[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].

Core Insights - Blue Star Foods Corp. reported a 19% revenue increase in Q1 2024 compared to Q1 2023, indicating strong growth momentum and a positive outlook for 2024-2025 [2][4] - The company forecasts at least 65% revenue growth for 2024, with an annual run-rate exceeding $20 million, driven by new business opportunities and an expanding customer base [4][5] Company Overview - Blue Star Foods is an integrated Environmental, Social, and Governance (ESG) sustainable seafood company specializing in Recirculatory Aquaculture Systems (RAS) [3][4] - The company operates the oldest continuously running RAS full grow-out salmon farm in North America, located in Miami, Florida [3] Business Development - The company has successfully secured new business opportunities, particularly increasing its customer base at its Canadian facility for steelhead salmon [5]

Core Insights - Blue Star Foods Corp. has received a renewal for its land-based aquaculture license, extending it through 2033, which allows the company to continue its aquaculture activities under the Fisheries Act [1][2][3] Company Overview - Blue Star Foods is an integrated Environmental, Social, and Governance (ESG) sustainable seafood company focused on Recirculatory Aquaculture Systems (RAS) [1][3] - The company operates the oldest continuously running RAS full grow-out salmon farm in North America and emphasizes resource sustainability management and ecological packaging [3] License Details - The renewed aquaculture license covers operations at the Taste of BC Aquafarms, which includes the cultivation of white sturgeon, coho salmon, chinook salmon, and rainbow trout [2] - The license renewal is seen as a significant step for the company, providing a stable period to maintain its land-based facilities [3]

Company Compliance - Blue Star Foods Corp. has demonstrated compliance with the bid price requirement in Listing Rule 5550(a)(2) and the minimum stockholders' equity requirement in Listing Rule 5550(b)(1) as confirmed by a letter from the Nasdaq Hearings Panel on June 11, 2024 [1] - The company will be subject to a Discretionary Panel Monitor for a period of one year, until June 11, 2025, to ensure continued compliance with listing requirements [3] Company Overview - Blue Star Foods Corp. is an integrated Environmental, Social, and Governance (ESG) sustainable seafood company focusing on Recirculatory Aquaculture Systems (RAS) [1][4] - The company processes, packages, and sells high-value seafood products and claims to utilize best-in-class technology for resource sustainability management and traceability [4] - Blue Star Foods operates the oldest continuously operating RAS full grow-out salmon farm in North America, based in Miami, Florida [4]

Core Viewpoint - Blue Star Foods Corp. has reported a significant increase in revenues and a notable reduction in losses for the first quarter of 2024, indicating a positive turnaround in financial performance [2][4]. Financial Highlights - Revenue for the three months ended March 31, 2024, increased by 19% to $2.3 million compared to $1.9 million for the same period in 2023, primarily due to an increase in poundage sold [6][7]. - Net loss decreased by 44% to $1.1 million from $1.9 million year-over-year, with net loss per share improving from ($1.16) to ($0.04) [6][7]. - Adjusted EBITDA loss decreased by 35% to $0.6 million compared to $0.9 million for the same period in 2023 [6][7]. Business Highlights - The company successfully commenced production at its Recirculatory Aquaculture Systems (RAS) platform in South Carolina, which includes over 100 tanks [4]. - A Master Service Agreement (MSA) was executed with a fully integrated seafood provider, aimed at sourcing, operations, and distribution, along with a supply agreement to provide food solutions for the U.S. Military [4][6]. - The company reported an inventory and RAS biomass valued at $2.3 million [6].

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] Reverse Stock Split Announcement - Blue Star Foods Corp. will implement a 1-for-50 reverse stock split of its Class A common stock, effective at 12:01 am, Eastern Time, on May 20, 2024 [1][3] - Each 50 shares of issued and outstanding common stock will be reclassified into one new share, with no fractional shares issued; all fractional shares will be rounded up [1][3] - The total number of authorized shares will remain at 100,000,000 [1] Compliance with Nasdaq Requirements - The reverse stock split aims to bring the company into compliance with the $1.00 minimum bid price requirement for maintaining its Nasdaq listing [3] - The board of directors approved the reverse stock split on May 7, 2024, and shareholders approved it on April 30, 2024 [3] Trading Information - Post-split, Blue Star's common stock will continue to trade on The Nasdaq Capital Market under the existing symbol "BSFC" and will begin trading on a split-adjusted basis on May 20, 2024 [2]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited consolidated financial statements for Q1 2024, including balance sheets, statements of operations, equity, cash flows, and notes [Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) | ASSETS / LIABILITIES AND STOCKHOLDERS' EQUITY | March 31, 2024 | December 31, 2023 | | :-------------------------------------------- | :------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $22,298 | $24,163 | | Accounts receivable, net | $910,815 | $534,195 | | Inventory, net | $2,280,480 | $2,608,521 | | Total Current Assets | $4,539,604 | $4,095,876 | | Total Assets | $6,858,362 | $6,362,498 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable and accruals | $1,061,169 | $661,377 | | Total Current Liabilities | $3,669,807 | $3,196,661 | | Total Liabilities | $4,282,022 | $3,767,576 | | Total Stockholders' Equity | $2,576,340 | $2,594,922 | [Consolidated Statements of Operations and Comprehensive Loss (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(Unaudited)) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Revenue, Net | $2,260,329 | $1,898,439 | | Cost of Revenue | $2,089,567 | $1,614,077 | | Gross Profit | $170,762 | $284,362 | | Loss From Operations | $(842,199) | $(950,208) | | Net Loss | $(1,093,095) | $(1,951,402) | | Comprehensive Loss | $(1,015,062) | $(1,865,828) | | Net loss per common share | $(0.04) | $(1.10) | | Weighted average common shares outstanding | 26,387,484 | 1,688,843 | [Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)%20(Unaudited)) - **Stockholders' Equity** (Deficit) decreased slightly from **$2,594,922** as of December 31, 2023, to **$2,576,340** as of March 31, 2024, primarily due to a **net loss** of **$1,093,095**, partially offset by **common stock** issuances for cash, services, and loan commitment fees[179](index=179&type=chunk)[189](index=189&type=chunk)[219](index=219&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net Cash (Used in) Operating Activities | $(679,928) | $(1,406,778) | | Net Cash (Used in) Investing Activities | $(23,146) | $(15,351) | | Net Cash Provided by Financing Activities | $622,626 | $1,515,941 | | Net Increase in Cash and Cash Equivalents | $(1,865) | $179,648 | | Cash and Cash Equivalents – End of Period | $22,298 | $188,910 | [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [Note 1. Company Overview](index=10&type=section&id=Note%201.%20Company%20Overview) - Blue Star Foods Corp is an international sustainable marine protein company importing, packaging, and selling refrigerated pasteurized crab meat and other premium seafood products under various brand names. The company's **revenue** sources include blue and red swimming crab meat, steelhead salmon, rainbow trout, and packaged seafood **inventory** from its subsidiaries[193](index=193&type=chunk)[297](index=297&type=chunk) - On February 1, 2024, the Company entered into a **Master Services Agreement** with Afritex Ventures, Inc., taking responsibility for Afritex's operations and finance functions, providing working capital, and purchasing **inventory**. This agreement automatically extends for three 30-day periods if Afritex's debt is below **$325,000**[19](index=19&type=chunk)[267](index=267&type=chunk) - On February 12, 2024, the Company entered into an **Option Agreement** with Afritex to potentially purchase its intangible assets, machinery, and equipment for **$554,714** cash and **5,000,000 shares** of **common stock** held in escrow. The closing is contingent on Afritex's debt restructuring[182](index=182&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The financial statements are unaudited interim consolidated statements prepared in accordance with SEC rules and GAAP, reflecting normal recurring adjustments. They should be read in conjunction with the 2023 Annual Report on Form 10-K[223](index=223&type=chunk) - **Revenue** is recognized when customers obtain control of goods or services, reflecting the expected consideration. The Company's **revenue** streams include crab meat, steelhead salmon, rainbow trout, and packaged seafood, primarily sold to food service distributors, wholesalers, and retail establishments[197](index=197&type=chunk)[198](index=198&type=chunk)[224](index=224&type=chunk) - **Inventory** is valued at the lower of cost or net realizable value, using the specific identification method for crab meat and raw materials, and estimated biomass for fish in process. An **inventory** allowance of **$336,049** was recorded for the three months ended March 31, 2024[202](index=202&type=chunk)[229](index=229&type=chunk)[231](index=231&type=chunk) - The Company accounts for leases under ASC 842, recognizing right-of-use assets and lease obligations on the balance sheet. As of March 31, 2024, **operating lease assets** were **$114,807** and **operating lease liabilities** were **$35,650** (current) and **$79,157** (noncurrent)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[232](index=232&type=chunk)[234](index=234&type=chunk) - Financial instruments, including **derivative** and **warrant liabilities**, are measured at **fair value** using the Black-Scholes option pricing model. The **derivative liability** on convertible debt was **$957,265** and **warrant liability** was **$402** as of March 31, 2024[59](index=59&type=chunk)[240](index=240&type=chunk) [Note 3. Going Concern](index=16&type=section&id=Note%203.%20Going%20Concern) - The Company's ability to continue as a **going concern** is in substantial doubt due to a **net loss** of **$1,093,095** for the three months ended March 31, 2024, an **accumulated deficit** of **$34,903,827**, and reliance on increasing revenues, acquiring complementary companies, and raising capital[211](index=211&type=chunk) [Note 4. Other Current Assets](index=17&type=section&id=Note%204.%20Other%20Current%20Assets) - **Other current assets** increased to **$1,326,011** as of March 31, 2024, from **$833,472** as of December 31, 2023. This balance primarily includes prepaid **inventory** (**$404,000**), prepaid legal fees (**$158,000**), and receivables for **shares** issuance (**$390,000**) from ClearThink[14](index=14&type=chunk)[242](index=242&type=chunk) [Note 5. Fixed Assets, Net](index=17&type=section&id=Note%205.%20Fixed%20Assets,%20Net) | Fixed Assets Category | March 31, 2024 | December 31, 2023 | | :------------------------ | :------------- | :---------------- | | Computer equipment | $47,908 | $47,908 | | RAS system | $138,588 | $140,214 | | Leasehold improvements | $17,904 | $17,904 | | Building Improvements | $159,798 | $136,653 | | Total | $364,198 | $342,679 | | Less: Accumulated depreciation | $(40,121) | $(38,822) | | Fixed assets, net | $324,077 | $303,857 | - **Depreciation expense** for **fixed assets** was approximately **$1,300** for the three months ended March 31, 2024, an increase from **$1,000** in the same period of 2023[274](index=274&type=chunk) [Note 6. Debt](index=17&type=section&id=Note%206.%20Debt) [Working Capital Line of Credit](index=17&type=section&id=Working%20Capital%20Line%20of%20Credit) - The **$5,000,000** revolving line of credit with Lighthouse Financial Corp was terminated on June 16, 2023, with approximately **$108,400** paid, including **principal**, accrued **interest**, and fees[34](index=34&type=chunk)[118](index=118&type=chunk) [John Keeler Promissory Notes](index=18&type=section&id=John%20Keeler%20Promissory%20Notes) - As of March 31, 2024, approximately **$86,000** in **principal** remained outstanding on unsecured promissory notes to John Keeler, accruing **6%** annual **interest**. The Company made **principal payments** of **$79,582** during the three months ended March 31, 2024, compared to no **principal payments** in the prior year period[113](index=113&type=chunk)[276](index=276&type=chunk) [Walter Lubkin Jr. Note](index=18&type=section&id=Walter%20Lubkin%20Jr.%20Note) - The **outstanding principal balance** on the Walter Lubkin Jr note was **$100,000** as of March 31, 2024, and December 31, 2023. **Interest expense** for this note was approximately **$1,000** for the three months ended March 31, 2024, down from **$3,500** in the prior year period[36](index=36&type=chunk)[277](index=277&type=chunk) [Lind Global Fund II LP notes](index=18&type=section&id=Lind%20Global%20Fund%20II%20LP%20notes) - The 2022 Lind Note, with a **principal** of **$5,750,000**, was extinguished on September 15, 2023, after a payment of **$2,573,142**. **Amortization expense** related to this debt discount was **$0** for the three months ended March 31, 2024, compared to **$273,614** in the prior year period[69](index=69&type=chunk)[131](index=131&type=chunk)[215](index=215&type=chunk) - The 2023 Lind Note, a **$1,200,000** convertible promissory note, was issued on May 30, 2023, with a variable conversion price, leading to an embedded conversion feature accounted for as a **derivative liability**. During Q1 2024, **$60,000** of **principal** was converted into **750,000 shares** of **common stock**[38](index=38&type=chunk)[41](index=41&type=chunk)[251](index=251&type=chunk) - On July 27, 2023, an amendment to the Purchase Agreement with Lind allowed for the issuance of an additional **$300,000** convertible promissory note and warrants, with the embedded conversion feature also treated as a **derivative liability**[72](index=72&type=chunk)[252](index=252&type=chunk)[284](index=284&type=chunk) [Agile Lending, LLC Loans](index=20&type=section&id=Agile%20Lending,%20LLC%20Loans) - On January 2, 2024, the Company entered into a **$122,491** term loan with Agile, due May 31, 2024, with weekly payments of **$7,795**. As of March 31, 2024, the **outstanding balance** was **$50,110**, after **principal payments** of **$72,381**[128](index=128&type=chunk)[254](index=254&type=chunk) - A **$210,000** term loan with Agile, dated October 19, 2023, was fully repaid by March 31, 2024, with **principal payments** totaling **$112,000** and **interest payments** of **$47,250** during Q1 2024[42](index=42&type=chunk) - On March 1, 2024, another **$210,000** term loan was secured with Agile, due August 29, 2024, with weekly payments of **$11,146**. The **outstanding balance** was **$176,562** as of March 31, 2024, after **principal payments** of **$33,438**[74](index=74&type=chunk)[139](index=139&type=chunk) [ClearThink Term Loan](index=21&type=section&id=ClearThink%20Term%20Loan) - On January 18, 2024, the Company entered into a 33-week term loan of **$200,000** with ClearThink Capital LLC, with a **25%** annual **interest rate** and biweekly payments of **$14,706**. As of March 31, 2024, the **outstanding balance** was **$141,176**, after **principal payments** of **$58,824**[43](index=43&type=chunk)[140](index=140&type=chunk) - A commitment fee of **$50,000** for the ClearThink loan was paid by issuing **354,610 shares** of **common stock** on January 25, 2024[43](index=43&type=chunk)[76](index=76&type=chunk)[140](index=140&type=chunk) [Note 7. Stockholders' Equity](index=21&type=section&id=Note%207.%20Stockholders'%20Equity) - During Q1 2024, the Company issued **11,332,787 shares** of **common stock** for **$836,360** in **cash proceeds** from ClearThink, with **$446,360** received by March 31, 2024, and the remaining **$390,000** in April 2024[263](index=263&type=chunk)[288](index=288&type=chunk) - The Company issued **5,000,000 shares** of **common stock** with a **fair value** of **$630,000** to be held in escrow for the **Option Agreement** with Afritex Texas on February 12, 2024[45](index=45&type=chunk) - **750,000 shares** of **common stock** were issued to Lind on March 11, 2024, as partial conversion of **$60,000 principal** from the May 2023 convertible promissory note[257](index=257&type=chunk) [Note 8. Options](index=23&type=section&id=Note%208.%20Options) | Option Activity | Number of Options | Weighted Average Exercise Price | | :------------------------ | :---------------- | :------------------------------ | | Outstanding – Dec 31, 2023 | 316,540 | $31.11 | | Exercisable – Dec 31, 2023 | 219,908 | $31.11 | | Outstanding – Mar 31, 2024 | 316,540 | $29.50 | | Exercisable – Mar 31, 2024 | 230,152 | $29.50 | - The Company recognized **$8,800** of **compensation expense** for vested stock options issued to directors, contractors, and employees during Q1 2024[290](index=290&type=chunk) [Note 9. Warrants](index=23&type=section&id=Note%209.%20Warrants) | Warrant Activity | Number of Warrants | Weighted Average Exercise Price | | :------------------------ | :----------------- | :------------------------------ | | Outstanding – Dec 31, 2023 | 730,944 | $12.04 | | Exercisable – Dec 31, 2023 | 555,710 | $15.41 | | Forfeited or Expired | (50,000) | - | | Outstanding – Mar 31, 2024 | 680,944 | $6.31 | | Exercisable – Mar 31, 2024 | 680,944 | $6.31 | - No **warrant activity** occurred during the three months ended March 31, 2024. Series A-1 and A-2 warrants issued in September 2023 are not considered outstanding as of March 31, 2024, as their exercise is contingent upon stockholder approval, which has not yet been obtained[48](index=48&type=chunk)[260](index=260&type=chunk)[292](index=292&type=chunk) [Note 10. Commitment and Contingencies](index=24&type=section&id=Note%2010.%20Commitment%20and%20Contingencies) - The Company has various lease agreements, including a month-to-month verbal lease for executive offices (**$17,400** paid in Q1 2024) and a month-to-month verbal lease for Coastal Pride's operations (**$4,500** paid in Q1 2024). Total **rental and equipment lease expenses** were approximately **$42,600** for Q1 2024[49](index=49&type=chunk)[50](index=50&type=chunk)[79](index=79&type=chunk)[261](index=261&type=chunk) [Note 11. Subsequent Events](index=25&type=section&id=Note%2011.%20Subsequent%20Events) - On April 4, 2024, the Company entered into a two-year **contract manufacturing agreement** with Afritex Ventures, Inc and Eagle Rising Food Solutions LLC, effective March 21, 2024, for food product manufacturing and consulting services[51](index=51&type=chunk)[267](index=267&type=chunk) - In April 2024, the Company issued **9,000,000 shares** of **common stock** for **$518,000 cash proceeds** to ClearThink and **119,565 shares** for consulting services[52](index=52&type=chunk)[81](index=81&type=chunk)[96](index=96&type=chunk) - On April 16, 2024, the Company issued a **$138,000** convertible promissory note to 1800 Diagonal Lending LLC, with a **$23,000** original issue discount and a **$26,220 interest payment** due January 15, 2025[82](index=82&type=chunk)[299](index=299&type=chunk) - On April 16, 2024, the Company issued a **$300,000** promissory note to Hart Associates, LLC, with a **$50,000 interest payment** due May 15, 2024 (extendable up to 90 days)[86](index=86&type=chunk)[264](index=264&type=chunk) - On April 9 and April 22, 2024, the Company issued **1,351,351** and **1,403,508 shares** of **common stock** to Lind as partial conversion of **$100,000** and **$80,000 principal**, respectively, from the May 2023 convertible promissory note[294](index=294&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial performance, condition, and liquidity, highlighting operational changes and recent events [Overview](index=26&type=section&id=Overview) - Blue Star Foods Corp is an international seafood company focused on importing, packaging, and selling refrigerated pasteurized crab meat and other premium seafood products. **Revenue** is generated from various seafood products distributed in the US and Canada, primarily to food service distributors[297](index=297&type=chunk) [Recent Events](index=26&type=section&id=Recent%20Events) - The Company entered into a **Master Services Agreement** with Afritex Ventures, Inc on February 1, 2024, taking over operations and finance functions, providing working capital, and purchasing **inventory**. This was followed by a two-year **contract manufacturing agreement** with Afritex and Eagle Rising Food Solutions LLC, effective March 21, 2024[99](index=99&type=chunk)[267](index=267&type=chunk) - The Company received a letter from Nasdaq on March 26, 2024, regarding non-compliance with the **minimum bid price requirement**. An appeal was filed, and Nasdaq granted continued listing subject to meeting specific compliance criteria by May 30, 2024, including a **$1.00 bid price** for ten consecutive trading sessions[56](index=56&type=chunk)[100](index=100&type=chunk)[298](index=298&type=chunk) - **Stockholders** approved a **reverse stock split** (ratio 1-for-2 to 1-for-50) on April 30, 2024. On May 3, 2024, the Company entered into an **At The Market (ATM) Offering Agreement** with H.C. Wainwright & Co, LLC to sell up to **$2,199,769** of **common stock** for working capital and debt repayment[87](index=87&type=chunk)[101](index=101&type=chunk)[269](index=269&type=chunk) - Silvia Alana, Director and Chief Financial Officer, notified the Company of her resignation effective May 28, 2024[53](index=53&type=chunk)[88](index=88&type=chunk)[97](index=97&type=chunk)[169](index=169&type=chunk)[270](index=270&type=chunk) [Results of Operations (Three months ended March 31, 2024 and 2023)](index=30&type=section&id=Results%20of%20Operations) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2123 | Change (YoY) | | :-------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net Revenue | $2,260,329 | $1,898,439 | +19.1% | | Cost of Goods Sold | $2,089,567 | $1,614,077 | +29.5% | | Gross Profit | $170,762 | $284,362 | -39.9% | | Commissions Expense | $4,221 | $973 | +333.8% | | Salaries and Wages Expense | $301,790 | $530,838 | -43.1% | | Depreciation and Amortization | $1,299 | $2,669 | -51.3% | | Other Operating Expense | $705,651 | $700,090 | +0.8% | | Other Income | $1,535 | $1,902 | -19.2% | | Change in Fair Value of Derivatives and Warrants Liabilities | $82,636 | $0 | N/A | | Loss on Settlement of Debt | $0 | $648,430 | -100% | | Interest Expense | $335,067 | $354,666 | -5.5% | | Net Loss | $(1,093,095) | $(1,951,402) | -44.0% | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) - **Cash used in operating activities** decreased to **$679,928** for Q1 2024 from **$1,406,778** for Q1 2023, primarily due to a decrease in **inventory** and payables, offset by an increase in **other current assets**[95](index=95&type=chunk) - **Cash used in investing activities** increased to **$23,146** for Q1 2024 from **$15,351** for Q1 2023, mainly due to increased purchases of **fixed assets**[115](index=115&type=chunk) - **Cash provided by financing activities** decreased to **$622,626** for Q1 2024 from **$1,515,941** for Q1 2023, attributed to increased repayments of short-term loans and less **proceeds** from **common stock** offerings[110](index=110&type=chunk) - As of March 31, 2024, the Company had **cash** of **$22,298** and a **working capital surplus** of **$869,797**. Liquidity sources include **inventory** (**$2,280,480**) and **accounts receivable** (**$910,815**)[109](index=109&type=chunk) - The Company has historically financed operations through **cash flow**, capital investment, notes payable, and a working capital line of credit. The Lighthouse Financial Corp line of credit was terminated in June 2023[109](index=109&type=chunk)[118](index=118&type=chunk) - The Company issued **690,000 shares** of **common stock**, along with Series A-1 and A-2 warrants and pre-funded warrants, in a 'best efforts' public offering on September 11, 2023. H.C. Wainwright & Co, LLC acted as placement agent, receiving a **7% fee**[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - In a 2021 underwritten public offering, the Company sold **800,000 shares** of **common stock** at **$5.00 per share**, generating approximately **$3,600,000** in net **proceeds** for general corporate purposes, including working capital and potential acquisitions[141](index=141&type=chunk)[142](index=142&type=chunk) - The Company currently has no off-balance sheet arrangements[144](index=144&type=chunk)[149](index=149&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) As a smaller reporting company, detailed quantitative and qualitative market risk disclosures are not required - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about **market risk**[138](index=138&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Evaluates disclosure controls and procedures, identifies material weaknesses, and outlines remediation initiatives for internal controls [Evaluation of Disclosure Controls and Procedures](index=35&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of March 31, 2024, management concluded that **disclosure controls and procedures** were not effective due to identified **material weaknesses**, including inadequate segregation of duties, insufficient personnel with technical accounting expertise, ineffective controls over financial close and reporting, and inadequate monitoring of third-party warehouse **inventory**[145](index=145&type=chunk)[151](index=151&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [Management's Remediation Initiatives](index=35&type=section&id=Management's%20Remediation%20Initiatives) - To remediate identified **material weaknesses**, the Company plans to create a position to segregate duties and hire personnel with technical accounting expertise. Additionally, an **internal control framework** will be established to address the financial close and reporting process[146](index=146&type=chunk)[157](index=157&type=chunk)[167](index=167&type=chunk) [Changes in Internal Control over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - During the period covered by this Quarterly Report, there were no changes in **internal controls over financial reporting** that have materially affected, or are reasonably likely to materially affect, the Company's **internal control over financial reporting**[170](index=170&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Confirms no material pending legal proceedings involving the Company or its key stakeholders - There are no material pending **legal proceedings** to which the Company is a party or in which any director, officer, or significant shareholder has an adverse material interest[153](index=153&type=chunk)[168](index=168&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, risk factor discussion refers to the Annual Report on Form 10-K, not required in this report - The Company is a smaller reporting company and is not required to provide **risk factor** information in this report. A description of risks and uncertainties can be found in the Annual Report on Form 10-K for the year ended December 31, 2023[158](index=158&type=chunk)[173](index=173&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) Reports unregistered equity securities sales during the period, noting exemptions from registration requirements - No **unregistered sales of equity securities** were made during the period covered by this report that were not previously reported, except as noted. These issuances are believed to be exempt from registration requirements under Section 4(2) of the Securities Act of 1933[154](index=154&type=chunk)[155](index=155&type=chunk) - On April 8, 2024, the Company issued **119,565 shares** of **common stock** to ClearThink's designee for consulting services[159](index=159&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States no defaults occurred upon senior securities during the reporting period - There were no **defaults upon senior securities** during the three months ended March 31, 2024[156](index=156&type=chunk)[160](index=160&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Indicates mine safety disclosures are not applicable to the Company's operations - **Mine safety disclosures** are not applicable to the Company[160](index=160&type=chunk)[169](index=169&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) Reports CFO resignation and confirms no Rule 10b5-1 trading arrangements by directors or officers - Silvia Alana, a director and the Company's Chief Financial Officer, notified her resignation from both roles, effective May 28, 2024. Her resignation was not due to any disagreement with the Company[156](index=156&type=chunk)[169](index=169&type=chunk) - During Q1 2024, none of the Company's directors or officers adopted or terminated any **Rule 10b5-1(c) trading arrangements** or non-Rule 10b5-1 trading arrangements[156](index=156&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) Lists exhibits filed as part of Form 10-Q, including certifications and Inline XBRL documents - The **exhibits** include **certifications** from the Principal Executive Officer and Principal Financial Officer (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act of 2002) and various **Inline XBRL documents** (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents, and Cover Page Interactive Data File)[161](index=161&type=chunk)

Miami, FL, April 17, 2024 (GLOBE NEWSWIRE) -- Blue Star Foods Corp., ("Blue Star," the "Company," "we," "our" or "us") (NASDAQ: BSFC), an integrated Environmental, Social, and Governance (ESG) sustainable seafood company with a focus on Recirculatory Aquaculture Systems (RAS), today announced it has secured additional funding to help meet increased demand under its previously announced Master Service Agreement as well as increase the volume in its soft shell crab operations. On April 16, 2024 Blue Star ente ...