NaturalShrimp terminates merger, announces re-IPO

Dallas, Texas, U.S.A.-based recirculating aquaculture system shrimp-farming firm NaturalShrimp has called off its planned merger agreement with Yotta Acquisition Corporation, a public blank check corporation listed on the Nasdaq Stock Exchange.

NaturalShrimp said the termination of the agreement, announced in October 2022, would have delivered up to USD 105 million (EUR 95.5 million million) in net cash proceeds if it had proceeded, but the termination will cost it an unspecified cancellation fee, and it had already paid USD 575,100 (EUR 523,000) in expenses related to passing two deadlines for closing the acquisition by 23 January and 23 April, 2023.

Under the terms of their agreement, the combined new entity created by the merger of Yotta and NaturalShrimp needed to have net tangible assets of at least USD 5 million (EUR 4.5 million), but a financial document filed 25 April indicated the proposed entity would have had nearly USD 21.2 million (EUR 19.3 million) in liabilities.

“The termination is based on Yotta’s inability to comply with the provision of its amended and restated certificate of incorporation that prohibits Yotta from consummating an initial business combination unless it has net tangible assets of at least USD 5,000,001 upon consummation of such initial business combination, in connection with the transactions contemplated with the merger agreement, which makes impossible the satisfaction of certain conditions to NaturalShrimp’s obligations to consummate, and the consummation of, such transactions,” the company said in a 27 July press release.

As recently as 24 July, Yotta received the last of a series of additional contributions from its IPO sponsor to support its merger with NaturalShrimp, and both NaturalShrimp CEO Gerald Easterling and Yotta CEO Hui Chen expressed confidence publicly as recently as April 2023 the transaction would be consummated.

“We are pleased to have overcome the delays and are now able to proceed with the business combination in a timely manner,” Chen said in a press release.

NaturalShrimp CFO and Treasurer William Delgado said the company is now investigating other business opportunities.

“After working on this for almost 12 months, we are naturally disappointed in this news,” Delgado said. 

“We are currently in negotiations with another entity which will involve a re-IPO and a new capital raise of between USD 10 million to USD 12 million [EUR 9.1 million to EUR 10.9 million],” he added. “This opportunity has the full support of management, its advisors, and its investment banking team. The timing of this re-IPO, if executed, will result in an uplist on similar timing as the previous business combination agreement. That timetable for the uplist remains at the end of September [to the] beginning of October.”

In its most recent fiscal year, ending 31 March, 2023, NaturalShrimp recorded a net loss of USD 17.5 million (EUR 15.9 million), down from USD 96.4 million (EUR 87.7 million) in its previous fiscal year. As of 31 March, 2023, it had an accumulated deficit of approximately USD 167.5 million (EUR 152.3 million) and a working capital deficit of approximately USD 9.3 million (EUR 8.5 million). It had gross sales revenue of USD 238,685 (EUR 217,000) and USD 33,765 (EUR 30,700) in the prior year.

“We expect to continue to incur operating losses until we reach sufficient commercial scale of our product to cover our operating costs. We cannot be certain when, if ever, we will become profitable. Even if we were to become profitable, we might not be able to sustain such profitability on a quarterly or annual basis,” the company said in its annual report.

NaturalShrimp suffered a net loss of USD 869,379 due to a fire at its facility in LaCoste, Texas, in July 2022. Additionally, it paid out a legal expense of USD 29.4 million (EUR 26.7 million) last year to settle a legal suit claiming breach of contract brought by former shareholder Gary Shover. NaturalShrimp said in its most recent financial statement it had reduced its current liabilities to USD 11.2 million (EUR 10.2 million) as of 31 March, 2023, while its assets were USD 1.9 million (EUR 1.7 million), but the company remains in a precarious financial position, endangering its 525 shareholders, it said.

“Not including funds needed for capital expenditures or to pay down existing debt and trade payables, however, we anticipate that we will need to raise an additional USD 2.5 million [EUR 2.3 million] to cover all of our capital and operational expenses over the next 12 months, not including any capital expenditures needed as part of any commercial scale-up of our equipment," it said.

NaturalShrimp operates two recirculating aquaculture system farms growing Pacific white shrimp in Texas and in the former VeroBlue and Alder Aqua farm in Webster City, Iowa. It has announced plans to expand in Florida and Puerto Rico and has signed distribution agreements with US Foods and Gulf Seafood Inc.

“Our team remains highly focused on commercialization and production ramp up of farm-to-table sushi-grade shrimp and fresh seafood including a planned U.S. facility expansion, and we look forward to additional announcements in the weeks to come,” Delgado said.

Photo courtesy of NaturalShrimp