Nocera’s History of Innovation
Nocera was incorporated in the State of Nevada on February 1, 2002, but remained dormant until its reverse merger with Grand Smooth Inc. Limited (GSI) on December 31, 2018. Through this transformative merger, Nocera gained access to GSI’s expertise and technology, setting the stage for its ambitious growth plans. GSI, a holding company without operations, was established under Hong Kong laws on August 1, 2014.
The company’s primary operating subsidiary, Guizhou Grand Smooth Technology Ltd. (GZ GST), was incorporated in Xingyi City, Guizhou Province, China on October 25, 2017. GZ GST specializes in providing fish farming container services, integrating sales, installations, and maintenance of aquaculture equipment.
In September 2020, Nocera underwent a significant restructuring by terminating its relationship with its former variable interest entity, Guizhou Wan Feng Hu Intelligent Aquatic Technology Co. Limited (GZ WFH). This move was followed by a Settlement Agreement and Release in October 2020, resolving all claims related to GZ WFH’s debt and share ownership in Nocera or GZ GST.
On December 31, 2020, Nocera entered into a series of contractual agreements with Xin Feng Construction Co., Ltd. (XFC), a Taiwan limited liability company, acquiring a 100% controlling interest. However, this arrangement was short-lived, as Nocera sold its controlling interest in XFC to Han-Chieh Shih for $300,000 on November 30, 2022, terminating the XFC variable interest entity (VIE) agreements.
In the following years, Nocera continued to expand its capabilities, both organically and through strategic acquisitions. In 2022, the company acquired an 80% controlling interest in Meixin Institutional Food Development Co., Ltd., a Taiwanese food processing and catering company. This strategic move diversified Nocera’s revenue streams and provided a platform to showcase its RAS-produced seafood products.
Nocera’s RAS Technology and Sustainability Focus
At the heart of Nocera’s business model is its proprietary RAS technology. These land-based fish farming systems offer a highly controlled and traceable environment for various fish species, addressing the growing global demand for aquaculture production and the declining supply from wild fisheries.
Nocera’s RAS systems utilize advanced water filtration and recirculation techniques to minimize water usage and waste, making them a sustainable alternative to traditional aquaculture methods. The company’s focus on reducing environmental impact has positioned it as a leader in the industry’s transition towards more eco-friendly practices.
Expansion into Global Markets
Nocera’s growth strategy involves expanding its RAS technology globally, with a particular focus on the United States and Brazil. In 2023, the company acquired 229 acres of land in Montgomery County, Alabama, where it plans to build its first RAS-based fish farm in the U.S. market. This marks a significant milestone in Nocera’s international expansion, as the company aims to capitalize on the growing demand for sustainable seafood in the Americas.
Financials and Operational Performance
Nocera’s financial performance has been mixed in recent years, as the company has navigated the challenges of the COVID-19 pandemic and global supply chain disruptions. In the fiscal year ended December 31, 2023, the company reported total revenue of $23.92 million, a decrease from the previous year’s $14.10 million. This decline was primarily due to a slowdown in the company’s fish trading business in Taiwan and its Meixin catering operations. The net loss for the fiscal year 2023 was $4.29 million, while operating cash flow (OCF) and free cash flow (FCF) were negative at $1.06 million and $1.92 million, respectively.
For the quarter ended September 30, 2024, Nocera reported revenue of $1.36 million, a significant 81.3% decline from $7.28 million in the same quarter of the previous year. The net loss for this quarter was $285,420, with OCF and FCF both at negative $251,520. This substantial year-over-year decrease in revenue was primarily attributed to the continued slowdown in the fish trading business in Taiwan and lower revenues from the Meixin catering business.
Despite these challenges, Nocera’s focus on its core RAS technology and diversification efforts have shown promise. The company’s gross profit margin for the nine-month period ended September 30, 2024, was 1.3%, an improvement from the previous year’s 1.1%. This uptick can be attributed to increased demand for the company’s RAS-produced seafood through its e-commerce channels. For the nine-month period ended September 30, 2024, Nocera reported total revenue of $13.02 million, down from $16.45 million in the comparable period of the prior year. Gross profit for this period was $163,880, slightly up from $157,260 in the previous year.
Liquidity
Nocera’s liquidity position remains a concern, with a current ratio of 0.51 and a quick ratio of 0.46 as of September 30, 2024. The company’s cash position stood at $372,270 as of the same date. Nocera’s debt-to-equity ratio was relatively low at 0.007, indicating a conservative approach to leverage. The company had previously secured a loan from Chailease Finance Co., Ltd. of $487,800, which has been fully repaid as of September 30, 2024.
The company’s net cash used in operating activities for the nine-month period ended September 30, 2024, was $909,560, a slight improvement from the $1.05 million used in the same period the previous year.
Addressing Challenges and Uncertainties
Nocera’s journey has not been without its challenges. The company has faced headwinds from the COVID-19 pandemic, which disrupted its global supply chains and impacted consumer demand. Additionally, geopolitical tensions, particularly the ongoing conflict between Russia and Ukraine, have introduced volatility in commodity prices, further straining Nocera’s operations.
To mitigate these risks, Nocera has implemented cost-cutting measures and focused on diversifying its revenue streams. The company’s acquisition of Meixin, for example, has provided a new avenue for growth, allowing Nocera to leverage its RAS technology to produce seafood for its own branded food products.
Furthermore, Nocera has taken steps to strengthen its internal controls and financial reporting processes, addressing past material weaknesses identified by its auditors. The company’s efforts to improve its corporate governance and transparency have been crucial in maintaining investor confidence during these uncertain times.
Looking Ahead: Nocera’s Growth Prospects
Despite the challenges faced, Nocera remains optimistic about its long-term growth prospects. The company’s commitment to sustainable aquaculture and its innovative RAS technology position it well to capitalize on the growing global demand for eco-friendly seafood production.
Nocera’s expansion into the U.S. and Brazilian markets presents significant opportunities for the company. With its Alabama fish farm project underway and plans to build additional RAS facilities in these regions, Nocera aims to establish a strong foothold in the Americas and diversify its geographic revenue streams. The company is currently in the process of exploring a strategic collaboration with Chang Tai Group to leverage their solar energy solutions to improve the sustainability of its aquaculture operations.
Furthermore, Nocera’s strategic partnerships and acquisitions demonstrate the company’s ability to leverage emerging technologies and sales channels to drive growth. Recent acquisitions include Zhejiang Xinca Mutual Entertainment Culture Media Co., Ltd. and Hangzhou SY Culture Media Co. Ltd., which are expected to enhance the company’s capabilities and market reach.
As Nocera continues to navigate the evolving aquaculture landscape, the company’s focus on innovation, sustainability, and strategic expansion will be crucial in delivering long-term value for its shareholders. The company’s shift away from operations in China to focus on Taiwan and its expansion into new markets like the U.S. and Brazil reflect its adaptability and commitment to growth in promising regions.
While the recent financial results have shown some challenges, particularly in the fish trading and catering segments, Nocera’s core RAS technology and its potential applications in sustainable aquaculture remain the company’s primary value drivers. The company’s efforts to improve profitability through cost management and the development of new revenue streams, coupled with its strategic investments in land and technology, position Nocera to potentially capitalize on the growing demand for sustainable seafood production methods in the coming years.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.