of this Section 9.1 shall survive the termination of this Agreement, the Note, the Deed of Trust and the any other loan documents and the payment in full of the Obligations.
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9.2 Borrower agrees to pay to Lender upon demand (a) an amount equal to any and all out-of-pocket costs or expenses (including legal fees (including allocable costs and disbursements of Lender's legal counsel)) incurred or sustained by Lender in connection with the preparation and negotiation of this Agreement and all related matters; and (b) from time to time after the Forbearance Termination Date, any and all out-of-pocket costs, fees and expenses (including legal fees (including allocable costs and disbursements of Lender's in-house legal counsel) and reasonable consulting, accounting, appraisal and other similar professional fees and expenses) hereafter incurred or sustained by Lender in connection with the administration of credit extended by Lender to Borrower or the preservation of or enforcement of any rights of Lender under this Agreement, the Note, and the Deed of Trust, or in respect of any of Borrower's obligations to Lender, all of which shall be deemed reasonable and payment of which shall be secured by the Property.
9.3 Borrower hereby represents and warrants to Lender as follows: (a) each Borrower is au individual resident of Cameron County and citizens of the State of Texas; (b) Borrower has the power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement; (c) the execution, delivery and performance by Borrower of this Agreement has been duly authorized by all necessary action; (d) this Agreement constitutes the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditor's rights generally or by equitable principles relating to enforceability; and (e) no Default or Event of Default, other than the Designated Defaults, exists.
9.4 Except as otherwise expressly provided for in this Agreement, nothing in this Agreement shall extend to or affect in any way Borrower's Obligations or any of the rights of Lender and remedies of Lender arising under the Note and Deed of Trust executed in connection therewith, and Lender shall not be deemed to have waived any or all of such rights or remedies with respect to any Event of Default or event or condition which, with notice or the lapse of time, or both would become a Event of Default under the Note or Deed of Trust and which upon Borrower's execution and delivery of this Agreement might otherwise exist or which might hereafter occur. Borrower specifically acknowledges that Lender has not waived, presently does not intend to waive, and may never waive the Designated Defaults, and nothing contained herein or the transactions contemplated hereby shall be deemed to constitute any such waiver or to establish a custom or course of dealing. The failure of Lender at any time or times hereafter to require strict performance by Borrower of any of the provisions, warranties, terms and conditions contained herein in this Agreement or the Note or Deed of Trust shall not waive, affect or diminish any right of Lender at any time or times thereafter to demand strict performance thereof; and, no rights of Lender hereunder shall be deemed to have been waived by any act or knowledge of Lender, its agents, officers or employees, unless such waiver is contained in an instrument in writing signed by Lender and directed to Borrower specifying such waiver. No waiver by Lender of any of its rights shall operate as a waiver of any other of its rights or any of its rights on a future occasion.
9.5 In the event Lender seeks to take possession of or to have a receiver appointed for any or all of the Property by court process, Borrower hereby irrevocably waives any bonds and any surety or security relating thereto required by any statute, court rule or otherwise as an incident to such possession, and waives any demand for possession prior to the commencement of any suit or action to recover the Property.
9.6 Borrower shall at any time or from time to time execute and deliver such further instruments, and take such further action as Lender may reasonably request, in each case further to effect the purposes of this Agreement, the Note and the Deed of Trust, including, without limitation, to create, perfect, protect or maintain Lender's Liens and security interests in and to the Property. In addition, Borrower will promptly furnish to Lender such additional financial or other information as they may reasonably request from time to time to verify compliance with this Agreement, or to ascertain whether any Event of Termination has occurred.
9.7 Borrower represents and warrants that it is represented by competent legal counsel of its choice, is fully aware of the terms contained in this Agreement and has voluntarily and without coercion or duress of any kind, entered into this Agreement and the documents executed in connection with this Agreement.
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9.8 Each reference herein or in the Note or Deed of Trust to Lender shall be deemed to include its successors and assigns, and each reference to Borrower and any pronouns referring thereto as used herein shall be construed in the masculine, feminine, neuter, singular or plural as the context may require, shall be deemed to include the legal representatives, successors and permitted assigns of Borrower, all of whom shall be bound by the provisions hereof or in the Note and Deed of Trust. The terms “Borrower” as used herein shall, if this Agreement or in the Note and Deed of Trust is signed by more than one party, mean, unless this Agreement or in the Note and Deed of Trust otherwise provides or unless the context otherwise requires, the "Borrower" and each and every representation, promise, agreement and undertaking shall be joint and several. No inferences should be made or drawn based either upon (1) earlier drafts of this Agreement or (2) the identity of the party drafting this Agreement.
9.9 Any notice, demand or communication required or permitted to be given by any provision of this Agreement shall be delivered and deemed given in accordance with the notice provisions of the Note and Deed of Trust.
9.10 This Agreement, the Note and Deed of Trust constitute the entire and final agreement among the parties and there are no agreements, understandings, warranties or representations among the parties except as set forth therein and herein. This Agreement will inure to the benefit and bind the respective heirs, administrators, executors, representatives, successors and permitted assigns of the parties hereto.
Nothing in this Agreement or in the Note and Deed of Trust, expressed or implied, is intended to confer npon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the Note and Deed of Trust.
9.11 Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law; if any clause or provision of this Agreement is determined to be illegal, invalid or unenforceable under any present or future law by the final judgment of a court of competent jurisdiction, the remainder of this Agreement will not be affected thereby, will continue in full force and effect in all other jurisdictions and said remaining portions of this Agreement shall continue in full force and effect in the subject jurisdiction as if this Agreement had been executed with the invalid portions thereof deleted. It is the intention of the parties that if any such provision is held to be invalid, illegal or unenforceable, there will be added in lieu thereof a provision as similar in terms to such provision as is possible, and that such added provision will be legal, valid and enforceable.
9.12 All headings contained in this Agreement are for reference purposes only and are not intended to affect in any way the meaning or interpretation of this Agreement.
9.13 This Agreement may be executed in counterparts, each of which will be deemed an original document, but all of which will constitute a single document. This document will not be binding on or constitute evidence of a contract between the parties until such time as a counterpart of this document has been executed by each of the parties and a copy thereof delivered to each party under this Agreement. A facsimile of any party's signature to this Agreement shall be treated as an original signature for all purposes of this Agreement and shall be fully effective to bind such party to the terms of this Agreement.
9.14 Neither this Agreement nor any of the provisions hereof can be changed, waived, discharged or terminated, except by an instrument in writing signed by the parties against whom enforcement of the change, waiver, discharge or termination is sought.
9.15 This Agreement constitutes a modification of the terms of the Note. Any breach by Borrower of any term, provision, covenant, agreement, representation or warranty set forth in this Agreement shall constitute an immediate Event of Default under the Note and Deed of Trust. Borrower hereby acknowledges, confirms and agrees that (a) each of the Note and Deed of Trust to which it is a party has been duly executed and delivered to Lender by it, and each is in full force and effect as of the date hereof; (b) the agreements and obligations of Borrower contained in such documents and in this Agreement constitute the legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms, and Borrower does not have any valid defense to the enforcement of such obligations; and (c) Lender is and shall be entitled to the rights, remedies and benefits provided for in the Note, Deed of Trust and applicable law (subject to the terms of Section 4.1 above). Borrower hereby ratifies, confirms and reaffirms its liabilities, obligations, covenants and agreements under the Note and Deed of Trust and the any other loan documents and the liens and security interests created thereby and agrees that all terms, conditions and provisions of the Note and Deed of Trust shall continue in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized officers as of the day and year first written above.
| LENDER: | BORROWER: | |
| TRANS AMERICAN | KINGS AQUA FARM, LLC | |
| AQUACULTURE, LLC | ||
| By: /s/ Adam Thomas | By: /s/ Jizhong Wang | |
| ADAM THOMAS, President/Manager | JIZONG WANG, President/Manager |
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Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Adam Thomas, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Trans American Aquaculture, Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a – 15(f) and 15d – 15(f) for the Registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others, particularly during the period in which this report is being prepared; |
| b. | Designed such disclosure control over financial reporting, or caused such internal control over financial reporting got be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s issuer’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s issuer’s internal control over financial reporting. |
Date: August 19, 2024
By: /s/ Adam Thomas
Adam Thomas
Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Adam Thomas, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Trans American Aquaculture, Inc. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a – 15(f) and 15d – 15(f) for the Registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others, particularly during the period in which this report is being prepared; |
| b. | Designed such disclosure control over financial reporting, or caused such internal control over financial reporting got be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s issuer’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s issuer’s internal control over financial reporting. |
Date: August 19, 2024
By: /s/ Adam Thomas
Adam Thomas
Chief Executive Officer
(Principal Financial and Accounting Officer)
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of Trans American Aquaculture, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Adam Thomas, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
By: /s/ Adam Thomas
Adam Thomas
Chief Executive Officer
(Principal Executive Officer and
Principal Financial and Accounting Officer)
Date: August 19, 2024