SEC Form 10-Q filed by Blue Star Foods Corp.
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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
| (Address of principal executive offices) |
| (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 | ||
| Over The Counter Markets Group |
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
was required to submit such files).
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. ☐
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 12, 2025, there were shares of the registrant’s common stock outstanding.
BLUE STAR FOODS CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025
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 | 23 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 30 |
| Item 4. | Controls and Procedures | 30 |
| PART II - OTHER INFORMATION | 31 | |
| Item 1. | Legal Proceedings | 31 |
| Item 1A. | Risk Factors | 31 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31 |
| Item 3. | Defaults Upon Senior Securities | 31 |
| Item 4. | Mine Safety Disclosures | 31 |
| Item 5. | Other Information | 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; and | |
| ● | Changes in the political and regulatory environment and in business and fiscal conditions in the United States and overseas. |
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, 2024 which we filed with the Securities and Exchange Commission (“SEC”) on June 23, 2025. 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”).
| 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, 2024. 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, 2025 | DECEMBER 31, 2024 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowances and credit losses of $ | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| Advance to related party | ||||||||
| Total Current Assets | ||||||||
| FIXED ASSETS, net | ||||||||
| RIGHT OF USE ASSET-RELATED PARTY | ||||||||
| OTHER ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued compensation | ||||||||
| Customer refunds | ||||||||
| Current maturities of lease liabilities – related party | ||||||||
| Loan payable | ||||||||
| Derivative liability | ||||||||
| Other current liabilities | ||||||||
| Total Current Liabilities | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Lease liability, net of current portion – related party | ||||||||
| 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 September 30, 2025, and shares issued and outstanding as of December 31, 2024 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock, shares as of September 30, 2025 and shares as of December 31, 2024 | ( | ) | ( | ) | ||||
| 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 September 30 | Nine months ended September 30 | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| REVENUE, NET | $ | $ | $ | $ | ||||||||||||
| COST OF REVENUE | ||||||||||||||||
| GROSS PROFIT | ( | ) | ( | ) | ||||||||||||
| COMMISSIONS | ||||||||||||||||
| SALARIES AND WAGES | ||||||||||||||||
| DIRECTORS COMPENSATION | ( | ) | ||||||||||||||
| DEPRECIATION AND AMORTIZATION | ||||||||||||||||
| OTHER OPERATING EXPENSES [1] | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (LOSS) | ||||||||||||||||
| 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
| [1] |
| 5 |
Blue Star Foods Corp.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
| Series A Preferred Stock $.0001 par value | Common Stock $.0001 par value | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Treasury | Total Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Stock | Equity | ||||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Stock based compensation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Common stock issued for service | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for directors stock compensation | 4,320,000 | 432 | 539,568 | 540,000 | ||||||||||||||||||||||||||||||||
| Common stock issued for note payment | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Common stock issued for service | - | |||||||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Common stock issued for note payment | - | |||||||||||||||||||||||||||||||||||
| Series A Super-Voting Convertible Preferred Stoc | - | |||||||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Series A Preferred Stock $.0001 par value | Common Stock $.0001 par value | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Treasury | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Stock | (Deficit) | ||||||||||||||||||||||||||||
| 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 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Common stock issued for service | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for note payment | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for cash and exercise for warrants | - | |||||||||||||||||||||||||||||||||||
| Common stock issued for loan commitment fees | - | |||||||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 6 |
Blue Star Foods Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Nine Months Ended September 30 | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
| Stock based compensation | ( | ) | ||||||
| Common stock issued for service | ||||||||
| Depreciation of fixed assets | ||||||||
| Amortization of debt discounts | ||||||||
| Allowance for inventory obsolescence | ( | ) | ||||||
| Loss on settlement of debt | ||||||||
| Lease expense | ||||||||
| Credit loss expense | ( | ) | ||||||
| (Gain) 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 | ( | ) | ||||||
| Accrued compensation | ||||||||
| 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 short-term loan | ||||||||
| Repayments of short-term loan | ( | ) | ( | ) | ||||
| Repayments of related party notes payable | ( | ) | ||||||
| Net Cash Provided by Financing Activities | ||||||||
| Effect of Exchange Rate Changes on Cash | ( | ) | ||||||
| NET INCREASE (DECREASE) 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 | ||||||||
| Common stock issued for accrued directors stock compensation | ||||||||
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 importing blue and red swimming crab meat primarily from South East Asia 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, and steelhead salmon and rainbow trout fingerlings produced under the brand name Little Cedar Farms for distribution in Canada.
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 $
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.
| 8 |
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, 2024 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, 2024 filed with the SEC on June 23, 2025 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 September 30, 2025, and December 31, 2024, the balance due from the related party for future shipments was approximately $
As
of September 30, 2025, the Company made payments to John Keeler for an unsecured promissory note which has already been paid off in the
year 2024. These payments exceeded the amount owed under the note, resulting in an overpayment of 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 from importing blue and red swimming crab meat primarily from South East Asia 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, and steelhead salmon and rainbow trout fingerlings produced under the brand name Little Cedar Farms for distribution in Canada. We sell primarily to food service distributors. The Company also sells its products to wholesalers, retail establishments and seafood distributors.
| 9 |
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.
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 September 30, 2025, 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 on a cost and freight shipping point basis, and it becomes the Company’s asset and liability upon leaving the suppliers’ warehouse.
| 10 |
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 nine months ended September 30, 2025, the Company recorded an inventory allowance of $
The Company’s inventory as of September 30, 2025 and December 31, 2024 consists of:
| September 30, 2025 | December 31, 2024 | |||||||
| Inventory purchased for resale | $ | $ | ||||||
| Feeds and eggs processed | ||||||||
| Raw materials for packaged seafood | ||||||||
| Less: Inventory allowance | ( | ) | ( | ) | ||||
| Inventory, net | $ | $ | ||||||
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 September 30, 2025. The Company’s leases generally have terms that range from three years for
equipment and six to
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.
| 11 |
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 September 30, 2025 and December 31, 2024. There were no financial assets and liabilities that were measured at fair value on a recurring basis under Levels 1 and 2.
| Level 3 Fair Value | ||||||||
As of September 30, 2025 | As of December 31, 2024 | |||||||
| Liabilities | ||||||||
| Derivative liability on convertible debt | $ | $ | ||||||
| Total | $ | $ | ||||||
| 12 |
The table below presents the change in the fair value of the derivative liability convertible debt and warrant liability during the nine months ended September 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, September 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, September 30, 2024 | $ |
The table below presents the change in the fair value of the derivative liability convertible debt and warrant liability during the nine months ended September 30, 2025:
| Derivative liability balance, January 1, 2025 | $ | |||
| Issuance of derivative liability during the period | ||||
| Change in derivative liability during the period | ( | ) | ||
| Derivative liability balance, March 31, 2025 | $ | |||
| Issuance of derivative liability during the period | ||||
| Change in derivative liability during the period | ( | ) | ||
| Derivative liability balance, June 30, 2025 | $ | |||
| Issuance of derivative liability during the period | ||||
| Change in derivative liability during the period | ( | ) | ||
| Derivative liability balance, September 30, 2025 | $ |
The fair market value of all derivatives and warrant liability as of December 31, 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 |
Segment Information
The
Company’s business consists of
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
Recent Accounting Pronouncements
ASU 2023-09 – Income Taxes (Topic 740)
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU aims to enhance the transparency and usefulness of income tax disclosures by requiring public business entities to provide more disaggregated information in the effective tax rate reconciliation and for income taxes paid. Key provisions include a requirement for tabular reconciliation using both percentages and amounts, broken out into specific categories, with certain reconciling items at or above a 5% quantitative threshold further disaggregated by nature and/or jurisdiction. Additionally, the ASU requires disclosure of income taxes paid (net of refunds received), disaggregated by federal, state/local, and foreign jurisdictions, and amounts paid to individual jurisdictions that comprise 5% or more of total income taxes paid. The ASU also eliminates certain existing disclosure requirements related to unrecognized tax benefits and cumulative unrecognized deferred tax liabilities. For public business entities, the amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. The Company does not expect this adoption to have a material impact on its consolidated financial statements.
| 13 |
ASU 2024-03 – Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires public business entities to disclose more detailed information about certain costs and expenses in the notes to their financial statements, both in annual and interim filings. The objective is to provide investors with greater transparency into a company’s expense structure, enabling a better understanding of performance, assessment of future cash flows, and comparison with other entities. Key provisions include the disaggregation, in a tabular format, of specific natural expense categories such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization, within each relevant expense caption on the income statement. The ASU also requires disclosure of the total amount of selling expenses and a qualitative description of expenses remaining in the “other” category. For public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of adopting this ASU on its financial statements and disclosures.
ASU 2025-01 – Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date
In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update clarifies the effective date guidance in ASU 2024-03, which requires public business entities to disclose, in the notes to the financial statements, the disaggregation of certain income statement expense line items. The amendments do not change the disclosure requirements established by ASU 2024-03 but clarify when entities are required to apply them. For public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of adopting this ASU on its financial statements and disclosures.
ASU 2025-05 — Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU introduces a practical expedient to simplify the estimation of expected credit losses for current trade accounts receivable and current contract assets arising from revenue transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under the expedient, entities may assume that current conditions as of the balance sheet date will persist for the remaining life of those short-term assets when measuring expected credit losses. For public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within annual reporting periods beginning after December 15, 2025. The Company is currently evaluating the impact of adopting this ASU on its financial statements and disclosures.
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 nine months ended September 30, 2025, the Company incurred a net loss of $
Note 4. Other Current Assets
Other
current assets totaled $
Note 5. Fixed Assets, Net
Fixed assets comprised the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Computer equipment | $ | $ | ||||||
| RAS system | ||||||||
| Automobiles | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed assets, net | $ | $ | ||||||
For
the nine months ended September 30, 2025 and 2024, depreciation expense totaled approximately $
| 14 |
Note 6. Accrued Compensation
Accrued
compensation totaled $
Note 7. Debt
John Keeler Promissory Notes
The
Company had unsecured promissory notes outstanding to John Keeler, a related party, 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, 2024, $
Interest
expense for the note totaled approximately $
As
of September 30, 2025 and December 31, 2024, the outstanding principal balance on the note totaled $
Lind Global Fund II LP notes
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.
| 15 |
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
$
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 $
On August 3, 2024 the Company and Lind entered into a waiver and acknowledgement 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 $
During
the nine months ended September 30, 2025, there were
| 16 |
Agile Lending, LLC Loans
On
January 28, 2025, the Company, and Keeler & Co. (each a “Borrower”) 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
$
1800 Diagonal Notes
On
September 9, 2024, the Company issued to Diagonal a convertible promissory note in the principal amount of $
On
October 1, 2024, the Company issued to Diagonal a convertible promissory note in the principal amount of $
On
December 16, 2024, the Company issued to Diagonal a convertible promissory note in the principal amount of $
| 17 |
On
January 28, 2025, the Company issued to Diagonal a convertible promissory note in the principal amount of $
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 we issued promissory notes in the aggregate principal amount of $
The Company agreed to issue to Quick Capital and Jefferson up to 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 $
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 $
If
an event of default occurs under the Private Placement Notes, the investors have the right to convert all amounts outstanding under the
notes at any time thereafter into shares of Common Stock at the lesser of (i) the then applicable conversion price under the notes or
(ii) the Market Price. “Market Price” shall mean
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 notes, including the amount of the Private Placement Notes to be prepaid.
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 $
The investors may assign their rights to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction 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 with respect to 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 the investor (iii)
advance any loans made in the ordinary course of business in excess of $
| 18 |
In conjunction with the August Private Placement Offering, the Company entered into 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.
During
the nine months ended September 30, 2025, the Company made aggregate principal payments on the Private Placement Notes of $
Vehicle Loan
On
December 7, 2024, the Company entered into a financing loan in connection with the purchase of a company vehicle. The loan has a
principal amount of $
Labrys Fund Note
On
August 25, 2025, the Company issued to Labrys Fund II, L.P. (“Labrys Fund”) a convertible promissory note in the
principal amount of $
Quick Capital Note
On
September 16, 2025, the Company issued to Quick Capital a convertible promissory note in the principal amount of $
ClearThink Note
On
September 18, 2025, the Company issued ClearThink a convertible promissory note in the principal amount of $
Note 8. Leases
The table below presents the lease-related assets and liabilities recorded on the balance sheet as of September 30, 2025.
September 30, 2025 | ||||
| Assets | ||||
| Operating lease assets | $ | |||
| Liabilities | ||||
| Current | ||||
| Operating lease liabilities | $ | |||
| Noncurrent | ||||
| Operating lease liabilities | $ | |||
Supplemental cash flow information related to leases were as follows:
Nine Months Ended September 30, 2025 | ||||
| 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 | $ | |||
| 19 |
The table below presents the remaining lease term and discount rates for operating leases.
September 30, 2025 | ||||
| Weighted-average remaining lease term | ||||
| Operating leases | ||||
| Weighted-average discount rate | ||||
| Operating leases | % | |||
Maturities of lease liabilities as of September 30, 2025 were as follows:
Operating Leases | ||||
| 2025 (three months remaining) | ||||
| 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 | $ | |||
Note 9. Stockholders’ Equity
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 $
On
August 12, 2024, the Company issued an aggregate of shares of common stock to Jefferson and Quick Capital, with a fair value of
$
During
the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock in consideration of proceeds
of $
During
the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock to Lind as partial conversion
of $
During
the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock to the designee of ClearThink
with a fair value of $
During
the nine months ended September 30, 2024, the Company sold an aggregate of shares of common stock for net proceeds of $
During the nine months ended September 30, 2025, the Company issued an aggregate of shares of common stock to the designee of ClearThink for consulting services provided to the Company.
On January 14, 2025, the Company issued shares of common stock to each of Nubar Herian and John Keeler, shares of common stock to each of Timothy McLellan and Trond Ringstad, and shares of common stock to Jeffrey Guzy, for serving as directors of the Company.
On
March 11, 2025, the Company issued shares of common stock in consideration of proceeds of $
During
the nine months ended September 30, 2025, the Company issued shares of common stock to Diagonal as partial conversion of $
During
the nine months ended September 30, 2025, the Company issued an aggregate of shares of common stock to Quick Capital as partial
conversion of $
During
the nine months ended September 30, 2025, the Company issued an aggregate of shares of common stock to Jefferson as partial conversion
of $
During the nine months ended September 30, 2025, the Company issued shares of Series A Super Voting Convertible Preferred Stock (“Series A Preferred”) with par value $ per share. The Series A Preferred was issued for no cash or other consideration and solely to establish a voting control structure. Each share of Series A Preferred entitles the holder to 100 votes per share on all matters submitted to a vote of the stockholders.
| 20 |
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
| Outstanding – December 31, 2024 | $ | |||||||||||||||
| Exercisable – December 31, 2024 | $ | $ | ||||||||||||||
| Granted | $ | |||||||||||||||
| Forfeited | $ | |||||||||||||||
| Vested | ||||||||||||||||
| Outstanding – September 30, 2025 | $ | |||||||||||||||
| Exercisable – September 30, 2025 | $ | $ | ||||||||||||||
For the nine months ended September 30, 2025, the Company recognized a stock compensation expense of $ due to options forfeitures.
The following table represents option activity for the nine months ended September 30, 2024:
| 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 – September 30, 2024 | $ | $ | - | |||||||||||||
| Exercisable – September 30, 2024 | $ | $ | ||||||||||||||
For the nine months ended September 30, 2024, the Company recognized a net credit to stock compensation expense of $ due to options forfeitures.
Note 11. Warrants
The following table represents warrant activity for the nine months ended September 30, 2025:
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
| Outstanding – December 31, 2024 | $ | |||||||||||||||
| Exercisable – December 31, 2024 | $ | $ | ||||||||||||||
| Granted | $ | |||||||||||||||
| Exercised | $ | |||||||||||||||
| Forfeited or Expired | $ | |||||||||||||||
| Outstanding – September 30, 2025 | $ | |||||||||||||||
| Exercisable – September 30, 2025 | $ | $ | ||||||||||||||
The following table represents warrant activity for the nine months ended September 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 – September 30, 2024 | $ | |||||||||||||||
| Exercisable – September 30, 2024 | $ | $ | ||||||||||||||
On
May 30, 2023, in connection with the issuance of the $
| 21 |
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 five-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 nine months ended September 30, 2025 and 2024.
Note 12. 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 leased 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 13. Subsequent Events
Shares issuances
On
October 14, 2025, October 24, 2025, October 29, 2025, November 3, 2025, November 4, 2025, November 5, 2025, and November 7, 2025, the Company issued an
aggregate of
shares of common stock to Quick Capital as partial conversion
of $
On
October 28, 2025, October 30, 2025, November 3, 2025, November 4, 2025, November 5, 2025, November 6, 2025, November 10, 2025, and
November 12, 2025, the Company issued an aggregate of
shares of common stock to Diagonal as partial conversion of $
Schedule 14C
On October 7, 2025, the Company filed an Information Statement on Schedule 14C with the Securities and Exchange Commission to notify stockholders of certain corporate actions that were approved by written consent of the Company’s majority stockholders in accordance with applicable law. The Information Statement was filed to provide the required notice to stockholders prior to the effectiveness of such actions.
Unaffiliated Note
On
October 29, 2025, the Company entered into a promissory note agreement with an unaffiliated third-party lender for aggregate principal
of $
| 22 |
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, 2025, 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
Looking ahead, the Company plans to focus on strengthening its position in the premium seafood market by improving supply chain efficiency, expanding distribution channels, and managing costs to enhance profitability. Management expects continued demand for pasteurized crab meat and other specialty seafood products in our core U.S. and Canadian markets, supported by steady consumer interest in sustainable, ready-to-eat protein options. We intend to leverage our existing co-packing relationships across Southeast Asia to maintain consistent product quality and supply reliability while exploring new sourcing opportunities to support future growth. The Company will continue to emphasize disciplined cost management, operational efficiency, and product innovation as part of its strategy to improve margins and support long-term growth.
Recent Events
Resignation of Chief Operating Officer and Director
On June 2, 2025, Miozotis Ponce, the Company’s Operating Officer, notified the Company of her resignation as Chief Operating Officer, effective June 30, 2025.
| 23 |
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 September 30, 2025 and 2024
Net Revenue. Revenue for the three months ended September 30, 2025 increased 77.9% to $462,260 as compared to $259,779 for the three months ended September 30, 2024 as a result of an increase in inventory items sold along with increase in price during the three months ended September 30, 2025.
Cost of Goods Sold. Cost of goods sold for the three months ended September 30, 2025 decreased to $34,444 as compared to $551,116 for the three months ended September 30, 2024. This decrease is attributable to the adjustment of inventory allowance and cost in the inventory items sold.
Gross Profit. Gross profit for the three months ended September 30, 2025 increased to $427,816 as compared to gross loss of $291,337 in the three months ended September 30, 2024. This increase is attributable to the increase in sales and decrease in cost.
Commissions Expense. Commissions expense increased to $425 for the three months ended September 30, 2025 from $0 for the three months ended September 30, 2024. This increase was due to commissionable revenues for the three months ended September 30, 2024.
Salaries and Wages Expense. Salaries and wages expense decreased to $239,299 for the three months ended September 30, 2025 as compared to $268,530 for the three months ended September 30, 2024. This decrease is mainly attributable to the decrease in gross wages.
Director Compensation. Director compensation increased to $138,012 for the three months ended September 25, 2025 as compared to $3,012 for the three months ended September 30, 2024. This increase is mainly attributable to the accrual of director compensation for year-end stock issuances.
Depreciation and Amortization. Depreciation and amortization expense increased to $6,269 for the three months ended September 30, 2025 as compared to $1,535 for the three months ended September 30, 2024. This increase is attributable to higher depreciation due to depreciable purchases of fixed assets during the three months ended September 30, 2025.
Other Operating Expense. Other operating expense decreased to $456,599 for the three months ended September 30, 2025 from $2,077,793 for the three months ended September 30, 2024. This decrease is mainly attributable to expenses like legal and professional fees, storage warehouse, and loss from operating expenses in AFVFL during the three months ended September 30, 2024.
Other Income. Other income increased for the three months ended September 30, 2025 to $68,531 from $18 for the three months ended September 30, 2024. This increase is mainly attributable to the employment retention tax relief credit received.
Loss on Settlement of Debt. Loss on settlement of debt increased for the three months ended September 30, 2025 to $52,205 from $0 for the three months ended September 30, 2024. The increase is caused by the Securities Purchase Agreement notes repayments during the three months ended September 30, 2025
Change in Fair Value of Derivative and Warrant Liabilities. Change in fair value of derivative and warrant liabilities decreased to $19,628 for the three months ended September 30, 2025 from $33,806 for the three months ended September 30, 2024. The decrease is attributable to the fair value measurement for the derivative liability and warrant liability for the three months ended September 30, 2025.
Interest Expense. Interest expense decreased to $104,131 for the three months ended September 30, 2025 from $439,176 for the three months ended September 30, 2024. The decrease is attributable to the decrease in amortization of debt discount and interest paid and accrued on the notes.
Net Loss. Net loss was $480,965 for the three months ended September 30, 2025 as compared to $3,047,559 for the three months ended September 30, 2024. The decrease in net loss is primarily attributable to the decrease in other operating expenses and the interest expense.
| 24 |
Nine months ended September 30, 2025 and 2024
Net Revenue. Revenue for the nine months ended September 30, 2025 increased 32.8% to $2,595,358 as compared to $1,954,152 for the nine months ended September 30, 2024 as a result of increase in inventory items sold along with increase in price during the nine months ended September 30, 2025.
Cost of Goods Sold. Cost of goods sold for the nine months ended September 30, 2025 decreased to $1,823,208 as compared to $2,237,620 for the nine months ended September 30, 2025. This decrease is attributable to the adjustment of inventory allowance and cost in the inventory items sold.
Gross Profit. Gross profit for the nine months ended September 30, 2025 increased to $772,150 as compared to gross loss of $283,468 in the nine months ended September 30, 2024. This increase is attributable to increase in sales.
Commissions Expense. Commissions expense decreased to $885 for the nine months ended September 30, 2025 from $4,221 for the nine months ended September 30, 2024. This decrease was due to commissionable revenues for the nine months ended September 30, 2025.
Salaries and Wages Expense. Salaries and wages expense decreased to $842,809 for the nine months ended September 30, 2025 as compared to $875,780 for the nine months ended September 30, 2024. This decrease is mainly attributable to the decrease in gross wages.
Director Compensation. Director compensation increased to $414,036 for the nine months ended September 25, 2025 as compared to a credit balance of $6,999 for the nine months ended September 30, 2024. This increase is mainly attributable to the accrual of director compensation for year-end stock issuances.
Depreciation and Amortization. Depreciation and amortization expense increased to $19,587 for the nine months ended September 30, 2025 as compared to $4,211 for the nine months ended September 30, 2024. This increase is attributable to higher depreciation due to depreciable purchases of fixed assets during the nine months ended September 30, 2025.
Other Operating Expense. Other operating expense decreased to $1,373,017 for the nine months ended September 30, 2025 from $3,393,594 for the nine months ended September 30, 2024. This decrease is mainly attributable to expenses like legal and professional fees, storage warehouse, and loss from operating expenses in AFVFL during the nine months ended September 30, 2024.
Other Income. Other income increased for the nine months ended September 30, 2025 to $73,280 from $49,680 for the nine months ended September 30, 2024. This increase is mainly attributable to the employment retention tax relief credit received.
Loss on Settlement of Debt. Loss on settlement of debt increased to $93,271 for the nine months ended September 30, 2025 from $0 for the nine months ended September 30, 2024. The increase is caused by the Securities Purchase Agreement notes repayments during the nine months ended September 30, 2025.
Change in Fair Value of Derivative and Warrant Liabilities. Change in fair value and derivative and warrant liabilities increased to a gain of $49,564 for the nine months ended September 30, 2025 from a loss of $210,680 for the nine months ended September 30, 2024. The increase is attributable to the fair value measurement for the derivative liability and warrant liability for the nine months ended September 30, 2025.
Interest Expense. Interest expense decreased to $484,102 for the nine months ended September 30, 2025 from $1,645,492 for the nine months ended September 30, 2024. The decrease is attributable to the decrease in amortization of debt discount and interest paid and accrued on the notes.
Net Loss. Net loss was $2,332,713 for the nine months ended September 30, 2025 as compared to $6,360,767 for the nine months ended September 30, 2024. The decrease in net loss is primarily attributable to the change in fair value of derivative and warrant liabilities, interest expense and decrease in other operating expenses.
| 25 |
Liquidity and Capital Resources
The Company had cash of $82,770 as of September 30, 2025. As of September 30, 2025, the Company had a working capital deficit of $1,664,699 and the Company’s primary sources of liquidity consisted of inventory of $117,266 and accounts receivable of $97,240.
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 nine months ended September 30, 2025 was $372,077 as compared to cash used in operating activities of $4,285,630 for the nine months ended September 30, 2024. The decrease is primarily attributable to increase in inventory of $488,358 and increase in accounts receivable of $53,985, offset by the increase in other current assets of $869,524 and increase in payables and accruals of $450,893 for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024.
Cash (Used in) Investing Activities. Cash used in investing activities for the nine months ended September 30, 2025 was $9,914 as compared to cash used in investing activities of $94,152 for the nine months ended September 30, 2024. The decrease was mainly attributable to a decrease in the purchases of fixed assets for the nine months ended September 30, 2025 compared to the purchases of fixed assets for the nine months ended September 30, 2024.
Cash Provided by Financing Activities. Cash provided by financing activities for the nine months ended September 30, 2025 was $202,993 as compared to cash provided by financing activities of $4,350,018 for the nine months ended September 30, 2024. The decrease is mainly attributable due to the netted decrease in repayments and proceeds of short-term loans and less proceeds from common stock offering during the nine months ended September 30, 2025.
Lind Global Fund II LP investment
On May 30, 2023, the Company entered into a securities 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 $1,200,000 (the “Lind Note”) and a warrant (the “Lind Warrant”) to purchase 8,701 shares of common stock of the Company commencing six months after issuance and exercisable for five years at an exercise price of $122.50 per share, for the aggregate funding amount of $1,000,000. The Lind Warrant includes cashless exercise and full ratchet anti-dilution provisions. In connection with the issuance of the Lind Note and the Lind Warrant, the Company paid Lind a $50,000 commitment fee. The proceeds from the sale of the Note and Warrant are for general working capital purposes.
On July 27, 2023, the Company, entered into a First Amendment to the securities purchase agreement (the “Purchase Agreement Amendment”) with Lind, pursuant to which the Company amended the securities purchase agreement, entered into with Lind as of May 30, 2023 in order to permit the issuance of further senior convertible promissory notes in the aggregate principal amount of up to $1,800,000 and warrants in such aggregate amount as the Company and Lind shall mutually agree.
Pursuant to the Purchase Agreement Amendment, the Company issued to Lind a two-year, interest free convertible promissory note in the principal amount of $300,000 and a warrant to purchase 3,505 shares of common stock of the Company, for the aggregate amount of $250,000. In connection with the issuance of the note and the warrant, the Company paid a $12,500 commitment fee. The proceeds from the sale of the note and warrant are for general working capital purposes.
On August 3, 2024 the Company and Lind entered into a waiver and acknowledgement 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. Each of the Company and Lind acknowledge that the amounts owing under the convertible promissory note as of the filing of the Waiver Agreement is equal to $355,500.
During the nine months ended September 30, 2025, there were no payments to the note principal. The note has a maturity due date of July 27, 2025. As of September 30, 2025, the outstanding balance on the notes was $55,500, net of debt discount of $0, and totaling $55,500. As of December 31, 2024, the outstanding balance on the notes was $55,500, net of debt discount of $27,656, and totaling $27,844. For the nine months ended September 30, 2025 and 2024, amortization of debt discounts totaled $27,656 and $858,614, respectively.
Agile Lending, LLC Loans
On January 28, 2025, the Company 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 $420,000 which principal and interest (of $176,400) and has a maturity date of August 15, 2025. Commencing February 7, 2025, the Company is required to make weekly payments of $21,300 until the maturity date. The loan may be prepaid subject to a prepayment fee. Administrative agent fee of $20,000 was paid on the loan which was recognized as a debt discount and amortized over the term of the loan. In connection with the loan, Agile was issued a subordinated secured promissory note, dated January 28, 2025, in the principal amount of $420,000 which note is secured by all of the Borrowers’ assets, including receivables. For the nine months ended September 30, 2025, the Company made principal payments on the loan totaling $152,000 and no interest payments were made. The outstanding balance on the loan was $268,000 as of September 30, 2025.
| 26 |
1800 Diagonal Notes
On September 9, 2024, the Company issued to Diagonal a convertible promissory note in the principal amount of $179,400 with an original issue discount of $23,400 (the “September Diagonal Note”). The September Diagonal Note has an interest rate of 13% with a one-time interest payment of $23,322 paid upon issuance and a maturity date of June 15, 2025. The proceeds from the sale of the September Diagonal Note are for general working capital. Upon the occurrence of an event of default as described in the September Diagonal Note, the note will become immediately due and payable at a default interest rate of 22% of the then outstanding principal amount of the note. Additionally, Diagonal will have the right to convert all or any part of the outstanding and unpaid amount of the September Diagonal Note into shares of the Company’s common stock at a conversion price of 65% of the market price as described in the note. The Company may not, without Diagonal’s written consent, sell, lease, or otherwise dispose of any significant portion of its assets except in the ordinary course of business. The Company will reserve a sufficient number of shares to provide for the issuance of shares upon the full conversion of the September Diagonal Note. The Company is required to make monthly payments starting March 15, 2025, until the due date of June 15, 2025. The first payment due March 15, 2025, is $131,769. The monthly payment for April 15, 2025, May 15, 2025, and June 15, 2025, is $23,651. For the nine months ended September 30, 2025, the Company made principal payments on the loan totaling $179,400 of which $38,681 was paid through the issuance of an aggregate of 1,639,719 share of common stock and no interest payments were made. The outstanding balance on the loan was $0 as of September 30, 2025.
On October 1, 2024, the Company issued to Diagonal a convertible promissory note in the principal amount of $121,900 with an original issue discount of $15,900 (the “October Diagonal Note”). The October Diagonal Note has an interest rate of 12% with a one-time interest payment of $14,628 paid upon issuance and a maturity date of June 30, 2025. The proceeds from the sale of the October Diagonal Note are for general working capital. Upon the occurrence of an event of default as described in the October Diagonal Note, the note will become immediately due and payable at a default interest rate of 22% of the then outstanding principal amount of the note. Additionally, Diagonal will have the right to convert all or any part of the outstanding and unpaid amount of the October Diagonal Note into shares of the Company’s common stock at a conversion price of 75% of the market price as described in the note. The Company may not, without Diagonal’s written consent, sell, lease, or otherwise dispose of any significant portion of its assets except in the ordinary course of business. The Company will reserve a sufficient number of shares to provide for the issuance of shares upon the full conversion of the October Diagonal Note. For the nine months ended September 30, 2025, the Company made principal payments on the loan totaling $81,267 and interest payments of $9,752. The outstanding balance on the loan was $0 as of September 30, 2025.
On December 16, 2024, the Company issued to Diagonal a convertible promissory note in the principal amount of $90,850 with an original issue discount of $11,850 (the “December Diagonal Note”). The December Diagonal Note has an interest rate of 12% with a one-time interest payment of $10,902 paid upon issuance and a maturity date of September 15, 2025. The proceeds from the sale of the December Diagonal Note are for general working capital. Upon the occurrence of an event of default as described in the December Diagonal Note, the note will become immediately due and payable at a default interest rate of 22% of the then outstanding principal amount of the note. Additionally, Diagonal will have the right to convert all or any part of the outstanding and unpaid amount of the December Diagonal Note into shares of the Company’s common stock at a conversion price of 75% of the market price as described in the note. The Company may not, without Diagonal’s written consent, sell, lease, or otherwise dispose of any significant portion of its assets except in the ordinary course of business. The Company will reserve a sufficient number of shares to provide for the issuance of shares upon the full conversion of the December Diagonal Note. For the nine months ended September 30, 2025, the Company made principal payments on the loan totaling $81,329 and interest payments of $9,691. The outstanding balance on the loan was $9,521 as of September 30, 2025.
| 27 |
On January 28, 2025, the Company issued to Diagonal a convertible promissory note in the principal amount of $149,650 with an original issue discount of $19,650 (the “January Diagonal Note”). The January Diagonal Note has an interest rate of 13% with a one-time interest payment of $19,454 paid upon issuance and a maturity date of October 30, 2025. The proceeds from the sale of the January Diagonal Note are for general working capital. Upon the occurrence of an event of default as described in the January Diagonal Note, the note will become immediately due and payable at a default interest rate of 22% of the then outstanding principal amount of the note. Additionally, Diagonal will have the right to convert all or any part of the outstanding and unpaid amount of the January Diagonal Note into shares of the Company’s common stock at a conversion price of 75% of the market price as described in the note. The Company may not, without Diagonal’s written consent, sell, lease, or otherwise dispose of any significant portion of its assets except in the ordinary course of business. The Company will reserve a sufficient number of shares to provide for the issuance of shares upon the full conversion of the January Diagonal Note. The Company is required to make monthly payments starting July 30, 2025, until the due date of October 30, 2025. The first payment due July 30, 2025, is $109,918. The monthly payment for August 30, 2025, September 30, 2025, and October 30, 2025, is $19,729. For the nine months ended September 30, 2025, the Company made no principal and interest payments. The outstanding balance on the loan was $149,650, net of discount of $2,183, and totaling $147,467 as of September 30, 2025.
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 we issued promissory notes in the aggregate principal amount of $550,000 (the “August Private Placement Offering”).
The Company agreed to issue to 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, or (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.
If an event of default occurs under the Private Placement Notes, the investors have the right to convert all amounts outstanding under the notes at any time thereafter into shares of Common Stock at the lesser of (i) the then applicable conversion price under the notes or (ii) the Market Price. “Market Price” shall mean 85% of the lowest VWAP on any trading day during the ten (10) trading days prior to the respective conversion date. “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the principal market during the period beginning at 9:30 a.m., Eastern Standard Time, and ending at 4:00 p.m., Eastern Standard Time, as reported by Quote stream or other similar quotation service provider designated by the investors.
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 notes, including the amount of the Private Placement Notes to be prepaid. If the Company exercises its right to prepay the notes, 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.
| 28 |
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 investors may assign their rights to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction 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 with respect to 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 the investor (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 our 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 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.
During the nine months ended September 30, 2025, the Company made aggregate principal payments on the Private Placement Notes of $257,639 of which $91,441 was paid through the issuance of an aggregate of 2,876,074 shares of common stock. The outstanding balance on the loan was $99,874 as of September 30, 2025.
Labrys Fund Note
On August 25, 2025, the Company issued to Labrys Fund II, L.P. (“Labrys Fund”) a convertible promissory note in the principal amount of $169,500 with an original issue discount of $25,425 (the “Labrys Note”). The Labrys Note has an interest rate of 13% with a one-time interest payment of $22,035 paid upon issuance and a maturity date of August 25, 2026. The proceeds from the sale of the Labrys Note are for general working capital. Upon the occurrence of an event of default as described in the Labrys Note, the note will become immediately due and payable at a default interest rate of 22% of the then outstanding principal amount of the note. Additionally, Labrys Funds will have the right to convert all or any part of the outstanding and unpaid amount of the Labrys Note into shares of the Company’s common stock at a conversion price of 75% of the market price as described in the note. The Company will reserve a sufficient number of shares to provide for the issuance of shares upon the full conversion of the Labrys Note. For the nine months ended September 30, 2025, the Company made no principal and interest payments on the loan. The outstanding balance on the loan was $169,500 as of September 30, 2025.
Quick Capital Note
On September 16, 2025, the Company issued to Quick Capital a convertible promissory note in the principal amount of $47,059 with an original issue discount of $7,059 (the “Quick Capital Note”). The Quick Capital Note has an interest rate of 13% with a one-time interest payment of $6,118 paid upon issuance and a maturity date of June 16, 2026. The proceeds from the sale of the Quick Capital Note are for general working capital. Upon the occurrence of an event of default as described in the Quick Capital Note, the note will become immediately due and payable at a default interest rate of 24% of the then outstanding principal amount of the note. Additionally, Quick Capital will have the right to convert all or any part of the outstanding and unpaid amount of the Quick Capital Note into shares of the Company’s common stock at a conversion price of 65% of the market price as described in the note. The Company will reserve a sufficient number of shares to provide for the issuance of shares upon the full conversion of the Quick Capital Note. For the nine months ended September 30, 2025, the Company made no principal and interest payments on the loan. The outstanding balance on the loan was $47,059 as of September 30, 2025.
ClearThink Note
On September 18, 2025, the Company issued ClearThink a convertible promissory note in the principal amount of $47,059 with an original issue discount of $7,059 (the “ClearThink Note”). The ClearThink Note has an interest rate of 13% with a one-time interest payment of $6,118 paid upon issuance and a maturity date of June 16, 2026. The proceeds from the sale of the ClearThink Note are for general working capital. Upon the occurrence of an event of default as described in the ClearThink Note, the note will become immediately due and payable at a default interest rate of 24% of the then outstanding principal amount of the note. Additionally, ClearThink will have the right to convert all or any part of the outstanding and unpaid amount of the ClearThink Note into shares of the Company’s common stock at a conversion price of 65% of the market price as described in the note. The Company will reserve a sufficient number of shares to provide for the issuance of shares upon the full conversion of the ClearThink Note. For the nine months ended September 30, 2025, the Company made no principal and interest payments on the loan. The outstanding balance on the loan was $47,059 as of September 30, 2025.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements.
| 29 |
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 March 31, 2025, 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 has 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’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.
| 30 |
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
On January 13, 2025, February 24, 2025, September 11, 2025, September 29, 2025, October 14, 2025, October 24, 2025, October 29, 2025, November 3, 2025, November 4, 2025, November 5, 2025, and November 7, 2025, the Company issued an aggregate of 12,161,691 shares of common stock to Quick Capital as partial conversion of $131,249 principal pursuant to the convertible promissory note.
On January 14, 2025, the Company issued 480,000 shares of common stock to each of Nubar Herian and John Keeler, 960,000 shares of common stock to each of Timothy McLellan and Trond Ringstad, and 1,440,000 shares of common stock to Jeffrey Guzy, for serving as directors of the Company.
January 17, 2025, February 25, 2025, July 22, 2025, and August 27, 2025, the Company issued an aggregate of 866,649 shares of common stock to Jefferson as partial conversion of $45,583 principial and accrued interest pursuant to the convertible promissory note.
On March 12, 2025, July 17, 2025, August 19, 2025, October 28, 2025, October 30, 2025, and November 3, 2025, the Company issued 12,806,607 shares of common stock to Diagonal as partial conversion of $116,175 principal pursuant to the convertible promissory note.
During the nine months ended September 30, 2025, the Company issued an aggregate of 877,509 shares of common stock to the designee of ClearThink for consulting services provided to the Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During
the nine months ended September 30, 2025, none of the Company’s directors or officers
ITEM 6. EXHIBITS
| Exhibit No. | Description | |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| 31 |
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: November 12, 2025 | By: | /s/ John Keeler |
| Name: | John Keeler | |
| Title: | Executive Chairman and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer and Accounting Officer) | |
| 32 |