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]
Blue Star(BSFC) - 2024 Q3 - Quarterly Report