10-Q/A: Nocera Inc. Reports Second Quarter 2024 Results, Revenue Increases but Losses Persist

Nocera Inc. saw a revenue increase in the second quarter of 2024 compared to the same period last year, but the company continues to experience net losses.

Summary

• Nocera Inc. reported its financial results for the second quarter of 2024, showing a net sales increase to $6,753,112 from $5,327,181 in the same quarter of 2023.
• The company's cost of sales also increased, reaching $6,707,325, up from $5,289,946 in the prior year's quarter.
• Gross profit for the quarter was $45,787, compared to $37,235 in the second quarter of 2023.
• Operating expenses were $308,795 for the quarter, a decrease from $368,667 in the same period last year.
• The company experienced a loss from operations of $263,008, compared to a loss of $331,432 in the second quarter of 2023.
• Nocera reported a net loss of $369,252 for the quarter, compared to a net loss of $332,312 in the same period of 2023.
• For the six months ended June 30, 2024, net sales were $11,652,992, up from $9,165,044 in the same period of 2023.
• The company's net loss for the first six months of 2024 was $863,172, compared to a net loss of $1,334,501 for the same period in 2023.
• The company's cash and cash equivalents decreased to $586,424 as of June 30, 2024, from $1,229,580 at the end of 2023.
• There were 13,556,987 shares of common stock outstanding as of June 30, 2024.

Sentiment

Score: 4

Explanation: The document presents a mixed picture with increased revenue but persistent losses and concerns about the company's financial stability and internal controls. The need for potential capital raises and the risk of delisting contribute to a negative sentiment.

Positives

• Nocera experienced an increase in net sales for both the three and six months ended June 30, 2024, compared to the same periods in 2023.
• Operating expenses decreased for both the three and six months ended June 30, 2024, compared to the same periods in 2023.
• The net loss attributable to the company decreased for the six months ended June 30, 2024, compared to the same period in 2023.

Negatives

• Nocera continues to experience net losses, despite increased revenue.
• The company's cash and cash equivalents decreased significantly from the end of 2023 to June 30, 2024.
• The company has identified material weaknesses in its disclosure controls and procedures.

Risks

• The company's operations could be disrupted by geopolitical conditions, trade disputes, and other similar events.
• Fluctuations in foreign currency exchange rates could negatively impact the company's financial results.
• The company's business could be adversely affected by future outbreaks of COVID-19 or similar public health threats.
• There is substantial doubt about the company's ability to continue as a going concern due to several factors, including the potential delisting of its securities and the excess of current liabilities over current assets.
• The company's auditor is located in Hong Kong, which is subject to the PCAOB's determination that it is unable to inspect or investigate completely, potentially leading to delisting under the Holding Foreign Companies Accountable Act.

Future Outlook

The company plans to expand its sales and marketing model through online marketing, data intelligence, and the establishment of a distributor network. They also plan to sell and develop fish farms in Taiwan, the U.S., and Brazil, and expect to sell over five thousand tanks in the next five years. The company intends 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 believes that the company's current cash balances, coupled with anticipated cash flow from operating activities, will be sufficient to meet its working capital requirements for at least one year from the date of issuance of the financial statements.
• Management is also focused on growing the company's existing product offering, as well as its customer base, to increase its revenues.

Industry Context

The company operates in the aquaculture industry, which is experiencing growing demand due to decreasing production from wild fisheries. Nocera's fish farming systems provide a controlled and traceable environment for fish species, which aligns with the industry's need for sustainable and efficient aquaculture solutions. The company is also targeting the Taiwan government-supported solar fish farms initiative, which is a growing trend in the region.

Comparison to Industry Standards

• While the document provides specific financial figures for Nocera, it lacks direct comparisons to industry benchmarks or competitors.
• Without specific data on comparable companies or projects, it's difficult to assess Nocera's performance against industry standards.
• For example, the document does not compare Nocera's revenue growth, profitability, or operating efficiency to other aquaculture companies or RAS technology providers.
• Similarly, there is no comparison of Nocera's cost structure or capital expenditure to industry averages.
• To provide a more detailed assessment, it would be necessary to compare Nocera's results to companies like AquaBounty Technologies, which focuses on land-based aquaculture, or other companies in the RAS sector such as Atlantic Sapphire or The Kingfish Company.
• Additionally, comparing Nocera's financial metrics to industry reports and analysis would provide a more comprehensive understanding of its performance relative to its peers.

Related Party Transactions

• The company had sales of $5,352 to Grand Smooth Corporation Limited, a related party, during the six months ended June 30, 2024.

Stakeholder Impact

• Shareholders face the risk of potential delisting and dilution from future capital raises.
• Employees may be affected by the company's financial instability and potential restructuring.
• Customers may be impacted by the company's ability to deliver products and services due to financial constraints.
• Suppliers may face increased risk of non-payment due to the company's financial challenges.
• Creditors face increased risk of default due to the company's financial instability.

Next Steps

• 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 intends to expand fish farming demo sites in Taiwan and build a catfish farm in the U.S. by the end of 2024.
• The company expects to remediate material weaknesses in its disclosure controls and procedures in the second half of 2024.

Key Dates

Keywords

aquaculture, fish farming, RAS, recirculation aquaculture systems, financial results, net sales, net loss, operating expenses, Taiwan, VIE, variable interest entity, food processing, catering, e-commerce, live-stream sales