Core Insights - Blue Star Foods Corp. is focusing on improving revenue growth through strategic partnerships and product initiatives, particularly with KeHE and the relaunch of the Crab Meat Pouch & Meals [2] - The company has successfully reduced operating expenses to align with revenue levels, leading to a decrease in losses [2] Financial Performance - Revenues increased by 85% to $1,172,340 due to higher inventory sales and increased pricing [6] - Gross profit surged by 532% to $252,690 [6] - Operating loss decreased by 44% to $493,875, which includes $138,012 of non-cash expenses [6] - Adjusted EBITDA loss improved to $355,863 [6] - Net loss decreased by 68% to $651,818, including $276,024 of non-cash expenses [6] Company Overview - Blue Star Foods Corp. is an integrated ESG sustainable seafood company specializing in Recirculatory Aquaculture Systems (RAS) [4] - The company processes, packages, and sells high-value seafood products and operates the oldest continuously running RAS full grow-out salmon farm in North America [4]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited consolidated financial statements for the three months ended March 31, 2025 [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Details the company's assets, liabilities, and stockholders' deficit as of March 31, 2025, and December 31, 2024 **Balance Sheet Snapshot:** | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :--------------- | :---------------- | | Cash and cash equivalents | $23,049 | $326,854 | | Total Current Assets | $1,754,202 | $2,233,749 | | Total Assets | $2,050,518 | $2,554,599 | | Total Current Liabilities | $2,441,523 | $2,644,974 | | Total Liabilities | $2,688,161 | $2,746,296 | | Total Stockholders' Equity | $(637,643) | $(191,697) | [Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20LOSS) Outlines revenues, costs, and net loss for the three months ended March 31, 2025, compared to the same period in 2024 **Income Statement Highlights (Three Months Ended March 31):** | Metric | 2025 | 2024 | Change (YoY) | | :------------------------------------------ | :----------- | :----------- | :----------- | | REVENUE, NET | $960,758 | $1,059,355 | (9.3%) | | COST OF REVENUE | $869,114 | $1,098,989 | (20.9%) | | GROSS PROFIT (LOSS) | $91,644 | $(39,634) | N/A (Positive swing) | | LOSS FROM OPERATIONS | $(971,521) | $(1,028,555) | (5.5%) | | NET LOSS | $(1,199,930) | $(1,279,451) | (6.2%) | | Net loss per common share - basic and diluted | $(0.08) | $(2.42) | (96.7%) | | Weighted average common shares outstanding | 14,452,810 | 527,750 | 2647.8% | [Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY%20(DEFICIT)) Summarizes the changes in stockholders' equity during the first quarter of 2025, driven by net loss and stock issuances **Stockholders' Equity Changes (Three Months Ended March 31, 2025):** | Item | Amount | | :------------------------------------ | :----------- | | Accumulated Deficit (Dec 31, 2024) | $(46,289,219) | | Net Loss | $(1,199,930) | | Accumulated Deficit (Mar 31, 2025) | $(47,489,149) | | Common Stock Issued for Service | $573,000 | | Common Stock Issued for Note Payment | $147,821 | | Common Stock Issued for Cash | $19,950 | | Total Stockholders' Equity (Mar 31, 2025) | $(637,643) | [Consolidated Statements of Cash Flows](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Details the sources and uses of cash from operating, investing, and financing activities for the first quarter of 2025 **Cash Flow Summary (Three Months Ended March 31):** | Activity | 2025 | 2024 | | :---------------------------------- | :----------- | :----------- | | Net Cash (Used in) Operating Activities | $(392,550) | $(679,928) | | Net Cash (Used in) Investing Activities | $(9,914) | $(23,146) | | Net Cash Provided by Financing Activities | $80,167 | $622,626 | | NET INCREASE IN CASH AND CASH EQUIVALENTS | $(303,805) | $(1,865) | | CASH AND CASH EQUIVALENTS – END OF PERIOD | $23,049 | $22,298 | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides supplementary details and explanations for the line items presented in the primary financial statements [Note 1. Company Overview](index=9&type=section&id=Note%201.%20Company%20Overview) Describes the company's business as an international sustainable marine protein company and its key product brands - Blue Star Foods Corp is an international sustainable marine protein company, importing, packaging, and selling refrigerated pasteurized crab meat and other premium seafood products[22](index=22&type=chunk) - Key brands include Blue Star, Oceanica, Pacifika, Crab & Go, First Choice, Good Stuff, Coastal Pride Fresh (crab meat), and Little Cedar Farms (steelhead salmon and rainbow trout fingerlings)[22](index=22&type=chunk) - The Services Agreement with Afritex Ventures, Inc expired on August 31, 2024, resulting in approximately **$1.5 million in losses** for the Company[24](index=24&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the key accounting principles and policies applied in the preparation of the financial statements - Unaudited interim consolidated financial statements are prepared under SEC rules and GAAP, with all adjustments consisting of normal recurring items[28](index=28&type=chunk) - Revenue is recognized when the customer obtains control of the promised goods, primarily from importing and distributing crab meat and salmon/trout fingerlings[31](index=31&type=chunk) - Inventory is valued at the lower of cost or net realizable value, using specific identification for crab meat and raw materials, and estimated biomass for fish in process[37](index=37&type=chunk) - An inventory allowance of **$1,398,927** was recorded for the three months ended March 31, 2025, compared to **$1,417,305** for the year ended December 31, 2024[39](index=39&type=chunk) **Fair Value Measurements (Level 3 Liabilities):** | Liability | March 31, 2025 | December 31, 2024 | | :------------------------------ | :--------------- | :---------------- | | Derivative liability on convertible debt | $35,475 | $49,565 | - The Company is evaluating ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation) but does not expect ASU 2023-09 to have a material impact[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 3. Going Concern](index=15&type=section&id=Note%203.%20Going%20Concern) Highlights substantial doubt about the company's ability to continue operating due to recurring losses and capital deficits - The Company incurred a net loss of **$1,199,930**, had an accumulated deficit of **$47,489,149**, and a working capital deficit of **$687,321** for the three months ended March 31, 2025[55](index=55&type=chunk) - These factors raise **substantial doubt** about the Company's ability to continue as a going concern[55](index=55&type=chunk) - The Company's ability to continue as a going concern is dependent on increasing revenues, executing its business plan to acquire complimentary companies, and raising capital[55](index=55&type=chunk) [Note 4. Other Current Assets](index=15&type=section&id=Note%204.%20Other%20Current%20Assets) Provides a breakdown of other current assets, primarily consisting of prepaid inventory and legal fees **Other Current Assets Breakdown:** | Item | March 31, 2025 | December 31, 2024 | | :------------------ | :--------------- | :---------------- | | Prepaid inventory | ~$731,000 | ~$943,000 | | Prepaid legal fees | ~$84,000 | ~$136,000 | | Total | $932,810 | $1,109,494 | [Note 5. Fixed Assets, Net](index=15&type=section&id=Note%205.%20Fixed%20Assets,%20Net) Details the company's fixed assets and associated accumulated depreciation for the period **Fixed Assets, Net:** | Item | March 31, 2025 | December 31, 2024 | | :---------------------- | :--------------- | :---------------- | | Total Fixed Assets | $177,463 | $167,548 | | Less: Accumulated depreciation | $(51,074) | $(44,688) | | Fixed Assets, Net | $126,389 | $122,860 | - Depreciation expense for the three months ended March 31, 2025, totaled approximately **$6,400**, an increase from **$1,300** in the same period of 2024[57](index=57&type=chunk) [Note 6. Debt](index=16&type=section&id=Note%206.%20Debt) Summarizes the company's various outstanding debt obligations, including promissory notes and loans, and recent payment activities - John Keeler Promissory Notes and Walter Lubkin Jr Note had **$0 outstanding principal** as of March 31, 2025[58](index=58&type=chunk)[61](index=61&type=chunk) - Lind Global Fund II LP notes had an outstanding balance of **$39,697** (net of debt discount) as of March 31, 2025, with **$11,853** amortization of debt discounts for Q1 2025[73](index=73&type=chunk) - Agile Lending, LLC provided a **$420,000** term loan on January 28, 2025; **$129,000** in principal payments were made in Q1 2025, leaving an outstanding balance of **$291,000**[74](index=74&type=chunk) - 1800 Diagonal Notes (September, October, December 2024, January 2025) had various principal payments made in Q1 2025, including **$15,000** paid via common stock for the September note[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - The August 2024 Private Placement Offering notes had aggregate principal payments of **$246,454** in Q1 2025, with **$80,255** paid through the issuance of 1,000,000 common shares, leaving an outstanding balance of **$111,060**[90](index=90&type=chunk) - A vehicle loan of **$69,299** was entered into on December 7, 2024; **$7,843** in principal payments were made in Q1 2025, with an outstanding balance of **$61,457**[91](index=91&type=chunk) [Note 7. Stockholders' Equity](index=21&type=section&id=Note%207.%20Stockholders'%20Equity) Details the issuance of common shares for services, cash proceeds, and debt conversion during the first quarter of 2025 - During Q1 2025, the Company issued **302,762 common shares** for consulting services[95](index=95&type=chunk) - The Company issued **3,840,000 common shares** to directors for their services on January 14, 2025[95](index=95&type=chunk) - **350,000 common shares** were issued for cash proceeds of **$19,950** on March 11, 2025[96](index=96&type=chunk) - **288,101 common shares** were issued to Diagonal as partial conversion of **$15,000** principal on March 12, 2025[96](index=96&type=chunk) - **750,000 common shares** were issued to Quick Capital for partial conversion of **$57,673** principal, and **406,484 shares** to Jefferson for partial conversion of **$32,583** principal and accrued interest[97](index=97&type=chunk) [Note 8. Options](index=22&type=section&id=Note%208.%20Options) Reports on the company's stock option activity, including forfeitures and outstanding options, for the first quarter of 2025 **Option Activity (Three Months Ended March 31, 2025):** | Metric | Value | | :-------------------------- | :------ | | Outstanding – Dec 31, 2024 | 4,744 | | Forfeited | 1,058 | | Outstanding – Mar 31, 2025 | 3,686 | | Net credit to stock compensation expense | $(5,627) | [Note 9. Warrants](index=22&type=section&id=Note%209.%20Warrants) Discloses the status of outstanding warrants, noting no new activity during the first quarter of 2025 - There was **no warrant activity** (granted, exercised, forfeited, or expired) for the three months ended March 31, 2025[104](index=104&type=chunk) - As of March 31, 2025, **12,205 warrants were outstanding** with a weighted average exercise price of **$106.71** and a remaining contractual life of **3.72 years**[100](index=100&type=chunk) [Note 10. Commitment and Contingencies](index=23&type=section&id=Note%2010.%20Commitment%20and%20Contingencies) Details the company's lease commitments for office and facility space, including related and non-related party agreements - The Company paid **$13,800** for its executive office month-to-month lease in Q1 2025, down from **$17,400** in Q1 2024[105](index=105&type=chunk) - Coastal Pride's Beaufort office lease with a related party terminated in August 2024, and its soft-shell crab facility lease with Gault was renewed month-to-month for **$1,500 per month**[106](index=106&type=chunk)[107](index=107&type=chunk) - TOBC has two five-year leases with related parties for its Nanaimo facilities, totaling **CAD$4,960 per month** plus taxes, renewable for two additional five-year terms[108](index=108&type=chunk) **Rental and Equipment Lease Expenses (Three Months Ended March 31):** | Category | 2025 | 2024 | | :--------------- | :---------- | :---------- | | Related Party | ~$11,400 | ~$15,000 | | Non-Related Party | ~$16,500 | ~$27,600 | [Note 11. Subsequent Events](index=23&type=section&id=Note%2011.%20Subsequent%20Events) Discloses material events that occurred after the balance sheet date but before the financial statements were issued - On April 1, May 1, and June 1, 2025, the Company issued an aggregate of **574,747 shares** of common stock for consulting services provided by ClearThink's designee[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, liquidity, and operational performance compared to Q1 2024 [Overview](index=24&type=section&id=Overview) Provides a general description of the company's business, product portfolio, and primary customer base - Blue Star Foods Corp is an international seafood company that imports, packages, and sells refrigerated pasteurized crab meat and other premium seafood products[114](index=114&type=chunk) - The company's product portfolio includes blue and red swimming crab meat, soft shell crab, steelhead salmon, and rainbow trout fingerlings[114](index=114&type=chunk) - Products are primarily sold to food service distributors, as well as wholesalers, retail establishments, and seafood distributors[114](index=114&type=chunk) [Recent Events](index=24&type=section&id=Recent%20Events) Highlights significant recent corporate events, including changes in key management personnel - Miozotis Ponce, the Company's Chief Operating Officer, **resigned effective June 30, 2025**[115](index=115&type=chunk) [Results of Operations (Three months ended March 31, 2025 and 2024)](index=25&type=section&id=Results%20of%20Operations%20(Three%20months%20ended%20March%2031,%202025%20and%202024)) Analyzes the company's operational performance, comparing revenue, gross profit, expenses, and net loss between Q1 2025 and Q1 2024 - Net Revenue **decreased 9.3% to $960,758** in Q1 2025 from $1,059,355 in Q1 2024, primarily due to a decrease in poundage sold[117](index=117&type=chunk) - Gross Profit **increased to $91,644** in Q1 2025 from a gross loss of $(39,634) in Q1 2024, mainly attributable to no inventory reserve recorded in Q1 2025[119](index=119&type=chunk) - Salaries and Wages Expense **increased to $408,296** in Q1 2025 from $301,790 in Q1 2024, mainly due to the accrual of directors stock compensation[121](index=121&type=chunk) - Net Loss **decreased to $(1,199,930)** in Q1 2025 from $(1,279,451) in Q1 2024, primarily due to changes in fair value of derivative and warrant liabilities and lower interest expense[128](index=128&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's financial health, including cash position, working capital, and cash flow activities - As of March 31, 2025, the Company had cash of **$23,049** and a working capital deficit of **$687,321**[129](index=129&type=chunk) - Cash used in operating activities **decreased to $392,550** in Q1 2025 from $679,928 in Q1 2024, primarily due to changes in inventory and payables and accruals[130](index=130&type=chunk) - Cash provided by financing activities **decreased to $80,167** in Q1 2025 from $622,626 in Q1 2024, mainly due to increased repayments of short-term loans and less proceeds from common stock offerings[132](index=132&type=chunk) - The Company made principal payments on various loans, including **$129,000** on the Agile Lending loan and **$246,454** on the August 2024 Private Placement Notes (partially through common stock issuance)[140](index=140&type=chunk)[158](index=158&type=chunk) [Off-Balance Sheet Arrangements](index=30&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms the absence of any off-balance sheet arrangements that could impact the company's financial condition - The Company currently has **no off-balance sheet arrangements**[159](index=159&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States that as a smaller reporting company, detailed market risk disclosures are not required in this report - The Company is a smaller reporting company and is **not required to provide** quantitative and qualitative disclosures about market risk[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Evaluates the effectiveness of the company's disclosure controls, identifying material weaknesses and outlining remediation plans - Disclosure controls and procedures were **not effective** as of March 31, 2025[162](index=162&type=chunk) - Material weaknesses identified include **inadequate control over third-party warehouse inventory**, ineffective financial close and reporting processes, and insufficient segregation of duties and technical accounting expertise[165](index=165&type=chunk) - Remediation initiatives include creating a position to segregate duties, hiring personnel with technical accounting expertise, and establishing an internal control framework[163](index=163&type=chunk) - There were **no material changes** in internal controls over financial reporting during the period[164](index=164&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Reports no material pending legal proceedings involving the company or its affiliates - There are **no material pending legal proceedings** involving the Company or its related parties[167](index=167&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) States that as a smaller reporting company, detailed risk factor disclosures are not required in this quarterly report - The Company is a smaller reporting company and is **not required to provide** risk factor disclosures[168](index=168&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Discloses unregistered issuances of common shares for debt conversion, director compensation, and consulting services - The Company issued **750,000 common shares** to Quick Capital as partial conversion of **$57,673** principal[169](index=169&type=chunk) - **3,840,000 common shares** were issued to directors (Nubar Herian, John Keeler, Timothy McLellan, Trond Ringstad, Jeffrey Guzy) for their services[170](index=170&type=chunk) - **406,484 common shares** were issued to Jefferson as partial conversion of **$32,583** principal and accrued interest[171](index=171&type=chunk) - **288,101 common shares** were issued to Diagonal as partial conversion of **$15,000** principal[171](index=171&type=chunk) - **302,762 common shares** were issued to ClearThink's designee for consulting services[172](index=172&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Confirms that no defaults upon senior securities occurred during the reporting period - **No defaults** upon senior securities were reported[173](index=173&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that this disclosure requirement is not applicable to the company's operations - This item is **not applicable** to the Company[174](index=174&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) Reports no adoption or termination of Rule 10b5-1 trading arrangements by directors or officers during the quarter - **No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** were adopted or terminated by directors or officers during the three months ended March 31, 2025[175](index=175&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed with the Form 10-Q, including certifications and XBRL interactive data files - Exhibits include certifications (31.1, 32.1), Inline XBRL Instance Document (101.INS), Taxonomy Extension Schema (101.SCH), Calculation Linkbase (101.CAL), Definition Linkbase (101.DEF), Label Linkbase (101.LAB), Presentation Linkbase (101.PRE), and Cover Page Interactive Data File (104)[176](index=176&type=chunk)

Part I [Business](index=5&type=section&id=ITEM%201.%20BUSINESS) The company is an international seafood importer and packager shifting its focus towards its land-based salmon farming subsidiary and away from certain legacy operations - The company's core business involves importing crab meat from Southeast Asia and Latin America and distributing it in the U.S. and Canada under various brand names[22](index=22&type=chunk) - A strategic shift is underway to focus more on the Coastal Pride and Taste of BC Aquafarms (TOBC) subsidiaries, with plans to phase out the Keeler & Co. operations by **Q2 2025**[25](index=25&type=chunk)[40](index=40&type=chunk) - The company operates a land-based recirculating aquaculture system (RAS) salmon farming operation (TOBC) in Canada, with plans to scale production significantly to **21,000 metric tons by 2028**, contingent on securing funding[29](index=29&type=chunk)[53](index=53&type=chunk) - Growth strategy includes organic expansion, strategic acquisitions of complementary companies, and scaling the RAS salmon business[27](index=27&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - The company emphasizes sustainability and traceability, utilizing a proprietary QR code-enabled application to track products through the supply chain and patented eco-friendly packaging[39](index=39&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) [Risk Factors](index=12&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant operational, financial, and market risks, including a "going concern" warning, dependency on a volatile crab market, and challenges in scaling its new aquaculture venture - The company's independent accounting firm has issued a **"going concern" warning** due to recurring losses and a net capital deficiency, indicating substantial doubt about its ability to continue operations without raising additional capital[111](index=111&type=chunk) - Business operations are highly dependent on the sale of crab meat, a commodity subject to significant price fluctuations and supply risks related to natural population declines[90](index=90&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) - The company is involved in litigation regarding its Fisheries and Oceans Canada license for its TOBC aquaculture farm, which is critical for its operations and expansion plans[96](index=96&type=chunk) - Significant risks are associated with the expansion of the TOBC RAS business, including the ability to produce salmon cost-effectively at a large commercial scale, operational challenges, and maintaining product quality[101](index=101&type=chunk)[107](index=107&type=chunk) - The company's common stock, which trades on the OTCQB Market, is considered a **"penny stock,"** making it subject to rules that can limit liquidity and depress the market price[148](index=148&type=chunk)[151](index=151&type=chunk) [Unresolved Staff Comments](index=27&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) As a smaller reporting company, Blue Star Foods Corp is not required to provide information regarding unresolved staff comments - The company is exempt from this disclosure requirement as it qualifies as a smaller reporting company[162](index=162&type=chunk) [Cybersecurity](index=27&type=section&id=ITEM%201C.%20CYBERSECURITY) Cybersecurity is managed by a third-party provider with board oversight, and no material incidents have affected the company to date - Cybersecurity is managed by a third-party provider with oversight from the company's Board and management[163](index=163&type=chunk)[164](index=164&type=chunk) - The company has not experienced any material cybersecurity incidents[165](index=165&type=chunk) [Properties](index=28&type=section&id=ITEM%202.%20PROPERTIES) The company conducts all operations from leased facilities in Florida, South Carolina, and British Columbia, Canada, and does not own any real estate - The main executive offices are in Miami, FL, under a month-to-month lease for 4,756 sq ft at **$5,800/month**[166](index=166&type=chunk) - Coastal Pride leases a 9,050 sq ft facility in Beaufort, SC, on a month-to-month basis for **$1,500/month** for its soft-shell crab operations[168](index=168&type=chunk) - TOBC's facility in Nanaimo, British Columbia, is on land leased from the former owners under two five-year leases entered into on April 1, 2022, which are renewable for two additional five-year terms[169](index=169&type=chunk) [Legal Proceedings](index=28&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company's subsidiary is engaged in two lawsuits in British Columbia concerning a commercial lease and control of a critical aquaculture license - On July 16, 2024, TOBC filed a lawsuit against its landlords to declare its commercial lease valid and in full effect[171](index=171&type=chunk) - On January 17, 2025, TOBC filed a lawsuit against its former owners, alleging they improperly transferred the essential Fisheries and Oceans Canada aquaculture license into their personal names instead of TOBC's[172](index=172&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's operations Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on the OTCQB, it has never paid dividends, and it has recently issued numerous unregistered shares to settle debt and pay for services - The company's common stock trades on the OTCQB under the symbol "BSFC" with the last reported sale price on June 18, 2025, at **$0.051**[176](index=176&type=chunk)[177](index=177&type=chunk) - The company has a policy of retaining earnings for business development and does not anticipate paying cash dividends[179](index=179&type=chunk) - During 2024 and early 2025, the company issued a significant number of unregistered shares to settle convertible notes with Lind, for consulting services with ClearThink Capital and others, and as commitment fees for various financing agreements[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Fiscal year 2024 saw a significant revenue decline, a shift from gross profit to gross loss, a widening net loss, and a weakened financial position necessitating numerous debt financing activities | Financial Metric | FY 2024 | FY 2023 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $3,593,881 | $6,124,529 | -41.3% | Decrease in poundage sold | | **Gross (Loss) Profit** | ($1,288,990) | $158,077 | -915.4% | Higher market prices and higher inventory reserve | | **Gross Margin** | -35.9% | 2.6% | -38.5 pts | Same as above | | **Other Operating Expenses** | $7,147,468 | $2,525,661 | +177% | Increase in legal/professional fees, valuation allowances, and a $1.5M loss from the Afritex service agreement | | **Net Loss** | ($12,478,487) | ($4,471,612) | +179.1% | Increased gross loss, higher operating expenses, and loss from change in fair value of derivative liabilities | | Liquidity & Cash Flow | As of Dec 31, 2024 | As of Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | **Cash** | $326,854 | $24,163 | +$302,691 | | **Working Capital** | ($411,225) | $899,215 | -$1,310,440 | | **Cash Used in Operations** | ($6,195,893) | ($3,530,662) | +$2,665,231 (increase in use) | | **Cash Provided by Financing** | $6,417,872 | $3,676,355 | +$2,741,517 | - The company executed a **1-for-50 reverse stock split** effective May 20, 2024[194](index=194&type=chunk)[257](index=257&type=chunk) - The company's stock was **delisted from Nasdaq** in December 2024 for failing to meet the minimum bid price requirement and now trades on the OTCQB[199](index=199&type=chunk)[200](index=200&type=chunk) - The company entered into numerous debt and financing agreements throughout 2024 and early 2025 with lenders including Agile, 1800 Diagonal, Hart Associates, FirstFire, Quick Capital, and Jefferson Street Capital to sustain operations[228](index=228&type=chunk)[232](index=232&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Blue Star Foods Corp is not required to provide this information - The company is exempt from this disclosure requirement due to its status as a smaller reporting company[259](index=259&type=chunk) [Financial Statements and Supplementary Data](index=43&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) The audited financial statements include a "going concern" warning from the auditor, reflect restatements for interim 2024 periods, and detail significant debt and equity transactions - The Report of Independent Registered Public Accounting Firm contains a **"Going Concern Matter" paragraph**, citing recurring losses and a net capital deficiency as factors that raise substantial doubt about the company's ability to continue as a going concern[265](index=265&type=chunk)[353](index=353&type=chunk) - Previously issued unaudited financial statements for the interim periods of 2024 were restated due to the incorrect application of ASC 606 revenue recognition standards related to a service agreement with Afritex Texas, resulting in **significant downward adjustments to previously reported revenue**[286](index=286&type=chunk) | Balance Sheet Item | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | $2,554,599 | $6,362,498 | | **Total Liabilities** | $2,746,296 | $3,767,576 | | **Total Stockholders' Equity** | ($191,697) | $2,594,922 | - Subsequent to year-end, in early 2025, the company continued to issue shares to convert debt and for consulting services, and entered into new convertible promissory note and loan agreements to raise capital[458](index=458&type=chunk)[462](index=462&type=chunk)[464](index=464&type=chunk) [Controls and Procedures](index=86&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were ineffective as of year-end 2024 due to several material weaknesses in internal control over financial reporting - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2024[467](index=467&type=chunk) - Several material weaknesses were identified, including: - Inadequate monitoring of inventory at third-party warehouses - Ineffective controls over the financial close and reporting process - Inadequate segregation of duties and lack of technical accounting expertise - Poorly designed controls over related-party transactions[470](index=470&type=chunk)[471](index=471&type=chunk) - Remediation plans include developing an internal control framework and hiring additional accounting personnel, contingent on available resources[471](index=471&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=89&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) The company is led by a five-member Board of Directors and executive officers with experience in the seafood and public company sectors, featuring established governance committees - The Board of Directors consists of five members: John Keeler (Executive Chairman & CEO), Nubar Herian, Jeffrey J Guzy, Timothy McLellan, and Trond Ringstad[476](index=476&type=chunk) - The company has three board committees: Audit, Compensation, and Nominating and Corporate Governance, all chaired by Jeffrey Guzy and composed of directors determined to be independent[483](index=483&type=chunk)[484](index=484&type=chunk)[485](index=485&type=chunk)[487](index=487&type=chunk) - The board of directors oversees risk assessment as an integral part of its governance process[492](index=492&type=chunk) [Executive Compensation](index=94&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) CEO John Keeler's total compensation was $186,608 in 2024, with no employment agreements in place for executives, and director compensation consisted solely of stock awards | Name and Principal Position | Year | Salary ($) | Stock awards ($) | Option awards ($) | All other compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **John Keeler** - CEO | 2024 | 76,878 | 60,000 | - | 49,730 | 186,608 | | **John Keeler** - CEO | 2023 | 76,878 | 500 | - | 43,831 | 121,209 | | **Silvia Alana** - Former CFO | 2024 | 66,000 | - | - | 2,500 | 68,500 | | **Silvia Alana** - Former CFO | 2023 | 147,000 | 25,000 | 12,261 | 5,700 | 189,961 | | **Miozotis Ponce** - COO | 2024 | 155,925 | - | - | 6,000 | 161,925 | | **Miozotis Ponce** - COO | 2023 | 166,000 | - | - | 5,700 | 171,700 | - The company does not have employment agreements with its executive officers[508](index=508&type=chunk) - Equity compensation is managed under the 2018 Equity Incentive Award Plan, which reserves **7,500,000 shares** for various awards like stock options, RSUs, and performance awards[513](index=513&type=chunk)[515](index=515&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=100&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) As of June 20, 2025, directors and executive officers as a group beneficially owned 26.7% of the company's common stock | Name | Number of Shares Beneficially Owned | Percentage of Beneficial Ownership | | :--- | :--- | :--- | | **Jeffrey Guzy** (Director) | 1,448,176 | 8.9% | | **Timothy McLellan** (Director) | 965,684 | 5.9% | | **Trond Ringstad** (Director) | 965,689 | 5.9% | | **John Keeler** (CEO) | 498,489 | 3.0% | | **Nubar Herian** (Director) | 484,508 | 3.0% | | **All current directors and executive officers as a group (6 persons)** | 4,362,796 | 26.7% | [Certain Relationships and Related Transactions, and Director Independence](index=101&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The company engaged in significant transactions with entities controlled by CEO John Keeler, including inventory prepayments and receivables for which full valuation allowances were recorded in 2024 - CEO John Keeler owns 95% of Bacolod, a key supplier; as of year-end 2024, the company had a receivable of **$1,299,984** for future shipments from Bacolod, for which a full allowance was recorded[546](index=546&type=chunk)[547](index=547&type=chunk) - The company has a long-term receivable from Strike the Gold Foods, Ltd, an entity 80% owned by CEO John Keeler; in 2024, the company recorded a **full valuation allowance** against the entire balance due to uncertainty of collection[548](index=548&type=chunk)[552](index=552&type=chunk) - Promissory notes previously issued to CEO John Keeler were **fully paid off** during 2024[545](index=545&type=chunk) - All directors are considered independent except for John Keeler (Executive Chairman and CEO)[553](index=553&type=chunk) [Principal Accountant Fees and Services](index=102&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Total fees billed by the principal accountant, MaloneBailey, LLP, were $299,260 in fiscal year 2024, consisting entirely of audit fees | Fee Category | FY 2024 | FY 2023 | | :--- | :--- | :--- | | **Audit fees** | $299,260 | $221,800 | | **Audit-related fees** | - | $53,560 | | **Tax fees** | - | - | | **All other fees** | - | - | | **Total fees** | $299,260 | $275,360 | Part IV [Exhibits and Financial Statement Schedules](index=103&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all exhibits filed with the Form 10-K, including corporate governance documents, financing agreements, and required officer certifications [Form 10-K Summary](index=110&type=section&id=ITEM%2016.%20FORM%2010%E2%80%93K%20SUMMARY) No summary is provided under this item - This section is intentionally left blank[567](index=567&type=chunk)

Company Overview - Blue Star Foods Corp. is an integrated Environmental, Social, and Governance (ESG) sustainable seafood company focusing on Recirculatory Aquaculture Systems (RAS) [2][5] - The company processes, packages, and sells high-value seafood products and operates the oldest continuously running land-based RAS full grow-out salmon farm in North America [5] Industry Insights - The sushi restaurant industry in the U.S. has experienced significant growth, with a 163% increase in market size over the past 10 years, reaching $27.9 billion in 2022 [4] - The market is projected to continue expanding, with an estimated value of $34.9 billion by 2025 [4] - Sushi has become one of the most popular cuisines in the U.S., with approximately 30,000 sushi restaurants operating nationwide [4] Strategic Initiatives - The company has launched an Asian Food Division focusing on high-value sushi categories to capitalize on the growing popularity of Japanese cuisine and health-conscious dining preferences [3] - High-value sushi products include Hamachi, responsibly raised and harvested in Japan's Kagawa prefecture, Seto Inland Sea, and Kagoshima Bay [3] - The company aims to increase sales and rebuild shareholder value through its entry into the sushi market, leveraging its Japanese-speaking team for sourcing and relationships [4]

Core Viewpoint - Blue Star Foods Corp. has been included in the OTC Markets Group's OTCQB Venture Market, highlighting its commitment to transparency and accessibility in financial markets, thereby reinforcing its position as a leader in sustainable seafood production [1][2]. Group 1: OTCQB Venture Market Inclusion - The OTCQB Venture Market is characterized by high financial reporting standards and advanced corporate governance, which enhances investor visibility [2]. - Blue Star Foods' listing on the OTCQB demonstrates its dedication to transparency, financial integrity, and investor confidence [2][3]. Group 2: Advantages of OTCQB Quotation - Enhanced Transparency: The company is committed to providing comprehensive financial reports, ensuring stakeholders have access to crucial information for investment decisions [4]. - Increased Visibility: The listing elevates Blue Star Foods' profile, attracting a broader spectrum of investors and facilitating greater market exposure [5]. - Credibility and Trust: The OTCQB quotation reinforces trust among investors and business partners, affirming the company's commitment to ethical practices and sustainability [6]. - Access to Capital Markets: Joining the OTCQB provides heightened access to capital, essential for driving sustainable growth and funding expansion initiatives [7]. Group 3: Company Overview - Blue Star Foods Corp. focuses on Recirculatory Aquaculture Systems (RAS) and processes, packages, and sells high-value seafood products, utilizing best-in-class technology for sustainability and traceability [8]. - The company operates the oldest continuously running RAS full grow-out salmon farm in North America, emphasizing its commitment to innovation and environmental stewardship [8].

Core Viewpoint - Blue Star Foods Corp. will be delisted from Nasdaq due to a violation of the Minimum Bid Price Requirement and will commence trading on OTC Markets on December 20, 2024 [2][3]. Company Overview - Blue Star Foods Corp. is an integrated Environmental, Social, and Governance (ESG) sustainable seafood company focused on Recirculatory Aquaculture Systems (RAS) [4]. - The company processes, packages, and sells high-value seafood products and operates the oldest continuously operating RAS full grow-out salmon farm in North America [4]. Financial Position - The company has returned to revenue growth and maintains a strong cash position, as stated by the Chairman and CEO [3]. - The decision not to appeal the delisting is seen as a positive move, allowing the company to lower public company costs and avoid an immediate reverse split [3]. Future Plans - Blue Star Foods intends to apply for listing on the OTCQB as soon as practicable [3].

Revenue and Profitability - Revenue for the three months ended September 30, 2024 decreased 43.4% to $884,283 compared to $1,561,679 for the same period in 2023 due to a decrease in poundage sold[50] - Revenue for the nine months ended September 30, 2024 decreased 3.8% to $4,921,170 compared to $5,115,680 for the same period in 2023, also due to a decrease in poundage sold[52] - Gross profit for the nine months ended September 30, 2024 increased to $461,712 from $340,578 for the same period in 2023, attributed to a decrease in costs[52] - Net loss for the three months ended September 30, 2024 was $1,325,147, an increase from a net loss of $445,813 for the same period in 2023, primarily due to changes in fair value of derivative and warrant liabilities[51] Expenses and Cash Flow - Cost of goods sold for the three months ended September 30, 2024 decreased to $887,850 from $1,586,478 for the same period in 2023, attributed to the decrease in poundage sold[50] - Other operating expense increased to $2,026,787 for the nine months ended September 30, 2024 from $1,773,702 for the same period in 2023, mainly due to increased legal and professional expenses[53] - Cash used in operating activities during the nine months ended September 30, 2024 was $4,285,630, an increase from $3,112,126 for the same period in 2023, primarily due to a decrease in payables and customer refunds[54] Financing Activities - Cash provided by financing activities for the nine months ended September 30, 2024 was $4,350,018, compared to $3,667,373 for the same period in 2023, mainly due to proceeds from short-term loans and share issuances[54] - The Company issued a secured, two-year, interest-free convertible promissory note to Lind for $1,200,000 and a warrant to purchase 435,035 shares at an exercise price of $2.45 per share[56] - The Company made aggregate principal payments on the Lind Note of $1,144,900 through the issuance of 571,531 shares of common stock during the nine months ended September 30, 2024[56] - The Company entered into a Purchase Agreement Amendment allowing for the issuance of further senior convertible promissory notes up to $1,800,000[56] - The Company issued an additional convertible promissory note of $300,000 and a warrant for 175,234 shares for an aggregate amount of $250,000[56] Liquidity and Capital Resources - As of September 30, 2024, the company had cash of $72,697 and a working capital surplus of $2,527,851, with primary liquidity sources including inventory of $2,366,056 and accounts receivable of $1,316,093[54] Internal Controls and Management - Management identified material weaknesses in internal controls, including inadequate inventory monitoring and ineffective financial close processes[60] - Management plans to create a position to segregate duties and hire personnel with technical accounting expertise to address identified weaknesses[61] Legal Proceedings and Other Matters - There were no material pending legal proceedings involving the Company or its affiliates[62] - The Company has no off-balance sheet arrangements[57] - The Company issued an aggregate of 93,743 shares of common stock for consulting services from January 1, 2024, to November 8, 2024[63] Business Development - The company entered into a vendor agreement with Low Tide LLC to promote and sell seafood products under the Wicked Tuna and Toby Keith brands[48]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section covers unaudited financial statements, management's analysis, market risk, and internal controls [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited consolidated financial statements, including balance sheets, income, equity, and cash flow statements, with detailed accounting notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | June 30, 2024 | December 31, 2023 | |:---------------------------|:--------------|:------------------| | Total Assets | $8,104,796 | $6,362,498 | | Total Liabilities | $3,489,951 | $3,767,576 | | Total Stockholders' Equity | $4,614,845 | $2,594,922 | - Total Assets increased by approximately **$1.74 million**, driven by increases in cash and cash equivalents, accounts receivable, inventory, and other current assets[8](index=8&type=chunk) - Total Liabilities decreased by approximately **$0.28 million**, primarily due to a reduction in derivative and warrant liabilities, and debt[8](index=8&type=chunk) - Total Stockholders' Equity increased by approximately **$2.02 million**, reflecting new common stock issuances for cash and note payments, partially offset by net loss[8](index=8&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Details financial performance, including revenue, cost, gross profit, and net loss for the three and six months ended June 30 | Metric (Three Months Ended June 30) | 2024 | 2023 | Change (%) | |:------------------------------------|:--------------|:--------------|:-----------| | Revenue, Net | $1,776,558 | $1,655,562 | 7.3% | | Cost of Revenue | $1,482,041 | $1,574,547 | -5.8% | | Gross Profit | $294,517 | $81,015 | 263.5% | | Loss from Operations | $(691,723) | $(1,076,252) | -35.7% | | Net Loss | $(1,841,967) | $(1,451,735) | 26.9% | | Net Loss per Common Share (basic & diluted) | $(1.52) | $(30.68) | -95.0% | | Metric (Six Months Ended June 30) | 2024 | 2023 | Change (%) | |:----------------------------------|:--------------|:--------------|:-----------| | Revenue, Net | $4,036,887 | $3,554,001 | 13.6% | | Cost of Revenue | $3,571,608 | $3,188,624 | 12.0% | | Gross Profit | $465,279 | $365,377 | 27.3% | | Loss from Operations | $(1,533,922) | $(2,026,460) | -24.3% | | Net Loss | $(2,935,062) | $(3,403,137) | -13.7% | | Net Loss per Common Share (basic & diluted) | $(3.39) | $(83.85) | -95.9% | - Gross profit significantly increased for both the three-month and six-month periods due to higher sales and reduced cost of goods sold (three months) or increased sales (six months)[121](index=121&type=chunk)[126](index=126&type=chunk) - Net loss increased for the three months ended June 30, 2024, primarily due to a loss from the change in fair value of derivative and warrant liabilities and higher interest expense[124](index=124&type=chunk)[125](index=125&type=chunk) - Net loss decreased for the six months ended June 30, 2024, mainly due to the absence of a significant loss on settlement of debt compared to the prior year[130](index=130&type=chunk)[131](index=131&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)) Outlines changes in stockholders' equity, including stock issuances and net loss, from December 31, 2023, to June 30, 2024 - Stockholders' Equity increased from **$2,594,922** at December 31, 2023, to **$4,614,845** at June 30, 2024[10](index=10&type=chunk)[11](index=11&type=chunk) - Key drivers of the increase include common stock issued for cash (**$2,146,055**) and for note payments (**$1,684,751**), partially offset by a net loss of **$1,841,967** for the quarter[10](index=10&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Presents cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30 | Cash Flow Activity (Six Months Ended June 30) | 2024 | 2023 | |:----------------------------------------------|:--------------|:--------------| | Net Cash (Used in) Operating Activities | $(2,639,077) | $(1,573,217) | | Net Cash (Used in) Investing Activities | $(57,797) | $(15,351) | | Net Cash Provided by Financing Activities | $2,650,048 | $1,538,386 | | Net Increase in Cash and Cash Equivalents | $48,947 | $(2,170) | | Cash and Cash Equivalents – End of Period | $73,110 | $7,092 | - Cash used in operating activities increased significantly in 2024, primarily due to decreases in payables and customer refunds, and increases in inventory and other current assets[132](index=132&type=chunk) - Cash provided by financing activities increased, driven by proceeds from common stock offerings and short-term loans, with no repayments of the working capital line of credit in 2024[133](index=133&type=chunk) [Note 1. Company Overview](index=11&type=section&id=Note%201.%20Company%20Overview) Outlines Blue Star Foods Corp.'s business, revenue sources, and recent corporate actions, including a reverse stock split - Blue Star Foods Corp. is an international sustainable marine protein company importing, packaging, and selling refrigerated pasteurized crab meat and other premium seafood products[14](index=14&type=chunk)[101](index=101&type=chunk) - The Company's revenue sources include blue and red swimming crab meat under various brands, steelhead salmon and rainbow trout under Little Cedar Farms, and packaged seafood raw materials via AFVFL[14](index=14&type=chunk)[21](index=21&type=chunk)[101](index=101&type=chunk) - AFVFL, a wholly-owned subsidiary, was incorporated on February 1, 2024, to purchase raw materials from Afritex for packaged seafood and other inventory[18](index=18&type=chunk) - A **1-for-50 reverse stock split** became effective on May 20, 2024, with all share and per share amounts retrospectively adjusted[7](index=7&type=chunk)[18](index=18&type=chunk)[102](index=102&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=13&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) Details significant accounting policies, including revenue recognition, inventory valuation, lease accounting, and fair value measurements for financial liabilities - The interim financial statements are unaudited and prepared in accordance with SEC rules and GAAP, reflecting normal recurring adjustments[19](index=19&type=chunk) - Revenue is recognized when customers obtain control of promised goods, primarily from selling crab meat, steelhead salmon, and packaged seafood to food service distributors, wholesalers, and retailers[21](index=21&type=chunk)[22](index=22&type=chunk) - Inventory is valued at the lower of cost or net realizable value, with cost determined by specific identification for crab meat and raw materials, and estimated biomass for fish in process[26](index=26&type=chunk) - The Company recorded an inventory allowance of **$546,923** for the six months ended June 30, 2024, compared to **$176,000** for the year ended December 31, 2023[27](index=27&type=chunk) | Inventory Category | June 30, 2024 | December 31, 2023 | |:-----------------------------------|:--------------|:------------------| | Inventory purchased for resale | $1,955,424 | $1,708,311 | | Feeds and eggs processed | $50,979 | $102,373 | | Raw materials for packaged seafood | $248,186 | $- | | Packaged seafood inventory | $897,388 | $- | | Inventory other | $33,054 | $- | | In-transit inventory | $- | $973,837 | | Less: Inventory allowance | $(546,923) | $(176,000) | | **Inventory, net** | **$2,638,108**| **$2,608,521** | - Leases are accounted for under ASC 842, with operating lease assets of **$104,788** and current operating lease liabilities of **$35,852** as of June 30, 2024[30](index=30&type=chunk)[31](index=31&type=chunk)[34](index=34&type=chunk) | Fair Value Measurement (Level 3 Liabilities) | June 30, 2024 | December 31, 2023 | |:---------------------------------------------|:--------------|:------------------| | Derivative liability on convertible debt | $484,350 | $1,047,049 | | Warrant liability | $550 | $1,574 | | **Total** | **$484,900** | **$1,048,623** | - The fair value of derivative and warrant liabilities decreased significantly, primarily due to the settlement of derivative liability and changes in fair value[41](index=41&type=chunk)[42](index=42&type=chunk) [Note 3. Going Concern](index=18&type=section&id=Note%203.%20Going%20Concern) Addresses the company's ability to continue as a going concern, citing net losses and accumulated deficit, and outlines plans for financial sustainability - The Company incurred a net loss of **$2,935,062** and had an accumulated deficit of **$36,745,794** for the six months ended June 30, 2024, raising substantial doubt about its ability to continue as a going concern[45](index=45&type=chunk) - Continuation as a going concern depends on increasing revenues, executing business plans to acquire complementary companies, raising capital, and maintaining adequate working capital[45](index=45&type=chunk) [Note 4. Other Current Assets](index=19&type=section&id=Note%204.%20Other%20Current%20Assets) Details the composition and changes in other current assets, including prepaid inventory, legal and accounting fees, and receivables for share issuances - Other current assets increased to **$2,455,069** as of June 30, 2024, from **$833,472** as of December 31, 2023[46](index=46&type=chunk) - The increase is primarily due to prepaid inventory (**$551,800**), prepaid legal and accounting fees (**$234,200**), and receivables for shares issuance per the securities purchase agreement with ClearThink (**$821,650**)[46](index=46&type=chunk) [Note 5. Fixed Assets, Net](index=19&type=section&id=Note%205.%20Fixed%20Assets,%20Net) Presents the breakdown and net value of fixed assets, including computer equipment, RAS system, leasehold improvements, and building improvements | Fixed Asset Category | 2024 | 2023 | |:---------------------|:--------------|:--------------| | Computer equipment | $52,625 | $47,908 | | RAS system | $150,424 | $140,214 | | Leasehold improvements | $17,904 | $17,904 | | Building Improvements | $179,523 | $136,653 | | Total | $400,476 | $342,679 | | Less: Accumulated depreciation | $(41,498) | $(38,822) | | **Fixed assets, net**| **$358,978** | **$303,857** | - Net fixed assets increased to **$358,978** as of June 30, 2024, from **$303,857** at December 31, 2023, driven by additions to computer equipment, RAS system, and building improvements[47](index=47&type=chunk) [Note 6. Debt](index=19&type=section&id=Note%206.%20Debt) Details the company's debt obligations, including revolving lines of credit, promissory notes, and convertible debt, along with related interest expenses and repayments - The Company terminated its **$5,000,000** revolving line of credit with Lighthouse Financial Corp. on June 16, 2023, by paying off the outstanding balance[51](index=51&type=chunk) - Outstanding principal on John Keeler Promissory Notes was approximately **$44,000** at June 30, 2024, with **$121,582** in principal payments made during the six months ended June 30, 2024[52](index=52&type=chunk) - The outstanding principal balance on the Walter Lubkin Jr. Note was **$100,000** as of June 30, 2024, with **$250,000** paid in common stock during 2023[53](index=53&type=chunk) - The 2022 Lind Note was extinguished on September 15, 2023, after a payment of **$2,573,142**[60](index=60&type=chunk) - For the 2023 Lind Note, **$944,900** of principal was converted into **441,831 shares** of common stock during the six months ended June 30, 2024, leaving an outstanding balance of **$555,100**[68](index=68&type=chunk) - The Company entered into several subordinated business loan agreements with Agile Lending, LLC in 2023 and 2024, with varying principal amounts and maturity dates, primarily for working capital[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) - Interest expense increased to **$1,206,316** for the six months ended June 30, 2024, from **$670,453** in the prior year, mainly due to amortization of Lind convertible debt discount and payments on the 2023 Lind note[79](index=79&type=chunk)[130](index=130&type=chunk) [Note 7. Stockholders' Equity](index=26&type=section&id=Note%207.%20Stockholders'%20Equity) Details changes in stockholders' equity, including common stock issuances for cash, note conversions, and commitment fees during the six months ended June 30, 2024 - During the six months ended June 30, 2024, the Company issued **1,339,656 shares** of common stock for **$2,982,415** in proceeds, with **$2,160,765** received in cash by June 30, 2024[83](index=83&type=chunk) - An additional **441,831 shares** of common stock were issued to Lind as partial conversion of **$944,900** principal from the May 2023 convertible promissory note[84](index=84&type=chunk) - Other issuances include **7,092 shares** to ClearThink for a commitment fee (**$50,000** fair value), **100,000 shares** for the Afritex Option Agreement (**$630,000** fair value), and **10,000 shares** to Hart for a commitment fee (**$23,300** fair value)[83](index=83&type=chunk) [Note 8. Options](index=26&type=section&id=Note%208.%20Options) Summarizes option activity, including outstanding, forfeited, expired, and vested options, and the impact on stock compensation expense for the period | Option Activity (Six Months Ended June 30, 2024) | Number of Options | |:-------------------------------------------------|:------------------| | Outstanding – December 31, 2023 | 6,331 | | Forfeited | 896 | | Expired | 500 | | Vested | 4,078 | | Outstanding – June 30, 2024 | 4,935 | - The Company recognized a net credit to stock compensation expense of **$5,623** due to option forfeitures[85](index=85&type=chunk) [Note 9. Warrants](index=27&type=section&id=Note%209.%20Warrants) Details warrant activity, including outstanding, forfeited, and expired warrants, and the accounting treatment for warrants issued in connection with debt | Warrant Activity (Six Months Ended June 30, 2024) | Number of Warrants | |:--------------------------------------------------|:-------------------| | Outstanding – December 31, 2023 | 14,619 | | Forfeited or Expired | (2,144) | | Outstanding – June 30, 2024 | 12,475 | - No warrant activity (granted, exercised) occurred during the six months ended June 30, 2024, other than forfeitures/expirations[88](index=88&type=chunk) - Warrants issued in connection with the May 2023 and July 2023 Lind promissory notes (**8,701** and **3,505 shares**, respectively) were recorded as liabilities[86](index=86&type=chunk)[87](index=87&type=chunk) - Series A-1 and A-2 warrants issued in September 2023 are not considered outstanding as of June 30, 2024, as their exercise is contingent upon stockholder approval, which has not been obtained[87](index=87&type=chunk)[88](index=88&type=chunk) [Note 10. Commitment and Contingencies](index=29&type=section&id=Note%2010.%20Commitment%20and%20Contingencies) Outlines the company's various lease agreements for offices and facilities, and reports on rental and equipment lease expenses for the period - The Company has various office and facility lease agreements, including month-to-month verbal agreements and a five-year lease for TOBC's offices and facility[90](index=90&type=chunk)[91](index=91&type=chunk) - Rental and equipment lease expenses were approximately **$76,957** for the six months ended June 30, 2024, a decrease from **$92,705** in the prior year[92](index=92&type=chunk) [Note 11. Subsequent Events](index=29&type=section&id=Note%2011.%20Subsequent%20Events) Reports on significant events occurring after June 30, 2024, including stock issuances, new loan agreements, and a lawsuit filing - In July 2024, the Company issued **129,700 shares** to Lind as partial conversion of a **$200,000** principal from the May 2023 convertible promissory note[93](index=93&type=chunk) - In July 2024, **9,900 shares** were issued to ClearThink's designee for **$11,000** in consulting services[93](index=93&type=chunk) - On July 25, 2024, the Company entered into a **$210,000** term loan with Agile, due January 31, 2025, with weekly payments of **$10,889**[93](index=93&type=chunk) - In August 2024, the Company entered into a private placement offering of **$550,000** in promissory notes with Quick Capital and Jefferson Street Capital, issuing **39,300 shares** as a commitment fee[94](index=94&type=chunk)[95](index=95&type=chunk) - On July 16, 2024, TOBC filed a lawsuit in British Columbia against its landlords regarding the validity of its commercial lease[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operations, liquidity, and capital resources for the three and six months ended June 30, 2024, highlighting recent corporate events and performance [Overview](index=31&type=section&id=Overview) Provides a brief overview of Blue Star Foods Corp.'s business as an international seafood company and its primary revenue sources - The Company is an international seafood company focused on importing, packaging, and selling refrigerated pasteurized crab meat and other premium seafood products[101](index=101&type=chunk) - Primary revenue sources include blue and red swimming crab meat, packaged seafood raw materials via AFVFL, and steelhead salmon and rainbow trout fingerlings under the Little Cedar Farms brand[101](index=101&type=chunk) [Recent Events](index=31&type=section&id=Recent%20Events) Highlights key corporate events, including a reverse stock split, board resignation, NASDAQ compliance, and various debt and equity financing activities - A **1-for-50 reverse stock split** became effective on May 20, 2024, following board and stockholder approval[102](index=102&type=chunk) - Silvia Alana resigned as a director and Chief Financial Officer, effective May 28, 2024[104](index=104&type=chunk) - The Company regained compliance with NASDAQ's minimum bid price and stockholders' equity requirements as of June 11, 2024, but is subject to a one-year discretionary panel monitor[104](index=104&type=chunk)[105](index=105&type=chunk) - New Agile Loans were secured in May and July 2024, totaling **$210,000** each, for general corporate purposes and to pay off existing loan balances[105](index=105&type=chunk)[107](index=107&type=chunk) - A FirstFire Note for **$240,000** (with a **$40,000** discount) was issued on May 17, 2024, accruing **19% interest** per annum, with mandatory monthly payments[107](index=107&type=chunk)[108](index=108&type=chunk) - A waiver and acknowledgement agreement was entered with Lind Global Fund II LP on August 3, 2024, regarding an at-the-market offering, with specific conditions on sales volume and payments to Lind[109](index=109&type=chunk)[110](index=110&type=chunk) - An August 2024 Private Placement Offering of **$550,000** in promissory notes was executed with Quick Capital and Jefferson Street Capital, including commitment fees in common stock and a conversion option for investors[112](index=112&type=chunk)[113](index=113&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Analyzes financial performance, including net revenue, cost of goods sold, gross profit, operating expenses, interest, and net loss for the three and six months ended June 30 | Metric (Three Months Ended June 30) | 2024 | 2023 | Change (%) | |:------------------------------------|:--------------|:--------------|:-----------| | Net Revenue | $1,776,558 | $1,655,562 | 7.3% | | Cost of Goods Sold | $1,482,041 | $1,574,547 | -5.8% | | Gross Profit | $294,517 | $81,015 | 263.5% | | Salaries and Wages Expense | $295,449 | $466,127 | -36.7% | | Other Operating Expense | $689,414 | $662,699 | 4.0% | | Interest Expense | $871,249 | $315,787 | 176.0% | | Net Loss | $(1,841,967) | $(1,451,735) | 26.9% | | Metric (Six Months Ended June 30) | 2024 | 2023 | Change (%) | |:----------------------------------|:--------------|:--------------|:-----------| | Net Revenue | $4,036,887 | $3,554,001 | 13.6% | | Cost of Goods Sold | $3,571,608 | $3,188,624 | 12.0% | | Gross Profit | $465,279 | $365,377 | 27.3% | | Salaries and Wages Expense | $597,239 | $996,965 | -40.1% | | Other Operating Expense | $1,395,065 | $1,362,789 | 2.4% | | Interest Expense | $1,206,316 | $670,453 | 79.9% | | Net Loss | $(2,935,062) | $(3,403,137) | -13.7% | - Revenue increased for both periods due to higher poundage sold[121](index=121&type=chunk)[126](index=126&type=chunk) - Salaries and wages expense decreased significantly due to a strategic reduction in salaries[122](index=122&type=chunk)[127](index=127&type=chunk) - Interest expense rose substantially, driven by the amortization of the Lind convertible debt discount and payments on the 2023 Lind note[125](index=125&type=chunk)[130](index=130&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's liquidity position, including cash, working capital, and cash flows from operating and financing activities - As of June 30, 2024, the Company had cash of **$73,110** and a working capital surplus of **$2,534,259**[132](index=132&type=chunk) - Cash used in operating activities increased to **$2,639,077** for the six months ended June 30, 2024, from **$1,573,217** in the prior year, mainly due to changes in payables, customer refunds, and inventory[132](index=132&type=chunk) - Cash provided by financing activities increased to **$2,650,048**, primarily from common stock offerings and short-term loans, with no repayments of the working capital line of credit[133](index=133&type=chunk) [Off-Balance Sheet Arrangements](index=38&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms that the Company currently has no off-balance sheet arrangements - The Company currently has no off-balance sheet arrangements[133](index=133&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Blue Star Foods Corp. is not required to provide detailed quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide information under this item[135](index=135&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2024, due to material weaknesses, with remediation planned - Disclosure controls and procedures were deemed ineffective as of June 30, 2024[136](index=136&type=chunk) - Material weaknesses identified include: * Inadequate control over inventory monitoring in third-party warehouses * Ineffective controls over the financial close and reporting process * Inadequate segregation of duties, lack of personnel resources, and technical accounting expertise[137](index=137&type=chunk) - Planned remediation initiatives include creating a position to segregate duties, hiring personnel with technical accounting expertise, and establishing an internal control framework for financial close and reporting[138](index=138&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the period[139](index=139&type=chunk) [PART II - OTHER INFORMATION](index=29&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, unregistered equity sales, defaults, and other miscellaneous information and exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) There are no material pending legal proceedings to which the Company or its affiliates are a party, or in which any director, officer, or significant security holder has a material adverse interest - No material pending legal proceedings are reported[139](index=139&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Blue Star Foods Corp. is not required to provide specific risk factor disclosures under this item in its Form 10-Q - The Company is a smaller reporting company and is not required to provide information under this item[140](index=140&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company reported several unregistered sales of equity securities, primarily common stock for consulting services and in satisfaction of convertible promissory notes - Common stock issued to ClearThink Capital's designee for consulting services: * January 23, 2024: **1,528 shares** * February 1, 2024: **1,654 shares** * March 8, 2024: **2,056 shares** * April 8, 2024: **2,391 shares** * May 10, 2024: **3,928 shares** * July 1, 2024: **9,900 shares**[141](index=141&type=chunk) - Common stock issued to Lind in satisfaction of a convertible promissory note: * June 6, 2024: **55,954 shares** * June 13, 2024: **55,954 shares** * June 27, 2024: **113,751 shares** * June 28, 2024: **56,970 shares** * July 17, 2024: **64,850 shares** * July 23, 2024: **64,850 shares**[141](index=141&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[141](index=141&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - This item is not applicable[141](index=141&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item - No other information was reported[142](index=142&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including certifications, forms of agreements for the August 2024 Private Placement Offering, and Inline XBRL documents - Key exhibits include: * Certifications of Principal Executive and Financial Officers (31.1, 31.2, 32.1, 32.2) * Forms of Securities Purchase Agreement, Promissory Note, and Registration Rights Agreement for the August 2024 Private Placement Offering (10.86, 10.87, 10.88) * Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[144](index=144&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES) Lists the signatories and their titles for the report, confirming its official submission - The report was signed by John Keeler, Executive Chairman and Chief Executive Officer, and Claudia Campos, Corporate Controller, on August 14, 2024[146](index=146&type=chunk)

Group 1 - BSFC stock has seen over 10 million shares traded, significantly exceeding its daily average of approximately 1.1 million shares and its float of 900,930 units [1] - The stock is classified as a penny stock, with a prior closing price of $1.68 and a market capitalization of $1.769 million [2] - As of Thursday morning, BSFC stock has increased by 74.4% [4] Group 2 - The heavy trading activity of BSFC stock is occurring without any clear news or earnings reports from the company, nor any analyst coverage to explain the rally [8] - The current investment in BSFC is considered risky, with potential volatility driven by speculative trading and lack of stability [3][9]

Core Viewpoint - Blue Star Foods Corp. is implementing advanced technology combining Artificial Intelligence (AI) and Ultraviolet (UV) light to enhance the soft-shell crab molting identification process, aiming to improve operational efficiency and profitability [1][2][6]. Technology Implementation - The integration of AI with UV light technology is expected to automate the identification of molting crabs, significantly reducing labor hours and costs while enhancing operational efficiency and decreasing mortality rates [2][3][11]. - The AI system will continuously monitor crab tanks under UV light, identifying molting crabs based on fluorescence changes, which will improve accuracy in distinguishing between busters and peelers [10][13]. Operational Analysis and Benefits - The new technology is projected to improve yield rates by 50%, leading to an estimated 12.5% increase in profits, approximately $9 per dozen of live soft-shell crabs [8][11]. - The implementation is anticipated to enhance the average biennial survival rates of crabs, which currently stand at 75%, thereby increasing operational profitability [4][11]. Pilot Study and Performance Metrics - A pilot study is being conducted to compare key performance indicators between traditional manual methods and the AI-UV system, focusing on accuracy, labor hours, mortality rates, and costs [5][12]. - Observations indicate that the night shift experiences a 30% increase in molting crabs, but also faces challenges due to worker fatigue, which the AI-UV system aims to mitigate [9]. Industry Context - The soft-shell crab industry faces high labor costs due to the manual identification process, which is time-consuming and prone to errors, leading to high mortality rates and operational inefficiencies [2][16].