SHMP.OTC.PinkNaturalshrimp INC
10-K: NaturalShrimp Liquidates Assets, Ceases Operations
Sentiment:
Annual Report
NaturalShrimp Incorporated has ceased all business operations following the court-approved sale of substantially all its assets to creditors Streeterville Capital and Bucktown Capital for a $35.7 million credit bid and $100,000 cash.
Worse than expectedThe company has ceased all business operations and is in liquidation.Substantially all assets were sold to creditors to extinguish debt, indicating a complete failure of the business model.Reported a significant net loss of $(10,727,729) for the period ended March 30, 2025.Net liabilities in liquidation amounted to $(8,791,012) as of March 31, 2025.
Summary
- NaturalShrimp Incorporated has ceased all current business operations as of May 14, 2025.
- Substantially all of the company's assets, including fixed assets, patents, and license agreements, were sold to creditors Streeterville Capital, LLC and Bucktown Capital, LLC.
- The asset sale was approved by the Utah State Court on March 30, 2025, for an approximate $35,703,789.87 credit bid and $100,000 cash.
- The transfer of assets extinguished outstanding debt to Streeterville and Bucktown Capital, including restructured August and Senior notes ($33.1 million) and the Buckstown line of credit ($2.7 million).
- The company transitioned from a going concern basis to a liquidation basis of accounting as of March 31, 2025.
- For the period ended March 30, 2025, the company reported sales of $202,817 and a net loss of $(10,727,729).
- As of March 31, 2025, the company reported net liabilities in liquidation of $(8,791,012).
- The company has a very limited number of full-time employees due to the cessation of operations.
Sentiment
Score: 1
Explanation: The company has ceased all operations, sold substantially all its assets to creditors, and is in liquidation. This represents a complete business failure with no clear path for recovery or future value creation for common shareholders.
Positives
- The sale of assets extinguished significant outstanding debt to Streeterville and Bucktown Capital, totaling approximately $35.8 million.
- The company had developed proprietary, patented platform technologies for ecologically-controlled, high-density, low-cost aquaculture without antibiotics or toxic chemicals.
Negatives
- Cessation of all current business operations as of May 14, 2025.
- The company entered receivership due to significant debt defaults.
- Substantially all assets, including intellectual property, were sold to creditors.
- Reported a net loss of $(10,727,729) for the period ended March 30, 2025.
- Net liabilities in liquidation of $(8,791,012) as of March 31, 2025.
- Significant accrued and unpaid wages for executive officers: Gerald Easterling ($412,500), William Delgado ($266,667), and Tom Untermeyer ($430,667).
- Common stock now trades on the OTC Markets Expert Market, accessible only to broker-dealers and professional investors, indicating a lack of an established public trading market.
- Material weaknesses in internal control over financial reporting, including inadequate segregation of duties and lack of an independent board/audit committee.
- Promissory notes with family members of related parties are in default.
Risks
- The company's liquidation process is ongoing, and there is uncertainty regarding the settlement of remaining outstanding liabilities and the exact timeline for completion.
- Material weaknesses in internal control over financial reporting, including inadequate segregation of duties, lack of an independent board of directors and audit committee, lack of risk assessment procedures on internal controls, and lack of documentation on policies and procedures.
- Cybersecurity threats, as evidenced by a past incident where an executive officer's email was hacked, resulting in a $100,000 loss.
- Reliance on a very limited number of full-time employees and outside consultants, which could impact the liquidation process and any potential future endeavors.
- The company's common stock is traded on the OTC Markets Expert Market, which has limited accessibility and liquidity, posing a risk to shareholders.
Future Outlook
The company does not have a finalized plan regarding the settlement of its remaining outstanding liabilities or an exact timeline regarding its liquidation process. Management intends to implement measures to remediate material weaknesses in internal control over financial reporting, including identifying skill gaps, establishing an independent board/audit committee, retaining additional accounting personnel, and developing formal policies and procedures, as funds allow.
Management Comments
- "The Company believes that it continued to function as a going concern until the date that the motion to sell its assets was approved by the court on March 30, 2025 at which point its liquidation became imminent."
- "As of the date of this filing, the Company had limited assets available and was therefore uncertain as to the manner by which it expects to settle our remaining outstanding liabilities. Furthermore, we are also uncertain about the expected date by which we expect to complete the liquidation."
- "We believe that our compensation policies and practices for our employees, including our executive officers, do not create risks that are reasonably likely to have a material adverse effect on the Company."
Industry Context
The company's business model aimed to address the unsustainable nature of traditional shrimp production methods (ocean trawling and open-air farming) by offering a closed-system aquaculture technology. This technology was designed to produce antibiotic-free shrimp in an ecologically controlled, high-density, low-cost environment, positioning it as a superior alternative to current industry practices that face issues like environmental damage, declining yields, and chemical contamination. However, the company's liquidation indicates a failure to successfully commercialize and sustain this alternative within the broader industry context.
Comparison to Industry Standards
- The company's Vibrio Suppression Technology, utilizing electrocoagulation and Hydrogas, was designed to overcome limitations of BioFloc Technology by killing potential pathogens and harmful bacteria, creating higher sustainable densities, consistent production, improved growth and survival rates, and improved food conversion without antibiotics, probiotics, or unhealthy anti-microbial chemicals.
- Third-party studies and internal trials, including one on North Atlantic Salmon at the RASLab research facility in Norway in 2021, demonstrated that the company's system created water chemistry with antioxidant properties, leading to increased well-being and enhanced growth rates for aquatic species.
- The technology aimed to provide a superior product (Always Fresh, Always Natural, 100% free of antibiotics) compared to imported shrimp often laden with chemicals and antibiotics from developing countries' open-air farms.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Committee Structure | The Board of Directors does not have a standing audit, nominating, or compensation committee; the entire Board performs these functions. | Lack of specialized oversight and potential for conflicts of interest due to the absence of independent committees. | |
| Director Independence | All current directors (Gerald Easterling, William Delgado, Tom Untermeyer) are not independent. | Raises concerns about independent oversight and potential for management dominance, contributing to material weaknesses in internal controls. | |
| Internal Control Weaknesses | Identified material weaknesses in internal control over financial reporting: inadequate segregation of duties, lack of independent board/audit committee, lack of risk assessment procedures on internal controls, and lack of documentation on policies and procedures. | Significant risk of financial misstatement and operational inefficiencies. Management plans remediation 'as funds allow', which is uncertain given liquidation. |
Legal Proceedings
- Receivership initiated by Streeterville Capital, LLC and Bucktown Capital, LLC on September 4, 2024, due to loan defaults, leading to the court-approved sale of substantially all assets and cessation of business operations.
- Past lawsuit by Gary Shover (shareholder of NaturalShrimp Holdings, Inc.) for breach of contract, settled on December 6, 2021, by issuing approximately 93 million shares.
- Termination of Merger Agreement with Yotta Acquisition Corporation on July 20, 2023, due to Yotta's breaches, with a potential $3,000,000 breakup fee not yet sought by NaturalShrimp.
Related Party Transactions
- Received $40,000 in proceeds from promissory notes with family members of related parties in FY2025, bearing 10% interest, all of which are in default.
- Received $140,000 in proceeds from three promissory notes with family members of related parties in FY2024, bearing 10% interest, all of which are in default.
- Notes payable to NaturalShrimp Holdings, Inc. (NSH), a shareholder, with an outstanding balance of approximately $79,000 as of March 30, 2025, bearing 2% interest.
- Working capital notes payable to multiple shareholders of NSH and Bill Williams (former officer/director) totaling $486,500, bearing 8% interest, with $356,404 outstanding as of March 30, 2025.
- Working capital notes payable to various NSH shareholders totaling $290,000, bearing 8% interest, with $54,647 outstanding as of March 30, 2025.
- Bonus compensation of $200,000 outstanding to the Chief Financial Officer, President, and Chief Technology Officer as of March 30, 2025.
Stakeholder Impact
- Shareholders: Significant negative impact due to the cessation of operations, asset sale, and trading on the OTC Markets Expert Market, likely resulting in substantial loss of investment value. The common stock price was $0.0054 per share on November 4, 2024.
- Employees: Very limited number of full-time employees remain, indicating significant job losses. Executive officers have substantial accrued and unpaid wages.
- Creditors: Secured creditors (Streeterville Capital, Bucktown Capital) recovered their debt through the asset sale. Other creditors (e.g., related parties with defaulted notes) face uncertainty regarding settlement.
- Customers: The company has ceased current business operations, meaning existing customers for live shrimp (grocery stores in Chicago, stores/restaurants in Texas) will no longer be supplied.
- Suppliers: Operations have ceased, so demand for raw materials (feed, post larvae shrimp) from suppliers like Zeigler, Sea Products Development, and Homegrown Shrimp will cease.
Next Steps
- Settle remaining outstanding liabilities.
- Complete the liquidation process.
- Management intends to implement measures to remediate material weaknesses in internal control over financial reporting, including identifying skill gaps, establishing an independent board/audit committee, retaining additional accounting personnel, and developing formal policies and procedures, as funds allow.
Key Dates
| Date | Description |
|---|---|
| 2001 | Company began R&D of high-density, natural aquaculture system. |
| 2008-07-03 | Company incorporated in Nevada as Multiplayer Online Dragon, Inc. |
| 2015-01-30 | Acquired assets of NaturalShrimp Holdings, Inc. (NSH), changed principal business to global shrimp farming, and changed name to NaturalShrimp Incorporated. |
| 2015-10-05 | Formed Natural Aquatic Systems, Inc. (NAS) with F&T Water Solutions, LLC to jointly develop water technologies. |
| 2016 | Engaged in additional engineering projects to enhance indoor production capabilities. |
| 2018-03-06 | US Patent 9,908,794 B2 issued for Electrocoagulation Chamber. |
| 2018-08-22 | Certificate of Designation of Series A Preferred Stock filed. |
| 2018-12-25 | US Patent 10,163,199 B2 issued for Recirculating Aquaculture System and Treatment method of Aquatic Species. |
| 2019 | Began $2,000,000 facility renovation in La Coste, Texas, replacing wood-lined tanks with fiberglass tanks. |
| 2020-03-18 | Research and development plant in La Coste, Texas, destroyed by a fire. |
| 2020-12-17 | Acquired assets from VeroBlue Farms USA, Inc. and subsidiaries for $10,000,000, including facilities in Iowa. |
| 2021-04-14 | Board authorized issuance of Series E Preferred Stock and entered into share exchange agreement for Series D to Series E conversion. |
| 2021-04-15 | Series D to Series E Preferred Stock exchange completed. |
| 2021-05-19 | Purchased F&T's ownership interest in water treatment technology and NAS shares for $10,000,000 (cash and common stock). |
| 2021-08-25 | Entered into Equipment Rights Agreement with Hydrenesis Delta Systems, LLC and Technology Rights Agreement with Hydrenesis Aquaculture, LLC. |
| 2021-11-22 | Entered into securities purchase agreement for 1,500 shares of Series E Preferred Stock and warrants. |
| 2021-12-15 | Entered into securities purchase agreement for a secured promissory note (Senior Note) of approximately $16,320,000. |
| 2022-04-12 | US Patent 11,297,809 B1 issued for Ammonia Control in a Recirculating Aquaculture System. |
| 2022-06-16 | One of the holders of Series E Convertible Preferred Stock exercised their right to receive conversion price adjustment. |
| 2022-08-10 | Issued a loan agreement for $300,000 with employee and family member related parties. |
| 2022-08-17 | Entered into a securities purchase agreement for a secured promissory note (August Note) of approximately $5,433,333. |
| 2022-08-25 | Patent application filed for Method and Apparatus for removing specific contaminants from water. |
| 2022-10-24 | Entered into a Merger Agreement with Yotta Acquisition Corporation. |
| 2022-11-04 | Entered into Restructuring Agreement for Amended and Restated Secured Promissory Note (August Note) and Senior Note. Also entered into GHS Purchase Agreement. |
| 2022-11-05 | Entered a restructuring agreement with the Series E Preferred Stockholders. |
| 2023 | Changed the focus of the Texas facility into a research and development center. |
| 2023-01-20 | Entered into a secured promissory note (January 2023 Note) for $631,968. |
| 2023-04-21 | Entered into a $60,000 promissory note with Yotta Investment LLC. |
| 2023-04-28 | Entered into an Equity Financing Agreement and Registration Rights Agreement with GHS for up to $10,000,000. |
| 2023-05-01 | One of the holders converted 600 Series E Preferred Stock into 23,989,570 shares of common stock. |
| 2023-05-09 | Entered into GHS 2023 Purchase Agreement for up to 45,923,929 common shares ($6,000,000 total). |
| 2023-05-17 | Entered into an additional $60,000 promissory note with Yotta Investment LLC. |
| 2023-06-19 | Issued 100,000 common shares to a consultant. |
| 2023-07-10 | Received a tranche of $100,000 under SPA for 100 Series G Preferred Stock. |
| 2023-07-17 | Received $140,000 from three promissory notes with family member related parties. |
| 2023-07-20 | Company sent Yotta notice of termination of Merger Agreement. Also entered into Securities Purchase Agreement for additional sale of 156 shares of Series E Preferred Stock. |
| 2023-09-28 | Increased authorized common shares to 1,400,000,000. |
| 2023-10-10 | Issued 50,000 shares of common stock to a new employee as a signing bonus. |
| 2023-11-08 | 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 | 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 Series G Preferred Stock. |
| 2023-12-04 | Issued 40,000,000 shares of common stock to a consultant. |
| 2023-12-14 | Entered into a Securities Purchase Agreement for the sale of 110 shares of Series G Preferred Stock. |
| 2023-12-19 | Received an initial tranche of $110,000 under the Series G SPA. Also paid a $2,063 security deposit for new office space. |
| 2023-12-20 | Entered into a sublease for a new office space in Texas. |
| 2023-12-31 | Company moved to a new office space in Texas, terminating the previous sublease. |
| 2024-01-01 | Commencement date of the new Texas office space sublease. |
| 2024-01-17 | 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 | Received a tranche of $100,000 under the Series G SPA for 100 Series G Preferred Stock. |
| 2024-02-22 | 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 | Entered into a consulting agreement requiring the issuance of 200 Series G Preferred Stock. |
| 2024-03-30 | Court approved the sale of substantially all assets; company ceased being a going concern. |
| 2024-03-31 | Financial statements presented under liquidation basis of accounting. |
| 2024-04-03 | 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 | Received a tranche of $100,000 under the Series G SPA for 100 Series G Preferred Stock. |
| 2024-06-12 | Received a tranche of $100,000 under the Series G SPA for 100 Series G Preferred Stock. |
| 2024-07-03 | Investor issued a waiver to the Company on equal monthly payments for the Senior Note through August 15, 2024. |
| 2024-07-10 | Received a tranche of $100,000 under the Series G SPA for 100 Series G Preferred Stock. |
| 2024-08-15 | Maturity date for the January 2023 Note and Restructured August Note extended to this date. |
| 2024-09-04 | Streeterville Capital and Bucktown Capital filed Verified Emergency Motion for Appointment of Receiver. |
| 2024-09-09 | Utah State Court granted ex parte order appointing Amplo Turnaround and Restructuring, LLC as receiver. |
| 2024-09-17 | Hearing scheduled on preliminary injunction in Receivership Case. |
| 2024-11-03 | Number of shares outstanding of common stock was 1,277,546,746. |
| 2024-11-04 | Aggregate market value of common equity held by non-affiliates was $6,648,639 ($0.0054 per share). |
| 2024-11-05 | Filing date of the 10-K report. |
| 2024-11-20 | Lenders and NaturalShrimp filed Verified Amended and Stipulated Emergency Motion for Immediate Appointment of a Receiver. |
| 2024-11-22 | Utah State Court entered order granting Stipulated Motion and appointed Receiver. |
| 2025-02-11 | Receiver filed Motion for Approval to Sell Substantially all of the Receivership Entities Assets. |
| 2025-03-30 | Court approved the sale of assets to Streeterville and Bucktown Capital. |
| 2025-03-31 | End of fiscal year for liquidation basis accounting. |
| 2025-05-14 | Title to assets transferred to lenders; Company ceased current business operations. |
| 2025-10-06 | Approximately 520 shareholders of record of common stock. |
| 2025-10-31 | Termination date for one of the Texas office subleases. |
| 2027-03-31 | Termination date for the new Texas office sublease. |
Recommendation
strong sellThe company has ceased all business operations and is undergoing liquidation, having sold substantially all its assets to creditors. This indicates a complete failure of the business, and there is no clear path for recovery or future value creation for common shareholders. The stock is trading on an expert market with limited liquidity, and the company has significant outstanding liabilities with an uncertain settlement timeline.
Keywords
aquaculture, shrimp farming, SEC filing, liquidation, receivership, debt default, asset sale, financial distress, proprietary technology, indoor farming, aquatic species, electrocoagulation, Hydrogas, SEC 10-K
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