UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended:
or
For the transition period from ________________ to ________________
Commission
file number:
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Securities registered pursuant to Section 12(b) of the Act:
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The
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| 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. ☐
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As of August 14, 2024, there were shares of the registrant’s common stock, par value $ per share, outstanding.
BLUE STAR FOODS CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024
TABLE OF CONTENTS
| PAGE | ||
| PART I - FINANCIAL INFORMATION | 4 | |
| Item 1. | Financial Statements (Unaudited) | 4 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 28 |
| Item 4. | Controls and Procedures | 28 |
| PART II - OTHER INFORMATION | 29 | |
| Item 1. | Legal Proceedings | 29 |
| Item 1A. | Risk Factors | 29 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 29 |
| Item 3. | Defaults Upon Senior Securities | 29 |
| Item 4. | Mine Safety Disclosures | 29 |
| Item 5. | Other Information | 29 |
| Item 6. | Exhibits | 30 |
| SIGNATURES | 31 | |
| 2 |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements include, among others, those statements including the words “believes”, “anticipates”, “expects”, “intends”, “estimates”, “plans” and words of similar import. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Forward-looking statements are based on our current expectations and assumptions regarding our business, potential target businesses, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include changes in local, regional, national or global political, economic, business, competitive, market (supply and demand), regulatory conditions and the following:
| ● | Our ability to raise capital when needed and on acceptable terms and conditions; | |
| ● | Our ability to make acquisitions and integrate acquired businesses into our company; | |
| ● | Our ability to attract and retain management with experience in the business of importing, packaging and selling of seafood; | |
| ● | Our ability to negotiate, finalize and maintain economically feasible agreements with suppliers and customers; | |
| ● | The availability of crab meat and other premium seafood products we sell; | |
| ● | The intensity of competition; | |
| ● | Changes in the political and regulatory environment and in business and fiscal conditions in the United States and overseas; and | |
| ● | The effect of COVID-19 on our operations and the capital markets. |
A description of these and other risks and uncertainties that could affect our business appears in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 which we filed with the Securities and Exchange Commission (“SEC”) on April 1, 2024. The risks and uncertainties described under “Risk Factors” are not exhaustive.
Given these uncertainties, readers of this Quarterly Report on Form 10-Q (“Quarterly Report”) are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
All references in this Quarterly Report to the “Company”, “we”, “us”, or “our”, are to Blue Star Foods Corp., a Delaware corporation, and its consolidated subsidiaries, 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”), Taste of BC Aquafarms, Inc., a corporation formed under the laws of the Province of British Columbia, Canada (“TOBC”) and Afritex Ventures, Inc., a Florida corporation (“AFVFL”).
All references to shares of common stock of the Company in this Quarterly Report have been adjusted to reflect the Company’s 1:50 reverse stock split effective as of May 20, 2024 (the “Reverse Stock Split”).
| 3 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the SEC, and should be read in conjunction with the audited financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
Blue Star Foods Corp.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| JUNE 30, 2024 | DECEMBER 31, 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowances and credit losses of $ | ||||||||
| Inventory, net | ||||||||
| Advances to related party | ||||||||
| Other current assets | ||||||||
| Total Current Assets | ||||||||
| RELATED PARTY LONG-TERM RECEIVABLE | ||||||||
| FIXED ASSETS, net | ||||||||
| RIGHT OF USE ASSET | ||||||||
| ADVANCES TO RELATED PARTY | ||||||||
| OTHER ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accruals | $ | $ | ||||||
| Customer refunds | ||||||||
| Deferred income | ||||||||
| Current maturities of lease liabilities | ||||||||
| Current maturities of related party long-term notes | ||||||||
| Loan payable | ||||||||
| Related party notes payable - subordinated | ||||||||
| Derivative liability | ||||||||
| Warrants liability | ||||||||
| Other current liabilities | ||||||||
| Total Current Liabilities | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Lease liability, net of current portion | ||||||||
| Debt, net of current portion and discounts | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Series A | ||||||||
| Common stock, $ par value, shares authorized; shares issued and outstanding as of June 30, 2024, and shares issued and outstanding as of December 31, 2023 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock, shares as of June 30, 2024 and shares as of December 31, 2023 | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 4 |
Blue Star Foods Corp.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| Three months ended June 30 | Six months ended June 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| REVENUE, NET | $ | $ | $ | $ | ||||||||||||
| COST OF REVENUE | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| COMMISSIONS | ||||||||||||||||
| SALARIES AND WAGES | ||||||||||||||||
| DEPRECIATION AND AMORTIZATION | ||||||||||||||||
| OTHER OPERATING EXPENSES | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME | ||||||||||||||||
| INTEREST INCOME | ||||||||||||||||
| LOSS ON SETTLEMENT OF DEBT | ( | ) | ( | ) | ||||||||||||
| CHANGE IN FAIR VALUE OF DERIVATIVE AND WARRANT LIABILITIES | ( | ) | ( | ) | ||||||||||||
| INTEREST EXPENSE | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| COMPREHENSIVE LOSS: | ||||||||||||||||
| CHANGE IN FOREIGN CURRENCY TRANSLATION ADJUSTMENT | ( | ) | ||||||||||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per common share: | ||||||||||||||||
| Net loss per common share - basis and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common shares outstanding - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 5 |
Blue Star Foods Corp.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2024 AND 2023
| Series A | Accumulated | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Other | Total | ||||||||||||||||||||||||||||||||
| $.0001 par value | $.0001 par value | Paid-in | Accumulated | Comprehensive | Treasury | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Stock | Equity | ||||||||||||||||||||||||||||
| December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Common stock issued for service | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for note payment | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||||||||||
| Common stock issued for loan commitment fees | - | |||||||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Stock based compensation, net of forfeitures | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Common stock issued for service | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for note payment | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for cash | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for loan commitment fees | - | |||||||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Series A | Accumulated | Total | ||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Other | Stockholders’ | ||||||||||||||||||||||||||||||||
| $.0001 par value | $.0001 par value | Paid-in | Accumulated | Comprehensive | Treasury | Equity | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Stock | (Deficit) | ||||||||||||||||||||||||||||
| December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Common stock issued for service | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for note payment | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for cash | - | |||||||||||||||||||||||||||||||||||
| Repurchase of common stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| March 31, 2023 | $ | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Common stock issued for service | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for note payment | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for cash | - | |||||||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 6 |
Blue Star Foods Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Six Months Ended June 30 | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
| Stock based compensation, net of forfeitures | ( | ) | ||||||
| Common stock issued for service | ||||||||
| Depreciation of fixed assets | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of debt discounts | ||||||||
| Allowance for inventory obsolescence | ||||||||
| Loss on settlement of debt | ||||||||
| Lease expense | ||||||||
| Credit loss expense | ||||||||
| Loss on revaluation of fair value of derivative and warrant liabilities | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivables | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Advances to related parties | ||||||||
| Other current assets | ( | ) | ( | ) | ||||
| Right of use liability | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable and accruals | ||||||||
| Customer refunds | ( | ) | ( | ) | ||||
| Net Cash (Used in) Operating Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of fixed assets | ( | ) | ( | ) | ||||
| Net Cash (Used in) Investing Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from common stock offering | ||||||||
| Proceeds from working capital line of credit | ||||||||
| Proceeds from short-term loan | ||||||||
| Proceeds from convertible debt | ||||||||
| Repayments of working capital line of credit | ( | ) | ||||||
| Repayments of short-term loan | ( | ) | ( | ) | ||||
| Repayments of related party notes payable | ( | ) | ( | ) | ||||
| Purchase of treasury stock | ( | ) | ||||||
| Net Cash Provided by Financing Activities | ||||||||
| Effect of Exchange Rate Changes on Cash | ||||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES | ||||||||
| Common stock issued for partial settlement of note payable | $ | $ | ||||||
| Common stock issued for loan commitment fees | ||||||||
Receivable for equity proceeds | ||||||||
| Derivative liability recognized on issuance of convertible note | ||||||||
| Warrant liability recognized on issuance of convertible note | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 7 |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Company Overview
Blue Star Foods Corp., a Delaware corporation (“we”, “our”, the “Company”), is an international sustainable marine protein company based in Miami, Florida that imports, packages and sells refrigerated pasteurized crab meat, and other premium seafood products. The Company’s main operating business, John Keeler & Co., Inc. (“Keeler & Co.”) was incorporated in the State of Florida in May 1995. The Company has three other subsidiaries, Coastal Pride, TOBC and AFVFL which maintain the Company’s fresh crab meat, steelhead salmon and packaged seafood and other inventory businesses, respectively. The Company’s current source of revenue is purchasing blue and red swimming crab meat primarily from our largest supplier in Miami and distributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika, Crab & Go, First Choice, Good Stuff and Coastal Pride Fresh, steelhead salmon and rainbow trout produced under the brand name Little Cedar Farms for distribution in Canada and purchasing raw materials for packaged seafood and other inventory under AFVFL to be sold to various customers in the United States.
On
February 3, 2022, Coastal Pride entered into an asset purchase agreement with Gault Seafood, LLC, a South Carolina limited liability
company (“Gault Seafood”), and Robert J. Gault II, President of Gault Seafood (“Gault”) pursuant to which Coastal
Pride acquired all of the Seller’s right, title and interest in and to assets relating to Gault Seafood’s soft-shell crab
operations, including intellectual property, equipment, vehicles and other assets used in connection with the soft-shell crab business.
Coastal Pride did not assume any liabilities in connection with the acquisition. The purchase price for the assets consisted of a cash
payment in the amount of $
On
February 1, 2024, the Company entered into a ninety-day Master Services Agreement (the “Services Agreement”) with Afritex
Ventures, Inc. a Texas corporation (“Afritex”), pursuant to which the Company will be responsible for all of Afritex’s
operations and finance functions. The Company will provide Afritex with working capital in order to sustain operations and will purchase
certain inventory listed in the Services Agreement. In consideration for its services, during the term of the Services Agreement, the
Company will earn all of the revenue and profits by the purchase and sale of Afritex’s inventory. Under the Services Agreement,
Afritex may not sell or otherwise use as consideration any of its intellectual property without the Company’s consent. The Company
must maintain certain commercial liability insurance during the term of the Services Agreement. The Services Agreement also provides
that the Company may not solicit Afritex employees for 24 months nor circumvent existing business relationships of Afritex for three
years, after the term of the Services Agreement.
In
connection with the Services Agreement, on February 12, 2024, the Company entered into an Intangibles Assets and Machinery Option To
Purchase Agreement with Afritex (the “Option Agreement”). Pursuant to the Option Agreement, the Company has the option to
purchase Afritex’s intangible assets, machinery and equipment set forth in the Option Agreement for a purchase price of $
| 8 |
In connection with the Services Agreement, on February 1, 2024, AFVFL, a wholly-owned subsidiary of the Company, was incorporated in the State of Florida for the purpose of purchasing raw materials from Afritex for the preparation of packaged seafood and other inventory to be sold to various customers in the United States.
On
May 20, 2024, the Company amended its Certificate of Incorporation to affect a
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The following unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. The consolidated balance sheet as of December 31, 2023 has been derived from the Company’s annual financial statements that were audited by our independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 1, 2024 for a broader discussion of our business and the risks inherent in such business.
Advances to Suppliers and Related Party
In the normal course of business, the Company may advance payments to its suppliers, including of Bacolod Blue Star Export Corp. (“Bacolod”), a related party based in the Philippines. These advances are in the form of prepayments for products that will ship within a short window of time. In the event that it becomes necessary for the Company to return products or adjust for quality issues, the Company is issued a credit by the vendor in the normal course of business and these credits are also reflected against future shipments.
As
of June 30, 2024, and December 31, 2023, the balance due from the related party for future shipments was approximately $
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, as such, we record revenue when our customer obtains control of the promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company’s source of revenue is purchasing blue and red swimming crab meat primarily from our largest supplier in Miami and distributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika, Crab & Go, First Choice, Good Stuff and Coastal Pride Fresh, steelhead salmon and rainbow trout fingerlings produced by TOBC under the brand name Little Cedar Farms for distribution in Canada and purchasing raw materials for packaged seafood and other inventory under AFVFL. The Company sells primarily to food service distributors. The Company also sells its products to wholesalers, retail establishments and seafood distributors.
To determine revenue recognition for the arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (1) identify the contract(s) with a customer by receipt of purchase orders and confirmations sent by the Company which includes a required line of credit approval process, (2) identify the performance obligations in the contract which includes shipment of goods to the customer FOB shipping point or destination, (3) determine the transaction price which initiates with the purchase order received from the customer and confirmation sent by the Company and will include discounts and allowances by customer if any, (4) allocate the transaction price to the performance obligations in the contract which is the shipment of the goods to the customer and transaction price determined in step 3 above and (5) recognize revenue when (or as) the entity satisfies a performance obligation which is when the Company transfers control of the goods to the customers by shipment or delivery of the products.
| 9 |
The Company elected an accounting policy to treat shipping and handling activities as fulfillment activities. Consideration payable to a customer is recorded as a reduction of the arrangement’s transaction price, thereby reducing the amount of revenue recognized, unless the payment is for distinct goods or services received from the customer.
Accounts Receivable
Accounts receivable consist of unsecured obligations due from customers under normal trade terms, usually net 30 days. The Company grants credit to its customers based on the Company’s evaluation of a particular customer’s credit worthiness.
Allowances for credit losses are maintained for potential credit losses based on the age of the accounts receivable and the results of the Company’s periodic credit evaluations of its customers’ financial condition. Receivables are written off as uncollectible and deducted from the allowance for doubtful accounts after collection efforts have been deemed to be unsuccessful. Subsequent recoveries are netted against the allowance for credit losses. The Company generally does not charge interest on receivables.
Receivables
are net of estimated allowances for doubtful accounts and sales return, allowances and discounts. They are stated at estimated net realizable
value. As of June 30, 2024, the Company recorded allowances for sales returns, allowances and discounts of $
Inventories
Substantially all of the Company’s inventory consists of packaged crab meat located at a public cold storage facility and merchandise in transit from suppliers. The Company also has eggs and fish in process inventory from TOBC and raw materials for packaged seafood and other inventory from AFVFL. The cost of inventory is primarily determined using the specific identification method for crab meat and raw materials for packaged seafood inventory. Fish in process inventory is measured based on the estimated biomass of fish on hand. The Company has established a standard procedure to estimate the biomass of fish on hand using counting and sampling techniques. Inventory is valued at the lower of cost or net realizable value, cost being determined using the first-in, first-out method for crab meat and raw materials for packaged seafood inventory and using various estimates and assumptions in regard to the calculation of the biomass, including expected yield, market value of the biomass, and estimated costs of completion.
Merchandise is purchased cost and freight shipping point and becomes the Company’s asset and liability upon leaving the suppliers’ warehouse.
The
Company periodically reviews the value of items in inventory and records an allowance to reduce the carrying value of inventory to the
lower of cost or net realizable value based on its assessment of market conditions, inventory turnover and current stock levels. For
the six months ended June 30, 2024, the Company recorded an inventory allowance of $
The Company’s inventory as of June 30, 2024 and December 31, 2023 consists of:
| June 30, 2024 | December 31, 2023 | |||||||
| Inventory purchased for resale | $ | $ | ||||||
| Feeds and eggs processed | ||||||||
| Raw materials for packaged seafood | ||||||||
| Packaged seafood inventory | ||||||||
| Inventory other | ||||||||
| In-transit inventory | ||||||||
| Less: Inventory allowance | ( | ) | ( | ) | ||||
| Inventory, net | $ | $ | ||||||
Inventory other is comprised of packaged inventory involving other protein items such as poultry, beef and pork.
| 10 |
Lease Accounting
The Company accounts for its leases under ASC 842, Leases, which requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations. The Company elected the practical expedients permitted under the transition guidance that retained the lease classification and initial direct costs for any leases that existed prior to adoption of the standard.
The Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that would allow the Company to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in property and equipment, net. All other leases are categorized as operating leases. The Company did not have any finance leases as of June 30, 2024. The Company’s leases generally have terms that range from three years for equipment and six to seven years for real property. The Company elected the accounting policy to include both the lease and non-lease components of its agreements as a single component and accounts for them as a lease.
Lease liabilities are recognized at the present value of the fixed lease payments using a discount rate based on similarly secured borrowings available to us. Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord incentives, plus any direct costs from executing the lease. Lease assets are tested for impairment in the same manner as long-lived assets used in operations. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the lease term.
When we have the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that we will exercise the option, we consider these options in determining the classification and measurement of the lease. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease.
The table below presents the lease-related assets and liabilities recorded on the balance sheet as of June 30, 2024.
June 30, 2024 | ||||
| Assets | ||||
| Operating lease assets | $ | |||
| Liabilities | ||||
| Current | ||||
| Operating lease liabilities | $ | |||
| Noncurrent | ||||
| Operating lease liabilities | $ | |||
Supplemental cash flow information related to leases were as follows:
Six Months Ended June 30, 2024 | ||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows from operating leases | $ | |||
| ROU assets recognized in exchange for lease obligations: | ||||
| Operating leases | $ | |||
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The table below presents the remaining lease term and discount rates for operating leases.
June 30, 2024 | ||||
| Weighted-average remaining lease term | ||||
| Operating leases | ||||
| Weighted-average discount rate | ||||
| Operating leases | % | |||
Maturities of lease liabilities as of June 30, 2024 were as follows:
Operating Leases | ||||
| 2024 (six months remaining) | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total lease payments | ||||
| Less: amount of lease payments representing interest | ( | ) | ||
| Present value of future minimum lease payments | $ | |||
| Less: current obligations under leases | $ | ( | ) | |
| Non-current obligations | $ | |||
Long-lived Assets
Management
reviews long-lived assets, including finite-lived intangible assets, for indicators of impairment whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Cash flows expected to be generated by the related assets are estimated over
the asset’s useful life on an undiscounted basis. If the evaluation indicates that the carrying value of the asset may not be recoverable,
the potential impairment is measured using fair value. Fair value estimates are completed using a discounted cash flow analysis. Impairment
losses for assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.
Foreign Currency Exchange Rates Risk
The Company manages its exposure to fluctuations in foreign currency exchange rates through its normal operating activities. Its primary focus is to monitor exposure to, and manage, the economic foreign currency exchange risks faced by, its operations and realized when the Company exchanges one currency for another. The Company’s operations primarily utilize the U.S. dollar and Canadian dollar as its functional currencies. Movements in foreign currency exchange rates affect its financial statements.
Fair Value Measurements and Financial Instruments
Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured using inputs in one of the following three categories:
Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.
Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities.
Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
Our financial instruments include cash, accounts receivable, accounts payable, accrued expenses, debt obligations, derivative liabilities and warrant liabilities. We believe the carrying values of our cash, accounts receivable, accounts payable, and accrued expenses approximate their fair values because they are short term in nature or payable on demand. The derivative liability is the embedded conversion feature on the 2023 Lind convertible note. All derivatives and warrant liabilities are recorded at fair value. The change in fair value for derivatives and warrants liabilities is recognized in earnings. The Company’s derivative and warrant liabilities are measured at fair value on a recurring basis using the Black Scholes Pricing model as of June 30, 2024 and December 31, 2023. There were no financial assets and liabilities that were measured at fair value on a recurring basis under Levels 1 and 2.
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| Level 3 Fair Value | ||||||||
| As of June 30, 2024 | As of December 31, 2023 | |||||||
| Liabilities | ||||||||
| Derivative liability on convertible debt | $ | $ | ||||||
| Warrant liability | ||||||||
| Total | $ | $ | ||||||
The table below presents the change in the fair value of the derivative liability convertible debt and warrant liability during the six months ended June 30, 2024:
| Derivative liability balance, January 1, 2024 | $ | |||
| Issuance of derivative liability during the period | ||||
| Settlement of derivative liability | ( | ) | ||
| Change in fair value of derivative liability during the period | ||||
| Derivative liability balance, June 30, 2024 | $ | |||
| Warrant liability balance, January 1, 2024 | $ | |||
| Issuance of warrant liability during the period | ||||
| Change in fair value of warrant liability during the period | ( | ) | ||
| Warrant liability balance, June 30, 2024 | $ |
The fair market value of all derivatives and warrant liability as of December 31, 2023 was determined using the Black-Scholes option pricing model which used the following assumptions:
| Stock price | $ | |||
| Expected dividend yield | % | |||
| Expected stock price volatility | % | |||
| Risk-free interest rate | % | |||
| Expected term |
The fair market value of all derivatives and warrant liability as of June 30, 2024 was determined using the Black-Scholes option pricing model which used the following assumptions:
| Stock price | $ | |||
| Expected dividend yield | % | |||
| Expected stock price volatility | % | |||
| Risk-free interest rate | % | |||
| Expected term |
Recent Accounting Pronouncements
There are various updates recently issued to the accounting literature and these are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
Note 3. Going Concern
The
accompanying consolidated financial statements and notes have been prepared assuming the Company will continue as a going concern. For
the six months ended June 30, 2024, the Company incurred a net loss of $
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Note 4. Other Current Assets
Other
current assets totaled $
Note 5. Fixed Assets, Net
Fixed assets comprised the following:
June 30, 2024 | December 31, 2023 | |||||||
| Computer equipment | $ | $ | ||||||
| RAS system | ||||||||
| Leasehold improvements | ||||||||
| Building Improvements | ||||||||
| Total | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed assets, net | $ | $ | ||||||
For
the six months ended June 30, 2024 and 2023, depreciation expense totaled approximately $
Note 6. Debt
Working Capital Line of Credit
On
March 31, 2021, Keeler & Co. and Coastal Pride entered into a loan and security agreement (“Loan Agreement”) with Lighthouse
Financial Corp., a North Carolina corporation (“Lighthouse”). Pursuant to the terms of the Loan Agreement, Lighthouse made
available to Keeler & Co. and Coastal Pride (together, the “Borrowers”) a $
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 $
On
June 16, 2023, the Company terminated the Loan Agreement and paid a total of approximately $
John Keeler Promissory Notes
The
Company had unsecured promissory notes outstanding to John Keeler of approximately $
Walter Lubkin Jr. Note
On
November 26, 2019, the Company issued a five-year unsecured promissory note in the principal amount of $
For
the year ended December 31, 2023, $
As
of June 30, 2024, $
Interest
expense for the note totaled approximately $
As
of June 30, 2024 and December 31, 2023, the outstanding principal balance on the note totaled $
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Lind Global Fund II LP notes
2022 Note
On
January 24, 2022, the Company entered into a securities purchase agreement with Lind Global Fund II LP, a Delaware limited partnership
(“Lind”), pursuant to which the Company issued Lind a secured, two-year, interest free convertible promissory note in the
principal amount of $
In connection with the issuance of the 2022 Lind Note, the Company granted Lind a first priority security interest and lien on all of its assets, including a pledge of its shares in Keeler & Co., pursuant to a security agreement and a stock pledge agreement with Lind, dated January 24, 2022 (the “2022 Security Agreement). Each subsidiary of the Company also granted a second priority security interest in all of its respective assets.
The 2022 Lind Note was mandatorily payable prior to maturity if the Company issued any preferred stock (with certain exceptions described in the note) or, if the Company or its subsidiaries issued any debt. The Company also agreed not to issue or sell any securities with a conversion, exercise or other price based on a discount to the trading prices of the Company’s stock or to grant the right to receive additional securities based on future transactions of the Company on terms more favorable than those granted to Lind, with certain exceptions.
If
the Company failed to maintain the listing and trading of its common stock, the note would become due and payable and Lind may convert
all or a portion of the outstanding principal at the lower of the then current conversion price and
If
the Company engaged in capital raising transactions, Lind had the right to purchase up to
The
2022 Lind Note was convertible into common stock at $
Upon
an event of default as described in the 2022 Lind Note, the 2022 Lind Note would become immediately due and payable at a default interest
rate of
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During
the year ended December 31, 2023, the Company made aggregate principal payments on the 2022 Lind Note of $
2023 Note
On
May 30, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Lind pursuant to which
the Company issued to Lind a secured, two-year, interest free convertible promissory note in the principal amount of $
In connection with the issuance of the 2022 Lind Note, the Company and Lind amended the 2022 Security Agreement to include the new 2023 Lind Note, pursuant to an amended and restated security agreement, dated May 30, 2023, between the Company and Lind.
The Company agreed to file a registration statement with the Securities and Exchange Commission covering the resale of the shares of common stock issuable pursuant to the 2023 Lind Note and Lind Warrant. Lind was also granted piggyback registration rights.
If
the Company engages in capital raising transactions, Lind has the right to purchase up to
The
2023 Lind Note is convertible into common stock of the Company after the earlier of 90 days from issuance or the date the registration
statement is effective, provided that no such conversion may be made that would result in beneficial ownership by Lind and its affiliates
of more than % of the Company’s outstanding shares of common stock. The conversion price of the 2023 Lind Note is equal to
the lesser of: (i) $
The 2023 Lind Note contains certain negative covenants, including restricting the Company from certain distributions, stock repurchases, borrowing, sale of assets, loans and exchange offers.
Upon
the occurrence of an event of default as described in the 2023 Lind Note, the 2023 Lind Note will become immediately due and payable
at a default interest rate of
The
Warrant entitles the Investor to purchase up to
On
July 27, 2023, the Company, entered into a First Amendment to the Purchase Agreement (the “Purchase Agreement Amendment”)
with Lind, which provided for the issuance of further senior convertible promissory notes up to an aggregate principal amount of up to
$
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Pursuant
to the Purchase Agreement Amendment, the Company issued to Lind a two-year, interest free convertible promissory note in the principal
amount of $
Due
to the variable conversion price of the convertible promissory note, pursuant to the Purchase Agreement Amendment, the embedded conversion
feature was accounted for as a derivative liability. The fair value of the derivative liability at issuance amounting to $
During
the six months ended June 30, 2024, $
Agile Lending, LLC Loans
On
June 14, 2023, the Company, and Keeler & Co. (each a “Borrower”) entered into a subordinated business loan and security
agreement with Agile Lending, LLC as lead lender (“Agile”) and Agile Capital Funding, LLC as collateral agent, which provides
for a term loan to the Company in the amount of $
On
October 19, 2023, the Borrowers entered into a subordinated business loan and security agreement with Agile and Agile Capital as collateral
agent, which provides for a term loan to the Company in the amount of $
On
January 2, 2024, the Company, and Keeler & Co. entered into a subordinated business loan and security agreement with Agile and Agile
Capital as collateral agent, which provides for a term loan to the Company in the amount of $
On
March 1, 2024, the Borrowers entered into a subordinated business loan and security agreement with Agile and Agile Capital as collateral
agent, which provides for a term loan to the Company in the amount of $
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On
May 9, 2024, the Borrowers entered into a subordinated business loan and security agreement with Agile and Agile Capital as collateral
agent, which provides for a term loan to the Company in the amount of $
ClearThink Term Loan
On
January 18, 2024, the Company entered into the Revenue-Based Factoring MCA Plus Agreement with ClearThink Capital LLC (“ClearThink”)
which provides, among other things, for a 33-week term loan in the principal amount of $
1800 Diagonal Note
On
April 16, 2024, the Company issued to 1800 Diagonal Lending LLC, a Virginia limited liability company (“Diagonal”), a
convertible promissory note in the principal amount of $
The Hart Note
On
April 16, 2024, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Hart
Associates, LLC, a Delaware limited liability company (the “Hart”), pursuant to which the Company issued a promissory
note in the principal amount of $
The FirstFire Note
On
May 17, 2024, the Company entered into a promissory note with FirstFire Global Opportunities Fund, LLC, a Delaware limited liability
company (the “FirstFire”), pursuant to which the Company issued a promissory note in the principal amount of $
Interest expense totaled $1,206,316 as of June 30, 2024 and $670,453 as of June 30, 2023. As of June 30, 2024, approximately $777,600, $307,500 and $121,000 of the balance was related to amortization on debt discount, cash paid interest, and accrued interest. The remainder of the balance was related to amortization of loan costs.
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Note 7. Stockholders’ Equity
In
January 2023, the Company sold an aggregate of shares of common stock for net proceeds of $
On
February 14, 2023, the Company issued shares of common stock and
During
the six months ended June 30, 2023, between May 2023 and June 2023, the Company issued an aggregate of shares of common stock for
cash proceeds of $
During
the six months ended June 30, 2023, the Company issued an aggregate of shares of common stock to Lind with a fair value
of $
During the six months ended June 30, 2023, the Company issued an aggregate of shares of common stock to the designee of ClearThink for consulting services provided to the Company.
On
January 25, 2024, the Company issued shares of common stock to ClearThink, with a fair value of $
On
February 12, 2024, the Company issued shares of common stock to be held by The Crone Law Group as Escrow Agent with a fair value
of $
On
May 22, 2024, the Company issued shares of common stock to Hart, with a fair value of $
During
the six months ended June 30, 2024, the Company issued an aggregate of
shares of common stock in consideration of proceeds of $
During
the six months ended June 30, 2024, the Company issued an aggregate of shares of common stock to Lind as partial conversion of
$
During
the six months ended June 30, 2024, the Company issued an aggregate of
shares of common stock to the designee of ClearThink with a fair value of $
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | ||||||||||||||
| Outstanding – December 31, 2023 | $ | $ | - | ||||||||||||||
| Exercisable – December 31, 2023 | $ | $ | |||||||||||||||
| Granted | $ | ||||||||||||||||
| Forfeited | $ | ||||||||||||||||
| Expired | $ | ||||||||||||||||
| Vested | $ | ||||||||||||||||
| Outstanding – June 30, 2024 | $ | $ | - | ||||||||||||||
| Exercisable – June 30, 2024 | $ | $ | |||||||||||||||
For the six months ended June 30, 2024, the Company recognized a net credit to stock compensation expense of $ due to options forfeitures.
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Note 9. Warrants
The following table represents warrant activity for the six months ended June 30, 2024:
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
| Outstanding – December 31, 2023 | $ | |||||||||||||||
| Exercisable – December 31, 2023 | $ | $ | ||||||||||||||
| Granted | $ | |||||||||||||||
| Exercised | $ | |||||||||||||||
| Forfeited or Expired | ( | ) | $ | |||||||||||||
| Outstanding – June 30, 2024 | $ | |||||||||||||||
| Exercisable – June 30, 2024 | $ | $ | ||||||||||||||
On
May 30, 2023, in connection with the issuance of the $
On
July 27, 2023, in connection with the issuance of the $
On
September 11, 2023, in connection with the underwritten public offering, the Company issued -year
Series A-1 warrants to purchase up to
On
September 11, 2023, in connection with the underwritten public offering, the Company issued eighteen-month Series A-2 warrants to purchase
up to
There was no warrant activity for the six months ended June 30, 2024.
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Note 10. Commitment and Contingencies
Office lease
On
January 1, 2022, the Company entered into a verbal month-to-month lease agreement for its executive offices with an unrelated third party
and paid $
Coastal
Pride leases approximately
Coastal
Pride also leased a
The
offices and facility of TOBC are located in Nanaimo, British Columbia, Canada and are on land which was leased to TOBC for approximately
$
Rental
and equipment lease expenses were approximately $
Note 11. Subsequent Events
Shares issuances
In July
2024, the Company issued shares
of common stock to Lind as partial conversion of $
During
July 2024, the Company issued an aggregate of
shares of common stock to the designee of ClearThink for $
Note issuances
On July 25, 2024, the Company entered
into a second subordinated business loan and security agreement with Agile and Agile Capital as collateral agent whereby the Company
issued a promissory note for a term loan in the amount of $
In August 2024 the
Company entered into securities purchase agreements (each a “Securities Purchase Agreement”) with each of Quick Capital,
LLC, a Wyoming limited liability company (“Quick Capital”) and Jefferson Street Capital, LLC a New Jersey limited
liability company (“Jefferson”) whereby it will issue promissory notes in the aggregate principal amount of $
As part of the August
Private Placement Offering, the Company issued two promissory notes each in the principal amount of $
The investors have the right, at any time on or following the earlier of (i) the date that any of the shares are registered for resale under a registration statement of the Company or (ii) the date that is six (6) months after the issue date, to convert all or any portion of the then outstanding and unpaid principal and interest into fully paid and non-assessable shares of our common stock. The conversion price shall be $, subject to adjustments. We have agreed to reserve a sufficient number of common stock (initially, shares) for issuance upon conversion of the Private Placement Notes in accordance with their terms.
British Columbia Lawsuit
On July 16, 2024, the Company, through TOBC, filed a lawsuit in the Supreme Court of British Columbia (the “Court”) against their landlords Steven Atkinson, Kathryn Atkinson and Janet Atkinson (the “Landlords”) requesting a declaration that their commercial lease located at 2904 and 2934 Jameson Road, Nanaimo, B.C. V9R 6W8 dated April 1, 2022 by and between TOBC and their Landlords is a valid lease and remains in full force and effect. The Company cannot provide any assurance as to the timing of resolution or outcome of this matter.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The following management’s discussion and analysis should be read in conjunction with the financial statements and the related notes thereto contained in this Quarterly Report. The management’s discussion and analysis contain forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 1, 2024, as updated in subsequent filings we have made with the SEC that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.
Basis of Presentation
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Overview
We are an international seafood company that imports, packages and sells refrigerated pasteurized crab meat, and other premium seafood products. Our current source of revenue is purchasing blue and red swimming crab meat primarily from our largest supplier in Miami and distributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika, Crab & Go, First Choice, Good Stuff and Coastal Pride Fresh, purchasing raw materials for packaged seafood inventory under AFVFL, and steelhead salmon and rainbow trout fingerlings produced under the brand name Little Cedar Farms for distribution in Canada. The crab meat which we import is processed in six out of the ten plants available throughout Southeast Asia. Our suppliers are primarily via co-packing relationships, including two affiliated suppliers. We sell primarily to food service distributors. We also sell our products to wholesalers, retail establishments and seafood distributors.
Recent Events
Reverse Split
On May 7, 2024, the Company’s board of directors approved, and on April 30, 2024, at a special meeting of the stockholders, holders of approximately 62.9% of the Company’s voting power, approved the granting of authority to the Board to amend the Company’s Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of the Company’s common stock, by a ratio of not less than 1-for-2 and not more than 1-for-50, with the exact ratio to be determined by the Board in its sole discretion.
The Board determined to effectuate a 1:50 reverse stock split (the “Reverse Stock Split”) and on May 20, 2024 the Company amended its Certificate of Incorporation to effect the Reverse Stock Split. All shares and per share amounts in the financial statements have been retrospectively adjusted for all periods presented to reflect the Reverse Stock Split.
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Board Resignation
On May 10, 2024, Silvia Alana, a director and the Company’s Chief Financial Officer, notified the Company of her resignation from the board of directors and as Chief Financial Officer, effective May 28, 2024.
NASDAQ Compliance
On March 26, 2024, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC indicating that as of March 25, 2024, the Company had not regained compliance with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2). The Company appealed this determination to the Nasdaq Hearings Panel (the “Panel”) on April 1, 2024.
On June 11, 2024, the Company received a letter from the Panel indicating that the Company 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).
Additionally, the Company will be subject to a Discretionary Panel Monitor for a period of one year, until June 11, 2025. If the Company fails to maintain compliance with any continued listing requirement during the one-year monitoring period, the Company will have an opportunity to request a new hearing with the initial Panel or a newly convened Hearings Panel if the initial Panel is unavailable.
Agile Loans
On May 9, 2024 the Company entered into a subordinated business loan and security agreement with Agile Lending, LLC and Agile Capital Funding, LLC as collateral agent (collectively “Agile”), which provides for a term loan to the Company in the form of a promissory note in the aggregate principal amount of $210,000 (the “May Agile Loan”). The May Agile Loan will accrue principal and interest of $84,000 and has a maturity date of November 22, 2024. Commencing May 17, 2024, the Company is required to make weekly payments of $10,500 until the maturity date.
The Company shall have the right to make a full prepayment or partial prepayment of the May Agile Loan. Upon prepayment of any principal amount, the Company is obligated to pay a make-whole premium payment on account of such principal so paid, which shall be equal to the aggregate and actual amount of interest (at the contract rate of interest) that wouldbe paid through the maturity date.
In the event of a default (as described in the May Agile Loan), the Agile Loan shall accrue interest at a fixed per annum rate equal to the rate that is otherwise applicable thereto plus an additional 5%. The Company also agreed to pay Agile an administration fee of $10,000 upon execution.
While the May Agile Loan remains outstanding, the Company will grant Agile a continuing security interest in its Collateral (defined as all properties, rights and assets of the Company), wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.
The Company shall use some of the proceeds of the May Agile Loan to pay off its existing loan balance of $116,658 for the loan funded by Agile on June 26, 2023. The rest of the proceeds will be used for general corporate purposes.
On July 25, 2024 the Company entered into a second subordinated business loan and security agreement with Agile which provides for a term loan to the Company in the form of a promissory note in the aggregate principal amount of $210,000 (the “July Agile Loan”). The July Agile Loan will accrue principal and interest of $84,000 and has a maturity date of January 31, 2025. Commencing August 2, 2024, the Company is required to make weekly payments of $10,889 until the maturity date. The proceeds of the July Agile Loan will be used for general corporate purposes.
All the other terms and provision of the July Agile Loan are exactly the same as the May Agile Loan.
FirstFire Note
On May 17, 2024, the Company entered into a promissory note with FirstFire Global Opportunities Fund, LLC, a Delaware limited liability company (“FirstFire”), pursuant to which the Company issued a promissory note in the principal amount of $240,000 with an original discount of $40,000 (the “FirstFire Note”). The FirstFire Note accrues interest at a rate of 19% per annum and has a maturity date of April 17, 2025. The proceeds from the FirstFire Note are for general corporate purposes.
The FirstFire Note has mandatory monthly payments due the 17th of each month. The initial payment on August 17, 2024 is $185,600. Monthly payments from September 2024 – December 2024 are $22,000. Monthly payments from January 2025 - April 2025 are $3,000. The Company may prepay the FirstFire Note at any time without penalty. The Company’s failure to comply with the material terms of the FirstFire Note will be considered an event of default and the principal sum of the FirstFire Note will become immediately due and payable at an amount equal to 150% times the sum of (i) the then outstanding principal amount of the note plus (ii) accrued and unpaid interest on the unpaid principal amount of the note to the date of payment plus (iii) default interest, plus (iv) any other amounts owed to FirstFire.
After the occurrence of an event of default, at any time, FirstFire shall have the right to convert all or any part of the outstanding and unpaid amount of the FirstFire Note into fully paid and non-assessable shares of our common stock. The conversion price shall be 61% multiplied by the Market Price (as defined in the FirstFire Note). While the FirstFire Note remains outstanding, we will reserve 40,000 shares of our common stock free from preemptive rights, to provide for the issuance upon the full conversion of the FirstFire Note. The shares will be subject to Rule 144.
While the FirstFire Note remains outstanding, we shall not, without FirstFire’s written consent, sell, lease, or otherwise dispose of any significant portion of our assets outside the ordinary course of business.
Lind Waiver and Acknowledge Agreement
On August 3, 2024 the Company and Lind Global Fund II LP (“Lind”) entered into a waiver and acknowledgement agreement (the “Waiver Agreement”).
The Company and Lind previously entered into that certain Securities Purchase Agreement, dated as of May 20, 2023, as amended on July 27, 2023 pursuant to which the Company issued Lind a senior convertible promissory note in the principal amount of $300,000.
The Company intends to engage in an at-the-market offering in connection with which HC Wainwright & Co, LLC or an affiliate thereof will act as placement agent (the “HCWATM”)
Pursuant to the Waiver Agreement, it is agreed, solely as it relates to the HCW ATM to the wavier of Sections 3.4(a)(v) (Adjustments for Issuance of Additional Shares of Common Stock) and 4.1(f) (Prohibited Transactions) of the note and Section 5.9 (Prohibited Transactions) of the Securities Purchase Agreement. The waiver is subject to the following conditions: (i) the Company may not make any sales of securities under the HCW ATM until 3 Trading Days have elapsed from the date that the terms of this Agreement are publicly announced, (ii) for the period beginning on the date hereof and ending on that the day that is 60 days thereafter, the aggregate amount of gross proceeds receivable under the HCW ATM for the sale of securities by the Company may not exceed $1,000,000, and (iii) for the period beginning on the date that is 61 days following the date hereof and ending on that the day that is 150 days thereafter, the aggregate amount of total gross proceeds receivable under the HCW ATM for the sale of securities by the Company may not exceed an additional $1,000,000. Additionally, on the date that is the earlier of (i) the date that gross the proceeds for the sale of securities by the Company under the HCW ATM equals or is in excess of $500,000.00, or (ii) the date that is 120 days from the date hereof, the Company shall pay to Lind $100,000.00 and an additional $3,000.00 for the Lind’s legal expenses relating to the preparation of this Agreement.
If the Company sells securities prior to the date permitted, in excess of the amounts agreed to, or if the Company fails to make the payments as required the Waiver Agreement will be deemed to have not been given. We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our Common Stock held by non-affiliates equals or exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues equalled or exceeded $100 million during such completed fiscal year and the market value of our Common Stock held by non-affiliates equals or exceeds $700 million as of the end of that year’s second fiscal quarter.
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August 2024 Private Placement Offering
In August, 2024, the Company entered into securities purchase agreements (each a “Securities Purchase Agreement”) with each of Quick Capital, LLC, a Wyoming limited liability company (“Quick Capital”) and Jefferson Street Capital, LLC a New Jersey limited liability company (“Jefferson”) whereby it will issue promissory notes in the aggregate principal amount of $550,000 (the “August Private Placement Offering”).
The Company agreed to issue to each of Quick Capital and Jefferson up to 39,300 shares of our common stock as a “Commitment Fee”
As part of the August Private Placement Offering, the Company issued two promissory notes each in the principal amount of $275,000 with an original issue discount of $25,000 (the “Private Placement Notes”). The Private Placement Notes have a one-time interest payment of $27,500. Thereafter, any principal amount of interest which is not paid upon maturity will accrue at a rate of the lesser of (i) sixteen percent (16%) per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid. The Private Placement Notes have a maturity date of 10 months after issuance and the proceeds from the notes are for general corporate purposes. The Company agreed to issue to each of Quick Capital and Jefferson 19,650 shares of common stock as additional consideration for entering into Private Placement Notes.
The investors have the right, at any time on or following the earlier of (i) the date that any of the shares are registered for resale under a registration statement of the Company or (ii) the date that is six (6) months after the issue date, to convert all or any portion of the then outstanding and unpaid principal and interest into fully paid and non-assessable shares of our common stock. The conversion price shall be $1.50, subject to adjustments. We have agreed to reserve a sufficient number of common stock (initially, 2,000,000 shares) for issuance upon conversion of the Private Placement Notes in accordance with their terms.
The Company may prepay the Private Placement Notes at any time with fifteen (15) trading days prior written notice (the “Prepayment Notice Period”). During the Prepayment Notice Period, the investor shall have the right to convert all or any portion of the Private Placement Notes pursuant to the terms of the note, including the amount of the Private Placement Notes to be prepaid. If the Company exercises its right to prepay the notes in accordance with their terms, the Company shall make payment to the investor of an amount in cash equal to the sum of: (i) 100% multiplied by the principal amount then outstanding plus (ii) accrued and unpaid interest on the principal amount to the prepayment notice date, and (iii) $750 to reimburse the investor for administrative fees.
If the Company delivers a prepayment notice and fails to pay the applicable prepayment amount, the Company shall forever forfeit its right to prepay any part of the Private Placement Notes.
The Private Placement Notes have mandatory monthly payments of $43,200. The initial payments are due on November 9, 2024 and November 12, 2024, respectively.
The Company’s failure to comply with the material terms of the Private Placement Notes will be considered an event of default and the principal sum of the Private Placement Notes will become immediately due and payable at an amount equal to the principal amount then outstanding plus accrued interest (including any default interest) through the date of full repayment multiplied by 135%, as well as all costs, all without demand, presentment or notice, unless expressly waived by the investor.
The investor may assign its rights to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction from Quick Capital or to any of its affiliates without the consent of the Company.
While the Private Placement Notes remain outstanding, we shall not, without the investor’s written consent (i) (a) pay, declare or set apart for such payment, any dividend or other distribution on shares of capital stock other than dividends on shares of common stock solely in the form of additional shares of common stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Company’s disinterested directors, (ii) redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Company or any warrants, rights or options to purchase or acquire any such shares, or repay any indebtedness of Quick Capital, (iii) advance any loans made in the ordinary course of business in excess of $100,000, (iv) sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business, and (v) enter into any transaction or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) or Section 3(a)(10) of the Securities Act.
In conjunction with the August Private Placement Offering, the Company entered into a registration rights agreement (each a “Registration Rights Agreement”) with each of Quick Capital and Jefferson. The Company agreed to file a registration statement with the Securities and Exchange Commission to register the re-sale of the maximum number of shares of common stock covered in the August Private Placement Offering within sixty (60) calendar days from the date of execution.
The foregoing descriptions of the Securities Purchase Agreement, Private Placement Notes and Registration Rights Agreement do not purport to be complete and are qualitied in their entirety by reference to the full text of the Securities Purchase Agreement, Private Placement Notes and Registration Rights Agreement, forms of which are attached as exhibits 10.86, 10.87 and 10.88 to this Quarterly Report on Form 10-Q and incorporated by reference herein.
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Results of Operations
The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, the financial statements and accompanying notes elsewhere in this Quarterly Report.
Three months ended June 30, 2024 and 2023
Net Revenue. Revenue for the three months ended June 30, 2024 increased 7.3% to $1,776,558 as compared to $1,655,562 for the three months ended June 30, 2023 as a result of an increase in poundage sold during the three months ended June 30, 2024.
Cost of Goods Sold. Cost of goods sold for the three months ended June 30, 2024 decreased to $1,482,041 as compared to $1,574,547 for the three months ended June 30, 2023. This decrease is attributable to cost savings in the poundage sold.
Gross Profit. Gross profit for the three months ended June 30, 2024 increased to $294,517 as compared to gross profit of $81,015 in the three months ended June 30, 2023. This increase is attributable to the increase in sales and decrease of cost.
Commissions Expense. Commissions expense decreased to $0 for the three months ended June 30, 2024 from $773 for the three months ended June 30, 2023. This decrease was due to no commissionable revenues for the three months ended June 30, 2024.
Salaries and Wages Expense. Salaries and wages expense decreased to $295,449 for the three months ended June 30, 2024 as compared to $466,127 for the three months ended June 30, 2023. This decrease is mainly attributable to a strategic reduction in salaries completed in the year end December 31, 2023.
Depreciation and Amortization. Depreciation and amortization expense decreased to $1,377 for the three months ended June 30, 2024 as compared to $27,668 for the three months ended June 30, 2023. This decrease is attributable to lower depreciation due to no depreciable purchases of fixed assets during the three months ended June 30, 2024.
Other Operating Expense. Other operating expense increased to $689,414 for the three months ended June 30, 2024 from $662,699 for the three months ended June 30, 2023. This increase is mainly attributable to legal and professional related to our business operations.
Other Income. Other income increased for the three months ended June 30, 2024 to $48,127 from $25,292 for the three months ended June 30, 2023. This increase is mainly attributable to the collections by Coastal Pride of receivables existing prior to the acquisition of Coastal Pride by the Company,
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Interest Income. Interest income decreased to $0 for the three months ended June 30, 2024 from $24 for the three months ended June 30, 2023. The decrease is attributable to no interest earned for the three months ended June 30, 2024.
Loss on Settlement of Debt. Loss on settlement of debt decreased to $0 for the three months ended June 30, 2024 from $184,589 for the three months ended June 30, 2023. The decrease is caused by the Lind notes settlement in prior year.
Change in Fair Value of Derivative and Warrant Liabilities. Change in fair value of derivative and warrant liabilities decreased to a loss of $327,122 for the three months ended June 30, 2024 from a gain of $99,577 for the three months ended June 30, 2023. The decrease is attributable to the fair value measurement for the derivative liability and warrant liability for the three months ended June 30, 2024.
Interest Expense. Interest expense increased to $871,249 for the three months ended June 30, 2024 from $315,787 for the three months ended June 30, 2023. The increase is attributable to the amortization of the Lind convertible debt discount and due to the payments made to the Lind note which entered on May 30, 2023.
Net Loss. Net loss was $1,841,967 for the three months ended June 30, 2024 as compared to $1,451,735 for the three months ended June 30, 2023. The increase in net loss is primarily attributable to the increase in the amortization of Lind convertible debt discount.
Six months ended June 30, 2024 and 2023
Net Revenue. Revenue for the six months ended June 30, 2024 increased 13.6% to $4,036,887 as compared to $3,554,001 for the six months ended June 30, 2023 as a result of increase in poundage sold during the six months ended June 30, 2024.
Cost of Goods Sold. Cost of goods sold for the six months ended June 30, 2024 increased to $3,571,608 as compared to $3,188,624 for the six months ended June 30, 2023. This increase is attributable to the increase in poundage sold in the cost of goods and increase of inventory reserve.
Gross Profit. Gross profit for the six months ended June 30, 2024 increased to $465,279 as compared to gross profit of $365,377 in the six months ended June 30, 2023. This increase is attributable to increase in sales.
Commissions Expense. Commissions expense increased to $4,221 for the six months ended June 30, 2024 from $1,746 for the six months ended June 30, 2023. This increase was due to higher commissionable revenues for the six months ended June 30, 2024.
Salaries and Wages Expense. Salaries and wages expense decreased to $597,239 for the six months ended June 30, 2024 as compared to $996,965 for the six months ended June 30, 2023. This decrease is mainly attributable to a strategic reduction in salaries completed in the year end December 31, 2023.
Depreciation and Amortization. Depreciation and amortization expense decreased to $2,676 for the six months ended June 30, 2024 as compared to $30,337 for the six months ended June 30, 2023. This decrease is attributable to lower depreciation due to no depreciable purchases of fixed assets during the six months ended June 30, 2024.
Other Operating Expense. Other operating expense increased to $1,395,065 for the six months ended June 30, 2024 from $1,362,789 for the six months ended June 30, 2023. This increase is mainly attributable to legal and professional related to our business operations.
Other Income. Other income increased for the six months ended June 30, 2024 to $49,662 from $27,194 for the six months ended June 30, 2023. This increase is mainly attributable to the collections by Coastal Pride of receivables existing prior to the acquisition of Coastal Pride by the Company.
Interest Income. Interest income decreased to $0 for the six months ended June 30, 2024 from $24 for the six months ended June 30, 2023. The decrease is attributable to no interest earned for the six months ended June 30, 2024.
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Loss on Settlement of Debt. Loss on settlement of debt decreased to $0 for the six months ended June 30, 2024 from $833,019 for the six months ended June 30, 2023. The decrease is caused by the Lind notes settlement in prior year.
Change in Fair Value of Derivative and Warrant Liabilities. Change in fair value and derivative and warrant liabilities decreased to a loss of $244,486 for the six months ended June 30, 2024 from a gain of $99,577 for the six months ended June 30, 2023. The decrease is attributable to the fair value measurement for the derivative liability and warrant liability for the six months ended June 30, 2024.
Interest Expense. Interest expense increased to $1,206,316 for the six months ended June 30, 2024 from $670,453 for the six months ended June 30, 2023. The increase is attributable to the amortization of the Lind convertible debt discount and due to the payments made to the Lind note which entered on May 30, 2023.
Net Loss. Net loss was $2,935,062 for the six months ended June 30, 2024 as compared to $3,403,137 for the six months ended June 30, 2023. The decrease in net loss is primarily attributable to the decrease loss of settlement of debt.
Liquidity and Capital Resources
The Company had cash of $73,110 as of June 30, 2024. At June 30, 2024, the Company had a working capital surplus of $2,534,259, including $44,038 in stockholder loans, and the Company’s primary sources of liquidity consisted of inventory of $2,638,108 and accounts receivable of $600,478.
The Company has historically financed its operations through the cash flow generated from operations, capital investment, notes payable and a working capital line of credit.
Cash (Used in) Operating Activities. Cash used in operating activities during the six months ended June 30, 2024 was $2,639,077 as compared to cash used in operating activities of $1,573,217 for the six months ended June 30, 2023. The increase is primarily attributable to decrease in payables and customer refunds of $1,250,508, offset by the increase in inventory of $2,058,607 and other current assets of $259,877 for the six months ended June 30, 2024 compared with the six months ended June 30, 2023.
Cash (Used in) Investing Activities. Cash used in investing activities for the six months ended June 30, 2024 was $57,797 as compared to cash used in investing activities of $15,351 for the six months ended June 30, 2023. The increase was mainly attributable to an increase in the purchase of fixed assets for the six months ended June 30, 2024 compared to the purchases of fixed assets for the six months ended June 30, 2023.
Cash Provided by Financing Activities. Cash provided by financing activities for the six months ended June 30, 2024 was $2,650,048 as compared to cash provided by financing activities of $1,538,386 for the six months ended June 30, 2023. The increase is mainly attributable due to the no repayments of working capital line of credit during the six months ended June 30, 2024.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of June 30, 2024, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation our principal executive officer and principal financial officer have concluded that based on the material weaknesses discussed below our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:
| ● | inadequate control over the monitoring of inventory maintained in the Company’s third-party warehouse; | |
| ● | ineffective controls over the Company’s financial close and reporting process; and | |
| ● | inadequate segregation of duties consistent with control objectives, including lack of personnel resources and technical accounting expertise within the accounting function of the Company. |
Management believes that the material weaknesses that were identified did not have an effect on our financial results. However, management believes that these weaknesses, if not properly remediated, could result in a material misstatement in our financial statements in future periods.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to further initiate, the following measures, subject to the availability of required resources:
| ● | We plan to create a position to segregate duties consistent with control objectives and hire personnel resources with technical accounting expertise within the accounting function; and | |
| ● | We plan to create an internal control framework that will address financial close and reporting process, among other procedures. |
Changes in Internal Control over Financial Reporting
During the period covered by this Quarterly Report, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which we are a party or in which any director, officer or affiliate of ours, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Except as set forth below, there were no sales of equity securities sold during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.
On January 23, 2024, February 1, 2024, March 8, 2024, April 8, 2024, May 10, 2024, and July 1,2024, the Company issued 1,528, 1,654, 2,056, 2,391, 3,928, and 9,900 shares of common stock, respectively, to the designee of ClearThink Capital for consulting services provided to the Company.
On June 6, 2024, June 13, 2024, June 27, 2024, June 28, 2024, July 17, 2024, and July 23, 2024, the company issued 55,954, 55,954, 113,751, 56,970, 64,850, and 64,850 shares of common stock to Lind in satisfaction of a convertible promissory note.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
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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.
| BLUE STAR FOODS CORP. | ||
| Dated: August 14, 2024 | By: | /s/ John Keeler |
| Name: | John Keeler | |
| Title: | Executive Chairman and Chief Executive Officer (Principal Executive Officer) | |
| Dated: August 14, 2024 | By: | /s/ Claudia Campos |
| Name: | Claudia Campos | |
| Title: | Corporate Controller (Principal Financial and Accounting Officer) | |
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