S-1/A: Trans American Aquaculture Files Amendment for $10 Million Stock Resale by GHS Investments

Trans American Aquaculture aims to register up to 533,695,874 shares for resale by GHS Investments, potentially diluting existing shareholders.

Summary

• Trans American Aquaculture, Inc. has filed an amendment to its S-1 registration statement to register the offer and resale of up to 533,695,874 shares of its common stock by GHS Investments LLC.
• These shares may be purchased by GHS Investments under an Equity Financing Agreement (EFA) dated January 20, 2023.
• If all shares are issued, GHS Investments would hold approximately 33% of the company's public float.
• The company will not receive any proceeds from the resale of shares by GHS Investments.
• The company's common stock is currently quoted on the OTC Markets under the symbol GRPS, with the last reported sale price on February 7, 2024, at $0.0035.
• The company has issued Series B, Series C, and Series D Preferred Stock with different voting rights than the common stock being registered.
• The holders of these preferred shares are entitled to a greater amount of votes than the common shares on any matter submitted to a vote of the shareholders.
• Investing in the company's common stock involves a high degree of risk, as detailed in the Risk Factors section of the prospectus.
• The company's independent auditor has raised substantial doubt about its ability to continue as a going concern.
• The company is currently in default of secured debt, which is currently in default, and, if the lender forecloses, you may lose all of your investment and our business would fail.
• The company is currently in a legal dispute with Kings Aqua Farm LLC and, if we were to lose, it would have a negative impact on our business.
• The company is heavily reliant on Adam Thomas, our Chief Executive Officer, and Fernando Granda, farm manager, and the departure or loss of either Mr. Thomas or Mr. Granda could disrupt our business.
• The company's financial results are substantially dependent on shrimp prices, and those prices are subject to large short and longterm fluctuations due to variations in supply and demand caused by factors such as biological factors, shifts in consumption and license changes.
• The company's financial results are substantially dependent on the procurement of broodstock strong genetic lineages.
• The company requires funding in order to have meaningful harvests.
• The seasonality of the company's business could negatively impact our operations.
• The company's business and operations are affected by the volatility of prices for shrimp.
• The company's success is dependent on external factors that affect shrimp mortality.
• The company relies on steady winds in the valley to help with oxygen levels.
• The company's shrimp product is subject to external factors, like weather.
• Failure to ensure food safety and compliance with food safety standards could result in serious adverse consequences for the Company.
• Government regulation, including food safety and aquaculture regulation, affects our business.
• Trade restrictions resulting in suboptimal distribution of shrimp may be intensified, creating a negative impact on the price of ours shrimp in some countries.
• The company's shrimp farming operations may be dependent on shrimp farming licenses.
• Natural disasters may have an adverse effect on our business.
• The company is subject to general business risks.
• The company's business lacks diversification which increases the risk of failure.
• You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.
• Because the SEC imposes additional sales practice requirements on brokers who deal in our shares that are penny stocks, some brokers may be unwilling to trade them.
• The company does not expect to declare or pay any dividends.
• The market price of our common stock has fluctuated significantly.
• Being a public company is expensive and administratively burdensome.
• Public company compliance may make it more difficult to attract and retain officers and directors.
• You could lose all your investment.
• The ability of our Board of Directors to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of the Company.
• Due to being quoted on the OTC Pink marketplace, our stock may be traded infrequently and in low volumes, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell your shares.
• There currently is no active public market for our common stock and there can be no assurance that an active public market will ever develop.
• Our common stock is subject to the penny stock rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.
• Our stock price may be volatile.
• Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
• Our existing stockholders may experience significant dilution from the sale of our common stock pursuant to the GHS Equity Financing Agreement.
• The issuance of shares pursuant to the EFA may have a significant dilutive effect.
• GHS will pay less than the then-prevailing market price of our common stock which could cause the price of our common stock to decline.
• We may not have access to the full amount under the financing agreement.
• There could be unidentified risks involved with an investment in our securities.

Sentiment

Score: 3

Explanation: The document presents a mixed picture, with some positive aspects regarding the company's products and market, but significant concerns about its financial stability, debt, and potential dilution. The overall sentiment is cautiously negative due to the going concern warning and numerous risk factors.

Positives

• The company believes its shrimp products are superior due to the use of 100% US-sourced feed ingredients, transparent production processes, eco-friendly practices, and being chemical and antibiotic-free.
• The company has superior genetic linage broodstock for cultivation of own post larvae in our onsite maturation and hatchery.
• The company's team is the only one in the U.S. that has been capable of producing shrimp of greater than 28 grams on a large-scale consistent basis.
• The company has partnerships with marketing professionals who can help us with building our brand, differentiate from the competition and generate leads.
• The company has the ability to quickly increase our scale to meet demand.

Negatives

• The company's independent auditor has raised substantial doubt about its ability to continue as a going concern.
• The company is currently in default of secured debt, which is currently in default, and, if the lender forecloses, you may lose all of your investment and our business would fail.
• The company is currently in a legal dispute with Kings Aqua Farm LLC and, if we were to lose, it would have a negative impact on our business.
• The company is heavily reliant on Adam Thomas, our Chief Executive Officer, and Fernando Granda, farm manager, and the departure or loss of either Mr. Thomas or Mr. Granda could disrupt our business.
• The company's financial results are substantially dependent on shrimp prices, and those prices are subject to large short and longterm fluctuations due to variations in supply and demand caused by factors such as biological factors, shifts in consumption and license changes.
• The company's financial results are substantially dependent on the procurement of broodstock strong genetic lineages.
• The company requires funding in order to have meaningful harvests.
• The seasonality of the company's business could negatively impact our operations.
• The company's business and operations are affected by the volatility of prices for shrimp.
• The company's success is dependent on external factors that affect shrimp mortality.
• The company relies on steady winds in the valley to help with oxygen levels.
• The company's shrimp product is subject to external factors, like weather.
• Failure to ensure food safety and compliance with food safety standards could result in serious adverse consequences for the Company.
• Government regulation, including food safety and aquaculture regulation, affects our business.
• Trade restrictions resulting in suboptimal distribution of shrimp may be intensified, creating a negative impact on the price of ours shrimp in some countries.
• The company's shrimp farming operations may be dependent on shrimp farming licenses.
• Natural disasters may have an adverse effect on our business.
• The company is subject to general business risks.
• The company's business lacks diversification which increases the risk of failure.
• You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.
• Because the SEC imposes additional sales practice requirements on brokers who deal in our shares that are penny stocks, some brokers may be unwilling to trade them.
• The company does not expect to declare or pay any dividends.
• The market price of our common stock has fluctuated significantly.
• Being a public company is expensive and administratively burdensome.
• Public company compliance may make it more difficult to attract and retain officers and directors.
• You could lose all your investment.
• The ability of our Board of Directors to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of the Company.
• Due to being quoted on the OTC Pink marketplace, our stock may be traded infrequently and in low volumes, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell your shares.
• There currently is no active public market for our common stock and there can be no assurance that an active public market will ever develop.
• Our common stock is subject to the penny stock rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.
• Our stock price may be volatile.
• Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
• Our existing stockholders may experience significant dilution from the sale of our common stock pursuant to the GHS Equity Financing Agreement.
• The issuance of shares pursuant to the EFA may have a significant dilutive effect.
• GHS will pay less than the then-prevailing market price of our common stock which could cause the price of our common stock to decline.
• We may not have access to the full amount under the financing agreement.
• There could be unidentified risks involved with an investment in our securities.

Risks

• The company's independent auditor has raised substantial doubt about its ability to continue as a going concern.
• The company is currently in default of secured debt, which is currently in default, and, if the lender forecloses, you may lose all of your investment and our business would fail.
• The company is currently in a legal dispute with Kings Aqua Farm LLC and, if we were to lose, it would have a negative impact on our business.
• The company is heavily reliant on Adam Thomas, our Chief Executive Officer, and Fernando Granda, farm manager, and the departure or loss of either Mr. Thomas or Mr. Granda could disrupt our business.
• The company's financial results are substantially dependent on shrimp prices, and those prices are subject to large short and longterm fluctuations due to variations in supply and demand caused by factors such as biological factors, shifts in consumption and license changes.
• The company's financial results are substantially dependent on the procurement of broodstock strong genetic lineages.
• The company requires funding in order to have meaningful harvests.
• The seasonality of the company's business could negatively impact our operations.
• The company's business and operations are affected by the volatility of prices for shrimp.
• The company's success is dependent on external factors that affect shrimp mortality.
• The company relies on steady winds in the valley to help with oxygen levels.
• The company's shrimp product is subject to external factors, like weather.
• Failure to ensure food safety and compliance with food safety standards could result in serious adverse consequences for the Company.
• Government regulation, including food safety and aquaculture regulation, affects our business.
• Trade restrictions resulting in suboptimal distribution of shrimp may be intensified, creating a negative impact on the price of ours shrimp in some countries.
• The company's shrimp farming operations may be dependent on shrimp farming licenses.
• Natural disasters may have an adverse effect on our business.
• The company is subject to general business risks.
• The company's business lacks diversification which increases the risk of failure.
• You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.
• Because the SEC imposes additional sales practice requirements on brokers who deal in our shares that are penny stocks, some brokers may be unwilling to trade them.
• The company does not expect to declare or pay any dividends.
• The market price of our common stock has fluctuated significantly.
• Being a public company is expensive and administratively burdensome.
• Public company compliance may make it more difficult to attract and retain officers and directors.
• You could lose all your investment.
• The ability of our Board of Directors to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of the Company.
• Due to being quoted on the OTC Pink marketplace, our stock may be traded infrequently and in low volumes, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell your shares.
• There currently is no active public market for our common stock and there can be no assurance that an active public market will ever develop.
• Our common stock is subject to the penny stock rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.
• Our stock price may be volatile.
• Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
• Our existing stockholders may experience significant dilution from the sale of our common stock pursuant to the GHS Equity Financing Agreement.
• The issuance of shares pursuant to the EFA may have a significant dilutive effect.
• GHS will pay less than the then-prevailing market price of our common stock which could cause the price of our common stock to decline.
• We may not have access to the full amount under the financing agreement.
• There could be unidentified risks involved with an investment in our securities.

Future Outlook

The company projects a harvest of greater than 1 million lbs. of shrimp in 2024, contingent upon receipt of sufficient financing. The company believes that it may be cash flow positive by the end of 2024.

Industry Context

The document mentions that shrimp prices have dropped as much as 44% since 2022, according to preliminary 2023 data from the National Marine Fisheries Service. The document also mentions that the demand for shrimp continues to rise and, more importantly, the demand for premium quality product should impact prices positively going forward as demand starts to again outpace supply.

Comparison to Industry Standards

• The document mentions that Vannamei is the most widely farm raised shrimp in the world, accounting for 80% of all farm raised shrimp in the world.
• The document mentions that the typical size is 18 grams, which translates to 31/35 count.
• The document mentions that the company focuses on producing shrimp that are more than 28 grams, resulting in a 21/25 count.
• The document mentions that the world's largest consumer markets for shrimp are (in order): China, the U.S., and the EU+UK, with China consuming roughly 24% (1.8 MMT) of all produced shrimp.
• The document mentions that the U.S. and EU account for roughly 10% each.
• The document mentions that Japan, being the 4th largest consumer of shrimp, prefers larger, higher quality head on shrimp, but per capita consumption is very dependent on the value of the Yen.
• The document mentions that Pacific Vannemei is the leading species of farm raised shrimp and is the preferred shrimp in China, the U.S., and the EU.
• The document mentions that Head on/shell on (HOSO) are preferred in both China and the EU.

Legal Proceedings

• On December 13, 2023, Kings Aqua Farm, LLC (Kings Aqua Farm) filed an Original Petition for Declaratory Judgment against TAA and Lewis Brisbois Bisgaard & Smith, LLP (LBBS) in the 128th Judicial District Court of Cameron County, Texas.
• The Petition relates to a prior lawsuit against TAA by a third party who brought legal action against TAA for water rights on land sold to TAA by Kings Aqua Farm.
• TAA engaged LBBS as legal counsel.
• After the legal action was resolved, LBBS billed TAA for the legal services provided, which TAA declared was a credit against note payments due to Kings Aqua Farm.
• The Petition alleges the amount of legal services charged by LBBS were unconscionable.
• The damages sought by Kings Aqua Farm are from $250,000 to $1,000,000, which is why management believes the action is material and not in the ordinary course.

Related Party Transactions

• On October 1, 2021, TAA issued to Excellaqua, S.A. an unsecured promissory note in the principal amount of $45,923.27.
• The lender is owned by Bolivar Prieto Torres, a director of the Company.
• On October 1, 2021, TAA issued to Luis Arturo Granda Roman an unsecured promissory note in the principal amount of $8,873.09.
• The lender is a director of the Company.
• On October 1, 2021, TAA issued to Adam Thomas an unsecured promissory note in the principal amount of $138,330.05.
• The lender is a director and executive officer of the Company.
• Mr. Thomas is also owed $20,811 for unreimbursed business expenses through December 31, 2022.
• On December 31, 2022, the Company issued an unsecured promissory note to Adam Thomas for $63,514.
• On March 29, 2023, TAA issued Jeffery Sedacca an unsecured promissory note in the principal amount of $50,000.
• The lender is a director of the Company.

Stakeholder Impact

• Shareholders may experience significant dilution due to the potential issuance of a large number of shares to GHS Investments.
• The company's ability to continue as a going concern is uncertain, which could impact employees, suppliers, and creditors.
• The company's reliance on key personnel means that their departure could negatively impact the business.
• Customers may be affected by the company's ability to maintain consistent production and quality due to various risk factors.

Next Steps

• The company intends to file its 2020 federal tax return and pay the tax due, plus penalties in interest once it has sufficient cash to do so.
• The company will use the proceeds from the Puts for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for purposes our Board of Directors deems to be in the best interests of the Company.

Key Dates

Keywords

aquaculture, shrimp, GHS Investments, common stock, resale, EFA, dilution, OTC Markets, GRPS, preferred stock, risk factors, going concern, secured debt, legal dispute, key personnel, shrimp prices, broodstock, harvests, seasonality, shrimp mortality, food safety, government regulation, trade restrictions, shrimp farming licenses, natural disasters, business risks, penny stock, dividends, stock price, equity financing