GRPS 10-K & 10-Q changes, risk factors and insider trading
Trans American Aquaculture, Inc · Agricultural Prod-Livestock & Animal Specialties · CIK 1990446 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Not required for “smaller reporting companies.”
Removed heading “Risks Related to Our Business”
Removed heading “We need to continue as a going concern if our business is to succeed.”
Removed heading “If we do not obtain additional financing or sufficient revenues, our business will fail.”
Removed heading “We are currently in forbearance of secured debt, which may go into default, and, if the lender forecloses, you may lose all of your investment and our business would fail.”
Removed heading “Our liquidity is significantly impacted by current debt, some of which is currently in default. In the event we are unable to increase our liquidity, our business will fail.”
Removed heading “We are currently in a legal dispute with King’s Aqua Farm LLC and, if we were to lose, it would have a negative impact on our business.”
Removed heading “We are 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.”
Removed heading “If we are unable to recruit and retain key management, technical and sales personnel, our business would be negatively affected.”
Removed heading “Our financial results are substantially dependent on shrimp prices, and those prices are subject to large short– and long–term fluctuations due to variations in supply and demand caused by factors such as biological factors, shifts in consumption and license changes.”
Removed heading “We may be unable to effectively hedge our exposure to short– and medium– term fluctuations in shrimp prices.”
Removed heading “Our financial results are substantially dependent on the procurement of broodstock strong genetic lineages.”
Removed heading “Our success is dependent on sales channels and the ability to sell the shrimp.”
Removed heading “We require funding in order to have meaningful harvests.”
Removed heading “The seasonality of our business could negatively impact our operations.”
Removed heading “Our business and operations are affected by the volatility of prices for shrimp.”
Removed heading “Our success is dependent on external factors that affect shrimp mortality.”
Removed heading “[14] https://civileats.com/2023/06/20/cheap-imports-leave-us-shrimpers-struggling-to-compete/#:~:text=The%20U.S.%20Food%20and%20Drug,before%20entering%20the%20U.S.%20market”
Removed heading “Failure to ensure food safety and compliance with food safety standards could result in serious adverse consequences for the Company.”
Removed heading “Government regulation, including food safety and aquaculture regulation, affects our business.”
Removed heading “Trade restrictions resulting in suboptimal distribution of shrimp may be intensified, creating a negative impact on the price of ours shrimp in some countries.”
Removed heading “Our shrimp farming operations may be dependent on shrimp farming licenses.”
Removed heading “Natural disasters may have an adverse effect on our business.”
Removed heading “We are subject to general business risks.”
Removed heading “Our business lacks diversification which increases the risk of failure.”
Removed heading “Risks Related to Our Organization and Our Common Stock”
Removed heading “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.”
Removed heading “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. This means that investors may have difficulty reselling their shares and may cause the price of the shares to decline.”
Removed heading “We do not expect to declare or pay any dividends.”
Removed heading “Volatility of Stock Price.”
Removed heading “Being a public company is expensive and administratively burdensome.”
Removed heading “If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock.”
Removed heading “Public company compliance may make it more difficult to attract and retain officers and directors.”
Removed heading “You could lose all your investment.”
Removed heading “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.”
Removed heading “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.”
Removed heading “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. Failure to develop or maintain a trading market could negatively affect the value of our common stock and make it difficult or impossible for you to sell your shares.”
Removed heading “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.”
Removed heading “Our stock price may be volatile.”
Removed heading “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.”
Largest changes
“Our liquidity is significantly impacted by current debt, some of which is currently in default. In the event we are unable to increase our liquidity, our business will fail.”see in full comparison
“We are currently in forbearance of secured debt, which may go into default, and, if the lender forecloses, you may lose all of your investment and our business would fail.”see in full comparison
“Our shares qualify as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which imposes additional sales practice requirements on broker/dealers who sell our securities in this offering or in the aftermarket. …”see in full comparison
“We need to continue as a going concern if our business is to succeed.”see in full comparison
“Most of the jurisdictions in which we plan to operate may require us to obtain a license for each shrimp farm owned and operated in that jurisdiction. We plan to obtain and hold a license to own and operate each of our shrimp farms where a license is required. In order to maintain the licenses, we will have to operate each of our shrimp farms and, if we pursue acquisitions or construction of new shrimp farms in the future, we will need to obtain additional licenses to operate those farms, where a license is required. …”see in full comparison
“Shrimp farming and processing industries are subject to regional, federal and local governmental regulations relating to the farming, processing, packaging, storage, distribution, advertising, labeling, quality and safety of food products. New laws and regulations, or stricter (or otherwise adverse to that of the Company) interpretations of existing laws or regulations, may materially affect our business or operations in the future. …”see in full comparison
Full comparison: every changed paragraph (108)
Not required for “smaller reporting companies.”
Readers of this Form 10-K should carefully consider
the risks and uncertainties described below.
Our failure to successfully address the risks
and uncertainties described below would have a material adverse effect on our business, financial condition and/or results of operations,
and the trading price of our common stock may decline and investors may lose all or part of their investment. We cannot assure you that
we will successfully address these risks or other unknown risks that may affect our business.
As an enterprise engaged in the commercialization
of new technology, our business is inherently risky. Our common shares are considered speculative during the development of our business
operations. Prospective investors should consider carefully the risk factors set out below.
[13]
https://www.fda.gov/food/guidance-documents-regulatory-information-topic-food-and-dietary-supplements/seafood-guidance-documents-regulatory-information
Risks Related to Our Business
We need to continue as a going concern if our business is to
succeed.
Our independent registered public accounting firm
reports on our audited financial statements for the years ended December 31, 2023 and 2022, indicate that there are a number of factors
that raise substantial risks about our ability to continue as a going concern. Such factors identified in the report are our accumulated
deficit since inception, our failure to attain profitable operations, the excess of liabilities over assets, and our dependence upon obtaining
adequate additional financing to pay our liabilities. If we are not able to continue as a going concern, investors could lose their investments.
If we do not obtain additional financing
or sufficient revenues, our business will fail.
Our current operating funds are less than necessary
to fulfill our operating costs and we will need to obtain additional financing in order to continue our business operations. Although
we are generating revenues, we are not generating net income.
We will require additional financing to execute
our business plan through raising additional capital and/or generating greater revenues.
Obtaining additional financing is subject to a
number of factors, including acceptance of our products and current financial condition as well as general market conditions.
These factors affect the timing, amount, terms
or conditions of additional financing unavailable to us. If additional financing is not arranged, we will face the risk of going out of
business.
The most likely source of future funds presently
available to us is through the additional sales of equity or through convertible debt instruments. Any sales of share capital or conversion
of convertible debt will most likely result in dilution to existing shareholders.
There is no history upon which to base any assumption
as to the likelihood we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues
or achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
We are currently in forbearance of secured
debt, which may go into default, and, if the lender forecloses, you may lose all of your investment and our business would fail.
On June 15, 2017, we issued a Secured Promissory
Note, as addended, to King’s Aqua Farm, LLC (“KAF”) in the principal amount of $5,600,000, which is currently
in default. The note is secured by a deed of trust and security agreement dated June 15, 2017. The deed of trust contains a security agreement
that covers the personal property located at 16455 FM 1847 Rio Hondo, TX 78583. On May 31, 2024, we entered into a Forbearance and Modification
Agreement with KAF. Under the agreement, KAF agreed that it would not exercise or enforce its rights or remedies against the Company to
which it would be entitled under the terms of the Real Estate Lien Note dated June 15, 2017 in the original principal amount of $5,600,000,
and the Deed of Trust executed by us as grantor in favor of Jizhong Wang, as trustee, for the benefit of KAF by occurrence of the failure
by the Company to pay principal and interest installments from May 1, 2022 through May 31, 2024 before August 6, 2024. The forbearance
is conditioned on the obligation of us to pay to KAF $77,374.56, which was paid.
In the event we are unable to make required payments
under the loan, KAF may foreclose and, in the event that KAF forecloses on the collateral secured by the loan, you could lose all of your
investment and our business would fail.
Our liquidity is significantly impacted
by current debt, some of which is currently in default. In the event we are unable to increase our liquidity, our business will fail.
Our liquidity is significantly impacted by the
farm note to King’s Aqua Farm LLC, dated June 15, 2017, in the original amount of $5,600,000 bearing interest at 6.0% per annum,
due in 2039, yielding a monthly payment of $38,687.28. Secured by the farm property, the outstanding principal balances at December 31,
2023 and 2022, are $4,707,902 and $4,750,369, respectively. See the risk factor above titled, “We are currently in forbearance
of secured debt, which may go into default, and, if the lender forecloses, you may lose all of your investment and our business would
fail.”
We are also a party to an SBA Loan through a bank
in the original amount of $150,000 bearing interest at 3.75% per annum, due in 2050, yielding a monthly payment amount of $719.02.
Liquidity is also affected by notes to our shareholders.
At December 31, 2023, shareholders have loaned us approximately $1,667,985 which notes accrue interest at 12.0% per annum and were due
December 31, 2023 but have been extended to July 1, 2024. In the event we are unable to raise funds to pay our existing obligations when
they come due, our business may fail. Also, our existing liquidity may impact our ability to incur additional debt in the future. In the
event we cannot raise capital through equity, we will need to raise capital through debt and, if we are unable to incur additional debt
due to existing liquidity, our business will fail.
We are currently in a legal dispute with
King’s Aqua Farm LLC and, if we were to lose, it would have a negative impact on our business.
As disclosed further in “Legal Proceedings”
herein, in January 2024, King’s Aqua Farm LLC filed a petition against TAA claiming damages of $250,000 to $1,000,000. Although
we will be zealously disputing the petition, if we were to lose or have to settle the legal proceedings being required to pay within the
range of damages claims, it would have a negative impact on our business operations.
We are 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.
We depend heavily on the continued efforts of
Adam Thomas, Chief Executive Officer and director and Fernando Granda, farm manager. Mr. Thomas is essential to our strategic vision and
day-to-day operations and would be difficult to replace. Mr. Granda is a farm manager with 35 years of experience. The departure or loss
of either Mr. Thomas or Mr. Granda, or the inability to hire and retain qualified replacements, could negatively impact our ability to
manage our business.
If we are unable to recruit and retain key
management, technical and sales personnel, our business would be negatively affected.
For our business to be successful, we need to
attract and retain highly qualified technical, management and sales personnel. The failure to recruit additional key personnel when needed
with specific qualifications and on acceptable terms or to retain good relationships with our partners might impede our ability to continue
to commercialize and sell our products. To the extent the demand for skilled personnel exceeds supply, we could experience higher labor,
recruiting and training costs in order to attract and retain such employees. We face competition for qualified personnel from other companies
with significantly more resources available to them and thus may not be able to attract the level of personnel needed for our business
to succeed.
Our financial results are substantially
dependent on shrimp prices, and those prices are subject to large short– and long–term fluctuations due to variations in supply
and demand caused by factors such as biological factors, shifts in consumption and license changes.
Our chief product is shrimp. Accordingly, the
results of our operations will be substantially dependent on shrimp prices. Global and regional prices of shrimp are subject to significant
fluctuations due to supply and demand. Historically, prices have been driven primarily by the global and regional supply and demand for
shrimp. The demand for shrimp is affected by a number of different factors, such as changes in customer preferences, changes in public
attitude towards shrimp, relative pricing of substitute products, such as fish, poultry, pork, turkey, and beef, as well as general economic
conditions, such as levels of employment, inflation, growth in gross domestic product, or GDP, disposable income and consumer confidence.
Demand for shrimp could decrease in the future and put downward pressure on shrimp prices. The variable global supply and demand for shrimp
causes drastic price fluctuations on the regional level.
The supply of shrimp fluctuates strongly due to
variations in factors, such as feeding efficiency, biological factors, including the temperatures of waters and shrimp diseases. Also,
shrimp are generally sold as a fresh commodity with a limited time span available between harvesting and consumption further limiting
producers’ ability to control supply. The consequence of these dynamics is that shrimp farmers are expected to be price takers in
the market from week-to-week. Increases in harvests may therefore result in a significant reduction in shrimp prices.
In addition, an increased utilization of current
production licenses or issuance of new production licenses could result in short– and/or long–term over-production in the
industry, which may result in a significant reduction in shrimp prices. Short-term or long-term decreases in the price of shrimp may have
a material adverse effect on our revenues. We will have limited flexibility to adjust our product mix away from shrimp in order to accommodate
changing pricing circumstances.
We may be unable to effectively hedge our
exposure to short– and medium– term fluctuations in shrimp prices.
We may seek to manage our exposure to short–
and medium-term fluctuations in shrimp prices through sales contracts and shrimp futures as well as through secondary processing activities
(as prices for secondary processed shrimp may be more stable than for primary processed shrimp). However, our contracts and financial
future may not be fulfilled, or may not be available in the future, or may be ineffective in hedging our exposure to shrimp price fluctuations.
In addition, our sales contracts and financial futures may result in price achievement below prices in an environment of rising prices.
Furthermore, our secondary processing activities may not reduce the impact of fluctuating shrimp prices on our operations. Lastly, we
don’t currently engage in secondary processing activities but the practices would be to process the shrimp as value added. Currently
we only process our shrimp as head-on individually quick frozen (IQF) or be-headed (tails) IQF. The value added would be to reprocess
the shrimp by either peeling, cooking, deveining, or bloc packing. All of which we believe would be value added products. Since we don’t
currently engage in secondary processing activities, there is no assurance we would be able to execute at a level to add the expected
value.
An inability to effectively hedge our exposure
to shrimp prices may have a material adverse effect on our financial condition, results of operations or future cash flows.
Our financial results are substantially
dependent on the procurement of broodstock strong genetic lineages.
Our end product success is dependent upon the
procurement of broodstock genetic lineages of shrimp. This is vital for the continued genetic programs necessary to create larvae and
ensure successful shrimp production for human consumption.
Our success is dependent on sales channels
and the ability to sell the shrimp.
We believe that we currently have a strong sales
program with various buyers, but we do not have contracts in place with those buyers. If our sales channels were to cease doing business
with us, our sales programs and profitability would be negatively affected.
We require funding in order to have meaningful
harvests.
We produced and are in contract to sell 140,000
lbs. of shrimp from our 2023 harvest. During 2023, we did not produce a meaningful harvest prior to September 30th. Our projected
harvest for 2024 is greater than 1 million lbs. over two harvests; however, this harvest is contingent upon receipt of sufficient financing.
We did not have sufficient operating capital to produce a full harvest in 2022 and in the first half of 2023. In the event we are unable
to secure sufficient financing, we will not be able to generate meaningful harvests, and in the event we are unable to generate meaningful
harvests, our business will fail.
The seasonality of our business could negatively
impact our operations.
Our business is seasonal. We grow shrimp in outdoor,
open air ponds which are subject to weather conditions. Cold weather can affect shrimp grown rates and mortality. Too much rain can affect
salinity levels which could cause a slowdown in growth. Excessive heat could cause the shrimp to burrow in the bottoms of the ponds for
a period of time, thus not eating. Hurricanes can impact the water levels and reduce salinity. In the event that any of these seasonality
factors occur, it could negatively impact our operations and impede us from having two meaningful harvests per year.
Our business and
operations are affected by the volatility of prices for shrimp.
Recent trends in the
shrimp industry, including that, according to preliminary 2023 data from the National Marine Fisheries Service, shrimp prices have dropped
as much as 44% since 2022.[14] Our business, prospects, revenues,
profitability, and future growth are highly dependent upon the prices of and demand for shrimp. Our ability to borrow and to obtain additional
capital on attractive terms is also substantially dependent upon shrimp prices. These prices have been and are likely to continue to be
extremely volatile for seasonal, cyclical, and other reasons. Any substantial or extended decline in the price of shrimp will have a material
adverse effect on our financing capacity and our prospects for commencing and sustaining any economic commercial production. In addition,
increased availability of imported shrimp can affect our business by lowering commodity prices. This could reduce the value of inventories,
held both by us and by our customers, and cause many of our customers to reduce their orders for new products until they can dispose of
their higher-cost inventories.
Our success is
dependent on external factors that affect shrimp mortality.
We must ensure that our shrimp are safe and are
not contaminated by a various diseases (both known and unknown). This includes ensuring the shrimp are not contaminated by: new or previously
unknown diseases; known diseases that appear for the first time in new shrimp species (meaning the disease has expanded to a new host
range); known diseases that appear for the first time in a new location (meaning the disease has expanded to a new geographic range);
and known diseases with a new presentation or higher virulence due to changes in the causative agent. We must also ensure that our shrimp
are not contaminated by infections that commonly affect shrimp, including: white spot, yellow head, early mortality syndrome (EMS), taura
syndrome, infectious hypodermal and hematopoietic necrosis, and infectious myonecrosis. Each of these diseases and infections can contaminate
the shrimp and result in a loss of all distribution supply and related revenue.
We rely on steady winds in the valley to help
with oxygen levels. If we increase the stocking densities of our shrimp, we will need to add artificial aeration (supplemental oxygen)
to ensure that the shrimp receives consistent oxygen levels. Failure to maintain adequate oxygen levels will result in shrimp that is
not safe to distribute.
[14] https://civileats.com/2023/06/20/cheap-imports-leave-us-shrimpers-struggling-to-compete/#:~:text=The%20U.S.%20Food%20and%20Drug,before%20entering%20the%20U.S.%20market
Our shrimp product is subject to external factors,
like weather. Low temperatures affect the mortality rates of the shrimp. While more applicable to the end of the harvest season, occasional
cold fronts will increase the mortality rates in late September and early October. Natural disasters, including hurricanes and floods,
also increase the mortality rates of shrimp.
Failure to ensure food safety and compliance
with food safety standards could result in serious adverse consequences for the Company.
As our end products are mainly for human consumption,
food safety issues (both actual and perceived) may have a negative impact on the reputation of, and the demand for, our products. In addition
to the need to comply with relevant food safety regulations, it is of critical importance that our products are safe, and perceived as
safe and healthy in all relevant markets.
Our products may be subject to contamination by
food-borne pathogens, such as listeria monocytogenes, clostridia, salmonella and E. coli, or other contaminants. These pathogens are substances
are found in the environment; therefore, there is a risk that one or more of these organisms and pathogens can be introduced into our
products as a result of improper handling, poor processing hygiene or cross-contamination by us, the ultimate consumer or any intermediary.
We will have little, if any, control of handling procedures once we ship our products for distribution.
Furthermore, we may not be able to prevent contamination
of our shrimp by pollutants, such as polychlorinated biphenyls, or PCBs, dioxins or heavy metals. Such contamination is primarily the
result of environmental contamination of shrimp feed raw materials, such as shrimp meal or raw materials from crops, which could result
in a corresponding contamination of our shrimp feed and our shrimp. Residues of environmental pollutants present in our shrimp feed may
pass undetected in our products and may reach consumers due to failure in surveillance and control systems.
An inadvertent shipment of contaminated products
may be a violation of law and may lead to product liability claims, product recalls (which may not entirely mitigate the risk of product
liability claims), increased scrutiny and penalties, including injunctive relief and plant closings, by regulatory agencies, and adverse
publicity.
Increased quality demands from authorities in
the future relating to food safety may have a material adverse effect on our business, financial condition, results of operations or cash
flow. Legislation and guidelines with tougher requirements are expected and may imply higher costs for the food industry. In particular,
the ability to trace products through all stages of development, certification and documentation is becoming increasingly required under
food safety regulations. Further, limitations on additives and use of medical products in the shrimp industry may be imposed, which could
result in higher costs for us.
The food industry in general experiences high
levels of customer awareness with respect to food safety and product quality, information and traceability. If we fail to meet new and
exacting customer requirements, we could see reduced demand for our products.
Government regulation, including food safety
and aquaculture regulation, affects our business.
Shrimp farming and processing industries are subject
to regional, federal and local governmental regulations relating to the farming, processing, packaging, storage, distribution, advertising,
labeling, quality and safety of food products. New laws and regulations, or stricter (or otherwise adverse to that of the Company) interpretations
of existing laws or regulations, may materially affect our business or operations in the future. Our operations are also subject to extensive
and increasingly stringent regulations administered by environmental agencies in the jurisdictions in which we plan to operate. Failure
to comply with these laws, regulations or interpretations could have serious consequences, including criminal, civil and administrative
penalties, loss of production, injunctions, product recalls and negative publicity. Some environmental Non-Government Organizations, or
NGOs, have advocated for shrimp farming to be restricted to farming in a contained environment, which would substantially increase our
costs.
Relevant authorities may introduce further regulations
for the operations of aquaculture facilities, such as enhanced standards of production facilities, capacity requirements, shrimp feed
quotas, shrimp density, site allocation conditions, water allocation or other parameters for production. Furthermore, authorities may
impose stricter environmental requirements upon shrimp farming, e.g., restrictions or a ban on discharges of waste substances from the
production facilities, stricter requirements for seabed restoration, stricter requirements to prevent shrimp escapes and new requirements
regarding animal welfare. Investments necessary to meet new regulatory requirements and penalties for failure to comply with such requirements
could be significant. Likewise, an absence of or ineffective government regulation may lead to unsustainable farming practices at an industry-wide
level. The industry has been unable to cooperate to create sustainable practices in the absence of government regulation. We may rely
on such regulation to help create and enforce practices that ensures the long-term sustainability of the industry. Ineffective regulation
can hinder the industry's ability to implement sustainable and profitable practices. Accordingly changes in regulation or ineffective
government regulation may have a material adverse effect on the shrimp farming industry as a whole, which could harm our business, financial
condition, results of operations or cash flow.
Management's Discussion & Analysis (MD&A)
Largest changes
“On December 2, 2024, Kings Aqua Farm LLC filed a Deed in Lieu (“DIL”) of Foreclosure due to non-payment by Trans American Aquaculture. The land was conveyed back to Kings Aqua Farm because of the DIL filing. Over the next two weeks, various threats were made by Kings Aqua Farm on the assets of TAA, which are paramount to the survival and future of the company. To protect those key assets and any future business, TAA elected to file a voluntary Chapter 11 Bankruptcy.”see in full comparison
Liquidity is also affected by notes to our shareholders. At December 31,see in full comparison2023,2024, shareholders have loaned the Company approximately$1,667,985$1,646,636 which notes accrue interest at ranging from 12.0% to 18% per annum and were dueDecember 31, 2023. The Company extended this due date toJuly 1,2024,2024. No additional extensions have been completed as of yet, andplanstheto extend it again to December 31, 2024. The shareholder noteholdersnote areexpectedin default, however, toagreedate,tonothisoneextension.has called them due.
“Our liquidity is significantly impacted by the farm note to King’s Aqua Farm LLC, dated June 15, 2017, in the original amount of $5,600,000 bearing interest at 6.0% per annum, due in 2039, yielding a monthly payment of $38,687. Secured by the farm property, the outstanding principal balances at December 31, 2023 and December 31, 2022, are $4,707,902 and $4,750,369, respectively. On May 31, 2024, the Company entered into a Forbearance and Modification Agreement with the lender. …”see in full comparison
“At December 31, 2023, the broodstock shrimp for the 2024 harvest had been identified and segregated from consumable shrimp in outdoor ponds to indoor tanks. Collectively, the pre-harvest biomass in the ponds at that date, was estimated to be 128,000 pounds at an average size of 17 grams, which would have yielded a per pound price of $1.25 per pound. The harvest began in early November, whereupon the shrimp had grown and their price per pound had increased commensurately. …”see in full comparison
For the year ended December 31,see in full comparison2023,2024, cost of goodsgoodssold were$661,591$321,615 compared to$287,132$661,591 for the same period in2022,2023,anaincreasedecrease of$374,359$339,976 or130%.51%. Thisincreasedecrease was primarily a result of streamlining ofan increase inshrimp production andlowerfocusedthan expected yields in harvested shrimp which necessitated a write-down of inventory by $579,916 to net its realizable value. For the year ended December 31, 2021, cost of goods sold was $973,418, a difference of $686,286 due to the previously mentioned focus on broodstock development and no significantsmaller harvestbeing produced, which in turn lowered our overall costs significantly.totals.
“General and administrative expenses for year ended December 31, 2023 increased by $716,159, or482%, to $864,768 from $148,609 for the year ended December 31, 2022. The increase is due primarily to an increase in legal and professional fees of $208,495 due to legal and accounting fees associated with our corporate merger and filing on Form S-1 with the SEC, an increase in accrued salary and payroll taxes for our CEO of $168,971, and non-cash compensation to a consultant of $100,000. …”see in full comparison
Full comparison: every changed paragraph (29)
This Management’s Discussion and Analysis
of Financial Condition and Results of Operations contain certain forward-looking statements. Historical results may not indicate future
performance. Our forward-looking statements reflect our current views about future events; are based on assumptions and are subject to
known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements.
Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited
to, those discussed in the “Risk Factors” section. We undertake no obligation to publicly update or revise any forward-looking
statements, including any changes that might result from any
facts, events, or circumstances after the date hereof that may bear upon
forward-looking statements. Furthermore, we cannot guarantee
future results, events, levels of activity, performance, or achievements.
Shrimp farming is a seasonal business. On a calendar
year basis, we typically use the broodstock to breed our larvae shrimp during the first quarter so that by spring the shrimp are held
in large post-larvae tanks for development. Later, in early summer, the shrimp are transferred to ponds where they complete the grow out
process over the next five to sixnine months. This can vary if we have more than one cycle of shrimp. Grow out may begin in the second in
the second quarter, with a second cycle grow out beginning in early summer. The first harvest cycle can occur in early fall with the second
harvest cycle occurring in November or December. During 2023, we had one cycle and harvest occurred in early November 2023. During 2024,
we have not stocked, nor have we had a harvest; however, we are in process of larval development for broodstock sales, genetics families
and line continuation.
The inventory aton December 31,
2023 2024 consists of consumable shrimp held for sale as well as live
broodstock animals. Included in this amount is the March 2023 broodstock
cost basis reclassified to shrimp held for sale as thoseare costs are applicable expenditures and charges directly and indirectly incurred
in bringing shrimp inventory to its
existing condition and location as noted in FASB ASC 330-10-30. Although, these animals eventually
came to end of life, their costs are considered part of the necessary costs to birthing and raising shrimp held for sale.
At December 31, 2024, the broodstock shrimp for the 2024 harvest had been identified and segregated from consumable shrimp in outdoor ponds to indoor tanks. The table below summarizes inventory at December 31, 2024 and 2023.
At December 31, 2023, the broodstock
shrimp for the 2024 harvest had been identified and segregated from consumable shrimp in outdoor ponds to indoor tanks. Collectively,
the pre-harvest biomass in the ponds at that date, was estimated to be 128,000 pounds at an average size of 17 grams, which would have
yielded a per pound price of $1.25 per pound. The harvest began in early November, whereupon the shrimp had grown and their price per
pound had increased commensurately. By harvest time, the biomass estimated to be available for sale was 140,000 pounds with a net realizable
value (based on subsequent actual sales) of $2.75 per pound. This resulted in a write-down of $579,916 to net realizable value for the
year ended December 31, 2023.The table below summarizes inventory at December 31, 2023.
Not shown separately in the above
schedule is approximately 17,000 broodstock shrimp selected for their enhanced genetics and segregated from the larger biomass at the
time of harvest followingAt December 31, 2023.2024, Approximatelyapproximately 1,0004,415 animals
of this broodstock will be sold to foreign markets for between
$75 and $80 per animal, while the balance will be used to populate our next harvest in 2024.2025. The initial cost of the 17,000broodstock broodstock
will bewas reclassified to broodstock held for sale and broodstock held for restocking on the date of segregation
on a pro rata basis of
cost per pound of the total biomass of shrimp held for sale. Subsequent costs will be allocated in accordance with
ASC 330-10-30.
Founded in 2017, we are a leading aquaculture company
company that provides premium quality, farm-raised pacific white shrimp, 100% free of antibiotics and hormones, to the U.S. domestic seafood market.
market. We believe we are a leading aquaculture company due to Best Aquaculture Practices (“BAP”) guidelines,[15]guidelines,14
considering the rarity of the standards in the U.S. Although we are not currently in full compliance with BAP guidelines, we are working
towards full compliance. At the moment, we adhere to BAP guidelines as part of our operating and production model. Grown at our 1,880-acre
farm located in Rio Hondo, Texas, on the largest scale aquaculture farm in the U.S., our shrimp are meticulously raised to exceed in line
with industry best practices according to BAP guidelines[16]guidelines15
using only authentic, sustainable practices. Within our controlled facility, each harvest is responsibly raised and cultivated onsite
with minimal ecological footprint, promising our customers a superior product developed from the highest standard of care.
14 https://www.bapcertification.org/Downloadables/pdf/BAP%20-%20BAP%20Farm%20Standard%20-%20Issue%203.1%20-%2007-February-2023.pdf 15 https://www.bapcertification.org/Downloadables/pdf/BAP%20-%20BAP%20Farm%20Standard%20-%20Issue%203.1%20-%2007-February-2023.pdf Recent trends in the shrimp industry, including that,
that, according to preliminary 2023 data from the National Marine Fisheries Service, shrimp prices have dropped as much as 44% since 2022.[17]2022.16
Our business, prospects, revenues, profitability, and future growth are highly dependent upon the prices of and demand for shrimp. Our
ability to borrow and to obtain additional capital on attractive terms is also substantially dependent upon shrimp prices. These prices
have been and are likely to continue to be extremely volatile for seasonal, cyclical, and other reasons. Any substantial or extended decline
in the price of shrimp will have a material adverse effect on our financing capacity and our prospects for commencing and sustaining any
economic commercial production. In addition, increased availability of imported shrimp can affect our business by lowering commodity prices.
This could reduce the value of inventories, held both by us and by our customers, and cause many of our customers to reduce their orders
for new products until they can dispose of their higher-cost inventories.
As shown in the accompanying financial statements,
during the year ended December 31, 2024, we reported a net loss of $2,808,894. As of December 31, 2024, our current liabilities exceeded
its current assets by $3,351,602. As of December 31, 2024, we had $0 of cash. As shown in the accompanying financial statements, during
the year ended December 31, 2023, we reported a net loss of $1,894,993. As of December 31, 2023, our current liabilities exceeded its
its current assets by $3,478,423. As of December 31, 2023, we had $6,600 of cash. During the year ended December 31, 2022, we reported
a net loss of $922,817. As of December 31, 2022, our current liabilities exceeded its current assets by $ 2,490,346. As of December 31,
2022, we had $0 cash.
[15]
https://www.bapcertification.org/Downloadables/pdf/BAP%20-%20BAP%20Farm%20Standard%20-%20Issue%203.1%20-%2007-February-2023.pdf [16]
https://www.bapcertification.org/Downloadables/pdf/BAP%20-%20BAP%20Farm%20Standard%20-%20Issue%203.1%20-%2007-February-2023.pdf [17]
https://civileats.com/2023/06/20/cheap-imports-leave-us-shrimpers-struggling-to-compete/#:~:text=The%20U.S.%20Food%20and%20Drug,before%20entering%20the%20U.S.%20market We will require additional funding to finance the
the growth of our operations and achieve our strategic objectives. These factors, as relative to capital raising activities, create doubt
as to our ability to continue as a going concern. We are seeking to raise additional capital and are targeting strategic partners to accelerate
the sales and marketing of our products and begin generating revenues. Our ability to continue as a going concern is dependent upon the
success of future capital offerings or alternative financing arrangements, expansion of our operations and generating sales. The accompanying
financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. Management
is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations; however, management
cannot make any assurances that such financing will be secured.
For the year ended December 31, 2023,2024, total revenues
were $101,574$331,645 compared to $49,001$101,574 for the same period in 2022,2023, an increase of $52,573$213,571 or 107%.227%. This increase primarily consisted of
increases increases
in the production of shrimp for consumption sales. In 2022,2024, the Company focused efforts primarily on the development of genetic
lines lines
and did not produce a meaningful harvest. What shrimp revenue we did have was a result of inventory and late season sales.inventory. In future periods,
our focus
will be on developing these genetic lines, selling broodstock and producing shrimp for consumption and selling broodstock. This resulted in significantly
reduced revenues from 2021, when revenue was $316,112, representing a decrease of $267,111. This was due toat the previouslyappropriate mentioned focus
on broodstock development and no significant harvest being produced.time.
For the year ended December 31, 2023,2024, cost of goods
goods sold were $661,591$321,615 compared to $287,132$661,591 for the same period in 2022,2023, ana increasedecrease of $374,359$339,976 or 130%.51%. This increasedecrease was primarily
a result
of streamlining of an increase in shrimp production and lowerfocused than expected yields in harvested shrimp which necessitated a write-down of inventory
by $579,916 to net its realizable value. For the year ended December 31, 2021, cost of goods sold was $973,418, a difference of $686,286
due to the previously mentioned focus on broodstock development and no significantsmaller harvest being produced, which in turn lowered our overall
costs significantly.totals.
The gross lossprofit for the year ended December 31, 2024
2023 was $560,018$10,030 for an operating loss margin of 551%3% compared to a gross loss of $238,131$560,018 for the same period in 2022,2023, producing an operating
operating loss margin of 208%,-551%, due to significantly reduced shrimp production. For 2021, the gross loss was $657,306, producing a higher
operating loss margin of 208% due to the factors described above.
16 https://civileats.com/2023/06/20/cheap-imports-leave-us-shrimpers-struggling-to-compete/#:~:text=The%20U.S.%20Food%20and%20Drug, before%20entering%20the%20U.S.%20market
General and administrative expenses for year ended December 31, 2024 decreased by $18,534, or 2%, to $846,234 from $864,768 for the year ended December 31, 2023. The decrease is due primarily to a reduction non-cash compensation for consultants with a slight increase in legal and professional fees to $218,194 due to legal and accounting fees.
General and administrative expenses for year ended
December 31, 2023 increased by $716,159, or482%, to $864,768 from $148,609 for the year ended December 31, 2022. The increase is due primarily
to an increase in legal and professional fees of $208,495 due to legal and accounting fees associated with our corporate merger and filing
on Form S-1 with the SEC, an increase in accrued salary and payroll taxes for our CEO of $168,971, and non-cash compensation to a consultant
of $100,000. For the year ended December 31, 2021, general and administrative expenses were $232,425, or $83,816 more than in 2022. This
was due to numerous differences, including auto and travel expense totaling $42,522, insurance expense totaling $21,214, repair and maintenance
expense totaling $17,758, rent and depreciation expense totaling $31,538, offset by higher legal and professional fees of $32,891 and
payroll tax expense of $42,336.
For the year ended December 31, 2023,2024, we had interest
interest expenses of $490,053$477,964 compared to interest expenses of $485,446$490,053 for the same period in 2022,2023, ana increasedecrease in interest expense
of $4,607. $12,089.
This increasedecrease in interest expense was due primarily to higher interest charges on the farm note andlower financing charges on a
credit card account. For the year ended December 31, 2021, we had other expense of $512, 097, yielding a nominal difference of $2,956,
due to higher interest on the shareholder notes of $82,253 and the other interest of $23,452, offset by lower interest expense on the
farm note of $41,272. In addition, the company benefitted from a loan forgiveness of $32,447 under the Small Business Administration’s
Paycheck Protection Program.
As a result of the above, we reported a net loss of
$2,808,894 for the year ended December 31, 2024 compared to a net loss of $1,894,993 for the year ended December 31, 20232023. comparedThe tomain areason
for netthe increased loss ofis $922,817the expense recognition for the yeardifference ended December 31, 2022, and a net
loss of $1,401,828 forin the yearasset endedvalue Decemberto 31,the 2021.debt owed on the property
As of December 31, 2023,2024, we had a cash balance of
of $6,600,$0, compared to an overdrawncash balance of $288$6,600 as of December 31, 2022.2023. We currently do not have sufficient cash to fund our operations
for the
next 12 months and we will require working capital to complete development and production, testing and marketing of our products
and to
pay for ongoing operating expenses. We anticipate adding management positions for corporate development and the corresponding operations
of the Company, but this will not occur prior to obtaining additional capital. Currently, competitively priced loans from banks or other
lending sources for lines of credit or similar short-term borrowings are not available to us. We have been able to raise working capital
to fund operations through the issuances of convertible preferred stock to GHS, factoring our receivables, and borrowing funds from employees
of the company.Company. As of December 31, 2023,2024, our current liabilities exceeded our current assets by $3,478,423$3,351,602 as compared to 20222023 when current
liabilities exceeded current assts by $2,490,347,$3,478,423, ana increasedecrease of $988,076.$126,821.
On December 2, 2024, Kings Aqua Farm LLC filed a Deed in Lieu (“DIL”) of Foreclosure due to non-payment by Trans American Aquaculture. The land was conveyed back to Kings Aqua Farm because of the DIL filing. Over the next two weeks, various threats were made by Kings Aqua Farm on the assets of TAA, which are paramount to the survival and future of the company. To protect those key assets and any future business, TAA elected to file a voluntary Chapter 11 Bankruptcy.
Our liquidity is significantly impacted by the
farm note to King’s Aqua Farm LLC, dated June 15, 2017, in the original amount of $5,600,000 bearing interest at 6.0% per annum,
due in 2039, yielding a monthly payment of $38,687. Secured by the farm property, the outstanding principal balances at December 31, 2023
and December 31, 2022, are $4,707,902 and $4,750,369, respectively. On May 31, 2024, the Company entered into a Forbearance and Modification
Agreement with the lender. Under the agreement, the lender agreed that it would not exercise or enforce its rights or remedies against
the Company to which it would be entitled under the terms of the Real Estate Lien Note dated June 15, 2017 in the original principal amount
of $5,600,000, and the Deed of Trust executed by the Company as grantor in favor of Jizhong Wang, as trustee, for the benefit of the lender
by occurrence of the failure by the Company to pay principal and interest installments from May 1, 2022 through May 31, 2024 before August
6, 2024. The forbearance was conditioned on the obligation of the Company to pay the lender $77,375, which was paid.
At December 31, 2022, the Company was indebted
to King’s Aqua Farm LLC on a note secured by an adjacent piece of property to the farm. The balance of this note, $6,152, was paid
off during the year ended December 31, 2023.
At December 31, 2022, the Company was indebted
to an auto financing company on a note with a balance of $1,410. This note was paid off during the year ended December 31, 2023.
Liquidity is also affected by notes to our shareholders.
At December 31, 2023,2024, shareholders have loaned the Company approximately $1,667,985$1,646,636 which notes accrue interest at ranging from 12.0%
to 18% per annum and were due December 31, 2023. The Company extended this due date to July 1, 2024,2024. No additional extensions have been completed as of yet, and plansthe to extend it again to December
31, 2024. The shareholder noteholdersnote are expectedin default, however,
to agreedate, tono thisone extension.has called them due.
During the year ended December 31, 2024, net cash used in operating activities was $2,996,776, an increase usage of $1,888,864 resulting largely from $2,808,894 in net operating loss and a decrease in accrued interest expense of 379,956 in connection with the Deed in Lieu of Foreclosure and resulting settlement of the debt and recognition of the expense.
DuringBy comparison, during the year ended December 31,
2023, net cash
used in operating activities was $1,107,912, an increase usage of $602,009 resulting largely from $1,894,993 in net operating
loss and
an increase of $85,833 in inventory due to a build in preparation for our annual harvest, offset by an increases in accounts
payable and
accrued expenses of $387,549 in connection with our harvest preparation and accrued interest expense of $342,395 due mainly
to falling
into arrears on the note payable covering our farm property and increased interest expense on notes payable to shareholders,
and an increase
of $100,000 in common stock issued for consulting services.
By comparison, during the year ended December
31, 2022, net cash used in operating activities was $505,903 resulting mainly from a net operating loss of $922,817 and $112,924 of increased
inventory, offset by increases in accrued interest of $383.267.. Net cash used in operating activities during the year ended December
31, 2021, consisted mainly of a net operating loss of $1,401,828 and increased inventory of $48,636, offset by increases in accounts payable
and accrued interest of $70,060.
During the year ended December 31, 2023,2024, we had $6,717,292
$15,132 net cash used in investing activities. During the year ended December 31, 2022,2023, we had no$15,132 net cash used in investing activities.
The difference was in removal of the farm note and land improvements related to the Deed in Lieu of Foreclosure.
During the year ended December 31, 2024, net cash
provided by financing activities was $4,774,987 which was mainly comprised of which was mainly comprised of debt extinguishment of the
farm note due to the deed in Lieu of Foreclosure. During the year ended December 31, 2023, net cash
provided by financing activities was
$1,129,644 which was mainly comprised of purchases of Series D Preferred Stock of $1,028,000 by GHS,
additional borrowings from our shareholders
of $255,227, offset by $103,266 of payments to shareholder noteholders.. During the year ended
December 31, 2022, net cash provided by financing activities was $509,779 which was mainly comprised of member contributions of $510,136
and net shareholder loan proceeds of $112,975 received after the corporate merger. In addition, we paid $97,151 to service debt of notes
payable.noteholders.
What changed in the latest 10-Q
Risk Factors
We could not find a separate Risk Factors item in the latest 10-Q. Some companies leave it out of quarterly reports; see the annual 10-K risk factors and the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
New heading “Results of Operations for the Three-Months Ended September 30, 2025 and 2024”
New heading “Results of Operations for the Nine-Months Ended September 30, 2025 and 2024”
Largest changes
“Results of Operations for the Three-Months Ended September 30, 2025 and 2024”see in full comparison
“Results of Operations for the Nine-Months Ended September 30, 2025 and 2024”see in full comparison
During thesee in full comparisonsix-monthsnine-months endedJuneSeptember 30, 2025, netnetcash provided by financing activities was$699,696$743,696 which was mainly comprised of proceeds from the purchase of Preferred Series D SharesSharesof$73,000$117 and reclassification of related party notes payable. During thesix-monthsnine-months endedJuneSeptember 30, 2024, net cash provided by financing activities was$395,397$428,102 which was mainly comprised of proceeds from notes payable of$443,000,$506,000, offset by payments due to shareholdersshareholdersof$70,850,$74,375, and notes payable of$32,505.$74,243. During the nine-months ended September 30, 2023, net cash provided by financing activities was $908,667 which was mainly comprised of proceeds from $958,000 from issued Series D Preferred Stock to GHS, offset by $116,488 in payments on related party notes and $56,258 in notes payable as well as proceeds from shareholder notes of $123,700.
During thesee in full comparisonsix-monthsnine-months endedJuneSeptember 30, 2025, netnetcash used in operating activities was$716,809,$-771,113, due mainly to a net loss of$317,745,$-489,387, an increase in accounts payable of$989,069$835,244 mostlymostlyof payroll liabilities, professional services and reclassification of notes payment from related parties. By comparison, during thesix-monthsnine-months endedJuneSeptember 30, 2024, net cash used in operating activities was$389,780,$442,196 due mainly to a net loss of$568,332,$1,143,656,an decreaseincrease in accountsreceivableof $30,526 due sales of consumable shrimp, offset by a decrease of $122,838 in inventory levels, combined decrease in accountspayable and accrued expense of$44,793$613,243 due to increased operations, anda $38,468increase in accrued interest expense due mainly to fallingfallinginto arrears on the note payable covering our farm property and increased interest expense on notes payable to shareholders.
During the three-months endedsee in full comparisonJuneSeptember 30, 2025, netnetcash used in operating activities was$691,719,$-54,305, due mainly to a net loss of$204,038,$171,642, an increase in accounts payable of$1,073,204$57,086 mostly ofanpayroll liabilities,professional services and reclassification of notes payment from related parties,and an increase of$607,881$88,246 in accrued interest. By comparison, during the three-months endedJuneSeptember 30, 2024, net cash used in operating activities was $389,780, due mainly to a net loss of $568,332, payroll liabilities, offset by an increase of $216,203 in accrued interest.
During the three-months endedsee in full comparisonJuneSeptember 30, 2025, net cash provided by financing activities was$674,606$44,000 which was mainly comprised of proceeds from the purchase of Preferred Series D SharesSharesof$40,000 and reclassification of related party notes payable.$44,000. During the three-months endedJuneSeptember 30, 2024, net cash provided by financing activities was$338,672$395,397 which was mainly comprised of proceeds from notes payable of$350,000,$443,000, offset by payments due related parties of$103,355.$70,850.
Full comparison: every changed paragraph (31)
The inventory at JuneSeptember 30, 2025 consists of
live live
broodstock animals. Included in this amount are costs and charges directly and indirectly incurred in bringing shrimp inventory to
its its
existing condition and location as noted in FASB ASC 330-10-30.
At JuneSeptember 30, 2025, the broodstock shrimp for
the the
2025 harvest had been identified and segregated from consumable shrimp in outdoor ponds to indoor tanks. The table below summarizes
inventory inventory
at JuneSeptember 30, 2025 and 2024.
At JuneSeptember 30, 2025, approximately 4,415 animals
of broodstock will be used to populate our nextpost harvestlarval development in 2026. The cost of the broodstock was reclassified to broodstock
held for restocking
on a pro rata basis of cost per pound of the total biomass of shrimp held for sale. Subsequent costs will be allocated
in accordance
with ASC 330-10-30.
As shown in the accompanying financial statements,
during the three-months ended JuneSeptember 30, 2025, we reported a net loss of $204,038.$171,642. As of JuneSeptember 30, 2025, our current liabilities
exceeded exceeded
its current assets by $4,350,706.$4,379,486. As of JuneSeptember 30, 2025, we had $198$509 in cash. During the year ended December 31, 2024, we
reported a net loss
of $2,808,894. As of December 31, 2024, our current liabilities exceeded our current assets by $3,351,602. As of December
31, 2024, we
had $0 cash.
_______________
1
https://www.bapcertification.org/Downloadables/pdf/BAP%20-%20BAP%20Farm%20Standard%20-%20Issue%203.1%20-%2007-February-2023.pdf 2
https://www.bapcertification.org/Downloadables/pdf/BAP%20-%20BAP%20Farm%20Standard%20-%20Issue%203.1%20-%2007-February-2023.pdf 3 https://civileats.com/2023/06/20/cheap-imports-leave-us-shrimpers-struggling-to-compete/#:~:text=The%20U.S.%20Food%20and%20Drug,before%20entering%20the%20U.S.%20marketThe%20U.S.%20Food%20and%20Drug,before%20entering %20the%20U.S.%20market We will require additional funding to finance
the growth of our operations and achieve our strategic objectives. These factors, as relative to capital raising activities, create doubt
as to our ability to continue as a going concern. We are seeking to raise additional capital and are targeting strategic partners to accelerate
accelerate the sales and marketing of our products and begin generating revenues. Our ability to continue as a going concern is dependent
upon the
success of future capital offerings or alternative financing arrangements, expansion of our operations and generating sales.
The accompanying
financial statements do not include any adjustments that might be necessary should we be unable to continue as a going
concern. Management
is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations;
however, management
cannot make any assurances that such financing will be secured.
Results of Operations for the Three-Months Ended September 30, 2025 and 2024
Revenues
Results of Operations for the Three-Months Ended
June 30, 2025 and 2024 Revenues For the three-months ended JuneSeptember 30, 2025,
total total
revenues were $0 compared to $5,019$0 for the same period in 2024, a decrease of $5,019$0 or 100%.0%. This decrease was related to the company not
not having shrimp for sale and only maintaining the broodstock for future genetic development and stocking.
For the three-months ended JuneSeptember 30, 2025,
cost cost
of goods sold was $0 compared to $1,771$196,552 for the same period in 2024, a decrease of $1,771$196,552 or 100%. This was the result of not
producing producing
and harvesting or selling shrimp during the current three months ended JuneSeptember 30, 2025.
The gross profit for the three-months ended JuneSeptember
30, 2025 was $0 for an operating profit of $0 compared to a gross profit margin of $3,248$-196,552 for the same period in 2024.
General and administrative expenses for three-months
ended JuneSeptember 30, 2025 decreased by $18,703,$129,854, or 15%,61%, to $108,290$83,396 from $126,993$213,250 for the three-months ended JuneSeptember 30, 2024. This decrease
in in
expenses resulted from lower legal and professional fees and accrued payroll wages.
For the three-months ended JuneSeptember 30, 2025,
we had
interest expenses of $88,246 compared to interest expenses of $141,238$175,836 for the same period in 2024, a decrease in interest expense
of of
$52,992.$87,590. This decrease in interest expense was due primarily to reduction in interest related to the farm note.
As a result of the above, we reported a net loss
of $204,038$171,642 for the three-months ended JuneSeptember 30, 2025 compared to a net loss of $330,311$575,325 for the three-months ended JuneSeptember 30,
2024.
Results of Operations for the Nine-Months Ended September 30, 2025 and 2024
Revenues
Results of Operations for the Six-Months Ended
June 30, 2025 and 2024 Revenues For the six-monthsnine-months ended JuneSeptember 30, 2025,
total total
revenues were $0 compared to $315,145 for the same period in 2024, a decrease of $315,145 or 100%. This decrease was related to
the company
not having shrimp for sale and only maintaining the broodstock for future genetic development and stocking.
For the six-monthsnine-months ended JuneSeptember 30, 2025,
cost cost
of goods sold was $0 compared to $223,299$419,851 for the same period in 2024, a decrease of $223,299$419,851 or 100%. This was the result of not
producing producing
and harvesting or selling shrimp during the current three months ended JuneSeptember 30, 2025.
The gross profit for the six-monthsnine-months ended JuneSeptember
30, 2025 was $0 for an operating profit of 0% compared to a gross profit margin of $91,846$-104,706 for the same period in 2024.
General and administrative expenses for six-monthsnine-months
ended JuneSeptember 30, 2025 decreased by $138,422,$268,276, or 43%,50%, to $182,961$266,357 from $321,383$534,633 for the six-monthsnine-months ended JuneSeptember 30, 2024. This reduction
in in
expenses resulted from lower legal and professional fees and payroll wages.
For the six-monthsnine-months ended JuneSeptember 30, 2025,
we had
interest expenses of $127,282$215,528 compared to interest expenses of $273,520$449,356 for the same period in 2024, a decrease in interest expense
of of
$146,238.$233,828. This decrease in interest expense was due primarily to reduction in interest related to the farm note.
As a result of the above, we reported a net loss
of $317,745$489,387 for the six-monthsnine-months ended JuneSeptember 30, 2025 compared to a net loss of $568,332$1,143,656 for the six-monthsnine-months ended JuneSeptember 30,
2024.
As of JuneSeptember 30, 2025, we had a cash balance
of of
$198,$509, compared to a balance of $0 at JuneSeptember 30, 2024. We currently do not have sufficient cash to fund our operations for the next
12 months
and we will require working capital to complete development and production, testing and marketing of our products and to pay
for ongoing
operating expenses. We anticipate adding management positions for corporate development and the corresponding operations of
the Company,
but this will not occur prior to obtaining additional capital. Currently, competitively priced loans from banks or other
lending sources
for lines of credit or similar short-term borrowings are not available to us. We have been able to raise working capital
to fund operations
through the issuances of convertible preferred stock to GHS, factoring our receivables, and borrowing funds from employees
of the Company.
As of JuneSeptember 30, 2025, our current liabilities exceeded our current assets by $4,350,706$4,379,486 as compared to JuneSeptember 30,
2024, when current liabilities
exceeded current assets by $4,175,913,$3,351,602 , an increase of $174,793.$1,027,884.
Liquidity is also affected by notes to our shareholders.
At JuneSeptember 30, 2025, shareholders have loaned the Company approximately $1,646,636 which notes accrue interest at ranging from 12.0%
to to
18% per annum and were due JuneSeptember 30, 2024. The Company extended this due date to July 1, 2024, and plans to extend itthem again to Decemberinto
31, 2025.2026. Current discussions with noteholders are underway and we expect the noteholders to agree to this extension.extension, but to date, no extensions
have been finalized or approved.
During the three-months ended JuneSeptember 30, 2025,
net net
cash used in operating activities was $691,719,$-54,305, due mainly to a net loss of $204,038,$171,642, an increase in accounts payable of $1,073,204$57,086 mostly
of an payroll liabilities, professional services and reclassification of notes payment from related parties, and an increase of $607,881
$88,246 in accrued interest. By comparison, during the three-months ended JuneSeptember 30, 2024,
net cash used in operating activities was $389,780, due
mainly to a net loss of $568,332, payroll liabilities, offset by an increase of
$216,203 in accrued interest.
During the six-monthsnine-months ended JuneSeptember 30, 2025,
net net
cash used in operating activities was $716,809,$-771,113, due mainly to a net loss of $317,745,$-489,387, an increase in accounts payable of $989,069$835,244
mostly mostly
of payroll liabilities, professional services and reclassification of notes payment from related parties. By comparison, during
the six-months
nine-months ended JuneSeptember 30, 2024, net cash used in operating activities was $389,780,$442,196 due mainly to a net loss of $568,332,$1,143,656, an decrease increase
in accounts
receivable of $30,526 due sales of consumable shrimp, offset by a decrease of $122,838 in inventory levels, combined decrease in accounts
payable and accrued expense of $44,793$613,243 due to increased operations, and a $38,468 increase in accrued interest expense due mainly to
falling falling
into arrears on the note payable covering our farm property and increased interest expense on notes payable to shareholders.
During the three-months ended JuneSeptember 30, 2025,
we we
had $10,616 net cash used in investing activities. During the three-months ended JuneSeptember 30, 2024, we had $0 net cash used in investing
activities.
During the six-monthsnine-months ended JuneSeptember 30, 2025,
we we
had $10,616$21,232 net cash used in investing activities. During the six-monthsnine-months ended JuneSeptember 30, 2024, we had $12,216$7,494 net cash used in
investing investing
activities.
During the three-months ended JuneSeptember 30, 2025,
net cash provided by financing activities was $674,606$44,000 which was mainly comprised of proceeds from the purchase of Preferred Series D Shares
Shares of $40,000 and reclassification of related party notes payable.$44,000. During the three-months ended JuneSeptember 30, 2024, net cash provided
by financing activities was $338,672$395,397 which was mainly
comprised of proceeds from notes payable of $350,000,$443,000, offset by payments due related
parties of $103,355.$70,850.
During the six-monthsnine-months ended JuneSeptember 30, 2025,
net net
cash provided by financing activities was $699,696$743,696 which was mainly comprised of proceeds from the purchase of Preferred Series D
Shares Shares
of $73,000$117 and reclassification of related party notes payable. During the six-monthsnine-months ended JuneSeptember 30, 2024, net cash provided
by financing
activities was $395,397$428,102 which was mainly comprised of proceeds from notes payable of $443,000,$506,000, offset by payments due to
shareholders shareholders
of $70,850,$74,375, and notes payable of $32,505.$74,243. During the nine-months ended September 30, 2023, net cash provided by financing
activities was $908,667 which was mainly comprised of proceeds from $958,000 from issued Series D Preferred Stock to GHS, offset by $116,488
in payments on related party notes and $56,258 in notes payable as well as proceeds from shareholder notes of $123,700.
We have provided a discussion of recent accounting
pronouncements in NOTE 2 to the Quarterly Consolidated Financial Statements for JuneSeptember 30, 2025 and 2024.
GRPS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding GRPS (13F)
None of the 59 investors we track reported a position in their latest 13F.