UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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| (Address of principal executive offices) | (Zip Code) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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| Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
(Nasdaq Capital Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
| Item 1.01 | Entry into a Material Definitive Agreement. |
On July 6, 2023, Blue Star Foods Corp., a Delaware corporation (the “Company”), Taste of BC Aquafarms Inc., a corporation formed under the Province of British Columbia, Canada (“TOBC”) and Steve Atkinson and Janet Atkinson (each a “Seller” and collectively, the “Sellers”), entered into an agreement to waive a requirement in the First Amendment to Stock Purchase Agreement (the “Amendment”), entered into as of June 24, 2021, between the same parties, that an aggregate of 17,247 shares (after taking into account the Company’s 1:20 reverse stock split effective June 21, 2023) of common stock of the Company (“Additional Shares”) be held in escrow and be released from escrow and delivered to the Sellers, if at June 24, 2023, the twenty-four month anniversary of the closing of the acquisition of TOBC by the Company, TOBC had cumulative revenues of at least CAD$1,300,000, or if TOBC’s cumulative revenue has not reached CAD$1,300,000, the Sellers would be entitled to a prorated number of Additional Shares. Accordingly, on July 6, 2026, the Board of Directors of the Company authorized its escrow agent, to instruct the Company’s transfer agent to deliver 8,451 Additional Shares to Steve Atkinson and 8,796 Additional Shares to Janet Atkinson.
| Item 1.02 | Termination of a Material Definitive Agreement |
On June 16, 2023, the Company terminated the loan and security agreement, dated March 31, 2021 (the “Loan Agreement”), between Lighthouse Financial Corp., a North Carolina corporation (“Lighthouse”) and the Company’s wholly-owned subsidiary, John Keeler & Co., Inc., d/b/a Blue Star Foods, a Florida corporation (“Keeler & Co.”) and its wholly-owned subsidiary, Coastal Pride Seafood, LLC, a Florida limited liability company (“Coastal Pride”) and paid a total of approximately $108,471 to Lighthouse which included, as of June 16, 2023, an outstanding principal balance of approximately $93,490, accrued interest of approximately $9,988, and other fees incurred in connection with the line of credit of approximately $4,991. Upon the repayment of the total outstanding indebtedness owing to Lighthouse, the Loan Agreement and all other related financing agreements and documents entered into in connection with the Loan Agreement were deemed terminated.
As previously reported, pursuant to the terms of the Loan Agreement, Lighthouse made available to Keeler & Co. and Coastal Pride (together, the “Borrowers”) a $5,000,000 revolving line of credit for a term of thirty-six months, renewable annually for one-year periods. Amounts due under the line of credit were represented by a revolving credit note issued to Lighthouse by the Borrowers. The line of credit was secured by a first priority security interest on all the assets of each Borrower. Pursuant to the terms of a guaranty agreement, the Company guaranteed the obligations of the Borrowers under the note and John Keeler, Executive Chairman and Chief Executive Officer of the Company, provided a personal guaranty of up to $1,000,000 to Lighthouse.
| Item 3.02 | Unregistered Sales of Equity Securities. |
Reference is made to the disclosure set forth under Item 1.01 above, which disclosure is incorporated herein by reference.
The issuances of the Additional Shares are exempt from registration under Section 4(a)(2) of Securities Act of 1933, as amended, as transactions by an issuer not involving any public offering.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. | Description | |
| 10.1 |
| |
| 104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: July 11, 2023 | BLUE STAR FOODS CORP. | |
| By: | /s/ John Keeler | |
John Keeler Executive Chairman and Chief Executive Officer | ||
Exhibit 10.1
Blue Star Foods Corp.
3000 NW 109th Avenue
Miami, FL 33172
July 6, 2023
Taste of BC Aquafarms Inc.
2930 Jameson Road
Nanaimo, British Columbia
Canada V9R 6W8
Steve Atkinson
2904 Jameson Road
Nanaimo, British Columbia
Canada V9R 6W8
Janet Atkinson
2904 Jameson Road
Nanaimo, British Columbia
Canada V9R 6W8
Ladies and Gentlemen:
Reference is made to Section 2(d) of the First Amendment to Stock Purchase Agreement (the “Amendment”), entered into as of June 24, 2021 by and among Blue Star Foods Corp., a Delaware corporation (the “Company”), Taste of BC Aquafarms Inc., a corporation formed under the Province of British Columbia, Canada (“TOBC”) and Steve Atkinson and Janet Atkinson (each a “Seller” and collectively, the “Sellers”), which among other things, amends Section 2.2 of the stock purchase agreement, dated April 27, 2021 (“SPA”) of which the Company, TOBC and the Sellers are parties, to provide among other things, that, after taking into account the Company’s 1:20 reverse stock split effective June 21, 2023, 17,247 shares of common stock of the Company (“Additional Shares”) being held by The Crone Group, P.C. as escrow agent (“CLG”), be released from escrow and delivered to the Sellers, if at June 24, 2023, the twenty-four month anniversary of the closing of the acquisition of TOBC by the Company, (i)TOBC had cumulative revenues of at least CAD$1,300,000, with each Seller receiving a pro rata portion of such shares based upon the total number of shares of TOBC held by such Seller at April 27, 2021 or (ii) if TOBC’s cumulative revenue has not reached CAD$1,300,000, the Sellers would be entitled to a prorated number of Additional Shares, based on the actual cumulative revenue of the Company as of such date.
As an accommodation to the Sellers, the Company hereby agrees to (i) waive the revenue requirements set forth in Section 2(d) of the Amendment and (ii) authorizes and directs CLG, as escrow agent, to instruct the transfer agent for the Company to deliver the Additional Shares to the Sellers as follows:
| (i) | 8,451 Additional Shares to Steve Atkinson (49% original ownership); and | |
| (ii) | 8,796 Additional Shares to Janet Atkinson (51% original ownership). |
The parties hereto hereby indemnify and hold harmless CLG and its employees, agents and affiliates from any claim, loss, expense or liability of any kind, including reasonable attorney’s fees and expenses arising out of or connected in any way with this Agreement or the acting as escrow agent or holding the Additional Shares.
The Sellers acknowledge that the Additional Shares will not be registered pursuant to the Securities Act of 1933, as amended (the “Securities Act”) or any applicable state securities laws, and will be deemed “restricted securities” and cannot be sold or otherwise disposed of without registration under the Securities Act or an exemption therefrom.
Each Seller is acquiring the Additional Shares for their own account as principal, not as a nominee or agent, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof in whole or in part in any transactions that would be in violation of the Securities Act or any state securities or “blue-sky” laws. No other person or entity has a direct or indirect beneficial interest in, and such Seller does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participations to such person or entity or to any third party, with respect to, the Additional Shares or any part thereof that would be in violation of the Securities Act or any state securities laws or other applicable law.
Each Seller understands that the Company is under no obligation to register the Additional Shares under the Securities Act, or to assist such Seller in complying with the Securities Act or the securities laws of any state of the United States or of any foreign jurisdiction.
Except as expressly provided herein, nothing contained in this letter shall constitute a waiver of any other right, power or remedy, or constitute a waiver of any other provision of the SPA or Amendment, or any other document, instrument and/or agreement executed of delivered in connection therewith.
This letter agreement may be executed in counterparts, and execution may be evidenced by facsimile or other electronic transmission of a signed signature page, and all such counterparts together shall constitute one and the same document.
Please indicate your acknowledgment of and agreement to the foregoing by signing where indicated below and returning to a copy to us.
| Sincerely, | ||
| BLUE STAR FOODS CORP. | ||
| By: | /s/ John Keeler | |
| John Keeler, Chief Executive Officer | ||
Accepted and agreed to this July 6, 2023
| TASTE OF BC AQUAFARMS INC. | ||
| By: | /s/ Ben Atkinson | |
| Name: | Ben Atkinson | |
| Title: | President | |
| /s/Steve Atkinson | |
| Steve Atkinson | |
| /s/ Janet Atkinson | |
| Janet Atkinson |
Cover |
Jun. 16, 2023 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Jun. 16, 2023 |
| Entity File Number | 001-40991 |
| Entity Registrant Name | BLUE STAR FOODS CORP. |
| Entity Central Index Key | 0001730773 |
| Entity Tax Identification Number | 82-4270040 |
| Entity Incorporation, State or Country Code | DE |
| Entity Address, Address Line One | 3000 NW 109th Avenue |
| Entity Address, City or Town | Miami |
| Entity Address, State or Province | FL |
| Entity Address, Postal Zip Code | 33172 |
| City Area Code | (305) |
| Local Phone Number | 836-6858 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, $0.0001 par value |
| Trading Symbol | BSFC |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | true |
| Elected Not To Use the Extended Transition Period | false |