Blue Star(US:BSFC)2023-11-19 16:00Financial Performance - Revenue for the three months ended September 30, 2023 decreased 35.7% to $1,561,679 compared to $2,429,195 for the same period in 2022 due to a decrease in poundage sold[50]. - Net revenue for the nine months ended September 30, 2023 decreased by 52.2% to $5,115,680 compared to $10,712,363 for the same period in 2022[97]. - Gross profit for the nine months ended September 30, 2023 increased to $340,578 from a gross loss of $718,968 in the same period in 2022, indicating a significant turnaround[98]. - Net loss for the three months ended September 30, 2023 was $445,813, a decrease from $3,738,089 for the same period in 2022, reflecting improved operational efficiency[96]. Expenses - Salaries and wages expense decreased to $301,393 for the three months ended September 30, 2023 from $352,178 for the same period in 2022, attributed to a strategic reduction in salaries[51]. - Other operating expense decreased to $410,913 for the three months ended September 30, 2023 from $566,977 for the same period in 2022, mainly due to lower legal and professional fees[77]. - Interest expense increased to $799,690 for the three months ended September 30, 2023 from $336,378 for the same period in 2022, due to the amortization of the Lind convertible debt discounts[79]. - Interest expense increased to $1,470,143 for the nine months ended September 30, 2023, up from $893,146 in the same period in 2022, due to the amortization of convertible debt discounts[102]. - Cost of goods sold for the three months ended September 30, 2023 decreased to $1,586,478 from $3,973,656 for the same period in 2022, a reduction of approximately 60%[92]. - Cost of goods sold for the nine months ended September 30, 2023 decreased to $4,775,102 compared to $11,431,331 for the same period in 2022, attributed to a decrease in poundage sold[80]. - Loss on settlement of debt increased to $977,188 for the nine months ended September 30, 2023 from $57,085 for the same period in 2022, due to the fair value of common stock issued being higher than the principal amount paid[87]. Cash Flow - Cash used in operating activities during the nine months ended September 30, 2023 was $3,112,126, a decrease from $4,095,243 in the same period in 2022, primarily due to reduced inventory and payables[104]. - Cash provided by financing activities for the nine months ended September 30, 2023 was $3,667,373, slightly down from $3,732,734 in the same period in 2022[105]. - The company had cash of $488,833 and a working capital deficit of $1,254,840 as of September 30, 2023[104]. Compliance and Offerings - The company closed a $5 million public offering on September 11, 2023, regaining compliance with NASDAQ's minimum stockholders' equity requirement[49]. - The company issued an aggregate of 690,000 shares of common stock and various warrants on September 11, 2023, with a public offering price of $0.4655 per share[47]. - The company has until March 24, 2024, to regain compliance with NASDAQ's minimum bid price requirement of $1.00 per share[73]. - The company will be subject to a mandatory panel monitor until October 16, 2024, following its compliance with the minimum stockholders' equity requirement[49]. Internal Controls - Management identified material weaknesses in internal controls, including inadequate segregation of duties and ineffective controls over the financial close and reporting process[132][141]. - As of September 30, 2023, management concluded that disclosure controls and procedures were not effective due to identified material weaknesses[141]. - Management believes that the identified material weaknesses did not affect financial results but could lead to material misstatements in future periods if not remediated[142]. - Plans to create a position to segregate duties and hire personnel with technical accounting expertise to address control weaknesses[141][143]. - The company plans to establish an internal control framework to enhance the financial close and reporting process[144]. - There were no changes in internal controls over financial reporting that materially affected the company during the reporting period[134]. Legal and Regulatory - The company is classified as a smaller reporting company and is not required to provide certain disclosures[147]. - No material pending legal proceedings were reported that could adversely affect the company[146]. - The company has not sold any unregistered equity securities during the reporting period[148]. - Forward-looking statements are subject to risks and uncertainties that could materially affect actual results[161].