SHMP 10-Q

NaturalShrimp Inc (SHMP)

10-Q 2022-02-17 For: 2021-12-31

View Original

Added on July 28, 2026

5501 LBJ Freeway, Suite 450Dallas, Texas		75240
(Address of Principal Executive Offices)		(Zip Code)

Title of each class		Trading symbol(s)		Name of exchange on which registered
None		N/A		N/A

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

		Page

PART I. FINANCIAL INFORMATION

ITEM 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of December 31, 2021 (unaudited) and March 31, 2021	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2021 and 2020 (unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Deficit for the Nine Months Ended December 31, 2021 and 2020 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended December 31, 2021 and 2020 (unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	35

ITEM 4.	Controls and Procedures	35

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	36

ITEM 1A.	Risk Factors	37

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

ITEM 3.	Defaults Upon Senior Securities	37

ITEM 4.	Mine Safety Disclosures	37

ITEM 5.	Other Information	37

ITEM 6.	Exhibits	38

SIGNATURES		39

ASSETS	December 31, 2021			March 31, 2021
Current assets
Cash	$	2,665,205		$	155,795
Escrow account		5,000,000			-
Inventory		28,128			-
Prepaid expenses		326,505			655,339
Total current assets		8,019,838			811,134

Fixed assets		13,766,272			12,236,557

Other assets
Construction-in-process		2,306,608			1,873,219
Patents		6,756,000			-
License Agreement		10,492,376
Right of Use asset		301,733			275,400
Deposits		20,633			20,633
Total other assets		19,877,350			2,169,252
Total assets	$	41,663,460		$	15,216,943

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	3,321,164		$	963,289
Accrued interest		10,850			73,350
Accrued interest - related parties		203,520			187,520
Other accrued expenses		500,472			602,368
Accrued expenses - related parties		200,000			-
Short-term Promissory Note and Lines of credit		20,044			573,621
Bank loan		-			8,725
PPP loan		-			103,200
Convertible debenture		-			483,637
Note payable		96,000			96,000
Notes payable - related parties		495,412			1,151,162
Dividends payable		472,803			182,639
Derivative liability		12,985,000			-
Warrant liability		6,047,000			-
Total current liabilities		24,352,265			4,425,511

Bank loans, less current maturities		-			206,127
Convertible debenture, less unamortized debt discount of $15,400,000		340,000			-
Notes payable		-			5,000,000
Note payable, less current maturities		143,604			215,604
Lease Liability		303,920			275,400
Total liabilities		25,139,789			10,122,642

Commitments and contingencies (Note 14)
Series E Redeemable Convertible Preferred stock, $0.0001 par value, 10,000 shares authorized, 2,840 and 0 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively		1,925,371			-

Series D Redeemable Convertible Preferred stock, $0.0001 par value, 20,000 shares authorized, 0 and 6,050 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively		-			2,023,333

Stockholders' equity
Series A Convertible Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively		500			500
Series B Convertible Preferred stock, $0.0001 par value, 5,000 shares authorized, 67 and 607 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively		-			-
Common stock, $0.0001 par value, 900,000,000 shares authorized, 642,222,044 and 560,745,180 shares issued and 641,822,043 and 560,745,180 shares outstanding at December 31, 2021 and March 31, 2021, respectively		64,183			56,075
Additional paid in capital		86,808,591			56,649,491
Stock Payable		29,524,000			136,000
Accumulated deficit		(101,798,974	)		(53,683,268	)
Total stockholders' equity attributable to NaturalShrimp Incorporated shareholders		14,598,300			3,158,798

Non-controlling interest in NAS		-			(87,830	)

Total stockholders' equity		14,598,300			3,070,968
Total liabilities mezzanine and stockholders' equity	$	41,663,460		$	15,216,943

	For the Three Months Ended						For the Nine months Ended
	December 31, 2021			December 31, 2020			December 31, 2021			December 31, 2020

Sales	$	16,640		$	-		$	16,640		$	-

Operating expenses:
General and administrative		1,527,699			394,654			5,182,358			1,131,662
Research and development		20,357			-			217,229			79,550
Facility operations		398,504			154,470			810,260			234,113
Depreciation		218,134			18,173			830,409			37,850
Amortization		367,500			-			514,000

Total operating expenses		2,532,194			567,297			7,554,256			1,483,175
Net loss from operations		(2,515,554	)		(567,297	)		(7,537,616	)		(1,483,175	)

Other income (expense):
Interest expense		(80,991	)		(42,541	)		(228,190	)		(102,057	)
Amortization of debt discount		(340,000	)		-			(576,364	)		-
Financing costs		(1,393,000	)		-			(1,502,953	)		(64,452	)
Change in fair value of derivative liability		-			-			-			(29,000	)
Change in fair value of warrant liability		(137,000	)		-			(137,000	)		-
Forgiveness of PPP loan		-			-			103,200			-
Gain on Vero Blue note settlement		500,000			-			500,000			-
Legal Settlement		(29,400,000	)		-			(29,400,000	)		-
Total other income (expense)		(30,850,991	)		(42,541	)		(31,241,307	)		(195,509	)

Loss before income taxes		(33,366,545	)		(609,838	)		(38,778,923	)		(1,678,684	)

Provision for income taxes		-			-			-			-

Net loss		(33,366,545	)		(609,838	)		(38,778,923	)		(1,678,684	)

Less net loss attributable to non-controlling interest		-			(1,074	)		-			(4,655	)
Net loss attributable to NaturalShrimp Incorporated		(33,366,545	)		(608,764	)		(38,778,923	)		(1,674,029	)

Amortization of beneficial conversion feature on Preferred shares		-			(443,333	)		(817,376	)		(1,543,333	)
Redemption and exchange of Series D Preferred shares					-			(5,792,947	)		-
Dividends		-			(172,291	)		-			(317,083	)
Net loss available for common stockholders	$	(33,366,545	)	$	(1,224,388	)	$	(45,389,246	)	$	(3,534,445	)

EARNINGS PER SHARE (Basic and diluted)	$	(0.05	)	$	(0.00	)	$	(0.07	)	$	(0.01	)

WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and diluted)		635,536,459			451,549,772			608,191,555			419,177,832

	Series A Preferred Stock				Series B Preferred Stock						Common Stock				Additional Paid In			Stock			Accumulated			Non-controlling			Total Stockholders' Equity/
	Shares		Amount		Shares			Amount			Shares		Amount		Capital			Payable			Deficit			Interest			(Deficit)
Balance March 31, 2021		5,000,000	$	500		607		$	-			560,745,180	$	56,076	$	56,649,491		$	136,000		$	(53,683,268	)	$	(87,830	)	$	3,070,969

Issuance of common stock upon conversion												1,329,246		133		421,353												421,486
Conversion of Series B PS to common stock						(262	)		-			3,144,000		314		(314	)											-
Conversion of Series D PS to common stock									-			428,572		43		(43	)											-
Exchange of Series D PS to Series E PS																						(3,258,189	)					(3,258,189	)
Sale of common shares and warrants for cash, less offering costs and commitment shares												35,772,729		3,577		17,273,546												17,277,123
Exercise of warrants related to the sale of common shares												1,100,000		110		10,890												11,000
Beneficial conversion feature related to the Series E Preferred Shares																3,269,505												3,269,505
Amortization of beneficial conversion feature related to Series E Preferred Shares																						(817,376	)					(817,376	)
Redemption of Series D Preferred shares																						(2,534,758	)					(2,534,758	)
Common shares to be issued for the acquisition of the non-controlling interest subsidiary's remaining equity																(3,087,830	)		2,000,000						87,830			(1,000,000	)
Common shares to be issued for Patent acquisition																			5,000,000									5,000,000
Common stock vested to consultants												125,000		13		48,738			24,900									73,651
																												-
Net loss																						(2,562,743	)					(2,562,743	)
Balance June 30, 2021		5,000,000	$	500		345		$	-			602,644,727	$	60,266	$	74,585,336		$	7,160,900		$	(62,856,334	)	$	-		$	18,950,668

Conversion of Series E PS to common stock												4,114,286		411		(411	)											-
Amortization of beneficial conversion feature related to Series E Preferred Shares																						(1,341,948	)					(1,341,948	)
Revision of dividends payable on Series B Preferred Shares (See Note 2)																						(182,639	)
Dividends payable on Preferred Shares																						(177,586	)
Common shares to be issued for Technical and Equipment Rights Agreement																			4,762,376									4,762,376
Common stock vested to consultants												62,500		6		24,369			24,900									49,275
																												-
Net loss																						(2,849,635	)					(2,849,635	)
Balance September 30, 2021		5,000,000	$	500		345		$	-			606,821,513	$	60,683	$	74,609,294		$	11,948,176		$	(67,408,142	)	$	-		$	19,210,511

Conversion of Series B PS to common stock						(278	)					3,336,000		334		(334	)											(334	)
Conversion of Series E PS to common stock												4,114,286		411		2,879,589												2,879,589
Amortization of beneficial conversion feature related to Series E Preferred Shares												-		-		-						(831,543	)					(831,543	)
Beneficial conversion feature related to the Series E Preferred Shares												-		-		169,714												169,714
Accretion of Series E Preferred Shares												-		-		-						(80,167	)					(80,167	)
Dividends payable on Preferred Shares												-		-		-						(112,577	)					(112,577	)
Common shares issued for Technical and Equipment Rights Agreement												26,732,673		2,673		11,759,703			(11,762,376	)								-
Common stock vested to consultants												112,500		21		99,054			(49,800	)								49,275
Common stock issued to consultants												430,071		43		158,285												158,328
Common stock issued to employees												175,000		18		68,286												68,304
Reclassification of warrants to liability																(2,935,000)												(2,935,000)
Common stock to be issued for legal settlement to NSH shareholders																			29,388,000									29,388,000
Net loss																						(33,366,545	)					(33,366,545	)
Balance December 31, 2021		5,000,000	$	500		67		$	-			641,722,043	$	64,183	$	86,808,591		$	29,524,000		$	(101,798,974	)	$	-		$	14,598,300

Balance March 31, 2020		5,000,000	$	500		2,250		$	-			379,742,524	$	37,975	$	43,533,243			-		$	(46,427,396	)	$	(82,101	)		(2,937,780	)

Issuance of common stock upon conversion												37,926,239		3,793		222,644												226,437
Reclass of derivative liability upon conversion or redemption of related convertible debentures																205,000												205,000
Purchase of Series B Preferred shares						1,250			0							1,250,000												1,250,000
Beneficial conversion feature related to the Series B Preferred Shares																293,000						(293,000	)					-
Dividends payable on Series B PS																						(144,792	)					(144,792	)
Series B PS Dividends in kind issued						50			0							56,458												56,458
Conversion of Series B PS to common stock						(800	)		(0	)		33,569,730		3,357		(3,357	)											-
Common stock issued in Vista Warrant settlement												17,500,000		1,750		608,250												610,000
Reclass of warrant liability upon the cancellation of warrants under Vista Warrant settlement																90,000												90,000
Common stock issued to consultant												1,250,000		125		61,125												61,250
																												-
Net loss																						(477,072	)		(1,895	)		(478,967	)
Balance June 30, 2020		5,000,000	$	500		2,750		$	0			469,988,493	$	47,000	$	46,316,363		$	-		$	(47,342,260	)	$	(83,996	)	$	(1,062,394	)

Issuance of common stock upon conversion												1,014,001		101		125,635												125,736
Purchase of Series B Preferred shares						1,250			0							1,250,000												1,250,000
Beneficial conversion feature related to the Series B Preferred Shares									0							807,000						(807,000	)					-
Dividends payable on Series B PS																						(83,960	)					(83,960	)
Series B PS Dividends in kind issued						65										77,984												77,984
Conversion of Series B PS to common stock						(2,369	)		(0	)		58,521,249		5,852		(5,852	)											-
Common stock issued to consultant												1,500,000		150		67,350												67,500

Net loss																						(588,193	)		(1,686	)		(589,879	)
Balance September 30, 2020		5,000,000	$	500		1,696		$	(0	)		531,023,743	$	53,103	$	48,638,480		$	-		$	(48,821,413	)	$	(85,682	)	$	(215,012	)

Issuance of common stock upon conversion												795,387		80		198,768												198,848
Purchase of Series B Preferred shares						750			-							750,000												750,000
Beneficial conversion feature related to the Series B Preferred Shares																235,000						(235,000	)					-
Dividends payable on Series B Preferred Shares																						(88,333	)					(88,333	)
Conversion of Series B Preferred Shares to common stock						(526	)		-			5,670,051		567		(567	)											-
Beneficial conversion feature related to the Series D Preferred Shares																5,000,000												5,000,000
Amortization of beneficial conversion feature related to Series D Preferred Shares																						(208,333	)					(208,333	)
Commitment shares issued with Series D Preferred Shares												6,000,000		600		(600	)											-
Common stock issued to consultant												1,500,000		150		616,350												616,500
Common stock to be issued as finder's fees related to asset acquisition																			135,775									135,775

Net loss																						(608,764	)		(1,074	)		(609,838	)
Balance December 31, 2020		5,000,000	$	500		1,920		$	-			544,989,181	$	54,500	$	55,437,431			135,775		$	(49,961,843	)	$	(86,756	)	$	5,579,607

	For the 9 Months Ended
	December 31, 2021			December 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss attributable to NaturalShrimp Incorporated	$	(38,778,923	)	$	(1,674,029	)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation expense		586,409			37,850
Amortization expense		514,000			-
Amortization of debt discount		576,364			-
Change in fair value of derivative liability		-			29,000
Change in fair value of warrant liability		137,000			-
Financing costs		1,502,953			-
Default penalty		-			41,112
Net loss attributable to non-controlling interest		-			(4,655	)
Forgiveness of PPP loan		(103,200	)		-
Gain on Vero Blue note settlement		(500,000	)		-
Legal settlement		29,388,000			-
Shares issued for services		398,831			745,250

Changes in operating assets and liabilities:
Inventory		(28,128	)		-
Prepaid expenses and other current assets		(321,162	)		(649,326	)
Deposits		-			-
Accounts payable		(5,637,796	)		255,231
Other accrued expenses		(101,896	)		143,793
Accrued expenses - related parties		200,000			-
Accrued interest		(49,482	)		29,959
Accrued interest - related parties		16,000			32,096
Cash used in operating activities		(12,201,031	)		(1,013,719	)

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for machinery and equipment		(2,116,124	)		(1,481,558	)
Cash paid for asset acquisition with VeroBlue Farms, Inc.		-			(5,000,000	)
Cash paid for patent acquisition with F & T		(2,000,000	)		-
Cash paid for acquisition of shares of NCI		(1,000,000	)		-
Cash paid for License Agreement		(2,350,000	)		-
Cash received from Insurance settlement		-			917,210
Cash paid for construction in process		(433,389	)		(1,562,380	)
Cash (used in) provided by investing activities		(7,899,513	)		(7,126,728	)

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on bank loan		(214,852	)		(17,810	)
Payment of note payable		(72,000	)		(48,000	)
Payment of note payable, related party		(655,750	)		-
Repayment of short-term promissory note and lines of credit		(553,577	)		5,413
Proceeds from PPP loan		-			103,200
Proceeds from issuance of common shares		17,277,123			-
Shares issued upon exercise of warrants		11,000			-
Proceeds from sale of Series B Convertible Preferred stock		-			3,250,000
Proceeds from convertible debentures		8,905,000			-
Escrow account in relation to the proceeds from convertible debenture		5,000,000			-
Payments on convertible debentures		(421,486	)		-
Payments on notes payable		(4,500,000	)		-
Redemption of Series D PS		(3,513,504	)		-
Proceeds from sale of Series E Preferred Stock		1,348,000			5,000,000
Cash received in relation to Vista warrant settlement		-			50,000
Cash provided by financing activities		22,609,954			8,342,803

NET CHANGE IN CASH		2,509,410			202,356

CASH AT BEGINNING OF PERIOD		155,795			109,491

CASH AT END OF PERIOD	$	2,665,205		$	311,847

INTEREST PAID	$	212,190		$	69,961

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Shares issued upon conversion	$	421,486		$	1,131,824
Cancellation of Right of Use asset and Lease liability	$	275,400		$	-
Dividends in kind issued	$	-		$	134,446
Shares issued on Vista Warrant settlement	$	-		$	610,000
Shares issued as consideration for Patent acquisition	$	5,000,000		$	-
Shares issued as consideration for acquisition of remaining NCI	$	2,000,000		$	-
Notes payable, issued as consideration in VeroBlue Farms, Inc. asset acquisition	$			$	5,000,000
Shares payable, to be issued as finders fee in VeroBlue Farms, Inc. asset acquisition	$	-		$	136,000
Shares issued as consideration for Rights Agreement	$	4,762,376		$	-
Note payable, related party, issued in place of Settlement Agreement	$	-		$	383,604

	December 31, 2021		March 31, 2021
Derivative liability balance at beginning of period	$	-	$	176,000
Reclass to equity upon conversion or redemption		-		(205,000	)
Additions to derivatives		12,985,000		-
Change in fair value		-		29,000
Balance at end of period	$	12,985,000	$	-

	December 31, 2021		March 31, 2021
Warrant liability balance at beginning of period	$	-	$	90,000
Additions to warrant liability		5,910,000		-
Reclass to equity upon cancellation or exercise		-		(90,000	)
Change in fair value		137,000		-
Balance at end of period	$	6,047,000	$	-

Buildings		39 years
Machinery and Equipment		7 – 10 years
Vehicles		10 years
Furniture and Fixtures		3 – 10 years

	December 31, 2021			March 31, 2021
Land	$	324,293		$	324,293
Buildings		5,007,505			4,702,063
Machinery and equipment		9,607,180			7,580,873
Autos and trucks		247,356			213,849
		15,186,334			12,891,078
Accumulated depreciation		(1,420,062	)		(4,52158	)
Fixed assets, net	$	13,766,272		$	12,236,557

Year 3	$	250,000 Royalty
Year 4	$	375,000 Royalty
Year 5	$	625,000 Royalty
Year 6	$	875,000 Royalty
All subsequent years	$	1,000,000Royalty

·	our ability to continue developing and expanding our research and development plant in La Coste, Texas and our production facility in Webster City, Iowa;
·	our ability, once our research and development plant is rebuilt, to successfully commercialize our equipment and shrimp farming operations to produce a market-ready product in a timely manner and in enough quantity;
·	absence of contracts with customers or suppliers;
·	our ability to maintain and develop relationships with customers and suppliers;
·	our ability to successfully integrate acquired businesses or new brands;
·	the impact of competitive products and pricing;
·	supply constraints or difficulties;
·	the retention and availability of key personnel;
·	general economic and business conditions;
·	substantial doubt about our ability to continue as a going concern;
·	our continued ability to raise funding through institutional investors at the pace and quantities required to scale our plant needs to commercialize our products;
·	our ability to successfully recruit and retain qualified personnel in order to continue our operations;
·	our ability to successfully implement our business plan;
·	our ability to successfully acquire, develop or commercialize new products and equipment;
·	the commercial success of our products;
·	business interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks (such as the outbreak of COVID-19 or any of its variants);
·	intellectual property claims brought by third parties; and
·	the impact of any industry regulation.

	Three Months Ended December 31,
	2021		2020

Salaries and related expenses	$	332,393	$	97.090
Professional fees		544,684		228,967
Other general and administrative expenses		621,809		64,762
Rent		28,813		3,835
Facility operations		398,504		154,470
Research and development		20,357		-
Depreciation		218,134		18,173
Amortization		367,500		-
Total	$	2,532,194	$	567,297

	Nine months Ended December 31,
	2021		2020

Salaries and related expenses	$	1,987,920	$	311,623
Professional fees		1,520,783		516,453
Other general and administrative expenses		1,623,887		291,908
Rent		49,768		11,678
Facility operations		810,260		234,113
Research and development		217,229		79,550
Depreciation		830,260		37,850
Amortization		514,000		-
Total	$	7,554,256	$	1,483,175

	December 31,			March 31,
	2021			2021
Current assets	$	8,019,838		$	811,134
Current liabilities		24,352,265			4,425,511
Working capital deficiency	$	(16,332,427	)	$	(3,614,377	)

·	inadequate segregation of duties consistent with control objectives;
·	lack of independent Board of Directors and absence of Audit Committee to exercise oversight responsibility related to financial reporting and internal control;
·	lack of risk assessment procedures on internal controls to detect financial reporting risks in a timely manner; and
·	lack of documentation on policies and procedures that are critical to the accomplishment of financial reporting objectives.

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date
4.1	Form of Warrant, dated as of November 22, 2021, by and between the Company and the Purchaser.	8-K	4.1	11/24/2021
4.2	Form of Secured Convertible Promissory Note, dated December 15, 2021	8-K	4.1	12/21/2021
10.1	Form of Securities Purchase Agreement, dated as of November 22, 2021, by and between the Company and the Purchaser	8-K	10.1	11/24/2021
10.2	Form of Registration Rights Agreement, dated as of November 22, 2021, by and between the Company and the Purchaser	8-K	10.2	11/24/2021
10.3	Form of Waiver	8-K	10.3	11/24/2021
10.4	Securities Purchase Agreement, dated December 15, 2021, by and between NaturalShrimp Incorporated and Streeterville Capital LLC.	8-K	10.1	12/21/2021
10.5	Security Agreement, dated December 15, 2021, by and between NaturalShrimp Incorporated and Streeterville Capital LLC.	8-K	10.2	12/21/2021
31.1*	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.
32.1**	Section 1350 Certification of Chief Executive Officer.
32.2**	Section 1350 Certification of Chief Financial Officer.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

NATURALSHRIMP INCORPORATED

By:	/s/ Gerald Easterling
	Gerald Easterling
	Chief Executive Officer
	(Principal Executive Officer)
	Date: February 16, 2022

By:	/s/ William Delgado
	William Delgado
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)
	Date: February 16, 2022