UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 2021
BLUE STAR FOODS CORP.
(Exact name of registrant as specified in its charter)
| Delaware | 000-55903 | 82-4270040 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
|
3000 NW 109th Avenue Miami, Florida |
33172 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (860) 633-5565
(Former name or former address, if changed since last report.)
N/A
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [X]
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. [ ]
Section 1 – Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
Extension of Lobo Note
On June 30, 2021, Blue Star Foods Corp., a Delaware corporation (the “Company”), issued a replacement unsecured promissory note in the principal amount of $100,000 (the “Lobo Note”) to Lobo Holdings, LLC, a Florida limited liability company (“Lobo”), and a stockholder of the Company, which served to extend the maturity date of an unsecured promissory note the Company originally issued to Lobo on January 1, 2021, from June 30, 2021 to September 30, 2021. The Lobo Note, which bears interest at the rate of 10% per annum, may be prepaid in whole or in part without penalty.
The foregoing description of the Lobo Note is not complete and is qualified in its entirety by reference to the full text of the Lobo Note, a copy of which is attached hereto as Exhibit 4.1.
Payoff of Debt to Kenar
On July 6, 2021, the Company entered into a note payoff indemnity agreement (the “Kenar Payoff Agreement”) with Kenar Overseas Corp., a company registered in Panama (“Kenar”), pursuant to which the Company paid Kenar $918,539.32 of principal and accrued interest in full satisfaction of the amounts due to Kenar under the Second Loan Amendment, dated April 26, 2021, between the Company and Kenar. At the time the payment was made to Kenar, the 4,000,000 shares pledged by John Keeler, the Company’s Chief Executive Officer and Executive Chairman, to secure the obligations of the Company to Kenar, were released.
The foregoing description of the Kenar Payoff Agreement is not complete and is qualified in its entirety by reference to the full text of the Kenar Payoff Agreement, a copy of which is attached hereto as Exhibit 10.1.
Entry into Subscription Agreements
On June 30, 2021, the Company entered into subscription agreements (“Subscription Agreements”) with certain purchasers (the “Purchasers”), pursuant to which the Company sold the Purchasers an aggregate of 598,750 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at a purchase price of $2.00 per Share (the “Purchase Price”), for gross proceeds to the Company of $1,197,500.
All of the Purchasers were “accredited investors,” as defined in Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).
The Company intends to utilize the net proceeds from the sales of the Shares for the acquisition of a land-based salmon farm, to purchase more crabmeat, to repay certain of the Company’s debt, and for working capital and general corporate purposes.
In connection with the purchase of the Shares by the Purchasers, the Company issued each Purchaser warrants (“Warrants”) to purchase additional shares of the Company’s Common Stock (the “Warrant Shares”) equal to the number of Shares purchased by such Purchaser, at an exercise price of $2.00 per share. As a result, the Company issued Warrants to purchase an aggregate of 598,750 Warrant Shares to the Purchasers. The Warrants are exercisable for cash only, for a term of three years from the date of issuance. The number of Warrant Shares to be deliverable upon exercise of the Warrants is subject to adjustment for subdivision or consolidation of shares and other standard dilutive events.
Pursuant to the Subscription Agreements, the Company granted the Purchasers piggyback registration rights with respect to Shares and Warrant Shares (the “Registrable Securities”), requiring the Company to register the Registrable Securities in any registration statement filed by the Company within two years from the date of the issuance of the Registrable Securities to the Purchasers, subject to certain limitations.
The foregoing descriptions of the Subscription Agreement and the Warrant are not complete and are qualified in their entirety by reference to the full text of the forms of the Subscription Agreement and the Warrant, copies of which are attached hereto as Exhibits 10.1 and 4.2, respectively, and incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
Reference is made to the disclosure set forth under Item 1.01 above with respect to the payoff of debt to Kenar, which disclosure is incorporated herein by reference.
Section 2 – Financial Information
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Reference is made to the disclosure set forth under Item 1.01 above with respect to the issuance of the Lobo Note, which disclosure is incorporated herein by reference.
Section 3 – Securities and Trading Markets
Item 3.02 Unregistered Sale of Equity Securities.
Reference is made to the disclosure set forth under Item 1.01 above with respect to the entry into the Subscription Agreements, which disclosure is incorporated herein by reference.
The issuances of the Shares and Warrants were, and, upon exercise of the Warrants, the issuances of the Warrants Shares will be, exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation D as promulgated by the Securities and Exchange Commission under of the Securities Act, as transactions by an issuer not involving any public offering. At the time of their issuance, the Shares and the Warrants were deemed to be restricted securities for purpose of the Act and will bear restrictive legends to that effect.
Section 9 – Financial Statements and Exhibits.
Item 9.01 Financial Statements and Exhibits.
*Filed herewith
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 hereunto duly authorized.
| BLUE STAR FOODS CORP. | ||
| Date: July 7, 2021 | By: | /s/ John Keeler |
| Name: | John Keeler | |
| Title: | Executive Chairman and Chief Executive Officer | |
Exhibit 4.1
PROMISSORY NOTE
| $100,000.00 | Miami, Florida | |
| July 1st, 2021 |
FOR VALUE RECEIVED, BLUE STAR FOODS CORP., a Delaware corporation (the “Borrower”), promises to pay to the order of Lobo Holding, LLC, a Florida Limited Liability Corporation (the “Lender”, the principal sum of One Hundred thousand Dollars ($100,000.00), together with interest on the unpaid principal balance at the rate and on the terms provided herein.
| 1. | Interest Rate. Interest shall accrue on the unpaid principal balance of this Promissory Note (including all modifications, substitutions, renewals or extensions hereof, this “Note”) at the rate of 10% per annum (the “Interest Rate”) from the date hereof until the Note is paid in full. Interest shall be paid for the actual number of days elapsed based on a 360-day year and shall be payable together with payments of principal. | |
| 2. | Maturity Date. The term of the Note shall be the period commencing on the date hereof and ending on September 30, 2021 (the “Maturity Date”). | |
| 3. | Payment. The outstanding accrued, but unpaid, interest and principal balance due under the Note shall be due and payable on the Maturity Date. If the Maturity Date is not a Business Day, payments shall be due on the next Business Day. For purposes of this Note, “Business Day” means any day other than a Saturday, Sunday or other day on which banking institutions in New York are authorized or required by law to close. Amounts due under this Note shall be payable by certified or bank cashier’s check, or by wire transfer of immediately available funds to an account designated by Lender in writing. | |
| 4. | Pre-Payment. The Note may be prepaid in whole or in part at any time or from time to time during the term of the Note. Any such prepayment shall be applied first to interest accrued but unpaid to such date on the outstanding principal balance hereof immediately preceding such prepayment and then to reduction of the principal balance hereof. There will be no penalty for pre-payment of the Note. | |
| 5. | Default. The unpaid principal, interest and other amounts and charges due under the Note shall be immediately due and payable upon the occurrence of the following: |
| a. | Default in any payment of principal or interest due on the Note or default under any other provision of the Note; or | |
| b. | The Borrower makes an assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for any receiver of any trustee for the Borrower or any substantial part of its property, commences any proceeding relating to the Borrower under any reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect, or there is commenced against the Borrower any such action or proceeding which remains undismissed for a period of thirty (30) days, or the Borrower by any act indicates its consent to, approval of or acquiescence in any such action or proceeding or the appointment of any receiver of or any trustee for the Borrower or any substantial part of its property, or suffers any such receivership or trusteeship to continue undischarged for a period of thirty (30) days. |
| 6. | Waiver. Presentment for payment and demand for payment, notice of dishonor, protest and notice of protest, notice of non-payment, notice of intent to accelerate the maturity and acceleration are hereby waived. | |
| 7. | Amendment. The Note cannot be modified, discharged or terminated except in writing signed by the parties hereto. | |
| 8. | Cost of Collection. The Borrower shall pay all reasonable costs and expenses, including reasonable attorneys’ fees, incurred by the Lender in collecting or enforcing the Note. | |
| 9. | Governing Law. The Note shall be governed by, and construed in accordance with, the laws of the State of Florida applicable to contracts made and to be performed in such State, without giving effect to the conflicts of laws principles thereof. | |
| 10. | Savings Clause. Any provision herein or in any other agreement or commitment between the Borrower and the Lender, whether written or oral, expressed or implied, to the contrary notwithstanding, the Lender shall never be entitled to charge, receive, or collect, nor shall amounts received hereunder be credited as interest so that the Lender shall be paid, a sum greater than interest at the maximum nonusurious interest rate, if any, that at any time may be contracted for, charged, received, or collected on the indebtedness evidenced by the Note under applicable law (the “Maximum Rate”). It is the intention of the parties that the Note shall comply with applicable law. If the Lender ever contracts for, charges, receives, or collects, anything of value which is deemed to be interest under applicable law, and if the occurrence of any circumstance or contingency, whether acceleration of maturity of the Note, delay in advancing proceeds of the Note; or other event, should cause such interest to exceed interest at the Maximum Rate, any such excess amount shall be applied to the reduction of the unpaid principal balance of the Note or any other indebtedness owed to the Lender by the Borrower, and if the Note and such other indebtedness is paid in full, any remaining excess shall be paid to the Borrower. In determining whether or not the interest hereon exceeds interest at the Maximum Rate, the total amount of interest shall be spread throughout the entire term of the Note until its payment in full in a manner which will cause the interest rate on the Note not to exceed the Maximum Rate. | |
| 11. | Independent Legal Counsel. Each party hereto has been advised and has had the opportunity to consult with independent legal counsel regarding its rights and obligations under the Note and acknowledges that it fully understandings the terms and conditions contained herein. |
The Borrower agrees to the terms of the Note by signing below.
| BLUE STAR FOODS CORP. | ||
| By: | ||
| Name: | John Keeler | |
| Title: | Executive Chairman | |
Exhibit 10.1
NOTE PAYOFF INDEMNITY AGREEMENT
On April 26, 2021, the Company signed a Second Loan Amendment regarding the outstanding amount of USD 872,500 from the original Promissory note in the principal amount of $1,000,000 (the “Kenar Note”) between Blue Star Foods Corp., a Delaware Corporation (the “Company”) and Kenar Overseas Corp., a company registered in Panama (the “Lender”); and
WHEREAS, the CEO has determined that it is in the best interest of the Corporation and its shareholders to Pay the outstanding amount and terminate the Kenar Note.
NOW THEREFORE,
For and in consideration of the payment of USD 918,539.32 (principal amount plus interests from 03/15/21 thru 06/30/21) by “the Company” to “the Lender” under the “Second Loan Amendment” dated April 26, 2021 and the other good and valuable consideration to them in hand paid, the receipt of funds, sufficiency and reasonably equivalent value of which are hereby acknowledged, “the Lender” fully acknowledge the receipt of payment under the following Bank details after providing proof of Payment from the “the Company” and “the Lender” should consider and confirm “the Second Loan Agreement” Fully paid & release the company and/or its guarantor(s) of any past, present, future claims & indebtedness, said loan satisfied, closed & terminated as of July 6th, 2021.
Wire to:
Citibank NA, 399 Park Avenue, New York NY 10022
ABA: 021000089 SWIFT: CITIUS33
FBO Morgan Stanley Smith Barney LLC
A/C 40611172
For further credit to:
Account # 658-065699
Of Kenar Overseas Corp __
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of July 6th, 2021.
|
John Keeler “the Company” |
| Marcos Herian | |
| “the Lender” |