NaturalShrimp Inc 10-Q for FY2025 Q3
NaturalShrimp Inc (SHMP)
About this 10-Q
NaturalShrimp Inc filed this 10-Q on September 10, 2025, covering the quarter ended December 31, 2024 (FY2025 Q3).
Headline figures
Quarter ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $56.5K
- down 44.2% from $101.3K a year earlier
- Net loss
- $2.37M
- compared with a net loss of $5.4M a year earlier
- Diluted EPS
- $0.00
- compared with -$0.01 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the Quarterly Period Ended
or
For the Transition Period from _________ to _________
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or 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 exchange on which registered | ||
| None | N/A | N/A |
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. Yes ☐
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). Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small 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
As of September 10, 2025, there were shares of the registrant’s common stock outstanding.
NATURALSHRIMP INCORPORATED
FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
NATURALSHRIMP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF
| December 31, 2024 | March 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Escrow account | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Deferred offering costs | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Other assets | ||||||||
| Intercompany | ||||||||
| Construction-in-process | ||||||||
| Patents, net | ||||||||
| License Agreement, net | ||||||||
| Right of Use asset | ||||||||
| Deposits | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES, MEZZANINE AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued interest | ||||||||
| Accrued interest - related parties | ||||||||
| Accrued interest | ||||||||
| Other accrued expenses | ||||||||
| Accrued expenses - related parties | ||||||||
| Contract liability | ||||||||
| Short-term Note and Lines of credit | ||||||||
| Notes payable | ||||||||
| Restructured Senior note payable | ||||||||
| Restructured August note payable | ||||||||
| Notes payable - related parties | ||||||||
| Notes payable | ||||||||
| Dividends payable | ||||||||
| Derivative liability | ||||||||
| Warrant liability | ||||||||
| Lease Liability, current | ||||||||
| Total current liabilities | ||||||||
| Lease Liability, non-current | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 11) | ||||||||
| Series E Redeemable Convertible Preferred stock, $par value, shares authorized, and shares issued and outstanding at December 31, 2024 and March 31, 2024, respectively | ||||||||
| Series F Redeemable Convertible Preferred stock, $par value, shares authorized, shares issued and outstanding at December 31, 2024 and March 31, 2024, respectively | ||||||||
| Series G Redeemable Convertible Preferred stock, $par value, shares authorized, and shares issued and outstanding at December 31, 2024 and March 31, 2024, respectively | ||||||||
| Temporary equity, value | ||||||||
| Stockholders’ deficit | ||||||||
| Series A Convertible Preferred stock, $par value, shares authorized, shares issued and outstanding at December 31, 2024 and March 31, 2024, respectively | ||||||||
| Series B Convertible Preferred stock, $par value, shares authorized, and shares issued and outstanding at December 31, 2024 and March 31, 2024, respectively | ||||||||
| Series D Convertible Preferred stock, $par value, shares authorized, and shares issued and outstanding at December 31, 2024 and March 31, 2024, respectively | ||||||||
| Convertible preferred stock, value | ||||||||
| Common stock, $par value, shares authorized, and shares issued and outstanding at December 31, 2024 and March 31, 2024, respectively | ||||||||
| Additional paid in capital | ||||||||
| Stock to be issued | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities, mezzanine and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
NATURALSHRIMP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | |||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Net revenue | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Rent | ||||||||||||||||
| Salaries and Wages | ||||||||||||||||
| Stock Compensation | ||||||||||||||||
| Professional services | ( | ) | ||||||||||||||
| General and administrative | ||||||||||||||||
| Research and development | ||||||||||||||||
| Facility operations | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Interest expense - related parties | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of debt discount | ||||||||||||||||
| Penalty fees | ||||||||||||||||
| Financing costs | ||||||||||||||||
| Change in fair value of derivative liability | ||||||||||||||||
| Change in fair value of warrant liability | ||||||||||||||||
| Change in fair value of restructured notes | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss due to fire | ||||||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||
| Extension fee | ( | ) | ( | ) | ||||||||||||
| Gain on settlement of accrued expenses | ||||||||||||||||
| Gain on termination of lease | ||||||||||||||||
| Gain on sale of machinery and equipment | ||||||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less net loss attributable to non-controlling interest | ||||||||||||||||
| Net loss attributable to NaturalShrimp Inc. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of beneficial conversion feature on Preferred shares | ||||||||||||||||
| Accretion on Preferred shares | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Redemption and exchange of Series D Preferred shares | ||||||||||||||||
| Dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss available for common stockholders | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | |||||
| Loss per share (Basic and Diluted) | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | |||||
| Loss per share (Diluted) | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | |||||
| WEIGHTED AVERAGE SHARES OUTSTANDING (Basic and Diluted) | ||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted) | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
NATURALSHRIMP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
| Shares | Amount | Shares | Amount | Capital | issued | receivable | deficit | deficit | ||||||||||||||||||||||||||||
| Series A Preferred stock | Common stock | Additional paid in | Stock to be | Subscription | Accumulated | Total stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | issued | receivable | deficit | deficit | ||||||||||||||||||||||||||||
| Balance March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of common shares under financing agreement | - | |||||||||||||||||||||||||||||||||||
| Shares issued upon exchange of Partitioned Note | - | |||||||||||||||||||||||||||||||||||
| Accretion of Series E Preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Accretion on Series G Preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Dividends payable on Preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance June 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of common shares under financing agreement | - | |||||||||||||||||||||||||||||||||||
| Shares issued upon exchange of Partitioned Note | - | |||||||||||||||||||||||||||||||||||
| Accretion of Series E Preferred stock | - | - | ||||||||||||||||||||||||||||||||||
| Accretion on Series G Preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Dividends payable on Preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of common shares under financing agreement | - | |||||||||||||||||||||||||||||||||||
| Accretion on Series G Preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Dividends payable on Preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance March 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Common stock issued for legal settlement to NSH shareholders | - | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of common shares under financing agreement | - | |||||||||||||||||||||||||||||||||||
| Conversion of Series E Preferred Shares to common stock | - | ( | ) | |||||||||||||||||||||||||||||||||
| Dividends payable on Series E Preferred Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Common stock issued to consultants | - | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance June 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Common stock issued for legal settlement to NSH shareholders | - | |||||||||||||||||||||||||||||||||||
| Issuance of common shares under financing agreement | - | ( | ) | |||||||||||||||||||||||||||||||||
| Dividends payable on Series E Preferred Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Accretion on Series E Preferred shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of common shares under financing agreement | - | |||||||||||||||||||||||||||||||||||
| Shares issued upon exchange of Partitioned Note | - | |||||||||||||||||||||||||||||||||||
| Common stock issued to employee | - | |||||||||||||||||||||||||||||||||||
| Common stock issued to consultants | - | |||||||||||||||||||||||||||||||||||
| Dividends payable on Series E Preferred Shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Dividends payable on Preferred Stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Accretion on Series E Preferred shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Accretion on Series G Greferred shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | |||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
NATURALSHRIMP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Nine Months Ended | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation expense | ||||||||
| Amortization expense | ||||||||
| Amortization of debt discount | ||||||||
| Change in fair value of derivative liability | ||||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||
| Change in fair value of restructured notes payable | ||||||||
| Extension fee | ||||||||
| Financing costs | ||||||||
| Gain on extinguishment of debt | ||||||||
| Gain on sale of machinery and equipment | ( | ) | ||||||
| Shares issued for services | ||||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Gain on termination of lease | ( | ) | ||||||
| Loss due to fire | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Deferred offering costs | ||||||||
| Accounts payable | ||||||||
| Other accrued expenses | ( | ) | ||||||
| Accrued expenses - related parties | ||||||||
| Accrued interest | ||||||||
| Accrued interest - related parties | ||||||||
| Contract liability | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash paid for fixed assets | ( | ) | ||||||
| Cash received for fire damage to fixed assets | ||||||||
| Cash received from Insurance settlement | ||||||||
| Cash received for sale of machinery and equipment | ||||||||
| Cash paid for construction in process | ||||||||
| Cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Payments of notes payable | ( | ) | ||||||
| Payments on notes payable, related party | ||||||||
| Proceeds from short-term promissory note and lines of credit | ||||||||
| Proceeds from sale of stock | ||||||||
| Proceeds from promissory note | ||||||||
| Proceeds from promissory note, related parties | ||||||||
| Proceeds from convertible debentures, receipt from escrow | ||||||||
| Escrow account in relation to the proceeds from promissory notes | ||||||||
| Proceeds from sale of Series E Preferred Shares | ||||||||
| Proceeds from sale of Series G Preferred Shares | ||||||||
| Cash provided by financing activities | ||||||||
| NET CHANGE IN CASH | ( | ) | ( | ) | ||||
| CASH AT BEGINNING OF PERIOD | ||||||||
| CASH AT END OF PERIOD | $ | $ | ||||||
| INTEREST PAID | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
| Construction in process transferred to fixed assets | $ | $ | ||||||
| Shares issued upon conversion of Preferred stock | $ | |||||||
| Shares issues upon exchange of Partitioned Note | ||||||||
| Dividends on Series E Preferred stock | $ | $ | ||||||
| Dividends in kind issued | $ | $ | ||||||
| Shares issued/to be issued, for legal settlement | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
NATURALSHRIMP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2024
(Unaudited)
NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS
Nature of the Business
NaturalShrimp Incorporated (“NaturalShrimp” or the “Company”), a Nevada corporation, is a biotechnology company and has developed a proprietary technology that allows it to grow Pacific White shrimp (Litopenaeus vannamei, formerly Penaeus vannamei) in an ecologically controlled, high-density, low-cost environment, and in fully contained and independent production facilities. The Company’s system uses technology which allows it to produce a naturally-grown shrimp “crop” weekly and accomplishes this without the use of antibiotics or toxic chemicals. The Company has developed several proprietary technology assets, including a knowledge base that allows it to produce commercial quantities of shrimp in a closed system with a computer monitoring system that automates, monitors and maintains proper levels of oxygen, salinity and temperature for optimal shrimp production. The Company’s production facilities are located in La Coste, Texas and Webster City, Iowa.
The Company has three wholly-owned subsidiaries including NaturalShrimp USA Corporation (“NSC”) and NaturalShrimp Global, Inc. (“NS Global”) and Natural Aquatic Systems, Inc. (“NAS”), and owns 51% of NaturalShrimp/Hydrenesis LLC, a Texas limited liability company.
Going Concern
The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
Due
to the Company’s significant amount of debt that was in default as of September 30, 2024, Ampleo Turnaround and Restructuring,
LLC (“the receiver”) was placed as the receiver over the Company’s assets. Further, the receiver filed a motion to
sell substantially all of the Company’s assets to Streeterville and Bucktown Capital for an approximate credit bid of $
| 7 |
Receivership
On September 4, 2024, Streeterville Capital, LLC, a Utah limited liability company, and Bucktown Capital, LLC, a Utah limited liability company (collectively, “Lenders”), filed a Verified Emergency Motion for Appointment of Receiver (the “Motion”) under Civil Case No. 240907138, in the District Court of Salt Lake County, Utah, against NaturalShrimp, Inc. (“NaturalShrimp”).
The Motion alleges, among other things, that NaturalShrimp has defaulted under the terms of its loan agreements with the Lenders. The Motion sought the appointment of a Receiver to immediately take control of NaturalShrimp’s assets to preserve the same.
An order was entered ex parte by the Utah State Court in the Receivership Case on September 9, 2024 granting the relief requested by Lenders. The Utah State Court duly appointed Amplēo Turnaround and Restructuring, LLC (the “Receiver”) as the receiver over NaturalShrimp’s assets. The Utah State Court’s order further scheduled a hearing to be held on September 17, 2024, on a preliminary injunction to address issues raised in the Motion.
On November 20, 2024, the Lenders and NaturalShrimp filed a Verified Amended and Stipulated Emergency Motion for Immediate Appointment of a Receiver in the Receivership Case.
On November 22, 2024, the Utah State Court entered an order granting the Stipulated Motion and appointed Receiver as the receiver over the assets of NaturalShrimp. Under the Amended Receivership Order, the Receiver is the receiver over the Receivership Entities’ assets.
On
February 11, 2025, the Receiver filed a Motion for Approval to Sell Substantially all of the Receivership Entities’ Assets to
Streeterville Captial, LLC and Bucktown Captial, LLC (or Their Designees) or Any Other Party With a Higher and Better Offer Free and
Clear of All Liens, Interests, Claims, and Encumbrances (the “Sale Motion”) in the Receivership Case. The Sale Motion
seeks the Utah State Court’s approval for the Receiver to sell substantially all of the Receivership Entities’ assets free
and clear of all liens, interests, claims, and encumbrances to Streeterville and Bucktown Capital, through their designated entities,
NaturalShrimp Farms, Inc. (“NV Purchaser”), a Nevada corporation, Iowa Shrimp Holdings, LLC (“IA Purchaser”),
an Iowa limited liability company, Texas Shrimp Holdings, LLC (“TX Purchaser” or together with NV Purchaser and IA Purchaser,
the “Purchasers”), a Texas limited liability company, for a roughly $
| 8 |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial information as of and for the three and nine months ended December 31, 2024 and 2023 has been prepared in accordance with US GAAP for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three and nine months ended December 31, 2024 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission(“SEC”). These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended March 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on June 17, 2024.
As
discussed in Note 1, Ampleo Turnaround and Restructuring, LLC was placed as the receiver over the Company’s assets during September
of 2024. Further, during February of 2025, the receiver filed a motion to sell all of the Company’s assets to Streeterville and
Bucktown Capital for an approximate credit bid of $
Consolidation
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, NSC, NS Global, and NAS, and owns 51% of NaturalShrimp/Hydrenesis LLC, a Texas limited liability Company. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
| 9 |
Fair Value Measurements
ASC Topic 820, “Fair Value Measurement”, requires that certain financial instruments be recognized at their fair values at the balance sheet dates. However, other financial instruments, such as debt obligations, are not required to be recognized at their fair values, but GAAP provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair values of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument, along with other information, including changes in the fair values of certain financial instruments recognized in the operating results or within comprehensive income (loss) of the respective period. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under “Financial Instruments.”
Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in operating results in the period the remeasurement occurred.
The Company did not have any Level 1 or Level 2 assets or liabilities at December 31, 2024 or March 31, 2024.
The warrant liabilities and Restructured notes are considered Level 3 fair value measurements.
The following is a summary of activity of our Level 3 financial instruments during the nine months ended December 31, 2024 and the year ended March 31, 2024:
Warrant liability
SUMMARY OF ACTIVITY OF DERIVATIVES AT FAIR VALUE
| December 31, 2024 | March 31, 2024 | |||||||
| (unaudited) | ||||||||
| Warrant liability balance at beginning of period | $ | $ | ||||||
| Change in fair value | ( | ) | ( | ) | ||||
| Balance at end of period | $ | $ | ||||||
At
December 31, 2024, the Company’s shares were no longer being quoted on the Over the Counter (“OTC”) market and technically
had a fair value of $
At
March 31, 2024, the fair value of the warrant liability was estimated using a Black Sholes model with the following weighted-average
inputs: the price of the Company’s common stock of $; a risk-free interest rate of
Restructured August and Senior Notes Payable
SCHEDULE OF RESTRUCTURED AUGUST AND SENIOR NOTES PAYABLE AT FAIR VALUE
| December 31, 2024 | March 31, 2024 | |||||||
| Restructured notes payable fair value at beginning of period | $ | $ | ||||||
| Reclass of accrued interest | ||||||||
| Change in fair value | ||||||||
| Note Partition | ( | ) | ||||||
| Restructured notes payable fair value at end of period | $ | $ | ||||||
| 10 |
On
November 4, 2022, when the Company entered into a Restructuring Agreement for an Amended and Restated Secured Promissory Note for two
of their outstanding debentures (Note 6 and Note 7), which were accounted for as debt extinguishment, the Company elected to recognize
the new debt under the fair value option within ASC Topic 825, “Financial Instruments.”
Financial Instruments
The Company’s financial instruments include cash, receivables, payables, and debt and are accounted for under the provisions of ASC Topic 825. The carrying amount of these financial instruments, with the exception of discounted debt, as reflected in the unaudited condensed consolidated balance sheets approximates fair value.
Cash and Cash Equivalents
For
the purpose of the unaudited condensed consolidated statements of cash flows, the Company considers all highly liquid instruments purchased
with a maturity of three months or less to be cash equivalents. There were
Concentration of Credit Risk
The
Company maintains cash balances at two financial institutions. Accounts at this institution are insured by the Federal Deposit Insurance
Corporation (“FDIC”) up to $
Fixed Assets
Equipment is carried at historical value or cost and is depreciated using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives are as follows:
SCHEDULE OF ESTIMATED USEFUL LIVES
| Buildings | ||||
| Machinery and Equipment | ||||
| Vehicles | ||||
| Furniture and Fixtures |
Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.
| 11 |
Intangible Assets
The
Company has intangible assets, which were acquired in a patent acquisition, and license rights agreements. The Company’s patents
represent definite lived intangible assets and will be amortized over the
The Company periodically evaluates the remaining useful lives of its finite-lived intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. As of December 31, 2024, the Company believes the carrying value of the intangible assets are still recoverable, and there is no impairment to be recognized.
License agreements
On
August 25, 2021, the Company, through its
The
terms of the Agreements set forth that NAS will pay Hydrenesis
Impairment of Long-lived Assets
The Company will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.
Commitments and Contingencies
Certain conditions may exist as of the date the unaudited condensed consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s unaudited condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
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Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers”, as such, the Company records revenue when its customers obtain control of the promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company will sell primarily to food service distributors, as well as to wholesalers, retail establishments and seafood distributors. Additionally, the Company will sell or rent the NSI Technologies.
To determine revenue recognition for the arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (1) identify the contract(s) with a customer by receipt of purchase orders and confirmations sent by the Company which includes a required line of credit approval process, (2) identify the performance obligations in the contract which includes shipment of goods to the customer FOB shipping point or destination, (3) determine the transaction price which initiates with the purchase order received from the customer and confirmation sent by the Company and will include discounts and allowances by customer if any, (4) allocate the transaction price to the performance obligations in the contract which is the shipment of the goods to the customer and transaction price determined in step 3 above and (5) recognize revenue when (or as) the entity satisfies a performance obligation which is when the Company transfers control of the goods to the customers by shipment or delivery of the products.
In the future, if the Company has customers with long-term contracts for multiple shipments of live shrimp, the Company will elect the right-to-invoice practical expedient and any variable consideration estimate will be excluded from the transaction price and the revenue will be recognized directly when the goods are delivered.
Revenues for the three and nine months ended December 31, 2024 and 2023 were as follows:
SCHEDULE OF REVENUE RECOGNITION
| Three months ended | Nine months ended | |||||||||||||||
| December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | |||||||||||||
| Shrimp sales | $ | $ | $ | $ | ||||||||||||
| Technology and equipment services | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
Recently Issued Accounting Standards
In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures” which expands annual and interim disclosure requirements for reportable segments. The amendments require enhanced disclosure for certain segment items and required disclosure on how management uses reported measures to assess segment performance. The amendments do not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments. The updated standard is effective for annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026. Early adoption is permitted. The Company is currently evaluating the effect of adopting this ASU.
In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” which requires two primary enhancements of 1) disaggregated information on a reporting entity’s effective tax rate reconciliation, and 2) information on cash income taxes paid. Additionally, specific disclosures related to unrecognized tax benefits and indefinite reinvestment assertions were removed. For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the effect of adopting this ASU.
As of December 31, 2024, there were a few new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.
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NOTE 3 – FIXED ASSETS
A summary of the fixed assets as of December 31, 2024 and March 31, 2024 is as follows:
SCHEDULE OF FIXED ASSETS
December 31, 2024 | March 31, 2024 | |||||||
| (unaudited) | ||||||||
| Land | $ | $ | ||||||
| Buildings | ||||||||
| Machinery and equipment | ||||||||
| Autos and trucks | ||||||||
| Fixed assets, gross | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed assets, net | $ | $ | ||||||
The
unaudited condensed consolidated statements of operations reflect depreciation expense of approximately $
NOTE 4 – SHORT-TERM NOTE AND LINES OF CREDIT
The
Company has a working capital line of credit with Capital One Bank for $
The
Company also has a working capital line of credit with Chase Bank for $
During
August of 2024, the Company entered into a line of credit with Bucktown Capital, LLC for up to $
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NOTE 5 –NOTES PAYABLE
January 2023 Note
On
January 20, 2023, the Company entered into a secured promissory note (“January 2023 Note”) with an investor (the “Investor”).
The January 2023 Note is in the aggregate principal amount of $
On
November 8, 2023, the Company and the Investor entered into an Exchange Agreement on the January 2023 Note. In the Exchange Agreement
the original note was partitioned into a $
On
January 17, 2024, the Company and the Investor entered into an Exchange Agreement on the January 2023 Note. In the Exchange Agreement
the remaining January 2023 Note was partitioned into a $
On
February 22, 2024, the Company and the Investor entered into an Exchange Agreement on the January 2023 Note. In the Exchange Agreement
the remaining January 2023 Note was partitioned into a $
On
April 3, 2024, the Company and the Investor entered into an Exchange Agreement on the January 2023 Note. In the Exchange Agreement the
remaining January 2023 Note was partitioned into a $
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April 2023 Promissory Note
On
April 21, 2023, the Company entered into a $
May 2023 Promissory Note
On
May 17, 2023, the Company entered into an additional $
Ms. Williams Promissory Note
On
July 15, 2020, the Company issued a promissory note to Ms. Williams in the amount of $
NOTE 6 – RESTRUCTURED AUGUST NOTE PAYABLE
The
Company entered into a securities purchase agreement (the “SPA”) with an investor (the “Investor”) on August
17, 2022. Pursuant to the SPA, the Investor purchased a secured promissory note (the “Note”) in the aggregate principal amount
totaling approximately $
| 16 |
As
soon as reasonably possible, the Company will cause the common stock to be listed for trading on either of (a) NYSE, or (b) NASDAQ (in
either event, an “Uplist”). In the event the Company has not effectuated the Uplist by November 15, 2022, the then-current
outstanding balance will be increased by
The
Restructured August Note was analyzed under ASC 470-50 as to if the change in terms qualified as a modification or an extinguishment
of the note. The changes in terms were considered an extinguishment as the present value of the cash flows under the terms of the new
debt instrument was evaluated to be a substantial change, as over 10% difference from the present value of the remaining cash flows under
the terms of the original instrument. As such, with the removal of the original note and its debt discount and accrued interest as compared
to the restructured note with a fair value of approximately $
NOTE 7 – RESTRUCTURED SENIOR NOTE PAYABLE
December 15, 2021 Debenture
The
Company entered into a securities purchase agreement (the “SPA”) with an investor (the “Investor”) on December
15, 2021. Pursuant to the SPA, the Investor purchased a secured promissory note (the “Note”) in the aggregate principal amount
totaling approximately $
Beginning
on the date that was 6 months from the issuance date of the Note, the Investor had the right to redeem up to $ of the outstanding
balance per month. Payments could have been made by the Company, at the Company’s option, (a) in cash, or (b) by paying the redemption
amount in the form of shares of the Company’s common stock, par value $ per share (the “Common Stock”), per the
following formula: the number of redemption shares equals the portion of the applicable redemption amount divided by the Redemption Repayment
Price.
| 17 |
On
November 4, 2022, the Company entered into a Restructuring Agreement for an Amended and Restated Secured Promissory Note (the “Senior
Note”) with the December 2021 Investor through which the December 2021 Note was amended and restated in its entirety. These amendments
were made in conjunction with the Merger Agreement, entered into on October 24, 2022, with Yotta Acquisition Corporation (Note 11), The
main modification of the terms of the Senior Note was that the conversion feature was eliminated. Second, a Mandatory Payment was added
whereby within 3 trading days of the closing upon the Merger an amount equal to the lesser of (A) one-third of the amount retained in
the Trust Account at the Effective Time or (B) $
On July 3, 2024, the Investor issued a waiver to the Company on the equal monthly payments, which are not currently required to be paid, through August 15, 2024. The note was in default as of the date of this filing.
The
Note also contains certain negative covenants and Events of Default, which in addition to common events of default, include the Company
fails to maintain the share reserve, the occurrence of a Fundamental Transaction without the Lenders written consent, the Company effectuates
a reverse split of its common stock without 20 trading days written notice to Lender, fails to observe or perform or breaches any covenant,
and, the Company or any of its subsidiaries, breaches any covenant or other term or condition contained in any Other Agreements in any
material. Upon an Event of a Default, at its option and sole discretion, the Investor may consider the Note immediately due and payable.
The
Restructured Senior Note was analyzed under ASC 470-50 as to if the change in terms qualified as a modification or an extinguishment
of the note. The changes in terms were considered an extinguishment as the conversion feature has been eliminated and therefore the modified
Senior Note is determined to be fundamentally different from the original convertible note. As such, with the removal of the original
note and its debt discount and accrued interest as compared to the restructured note with a fair value of approximately $
| 18 |
As
a result of the extinguishment and at the Company’s election of the fair value option under ASC 825, the Company will account for
the Restructured Senior Note at fair value every period end until it is settled. In accordance with ASC 815- 15-25-1(b) a hybrid instrument
that is measured at fair value under ASC 825 fair value option each period with changes in fair value reported in earnings as they occur
should not be evaluated for embedded derivatives. Therefore, the Company did not evaluate the provisions in the Restructured Senior Note
as to whether they fell under the guidance of embedded derivatives and were required to be bifurcated. The Restructured Senior Note was
revalued as of December 31, 2024 at approximately $
NOTE 8 – STOCKHOLDERS’ EQUITY
Preferred Stock
As of December 31, 2024 and March 31, 2024, the Company had shares of preferred stock authorized with a par value of $. Of this amount, shares of Series A preferred stock are authorized and outstanding, shares Series B preferred stock are authorized and shares outstanding, shares Series D preferred stock are authorized with shares outstanding, shares Series E preferred stock are authorized and outstanding, shares of Series F preferred stock are authorized with outstanding, and shares of Series G preferred Stock are authorized with and outstanding, respectively.
Series G Preferred Stock
On
December 1, 2023, the Board authorized the issuance of preferred shares to be designated as Series G Preferred Stock (“Series
G Preferred Stock”). The Series G Preferred Stock has a par value of $, a stated value of $
As the redemption feature is mandatorily redeemable within one year of the issuance date, with a substantive conversion option, the Series G Preferred Stock is to be classified as mezzanine equity.
| 19 |
Series G Preferred Equity Offering
On
December 14, 2023, the Company entered into a Securities Purchase Agreement for the sale of shares of Series G Preferred Stock at
a price of $ per share of preferred stock, for a total of $
On
January 24, 2024, the Company received a tranche of $
On
February 23, 2024, the Company entered into a consulting agreement in which it was required to issue the consultant a retainer fee to
be either $
On
April 23, 2024, the Company received a tranche of $
On
June 12, 2024, the Company received a tranche of $
On
July 10, 2024, the Company received a tranche of $
During
the three and nine months ending December 31, 2024, the accretion for the Series G Preferred Stock was $
Series E Preferred Stock
On
November 22, 2021, the Company entered into a securities purchase agreement (“SPA”) for shares of the Company’s
Series E Preferred Stock, at a price of $ per share for a purchase price of $
On
July 24, 2023, the Company entered into a Securities Purchase Agreement for the additional sale of shares of Series E Preferred Stock
at a price of $ per share of Preferred Stock, for a total of $
| 20 |
Common Stock
On September 28, 2023, the Company increased their authorized common shares to .
GHS 2022 Purchase Agreement
On
November 4, 2022, the Company entered into a purchase agreement (the “GHS Purchase Agreement”) with GHS Investments LLC (“GHS”),
an accredited investor, pursuant to which, the Company may require GHS to purchase a maximum of up to shares of the Company’s
common stock (“GHS Purchase Shares”) based on a total aggregate purchase price of up to $
If there are any default events, as set forth in the GHS Purchase Agreement, has occurred and is continuing, the Company shall not deliver to GHS any Purchase Notice.
Further, pursuant to the terms of the GHS Purchase Agreement, from November 4, 2022 until the date that is the later of (i) the closing of the transactions whereby Yotta Merger Sub, Inc. will merge with and into the Company, with the Company as the surviving company (the “Merger”); and (ii) the 12 month anniversary of the first delivery of GHS Purchase Shares, upon any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), GHS shall have the right to participate in any financing, up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. Following the Merger, the Participation Maximum shall be 50% of the Subsequent Financing.
In
the three months ended June 30, 2023, the Company sold shares of common stock at a net amount of approximately $
$10,000,000 Common Stock Equity Financing
On
April 28, 2023, the Company entered into an Equity Financing Agreement (“Equity Financing Agreement”) and Registration Rights
Agreement with GHS. Under the terms of the Equity Financing Agreement, GHS agreed to provide the Company with up to $
With
the effectiveness of the Registration Statement, the Company now has the discretion to deliver puts to GHS and GHS will be obligated
to purchase shares of the Company’s common stock, par value $ per share (the “Common Stock”) based on the investment
amount specified in each put notice.
| 21 |
In
the nine months ended December 31, 2024, the Company sold shares of common stock at a gross amount of approximately $
In
the nine months ended December 31, 2023, the Company sold shares of common stock at a net amount of approximately $
GHS 2023 Purchase Agreement
On
May 9, 2023, the Company entered into a purchase agreement (the “GHS 2023 Purchase Agreement”) with GHS pursuant which the
Company may require GHS to purchase a maximum of up to shares of the Company’s common stock (“GHS 2023 Purchase
Shares”) based on a total aggregate purchase price of up to $
The
GHS 2023 Purchase Agreement provides that, upon the terms and subject to the conditions and limitations set forth in the agreement, the
Company has the right from time to time during the term of the agreement, in its sole discretion, to deliver to GHS a purchase notice
(a “Purchase Notice”) directing GHS to purchase (each, a “GHS Purchase”) a specified number of GHS 2023 Purchase
Shares.
If there are any default events, as set forth in the GHS Purchase Agreement, has occurred and is continuing, the Company shall not deliver to GHS any Purchase Notice.
Further, pursuant to the terms of the GHS 2023 Purchase Agreement, from May 9, 2023 until the date that is the later of (i) the closing of the transactions whereby Yotta Merger Sub, Inc. will merge with and into the Company, with the Company as the surviving company (the “Merger”); and (ii) the 12 month anniversary of the initial closing pursuant to the Section 2(a) of GHS Purchase Agreement, upon any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), GHS shall have the right to participate in any financing, up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. Following the Merger, the Participation Maximum would have been 50% of the Subsequent Financing.
In
the three months ended June 30, 2023, the Company sold shares of common stock at a net amount of approximately $
| 22 |
Common Shares Issued to Consultant
On
June 19, 2023, shares of common stock were issued to a consultant. The shares had a fair value of $
Options and Warrants
The Company has not granted any options since inception.
All of the warrants issued have been recognized as a liability, as of the issuance of the convertible debenture on December 15, 2021, because it is not known if there will be sufficient authorized shares to be issued upon settlement, based on the conversion terms of the existing convertible debt.
The
warrants were revalued at $
NOTE 9 – RELATED PARTY TRANSACTIONS
Promissory Note
On
July 10 through July 17, 2023, the Company received $
On
August 10, 2022, the Company issued a loan agreement for $
For
the three and nine months ended December 31, 2024 and December 31, 2023, the interest expense for the related party promissory notes
was approximately $
NaturalShrimp Holdings, Inc.
On
January 1, 2016 the Company entered into a notes payable agreement with NaturalShrimp Holdings, Inc.(“NSH”), a shareholder.
The note payable has no set monthly payment or maturity date with a stated interest rate of
Shareholder Notes
The
Company has entered into several working capital notes payable to multiple shareholders of NSH and Bill Williams, a former officer and
director, and a shareholder of the Company, for a total of $
Shareholders
Beginning
in 2010, the Company started entering into several working capital notes payable with various shareholders of NSH for a total of $
| 23 |
NOTE 10 – COMMITMENTS AND CONTINGENCIES
The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were not any known commitments or contingencies as of December 31, 2024 and March 31, 2024.
NOTE 11 – SUBSEQUENT EVENTS
In accordance with ASC 855, Subsequent Events, the Company evaluated all events or transactions that occurred after the balance sheet date but before the financial statements were issued. To that extent, the Company noted the following material events or transactions:
Liquidation Basis of Accounting
As
discussed in Note 1, Ampleo Turnaround and Restructuring, LLC was placed as the receiver over the Company’s assets during September
of 2024. Further, during February of 2025, the receiver filed a motion to sell all of the Company’s assets to Streeterville and
Bucktown Capital for an approximate credit bid of $
| 24 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes a number of forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 17, 2024, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.
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As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to NaturalShrimp Incorporated and its wholly-owned subsidiaries NSC, NS Global and NAS. The Company also owns 51% of NaturalShrimp/Hydrenesis LLC, a Texas limited liability company. Unless otherwise specified, all dollar amounts are expressed in United States Dollars.
Use of Generally Accepted Accounting Principles (“GAAP”) Financial Measures
We use United States GAAP financial measures, unless otherwise noted. All of the GAAP financial measures used by us in this report relate to the inclusion of financial information. This discussion and analysis should be read in conjunction with our financial statements and the notes thereto included elsewhere in this annual report. All references to dollar amounts in this section are in United States dollars, unless expressly stated otherwise.
This discussion and analysis should be read in conjunction with our financial statements and the notes thereto included elsewhere in this annual report.
Overview
We are an aquaculture technology company that has developed proprietary, patented platform technologies to allow for the production of aquatic species in an ecologically controlled, high-density, low-cost environment, and in fully contained and independent production facilities without the use of antibiotics or toxic chemicals. We own and operate indoor recirculating Pacific White shrimp production facilities in Texas and Iowa using these technologies.
We were incorporated in July 2008 and acquired substantially all of the assets of NSH, the company that developed the proprietary technology to grow and sell shrimp potentially anywhere in the world that is now the basis of our business. In 2015 NSH acquired 88.62% of the issued and outstanding shares of NaturalShrimp Common Stock, NSC and NS Global became our wholly-owned subsidiaries, and we changed our principal business to a global shrimp farming company.
On October 5, 2015, we formed NAS with F&T, the purpose of which was to jointly develop with F&T certain water technologies.
On December 17, 2020, we acquired for $10.0 million certain assets from VeroBlue Farms USA, Inc. and its subsidiaries, which assets included our three current facilities located in Iowa.
On May 25, 2021, we purchased certain parent and intellectual property rights from F&T and acquired all of its outstanding shares in NAS, thereby making NAS our wholly-owned subsidiary, for $3.0 million in cash and 13,861,386 shares of NaturalShrimp Common Stock.
On August 25, 2021, through NAS, we entered into an Equipment Rights Agreements with Hydrenesis-Delta Systems, LLC and a Technology Rights Agreement with Hydrenesis Aquaculture LLC. The Equipment Rights Agreement relates to specialized and proprietary equipment used to produce and control, dose, and infuse Hydrogas® and RLS® into both water and other chemical species, while the Technology Rights Agreement provides us with a sublicense to the rights to Hydrogas® and RLS®.
The Company has three wholly-owned subsidiaries: NSC, NS Global, and NAS, and owns 51% of NaturalShrimp/Hydrenesis LLC, a Texas limited liability company.
Most of the shrimp consumed in the world today come from shrimp farms that can only produce crops between one and four times per year. Consequently, the shrimp from these farms requires freezing between crops until consumed. Our system is designed to harvest different tanks each week, which provides for fresh shrimp throughout the year. We strive to create a niche market of “Always Fresh, Always Natural” shrimp. As opposed to many of the foreign shrimp farms, we can also claim that our product is 100% free of antibiotics. The ability to grow shrimp locally and year-round allows us to provide this high-end product to upscale restaurant and grocery stores throughout the world. We rotate the stocking and harvesting of our tanks each week, which allows for weekly shrimp harvests. Our product is free of pollutants and is fed only the highest-quality feeds.
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We began making regular weekly sales of live shrimp from our Iowa production facility in November 2021 and from our Texas production facility in June 2022. The Company is using its aforementioned platform technologies to retrofit 344,000 square feet of its existing Iowa facilities that we expect will, once fully operational, produce 18,000 pounds of shrimp per week. We believe that the combined output from our La Coste, Texas and Iowa facilities will be approximately 24,000 pounds of shrimp production per week by the third or fourth calendar quarter of 2025. We can, however, provide no assurances as to how significant our revenue will be in the next one to two fiscal quarters.
As discussed in our consolidated financial statements, Ampleo Turnaround and Restructuring, LLC was placed as the receiver over the Company’s assets during September of 2024. Further, during February of 2025, the receiver submitted a motion to sell substantially all of the Company’s assets to Streeterville and Bucktown Capital for an approximate credit bid of $35.7m and $100,000 in cash. The motion to sell was approved by the court on March 30, 2025. The Company believes that it continued to function as a going concern until the date of the approved sale. Subsequent to that date, the Company plans to present its financial statements using the liquidation basis of accounting as liquidation was considered imminent. As such, in accordance with ASC 205-30, Liquidation Basis of Accounting, the Company will present a Consolidated statement of net assets (liabilities) in liquidation and Consolidated statement of changes in net assets (liabilities). For purposes of reporting under the liquidation basis of accounting the Company plans to measure its assets at the amount used to settle its liabilities (based on the proposed credit bid).
Liquidity and Capital Resources
As of December 31, 2024, we had cash on hand of approximately $20,981 and a working capital deficiency of $40,860,138. While we continued to function as a going concern during the interim period ended December 31, 2024, the Company plans to liquidate its assets in order to settle its outstanding debts.
Receivership
On September 4, 2024, Streeterville Capital, LLC, a Utah limited liability company, and Bucktown Capital, LLC, a Utah limited liability company (collectively, “Lenders”), filed a Verified Emergency Motion for Appointment of Receiver (the “Motion”) under Civil Case No. 240907138, in the District Court of Salt Lake County, Utah, against NaturalShrimp, Inc. (“NaturalShrimp”).
The Motion alleges, among other things, that NaturalShrimp has defaulted under the terms of its loan agreements with Lenders. The Motion sought the appointment of a Receiver to immediately take control of NaturalShrimp’s assets to preserve the same.
An order was entered ex parte by the Utah State Court in the Receivership Case on September 9, 2024 granting the relief requested by Lenders. The Utah State Court duly appointed Amplēo Turnaround and Restructuring, LLC (the “Receiver”) as the receiver over NaturalShrimp’s assets. The Utah State Court’s order further scheduled a hearing to be held on September 17, 2024, on a preliminary injunction to address issues raised in the Motion.
On November 20, 2024, the Lenders and NaturalShrimp filed a Verified Amended and Stipulated Emergency Motion for Immediate Appointment of a Receiver in the Receivership Case.
On November 22, 2024, the Utah State Court entered an order granting the Stipulated Motion and appointed Receiver as the receiver over the assets of NaturalShrimp. Under the Amended Receivership Order, the Receiver is the receiver over the Receivership Entities’ assets.
On February 11, 2025, the Receiver filed a Motion for Approval to Sell Substantially all of the Receivership Entities’ Assets to Streeterville Captial, LLC and Bucktown Captial, LLC (or Their Designees) or Any Other Party With a Higher and Better Offer Free and Clear of All Liens, Interests, Claims, and Encumbrances (the “Sale Motion”) in the Receivership Case. The Sale Motion seeks the Utah State Court’s approval for the Receiver to sell substantially all of the Receivership Entities’ assets free and clear of all liens, interests, claims, and encumbrances to Streeterville and Bucktown Capital, through their designated entities, NaturalShrimp Farms, Inc. (“NV Purchaser”), a Nevada corporation, Iowa Shrimp Holdings, LLC (“IA Purchaser”), an Iowa limited liability company, Texas Shrimp Holdings, LLC (“TX Purchaser” or together with NV Purchaser and IA Purchaser, the “Purchasers”), a Texas limited liability company, for a roughly $35,703,789.87 credit bid (based on a secured and administrative claim basis) and $100,000 cash, pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement (“APA”) between Trustee and Purchasers. The order to sell the assets was approved on March 30, 2025 and the title to the assets was transferred to the lenders on May 14, 2025. As part of the sale, the Company transferred its ownership rights to its fixed assets, patents and license agreements (total balance of $24.7 million as of December 31, 2024) in exchange for the extinguishment of its outstanding debt to Streeterville and Buckstown Capital ($31.2 million as of December 31, 2024).
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Cash Flows
The following table summarizes our cash flows for the nine months ended December 30, 2024 and 2023:
| Nine months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Net cash used in operating activities | $ | (2,112,033 | ) | $ | (2,857,801 | ) | ||
| Net cash provided by (used in) investing activities | 117,712 | (8,640 | ) | |||||
| Net cash provided by financing activities | 1,899,777 | 2,686,291 | ||||||
| Net change in cash | $ | (94,544 | ) | $ | (180,150 | ) | ||
Net cash used in operating activities during the nine months ended December 31, 2024, was a decrease of approximately $745,000 as compared to the same period in 2023. The decrease in cash used is primarily due to the decrease in the current period net loss as compared to the same period the prior year and adjustments to reconcile the net loss to net cash, including i) the change in fair value of the restructured notes and ii) the prior period write-off of deferred offering costs.
The net cash provided by investing activities in the nine months ended December 31, 2024 increased by approximately $109,000 compared to net cash used by investing activities for the same period in the prior fiscal year. The increase was in the current period was due primarily to cash of $117,712 that was received for the sale of machinery and equipment.
The net cash provided by financing activities decreased by approximately $785,000 between periods. For the current period, the Company received approximately $1.1 million for the sale of common and preferred shares and $840,000 for the issuance of debt. In the same period in the prior year the Company received $2.6 million for the sale of shares and approximately $100,000 from the net issuance of debt.
Results of Operations
Comparison of the Three Months Ended December 31, 2024 to the Three Months Ended December 31, 2023
Revenue
We had gross sales revenue of $56,501 and $101,302, respectively, during the three months ended December 31, 2024 and 2023, a decrease of approximately $45,000.
Our decrease in gross sales revenue during the three months ended December 31, 2024 over the same period in the prior year was a result of the Company beginning to wind down the business.
Cost of Sales
Cost of sales includes direct costs related to the production and sale of our products, primarily the cost of the post-larva shrimp that we purchase to grow into our shrimp product at our facilities and the costs of shipping purchase orders to customers. Cost of sales were $32,221 and $23,353, respectively, during the three months ended December 31, 2024 and 2023.
Operating Expenses
Operating expenses for the three months ended December 31, 2024 were $2,050,194, which is an approximately $300,000 decrease over operating expenses of $2,351,293 for the same period in 2023. The overall change in expenses is primarily due to a decrease in professional services during the period stemming from a reduction in accounting and legal expenses.
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Other Income (Expense)
The following table summarizes the various components of our other income (expense) for the three months ended December 31, 2024 and 2023:
| Three Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Interest expense | $ | (334,060 | ) | $ | (18,033 | ) | ||
| Interest expense – related parties | (10,750 | ) | (9,750 | ) | ||||
| Change in fair value of warrant liability | - | 67,050 | ||||||
| Change in fair value of restructured notes | - | (3,180,000 | ) | |||||
| Extension Fee | - | (10,000 | ) | |||||
| Gain on termination of lease | - | 22,013 | ||||||
| Gain on sale of machinery and equipment | ||||||||
| Total | $ | (344,810 | ) | $ | (3,128,720 | ) | ||
Other Income (expense) for the three months ended December 31, 2024 decreased by approximately $2,784,000 as compared to the same period in the prior year. The decrease was primarily due to the change in fair value of the restructured notes and the change in fair value of the warrant liability.
Comparison of the Nine Months Ended December 31, 2024 to the Nine Months Ended December 31, 2023
Revenue
The Company had gross sales revenue of $163,492 and $365,184, respectively, during the nine months ended December 31, 2024 and 2023, a decrease of approximately $202,000. The decrease in gross sales revenue during the nine months ended December 31, 2024 over the same period in the prior year was a result of the $150,000 of revenue recognized in the prior period stemming from the rental of NSI Technologies that did not recur during the current period.
Cost of Sales
Cost of sales decreased by approximately $6,000 during the nine months ended December 31, 2024 as compared to the same period in the prior year. The decrease in cost of sales was not material.
Operating Expenses
Operating expenses for the nine months ended December 31, 2024 decreased by $2,888,063 compared to the same period in 2023, primarily due to a decrease in professional fees of $2.8 million stemming primarily from the $1.3 million write-off of deferred offering costs as a result of the termination of the Merger Agreement. In addition, the decrease was also due to a decrease in facility operation of approximately $267,000 and salaries of approximately $285,000 as compared to the same period in the prior year.
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Other income (expense)
The following table summarizes the various components of our Other income(expense) for each of the Nine months ended December 31, 2024 and December 31, 2023:
| Nine Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Interest expense | $ | (355,039 | ) | $ | (59,444 | ) | ||
| Interest expense - related parties | (31,246 | ) | (25,301 | ) | ||||
| Change in fair value of warrant liability | 24,000 | 337,050 | ||||||
| Change in fair value of restructured notes | (720,000 | ) | (2,512,366 | ) | ||||
| Extension Fee | - | (190,000 | ) | |||||
| Gain on termination of lease | - | 22,013 | ||||||
| Gain on sale of machinery and equipment | 39,330 | 16,014 | ||||||
| Total other income (expense) | $ | (1,042,955 | ) | $ | (2,412,034 | ) | ||
Other Income (expense) for the nine months ended December 31, 2024, decreased $1,369,079 as compared to the same period in the prior year. The decrease was due to primarily to the change in fair value of the restructured notes and warrant liability.
Critical Accounting Estimates
Fair Value Measurement
The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in the valuation of an asset or liability. It establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;
Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; or
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
The warrant liabilities and fair value option on Restructured notes, are Level 3 fair value measurements.
Impairment of Long-lived Assets and Long-lived Assets
The Company will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, and, as such, the Company records revenue when its customers obtain control of the promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company will sell primarily to food service distributors, as well as to wholesalers, retail establishments and seafood distributors. Additionally, the Company will sell or rent either the NSI Technologies or Equipment.
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To determine revenue recognition for the arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (1) identify the contract(s) with a customer by receipt of purchase orders and confirmations sent by the Company, which includes a required line of credit approval process, (2) identify the performance obligations in the contract, which includes shipment of goods to the customer FOB shipping point or destination, (3) determine the transaction price which initiates with the purchase order received from the customer and confirmation sent by the Company and will include discounts and allowances by customer if any, (4) allocate the transaction price to the performance obligations in the contract which is the shipment of the goods to the customer and transaction price determined in step 3 above and (5) recognize revenue when (or as) the Company satisfies a performance obligation, which is when the Company transfers control of the goods to the customers by shipment or delivery of the products.
Recently Adopted Accounting Pronouncements
Our recently adopted accounting pronouncements are more fully described in Note 2 to our financial statements included herein for the quarter ended December 31, 2024.
Recently Issued Accounting Standards
In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures” which expands annual and interim disclosure requirements for reportable segments. The amendments require enhanced disclosure for certain segment items and required disclosure on how management uses reported measures to assess segment performance. The amendments do not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments. The updated standard is effective for annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026. Early adoption is permitted. The Company is currently evaluating the effect of adopting this ASU.
In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” which requires two primary enhancements of 1) disaggregated information on a reporting entity’s effective tax rate reconciliation, and 2) information on cash income taxes paid. Additionally, specific disclosures related to unrecognized tax benefits and indefinite reinvestment assertions were removed. For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the effect of adopting this ASU.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company adopted ASU 2020-06 as of April 1, 2024, which had no impact on its consolidated financial statements and related disclosures.
During the period ending December 31, 2024, there were a few new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable. As a smaller reporting company, we are not required to provide the information required by this Item.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain a system of disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
The Company’s management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this Report.
Based upon that evaluation , our principal executive officer and principal financial officer concluded that, as of December 31, 2024, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below. Thus, there remains a reasonable possibility that a material misstatement of the Company’s interim financial statements will not be prevented or detected on a timely basis. This does not include an evaluation by the Company’s registered public accounting firm regarding the Company’s internal control over financial reporting. Accordingly, we cannot provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, to allow our principal financial and executive officers to make timely decisions regarding required disclosures as of December 31, 2024.
Management’s evaluation was based on the following material weaknesses in our internal control over financial reporting which existed as of March 31, 2024, and which continue to exist, as discussed in the Company’s Annual Report on Form 10-K:
| ● | Inadequate segregation of duties consistent with control objectives; |
| ● | Lack of independent Board of Directors (as of the balance sheet date) 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. |
Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Remediation Plan
Management continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively.
The remediation actions planned include:
| ● | Identify gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company; | |
| ● | Establish an independent Board of Directors and an Audit Committee to provide oversight for remediation efforts and ongoing guidance regarding accounting, financial reporting, overall risks and the internal control environment; | |
| ● | Retain additional accounting personnel with public company financial reporting, technical accounting, SEC compliance, and strategic financial advisory experience to achieve adequate segregation of duties; and | |
| ● | Continue to develop formal policies and procedures on accounting and internal control over financial reporting and monitor the effectiveness of existing controls and procedures. |
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
On September 4, 2024, Streeterville Capital, LLC, a Utah limited liability company, and Bucktown Capital, LLC, a Utah limited liability company (collectively, “Lenders”), filed a Verified Emergency Motion for Appointment of Receiver (the “Motion”) under Civil Case No. 240907138 (the “Receivership Case”), in the District Court of Salt Lake County, Utah (the “Utah State Court”), against NaturalShrimp, Inc. (“NaturalShrimp”), a Nevada corporation.
The Motion alleges, among other things, that NaturalShrimp has defaulted under the terms of its loan agreements with Lenders. The Motion sought the appointment of a Receiver to immediately take control of NaturalShrimp’s assets to preserve same.
An order was entered ex parte by the Utah State Court in the Receivership Case on September 9, 2024 granting the relief requested by Lenders. The Utah State Court duly appointed Amplēo Turnaround and Restructuring, LLC (the “Receiver”) as the receiver over NaturalShrip’s assets. The Utah State Court’s order further scheduled a hearing to be held on September 17, 2024, on a preliminary injunction to address issues raised in the Motion.
On November 20, 2024, Lenders, NaturalShrimp, NaturalShrimp USA Corporation (“NaturalShrimp USA”), NaturalShrimp Global, Inc. (“NaturalShrimp Global”), and Natural Aquatic Systems, Inc. (“Natural Aquatic”) (collectively, the “Receivership Entities”) filed a Verified Amended and Stipulated Emergency Motion for Immediate Appointment of a Receiver (the “Stipulated Motion”) in the Receivership Case.
On November 22, 2024, the Utah State Court entered an order granting the Stipulated Motion and appointed Receiver as the receiver over the assets of NaturalShrimp USA NaturalShrimp Global, and Natural Aquatic Systems pursuant to an amended receivership order (the “Amended Receivership Order”). Under the Amended Receivership Order, the Receiver is the receiver over the Receivership Entities’ assets.
On February 11, 2025, the Receiver filed a Motion for Approval to Sell Substantially all of the Receivership Entities’ Assets to Streeterville Captial, LLC and Bucktown Captial, LLC (or Their Designees) or Any Other Party With a Higher and Better Offer Free and Clear of All Liens, Interests, Claims, and Encumbrances (the “Sale Motion”) in the Receivership Case. The Sale Motion seeks the Utah State Court’s approval for the Receiver to sell substantially all of the Receivership Entities’ assets free and clear of all liens, interests, claims, and encumbrances to Streeterville and Bucktown Capital, through their designated entities, NaturalShrimp Farms, Inc. (“NV Purchaser”), a Nevada corporation, Iowa Shrimp Holdings, LLC (“IA Purchaser”), an Iowa limited liability company, Texas Shrimp Holdings, LLC (“TX Purchaser” or together with NV Purchaser and IA Purchaser, the “Purchasers”), a Texas limited liability company, for a roughly $35,703,789.87 credit bid (based on a secured and administrative claim basis) and $100,000 cash, pursuant to the terms and conditions set forth in that certain Asset Purchase Agreement (“APA”) between Trustee and Purchasers. The order to sell the assets was approved on March 30, 2025 and the title to the assets was transferred to the lenders on May 14, 2025. As part of the sale, the Company transferred its ownership rights to its fixed assets, patents and license agreements (total balance of $24.7 million as of December 31, 2024) in exchange for the extinguishment of its outstanding debt to Streeterville and Buckstown Capital ($31.2 million as of December 30, 2024).
Item 1A. Risk Factors
As a smaller reporting Company (“SRC”) we are not required to provide this information.
Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds
The Company had the following unregistered sale of equity securing during the three months ended December 31, 2024. All shares were issued under Section 4(a)(2) of the Securities Act of 1933 as follows:
| ● | On November 7, 2024 the Company sold 20,000,000 shares to an investor for gross proceeds of $106,975 |
Item 3. Defaults upon Senior Securities
As of the date of the filing the Company has defaulted on the following debt obligations with a total outstanding balance including interest of approximately $29.9 million:
| ● | January 2023 Note with a balance due of approximately $221,000 | |
| ● | Restructured August Note Payable with a balance due of approximately $27 million | |
| ● | Restructured Senior Note Payable with a balance due of approximately $2.6 million |
Further, the Company’s Series G preferred shares, which had a redemption value of $820,000 were required to be redeemed as of December of 2024.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
EXHIBIT INDEX
| Incorporated by Reference | ||||||
| Exhibit Number | Exhibit Description | Form | Exhibit | |||
| 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* | Inline XBRL Instance Document | |||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||
* Filed herewith.
** Furnished herewith.
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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.
NATURALSHRIMP INCORPORATED
| By: | /s/ Gerald Easterling | |
| Gerald Easterling | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: | September 10, 2025 |
| By: | /s/ William Delgado | |
| William Delgado | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
| Date: | September 10, 2025 |
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Exhibit 31.1
NATURALSHRIMP INCORPORATED
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gerald Easterling, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of NaturalShrimp Incorporated; | |
| 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 registrant 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 Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in 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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to 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 most recent fiscal quarter 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 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 registrant’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 internal control over financial reporting. | |
| By: | /s/ Gerald Easterling | |
| Gerald Easterling | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: | September 10, 2025 |
Exhibit 31.2
NATURALSHRIMP INCORPORATED
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, William Delgado, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of NaturalShrimp Incorporated; | |
| 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 registrant 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 Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in 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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to 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 most recent fiscal quarter 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 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 registrant’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 internal control over financial reporting. | |
| By: | /s/ William Delgado | |
| William Delgado | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
| Date: | September 10, 2025 |
Exhibit 32.1
NATURALSHRIMP INCORPORATED
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report on Form 10-Q of NaturalShrimp Incorporated (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| 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 results of operation of the Company. |
| By: | /s/ Gerald Easterling | |
| Gerald Easterling | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: | September 10, 2025 |
Exhibit 32.2
NATURALSHRIMP INCORPORATED
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report on Form 10-Q of NaturalShrimp Incorporated (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| 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 results of operation of the Company. |
| By: | /s/ William Delgado | |
| William Delgado | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
| Date: | September 10, 2025 |