Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018 | |
Document And Entity Information | |
Entity Registrant Name | Blue Star Foods Corp. |
Entity Central Index Key | 0001730773 |
Document Type | S-1/A |
Document Period End Date | Dec. 31, 2018 |
Amendment Flag | true |
Amendment Description | Amendment No.1 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business Flag | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash (including VIE $5,561 and $22,571, respectively) | $ 13,143 | $ 29,377 |
Restricted Cash | 334,083 | 29,498 |
Accounts receivable, net (including VIE $49,624 and $138,333, respectively) | 3,449,487 | 4,675,588 |
Inventory, net (including VIE $117,816 and $257,798, respectively) | 8,126,634 | 12,952,850 |
Advances to related party | 1,139,619 | |
Other current assets (including VIE $4,351 and $3,656, respectively) | 90,929 | 99,997 |
Total current assets | 13,153,895 | 17,787,310 |
FIXED ASSETS, net | 109,169 | 146,496 |
OTHER ASSETS | 218,254 | 311,053 |
TOTAL ASSETS | 13,481,318 | 18,244,859 |
CURRENT LIABILITIES | ||
Accounts payable and accruals (including VIE $95,720 and $318,073, respectively) | 3,155,741 | 4,409,232 |
Working capital line of credit | 8,203,725 | 12,109,150 |
Current maturities of long-term debt | 31,230 | 35,011 |
Stockholder notes payable - Subordinated | 2,910,136 | 2,910,136 |
Total current liabilities | 14,300,832 | 19,463,529 |
LONG -TERM DEBT | 33,878 | |
TOTAL LIABILITIES | 14,300,832 | 19,497,407 |
COMMITMENTS AND CONTINGENCIES | ||
Blue Star Foods Corp. Stockholder's Deficit | ||
Series A 8% cumulative convertible preferred stock, $0.0001 par value; 10,000 shares authorized, 1,413 shares issued and outstanding as of December 31, 2018 and 0 shares outstanding as of December 31, 2017 | ||
Common stock, $0.0001 par value, 100,000,000 shares authorized; 16,023,164 shares issued and outstanding (including 8,164 shares declared as stock dividend on December 31, 2018) as of December 31, 2018 and 15,000,000 shares outstanding as of December 31, 2017 | 1,603 | 1,500 |
Additional paid-in capital | 3,404,774 | 558,257 |
Accumulated deficit | (3,853,139) | (1,494,927) |
Total Blue Star Foods Corp. stockholder's deficit | (446,762) | (935,170) |
Non-controlling interest | (440,833) | (424,081) |
Accumulated other comprehensive income (VIE) | 68,081 | 106,703 |
Total VIE's deficit | (372,752) | (317,378) |
TOTAL STOCKHOLDER'S DEFICIT | (819,514) | (1,252,548) |
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT | $ 13,481,318 | $ 18,244,859 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 16,023,164 | |
Common stock, shares outstanding | 16,023,164 | 15,000,000 |
Common stock dividend shares | 8,164 | |
Series A 8% Cumulative Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 1,413 | 0 |
Preferred stock, shares outstanding | 1,413 | 0 |
Accounts Payable and Accruals [Member] | ||
Current liabilities of VIE | $ 95,720 | $ 318,073 |
Other Current Assets [Member] | ||
Current assets attributable to VIE | 4,351 | 3,656 |
Inventories [Member] | ||
Current assets attributable to VIE | 117,816 | 257,798 |
Accounts Receivable [Member] | ||
Current assets attributable to VIE | 49,624 | 138,333 |
Cash [Member] | ||
Current assets attributable to VIE | $ 5,561 | $ 22,571 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
REVENUE, NET | $ 32,165,933 | $ 36,951,923 |
COST OF REVENUE (including approximately $11,086,491 and $17,230,000 respectively, purchased from related party) | 27,227,664 | 31,254,430 |
GROSS PROFIT | 4,938,269 | 5,697,493 |
COMMISSIONS | 133,240 | 155,574 |
SALARIES & WAGES | 2,594,677 | 1,859,706 |
SETTLEMENT & WARRANT EXPENSE | 769,353 | |
OTHER OPERATING EXPENSES | 2,709,009 | 2,340,163 |
INCOME (LOSS) FROM OPERATIONS | (1,268,010) | 1,342,050 |
OTHER EXPENSE | (29,478) | |
INTEREST EXPENSE | (1,009,106) | (969,416) |
NET INCOME (LOSS) | (2,277,116) | 343,156 |
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST | (16,752) | (50,716) |
NET INCOME (LOSS) ATTRIBUTABLE TO BLUE STAR FOODS CORP. | (2,260,364) | 393,872 |
DIVIDEND ON PREFERRED STOCK | 16,328 | |
NET INCOME (LOSS) ATTRIBUABLE TO BLUE STAR FOODS CORP. COMMON SHAREHOLDERS | (2,276,692) | 393,872 |
COMPREHENSIVE INCOME (LOSS): | ||
TRANSLATION ADJUSTMENT ATTRIBUTABLE TO NON-CONTROLLING INTEREST | (38,622) | 56,010 |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST | (55,374) | 5,294 |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BLUE STAR FOODS CORP. | (2,260,364) | 393,872 |
PRO FORMA DATA: | ||
PRO FORMA INCOME TAX EXPENSE | 3,004 | 214,321 |
PRO FORMA NET (LOSS) INCOME ATTRIBUTABLE TO BLUE STAR FOODS CORP. | (2,263,368) | 179,551 |
PRO FORMA COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO BLUE STAR FOODS CORP. | $ (2,263,368) | $ 179,551 |
Loss per basic and diluted common share: | ||
Basic net income (loss) per common share | $ (0.15) | $ 0.03 |
Basic weighted average common shares outstanding | 15,147,384 | 15,000,000 |
Fully diluted net income (loss) per common share | $ (0.15) | $ 0.03 |
Fully diluted weighted average common shares outstanding | 15,147,384 | 15,000,000 |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Income (Loss) (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Purchased from related party | $ 11,086,491 | $ 17,230,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholder's Deficit - USD ($) | Series A Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total Blue Star Foods Corp. Stockholder's Deficit [Member] | Non-Controlling Interest [Member] | Total |
Balance at Dec. 31, 2016 | $ 1,500 | $ 558,257 | $ (1,888,799) | $ (1,329,042) | $ (322,672) | $ (1,651,714) | |
Balance, shares at Dec. 31, 2016 | 15,000,000 | ||||||
Reverse Merger recapitalization | |||||||
Net Income (Loss) | 393,872 | 393,872 | (50,716) | 343,156 | |||
Comprehensive loss | 56,010 | 56,010 | |||||
Balance at Dec. 31, 2017 | $ 1,500 | 558,257 | (1,494,927) | (935,170) | (317,378) | (1,252,548) | |
Balance, shares at Dec. 31, 2017 | 15,000,000 | ||||||
Balance at Dec. 29, 2017 | $ 1,500 | 558,257 | (1,494,927) | (935,170) | (317,378) | (1,252,548) | |
Balance, shares at Dec. 29, 2017 | 15,000,000 | ||||||
606 Adjustment to January 1, 2018 | (81,520) | (81,520) | (81,520) | ||||
Balance at Jan. 02, 2018 | $ 1,500 | 558,257 | (1,576,447) | (1,016,690) | (317,378) | (1,334,068) | |
Balance, shares at Jan. 02, 2018 | 15,000,000 | ||||||
Balance at Dec. 31, 2017 | $ 1,500 | 558,257 | (1,494,927) | (935,170) | (317,378) | (1,252,548) | |
Balance, shares at Dec. 31, 2017 | 15,000,000 | ||||||
Reverse Merger recapitalization | $ 2,400 | ||||||
Common stock issue for service, shares | 265,000 | 530,001 | |||||
Preferred Stock Issued for Cash | $ 16,328 | ||||||
Preferred Stock Issued for Cash, shares | 8,164 | ||||||
Net Income (Loss) | $ (2,277,116) | ||||||
Balance at Dec. 31, 2018 | $ 1,603 | 3,404,774 | (3,853,139) | (446,762) | (372,752) | (819,514) | |
Balance, shares at Dec. 31, 2018 | 1,413 | 16,023,164 | |||||
Balance at Jan. 02, 2018 | $ 1,500 | 558,257 | (1,576,447) | (1,016,690) | (317,378) | (1,334,068) | |
Balance, shares at Jan. 02, 2018 | 15,000,000 | ||||||
Reverse Merger recapitalization | $ 75 | (2,475) | (2,400) | (2,400) | |||
Reverse Merger recapitalization, shares | 750,000 | ||||||
Common stock issue for service | $ 27 | 529,974 | 530,001 | 530,001 | |||
Common stock issue for service, shares | 265,000 | ||||||
Preferred Stock Issued for Cash | 725,000 | 725,000 | 725,000 | ||||
Preferred Stock Issued for Cash, shares | 725 | ||||||
Preferred Stock Issued in Connection with SOR investors | 688,000 | 688,000 | 688,000 | ||||
Preferred Stock Issued in Connection with SOR investors, shares | 688 | ||||||
Option Expense | 808,338 | 808,338 | 808,338 | ||||
Warrant Expense | 81,353 | 81,353 | 81,353 | ||||
Series A 8% Dividend issued in Common Stock | $ 1 | 16,327 | (16,328) | ||||
Series A 8% Dividend issued in Common Stock, shares | 8,164 | ||||||
Net Income (Loss) | (2,260,364) | (2,260,364) | (16,752) | (2,277,116) | |||
Comprehensive loss | (38,622) | (38,622) | |||||
Balance at Dec. 31, 2018 | $ 1,603 | $ 3,404,774 | $ (3,853,139) | $ (446,762) | $ (372,752) | $ (819,514) | |
Balance, shares at Dec. 31, 2018 | 1,413 | 16,023,164 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholder's Deficit (Parenthetical) | Dec. 31, 2017$ / shares |
Common stock, par value | $ 0.0001 |
Series A Preferred Stock [Member] | |
Preferred stock, par value | $ 0.0001 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net Income (Loss) | $ (2,277,116) | $ (2,277,116) | $ 343,156 | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Stock Based Compensation & Settlement Expense | 2,107,692 | |||
Depreciation of fixed assets | 64,008 | 62,400 | ||
Amortization of intangible assets | 7,326 | 6,491 | ||
Amortization of loan costs | 155,474 | 164,457 | ||
Settlement of Accounts Payable | (388,199) | |||
Allowance for inventory obsolescence | (88,584) | $ 88,600 | ||
Changes in operating assets and liabilities: | ||||
Receivables | 884,240 | (257,934) | ||
Inventories | 5,220,684 | (3,429,637) | ||
Advances to affiliated supplier | (1,139,619) | 981,972 | ||
Other current assets | 9,068 | 70,370 | ||
Other assets | (23,071) | |||
Accounts payable and accruals | (1,001,820) | (905,564) | ||
Net cash provided by (used) in operating activities | 3,641,738 | (3,075,944) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Purchases of fixed assets | (26,681) | (33,491) | ||
Net cash used in investing activities | (26,681) | (33,491) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from Preferred Stock Offering | 725,000 | |||
Proceeds from working capital lines of credit | 32,503,116 | 39,080,437 | ||
Repayments of working capital lines of credit | (36,408,541) | (36,568,702) | ||
Principal payments of long-term debt | (37,659) | (33,090) | ||
Proceeds from stockholder notes payable - Subordinated | 500,000 | |||
Payments of Loan costs | (70,000) | (115,000) | ||
Net cash provided by (used) in financing activities | (3,288,084) | 2,863,645 | ||
Effect of exchange rate changes on cash | (38,622) | 56,010 | ||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 288,351 | (189,780) | ||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD | 58,875 | 248,655 | ||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - END OF PERIOD | 347,226 | 347,226 | 58,875 | $ 248,655 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY | ||||
Series A 8% Dividend issued in Common Stock | 16,328 | |||
Reverse Merger Recapitalization | $ (2,400) | 2,400 | ||
Supplemental Disclosure of Cash Flow Information | ||||
Cash paid for interest | $ 995,088 | $ 969,483 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) | 12 Months Ended |
Dec. 31, 2018 | |
Statement of Cash Flows [Abstract] | |
Preferred stock, dividend percentage | 8.00% |
Company Overview
Company Overview | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Company Overview | Note 1. Company Overview Located in Miami, Florida, Blue Star Foods Corp. (the “Company”) is a sustainable seafood company. The company’s main operating business, John Keeler & Co., Inc. has been in business for approximately twenty-one years. The Company was formed under the laws of the State of Delaware. The current source of revenue is importing blue and red swimming crab meat primarily from Indonesia, Philippines and China and distributing it in the United States of America, Canada and Europe under several brand names such as Blue Star, Oceanica, Pacifika and Harbor Banks. On November 8, 2018 the sole shareholder of John Keeler & Co., Inc. executed an Agreement and Plan of Merger and Reorganization with Blue Star Foods Corp. (Formerly A.G. Acquisition Group II, Inc.) and Blue Star Acquisition Corp. John R. Keeler exchanged his 500 shares with a par value of $1.00 in John Keeler & Co., Inc. for the 15,000,000 shares with a par value of $.0001 of the then outstanding 16,015,000 outstanding shares. As part of the merger, the net liabilities existing in the company as of the date of the merger totaling approximately $2,400 were converted to equity as part of this transaction. The prior owners of Blue Star Foods Corp. received 750,000 shares of common stock as part of this transaction, and various service providers received 265,000 shares as compensation for their work on the transaction resulting in and expense and additional paid in capital of $530,001. Additionally, there were 725 Series A Preferred shares and 181,250 warrants issued to private placement investors for total capital contribution of $725,000, 688 Series A Preferred shares and 172,000 warrants issued for settlement with prior investors which had a fair value of $688,000 and $81,353 respectively. Lastly, upon the close of the merger there were 3,120,000 options to purchase common stock issued to Christopher Constable. Additionally, Carlos Faria held options to purchase 104 shares of John Keeler & Co., Inc. prior to the merger. These options were immediately converted at closing to 3,120,000 options to purchase common stock in Blue Star Foods Corp. The Merger was accounted for as a “reverse merger” and recapitalization since, immediately following the completion of the transaction, the holders of John Keeler & Co., Inc.’s stock will have effective control of Blue Star Foods Corp. In addition, John Keeler & Co., Inc. will have control of the combined entity through control of the Board by designating all four of the board seats. Additionally, all of John Keeler & Co., Inc.’s officers and senior executive positions will continue on as management of the combined entity after consummation of the Merger. For accounting purposes, John Keeler & Co., Inc. will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction has been treated as a recapitalization of Blue Star Foods Corp. Accordingly, John Keeler & Co., Inc.’s assets, liabilities and results of operations are the historical financial statements of the registrant, and the John Keeler & Co., Inc.’s assets, liabilities and results of operations have been consolidated with Blue Star Foods Corp effective as of the date of the closing of the Merger. No step-up in basis or intangible assets or goodwill was recorded in this transaction. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation: The accompanying financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principles of Consolidation The consolidated financial statements include the accounts of the Company, John Keeler & Co, a wholly owned subsidiary, and its variable interest entity for which the John Keeler & Co. the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Variable Interest Entity Under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810, Consolidation The Company evaluates its interests in VIE’s on an ongoing basis and consolidates any VIE in which it has a controlling financial interest and is deemed to be the primary beneficiary. A controlling financial interest has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact its economic performance; and (ii) the obligation to absorb losses of the VIE that could potentially be significant to it or the right to receive benefits from the VIE that could be significant to the VIE. Effective April 1, 2014, the Company’s stockholder was transferred the controlling interest of Strike the Gold Foods, Ltd. (“Strike”), a related party entity which holds the Company’s inventory on consignment in United Kingdom (see Note 3). The Company evaluated its interest in Strike and determined that Strike is a VIE due to the Company’s implicit interest in Strike and the fact that Strike and the Company were under common control after the transfer of the controlling interest. Moreover, the Company determined that it is the primary beneficiary of Strike due to the fact that the Company had both the power to direct the activities that most significantly impact Strike and the obligation to absorb losses or the right to receive benefits from Strike. Therefore, the Company consolidated Strike in its financial statements. Strike’s activities are reflected in the Company’s financial statements starting on April 1, 2014, the effective date of the controlling interest transfer. Strike’s equity is classified as non-controlling interest in the Company’s financial statements since the Company is not a shareholder of Strike. Strike was not a VIE of the Company and the Company was not the primary beneficiary of Strike prior to the controlling interest transfer. The Company also evaluated its interest in three related party entities that are under common control with the Company, Bacolod Blue Star Export Corp. (“Bacolod”), Bicol Blue Star Export Co. (“Bicol”) and John Keeler Real Estate Holding (“JK Real Estate”), in light of ASC 810. The Company purchased inventory from Bacolod, an exporter of pasteurized crab meat out of the Philippines. The Company purchased inventory, via Bacolod, from Bicol. The Company leases its office and warehouse facility from JK Real Estate, a landlord that is a related party through common family beneficial ownership (see Note 7). The Company determined that Bacolod and Bicol are not VIE’s as they do not meet the criteria to be considered a VIE per ASC 810. The Company does not directly or indirectly absorb any variability of Bacolod or Bicol. The relationship between the Company and Bacolod and Bicol is strictly a supplier/customer relationship (see Advances to Suppliers and Related Party The Company determined that JK Real Estate is a VIE due the fact that the Company guarantees the mortgage on the facility rented from JK Real Estate. Therefore, JK Real Estate’s equity at risk is not deemed sufficient to permit JK Real Estate to finance its activities without subordinated financial support. Moreover, the activities of JK Real Estate are substantially conducted on behalf of the Company’s stockholder. The Company concluded that it not the primary beneficiary of JK Real Estate since the Company does not have the power to direct the activities that most significantly impact JK Real Estate. Therefore, JK Real Estate is not consolidated with the Company’s financial statements. Cash, Restricted Cash and Cash Equivalents On January 1, 2018 the Company adopted the provisions of ASU 2016-18, “Statement of Cash Flows (Topic 230) Restricted Cash” (“ASU 2016-18”) , The Company maintains cash balances with financial institutions in excess of Federal Deposit Insurance Company (“FDIC”) insured limits. The Company has not experienced any losses on such accounts and believes it does not have a significant exposure. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company considers any cash balance in the lender designated cash collateral account as restricted cash. All cash proceeds must be deposited into cash collateral account, and will be cleared and applied to the line of credit. The Company has no access to this account, and the purpose of the funds is restricted to repayment of the line of credit. As of December 31, 2018 and 2017 restricted cash was approximately $334,500 and $29,500. 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 doubtful accounts 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 provision for doubtful accounts expense. The Company generally does not charge interest on receivables. Receivables are net of estimated allowances for doubtful accounts and sales return and allowances. They are stated at estimated net realizable value. As of December 31, 2018 and 2017, the Company recorded sales return and allowances and refund liability of approximately $159,500 and $155,000, respectively. There was no allowance for bad debt recorded during the years ended December 31, 2018 and 2017. Inventories Substantially all of the Company’s inventory consists of packaged crab meat located at the Company’s warehouse facility as well as public cold storage facilities and merchandise in transit from suppliers. The cost of inventory is primarily determined using the specific identification method. Inventory is valued at the lower of cost or market, using the first-in, first-out method. Merchandise is purchased cost and freight shipping point and becomes the Company’s asset and liability upon leaving the suppliers’ warehouse. The Company had in-transit inventory of approximately $4,203,400 and $6,148,000 as of December 31, 2018 and December 31, 2017, respectively. 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 market based on its assessment of market conditions, inventory turnover and current stock levels. Inventory write-downs are charged to cost of goods sold. The Company recorded an inventory allowance of approximately $39,300 for the years ended December 31, 2018 and December 31, 2017, this represents a reduction of approximately $88,600 from the year ending December 31, 2016. Advances to Suppliers and Related Party In the normal course of business, the Company may advance payments to its suppliers, inclusive of Bacolod, a related party. 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 December 31, 2018 and 2017, the balance due from the related party for future shipments was approximately $1,139,619 and $0 respectively. The 2018 balances represent approximately three to four months of purchases from the supplier. Fixed Assets Fixed assets are stated at cost less accumulated depreciation and are being depreciated using the straight-line method over the estimated useful life of the asset as follows: Furniture and fixtures 7 to 10 years Computer equipment 5 years Warehouse and refrigeration equipment 10 years Leasehold improvements 7 years Automobile 5 years Trade show booth 7 years Leasehold improvements are amortized using the straight-line method over the shorter of the expected life of the improvement or the remaining lease term. The Company capitalizes expenditures for major improvements and additions and expenses those items which do not improve or extend the useful life of the fixed assets. The Company reviews fixed assets for recoverability if events or changes in circumstances indicate the assets may be impaired. At December 31, 2018 and 2017, the Company believes the carrying values of its long-lived assets are recoverable and as such, the Company did not record any impairment. Other Comprehensive (loss) Income The Company reports its comprehensive (loss) income in accordance with ASC 220, Comprehensive Income Foreign Currency Translation The Company’s functional and reporting currency is the U.S. Dollars. The assets and liabilities held by the Company’s VIE have a functional currency other than the U.S. Dollar. They are translated into U.S. Dollars at exchange rates in effect at the end of each reporting period. The VIE’s revenue and expenses are translated into U.S. Dollars at the average rates that prevailed during the period. The rates used in the financial statements as presented for December 31, 2018 and 2017 were 1.336 and 1.289 US dollar to UK pound sterling, respectively. The resulting net translation gains and losses are reported as foreign currency translation adjustments in stockholders’ equity as a component of comprehensive (loss) income. The Company recorded foreign currency translation adjustment of approximately ($38,600) and $56,000 for the years ended December 31, 2018 and December 31, 2017, respectively. Revenue Recognition Effective with the January 1, 2018 adoption of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” and the associated ASUs (collectively, “Topic 606”), the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. 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, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. 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. In periods prior to the adoption of Topic 606, the Company’s accounting policy was to recognize revenue when the products were shipped, the risks of ownership transferred to the customer and collectability was reasonably assured. Revenue was stated net of sales returns and allowances. The incentives for sales discounts and promotions the Company offers to its customers were accounted for as a reduction of revenue when they were characterized as cash consideration, in accordance with ASC 605, Revenue Recognition. Otherwise, the incentives were expensed. Advertising The Company expenses the costs of advertising as incurred. Advertising expenses which are included in Other Operating Expenses were approximately $127,000 and $108,000, for the years ended December 31, 2018 and 2017, respectively. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Customer Concentration The Company had three customers which accounted for approximately 65% and 63%, of revenue during the years ended December 31, 2018 and 2017, respectively. Outstanding receivables from these customers accounted for approximately 65% and 66% of the total accounts receivable as of December 31, 2018 and 2017, respectively. The loss of any major customer could have a material adverse impact on the Company’s results of operations, cash flows and financial position. Supplier Concentration The Company had three suppliers which accounted for approximately 87% of the Company’s total purchases during the year ended December 31, 2018. These three suppliers are located in two countries, Indonesia, and the Philippines, which accounted for approximately 93% of the Company’s total purchases during the year ended December 31, 2018. The Company had three suppliers which accounted for approximately 75% of the Company’s total purchases during the year ended December 31, 2017. These three suppliers are located in three countries, Indonesia, Philippines, and China, which accounted for approximately 93% of the Company’s total purchases during the year ended December 31, 2017. These suppliers included Bacolod, a related party, which accounted for approximately 49% and 53% of the Company’s total purchases, during the years ended December 31, 2018 and 2017, respectively. On September 20, 2018, the company entered into a settlement and mutual release agreement with a supplier that the company was engaged in a commercial dispute. The settlement resulted in a reduction of the outstanding accounts payable to that supplier of $388,199 to a balance due of $1,465,000. The balance due to this supplier as of December 31, 2018 was approximately $1,297,800. The loss of any major supplier could have a material adverse impact on the Company’s results of operations, cash flows and financial position. Fair Value of Financial Instruments Our financial instruments include cash, accounts receivable, accounts payable, accrued expenses, and debt obligations. We believe the carrying values of our financial instruments approximate their fair values because they are short term in nature or payable on demand. Earnings or Loss per Share: The Company accounts for earnings per share pursuant to ASC 260, Earnings per Share, which requires disclosure on the financial statements of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year. As further described in Footnote 6 - Series A Convertible Preferred Stock, as of December 31, 2018, 1,413 shares of Preferred Stock could be converted into 706,500 shares of common stock. As further described in Footnote 7 – Options & Warrants, as of December 31, 2018, 6,240,000 options may be exercised and 353,250 Warrants are eligible for exercise. There were no Preferred Stock, Warrants or Options outstanding as of December 31, 2017 As there was a net loss for the years ended December 31, 2018, basic and diluted losses per share are the same. Employee Stock-Based Compensation: The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. The Company has elected to adopt ASU 2016-09 and has a policy to account for forfeitures as they occur. Non-Employee Stock-Based Compensation: The Company accounts for stock-based compensation in accordance with the provision of ASC 505-50, “Equity Based Payments to Non-Employees,” which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest. Related Parties: The Company accounts for related party transactions in accordance with ASC 850 (“Related Party Disclosures”). A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. As of December 31, 2018 and 2017, there was $174,600 and $162,300 in interest paid to related parties on subordinated notes payable. See Note 6 Stockholder Notes Payable and Note 4 Consolidation of Variable Interest Entity for further information. Reclassifications Certain amounts in prior year have been reclassified to conform to the current year presentation. Income Taxes Accounting policies: Prior to November 8, 2018, the Company was taxed under the provisions of subchapter S of the Internal Revenue Code. Under these provisions, the Company did not pay corporate federal income taxes on its taxable income but was liable for Florida corporate income taxes and Texas Franchise Tax. The shareholder was liable for individual income taxes on the Company’s taxable income. Post-merger, the Company file consolidated federal and state income tax returns. Unaudited pro forma amounts for income tax expense have been presented assuming the Company’s pro forma effective tax rate of (2.56)% for the year ended December 31, 2018, and 68.09 % for the year ended December 31, 2017 as if it had been a C corporation during those periods. The pro-forma provision for income taxes excludes information related to the Company’s VIE. Income tax expense is the total of the current year income tax due and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company’s policy is to recognize interest and penalties on uncertain tax positions in “Income tax expense” in the Consolidated Statements of Operations. There were no amounts related to interest and penalties recognized for the years ended December 31, 2018 or 2017. Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers”, and has subsequently issued several supplemental and/or clarifying ASUs (collectively, “ASC 606”). ASC 606 prescribes a single common revenue standard that replaces most existing U.S. GAAP revenue recognition guidance. ASC 606 is intended to provide a more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. Adoption of ASC 606 is required for annual and interim periods beginning after December 15, 2017. Upon adoption, we must elect to adopt either retrospectively to each prior reporting period presented or use the modified retrospective transition method with the cumulative effect of initial adoption recognized at the date of initial application. We adopted the new standard using the modified retrospective method on January 1, 2018. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We examined our revenue recognition policy specific to all revenue streams governing product sales and have come to conclusions on the impact of the new standard using the 5-step process prescribed by ASC 606. We reviewed all of our contracts, and determined the potential impact to our accounting policies, financial controls and operations. Our conclusions include recognizing revenue on product sales once the product is sold to the distributor or retail customers. As noted above, we used the modified retrospective method to adopt the new standard. This means that we did not restate previously issued financial statements, but we recorded a one-time adjustment to retained earnings of ($81,520). This adjustment represents the sales of our product to our customers prior to January 1, 2018, that had not been delivered or in control of the customer. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 was as follows: Balance at December 31, 2017 Adjustments due to Adoption of ASC 606 Balance at January 1, 2018 ASSETS Accounts receivable, net $ 4,675,588 $ (341,861 ) $ 4,333,727 Inventory, net 12,952,850 394,468 13,347,318 Total Assets $ 18,244,859 $ 52,607 $ 18,297,466 LIABILITIES AND STOCKHOLDER’S DEFICIT Accounts payable and accruals $ 4,409,232 $ 134,127 $ 4,543,359 Accumulated deficit (1,494,927 ) (81,520 ) (1,576,447 ) Total liabilities and stockholder’s deficit $ 18,244,859 $ 52,607 $ 18,297,466 Previously, we recognized revenue on product sales once the product left the company’s warehouse. Effective January 1, 2018, we began recognizing revenue when our customers, take control of our product be it a shipment or upon delivery. This will have the impact of us recognizing revenue approximately seven calendar days later than before adopting the new standard. The following financial statement line items for twelve months ended December 31, 2018 were affected as a result of the adoption: CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) 12 months ended December 31, 2018 As Reported Effect of Change Balances without Adoption of ASC 606 Revenue, Net $ 32,165,933 (472,171 ) $ 32,638,104 Cost of revenue $ 27,227,664 $ (382,766 ) $ 27,610,430 Net Loss $ (2,277,116 ) $ (89,405 ) $ (2,187,711 ) Loss per basic and diluted common share: Basic and diluted net loss per common share (0.15 ) (0.01 ) (0.15 ) CONSOLIDATED BALANCE SHEET 12 months ended December 31, 2018 Balance as Presented Effect of Change Balances without Adoption of ASC 606 ASSETS Accounts receivable, net $ 3,449,487 $ (243,177 ) $ 3,206,310 Inventory, net 8,126,634 281,361 8,407,995 Total Assets $ 13,481,318 $ 38,184 $ 13,519,502 LIABILITIES AND STOCKHOLDER’S DEFICIT Accounts payable and accruals $ 3,155,741 $ 127,589 $ 3,283,330 Accumulated deficit (3,853,139 ) (89,405 ) (3,942,544 ) Total liabilities and stockholder’s deficit $ 13,481,318 $ 38,184 $ 13,519,502 ASC 606 did not have an aggregate impact on our net cash provided by operating activities but resulted in offsetting changes in certain assets and liabilities presented within net cash used in operating activities in our consolidated statement of cash flows, as reflected in the above tables. Recently Issued Accounting Pronouncements In February 2016, the FASB issued new lease accounting guidance ASU No. 2016-02, “Leases” (“ASU 2016-02”), as amended by ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842): Targeted Improvements.” Under the new guidance, at the commencement date, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new guidance is not applicable for leases with a term of 12 months or less. Lessor accounting is largely unchanged. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted upon issuance. ASC 842 was previously required to be adopted using the modified retrospective approach. However, in July 2018, the FASB issued ASU 2018-11, which allows for retrospective application with the recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under this option, entities would not need to apply ASC 842 (along with its disclosure requirements) to the comparative prior periods presented. Management expects that most of its operating leases (primarily warehouse space) will be recognized as operating lease liabilities and right of use assets on its consolidated balance sheet. The Company has elected to adopt certain of the optional practical expedients, including the package of practical expedients, which, among other things, gives the option to not reassess: 1) whether expired or existing contracts are or contain leases; 2) the lease classification for expired or existing leases; and 3) initial direct costs for existing leases. |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | 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 year ended December 31, 2018, the Company incurred a net loss of $2,277,116, has an accumulated deficit of $3,853,139 and working capital deficit of $1,146,937, inclusive of $2,910,136 in subordinated stockholder debt. The company does have a positive cash flow from operations. These circumstances raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to increase revenues, execute on its business plan to acquire complimentary companies, raise capital, and to continue to sustain adequate working capital to finance its operations. The failure to achieve the necessary levels of profitability and cash flows would be detrimental to the Company. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Consolidation of Variable Inter
Consolidation of Variable Interest Entities | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation of Variable Interest Entities | Note 4. Consolidation of Variable Interest Entities Effective April 1, 2014, the Company’s stockholder was transferred the controlling interest of Strike (see Note 2). The Company concluded that Strike is a VIE and the Company is the primary beneficiary of Strike, in accordance with ASC 810, Consolidation Company and the Company was not the primary beneficiary of Strike prior to the effective date of the controlling interest transfer of April 1, 2014. Strike’s equity is classified as non-controlling interest in the Company’s financial statements since the Company is not a shareholder of Strike. The information below represents the assets, liabilities and non-controlling interest related to Strike as of December 31, 2018 and December 31, 2017. December 31, 2018 Assets $ 177,352 Liabilities 95,720 Non-controlling interest (440,883 ) December 31, 2017 Assets $ 422,358 Liabilities 318,073 Non-controlling interest (424,081 ) |
Fixed Assets
Fixed Assets | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | Note 5. Fixed Assets Fixed assets comprised the following at December 31: 2018 2017 Computer equipment $ 27,320 $ 22,924 Warehouse and refrigeration equipment 157,839 135,607 Leasehold improvements 26,600 26,600 Automobile 174,620 174,621 Total 386,379 359,752 Less: Accumulated depreciation and amortization (277,210 ) (213,256 ) Fixed assets, net $ 109,169 $ 146,496 For the years ended December 31, 2018 and 2017, depreciation and amortization expense of fixed assets totaled approximately $64,000 and $62,400 respectively. |
Stockholder Notes Payable
Stockholder Notes Payable | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Stockholder Notes Payable | Note 6. Stockholder Notes Payable The Company had unsecured promissory notes outstanding to its stockholder of approximately $2,910,000 as of December 31, 2018 and 2017. These notes are payable on demand and bear an annual interest rate of 6%. These notes are subordinated to AFS Finco I LP (“Ares”) as a stipulation to the working capital line of credit. Principle payments are not allowed under this subordination agreement that was effective August 31, 2016. No Principal payments were made by the Company during 2018 or 2017. The Stockholder loaned an additional $500,000 in subordinated funds to the Company during the year ended December 31, 2017. Interest expense for the stockholder notes totaled approximately $174,600 and $162,300 for the years ending December 31, 2018 and 2017, respectively. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Note 7. Debt Working Capital Line of Credit The Company entered into a $14,000,000 revolving line of credit with ACF Finco I, LP on August 31, 2016, the proceeds of which were used to pay off the prior line of credit, pay new loan costs of approximately $309,000, and provide additional working capital to the company. This facility was amended on November 18, 2016, June 19, 2017, October 16, 2017, September 19, 2018 and November 8, 2018. In the fourth amendment the term of this facility was extended to a term of 5 years from the effective date and is subject to early termination by the lender upon defined events of default. The Company continues to be obligated to meet certain financial covenants. The line of credit bears an interest rate equal to the greater of 3 Month LIBOR rate plus 6.25%, the Prime rate plus 3.0% or a fixed rate of 6.5%. The Ares line of credit agreement is subject to the following terms: ● Borrowing is based on up to 85% of eligible accounts receivable plus the net orderly liquidation value of eligible inventory at the same rate, subject to certain defined limitations. ● The line is collateralized by substantially all the assets and property of the Company and is personally guaranteed by the stockholder of the Company. ● The Company is restricted to specified distribution payments, use of funds, and is required to comply with certain other covenants including certain financial ratios. ● All cash received by the Company is applied against the outstanding loan balance. ● A subjective acceleration clause allows Ares to call the note upon a material adverse change. During the year ended December 31, 2018, the Company failed to meet certain financial covenants. The bank issued the fourth amendment to the loan and security agreement dated September 19, 2018 waiving the defaults of the financial covenants, and resetting certain financial covenants. The Company is in compliance with all bank covenants as of December 31, 2018. On November 8, 2018, Inc. the company entered into the fifth amendment to the loan and security agreement with Ares Financial. This amendment memorialized the change in ownership of John Keeler & Co., Inc as a wholly owned subsidiary of Blue Star Foods Corp. as well as the change of John Keeler from CEO to Executive Chairman, and the appointment of Carlos Faria as the CEO of John Keeler& Co., Inc. The Company analyzed the Line of Credit modification under ASC 470-50-40-21 and determined that the modification did not trigger any additional accounting due to the revolving line of credit remain unchanged As of December 31, 2018, the line of credit bears interest rate of 8.96%. As of December 31, 2018 and 2017, the line of credit had an outstanding balance of approximately $8,204,000 and $12,100,000, respectively. The Company amortizes loan costs on a straight-line basis, which approximates the interest method, over the term of the credit facility. The Company added loan costs associated with the working capital lines of credit of approximately $70,000 and $115,000 for the twelve months ending December 31, 2018 and 2017, leaving balances in the asset of $109,200 and $195,000, net of approximately $384,500 and $229,000 of accumulated amortization as of December 31, 2018 and 2017, respectively. The Company recorded amortization expense of approximately $155,500 and $164,000 during the years ended December 31, 2018 and 2017, respectively. Long-Term Debt As of December 31, 2018 and 2017, long-term debt consisted of a note payable outstanding with Mercedes-Benz Financial Services (“MB Financial”). The Company entered into a loan agreement with MB Financial on November 30, 2014 to finance the purchase of an automobile. The loan bears interest at 5.56% per annum and requires monthly installment of approximately $3,000, inclusive of interest. The loan matures on November 30, 2019. As of December 31, 2018 and 2017, this loan had an outstanding balance of approximately $31,200 and $69,000, respectively. At December 31, 2018, scheduled principal payments related to long-term debt are as follows: 2019 31,200 Total $ 31,200 Interest expense for third party debt totaled approximately $820,500 and $807,000 for the years ended December 31, 2018 and 2017, respectively. |
Series A Convertible Preferred
Series A Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Series A Convertible Preferred Stock | Note 8. Series A Convertible Preferred Stock Our Board of Directors has designated 10,000 shares of preferred stock as “8% Series A Convertible Preferred Stock”. The Series A Stock has no maturity and is not subject to any sinking fund or redemption and will remain outstanding indefinitely unless and until converted by the holder or the Company redeems or otherwise repurchases the Series A Stock. Dividends. A dividend of common stock was authorized to the shareholders per the preferred shares designation on December 31, 2018. The dividend resulted in an issuance of 8,164 shares of stock with a value of $16,328. Conversion. |
Options
Options | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Options | Note 9. Options For the year ended December 31, 2018 Upon the closing of the Merger on November 8, 2018 the following options were issued: 1. Options to purchase an aggregate of 104 shares of Blue Star’s common stock issued to Carlos Faria at an exercise price of $10,000 per share, which were outstanding immediately prior to the closing of the Merger, were converted into ten-year immediately exercisable options to purchase an aggregate of 3,120,000 shares of Common Stock at an exercise price of $0.333 under the 2018 Plan. 2. Options to purchase 3,120,000 shares of Common Stock at an exercise price of $2.00 with a 10 year life, which vest one-year from the date of grant, were issued to Christopher Constable under the 2018 Plan. During the twelve months ending December 31, 2018, $808,338 in compensation expense was recognized on these 6,240,000 options. The following table summarizes the assumptions used to estimate the fair value of the stock options granted during 2018: 2018 Expected Volatility 37%-39 % Risk Free Interest Rate 2.84 % Expected life of warrants 5 - 5.5 Under the Black-Scholes option pricing model, the fair value of the 6,240,000 options granted during the twelve months ended December 31, 2018 is estimated at $2,926,087 on the date of grant. During the twelve months ended December 31, 2018, $808,338 compensation expense was recognized on these 6,240,000 options. The following Table represents option activity for the period ending December 31, 2018 and 2017: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding - December 31, 2017 - $ - Exercisable - December 31,2017 - $ - $ - Granted 6,240,000 $ 1.17 Exercised - Outstanding - December 31, 2018 6,240,000 $ 1.17 9.86 Exercisable - December 31, 2018 3,120,000 $ 0.33 9.86 $ 5,210,400 |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Warrants | |
Warrants | Note 10. Warrants For the year ended December 31, 2018 On November 8, 2018, as part of the units purchased by the private placement participants and the SOR settlement shareholders 172,000 warrants to purchase the Company’s common stock were granted. These warrants are immediately vested, are exercisable at an exercise price of $2.40 per share and expire on November 7, 2021. The Company recognized $81,353 in Settlement and Warrant expense during the twelve months ended December 31, 2018. The following table summarizes the assumptions used to estimate the fair value of the 172,000 warrants granted during 2018 as of re-measurement dates: 2018 Expected Volatility 40 % Risk Free Interest Rate 2.84 % Expected life of warrants 3.0 The following Table represents warrant activity for the period ending December 31, 2018 and 2017: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding - December 31, 2017 0 $ - Exercisable - December 31,2017 0 $ - $ - Granted 353,250 $ 2.40 Forfeited or Expired 0 Outstanding - December 31, 2018 353,250 $ 2.40 2.85 Exercisable - December 31, 2018 353,250 $ 2.40 2.85 $ - |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11 Income taxes In connection with the Merger, as discussed in Note 1, the Company terminated its S-Corporation status and became a taxable entity (“C Corporation”) on November 8, 2018. The consolidated statements of income present unaudited pro forma statements of income for the year to date and for prior year period. The pro-forma provision for income taxes excludes information related to the Company’s VIE. Allocation of federal and state income taxes between current and deferred portions is as follows: Components of Tax Expense December 31, 2018 December 31, 2018 (Pro forma) December 31, 2017 (Pro Forma) Current - Federal - - - Current - State 3,004 3,004 - Deferred - Federal - - 246,793 Deferred - State - - 23,842 Income Tax Provision/(Benefit) 3,004 3,004 270,635 Federal income tax expense differs from the statutory federal rates of 21% for the year ended December 31, 2018 and 34% for the year ended December 31, 2017 due to the following: Rate Reconciliation December 31, 2018 December 31, 2018 (Pro forma) December 31, 2017 (Pro Forma) Pre-Tax Book Income (1,939,482 ) (2,260,364 ) 393,872 Provision/(Benefit) at Statutory Rate (407,291 ) 21.00 % (474,676 ) 21.00 % 133,917 34.00 % State Tax Provision/(Benefit) net of federal benefit (46,706 ) 4.03 % (57,336 ) 4.03 % 16,665 3.61 % Permanent Book/Tax Differences 163,916 -8.45 % 175,909 -7.78 % 23,212 5.89 % Change in Tax Rate - 0.00 % - 0.00 % 102,745 26.09 % Employee Retention Credit - 0.00 % (6,484 ) 0.29 % (6,484 ) -1.65 % Change in valuation allowance 290,454 -14.98 % 423,761 -18.75 % - 0.00 % Other 2,631 -0.14 % (58,170 ) 2.57 % 580 0.15 % Income Tax Provision/(Benefit) 3,004 1.47 % 3,004 1.36 % 270,635 68.09 % The components of the net deferred tax asset at December 31, 2018, are as follows: December 31, 2018 Deferred Tax Assets 263A Unicap 29,233 Fixed Assets (4,408 ) Charitable Contribution Carryforward - Business Interest Limitation 36,969 Employee Retention Bonus - Stock based compensation 106,015 Federal Net Operating loss 109,380 State Net Operating Loss 20,612 Total Deferred Tax Assets 297,801 Deferred Tax Liabilities Intangibles (7,347 ) Inventory Reserve - Total Deferred Tax Liability (7,347 ) Net Deferred Tax Asset/(Liability) 290,454 Valuation Allowance (290,454 ) Net Deferred Tax Asset/(Liability) - Tax periods for all fiscal years after 2014 remain open to examination by the federal and state taxing jurisdictions to which the Company is subject. As of December 31, 2018, the Company has federal net operating loss of $520,857 to be carried forward indefinitely. ASC 740, “Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be recognized. A review of all available positive and negative evidence needs to be considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets and has, therefore, established a full valuation allowance as of December 31, 2018. As of December 31, 2018, the Company has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements. The Company’s policy is to classify assessments, if any, for tax related interest as income tax expenses. No interest or penalties were recorded during the years ended December 31, 2018. |
Commitment and Contingencies
Commitment and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment and Contingencies | Note 12. Commitment and Contingencies Office lease The Company leases its office and warehouse facility from JK Real Estate, a related party through common family beneficial ownership (see Note 2). The lease has a 20 year term, expiring in July 2021. The Company is a guarantor of the mortgage on the facility which had a balance of approximately $1,307,000 at December 31, 2018; the Company’s maximum exposure. The Company deems that rental income on this lease is sufficient to cover the loan payments under this mortgage. Therefore, the Company did not record any liability related to the mortgage in the consolidated financial statements as the Company does not believe it will be called upon to perform under this guarantee, in accordance with ASC 460, Guarantees Legal At December 31, 2018, future minimum lease payments under operating lease agreements are as follows: 2019 203,000 2020 203,000 2021 102,000 $ 508,000 Rental and equipment lease expenses amounted to approximately $213,600 and $211,000 for the years ended December 31, 2018 and 2017, respectively. On November 27, 2018 the company was issued a settlement letter in relation to a threatened lawsuit by a former employee. On March 26, 2019, the company responded to this letter with a settlement offer of approximately $40,000. The company has fully reserved for this settlement amount in the December 31, 2018 financial statements. The company has received no further communications regarding this settlement. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Note 13. Employee Benefit Plan The Company provides and sponsors a 401(k) plan for its employees. For the years ended December 31, 2018 and 2017, no contributions were made to the plan by the Company. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14. Subsequent Events On December 20, 2018, the Board of Directors granted stock options to purchase an aggregate of 705,000 shares of common stock at an exercise price of $2.00 per share to certain employees and service providers, effective January 15, 2019. On February 1, 2019, the Company sold 5,000 shares at $2.00 per share to one investor in a private offering. On April 2, 2019, the Company sold 5,000 shares at $2.00 per share to one investor in a private offering. On March 26, 2019, the Company issued a four-month promissory note in the principal amount of $1,000,000 to Kenar Overseas Corp., a company registered in Panama (the “Lender”). The term of the note may be extended for an additional two months at the Lender’s discretion. The note bears interest at the rate of 18% per annum during the initial four months which rate will increase to 24% during any extension thereof. The note may be prepaid in whole or in part without penalty. John Keeler, the Company’s Executive Chairman pledged 5,000,000 shares of common stock to secure the Company’s obligations under the note. On April 2, 2019, the Company issued a four-month promissory note in the principal amount of $100,000 to Lobo Holdings, LLC., a stockholder in the Company. The note bears interest at the rate of 18% per annum. The note may be prepaid in whole or in part without penalty. John Keeler, the Company’s Executive Chairman pledged 1,000,000 shares of common stock to secure the Company’s obligations under the note. On March 31, 2019, an aggregate of 14,130 shares of common stock were issued to the holders of Series A preferred stock with a value of $28,260. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The accompanying financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company, John Keeler & Co, a wholly owned subsidiary, and its variable interest entity for which the John Keeler & Co. the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. |
Variable Interest Entity | Variable Interest Entity Under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810, Consolidation The Company evaluates its interests in VIE’s on an ongoing basis and consolidates any VIE in which it has a controlling financial interest and is deemed to be the primary beneficiary. A controlling financial interest has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact its economic performance; and (ii) the obligation to absorb losses of the VIE that could potentially be significant to it or the right to receive benefits from the VIE that could be significant to the VIE. Effective April 1, 2014, the Company’s stockholder was transferred the controlling interest of Strike the Gold Foods, Ltd. (“Strike”), a related party entity which holds the Company’s inventory on consignment in United Kingdom (see Note 3). The Company evaluated its interest in Strike and determined that Strike is a VIE due to the Company’s implicit interest in Strike and the fact that Strike and the Company were under common control after the transfer of the controlling interest. Moreover, the Company determined that it is the primary beneficiary of Strike due to the fact that the Company had both the power to direct the activities that most significantly impact Strike and the obligation to absorb losses or the right to receive benefits from Strike. Therefore, the Company consolidated Strike in its financial statements. Strike’s activities are reflected in the Company’s financial statements starting on April 1, 2014, the effective date of the controlling interest transfer. Strike’s equity is classified as non-controlling interest in the Company’s financial statements since the Company is not a shareholder of Strike. Strike was not a VIE of the Company and the Company was not the primary beneficiary of Strike prior to the controlling interest transfer. The Company also evaluated its interest in three related party entities that are under common control with the Company, Bacolod Blue Star Export Corp. (“Bacolod”), Bicol Blue Star Export Co. (“Bicol”) and John Keeler Real Estate Holding (“JK Real Estate”), in light of ASC 810. The Company purchased inventory from Bacolod, an exporter of pasteurized crab meat out of the Philippines. The Company purchased inventory, via Bacolod, from Bicol. The Company leases its office and warehouse facility from JK Real Estate, a landlord that is a related party through common family beneficial ownership (see Note 7). The Company determined that Bacolod and Bicol are not VIE’s as they do not meet the criteria to be considered a VIE per ASC 810. The Company does not directly or indirectly absorb any variability of Bacolod or Bicol. The relationship between the Company and Bacolod and Bicol is strictly a supplier/customer relationship (see Advances to Suppliers and Related Party The Company determined that JK Real Estate is a VIE due the fact that the Company guarantees the mortgage on the facility rented from JK Real Estate. Therefore, JK Real Estate’s equity at risk is not deemed sufficient to permit JK Real Estate to finance its activities without subordinated financial support. Moreover, the activities of JK Real Estate are substantially conducted on behalf of the Company’s stockholder. The Company concluded that it not the primary beneficiary of JK Real Estate since the Company does not have the power to direct the activities that most significantly impact JK Real Estate. Therefore, JK Real Estate is not consolidated with the Company’s financial statements. |
Cash, Restricted Cash and Cash Equivalents | Cash, Restricted Cash and Cash Equivalents On January 1, 2018 the Company adopted the provisions of ASU 2016-18, “Statement of Cash Flows (Topic 230) Restricted Cash” (“ASU 2016-18”) , The Company maintains cash balances with financial institutions in excess of Federal Deposit Insurance Company (“FDIC”) insured limits. The Company has not experienced any losses on such accounts and believes it does not have a significant exposure. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company considers any cash balance in the lender designated cash collateral account as restricted cash. All cash proceeds must be deposited into cash collateral account, and will be cleared and applied to the line of credit. The Company has no access to this account, and the purpose of the funds is restricted to repayment of the line of credit. As of December 31, 2018 and 2017 restricted cash was approximately $334,500 and $29,500. |
Accounts Receivable | 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 doubtful accounts 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 provision for doubtful accounts expense. The Company generally does not charge interest on receivables. Receivables are net of estimated allowances for doubtful accounts and sales return and allowances. They are stated at estimated net realizable value. As of December 31, 2018 and 2017, the Company recorded sales return and allowances and refund liability of approximately $159,500 and $155,000, respectively. There was no allowance for bad debt recorded during the years ended December 31, 2018 and 2017. |
Inventories | Inventories Substantially all of the Company’s inventory consists of packaged crab meat located at the Company’s warehouse facility as well as public cold storage facilities and merchandise in transit from suppliers. The cost of inventory is primarily determined using the specific identification method. Inventory is valued at the lower of cost or market, using the first-in, first-out method. Merchandise is purchased cost and freight shipping point and becomes the Company’s asset and liability upon leaving the suppliers’ warehouse. The Company had in-transit inventory of approximately $4,203,400 and $6,148,000 as of December 31, 2018 and December 31, 2017, respectively. 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 market based on its assessment of market conditions, inventory turnover and current stock levels. Inventory write-downs are charged to cost of goods sold. The Company recorded an inventory allowance of approximately $39,300 for the years ended December 31, 2018 and December 31, 2017, this represents a reduction of approximately $88,600 from the year ending December 31, 2016. |
Advances to Suppliers and Related Party | Advances to Suppliers and Related Party In the normal course of business, the Company may advance payments to its suppliers, inclusive of Bacolod, a related party. 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 December 31, 2018 and 2017, the balance due from the related party for future shipments was approximately $1,139,619 and $0 respectively. The 2018 balances represent approximately three to four months of purchases from the supplier. |
Fixed Assets | Fixed Assets Fixed assets are stated at cost less accumulated depreciation and are being depreciated using the straight-line method over the estimated useful life of the asset as follows: Furniture and fixtures 7 to 10 years Computer equipment 5 years Warehouse and refrigeration equipment 10 years Leasehold improvements 7 years Automobile 5 years Trade show booth 7 years Leasehold improvements are amortized using the straight-line method over the shorter of the expected life of the improvement or the remaining lease term. The Company capitalizes expenditures for major improvements and additions and expenses those items which do not improve or extend the useful life of the fixed assets. The Company reviews fixed assets for recoverability if events or changes in circumstances indicate the assets may be impaired. At December 31, 2018 and 2017, the Company believes the carrying values of its long-lived assets are recoverable and as such, the Company did not record any impairment. |
Other Comprehensive (loss) Income | Other Comprehensive (loss) Income The Company reports its comprehensive (loss) income in accordance with ASC 220, Comprehensive Income |
Foreign Currency Translation | Foreign Currency Translation The Company’s functional and reporting currency is the U.S. Dollars. The assets and liabilities held by the Company’s VIE have a functional currency other than the U.S. Dollar. They are translated into U.S. Dollars at exchange rates in effect at the end of each reporting period. The VIE’s revenue and expenses are translated into U.S. Dollars at the average rates that prevailed during the period. The rates used in the financial statements as presented for December 31, 2018 and 2017 were 1.336 and 1.289 US dollar to UK pound sterling, respectively. The resulting net translation gains and losses are reported as foreign currency translation adjustments in stockholders’ equity as a component of comprehensive (loss) income. The Company recorded foreign currency translation adjustment of approximately ($38,600) and $56,000 for the years ended December 31, 2018 and December 31, 2017, respectively. |
Revenue Recognition | Revenue Recognition Effective with the January 1, 2018 adoption of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” and the associated ASUs (collectively, “Topic 606”), the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. 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, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. 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. In periods prior to the adoption of Topic 606, the Company’s accounting policy was to recognize revenue when the products were shipped, the risks of ownership transferred to the customer and collectability was reasonably assured. Revenue was stated net of sales returns and allowances. The incentives for sales discounts and promotions the Company offers to its customers were accounted for as a reduction of revenue when they were characterized as cash consideration, in accordance with ASC 605, Revenue Recognition. Otherwise, the incentives were expensed. |
Advertising | Advertising The Company expenses the costs of advertising as incurred. Advertising expenses which are included in Other Operating Expenses were approximately $127,000 and $108,000, for the years ended December 31, 2018 and 2017, respectively. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Customer Concentration | Customer Concentration The Company had three customers which accounted for approximately 65% and 63%, of revenue during the years ended December 31, 2018 and 2017, respectively. Outstanding receivables from these customers accounted for approximately 65% and 66% of the total accounts receivable as of December 31, 2018 and 2017, respectively. The loss of any major customer could have a material adverse impact on the Company’s results of operations, cash flows and financial position. |
Supplier Concentration | Supplier Concentration The Company had three suppliers which accounted for approximately 87% of the Company’s total purchases during the year ended December 31, 2018. These three suppliers are located in two countries, Indonesia, and the Philippines, which accounted for approximately 93% of the Company’s total purchases during the year ended December 31, 2018. The Company had three suppliers which accounted for approximately 75% of the Company’s total purchases during the year ended December 31, 2017. These three suppliers are located in three countries, Indonesia, Philippines, and China, which accounted for approximately 93% of the Company’s total purchases during the year ended December 31, 2017. These suppliers included Bacolod, a related party, which accounted for approximately 49% and 53% of the Company’s total purchases, during the years ended December 31, 2018 and 2017, respectively. On September 20, 2018, the company entered into a settlement and mutual release agreement with a supplier that the company was engaged in a commercial dispute. The settlement resulted in a reduction of the outstanding accounts payable to that supplier of $388,199 to a balance due of $1,465,000. The balance due to this supplier as of December 31, 2018 was approximately $1,297,800. The loss of any major supplier could have a material adverse impact on the Company’s results of operations, cash flows and financial position. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments include cash, accounts receivable, accounts payable, accrued expenses, and debt obligations. We believe the carrying values of our financial instruments approximate their fair values because they are short term in nature or payable on demand. |
Earnings or Loss Per Share | Earnings or Loss per Share: The Company accounts for earnings per share pursuant to ASC 260, Earnings per Share, which requires disclosure on the financial statements of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year. As further described in Footnote 6 - Series A Convertible Preferred Stock, as of December 31, 2018, 1,413 shares of Preferred Stock could be converted into 706,500 shares of common stock. As further described in Footnote 7 – Options & Warrants, as of December 31, 2018, 6,240,000 options may be exercised and 353,250 Warrants are eligible for exercise. There were no Preferred Stock, Warrants or Options outstanding as of December 31, 2017 As there was a net loss for the years ended December 31, 2018, basic and diluted losses per share are the same. |
Employee Stock-Based Compensation | Employee Stock-Based Compensation: The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation-Stock Compensation”. ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. The Company has elected to adopt ASU 2016-09 and has a policy to account for forfeitures as they occur. |
Non-Employee Stock-Based Compensation | Non-Employee Stock-Based Compensation: The Company accounts for stock-based compensation in accordance with the provision of ASC 505-50, “Equity Based Payments to Non-Employees,” which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest. |
Related Parties | Related Parties: The Company accounts for related party transactions in accordance with ASC 850 (“Related Party Disclosures”). A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. As of December 31, 2018 and 2017, there was $174,600 and $162,300 in interest paid to related parties on subordinated notes payable. See Note 6 Stockholder Notes Payable and Note 4 Consolidation of Variable Interest Entity for further information. |
Reclassifications | Reclassifications Certain amounts in prior year have been reclassified to conform to the current year presentation. |
Income Taxes | Income Taxes Accounting policies: Prior to November 8, 2018, the Company was taxed under the provisions of subchapter S of the Internal Revenue Code. Under these provisions, the Company did not pay corporate federal income taxes on its taxable income but was liable for Florida corporate income taxes and Texas Franchise Tax. The shareholder was liable for individual income taxes on the Company’s taxable income. Post-merger, the Company file consolidated federal and state income tax returns. Unaudited pro forma amounts for income tax expense have been presented assuming the Company’s pro forma effective tax rate of (2.56)% for the year ended December 31, 2018, and 68.09 % for the year ended December 31, 2017 as if it had been a C corporation during those periods. The pro-forma provision for income taxes excludes information related to the Company’s VIE. Income tax expense is the total of the current year income tax due and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company’s policy is to recognize interest and penalties on uncertain tax positions in “Income tax expense” in the Consolidated Statements of Operations. There were no amounts related to interest and penalties recognized for the years ended December 31, 2018 or 2017. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers”, and has subsequently issued several supplemental and/or clarifying ASUs (collectively, “ASC 606”). ASC 606 prescribes a single common revenue standard that replaces most existing U.S. GAAP revenue recognition guidance. ASC 606 is intended to provide a more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. Adoption of ASC 606 is required for annual and interim periods beginning after December 15, 2017. Upon adoption, we must elect to adopt either retrospectively to each prior reporting period presented or use the modified retrospective transition method with the cumulative effect of initial adoption recognized at the date of initial application. We adopted the new standard using the modified retrospective method on January 1, 2018. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASC 606 also impacts certain other areas, such as the accounting for costs to obtain or fulfill a contract. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We examined our revenue recognition policy specific to all revenue streams governing product sales and have come to conclusions on the impact of the new standard using the 5-step process prescribed by ASC 606. We reviewed all of our contracts, and determined the potential impact to our accounting policies, financial controls and operations. Our conclusions include recognizing revenue on product sales once the product is sold to the distributor or retail customers. As noted above, we used the modified retrospective method to adopt the new standard. This means that we did not restate previously issued financial statements, but we recorded a one-time adjustment to retained earnings of ($81,520). This adjustment represents the sales of our product to our customers prior to January 1, 2018, that had not been delivered or in control of the customer. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 was as follows: Balance at December 31, 2017 Adjustments due to Adoption of ASC 606 Balance at January 1, 2018 ASSETS Accounts receivable, net $ 4,675,588 $ (341,861 ) $ 4,333,727 Inventory, net 12,952,850 394,468 13,347,318 Total Assets $ 18,244,859 $ 52,607 $ 18,297,466 LIABILITIES AND STOCKHOLDER’S DEFICIT Accounts payable and accruals $ 4,409,232 $ 134,127 $ 4,543,359 Accumulated deficit (1,494,927 ) (81,520 ) (1,576,447 ) Total liabilities and stockholder’s deficit $ 18,244,859 $ 52,607 $ 18,297,466 Previously, we recognized revenue on product sales once the product left the company’s warehouse. Effective January 1, 2018, we began recognizing revenue when our customers, take control of our product be it a shipment or upon delivery. This will have the impact of us recognizing revenue approximately seven calendar days later than before adopting the new standard. The following financial statement line items for twelve months ended December 31, 2018 were affected as a result of the adoption: CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) 12 months ended December 31, 2018 As Reported Effect of Change Balances without Adoption of ASC 606 Revenue, Net $ 32,165,933 (472,171 ) $ 32,638,104 Cost of revenue $ 27,227,664 $ (382,766 ) $ 27,610,430 Net Loss $ (2,277,116 ) $ (89,405 ) $ (2,187,711 ) Loss per basic and diluted common share: Basic and diluted net loss per common share (0.15 ) (0.01 ) (0.15 ) CONSOLIDATED BALANCE SHEET 12 months ended December 31, 2018 Balance as Presented Effect of Change Balances without Adoption of ASC 606 ASSETS Accounts receivable, net $ 3,449,487 $ (243,177 ) $ 3,206,310 Inventory, net 8,126,634 281,361 8,407,995 Total Assets $ 13,481,318 $ 38,184 $ 13,519,502 LIABILITIES AND STOCKHOLDER’S DEFICIT Accounts payable and accruals $ 3,155,741 $ 127,589 $ 3,283,330 Accumulated deficit (3,853,139 ) (89,405 ) (3,942,544 ) Total liabilities and stockholder’s deficit $ 13,481,318 $ 38,184 $ 13,519,502 ASC 606 did not have an aggregate impact on our net cash provided by operating activities but resulted in offsetting changes in certain assets and liabilities presented within net cash used in operating activities in our consolidated statement of cash flows, as reflected in the above tables. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the FASB issued new lease accounting guidance ASU No. 2016-02, “Leases” (“ASU 2016-02”), as amended by ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842): Targeted Improvements.” Under the new guidance, at the commencement date, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new guidance is not applicable for leases with a term of 12 months or less. Lessor accounting is largely unchanged. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted upon issuance. ASC 842 was previously required to be adopted using the modified retrospective approach. However, in July 2018, the FASB issued ASU 2018-11, which allows for retrospective application with the recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under this option, entities would not need to apply ASC 842 (along with its disclosure requirements) to the comparative prior periods presented. Management expects that most of its operating leases (primarily warehouse space) will be recognized as operating lease liabilities and right of use assets on its consolidated balance sheet. The Company has elected to adopt certain of the optional practical expedients, including the package of practical expedients, which, among other things, gives the option to not reassess: 1) whether expired or existing contracts are or contain leases; 2) the lease classification for expired or existing leases; and 3) initial direct costs for existing leases. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Life of Asset | Fixed assets are stated at cost less accumulated depreciation and are being depreciated using the straight-line method over the estimated useful life of the asset as follows: Furniture and fixtures 7 to 10 years Computer equipment 5 years Warehouse and refrigeration equipment 10 years Leasehold improvements 7 years Automobile 5 years Trade show booth 7 years |
Schedule of Cumulative Effect of Adjustments Due to Adoption of ASC 606 | The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 was as follows: Balance at December 31, 2017 Adjustments due to Adoption of ASC 606 Balance at January 1, 2018 ASSETS Accounts receivable, net $ 4,675,588 $ (341,861 ) $ 4,333,727 Inventory, net 12,952,850 394,468 13,347,318 Total Assets $ 18,244,859 $ 52,607 $ 18,297,466 LIABILITIES AND STOCKHOLDER’S DEFICIT Accounts payable and accruals $ 4,409,232 $ 134,127 $ 4,543,359 Accumulated deficit (1,494,927 ) (81,520 ) (1,576,447 ) Total liabilities and stockholder’s deficit $ 18,244,859 $ 52,607 $ 18,297,466 The following financial statement line items for twelve months ended December 31, 2018 were affected as a result of the adoption: CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) 12 months ended December 31, 2018 As Reported Effect of Change Balances without Adoption of ASC 606 Revenue, Net $ 32,165,933 (472,171 ) $ 32,638,104 Cost of revenue $ 27,227,664 $ (382,766 ) $ 27,610,430 Net Loss $ (2,277,116 ) $ (89,405 ) $ (2,187,711 ) Loss per basic and diluted common share: Basic and diluted net loss per common share (0.15 ) (0.01 ) (0.15 ) CONSOLIDATED BALANCE SHEET 12 months ended December 31, 2018 Balance as Presented Effect of Change Balances without Adoption of ASC 606 ASSETS Accounts receivable, net $ 3,449,487 $ (243,177 ) $ 3,206,310 Inventory, net 8,126,634 281,361 8,407,995 Total Assets $ 13,481,318 $ 38,184 $ 13,519,502 LIABILITIES AND STOCKHOLDER’S DEFICIT Accounts payable and accruals $ 3,155,741 $ 127,589 $ 3,283,330 Accumulated deficit (3,853,139 ) (89,405 ) (3,942,544 ) Total liabilities and stockholder’s deficit $ 13,481,318 $ 38,184 $ 13,519,502 |
Consolidation of Variable Int_2
Consolidation of Variable Interest Entities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Assets, Liabilities and Non-controlling Interest Related to Strike | The information below represents the assets, liabilities and non-controlling interest related to Strike as of December 31, 2018 and December 31, 2017. December 31, 2018 Assets $ 177,352 Liabilities 95,720 Non-controlling interest (440,883 ) December 31, 2017 Assets $ 422,358 Liabilities 318,073 Non-controlling interest (424,081 ) |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | Fixed assets comprised the following at December 31: 2018 2017 Computer equipment $ 27,320 $ 22,924 Warehouse and refrigeration equipment 157,839 135,607 Leasehold improvements 26,600 26,600 Automobile 174,620 174,621 Total 386,379 359,752 Less: Accumulated depreciation and amortization (277,210 ) (213,256 ) Fixed assets, net $ 109,169 $ 146,496 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Principal Payments Related to Long-term Debt | At December 31, 2018, scheduled principal payments related to long-term debt are as follows: 2019 31,200 Total $ 31,200 |
Options (Tables)
Options (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Fair Value of Stock Options | The following table summarizes the assumptions used to estimate the fair value of the stock options granted during 2018: 2018 Expected Volatility 37%-39 % Risk Free Interest Rate 2.84 % Expected life of warrants 5 - 5.5 |
Schedule of Stock Option Activity | The following Table represents option activity for the period ending December 31, 2018 and 2017: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding - December 31, 2017 - $ - Exercisable - December 31,2017 - $ - $ - Granted 6,240,000 $ 1.17 Exercised - Outstanding - December 31, 2018 6,240,000 $ 1.17 9.86 Exercisable - December 31, 2018 3,120,000 $ 0.33 9.86 $ 5,210,400 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Warrants | |
Schedule of Fair Value of Warrants | The following table summarizes the assumptions used to estimate the fair value of the 172,000 warrants granted during 2018 as of re-measurement dates: 2018 Expected Volatility 40 % Risk Free Interest Rate 2.84 % Expected life of warrants 3.0 |
Schedule of Warrant Activity | The following Table represents warrant activity for the period ending December 31, 2018 and 2017: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding - December 31, 2017 0 $ - Exercisable - December 31,2017 0 $ - $ - Granted 353,250 $ 2.40 Forfeited or Expired 0 Outstanding - December 31, 2018 353,250 $ 2.40 2.85 Exercisable - December 31, 2018 353,250 $ 2.40 2.85 $ - |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision (Benefit) | Allocation of federal and state income taxes between current and deferred portions is as follows: Components of Tax Expense December 31, 2018 December 31, 2018 (Pro forma) December 31, 2017 (Pro Forma) Current - Federal - - - Current - State 3,004 3,004 - Deferred - Federal - - 246,793 Deferred - State - - 23,842 Income Tax Provision/(Benefit) 3,004 3,004 270,635 |
Schedule of Rate Reconciliation | Federal income tax expense differs from the statutory federal rates of 21% for the year ended December 31, 2018 and 34% for the year ended December 31, 2017 due to the following: Rate Reconciliation December 31, 2018 December 31, 2018 (Pro forma) December 31, 2017 (Pro Forma) Pre-Tax Book Income (1,939,482 ) (2,260,364 ) 393,872 Provision/(Benefit) at Statutory Rate (407,291 ) 21.00 % (474,676 ) 21.00 % 133,917 34.00 % State Tax Provision/(Benefit) net of federal benefit (46,706 ) 4.03 % (57,336 ) 4.03 % 16,665 3.61 % Permanent Book/Tax Differences 163,916 -8.45 % 175,909 -7.78 % 23,212 5.89 % Change in Tax Rate - 0.00 % - 0.00 % 102,745 26.09 % Employee Retention Credit - 0.00 % (6,484 ) 0.29 % (6,484 ) -1.65 % Change in valuation allowance 290,454 -14.98 % 423,761 -18.75 % - 0.00 % Other 2,631 -0.14 % (58,170 ) 2.57 % 580 0.15 % Income Tax Provision/(Benefit) 3,004 1.47 % 3,004 1.36 % 270,635 68.09 % |
Schedule of Deferred Income Tax Assets | The components of the net deferred tax asset at December 31, 2018, are as follows: December 31, 2018 Deferred Tax Assets 263A Unicap 29,233 Fixed Assets (4,408 ) Charitable Contribution Carryforward - Business Interest Limitation 36,969 Employee Retention Bonus - Stock based compensation 106,015 Federal Net Operating loss 109,380 State Net Operating Loss 20,612 Total Deferred Tax Assets 297,801 Deferred Tax Liabilities Intangibles (7,347 ) Inventory Reserve - Total Deferred Tax Liability (7,347 ) Net Deferred Tax Asset/(Liability) 290,454 Valuation Allowance (290,454 ) Net Deferred Tax Asset/(Liability) - |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments Under Operating Lease | At December 31, 2018, future minimum lease payments under operating lease agreements are as follows: 2019 203,000 2020 203,000 2021 102,000 $ 508,000 |
Company Overview (Details Narra
Company Overview (Details Narrative) - USD ($) | Nov. 08, 2018 | Nov. 08, 2019 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 02, 2018 | Dec. 29, 2017 | Dec. 31, 2016 |
Par value of exchanged shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Stock issued during period services | 530,001 | |||||||
Options outstanding | 6,240,000 | 6,240,000 | ||||||
Series A Preferred Stock [Member] | ||||||||
Shares outstanding | 1,413 | 1,413 | ||||||
Common Stock [Member] | ||||||||
Shares outstanding | 16,023,164 | 16,023,164 | 15,000,000 | 15,000,000 | 15,000,000 | 15,000,000 | ||
Common stock received on transaction | $ 750,000 | |||||||
Stock issued during period services | 265,000 | 265,000 | ||||||
Prior Investors [Member] | Series A Preferred Stock [Member] | ||||||||
Fair value | $ 688,000 | $ 81,353 | ||||||
Christopher Constable [Member] | ||||||||
Number of stock options granted | 3,120,000 | |||||||
John Keeler & Co., Inc. [Member] | Shareholder [Member] | ||||||||
Shares exchanged by the shareholder | 500 | |||||||
Par value of exchanged shares | $ 1 | |||||||
Shares issued to new shareholder | 15,000,000 | |||||||
Par value of shares issued to new shareholder | $ 0.0001 | |||||||
Shares outstanding | 16,015,000 | |||||||
Converted to equity transaction | $ 2,400 | |||||||
John Keeler & Co., Inc. [Member] | Private Placement Investors [Member] | ||||||||
Warrants issued to investors | 181,250 | |||||||
Total capital contribution | $ 725,000 | |||||||
John Keeler & Co., Inc. [Member] | Private Placement Investors [Member] | Series A Preferred Stock [Member] | ||||||||
Shares issued to investors | 725 | |||||||
John Keeler & Co., Inc. [Member] | Prior Investors [Member] | ||||||||
Warrants issued to investors | 172,000 | |||||||
John Keeler & Co., Inc. [Member] | Prior Investors [Member] | Series A Preferred Stock [Member] | ||||||||
Shares issued to investors | 688 | |||||||
John Keeler & Co., Inc. [Member] | Christopher Constable [Member] | ||||||||
Number of stock options granted | 3,120,000 | |||||||
John Keeler & Co., Inc. [Member] | Carlos Faria [Member] | ||||||||
Options to purchase stock | 104 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Sep. 20, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 08, 2018 |
Restricted cash | $ 334,083 | $ 29,498 | |||
Allowances for doubtful accounts | 159,500 | 155,000 | |||
Allowance for bad debt | |||||
In-transit inventory | 4,203,400 | 6,148,000 | |||
Allowance for inventory | 39,300 | 39,300 | |||
Reduction of inventory | (88,584) | $ 88,600 | |||
Due from related party for future shipments | $ 1,139,619 | 0 | |||
Foreign currency translation, description | The rates used in the financial statements as presented for December 31, 2018 and 2017 were 1.336 and 1.289 US dollar to UK pound sterling, respectively. | ||||
Foreign currency translation adjustment | $ (38,622) | 56,010 | |||
Advertising expenses | 127,000 | 108,000 | |||
Due to suppliers | $ 1,297,800 | ||||
Stock option exercised | |||||
Warrant exercise | 172,000 | ||||
Interest paid to related party | $ 174,600 | 162,300 | |||
Effective income tax rate | 1.47% | ||||
Interest and penalties | |||||
Retained earnings adjustment | $ (81,520) | ||||
Pro Forma [Member] | |||||
Effective income tax rate | 1.36% | 68.09% | |||
Warrant [Member] | |||||
Warrant exercise | 353,250 | ||||
Stock Option [Member] | |||||
Stock option exercised | 6,240,000 | ||||
Series A Convertible Preferred Stock [Member] | |||||
Shares outstanding | 1,413 | ||||
Converted into common shares | 706,500 | ||||
Three Customers [Member] | Revenue [Member] | |||||
Concentration Risk percentage | 65.00% | 63.00% | |||
Three Customers [Member] | Accounts Receivable [Member] | |||||
Concentration Risk percentage | 65.00% | 66.00% | |||
Three Suppliers [Member] | |||||
Concentration Risk percentage | 87.00% | 75.00% | |||
Indonesia and Philippines [Member] | |||||
Concentration Risk percentage | 93.00% | ||||
Indonesia, Philippines, and China [Member] | |||||
Concentration Risk percentage | 93.00% | ||||
Bacolod [Member] | |||||
Concentration Risk percentage | 49.00% | 53.00% | |||
Supplier [Member] | |||||
Outstanding accounts payable | $ 388,199 | ||||
Due to suppliers | $ 1,465,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Estimated Useful Life of Asset (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property plant and equipment useful life | 7 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property plant and equipment useful life | 10 years |
Computer Equipment [Member] | |
Property plant and equipment useful life | 5 years |
Warehouse and Refrigeration Equipment [Member] | |
Property plant and equipment useful life | 10 years |
Leasehold Improvements [Member] | |
Property plant and equipment useful life | 7 years |
Automobile [Member] | |
Property plant and equipment useful life | 5 years |
Trade Show Booth [Member] | |
Property plant and equipment useful life | 7 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Cumulative Effect of Adjustments Due to Adoption of ASC 606 (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 02, 2018 | |
Accounts receivable, net | $ 3,449,487 | $ 3,449,487 | $ 4,675,588 | $ 4,333,727 |
Inventory, net | 8,126,634 | 8,126,634 | 12,952,850 | 13,347,318 |
Total Assets | 13,481,318 | 13,481,318 | 18,244,859 | 18,297,466 |
Accounts payable and accruals | 3,155,741 | 3,155,741 | 4,409,232 | 4,543,359 |
Accumulated deficit | (3,853,139) | (3,853,139) | (1,494,927) | (1,576,447) |
Total liabilities and stockholder's deficit | 13,481,318 | 13,481,318 | 18,244,859 | $ 18,297,466 |
Revenue, Net | 32,165,933 | 36,951,923 | ||
Cost of revenue | 27,227,664 | 31,254,430 | ||
Net Loss | (2,277,116) | $ (2,277,116) | 343,156 | |
Basic and diluted net loss per common share | $ (0.15) | |||
Effect of Change [Member] | ||||
Accounts receivable, net | (243,177) | $ (243,177) | ||
Inventory, net | 281,361 | 281,361 | ||
Total Assets | 38,184 | 38,184 | ||
Accounts payable and accruals | 127,589 | 127,589 | ||
Accumulated deficit | (89,405) | (89,405) | ||
Total liabilities and stockholder's deficit | 38,184 | 38,184 | ||
Revenue, Net | (472,171) | |||
Cost of revenue | (382,766) | |||
Net Loss | $ (89,405) | |||
Basic and diluted net loss per common share | $ (0.01) | |||
Adjustments due to Adoption of ASC 606 [Member] | ||||
Accounts receivable, net | (341,861) | |||
Inventory, net | 394,468 | |||
Total Assets | 52,607 | |||
Accounts payable and accruals | 134,127 | |||
Accumulated deficit | (81,520) | |||
Total liabilities and stockholder's deficit | $ 52,607 | |||
Balances without Adoption of ASC 606 [Member] | ||||
Accounts receivable, net | 3,206,310 | $ 3,206,310 | ||
Inventory, net | 8,407,995 | 8,407,995 | ||
Total Assets | 13,519,502 | 13,519,502 | ||
Accounts payable and accruals | 3,283,330 | 3,283,330 | ||
Accumulated deficit | (3,942,544) | (3,942,544) | ||
Total liabilities and stockholder's deficit | $ 13,519,502 | 13,519,502 | ||
Revenue, Net | 32,638,104 | |||
Cost of revenue | 27,610,430 | |||
Net Loss | $ (2,187,711) | |||
Basic and diluted net loss per common share | $ (0.15) |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 02, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net income (loss) | $ 2,277,116 | $ 2,277,116 | $ (343,156) | |
Accumulated deficit | 3,853,139 | 3,853,139 | 1,494,927 | $ 1,576,447 |
Working capital deficit | 1,146,937 | 1,146,937 | ||
Subordinated stockholder debt | $ 2,910,136 | $ 2,910,136 | $ 2,910,136 |
Consolidation of Variable Int_3
Consolidation of Variable Interest Entities - Schedule of Assets, Liabilities and Non-controlling Interest Related to Strike (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Assets | $ 177,352 | $ 422,358 |
Liabilities | 95,720 | 318,073 |
Non-controlling interest | $ (440,883) | $ (424,081) |
Fixed Assets (Details Narrative
Fixed Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense of fixed assets | $ 64,008 | $ 62,400 |
Fixed Assets - Schedule of Fixe
Fixed Assets - Schedule of Fixed Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Total | $ 386,379 | $ 359,752 |
Less: Accumulated depreciation and amortization | (277,210) | (213,256) |
Fixed assets, net | 109,169 | 146,496 |
Computer Equipment [Member] | ||
Total | 27,320 | 22,924 |
Warehouse and Refrigeration Equipment [Member] | ||
Total | 157,839 | 135,607 |
Leasehold Improvements [Member] | ||
Total | 26,600 | 26,600 |
Automobile [Member] | ||
Total | $ 174,620 | $ 174,621 |
Stockholder Notes Payable (Deta
Stockholder Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Notes payable outstanding amount | $ 2,910,136 | $ 2,910,136 |
Interest expense | 174,600 | 162,300 |
AFS Finco I LP [Member] | ||
Proceeds from related party debt | 500,000 | |
Unsecured Promissory Notes [Member] | ||
Notes payable outstanding amount | $ 2,910,000 | $ 2,910,000 |
Annual interest rate | 6.00% | 6.00% |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Aug. 31, 2016 | |
Revolving line of credit | $ 8,204,000 | $ 12,100,000 | |
Repayment of new loan | $ 36,408,541 | 36,568,702 | |
Line of credit, interest rate | 8.96% | ||
Line of credit, description | Borrowing is based on up to 85% of eligible accounts receivable plus the net orderly liquidation value of eligible inventory at the same rate, subject to certain defined limitations. | ||
Line of credit, working capital | $ 70,000 | 115,000 | |
Debt issuance cost | 109,200 | 195,000 | |
Debt accumulated amortization | 384,500 | 229,000 | |
Amortization expense | 155,474 | 164,457 | |
Long term debt | 31,200 | 69,000 | |
Interest expenses | 820,500 | $ 807,000 | |
ACF Finco I LP [Member] | |||
Revolving line of credit | $ 14,000,000 | ||
Repayment of new loan | $ 309,000 | ||
Line of credit, term | 5 years | ||
ACF Finco I LP [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Line of credit, interest rate | 6.25% | ||
ACF Finco I LP [Member] | Prime Rate [Member] | |||
Line of credit, interest rate | 3.00% | ||
ACF Finco I LP [Member] | Fixed Rate [Member] | |||
Line of credit, interest rate | 6.50% | ||
Mercedes-Benz Financial Services [Member] | |||
Loan interest rate | 5.56% | ||
Debt monthly instalment | $ 3,000 | ||
Debt maturity date | Nov. 30, 2019 |
Debt - Schedule of Principal Pa
Debt - Schedule of Principal Payments Related to Long-term Debt (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
2019 | $ 31,200 | |
Total | $ 31,200 | $ 69,000 |
Series A Convertible Preferre_2
Series A Convertible Preferred Stock (Details Narrative) | 12 Months Ended | |
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
Dividend rate | 8.00% | |
Purchase price | $ / shares | $ 1,000 | $ 1,000 |
Number of shares issued during period | 8,164 | |
Number of shares issued during period, value | $ | $ 725,000 | $ 16,328 |
Common Stock [Member] | ||
Conversion of stock | 500 | |
Board of Directors [Member] | 8% Series A Convertible Preferred Stock [Member] | ||
Number of designated preferred stock | 10,000 | 10,000 |
Options (Details Narrative)
Options (Details Narrative) - USD ($) | Nov. 08, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Exercisable option to purchase common stock | 3,120,000 | ||
Stock issued during period as compensation, value | $ 808,338 | ||
Stock issued during period as compensation | 6,240,000 | ||
Option granted during period | 6,240,000 | ||
Estimated fair value of option granted during period | $ 2,926,087 | ||
2018 Plan [Member] | |||
Exercise price | $ 0.333 | ||
Exercisable option to purchase common stock | 3,120,000 | ||
Option term | 10 years | ||
Carlos Faria [Member] | |||
Option to purchase of common stock | 104 | ||
Exercise price | $ 10,000 | ||
Christopher Constable [Member] | 2018 Plan [Member] | |||
Option to purchase of common stock | 3,120,000 | ||
Exercise price | $ 2 | ||
Option term | 10 years | ||
Stock option vesting term | 1 year |
Options - Schedule of Fair Valu
Options - Schedule of Fair Value of Stock Options (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Expected Volatility, Minimum | 37.00% |
Expected Volatility, Maximum | 39.00% |
Risk Free Interest Rate | 2.84% |
Minimum [Member] | |
Expected life of warrants | 5 years |
Maximum [Member] | |
Expected life of warrants | 5 years 6 months |
Options - Schedule of Stock Opt
Options - Schedule of Stock Option Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Number of Option, Outstanding beginning | ||
Number of Option, Granted | 6,240,000 | |
Number of Option, Exercised | ||
Number of Option, Outstanding ending | 6,240,000 | |
Number of Option, Exercisable ending | 3,120,000 | |
Weighted Average Exercise Price, Outstanding beginning | ||
Weighted Average Exercise Price, Granted | 1.17 | |
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Outstanding ending | 1.17 | |
Weighted Average Exercise Price, Exercisable ending | $ 0.33 | |
Weighted Average Remaining Contractual Life in Years, Outstanding ending | 9 years 10 months 10 days | |
Weighted Average Remaining Contractual Life in Years, Exercisable ending | 9 years 10 months 10 days | |
Aggregate Intrinsic value, Exercisable ending | $ 5,210,400 |
Warrants (Details Narrative)
Warrants (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Nov. 08, 2018 | Dec. 31, 2017 | |
Warrants to purchase common stock | 172,000 | ||
Warrant exercise price | $ 2.40 | ||
Warrant expiration date | Nov. 7, 2021 | ||
Settlement of warrants | $ 81,353 | ||
Number of warrants granted | 353,250 | ||
Warrant [Member] | |||
Warrants to purchase common stock | 353,250 | ||
Number of warrants granted | 172,000 |
Warrants - Schedule of Fair Val
Warrants - Schedule of Fair Value of Warrants (Details) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2018 | |
Expected Volatility [Member] | |
Fair value assumptions, measurement input, percentages | 40.00% |
Risk Free Interest Rate [Member] | |
Fair value assumptions, measurement input, percentages | 2.84% |
Expected Life of Warrants [Member] | |
Fair value assumptions, measurement input, term | 3 years |
Warrants - Schedule of Warrant
Warrants - Schedule of Warrant Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Warrants | ||
Number of Shares, Warrants Outstanding Beginning | 0 | |
Number of Shares, Warrants Exercisable Beginning | 0 | |
Number of Shares, Warrants granted | 353,250 | |
Number of Shares, Warrants Forfeited or Expired | 0 | |
Number of Shares, Warrants Outstanding Ending | 353,250 | 0 |
Number of Shares, Warrants Exercisable Ending | 353,250 | 0 |
Weighted Average Exercise Price Outstanding Beginning | ||
Weighted Average Exercise Price Exercisable, Beginning | ||
Weighted Average Exercise Price granted | 2.40 | |
Weighted Average Exercise Price Forfeited or Expired | ||
Weighted Average Exercise Price Outstanding Ending | 2.40 | |
Weighted Average Exercise Price Exercisable Ending | $ 2.40 | |
Weighted Average Remaining Contractual Life Warrants Outstanding | 2 years 10 months 6 days | |
Weighted Average Remaining Contractual Life Warrants Exercisable | 2 years 10 months 6 days | |
Aggregate Intrinsic Value Exercisable |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Federal statutory rate | 21.00% | 34.00% |
Federal [Member] | ||
Net operating loss | $ 520,857 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Provision (Benefit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Current - Federal | ||
Current - State | 3,004 | |
Deferred - Federal | ||
Deferred - State | ||
Income Tax Provision/(Benefit) | 3,004 | |
Pro Forma [Member] | ||
Current - Federal | ||
Current - State | 3,004 | |
Deferred - Federal | 246,793 | |
Deferred - State | 23,842 | |
Income Tax Provision/(Benefit) | $ 3,004 | $ 270,635 |
Income Taxes - Schedule of Rate
Income Taxes - Schedule of Rate Reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Pre-Tax Book Income | $ (1,939,482) | |
Provision/(Benefit) at Statutory Rate | (407,291) | |
State Tax Provision/(Benefit) net of federal benefit | (46,706) | |
Permanent Book/Tax Differences | 163,916 | |
Change in Tax Rate | ||
Employee Retention Credit | ||
Change in valuation allowance | 290,454 | |
Other | 2,631 | |
Income Tax Provision/(Benefit) | $ 3,004 | |
Provision/(Benefit) at Statutory Rate, percent | 21.00% | 34.00% |
State Tax Provision/(Benefit) net of federal benefit, percent | 4.03% | |
Permanent Book/Tax Differences, percent | (8.45%) | |
Change in Tax Rate, percent | 0.00% | |
Employee Retention Credit, percent | 0.00% | |
Change in valuation allowance, percent | (14.98%) | |
Other, percent | (0.14%) | |
Income Tax Provision/(Benefit), percent | 1.47% | |
Pro Forma [Member] | ||
Pre-Tax Book Income | $ (2,260,364) | $ 393,872 |
Provision/(Benefit) at Statutory Rate | (474,676) | 133,917 |
State Tax Provision/(Benefit) net of federal benefit | (57,336) | 16,665 |
Permanent Book/Tax Differences | 175,909 | 23,212 |
Change in Tax Rate | 102,745 | |
Employee Retention Credit | (6,484) | (6,484) |
Change in valuation allowance | 423,761 | |
Other | (58,170) | 580 |
Income Tax Provision/(Benefit) | $ 3,004 | $ 270,635 |
Provision/(Benefit) at Statutory Rate, percent | 21.00% | 34.00% |
State Tax Provision/(Benefit) net of federal benefit, percent | 4.03% | 3.61% |
Permanent Book/Tax Differences, percent | (7.78%) | 5.89% |
Change in Tax Rate, percent | 0.00% | 26.09% |
Employee Retention Credit, percent | 0.29% | (1.65%) |
Change in valuation allowance, percent | (18.75%) | 0.00% |
Other, percent | 2.57% | 0.15% |
Income Tax Provision/(Benefit), percent | 1.36% | 68.09% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Income Tax Assets (Details) | Dec. 31, 2018USD ($) |
Income Tax Disclosure [Abstract] | |
263A Unicap | $ 29,233 |
Fixed Assets | (4,408) |
Charitable Contribution Carryforward | |
Business Interest Limitation | 36,969 |
Employee Retention Bonus | |
Stock based compensation | 106,015 |
Federal Net Operating loss | 109,380 |
State Net Operating Loss | 20,612 |
Total Deferred Tax Assets | 297,801 |
Intangibles | (7,347) |
Inventory Reserve | |
Total Deferred Tax Liability | (7,347) |
Net Deferred Tax Asset/(Liability) | 290,454 |
Valuation Allowance | (290,454) |
Net Deferred Tax Asset/(Liability) |
Commitment and Contingencies (D
Commitment and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Lease term | 20 years | |
Lease expiration | Jul. 31, 2021 | |
Mortgage amount | $ 1,307,000 | |
Rental and equipment lease expenses | 213,600 | $ 211,000 |
March 26, 2019 [Member] | ||
Settlement amount | $ 40,000 |
Commitment and Contingencies -
Commitment and Contingencies - Schedule of Future Minimum Lease Payments Under Operating Lease (Details) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 203,000 |
2020 | 203,000 |
2021 | 102,000 |
Future minimum lease payments | $ 508,000 |
Employee Benefit Plan (Details
Employee Benefit Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Retirement Benefits [Abstract] | ||
Contribution expenses |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Apr. 02, 2019 | Mar. 31, 2019 | Mar. 26, 2019 | Feb. 01, 2019 | Dec. 20, 2018 | Dec. 31, 2018 | Dec. 31, 2018 |
Number of shares issued during period | 8,164 | ||||||
Number of shares issued during period, value | $ 725,000 | $ 16,328 | |||||
Subsequent Event [Member] | Promissory Note [Member] | Kenar Overseas Corp [Member] | |||||||
Debt instrument face amount | $ 1,000,000 | ||||||
Percentage of debt interest rate | 18.00% | ||||||
Increase in debt interest rate | 24.00% | ||||||
Subsequent Event [Member] | Promissory Note [Member] | Lobo Holdings, LLC [Member] | |||||||
Debt instrument face amount | $ 100,000 | ||||||
Percentage of debt interest rate | 18.00% | ||||||
Board of Directors [Member] | |||||||
Stock option granted - Eligible number of shares | 705,000 | ||||||
Stock option exercise price | $ 2 | ||||||
One Investor [Member] | Subsequent Event [Member] | |||||||
Number of shares sold during period | 5,000 | 5,000 | |||||
Shares sold, price per share | $ 2 | $ 2 | |||||
John Keeler [Member] | Subsequent Event [Member] | Promissory Note [Member] | |||||||
Number of shares pledged to secure company's obligation | 1,000,000 | 5,000,000 | |||||
Holders of Series A Preferred Stock [Member] | Subsequent Event [Member] | |||||||
Number of shares issued during period | 14,130 | ||||||
Number of shares issued during period, value | $ 28,260 |