Company: BSFC
Filing Date: 2025-06-23
Form Type: 10-K
Source: 0001641172-25-015976
Chunk: 524

Company: Blue Star Foods Corp.
Filing Date: 2025-06-23
Form: 10-K
Item: Item 1A
Chunk 524
---

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 $554,714
for machinery and equipment and 100,000
shares of the Company’s common stock were issued on February 12, 2024 to be held in escrow, for intangible assets. The Company did not exercise its option to purchase such intangible assets, machinery and equipment.

In connection with the Services Agreement, on February 1, 2024, AFVFL,
a wholly-owned subsidiary of the Company, was incorporated in the State of Florida for the purpose of purchasing raw materials from Afritex
for the preparation of packaged seafood and other inventory to be sold to various customers in the United States.

On May 20, 2024, the Company amended
its Certificate of Incorporation to affect a one-for-fifty reverse stock split (“Reverse Stock Split”), which became effective
the same day. All share and per share amounts have been restated for all periods presented to reflect the Reverse Stock Split.

Note
2. Restatement of Previously Issued Unaudited Financial Statements

In
the course of preparing our December 31, 2024 financial statements, the Company determined that it had incorrectly applied the
provisions of ASC 606 in revenues recorded pursuant to our service agreement with Afritex Texas and also incorrectly accounted
certain inventory transactions and expenses related to such agreement. Specifically, the Company determined that not all of the
criteria under ASC 606-10-25-1 was met to support the recognition of revenues amounting to approximately $1.2 million for the three
months ended March 31, 2024, approximately $1.1 million and $2.3 million for the three and six months ended June 30, 2024 and
approximately $0.6 million and $3.0 million for the three and nine months ended September 30, 2024. The above also resulted to
errors in the accounting of the Company’s inventory and other related transactions with Afritex. These errors resulted to
misstatements that required restatement of our previously issued unaudited interim financial statements for 2024.

The
following tables present the impact of the restatements, to the applicable line items in the unaudited consolidated balance sheets, unaudited
consolidated statements of operations, and unaudited consolidated statements