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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended December 31, 2022

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from _________ to _________

 

Commission file number: 000-54030

 

NATURALSHRIMP INCORPORATED

(Exact name of registrant as specified in its charter)

 

Nevada   74-3262176

(State or other Jurisdiction of Incorporation or

Organization)

  

(I.R.S. Employer

Identification No.)

 

5501 LBJ Freeway, Suite 450

Dallas, Texas

   75240
(Address of Principal Executive Offices)   (Zip Code)

 

(888) 791-9474

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol(s)  

Name of exchange on

which registered

None   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

       
Large accelerated filer ☐ Accelerated filer ☐
       
Non-accelerated filer ☒ Smaller reporting company ☒
       
    Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of February 15, 2023, there were 783,161,589 shares of the registrant’s common stock outstanding.

 

 

 

 

 

 

NATURALSHRIMP INCORPORATED

FORM 10-Q

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2022

 

TABLE OF CONTENTS

 

  Page
   
PART I. FINANCIAL INFORMATION 3
     
ITEM 1. Financial Statements 3
     
  Condensed Consolidated Balance Sheets as of December 31, 2022 (unaudited) and March 31, 2022 3
     
  Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2022 and 2021 (unaudited) 4
     
  Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Nine Months Ended December 31, 2022 and 2021 (unaudited) 5
     
  Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2022 and 2021 (unaudited) 6
     
  Notes to Condensed Consolidated Financial Statements (unaudited) 7
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
     
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 39
     
ITEM 4. Controls and Procedures 39
     
PART II. OTHER INFORMATION 40
     
ITEM 1. Legal Proceedings 40
     
ITEM 1A. Risk Factors 40
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 42
     
ITEM 3. Defaults Upon Senior Securities 42
     
ITEM 4. Mine Safety Disclosures 42
     
ITEM 5. Other Information 42
     
ITEM 6. Exhibits 43
     
SIGNATURES 44

 

2

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

NATURALSHRIMP INCORPORATED and subsidiaries

CONDENSED Consolidated Balance Sheets

 

   December 31, 2022   March 31, 2022 
   (unaudited)     
ASSETS          
Current assets          
Cash  $141,864   $1,734,040 
Accounts receivable   7,502    14,385 
Escrow account   -    1,500,000 
Inventory   101,929    69,170 
Prepaid expenses   490,140    1,511,546 
Deferred offering costs   126,963    - 
           
Total current assets   868,398    4,829,141 
           
Fixed assets, net   15,350,443    14,798,103 
           
Other assets          
Construction-in-process   45,730    1,087,101 
Patents, net   6,366,000    6,658,500 
License Agreement, net   9,412,376    10,222,376 
Right of Use asset   224,266    282,753 
Deposits   20,633    20,633 
           
Total other assets   16,069,005    18,271,363 
           
Total assets  $32,287,846   $37,898,607 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
Current liabilities          
Accounts payable  $3,523,210   $2,802,787 
Accrued interest   336,102    500,450 
Accrued interest - related parties   213,292    203,520 
Other accrued expenses   299,978    207,418 
Accrued expenses - related parties   200,000    200,000 
Short-term Promissory Note and Lines of credit   19,817    20,044 
Note payable   96,000    96,000 
Restructured August note payable   2,219,347    - 
Notes payable - related parties   745,412    495,412 
Dividends payable   514,391    296,630 
Derivative liability   -    13,101,000 
Warrant liability   892,000    3,923,000 
           
Total current liabilities   9,059,549    21,846,261 
           
Convertible debenture, less unamortized debt discount of $9,680,000   -    2,629,079 
Restructured Senior note payable   20,223,035    - 
Note payable, less current maturities   47,604    119,604 
Lease Liability   231,704    286,253 
           
Total liabilities   29,561,892    24,881,197 
           
Commitments and contingencies (Note 10)   -    - 
           
Series E Redeemable Convertible Preferred stock, $0.0001 par value, 20,000 shares authorized, 1,670 and 2,840 shares issued and outstanding at December 31, 2022 and March 31, 2021, respectively   2,003,557    2,539,176 
           
Series F Redeemable Convertible Preferred stock, $0.0001 par value, 750,000 shares authorized, 750,000 and 0 shares issued and outstanding at December 31, 2022 and March 31, 2021, respectively   43,612,000    43,612,000 
           
Stockholders’ deficit          
Series A Convertible Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding at December 31, 2022 and March 31, 2021   500    500 
           
Common stock, $0.0001 par value, 900,000,000 shares authorized, 768,561,129 shares issued and 751,322,954 shares outstanding at December 31, 2022 and 674,831,624 shares issued and 674,644,124 shares outstanding at March 31, 2022, respectively   76,894    67,500 
           
Additional paid in capital   119,464,471    96,701,607 
Stock payable   662,767    20,132,650 
Subscription receivable   (56,250)   - 
Accumulated deficit   (163,037,985)   (150,036,023)
Total stockholders' deficit   (42,889,603)   (33,133,766)
           
Total liabilities, mezzanine and stockholders’ deficit  $32,287,846   $37,898,607 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3

 

 

NATURALSHRIMP INCORPORATED and subsidiaries

CONDENSED Consolidated STATEMENTS OF OPERATIONS

(Unaudited)

 

                 
   For the Three Months Ended   For the Nine Months Ended 
   December 31, 2022   December 31, 2021   December 31, 2022   December 31, 2021 
                 
Sales  $97,943   $16,640   $186,004   $16,640 
                     
Operating expenses:                    
General and administrative   1,481,195    1,527,699    4,256,819    5,182,358 
Research and development   14,212    20,357    190,855    217,229 
Facility operations   875,194    398,504    1,895,357    810,260 
Depreciation   416,377    218,134    1,349,838    830,409 
Amortization   367,500    367,500    1,102,500    514,000 
                     
Total operating expenses   3,154,478    2,532,194    8,795,369    7,554,256 
                     
Net loss from operations   (3,056,535)   (2,515,554)   (8,609,365)   (7,537,616)
                   14.2%
Other income (expense):                    
Interest expense   (593,331)   (80,991)   (1,674,994)   (228,190)
Interest expense - related parties   (6,250)   -    (9,772)   - 
Amortization of debt discount   (843,494)   (340,000)   (5,019,883)   (576,364)
Financing costs   -    (1,393,000)   -    (1,502,953)
Change in fair value of derivative liability   17,738,000    -    811,000    - 
Change in fair value of warrant liability   1,155,000    (137,000)   3,031,000    (137,000)
Change in fair value of restructured notes   (1,594,515)   -    (1,594,515)   - 
Forgiveness of PPP loan   -    -    -    103,200 
Gain on Vero Blue note settlement   -    500,000         500,000 
Gain on extinguishment of debt   2,383,088    -    2,383,088    - 
Legal Settlement   -    (29,400,000)   -    (29,400,000)
Loss due to fire   (6,262)   -    (869,379)   - 
                     
Total other income (expense)   18,232,236    (30,850,991)   (2,943,455)   (31,241,307)
                     
Income (loss) before income taxes   15,175,701    (33,366,545)   (11,552,820)   (38,778,923)
                     
Provision for income taxes   -    -    -    - 
                     
Net income (loss)   15,175,701    (33,366,545)   (11,552,820)   (38,778,923)
                     
Amortization of beneficial conversion feature on Preferred shares   (28,048)   -    (212,048)   (817,376)
Accretion on Preferred shares   (198,333)   -    (755,333)   - 
Redemption and exchange of Series D Preferred shares   -    -    -    (5,792,947)
Dividends   (60,107)   -    (481,761)   - 
                     
Net income (loss) available for common stockholders  $14,889,213   $(33,366,545)  $(13,001,961)  $(45,389,246)
                     
EARNINGS PER SHARE (Basic)  $0.02   $(0.05)  $(0.02)  $(0.07)
                     
EARNINGS PER SHARE (Diluted)  $0.01   $(0.05)  $(0.02)  $(0.07)
                     
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic)   697,586,776    635,536,459    682,750,957    608,191,555 
                     
WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted)   1,629,304,739    635,536,459    682,750,957    608,191,555 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4

 

 

NATURALSHRIMP INCORPORATED and subsidiaries

CONDENSED Consolidated STATEMENT of CHANGES IN SHAREHOLDERS’ DEFICIT

(Unaudited)

 

                                                 
   Series A Preferred stock   Series B Preferred stock   Common stock  

Additional

paid in

   Stock   Subscription   Accumulated   Non-controlling   Total stockholders' 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Payable   receivable   deficit   interest   deficit 
                                                 
Balance March 31, 2022   5,000,000   $500    -   $-    674,644,124   $67,500   $96,701,607   $20,132,650   $-    $(150,036,023)  $-   $(33,133,766)
                                                             
Common stock issued for legal settlement to NSH shareholders   -    -    -    -    61,154,136    6,112    19,311,486    (19,317,598)   -    -    -    - 
Conversion of Series E Preferred Shares to common stock   -    -    -    -    4,537,240    454    839,546    -    -    -    -    840,000 
Contingent beneficial conversion feature related to the Series E Preferred Shares, fully amortized   -    -    -    -    -    -    99,000    -    -    (99,000)   -    - 
Amortization of beneficial conversion feature related to Series E Preferred Shares   -    -    -    -    -    -    -    -    -    (42,500)   -    (42,500)
Accretion of Series E Preferred Shares   -    -    -    -    -    -    -    -    -    (278,500)   -    (278,500)
Dividends payable on Preferred Shares   -    -    -    -    -    -    -    -    -    (102,227)   -    (102,227)
Common stock issued in business agreement, to be paid from revenue earned   -    -    -    -    250,000    25    56,225    -    (56,250)   -    -    - 
Common stock vested to consultants   -    -    -    -    -    6    24,369    -    -    -    -    24,375 
                                                             
Net loss                                                (2,200,176)   -     (2,200,176)
                                                             
Balance June 30, 2022   5,000,000   $500    -    $      -    740,585,500   $74,097   $117,032,233   $815,052   $(56,250)  $(152,758,426)   -    $(34,892,794)
                                                             
Common stock issued for legal settlement to NSH shareholders   -    -    -    -    404,067    40    127,646    (127,686)   -    -    -    - 

Conversion of Series E Preferred Shares to

common stock

   -    -    -    -    9,920,887    992    827,008    -    -    (108,000)   -    720,000 
Increase of 10% in Series E Preferred Shares to one holder based on certain rights                                                (156,000)        (156,000)
Amortization of beneficial conversion feature related to Series E Preferred Shares   -    -    -    -    -    -    -    -    -    (42,500)   -    (42,500)
Accretion of Series E Preferred Shares   -    -    -    -    -    -    -    -    -    (278,500)   -    (278,500)
Dividends payable on Preferred Shares   -    -    -    -    -    -    -    -    -    (55,427)   -    (55,427)
Common stock issued in business agreement   -    -    -    -    250,000    25    25,975    -         -    -    26,000 
Common stock issued from shares payable   -    -    -    -    100,000    10    24,590    (24,600)        -    -    - 
Common stock vested to consultants   -    -    -    -    62,500    6    24,369    -    -    -    -    24,375 
                                                             
Net loss                                                (24,528,345)   -     (24,528,345)
                                                             
Balance September 30, 2022   5,000,000   $500    -   $-    751,322,954   $75,170   $118,061,820   $662,767   $(56,250)  $(177,927,198)   -    $(59,183,191)
                                                             
Issuance of common shares under financing agreement                       17,175,675    1,718    1,378,282                        1,380,000 
Amortization of beneficial conversion feature related to Series E Preferred Shares   -    -    -    -    -    -    -    -    -    (28,048)   -    (28,048)
Accretion of Series E Preferred Shares   -    -    -    -    -    -    -    -    -    (198,333)   -    (198,333)
Dividends payable on Preferred Shares   -    -    -    -    -    -    -    -    -    (60,107)   -    (60,107)
Common stock vested to consultants   -    -    -    -    62,500    6    24,369    -    -    -    -    24,375 
                                                             
Net income                                                15,175,701    -     15,175,701 
                                                             
Balance December 31, 2022   5,000,000   $500        -   $-    768,561,129   $76,894   $119,464,471   $662,767   $(56,250)  $(163,037,985)   -    $(42,889,603)
                                                             
Balance March 31, 2021   5,000,000   $500    607   $-    560,745,180   $56,075   $56,649,491   $136,000   $-   $(53,683,268)  $(87,830)  $3,070,969 
                                                             
Issuance of common stock upon conversion   -    -    -    -    1,329,246    133    421,353    -    -    -    -    421,486 
Conversion of Series B PS to common stock   -    -    (262)   -    3,144,000    314    (314)   -    -    -    -    - 
Conversion of Series D PS to common stock   -    -    -    -    428,572    43    (43)   -    -    -    -    - 
Exchange of Series D Preferred Shares to Series E Preferred Shares   -    -    -    -    -    -    -    -    -    (3,258,189)   -    (3,258,189)
Sale of common shares and warrants for cash, less offering costs and commitment shares   -    -    -    -    35,772,729    3,577    17,273,546    -    -    -    -    17,277,123 
Exercise of warrants related to the sale of common shares   -    -    -    -    1,100,000    110    10,890    -    -    -    -    11,000 
Beneficial conversion feature related to the Series E Preferred Shares   -    -    -    -    -    -    3,269,505    -    -    -    -    3,269,505 
Amortization of beneficial conversion feature related to Series E Preferred Shares   -    -    -    -    -    -    -    -    -    (817,376)   -    (817,376)
Redemption of Series D Preferred shares   -    -    -    -    -    -    -    -    -    (2,534,758)   -    (2,534,758)
Common shares to be issued for the acquisition of the non-controlling interest subsidiary's remaining equity   -    -    -    -    -    -    (3,087,830)   2,000,000    -    -    87,830    (1,000,000)
Common shares to be issued for Patent acquisition   -    -    -    -    -    -    -    5,000,000    -    -    -    5,000,000 
Common stock vested to consultants   -    -    -    -    125,000    13    48,738    24,900    -    -    -    73,651 
                                                             
Net loss   -     -     -     -     -     -     -     -     -     (2,562,743)   -     (2,562,743)
                                                             
Balance June 30, 2021   5,000,000   $500    345   $ -    602,644,727   $60,265   $74,585,336   $7,160,900   $-   $(62,856,334)  $-   $18,950,668