Blue Star(BSFC) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the company's unaudited consolidated financial statements for the three months ended March 31, 2025 Consolidated Balance Sheets 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 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) 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 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 Provides supplementary details and explanations for the line items presented in the primary financial statements Note 1. Company Overview 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] - 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] - The Services Agreement with Afritex Ventures, Inc expired on August 31, 2024, resulting in approximately $1.5 million in losses for the Company[24] Note 2. Summary of Significant Accounting Policies 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] - Revenue is recognized when the customer obtains control of the promised goods, primarily from importing and distributing crab meat and salmon/trout fingerlings[31] - 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] - 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] 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][54] Note 3. Going Concern 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] - These factors raise substantial doubt about the Company's ability to continue as a going concern[55] - 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] Note 4. Other Current Assets 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 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] Note 6. Debt 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][61] - 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] - 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] - 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][76][77][78] - 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] - 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] Note 7. Stockholders' Equity 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] - The Company issued 3,840,000 common shares to directors for their services on January 14, 2025[95] - 350,000 common shares were issued for cash proceeds of $19,950 on March 11, 2025[96] - 288,101 common shares were issued to Diagonal as partial conversion of $15,000 principal on March 12, 2025[96] - 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] Note 8. Options 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 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] - 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] Note 10. Commitment and Contingencies 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] - 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][107] - 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] 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 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, liquidity, and operational performance compared to Q1 2024 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] - The company's product portfolio includes blue and red swimming crab meat, soft shell crab, steelhead salmon, and rainbow trout fingerlings[114] - Products are primarily sold to food service distributors, as well as wholesalers, retail establishments, and seafood distributors[114] Recent Events 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] Results of Operations (Three months ended March 31, 2025 and 2024) 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] - 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] - 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] - 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] Liquidity and Capital Resources 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] - 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] - 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] - 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][158] Off-Balance Sheet Arrangements 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - 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] - Remediation initiatives include creating a position to segregate duties, hiring personnel with technical accounting expertise, and establishing an internal control framework[163] - There were no material changes in internal controls over financial reporting during the period[164] PART II - OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - 3,840,000 common shares were issued to directors (Nubar Herian, John Keeler, Timothy McLellan, Trond Ringstad, Jeffrey Guzy) for their services[170] - 406,484 common shares were issued to Jefferson as partial conversion of $32,583 principal and accrued interest[171] - 288,101 common shares were issued to Diagonal as partial conversion of $15,000 principal[171] - 302,762 common shares were issued to ClearThink's designee for consulting services[172] Item 3. Defaults Upon Senior Securities Confirms that no defaults upon senior securities occurred during the reporting period - No defaults upon senior securities were reported[173] Item 4. Mine Safety Disclosures States that this disclosure requirement is not applicable to the company's operations - This item is not applicable to the Company[174] Item 5. Other Information 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] Item 6. Exhibits 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]