NaturalShrimp Inc - FORM 10-Q - February 16, 2021

Attached files

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EX-31.1 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF - NaturalShrimp Inc	shmp_ex311.htm
EX-10.2 - ASSET PURCHASE AGREEMENT - NaturalShrimp Inc	shmp_ex102.htm
EX-32.2 - CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANE - NaturalShrimp Inc	shmp_ex322.htm
EX-32.1 - CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANE - NaturalShrimp Inc	shmp_ex321.htm
EX-31.2 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF - NaturalShrimp Inc	shmp_ex312.htm

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, 2020

☐

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.)

15150 Preston Road, Suite #300 Dallas, Texas		75248
(Address of Principal Executive Offices)		(Zip Code)

(888) 791-9474

(Registrant’s telephone number, including area code)

N/A

(Former address)

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, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” a “smaller reporting company” and an “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 7(a)(2)(B) of the Securities 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 16, 2021, there were 551,301,181 shares of the registrant’s common stock outstanding.

NATURALSHRIMP INCORPORATED

FORM 10-Q

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2020

TABLE OF CONTENTS

		Page

PART I. FINANCIAL INFORMATION		3

ITEM 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of December 31, 2020 (unaudited) and March 31, 2020	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2020 and 2019 (unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Deficit for the Three and Nine Months Ended December 31, 2020 and 2019 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2020 and 2019 (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	32

ITEM 4.	Controls and Procedures	32

PART II. OTHER INFORMATION		33

ITEM 1.	Legal Proceedings	33

ITEM 1A.	Risk Factors	34

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

ITEM 3.	Defaults Upon Senior Securities	34

ITEM 4.	Mine Safety Disclosures	34

ITEM 5.	Other Information	34

ITEM 6.	Exhibits	35

SIGNATURES		36

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NATURALSHRIMP INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS	December 31, 2020	March 31, 2020
Current assets	(unaudited)
Cash	$311,848	$109,491
Prepaid expenses	778,019	128,693
Insurance settlement	-	917,210

Total current assets	1,089,867	1,155,394

Fixed assets	12,286,515	707,808

Other assets
Construction-in-process	1,719,945	-
Right of Use asset	275,400	275,400
Deposits	20,633	178,198

Total other assets	2,015,978	453,598

Total assets	$15,392,360	$2,316,800

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable	$896,379	$641,146
Accrued interest	64,246	81,034
Accrued interest - related parties	175,520	296,624
Other accrued expenses	628,204	1,204,815
Short-term Promissory Note and Lines of credit	575,910	570,497
Bank loan	8,438	8,904
PPP loan	103,200	-
Convertible debentures	-	463,161
Notes payable - related parties	1,247,162	1,221,162
Dividends payable	182,639	-
Derivative liability	-	176,000
Warrant liability	-	90,000

Total current liabilities	3,881,698	4,753,343

Bank loans, less current maturities	208,493	225,837
Notes payable	5,000,000
Note payable - related party, less current maturities	239,604	-
Lease Liability	275,400	275,400

Total liabilities	9,605,195	5,254,580


Commitments and contingencies (Note 11)


Series D Redeemable Convertible Preferred stock, $0.0001 par value, 20,000 shares authorized, 5,000 and 0 shares issued and outstanding at December 31, 2020 and March 31, 2020, respectively	208,333	-


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, 2020 and March 31, 2020	500	500
Series B Convertible Preferred stock, $0.0001 par value, 5,000 shares authorized, 1,920 and 2,250 shares issued and outstanding at December 31, 2020 and March 31, 2020, respectively	-	-
Common stock, $0.0001 par value, 900,000,000 shares authorized, 544,989,181 and 379,742,524 shares issued and outstanding at December 31, 2020 and March 31, 2020, respectively	54,500	37,975
Additional paid in capital	55,437,431	43,533,242
Stock Payable	135,000	-
Accumulated deficit	(49,961,843)	(46,427,396)
Total stockholders' deficit attributable to NaturalShrimp, Inc. shareholders	5,665,588	(2,855,679)

Non-controlling interest in NAS	(86,756)	(82,101)

Total stockholders' deficit	5,578,832	(2,937,780)

Total liabilities mezzanine and stockholders' deficit	$15,392,360	$2,316,800

The accompanying footnotes are in integral part of these condensed consolidated financial statements.

NATURALSHRIMP INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended		For the Nine months Ended
	December 31, 2020	December 31, 2019	December 31, 2020	December 31, 2019

Sales	$-	$-	$-	$-

Operating expenses:
General and administrative	394,654	306,834	1,131,662	944,571
Research and development	-	101,500	79,550	101,500
Facility operations	154,470	41,375	234,113	180,934
Depreciation and amortization	18,173	15,958	37,850	41,521

Total operating expenses	567,297	465,667	1,483,175	1,268,526

Net loss from operations	(567,297)	(465,667)	(1,483,175)	(1,268,526)

Other income (expense):
Interest expense	(42,541)	(40,820)	(102,057)	(160,351)
Amortization of debt discount	-	(38,831)	-	(515,204)
Financing costs	-	(53,528)	(64,452)	(217,746)
Change in fair value of derivative liability	-	58,000	(29,000)	19,000
Change in fair value of warrant liability	-	-	-	-
Loss on warrant settlement	-	-	-	(50,000)
			-

Total other income (expense)	(42,541)	(75,179)	(195,509)	(924,301)

Loss before income taxes	(609,838)	(540,846)	(1,678,684)	(2,192,827)

Provision for income taxes	-	-	-	-

Net loss	(609,838)	(540,846)	(1,678,684)	(2,192,827)

Less net loss attributable to non-controlling interest	(1,074)	-51363	(4,655)	(51,363)

Net loss attributable to NaturalShrimp Inc.	(608,764)	(489,483)	(1,674,029)	(2,141,464)

Amortization of beneficial conversion feature on PS	(443,333)	(380,000)	(1,543,333)	(380,000)
Dividends	(172,291)	-	(317,083)	-

Net loss available for common stockholders	$(1,224,388)	$(869,483)	$(3,534,445)	$(2,521,464)

EARNINGS PER SHARE (Basic and diluted)	$(0.00)	$(0.00)	$(0.01)	$(0.01)

	451,549,772	345,260,292	419,177,832	326,835,226

The accompanying footnotes are in integral part of these condensed consolidated financial statements.

NATURALSHRIMP INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

	Series A Preferred stock		Series B Preferred stock		Common stock		Additional paid	Stock	Accumulated	Non-controlling	Total stockholders'
	Shares	Amount	Shares	Amount	Shares	Amount	in Capital	Payable	deficit	interest	deficit

Balance March 31, 2020	5,000,000	$500	2,250	$-	379,742,524	$37,975	$43,533,243	-	$(46,427,396)	$(82,101)	(2,937,780)

Issuance of common stock upon conversion					37,926,239	3,793	222,644				226,437
Reclass of derivative liability upon conversion or redemption of related convertible debentures							205,000				205,00
Purchase of Series B Preferred shares			1,250	-			1,250,000				1,250,000
Beneficial conversion feature related to the Series B Preferred Shares							293,000		(293,000)		-
Dividends payable on Series B PS									(144,792)		(144,792)
Series B PS Dividends in kind issued			50	-			56,458				56,458
Conversion of Series B PS to common stock			(800)	-	33,569,730	3,357	(3,357)				-
Common stock issued in Vista Warrant settlement					17,500,000	1,750	608,250				610,000
Reclass of warrant liability upon the cancellation of warrants under Vista Warrant settlement							90,000				90,000
Common stock issued to consultant					1,250,000	125	61,125				61,250

Net loss									(477,072)	(1,895)	(478,967)
											-
Balance June 30, 2020	5,000,000	$500	2,750	$-	469,988,493	$47,000	$46,316,363	$-	$(47,342,260)	$(83,996)	$(1,062,394)

Issuance of common stock upon conversion					1,014,001	101	125,635				125,736
Purchase of Series B Preferred shares			1,250	-			1,250,000				1,250,000
Beneficial conversion feature related to the Series B Preferred Shares			65	-			807,000		(807,000)		-
Dividends payable on Series B PS									(83,960)		(83,960)
Series B PS Dividends in kind issued							77,984				77,984
Conversion of Series B PS to common stock			(2,369)	-	58,521,249	5,852	(5,852)				-
Common stock issued to consultant					1,500,000	150	67,350				67,500

Net loss									(588,193)	(1,686)	(589,879)

Balance September 30, 2020	5,000,000	$500	1,696	$-	531,023,743	$53,103	$48,638,480	$-	$(48,821,413)	$(85,682)	$(215,012)

Issuance of common stock upon conversion					795,387	80	198,768				198,848
Purchase of Series B Preferred shares			750	-			750,000				750,000
Beneficial conversion feature related to the Series B Preferred Shares							235,000		(235,000)		-
Dividends payable on Series B Preferred Shares									(88,333)		(88,333)
Conversion of Series B Preferred Shares to common stock			(526)	-	5,670,051	567	(567)				-
Beneficial conversion feature related to the Series D Preferred Shares							5,000,000				5,000,000
Amortization of beneficial conversion feature related to Series D Preferred Shares									(208,333)		(208,333)
Commitment shares issued with Series D Preferred Shares					6,000,000	600	(600)				-
Common stock issued to consultant					1,500,000	150	616,350				616,500
Common stock to be issued as finder's fees related to asset acquisition								135,775			135,775

Net loss									(608,764)	(1,074)	(609,838)

Balance December 31, 2020	5,000,000	$500	1,920	$-	544,989,181	$54,500	$55,437,431	135,775	$(49,961,843)	$(86,756)	$5,579,607

	Series A Preferred stock		Series B Preferred stock		Common stock		Additional paid	Stock	Accumulated	Non-controlling	Total stockholders'
	Shares	Amount	Shares	Amount	Shares	Amount	in Captial	Receivable	deficit	interest	deficit

Balance April 1, 2019	5,000,000	500			301,758,293	30,177	38,335,782		(41,223,445)		(2,856,986)

Issuance of shares under equity financing agreement					11,482,721	1,148	1,498,852				1,500,000
Issuance of shares upon conversion					3,000,000	300	29,700				30,000
Beneficial conversion feature							58,548				58,548
											-
Net loss									(795,270)	-	(795,270)

Balance June 30, 2019	5,000,000	$500	-	$-	316,241,014	$31,625	$39,922,882	-	$(42,018,715)	$-	$(2,063,708)

Purchase of Series B Preferred shares			250	-			250,000				250,000
Issuance of shares upon conversion					14,000,000	1,400	138,600				140,000
Issuance of shares under equity financing agreement					3,275,060	326	273,675			#	274,001

Net loss									(856,711)		(856,711)

Balance September 30, 2019	5,000,000	$500	250	$-	333,516,074	$33,351	$40,585,157		$(42,875,426)		$(2,256,418)


Purchase of Series B Preferred shares			1,250	-			1,250,000				1,250,000
Issuance of shares upon conversion					20,600,461	2,060	211,388				213,448
Reclass of derivative liability upon conversion of related convertible debentures							8,000				8,000
Beneficial conversion feature related to the Series B Preferred Shares							380,000		(380,000)		-
											-
Net loss									(489,483)	(51,363)	(540,846)

Balance December 31, 2019	5,000,000	$500	1,500	$-	354,116,535	$35,411	$42,434,545		$(43,744,909)		$(1,325,816)

The accompanying footnotes are in integral part of these condensed consolidated financial statements.

NATURALSHRIMP INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	December 31, 2020	December 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss attributable to NaturalShrimp Inc.	$(1,674,029)	$(2,141,464)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation expense	37,850	41,521
Amortization of debt discount	-	515,204
Change in fair value of derivative liability	29,000	(19,000)
Default penalty	41,112	27,000
Net loss attributable to non-controlling interest	(4,655)	(51,363)
Shares issued for services	745,250	-

Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(649,326)	(91,643)
Deposits	-	(10,133)
Accounts payable	255,231	56,002
Other accrued expenses	143,793	180,728
Accrued interest	29,959	-
Accrued interest - related parties	32,096	(10,560)

Cash used in operating activities	(1,013,719)	(1,503,708)

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for machinery and equipment	(1,481,558)	(611,790)
Cash paid for asset acquisition with VeroBlue Farms, Inc.	(5,000,000)	-
Cash received from Insurance settlement	917,210	-
Cash paid for construction in process	(1,562,380)	(541,735)

CASH USED IN INVESTING ACTIVITIES	(7,126,728)	(1,153,525)

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on bank loan	(17,810)	(5,989)
Payment of related party notes payable	(48,000)	-
Repayment line of credit short-term	5,413	(110,788)
Proceeds from PPP loan	103,200	-
Proceeds from issuance of common shares under equity agreement	-	1,774,001
Proceeds from sale of Series B Convertible Preferred stock	3,250,000	1,500,000
Proceeds from convertible debentures	-	100,000
Proceeds from sale of Series D PS	5,000,000	(85,500)
Payments on convertible debentures, related party	-	(69,000)
Cash received in relation to Vista warrant settlement	50,000	-

Cash provided by financing activities	8,342,803	3,102,724

NET CHANGE IN CASH	202,357	445,491

CASH AT BEGINNING OF PERIOD	109,491	137,499

CASH AT END OF PERIOD	$311,848	$582,990

INTEREST PAID	$69,961	$170,911

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Shares issued upon conversion	$1,131,824	$383,448
Right of Use asset and Lease liability	$-	$275,400
Dividends in kind issued	$134,446	$-
Shares issued on Vista Warrant settlement	$610,000	$-
Note payable, related party, issued in place of Settlement Agreement	$383,604	$-
Notes payable, issued as consideration in VeroBlue Farms, Inc. asset acquisition	$5,000,000	$-
Shares payable, to be issued as finders fee in VeroBlue Farms, Inc. asset acquisition	$135,775	$-

The accompanying footnotes are in integral part of these condensed consolidated financial statements.

NATURALSHRIMP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2020

(Unaudited)

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

Nature of the Business

NaturalShrimp Incorporated (“NaturalShrimp” or the “Company”), a Nevada corporation, is a biotechnology company and has developed a proprietary technology that allows it to grow Pacific White shrimp (Litopenaeus vannamei, formerly Penaeus vannamei) in an ecologically controlled, high-density, low-cost environment, and in fully contained and independent production facilities. The Company’s system uses technology which allows it to produce a naturally-grown shrimp “crop” weekly, and accomplishes this without the use of antibiotics or toxic chemicals. The Company has developed several proprietary technology assets, including a knowledge base that allows it to produce commercial quantities of shrimp in a closed system with a computer monitoring system that automates, monitors and maintains proper levels of oxygen, salinity and temperature for optimal shrimp production. Its initial production facility is located outside of San Antonio, Texas.

The Company has two wholly-owned subsidiaries including NaturalShrimp Corporation, NaturalShrimp Global, Inc. and 51% owned Natural Aquatic Systems, Inc. (“NAS”).

Going Concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the nine months ended December 31, 2020, the Company had a net loss available for common stockholders of approximately $3,534,000. As of December 31, 2020, the Company had an accumulated deficit of approximately $49,962,000 and a working capital deficit of approximately $2,792,000. These factors raise substantial doubt about the Company’s ability to continue as a going concern, within one year from the issuance date of this filing. The Company’s ability to continue as a going concern is dependent on its ability to raise the required additional capital or debt financing to meet short and long-term operating requirements. During the nine months ended December 31, 2020, the Company received net cash proceeds of $3,250,000 from the sale of 3,250 Series B Preferred shares and $5,000,000 from the sale of 5,000 Series D Preferred shares. Management believes that private placements of equity capital will be needed to fund the Company’s long-term operating requirements. The Company may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. If the Company raises additional funds through the issuance of equity, the percentage ownership of its current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict our operations. The Company continues to pursue external financing alternatives to improve its working capital position. If the Company is unable to obtain the necessary capital, the Company may be unable to develop its facilities and enter in production.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial information as of and for the three and nine months ended December 31, 2020 and 2019 has been prepared in accordance with GAAP in the U.S. for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended March 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on June 26, 2020.

The condensed consolidated balance sheet as of March 31, 2020 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements.

Consolidation

The consolidated financial statements include the accounts of NaturalShrimp Incorporated and its wholly-owned subsidiaries, NaturalShrimp Corporation, NaturalShrimp Global and 51 % owned Natural Aquatic Systems, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.