SHMP.OTC.PinkNaturalshrimp INC
10-Q: NaturalShrimp Inc. Reports Q3 2024 Results, Cites Ongoing Financial Challenges
Sentiment:
Quarterly Report
NaturalShrimp Incorporated's Q3 2024 report reveals a net loss of $10.8 million and a working capital deficit, raising concerns about the company's ability to continue as a going concern.
Capital raiseThe company states that private placements of equity capital will be needed to fund the company's long-term operating requirements.The company anticipates needing to raise an additional $2.5 million to cover all of its capital and operational expenses over the next 12 months.The company has raised capital through the sale of common and preferred stock, as well as promissory notes.
Worse than expectedThe company's net loss and working capital deficit are worse than expected, raising concerns about its financial viability.The company's ability to continue as a going concern is in doubt, indicating a worse than expected financial situation.
Summary
- NaturalShrimp Incorporated reported a net loss available for common stockholders of approximately $10.8 million for the nine months ended December 31, 2023.
- The company's accumulated deficit reached approximately $178.4 million as of December 31, 2023.
- A working capital deficit of approximately $10.4 million was reported as of December 31, 2023.
- The company's ability to continue as a going concern is dependent on its ability to raise additional capital or debt financing.
- Gross sales revenue for the nine months ended December 31, 2023, was $365,184, compared to $186,004 for the same period in 2022.
- Operating expenses for the nine months ended December 31, 2023, were $8.176 million, a decrease from $8.795 million in the same period of 2022.
- The company sold 76,651,688 shares of common stock for approximately $1.9 million during the nine months ended December 31, 2023.
- The company also sold $150,000 of Series E Preferred stock and $97,000 of Series G Preferred stock during the same period.
- The company received $140,000 in proceeds from promissory notes with related parties during the nine months ended December 31, 2023.
Sentiment
Score: 3
Explanation: The document reveals significant financial challenges, including a substantial net loss, accumulated deficit, and working capital deficit. While there are some positive aspects, such as increased revenue and decreased operating expenses, the overall sentiment is negative due to the company's going concern risk and reliance on external financing.
Positives
- Gross sales revenue increased by 96% for the nine months ended December 31, 2023, compared to the same period in 2022.
- Operating expenses decreased by 7% for the nine months ended December 31, 2023, compared to the same period in 2022.
- The company successfully raised capital through the sale of common and preferred stock, as well as promissory notes.
Negatives
- The company reported a significant net loss of $10.8 million for the nine months ended December 31, 2023.
- The company has a substantial accumulated deficit of $178.4 million as of December 31, 2023.
- The company has a working capital deficit of $10.4 million as of December 31, 2023.
- The company's ability to continue as a going concern is in doubt due to its financial situation.
Risks
- The company's ability to continue as a going concern is dependent on raising additional capital or debt financing.
- The company may not be able to obtain additional financing on acceptable terms, or at all.
- If adequate funds are not available, the company may not be able to take advantage of business opportunities or scale its operations.
- The company's financial situation raises substantial doubt about its ability to continue operating within one year.
- The company is subject to risks related to its ability to successfully commercialize its technology and shrimp farming operations.
Future Outlook
Management believes that private placements of equity capital will be needed to fund the Company's long-term operating requirements. The Company may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. The company anticipates needing to raise an additional $2.5 million to cover all of its capital and operational expenses over the next 12 months, not including any capital expenditures needed as part of any commercial scale-up of its equipment.
Management Comments
- Management believes that private placements of equity capital will be needed to fund the Company's long-term operating requirements.
- Management believes that our cash on hand and working capital deficit are not sufficient to meet our current anticipated cash requirements for additional anticipated capital expenditures, operating expenses and scale-up of operations for the next twelve months.
Industry Context
The company operates in the aquaculture industry, specifically focusing on indoor shrimp farming. The report highlights the company's efforts to scale its production facilities and commercialize its technology. The company's ability to produce shrimp without antibiotics or toxic chemicals is a key differentiator in the market.
Comparison to Industry Standards
- The company's financial performance is weak compared to industry standards, with a significant net loss and working capital deficit.
- The company's reliance on external financing is a common challenge for early-stage aquaculture companies.
- The company's technology and production methods are innovative, but its financial sustainability remains a concern.
- The company's ability to scale production and achieve profitability will be critical for its long-term success.
- The company's financial results are worse than other companies in the sector that have achieved commercial scale and profitability.
Related Party Transactions
- The company received $140,000 in proceeds from promissory notes with related parties during the nine months ended December 31, 2023.
- 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.
- The company has entered into several working capital notes payable with various shareholders of NSH.
Stakeholder Impact
- Shareholders face significant risk due to the company's financial instability and potential dilution from future equity raises.
- Employees may be concerned about the company's ability to continue operations and maintain employment.
- Customers may be concerned about the company's ability to fulfill orders and maintain product quality.
- Suppliers may be concerned about the company's ability to pay its debts.
- Creditors face increased risk due to the company's financial difficulties.
Next Steps
- The company will continue to pursue external financing alternatives to improve its working capital position.
- The company will continue to develop its facilities and enter into production.
- The company will continue to monitor and evaluate the effectiveness of its internal controls and procedures over financial reporting.
Key Dates
| Date | Description |
|---|---|
| 2015-04-01 | Gerald Easterling's employment agreement effective date. |
| 2016-01-01 | Notes payable agreement with NaturalShrimp Holdings, Inc. |
| 2020-07-15 | Promissory note issued to Ms. Williams. |
| 2021-04-14 | Securities purchase agreement with GHS. |
| 2021-04-15 | Series D Preferred Stock exchanged for Series E Preferred Stock. |
| 2021-05-04 | Board of Directors approved a salary for Mr. Easterling of $180,000 per annum. |
| 2021-05-11 | Bonus compensation paid to the Chief Financial Officer. |
| 2021-05-26 | Company entered into a sublease for a new office space in Texas. |
| 2021-06-02 | Company paid a deposit for the new office space. |
| 2021-08-01 | Sublease for new office space commenced. |
| 2021-08-10 | Board of Directors awarded bonuses to the President and CTO. |
| 2021-08-25 | Equipment and Technology Rights Agreements with Hydrenesis. |
| 2021-09-08 | Company entered into an equipment lease agreement for VOIP phone equipment. |
| 2021-12-15 | Securities purchase agreement for a secured promissory note. |
| 2021-12-15 | Convertible note issued. |
| 2021-11-22 | Series E Preferred Stock and warrant sold to an accredited investor. |
| 2022-02-07 | Amendment to the SPA, extending the date for the Uplist. |
| 2022-06-16 | Holder of Series E Convertible Preferred Stock exercised their right to receive the rights extended to the convertible noteholder. |
| 2022-07-03 | Fire at the La Coste, Texas facility. |
| 2022-08-17 | Securities purchase agreement with an investor for a secured promissory note. |
| 2022-08-10 | Company issued a loan agreement with related parties. |
| 2022-10-24 | Merger Agreement entered into with Yotta Acquisition Corporation. |
| 2022-11-04 | Restructuring Agreement for Amended and Restated Secured Promissory Note. |
| 2022-11-04 | Purchase agreement with GHS Investments LLC. |
| 2023-01-20 | Secured promissory note (January 2023 Note) entered into. |
| 2023-04-21 | Promissory note with Yotta Investment LLC. |
| 2023-04-28 | Equity Financing Agreement with GHS. |
| 2023-05-01 | Holder converted Series E Preferred Stock into common stock. |
| 2023-05-09 | Purchase agreement with GHS. |
| 2023-05-17 | Additional promissory note with Yotta Investment LLC. |
| 2023-05-21 | Agreement for the use of NSI Technologies. |
| 2023-06-19 | Common stock issued to a consultant. |
| 2023-07-10 | Promissory notes with related parties. |
| 2023-07-20 | Company sent Yotta notice of termination of the Merger Agreement. |
| 2023-07-24 | Securities Purchase Agreement for the sale of Series E Preferred Stock. |
| 2023-08-14 | Registration Statement declared effective by the SEC. |
| 2023-09-28 | Company increased their authorized common shares to 1,400,000,000. |
| 2023-10-10 | Common stock issued to a new employee. |
| 2023-11-08 | Exchange Agreement on the January 2023 Note. |
| 2023-11-17 | Extension of the maturity date of the January 2023 Note. |
| 2023-11-20 | Maturity date of the Restructured August Note extended. |
| 2023-12-01 | Board authorized the issuance of Series G Preferred Stock. |
| 2023-12-04 | Common stock issued to a consultant. |
| 2023-12-14 | Securities Purchase Agreement for the sale of Series G Preferred Stock. |
| 2023-12-19 | Company received an initial tranche under the SPA for Series G Preferred Stock. |
| 2023-12-20 | Company entered into a sublease for a new office space in Texas. |
| 2023-12-31 | Company moved to a new office space in Texas, and the sublease in effect was terminated. |
| 2024-01-01 | Sublease for new office space commenced. |
| 2024-01-17 | Exchange Agreement on the January 2023 Note. |
| 2024-01-24 | Company received a tranche under the SPA for Series G Preferred Stock. |
Keywords
NaturalShrimp, aquaculture, shrimp farming, financial results, going concern, capital raise, preferred stock, promissory notes, working capital, net loss
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