10-Q: NaturalShrimp Faces Liquidation After Asset Sale to Lenders

Sentiment:

Quarterly Report 10 September 2025 3:22 PM

NaturalShrimp Incorporated is transitioning to a liquidation basis of accounting following the court-approved sale of substantially all its assets to its lenders for a $35.7 million credit bid and $100,000 cash.

Delay expectedThis Quarterly Report on Form 10-Q for the period ended December 31, 2024, was filed on September 10, 2025, indicating a significant delay in financial reporting.The January 2023 Note's maturity date was extended multiple times, first to June 30, 2024, and then to August 15, 2024.The Restructured August Note Payable's maturity date was extended to June 30, 2024, and then to August 15, 2024.Maturity dates for related party promissory notes were extended for six months for two parties and three months for one party, with some past due as of the filing date.

Capital raiseThe company had an Equity Financing Agreement with GHS Investments LLC for up to $10,000,000, under which it sold 141,064,683 shares of common stock for approximately $861,668 during the nine months ended December 31, 2024.The company also had a GHS 2023 Purchase Agreement for up to $6,000,000 in common stock sales, which ended on May 9, 2024.Proceeds from the sale of common and preferred shares totaled approximately $1.1 million, and $840,000 was received from the issuance of debt during the nine months ended December 31, 2024.

Worse than expectedSales revenue declined significantly by 55.2% for the nine months ended December 31, 2024, indicating a severe deterioration in core business operations.The company reported a substantial working capital deficiency of over $40 million and a negative stockholders' deficit exceeding $62 million, reflecting deep financial distress.Multiple major debt obligations, totaling approximately $29.9 million, were in default, demonstrating an inability to meet financial commitments.The ultimate outcome of a court-ordered receivership and the sale of substantially all assets to lenders for a credit bid signifies a complete failure of the business as a going concern.

Summary

The company is transitioning to a liquidation basis of accounting as of March 31, 2025, following a court-approved asset sale.
Substantially all assets were sold to Streeterville Capital, LLC and Bucktown Capital, LLC for an approximate $35.7 million credit bid and $100,000 cash.
The asset sale extinguished $31.2 million in outstanding debt to these lenders, in exchange for fixed assets, patents, and license agreements valued at $24.7 million as of December 31, 2024.
For the nine months ended December 31, 2024, sales revenue decreased by approximately $202,000 to $163,492, down from $365,184 in the prior year.
Net loss for the nine months ended December 31, 2024, was $6,285,201, an improvement from $10,347,034 in the same period of 2023, primarily due to reduced operating expenses and changes in fair value of restructured notes and warrant liability.
As of December 31, 2024, the company had cash of $20,981 and a working capital deficiency of $40,860,138.
Multiple debt obligations, including the January 2023 Note ($221,000), Restructured August Note Payable ($2.79 million), and Restructured Senior Note Payable ($27.6 million), were in default as of the filing date.
Series G preferred shares with a redemption value of $820,000 were required to be redeemed as of December 2024 and are in default.

Sentiment

Score: 1

Explanation: The company is undergoing liquidation, having sold substantially all assets to secured creditors, indicating a complete failure of the business and likely total loss for common shareholders.

Positives

Net loss for the nine months ended December 31, 2024, improved to $6,285,201 from $10,347,034 in the prior year, largely due to decreased operating expenses and favorable changes in fair value of financial instruments.
Net cash used in operating activities decreased by approximately $745,000 for the nine months ended December 31, 2024, compared to the same period in 2023.
Net cash provided by investing activities increased by approximately $109,000, primarily due to $117,712 received from the sale of machinery and equipment.

Negatives

The company is undergoing liquidation, having sold substantially all its assets to satisfy secured creditors.
Sales revenue significantly decreased by approximately $202,000 (55.2%) for the nine months ended December 31, 2024, compared to the prior year.
A substantial working capital deficiency of $40,860,138 existed as of December 31, 2024.
Cash on hand decreased significantly to $20,981 as of December 31, 2024, from $115,525 as of March 31, 2024.
Total liabilities increased to $41,148,487 as of December 31, 2024, from $38,571,859 as of March 31, 2024.
Multiple significant debt obligations, totaling approximately $29.9 million, are in default.
Series G preferred shares with a redemption value of $820,000 were due for redemption in December 2024 and are in default.

Risks

The company's ability to continue as a going concern has ceased, with a transition to liquidation basis of accounting.
Significant debt defaults have led to a receivership and the forced sale of core assets.
Shareholders face a high risk of complete loss of investment due to the liquidation process.
Material weaknesses in internal control over financial reporting persist, including inadequate segregation of duties and lack of independent board oversight.
The company's proprietary technology and production facilities have been transferred to lenders, ending its operational business model.

Future Outlook

The company's future outlook is one of liquidation. It plans to present its financial statements under the liquidation basis of accounting as of March 31, 2025, following the court-approved sale of substantially all its assets. Previous operational projections, such as producing 24,000 pounds of shrimp per week by Q3/Q4 2025, are no longer applicable.

Management Comments

Management believes the company continued to function as a going concern until March 30, 2025, the date the motion to sell its assets was approved by the court, at which point liquidation became imminent.

Industry Context

NaturalShrimp Incorporated, an aquaculture technology company, aimed to disrupt the shrimp farming industry with proprietary technology for high-density, antibiotic-free Pacific White shrimp production. Its business model focused on providing 'Always Fresh, Always Natural' shrimp to upscale markets year-round. However, severe financial distress, including significant debt defaults and an inability to secure sufficient capital, led to its collapse and liquidation, highlighting the challenges and capital intensity of scaling innovative aquaculture technologies, even with patented solutions.

Comparison to Industry Standards

NA The company is undergoing liquidation, rendering direct comparison to industry operational or financial performance standards irrelevant as it ceases to be a going concern.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Weaknesses	Identified material weaknesses in internal control over financial reporting, including inadequate segregation of duties, lack of an independent Board of Directors and Audit Committee, insufficient risk assessment procedures, and lack of documented policies and procedures.	2024-12-31	These weaknesses indicate a high risk of material misstatement in financial reporting and a lack of effective oversight, contributing to the company's financial distress.

Legal Proceedings

On September 4, 2024, Streeterville Capital, LLC and Bucktown Capital, LLC filed a Verified Emergency Motion for Appointment of Receiver due to loan defaults.
On September 9, 2024, the Utah State Court appointed Amplo Turnaround and Restructuring, LLC as receiver over the company's assets.
On November 22, 2024, an Amended Receivership Order was entered, appointing the receiver over the assets of NaturalShrimp, Inc. and its subsidiaries.
On February 11, 2025, the Receiver filed a motion to sell substantially all assets to Streeterville Capital, LLC and Bucktown Capital, LLC for an approximate $35.7 million credit bid and $100,000 cash.
On March 30, 2025, the court approved the asset sale, and title was transferred to the lenders on May 14, 2025, extinguishing $31.2 million in debt.

Related Party Transactions

Promissory notes totaling $180,000 were issued to related parties, bearing 10% interest, with extended maturity dates.
A loan agreement for $300,000 with related parties, considered priority debt, resulted in $250,000 received from five related parties, with notes bearing 10% interest and extended maturity dates (past due as of filing).
Notes payable to NaturalShrimp Holdings, Inc. (NSH), a shareholder, with an outstanding balance of approximately $79,000 as of December 31, 2024, bearing 2% interest.
Working capital notes payable to multiple shareholders of NSH and Bill Williams (former officer/director) totaling $486,500, with a balance of $356,404 as of December 31, 2024, bearing 8% interest.
Working capital notes payable with various shareholders of NSH totaling $290,000, with a balance of $54,647 as of December 31, 2024, bearing 8% interest.

Stakeholder Impact

Shareholders are highly likely to experience a complete loss of investment due to the company's liquidation and the sale of assets to satisfy secured creditors.
Lenders (Streeterville Capital, LLC and Bucktown Capital, LLC) recovered a significant portion of their outstanding debt through the asset sale.
Employees are likely to be negatively impacted by the cessation of operations and liquidation of the business.
Suppliers and other unsecured creditors may face significant losses as secured creditors have priority in the liquidation process.

Next Steps

Present financial statements under the liquidation basis of accounting as of March 31, 2025.
Finalize the asset transfer to Streeterville Capital, LLC and Bucktown Capital, LLC, which occurred on May 14, 2025.
Continue remediation efforts for material weaknesses in internal control over financial reporting, including identifying skill gaps, establishing an independent Board and Audit Committee, retaining additional accounting personnel, and developing formal policies and procedures, as funds allow.

Key Dates

Date	Description
2020-07-15	Promissory note issued to Ms. Williams for $383,604.
2021-08-25	Company, through NAS, entered into Equipment Rights Agreements with Hydrenesis-Delta Systems, LLC and Technology Rights Agreement with Hydrenesis Aquaculture LLC.
2021-11-22	Securities Purchase Agreement for 1,500 shares of Series E Preferred Stock at $1,000 per share.
2021-12-15	Securities Purchase Agreement for a secured promissory note (December 15, 2021 Debenture) in the aggregate principal amount of approximately $16,320,000.
2022-08-10	Loan agreement for $300,000 issued with related parties.
2022-08-17	Securities Purchase Agreement for a secured promissory note (August Note) in the aggregate principal amount of approximately $5,433,333.
2022-11-04	Company entered into a Restructuring Agreement for an Amended and Restated Secured Promissory Note (August Note) and a Restructuring Agreement for an Amended and Restated Secured Promissory Note (Senior Note).
2023-01-20	Company entered into a secured promissory note (January 2023 Note) with an investor for $631,968.
2023-04-21	Company entered into a $60,000 promissory note with Yotta Investment LLC.
2023-04-28	Company entered into an Equity Financing Agreement and Registration Rights Agreement with GHS for up to $10,000,000.
2023-05-09	Company entered into a purchase agreement (GHS 2023 Purchase Agreement) with GHS for up to $6,000,000.
2023-05-17	Company entered into an additional $60,000 promissory note with Yotta Investment LLC.
2023-06-19	100,000 shares of common stock issued to a consultant.
2023-07-10	Company received $140,000 in proceeds from the issuance of three promissory notes with related parties (initial date of range).
2023-07-17	Company received $140,000 in proceeds from the issuance of three promissory notes with related parties (end date of range).
2023-07-20	Company sent Yotta notice of termination of the Merger Agreement.
2023-07-24	Company entered into a Securities Purchase Agreement for the additional sale of 156 shares of Series E Preferred Stock.
2023-08-14	Registration Statement for the $10,000,000 Common Stock Equity Financing with GHS declared effective by the SEC.
2023-09-28	Company increased authorized common shares to 1,400,000,000.
2023-11-08	Company and Investor entered into an Exchange Agreement on the January 2023 Note, partitioning it into a $132,000 new promissory note exchanged for 10,000,000 common shares.
2023-11-17	Company received an extension of the maturity date for the January 2023 Note to June 30, 2024.
2023-11-20	Maturity date for the Restructured August Note extended to June 30, 2024.
2023-12-01	Board authorized the issuance of 10,000 shares of Series G Preferred Stock.
2023-12-14	Company entered into a Securities Purchase Agreement for the sale of 110 shares of Series G Preferred Stock.
2023-12-19	Company received an initial tranche of $110,000 under the Series G SPA.
2024-01-17	Company and Investor entered into an Exchange Agreement on the January 2023 Note, partitioning it into a $99,450 new promissory note exchanged for 10,000,000 common shares.
2024-01-24	Company received a tranche of $100,000 under the Series G SPA for 100 Series G Preferred Stock.
2024-02-10	Maturity date for related party promissory notes extended to this date (past due as of filing).
2024-02-22	Company and Investor entered into an Exchange Agreement on the January 2023 Note, partitioning it into a $91,800 new promissory note exchanged for 10,000,000 common shares.
2024-02-23	Company entered into a consulting agreement requiring issuance of 200 Series G Preferred Stock.
2024-03-31	Convenience date for presenting financial statements under the liquidation basis of accounting.
2024-04-03	Company and Investor entered into an Exchange Agreement on the January 2023 Note, partitioning it into a $92,700 new promissory note exchanged for 10,000,000 common shares.
2024-04-23	Company received a tranche of $100,000 under the Series G SPA for 100 Series G Preferred Stock.
2024-06-12	Company received a tranche of $100,000 under the Series G SPA for 100 Series G Preferred Stock.
2024-07-03	Company and Investor entered into an Exchange Agreement on the Restructured Senior Note, partitioning it into a $90,000 new promissory note exchanged for 10,000,000 common shares. Investor issued a waiver on monthly payments through August 15, 2024.
2024-07-10	Company received a tranche of $100,000 under the Series G SPA for 100 Series G Preferred Stock.
2024-08-15	Extended maturity date for January 2023 Note and Restructured August Note.
2024-09-04	Lenders filed a Verified Emergency Motion for Appointment of Receiver against NaturalShrimp, Inc.
2024-09-09	Utah State Court granted ex parte relief and appointed Amplo Turnaround and Restructuring, LLC as receiver over NaturalShrimp's assets.
2024-11-07	Company sold 20,000,000 shares to an investor for gross proceeds of $106,975.
2024-11-20	Lenders and NaturalShrimp filed a Verified Amended and Stipulated Emergency Motion for Immediate Appointment of a Receiver.
2024-11-22	Utah State Court entered an order granting the Stipulated Motion and appointed Receiver over the assets of NaturalShrimp USA, NaturalShrimp Global, and Natural Aquatic Systems.
2024-12-31	End of the quarterly period covered by this report. Series G preferred shares were due for redemption.
2025-02-11	Receiver filed a Motion for Approval to Sell Substantially all of the Receivership Entities Assets to Streeterville Capital, LLC and Bucktown Capital, LLC.
2025-03-30	Court approved the motion to sell substantially all of the company's assets.
2025-05-14	Title to the assets was transferred to the lenders.
2025-09-10	Date of filing of this Quarterly Report on Form 10-Q.

Recommendation

strong sell

The company is in liquidation, having sold substantially all its assets to secured creditors. This event effectively eliminates any remaining value for common shareholders. Any investment in the company's stock at this stage carries an extremely high risk of total loss, making a strong sell recommendation appropriate for any remaining positions.

Keywords

NaturalShrimp, liquidation, receivership, asset sale, debt default, aquaculture technology, financial distress, 10-Q, SEC filing, shrimp farming, biotechnology

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