10-K: Nocera Inc. Reports Full Year 2023 Results, Revenue Climbs to $23.9 Million

Nocera Inc. saw a significant increase in revenue to $23.9 million for 2023, while also experiencing operating losses and expressing concerns about its ability to continue as a going concern.

Summary

• Nocera, Inc. reported a net sales of approximately $23.9 million for the year ended December 31, 2023, compared to $14.1 million in 2022.
• The company incurred operating losses of $2,030,672 and $5,180,208 for the years ended December 31, 2023 and 2022, respectively.
• As of December 31, 2023, Nocera had a working capital of $87,409 and an accumulated deficit of $16,780,124.
• The company's auditors have expressed concern about Nocera's ability to continue as a going concern.
• Nocera's ability to continue as a going concern is dependent on generating cash flows from operations and obtaining financing.
• The company intends to fund operations through equity and debt financing, but there is no assurance that this will be sufficient.
• The company's gross profit for 2023 was approximately $194,959, compared to $255,966 in 2022.
• General and administrative expenses decreased to $2.2 million in 2023 from $2.7 million in 2022.
• The company's net loss attributable to Nocera shareholders was approximately $4.3 million in 2023, compared to $4.8 million in 2022.

Sentiment

Score: 3

Explanation: The document presents a mixed picture with strong revenue growth but significant losses and going concern issues. The auditor's concern and the need for future capital raises add to the negative sentiment.

Positives

• The company experienced a significant increase in net sales, reaching approximately $23.9 million in 2023.
• General and administrative expenses decreased by approximately $500,000 from 2022 to 2023.
• The net loss attributable to Nocera shareholders decreased from $4.8 million in 2022 to $4.3 million in 2023.

Negatives

• The company incurred significant operating losses of $2,030,672 in 2023.
• The company's auditors have expressed concern about its ability to continue as a going concern.
• The company's working capital is low at $87,409 as of December 31, 2023.
• The company has an accumulated deficit of $16,780,124 as of December 31, 2023.
• Gross profit decreased from $255,966 in 2022 to $194,959 in 2023.

Risks

• The company's ability to continue as a going concern is uncertain and dependent on generating cash flows and obtaining financing.
• The company may not be able to raise sufficient capital on acceptable terms.
• The company's business may be materially adversely affected by any future coronavirus (COVID-19) outbreak or similar global epidemic.
• The company has a limited operating history in an evolving industry, which makes it difficult to evaluate its future prospects.
• The company faces intense competition from other companies in the aquaculture industry.
• The company is susceptible to changes in market demand for the types of seafood for which its recirculating aquaculture systems are used.
• The company is highly susceptible to changes in market demand for eel, which makes up a significant portion of its revenues.
• The company is subject to certain risks by virtue of its international operations, particularly in Taiwan.
• The company is increasingly dependent on information technology, and its systems and infrastructure face certain risks, including cybersecurity and data leakage risks.
• The company may be subject to product liability claims if people or properties are harmed by the services sold by it.
• The company may be subject to civil or other legal proceedings, with or without merit.
• The company may have inadvertently violated Section 13(k) of the Exchange Act and may be subject to sanctions as a result.
• The company may not be able to maintain its listing on Nasdaq.
• The company has identified material weaknesses in its internal control over financial reporting.

Future Outlook

The company plans to focus on countries with a growing population and demand for food, building demo sites, and selling price-competitive systems. They also intend to expand fish farming demo sites in Taiwan and build a catfish farm in the U.S. by the end of 2024.

Management Comments

• Management is focused on growing our existing product offering, as well as our customer base, to increase our revenues.
• Management believes that our current cash balances coupled with anticipated cash flow from operating activities will be sufficient to meet our working capital requirements for at least one year from the date of issuance of the accompanying consolidated financial statements.

Industry Context

The document highlights the growing global demand for fish consumption and the shift towards farm-raised fish due to overfishing. It also mentions the trade conflict between the U.S. and China, which has led to a greater demand for non-Chinese origin seafood products from the U.S. market. The company believes that its RASs are a perfect solution to address these opportunities.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or competitors in terms of financial performance.
• However, it mentions that many producers and sellers in the aquaculture market are large entities with significantly greater resources than Nocera.
• The company also competes with small suppliers providing smaller alternative aquaculture solutions regionally, but believes it has a better price point due to the size of its projects.
• The document states that Nocera's cylindrical shaped tanks hold approximately 15,000 U.S. gallons of water, which they believe makes them among the largest systems in the market, but does not provide specific comparisons to other systems.

Management Changes

Corporate Governance

Legal Proceedings

• The company is currently not a party to any legal or administrative proceedings and is not aware of any pending or threatened legal or administrative proceedings against it in all material aspects.

Related Party Transactions

• The company had sales of $12,498 to Grand Smooth Corporation Limited in 2023 and $993,918 in 2022, a company with a common director.
• The company had a balance due to Mountain Share Transfer, LLC of $39,341 as of December 31, 2023 and 2022, a company controlled by a former director.

Stakeholder Impact

• Shareholders face the risk of potential loss of investment due to the company's going concern issues and potential delisting.
• Employees may be affected by potential cost-cutting measures or restructuring due to the company's financial challenges.
• Customers may be impacted by potential disruptions in service or product availability due to the company's financial instability.
• Suppliers may face increased risk of non-payment or delayed payments due to the company's financial challenges.
• Creditors may face increased risk of non-repayment of debt due to the company's financial instability.

Next Steps

• The company plans to build demo sites promoting its RASs and sell its systems in countries with growing populations and demand for food.
• The company plans to expand its sales and marketing model through online marketing, data intelligence, and the establishment of a distributor network.
• The company plans to sell and develop fish farms in Taiwan, the U.S. and Brazil.
• The company expects to sell over five thousand tanks in the next five years.
• The company plans to expand fish farming demo sites in Taiwan and build a catfish farm in the U.S. by the end of 2024.

Key Dates

Keywords

aquaculture, recirculating aquaculture systems, RAS, fish farming, seafood, Taiwan, eel, financial results, going concern, net sales, operating loss, internal control, capital raise