UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number: 000-55903

BLUE STAR FOODS CORP.

(Exact name of registrant as specified in its charter)

Delaware

82-4270040

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

3000 NW 109th Avenue

Miami, Florida 33172

(Address of principal executive offices)

(860) 633-5565

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

BSFC

The NASDAQ Stock Market LLC

(NASDAQ Capital Market)

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. Yes☒ No ☐

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 was required to submit such files). Yes ☒ No ☐

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	☐
Non-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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 22, 2021, there were 24,575,806 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

BLUE STAR FOODS CORP.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

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	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION		26

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	27

SIGNATURES		28

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) and 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 Registration Statement on Form S-1 which we filed with the Securities and Exchange Commission (“SEC”) on October 25, 2021. 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”, “Blue Star Foods”, “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, and its wholly-owned subsidiary, Coastal Pride Seaford, LLC, a Florida limited liability company (“Coastal Pride”) and Taste of BC Aquafarms, Inc., a corporation formed under the laws of the Province of British Columbia, Canada (“TOBC”).

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, as updated in subsequent filings we have made with the SEC. 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

	SEPTEMBER 30, 2021			DECEMBER 31, 2020
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	203,967		$	55,644
Restricted cash		-			282,043
Accounts receivable, net		754,778			1,082,468
Inventory, net		1,910,535			1,832,661
Advances to related party		1,299,984			1,299,984
Other current assets		849,628			176,925
Total Current Assets		5,018,892			4,729,725
RELATED PARTY LONG-TERM RECEIVABLE		455,545			455,545
FIXED ASSETS, net		2,023,596			20,064
RIGHT OF USE ASSET		78,214			99,472
INTANGIBLE ASSETS, net
Trademarks		1,145,697			788,614
Customer relationships		2,504,214			1,145,831
Non-compete agreements		113,238			29,171
Total Intangible Assets		3,763,149			1,963,616
GOODWILL		445,395			445,395
OTHER ASSETS		125,826			108,088
TOTAL ASSETS	$	11,910,617		$	7,821,905
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accruals	$	1,522,635		$	1,607,490
Working capital line of credit		1,520,433			1,805,907
Current maturities of long-term debt		-			-
Current maturities of lease liabilities		29,651			29,337
Current maturities of related party long-term notes		437,400			195,000
Related party notes payable		100,000			972,500
Related party notes payable - subordinated		1,150,000			1,299,712
Other current liabilities		1,084,650			1,346,838
Total Current Liabilities		5,844,769			7,256,784
LONG-TERM LIABILITY
Long-term lease liability		48,163			69,844
Long-term debt		31,531			-
Related party long-term notes		435,000			515,000
Other long-term liabilities		-			-
TOTAL LIABILITIES		6,359,463			7,841,628
STOCKHOLDERS’ EQUITY (DEFICIT)
Series A 8% cumulative convertible preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding as of September 30, 2021, and 1,413 shares issued and outstanding as of December 31, 2020		-			-
Common stock, $0.0001 par value, 100,000,000 shares authorized; 23,352,730 shares issued and outstanding as of September 30, 2021, and 19,580,721 shares issued and outstanding as of December 31, 2020		2,339			1,958
Additional paid-in capital		20,117,280			13,488,836
Accumulated other comprehensive gain		47,331			-
Accumulated deficit		(14,615,796	)		(13,510,517	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		5,551,154			(19,723	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	11,910,617		$	7,821,905

The accompanying notes are an integral part of these unaudited consolidated financial statements

Blue Star Foods Corp.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 and 2020


	Three months ended						Nine months ended
	(Unaudited)						(Unaudited)
	2021			2020			2021			2020
REVENUE, NET	$	3,726,704		$	3,980,151		$	8,341,984		$	11,416,868
COST OF REVENUE		3,056,461			3,433,789			6,799,063			10,464,728

GROSS PROFIT		670,243			546,362			1,542,921			952,140

COMMISSIONS		23,932			13,620			42,332			105,983
SALARIES AND WAGES		419,445			282,279			1,028,900			932,532
DEPRECIATION AND AMORTIZATION		143,199			109,738			243,189			348,358
OTHER OPERATING EXPENSES		575,824			307,543			1,531,807			1,060,978

LOSS FROM OPERATIONS		(492,157	)		(166,818	)		(1,303,307	)		(1,495,711	)

OTHER INCOME		385,855			355,857			491,045			511,770
FORBEARANCE FEE EXPENSE (NON-CASH)		-			-			-			(2,655,292	)
INTEREST EXPENSE		(55,486	)		(188,501	)		(264,757	)		(704,809	)

NET LOSS		(161,788	)		538			(1,077,019	)		(4,344,042	)

LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST		-			-			-			7,577

NET LOSS ATTRIBUTABLE TO BLUE STAR FOODS CORP.	$	(161,788	)	$	538		$	(1,077,019	)	$	(4,351,619	)

DIVIDEND ON PREFERRED STOCK		-			28,260			28,260			84,780

NET LOSS ATTRIBUTABLE TO BLUE STAR FOODS CORP. COMMON SHAREHOLDERS	$	(161,788	)	$	(27,722	)	$	(1,105,279	)	$	(4,436,399	)

COMPREHENSIVE INCOME (LOSS):

CHANGE IN FOREIGN CURRENCY TRANSLATION ADJUSTMENT		46,395			-			47,331			-

TRANSLATION ADJUSTMENT ATTRIBUTABLE TO NON-CONTROLLING INTEREST		-			-			-			23,700

COMPREHENSIVE INCOME	$	46,395		$	-		$	47,331		$	31,277

COMPREHENSIVE LOSS ATTRIBUTABLE TO BLUE STAR FOODS CORP.	$	(115,393	)	$	538		$	(1,029,688	)	$	(4,351,619	)

Loss per basic and diluted common share:
Basic net loss per common share	$	(0.01	)	$	(0.00	)	$	(0.05	)	$	(0.24	)
Basic weighted average common shares outstanding		23,181,182			18,701,736			20,899,560			18,117,491
Fully diluted net loss per common share	$	(0.01	)	$	(0.00	)	$	(0.05	)	$	(0.24	)
Fully diluted weighted average common shares outstanding		23,181,182			18,701,736			20,899,560			18,117,491

The accompanying notes are an integral part of these unaudited consolidated financial statements

Blue Star Foods Corp.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (UNAUDITED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020


	Series A Preferred Stock $.0001 par value				Common Stock $.0001 par value				Additional Paid-in		Accumulated			Accumulated Other Comprehensive		Total Blue Star Foods Corp. Stockholders’			Non- Controlling		Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Income		Deficit			Interest		Deficit
December 31, 2020		1,413	$	-		19,580,721	$	1,958	$	13,488,836	$	(13,510,517	)	$	-	$	(19,723	)	$	-

SEC Form 10-Q filed by Blue Star Foods Corp.