NaturalShrimp Issues Shareholder Letter and Provides Corporate Update - Seite 2

As a result of the continued research and innovations being developed at our La Coste facility, La Coste has evolved into the Company’s principal center for continued development of new engineering designs, processes, and materials. Consequently, La Coste now serves as our dedicated Research & Development Center with our expanding technical team focusing on refining, enhancing, and expanding our EC and Hydrogas technologies. We are committed to testing new applications for commercialization while developing more efficient, cost-effective, and secure system designs. La Coste will continue its production and sale of shrimp while assuming a pivotal role as our leading R&D Center.

The innovations in enhancing and redesigning the EC and Hydrogas equipment have shown significant potential in increased production efficiency, which can positively impact both our La Coste and Webster City facilities. Lowering the costs of production and reducing implementation time is at the forefront of the retrofits being constructed. In fact, these new designs have already produced tangible, quantifiable benefits. While the original cost of retrofitting our 50,000 sq ft production facility in Webster City exceeded $2,500,000, the cost of retrofitting the other three 50,000 sq. ft production facilities located in the warehouse using our new designs is expected to realize a seventy percent (70%) decrease in capital expenditures bringing the overall costs for each production facility down to $750,000.

For the better part of the last year our production facilities in both Texas and Iowa have been utilizing the Hydrogas and EC technologies to produce and sell shrimp to local markets, while maintaining weekly deliveries of live shrimp to our loyal customers in the Chicago area. The Company has further developed a better and much improved system for delivering live shrimp to these markets. This new delivery system instituted by Rafael Zelaya, our Vice President of Production, has significantly reduced our mortality rates of live shrimp upon delivery.

Another supply chain hurdle the Company has navigated included our primary supplier of post larvae shrimp (PLs). There was a point in time within the last year when our supplier was not able to provide us with necessary PLs, causing a reduction in our production output. Although we were able to procure PLs from alternative sources, our production nevertheless suffered. In March of 2023, we entered into a new PL Purchase Agreement with Homegrown USA, Inc. (“Homegrown”) to secure the delivery of up to 2 million PLs each month to accommodate our production requirements while maintaining an ongoing relationship with third party suppliers to cover any shortfalls. Moreover, the Company has taken steps to design and build a new hatchery at our Blairsburg, Iowa facility to avoid any future disruptions in our PL supply. Our agreement with Homegrown will also provide us access to Homegrown’s superior fast-growing genetic line of PLs.