UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2023

☐ 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: 001-40991

BLUE STAR FOODS CORP.

(Exact name of registrant as specified in its charter)

Delaware

82-4270040

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

3000 NW 109th Avenue

Miami, Florida 33172

(Address of principal executive offices)

(305) 836-6858

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

BSFC

The NASDAQ Stock Market LLC

(NASDAQ Capital Market)

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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “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 13(a) of the Exchange 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 November 20, 2023, there were 14,450,350 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

BLUE STAR FOODS CORP.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

		PAGE

PART I - FINANCIAL INFORMATION		4

Item 1.	Financial Statements (Unaudited)	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II - OTHER INFORMATION		30

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	30

SIGNATURES		31

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements include, among others, those statements including the words “believes”, “anticipates”, “expects”, “intends”, “estimates”, “plans” and words of similar import. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Forward-looking statements are based on our current expectations and assumptions regarding our business, potential target businesses, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include changes in local, regional, national or global political, economic, business, competitive, market (supply and demand), regulatory conditions and the following:

	●	Our ability to raise capital when needed and on acceptable terms and conditions;

	●	Our ability to make acquisitions and integrate acquired businesses into our company;

	●	Our ability to attract and retain management with experience in the business of importing, packaging and selling of seafood;

	●	Our ability to negotiate, finalize and maintain economically feasible agreements with suppliers and customers;

	●	The availability of crab meat and other premium seafood products we sell;

	●	The intensity of competition;

	●	Changes in the political and regulatory environment and in business and fiscal conditions in the United States and overseas; and

	●	The effect of COVID-19 on our operations and the capital markets.

A description of these and other risks and uncertainties that could affect our business appears in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 which we filed with the Securities and Exchange Commission (“SEC”) on April 17, 2023 and in our Registration Statement on Form S-1/A filed with the SEC on August 30, 2023. The risks and uncertainties described under “Risk Factors” are not exhaustive.

Given these uncertainties, readers of this Quarterly Report on Form 10-Q (“Quarterly Report”) are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

All references in this Quarterly Report to the “Company”, “we”, “us”, or “our”, are to Blue Star Foods Corp., a Delaware corporation, and its consolidated subsidiaries, John Keeler & Co., Inc., d/b/a Blue Star Foods, a Florida corporation (“Keeler & Co.”), and its wholly-owned subsidiary, Coastal Pride Seafood, LLC, a Florida limited liability company (“Coastal Pride”) and Taste of BC Aquafarms, Inc., a corporation formed under the laws of the Province of British Columbia, Canada (“TOBC”).

All references to shares of common stock of the Company in this Quarterly Report have been adjusted to reflect the Company’s 1:20 reverse stock split effective as of June 21, 2023 (the “Reverse Stock Split”).

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the SEC, and should be read in conjunction with the audited financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

Blue Star Foods Corp.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	SEPTEMBER 30, 2023			DECEMBER 31, 2022

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	488,833		$	9,262
Accounts receivable, net of allowances and credit losses of $29,019 and $25,964		152,954			813,416
Inventory, net		1,990,663			4,808,152
Advances to related party		218,525			218,525
Other current assets		2,102,377			671,933
Total Current Assets		4,953,352			6,521,288
RELATED PARTY LONG-TERM RECEIVABLE		435,545			435,545
FIXED ASSETS, net		267,561			120,400
RIGHT OF USE ASSET		159,915			197,540
ADVANCES TO RELATED PARTY		1,299,984			1,299,984
OTHER ASSETS		123,855			103,720
TOTAL ASSETS	$	7,240,212		$	8,678,477
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accruals	$	547,133		$	2,401,243
Working capital line of credit		-			1,776,068
Deferred income		47,265			47,078
Current maturities of long-term debt, net of discounts		-			3,439,557
Current maturities of lease liabilities		50,769			57,329
Current maturities of related party long-term notes		300,000			100,000
Loan payable		118,376			29,413
Related party notes payable - subordinated		768,839			893,000
Derivative liability		1,481,807			-
Warrants liability		2,103,122			-
Other current liabilities		790,881			790,881
Total Current Liabilities		6,208,192			9,534,569
LONG-TERM LIABILITIES
Lease liability, net of current portion		108,526			139,631
Debt, net of current portion and discounts		391,200			-
Related party notes, net of current portion		50,000			250,000
TOTAL LIABILITIES		6,757,918			9,924,200
STOCKHOLDERS’ EQUITY
Series A 8% cumulative convertible preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding as of September 30, 2023, and 0 shares issued and outstanding as of December 31, 2022		-			-
Common stock, $0.0001 par value, 100,000,000 shares authorized; 5,970,011 shares issued and outstanding as of September 30, 2023, and 1,338,321 shares issued and outstanding as of December 31, 2022		597			2,704
Additional paid-in capital		33,907,540			28,326,546
Accumulated other comprehensive loss		(161,450	)		(235,853	)
Accumulated deficit		(33,188,070	)		(29,339,120	)
Treasury stock, 7,564 shares as of September 30, 2023 and 0 shares as of December 31, 2022		(76,323	)		-
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		482,294			(1,245,723	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,240,212		$	8,678,477

The accompanying notes are an integral part of these unaudited consolidated financial statements

Blue Star Foods Corp.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	2023			2022			2023			2022
	Three months ended September 30						Nine months ended September 30
	2023			2022			2023			2022
REVENUE, NET	$	1,561,679		$	2,429,195		$	5,115,680		$	10,712,363

COST OF REVENUE		1,586,478			3,973,656			4,775,102			11,431,331

GROSS PROFIT (LOSS)		(24,799	)		(1,544,461	)		340,578			(718,968	)

COMMISSIONS		423			2,674			2,169			24,051
SALARIES AND WAGES		301,393			352,178			1,298,358			1,498,703
DEPRECIATION AND AMORTIZATION		2,754			151,568			33,091			426,364
IMPAIRMENT LOSS		-			748,997			-			748,997
OTHER OPERATING EXPENSES		410,913			566,977			1,773,702			1,930,753

LOSS FROM OPERATIONS		(740,282	)		(3,366,855	)		(2,766,742	)		(5,347,836	)

OTHER INCOME		(1,902	)		22,229			25,292			68,899
INTEREST INCOME		16			-			40			-
LOSS ON SETTLEMENT OF DEBT		(144,169	)		(57,085	)		(977,188	)		(57,085	)
CHANGE IN FAIR VALUE OF DERIVATIVE AND WARRANT LIABILITIES		1,240,214			-			1,339,791			-
INTEREST EXPENSE		(799,690	)		(336,378	)		(1,470,143	)		(893,146	)

NET LOSS		(445,813	)		(3,738,089	)		(3,848,950	)		(6,229,168	)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(445,813	)	$	(3,738,089	)	$	(3,848,950	)	$	(6,229,168	)

COMPREHENSIVE INCOME (LOSS):

CHANGE IN FOREIGN CURRENCY TRANSLATION ADJUSTMENT		25,573			(51,124	)		74,403			(52,910	)

COMPREHENSIVE LOSS	$	(420,240	)	$	(3,789,213	)	$	(3,774,547	)	$	(6,282,078	)

Loss per common share:
Net loss per common share - basis and diluted	$	(0.13	)	$	(2.97	)	$	(1.54	)	$	(4.98	)
Weighted average common shares outstanding - basic and diluted		3,437,050			1,258,484			2,503,628			1,251,103

The accompanying notes are an integral part of these unaudited consolidated financial statements

Blue Star Foods Corp.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

	Shares		Amount		Shares		Amount		Capital		Deficit			Stock			Income (Loss)			(Deficit)
	Series A Preferred Stock $.0001 par value				Common Stock $.0001 par value				Additional Paid-in		Accumulated			Treasury			Accumulated Other Comprehensive			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Capital		Deficit			Stock			Income (Loss)			(Deficit)
December 31, 2022		-	$	-		1,338,321	$	134	$	28,329,116	$	(29,339,120	)	$	-		$	(235,853	)	$	(1,245,723	)
Stock based compensation		-		-		-		-		20,190		-			-			-			20,190
Common stock issued for service		-		-		3,288		1		22,999		-			-			-			23,000
Common stock issued for note payment		-		-		373,533		37		1,743,193		-			-			-			1,743,230
Common stock issued for cash		-		-		473,705		47		1,880,645		-			-			-			1,880,692
Repurchase of common stock		-		-		-		-		-		-			(76,323	)		-			(76,323	)
Net Loss		-		-		-		-		-		(1,951,402	)		-			-			(1,951,402	)
Cumulative translation adjustment		-		-		-		-		-		-			-			85,574			85,574
March 31, 2023		-	$	-		2,188,847	$	219	$	31,996,143	$	(31,290,522	)	$	(76,323	)	$	(150,279	)	$	479,238
Stock based compensation		-		-		-		-		16,940		-			-			-			16,940
Common stock issued for service		-		-		70,323		7		17,993		-			-			-			18,000
Common stock issued for note payment		-		-		407,118		41		758,548		-			-			-			758,589
Common stock issued for cash		-		-		50,000		5		199,995		-			-			-			200,000
Net Loss		-		-		-		-		-		(1,451,735	)		-			-			(1,451,735	)
Cumulative translation adjustment		-		-		-		-		-		-			-			(36,744	)		(36,744	)
June 30, 2023		-	$	-		2,716,288	$	272	$	32,989,619	$	(32,742,257	)	$	(76,323	)	$	(187,023	)	$	(15,712	)
Stock based compensation		-		-		-		-		17,588		-			-			-			17,588
Common stock issued for service		-		-		223,140		22		67,978		-			-			-			68,000
Common stock issued for note payment		-		-		598,561		60		551,209		-			-			-			551,269
Common stock issued for cash and exercise of warrants		-		-		2,432,022		243		281,146		-			-			-			281,389
Net Loss		-		-		-		-		-		(445,813	)		-			-			(445,813	)
Cumulative translation adjustment		-		-		-		-		-		-			-			25,573			25,573
September 30, 2023		-	$	-		5,970,011	$	597	$	33,907,540	$	(33,188,070	)	$	(76,323	)	$	(161,450	)	$	482,294

	Series A Preferred Stock $.0001 par value				Common Stock $.0001 par value				Additional Paid-in			Accumulated			Treasury		Accumulated Other Comprehensive			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Stock		Income (Loss)			Equity
December 31, 2021		-	$	-		1,233,566	$	123	$	25,105,236		$	(16,144,151	)	$	-	$	(54,240	)	$	8,906,968
Stock based compensation		-		-		-		-		193,631			-			-		-			193,631
Warrants issued on convertible debt note		-		-		-		-		956,301			-			-		-			956,301
Common stock issued for service		-		-		1,019		1		73,970			-			-		-			73,971
Common stock issued for asset acquisition						8,355		1		359,249			-			-		-			359,250
Common stock issued from exercise of warrants						6,250		1		249,999			-			-		-			250,000
Net Loss		-		-		-		-		-			(1,053,866	)		-		-			(1,053,866	)
Comprehensive Income		-		-		-		-		-			-			-		35,411			35,411
March 31, 2022		-	$	-		1,249,190	$	126	$	26,938,386		$	(17,198,017	)	$	-		(18,829	)	$	9,721,666
Stock based compensation		-		-		-		-		151,252			-			-		-			151,252
Common stock issued for service		-		-		3,991		1		257,361			-			-		-			257,362
Net Loss		-		-		-		-		-			(1,437,213	)		-		-			(1,437,213	)
Comprehensive Loss		-		-		-		-		-			-			-		(37,197	)		(37,197	)
June 30, 2022		-	$	-		1,253,181	$	127	$	27,346,999		$	(18,635,230	)	$	-	$	(56,026	)	$	8,655,870
Balance		-	$	-		1,253,181	$	127	$	27,346,999		$	(18,635,230	)	$	-	$	(56,026	)	$	8,655,870
Stock based compensation		-		-		-		-		(45,710	)		-			-		-			(45,710	)
Common stock issued for service		-		-		733		-		57,221			-			-		-			57,221
Common stock issued for note payment		-		-		22,222		2		447,775			-			-		-			447,777
Net Loss		-		-		-		-		-			(3,738,089	)		-		-			(3,738,089	)
Comprehensive Loss		-		-		-		-		-			-			-		(51,124	)		(51,124	)
September 30, 2022		-	$	-		1,276,136	$	129	$	27,806,285		$	(22,373,319	)	$	-	$	(107,150	)	$	5,325,945
Balance		-	$	-		1,276,136	$	129	$	27,806,285		$	(22,373,319	)	$	-	$	(107,150	)	$	5,325,945

The accompanying notes are an integral part of these unaudited consolidated financial statements

Blue Star Foods Corp.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	2023			2022
	Nine Months Ended September 30
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Loss	$	(3,848,950	)	$	(6,229,168	)
Adjustments to reconcile net loss to net cash (used in) operating activities: