Executive Summary

Q3 2022 revenue fell 35% year-over-year to $2.43M, turning from a gross profit of $0.67M in Q3 2021 to a gross loss of $1.54M; net loss widened to $3.74M, driven by front‑loaded discounting for contract retention, a $0.51M inventory write‑down and a $0.70M goodwill impairment .
Soft-shell crab RAS revenue reached $0.50M in Q3 (and $1.0M YTD since starting in March 2022), validating early traction in the new vertical, while management reiterated it “remain[s] on track to nearly double revenue for all of 2022” versus ~$10M in FY2021 .
Liquidity tightened: cash fell to $0.24M, working capital surplus narrowed to $0.56M, and a going-concern disclosure was introduced; the company also received a covenant default notice on its revolver, though the lender did not exercise remedies .
RAS expansion timelines were updated: detailed engineering to conclude Q4 2022, construction to start Q1 2023, with first commercial harvest targeted by late Q4 2023; this remains the key operational catalyst for margin and growth recovery .
No Q3 2022 earnings call transcript was located; Wall Street consensus estimates (S&P Global) were unavailable for EPS and revenue, limiting beat/miss assessment (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

Soft-shell crab RAS contributed $0.50M of Q3 revenue (and $1.0M year-to-date), demonstrating initial commercialization and customer validation for land-based aquaculture .
Management extended multi-year supply relationships with Avendra LLC and Sysco, supporting distribution scale and contract continuity into 2023 .
Inventory increased to $6.12M (from $2.12M at YE 2021), and total assets reached $16.86M, positioning the company to convert inventory into sales in coming quarters; CEO: “we remain on track to nearly double revenue for all of 2022… with our $10.7 million revenue year-to-date and $6.1 million of inventory that we hope to convert to revenue over the next four months” .

What Went Wrong

Revenue declined 35% YoY to $2.43M due to lower selling prices from “front loading discounting for contract retention”; gross margin turned negative with a $1.54M gross loss .
Q3 recorded a $0.70M goodwill impairment and a $0.51M inventory write‑down; adjusted EBITDA loss increased versus prior year (press release states $1.8M for Q3), reflecting higher operating costs and pre-construction RAS spend .
Liquidity pressure and financing costs rose: interest expense climbed to $0.34M in Q3 on Lind note amortization; the company added a going-concern disclosure and received notice of covenant default on its revolver (lender forbearance) .

Financial Results

Income Statement Trend (oldest → newest)

Metric	Q3 2021	Q1 2022	Q2 2022	Q3 2022
Revenue ($USD)	$3,726,704	$5,324,302	$2,958,866	$2,429,195
Gross Profit (Loss) ($USD)	$670,243	$487,739	$337,754	$(1,544,461)
Operating Income (Loss) ($USD)	$(492,157)	$(848,779)	$(1,132,202)	$(3,366,855)
Net Income (Loss) ($USD)	$(161,788)	$(1,053,866)	$(1,437,213)	$(3,738,089)
Diluted EPS ($USD)	$(0.01)	$(0.04)	$(0.06)	$(0.15)

Selected KPIs (oldest → newest)

KPI	Q1 2022	Q2 2022	Q3 2022
Cash and Cash Equivalents ($USD)	$2,980,672	$2,585,878	$238,183
Accounts Receivable, net ($USD)	$3,854,439	$1,251,215	$772,187
Inventory, net ($USD)	$3,041,184	$5,689,982	$6,118,720
Total Assets ($USD)	$20,452,841	$20,585,671	$16,855,489
Working Capital Surplus ($USD)	$5,561,782	$3,207,745	$562,756

Segment / Product Highlights

Metric	Q2 2022	Q3 2022
Soft-shell Crab RAS Revenue ($USD)	$0.5M	$0.5M

Estimate Comparison

Metric	Q3 2022 Actual	Q3 2022 Consensus
Revenue ($USD)	$2,429,195	N/A (unavailable)
EPS ($USD)	$(0.15)	N/A (unavailable)

S&P Global Wall Street consensus was unavailable for BSFC; beat/miss cannot be determined.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2022	“On track to nearly double revenue… as compared to the $10.0M revenue in 2021”	“Remain on track to nearly double revenue for all of 2022… $10.7M YTD and $6.1M inventory to convert”	Maintained directional target
Soft-shell Crab RAS Facility Timeline	2022–2023	Construction by end of Sep 2022; installation by end of Dec 2022; commissioning by end of Mar 2023; first harvest in Q3 2023	Engineering concludes Q4 2022; construction starts Q1 2023; installation Q2 2023; commissioning end Q3 2023; first commercial harvest by end Q4 2023	Schedule shifted ~1 quarter later
Legacy Business Recovery	Through 2023	Restore to pre‑pandemic ~$20M annual revenue	Reiterated path to ~$20M and advancing construction phase of soft‑shell crab facility	Maintained directional target

No explicit quantitative guidance was provided for margins, OpEx, tax, dividends in Q3 materials.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2022 and Q2 2022)	Current Period (Q3 2022)	Trend
Supply chain and costs (freight, COGS)	Cost inflation and LTL fuel surcharges compressed gross margin; plan to pass through higher wholesale prices	Front‑loaded discounting for contract retention, inventory adjustment drove gross loss	Ongoing headwind; discounting intensified
RAS expansion execution	Acquired Gault soft‑shell assets; selected HTH as RAS technology provider	Updated timeline; ~220,000 dozen annual harvest potential when fully built	Progressing; timeline pushed
Liquidity and financing	Working capital revolver amendments; Lind convertible note; compliance issues noted with forbearance	Going‑concern disclosure; covenant default notice with lender forbearance; continued Lind repayments	Financial risk heightened
Customer/contract dynamics	Distribution relationships and contract retention priorities	Extended Avendra and Sysco multi‑year supply relationships	Positive continuity
COVID/macro impacts	Sales and supply adversely affected; cost/price dynamics	Continued adverse impact cited in MD&A	Lingering drag

No Q3 2022 earnings call transcript was located in company documents; themes derive from 8‑K and 10‑Q disclosures.

Management Commentary

“We remain on track to nearly double revenue for all of 2022, with our $10.7 million revenue year-to-date and $6.1 million of inventory that we hope to convert to revenue over the next four months” — John Keeler, Chairman & CEO .
“Our third quarter loss typically occurs due to front loading discounting for contract retention, that we believe will benefit future quarter earnings and profits… [and] approximately $0.5 million in engineering designs related to our new planned RAS facility in South Carolina” .
“When fully built, [we] anticipate being able to harvest over 220,000 dozen soft-shell Atlantic Blue Crab a year” .
“We continued our positive momentum… we believe remain on track to nearly double revenue for all of 2022… [soft-shell crab RAS] contributed $0.5 million… initial response from our seafood distributors and customers has been favorable” .

Q&A Highlights

No Q3 2022 earnings call transcript was available; no Q&A highlights could be extracted from company documents.

Estimates Context

S&P Global Wall Street consensus for Q3 2022 EPS and revenue was unavailable for BSFC; therefore, we cannot assess beat/miss versus consensus. Coverage gaps like this are common for microcap issuers.

Key Takeaways for Investors

Margin pressure and price discounting: Q3 revenue fell 35% YoY and gross margin turned negative on discounting for contract retention and an inventory write‑down; expect near‑term margin volatility until pricing normalizes and inventory clears .
Liquidity risk elevated: cash dropped to $0.24M; working capital surplus narrowed to $0.56M; going‑concern disclosure added; monitor revolver covenant compliance and Lind note repayments to assess dilution/convert risk .
RAS execution remains the core catalyst: updated timeline targets first commercial harvest by end Q4 2023; success here could improve product mix and margins; delays would defer the narrative .
Contract continuity offsets demand risk: multi‑year supply extensions with Avendra and Sysco help revenue visibility while legacy crab prices remain volatile .
Expense structure and one‑offs: Q3 included $0.70M goodwill impairment and $0.51M inventory write‑down; excluding non‑cash and one‑time items still shows elevated operating losses from RAS pre‑construction spend .
Financing costs rising: interest expense up sharply to $0.34M on Lind note amortization; continued repayments (cash and stock) create ongoing cash and dilution considerations .
Near‑term trading: stock likely sensitive to updates on RAS milestones, inventory conversion to sales, and any additional financing actions; medium‑term thesis hinges on scaling RAS to improve margins and stabilizing legacy pricing .

Citations: All quantitative and qualitative statements in this report reference the following company documents:

Q3 2022 10‑Q filed Nov 14, 2022 .
Q3 2022 8‑K Item 2.02 earnings press release filed Nov 15, 2022 .
Q2 2022 8‑K Item 2.02 earnings press release filed Aug 16, 2022 .
Q2 2022 10‑Q filed Aug 15, 2022 .
Q1 2022 10‑Q filed May 13, 2022 .

Blue Star Foods Corp. (BSFC)·Q3 2022 Earnings Summary