What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-04-15 compared with 2020-05-29 · 292 added, 205 removed, 238 unchanged (68% of the section changed)

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limited trading in our Common Stock and there can be no assurances that an active trading market will ever develop.

December 26, 2019, the Company entered into lock-up and resale restriction agreements (each a “Lock-Up Agreement”)

with fifteen shareholders with respect to an aggregate of 16,074,939 shares of Common Stock.

The Lock-Up Agreement provides, among

other things, that the shareholder may not until June 26, 2020 (the “Lock-Up Period”), sell or transfer in any way,

the shares of Common Stock held by such shareholder, except that each shareholder may sell 1,000 shares of Common Stock per month

during the Lock-Up Period.

of May 27, 2020, we have 17,557,575 shares of Common Stock outstanding held by 46 stockholders of record.

December 26, 2019, the Company entered into lock-up and resale restriction agreements with fifteen shareholders with respect to

an aggregate of 16,074,939 shares of Common Stock, which provide, among other things, that the shareholder may not until June

26, 2020 (the “Lock-Up Period”), sell or transfer in any way, the shares of Common Stock held by such shareholder,

except that each shareholder may sell 1,000 shares of Common Stock per month during the Lock-Up Period.

of April 15, 2021, there were 19,633,161 shares of Common Stock outstanding held by 51 stockholders of record.

have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our Common Stock in

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We intend to retain future earnings to fund ongoing operations and future capital requirements.

and Security Agreement with ACF contains terms prohibiting or limiting the amount of dividends that may be declared or paid on

our Common Stock.

Any future determination to pay cash dividends will be at the discretion of our board of directors and will

be dependent upon financial condition, results of operations, capital requirements and such other factors as the board of directors

deems relevant.

and Security Agreement with Lighthouse contains terms prohibiting or limiting the amount of dividends that may be declared or

paid on our Common Stock.

Any future determination to pay cash dividends will be at the discretion of our board of directors and

will be dependent upon financial condition, results of operations, capital requirements and such other factors as the board of

directors deems relevant.

Authorized for Issuance under Equity Compensation Plans

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(i) a 10-year option to purchase 3,120,000 shares of common stock at an exercise price of $2.00 per share granted to Christopher

Constable, (ii) 10-year options to purchase an aggregate of 680,000 shares of common stock at an exercise price of $2.00 per

share to certain employees, and (iii) 10-year options to purchase an aggregate of 25,000 shares of common stock at an exercise

price of $2.00 per share to certain contractors under the 2018 Plan.

Constable, our former chief financial officer and director (ii) 10-year options to purchase an aggregate of 665,000 shares

of common stock at an exercise price of $2.00 per share to certain employees, and (iii) 10-year options to purchase an aggregate

of 25,000 shares of common stock at an exercise price of $2.00 per share to certain contractors under the 2018 Plan.

Sales of Unregistered Securities

were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act

and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company.

as set forth below, there were no sales of equity securities during the period covered by this Report that were not registered

under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed

by the Company.

December 24, 2020, the Company issued 55,814 shares of common stock to the designee of a law firm in lieu of legal fees owed to

such firm for services provided to the Company.

December 24, 2020, the Company issued an aggregate of 60,000 shares of common stock to Newbridge Securities Corporation

and its affiliates as compensation under an investment banking and corporate advisory agreement.

December 30, 2020, the Company issued 796,650 shares of common stock to a third party designated by John Keeler pursuant to a

debt repayment agreement with Mr.

Keeler as repayment for an aggregate principal amount of $1,593,300 due under four demand promissory

December 31, 2020, the Company issued an aggregate of 52,286 shares of common stock to Series A preferred stockholders as a common

stock dividend for the quarters ended March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020.

February 8, 2021, the Company issued 25,000 shares to an investor relations firm for services provided to the Company under an

investor relations consulting agreement.

March 30, 2021, the Company issued 10,465 shares of common stock to the designee of a law firm for services provided to the Company.

March 31, 2021, the Company issued 11,975 shares of common stock to Series A preferred stockholders as a common stock dividend

for the quarter ended March 31, 2021.

March 31, 2021, the Company issued 5,000 shares to an investor relations firm for services provided to the Company under an investor

relations consulting agreement.

above issuances did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe

is exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof.

of Equity Securities by the Issuer and Affiliated Purchasers

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the related notes thereto.

The management’s discussion and analysis contains forward-looking statements, such as statements

The management’s discussion and analysis contain forward-looking statements, such as statements

of our plans, objectives, expectations and intentions.

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occurring after the date of this Annual Report.

were incorporated on October 17, 2017 in the State of Delaware as a blank check company to be used as a vehicle to pursue a business

combination with an unidentified target.

Since inception, and prior to the Merger, we only engaged in organizational efforts.

November 8, 2018, we consummated the Merger pursuant to the terms of the Merger Agreement by and among the Company, Acquisition

Sub, Keeler & Co and the Blue Star Stockholder.

As a result of the Merger, effective as of November 8, 2018, Acquisition Sub

merged with and into Keeler & Co, and Keeler & Co became a wholly-owned subsidiary of the Company.

connection with the Merger, the Company changed its name from “AG Acquisition Group II, Inc.”

to “Blue Star

Foods Corp.”

and succeeded to the business of Keeler & Co.

a result of the Merger and the related change in our business and operations, a discussion of our past financial results is not

pertinent, and under applicable accounting principles the historical financial results of Keeler & Co, the accounting acquirer,

prior to the Merger are considered the historical financial results of the Company.

November 26, 2019, Keeler & Co entered into the Coastal Pride Merger Agreement.

As a result, Coastal Pride became our indirect

operating subsidiary.

current outbreak of COVID-19 could have a material and adverse effect on our business operations, including disruptions or restrictions

on our ability to travel or to distribute our seafood products, as well as temporary closures of our facilities.

Any such disruption

or delay would likely impact our sales and operating results.

In addition, COVID-19 has resulted in a widespread health crisis

that could adversely affect the economies and financial markets of many other countries, resulting in an economic downturn that

could affect demand for our products and significantly impact our operating results.

As a result of COVID-19, in the current

year to date, the Company has experienced a significant decrease in revenue as compared to the prior period in 2019.

to contain costs, the Company has taken steps to reduce its overhead, including by a reduction of personnel and warehousing expenses.

March 29, 2021, the board of directors increased the size of the Company’s Board from two to five members and appointed

Guzy, Timothy McLellan and Trond Ringstad as directors, effective April 12, 2021, to fill the vacancies created by

such increase.

current COVID-19 pandemic has adversely affected our business operations, including disruptions and restrictions on our ability

to travel or to distribute our seafood products, as well as temporary closures of our facilities.

Any such disruption or delay

may impact our sales and operating results.

In addition, COVID-19 has resulted in a widespread health crisis that adversely affected

the economies and financial markets of many other countries.

As a result of COVID-19, the Company has experienced a significant

decrease in revenue in the year ended December 31, 2020 as compared to the year ended December 31, 2019.

a result of the business interruption experienced to date, management has taken steps to reduce expenses across all areas of its

operations, including payroll, marketing, sales and warehousing expenses The extent to which we are affected by COVID-19 will

operations, including payroll, marketing, sales and warehousing expenses.

The extent to which we are affected by COVID-19 will

largely depend on future developments and restrictions which may disrupt interactions with customers, suppliers, staff and advisors

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demand for our products, and our ability to provide our

While these factors are uncertain, the COVID-19 pandemic or the perception of its effects could continue to have a material

adverse effect on our business, financial condition, results of operations, or cash flows.

audited financial statements for our fiscal years ended December 31, 2019 include a summary of our significant accounting policies

We continue to monitor the effects of the pandemic on our business.

audited financial statements for our fiscal year ended December 31, 2020 include a summary of our significant accounting policies

and should be read in conjunction with the discussion below.

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Revenue for the twelve months ended December 31, 2020 decreased 40.8% to $14,111,368 as compared to $23,829,463 for

the twelve months ended December 31, 2018.

The revenue decrease reflects the Company’s exit from the private label business

that accounted for 18% of poundage sold for the 12 months ending December 31, 2019 as compared to 37% for the same period in 2018.

The company’s Blue Star and other brands poundage were consistent with the prior year.

Also contributing to the reduction

in revenue, was a reduction in the commodity value with the average price per pound decreasing by 8% for 2019 as compared to the

average price per pound in 2018.

the twelve months ended December 31, 2019 as a result of a decrease in poundage sold due to the impact of the COVID-19 pandemic

during the twelve months ended December 31, 2020, primarily affecting the first half of 2020.

of Goods Sold.

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The decrease is primarily attributable to the revenue decline.

Gross profit for the twelve months ended December 31, 2019 decreased $1,718,806 to $3,219,463 from $4,938,269 for

Gross profit for the twelve months ended December 31, 2020 decreased to $1,487,792 as compared to gross profit of

$3,219,463 for the twelve months ended December 31, 2019.

This decrease is attributable to a reduction in poundage sold due to

the COVID-19 pandemic, the reduction in the average selling price of the Company’s product, while the Company’s inventory

cost of product sold during the period did not fully reflect the drop in value of the commodity.

Profit Margin.

Gross profit margin for the twelve months ended December 31, 2020 decreased to 10.5% as compared to 13.5% for

the twelve months ended December 31, 2019.

This decrease is attributable to decreased revenues as well as a tightening of profit

margin that occurs as the commodity begins a deflation cycle.

Profit Margin for the twelve months ended December 31, 2019 decreased by 1.9% as compared to 15.4% for the twelve months ended

December 31, 2018.

This reduction is attributable to a tightening of the margin as the commodity prices begin a period of contraction.

Commissions expenses decreased from $133,240 for the twelve months ended December 31, 2018 to $106,671 for the twelve-month

period ended December 31, 2019.

This reduction is attributable to revenue and the gross profit decline.

Commissions expenses decreased from $106,671 for the twelve months ended December 31, 2019 to $96,594 for the twelve

months ended December 31, 2020.

The decrease is attributable to lower commissionable revenues.

& Wages Expense .

Salaries and wages increased $1,302,864 to $3,897,541 for the twelve months ending December 31, 2019

and Wages Expense .

Salaries and wages decreased to $1,286,879 for the twelve months ended December 31, 2020 as compared to

$3,897,541 for the twelve months ended December 31, 2019.

This decrease is primarily attributable to the strategic reduction in

salaries and stock-based compensation for the twelve months ended December 31, 2020.

and Amortization .

Depreciation and amortization expense increased to $268,341 for the twelve months ended December

31, 2020 as compared to $215,089 for the twelve months ended December 31, 2019.

The increase can be directly attributed to stock-based

compensation related to the completion of the amortization of options issued to an officer in the twelve months ended December

31, 2018, and the issuance of options to employees as well as stock grants to employees.

The expense related to the stock-based

compensation in the twelve months ended December 31, 2019 was $2,262,322 as compared to $808,338 for the twelve months ended December

Cash payment for salaries and wages decreased by $163,171 for the twelve months ending December 31, 2019.

& Warrant Expenses.

For the twelve months ended December 31, 2019, there were no settlement and warrant expenses as compared

to $769,353 for the twelve months ended December 31, 2018.

The increase is attributable to purchases of fixed

assets and corresponding depreciation recognized during the twelve months ended December 31, 2020.

Operating Expense.

Other operating expenses increased $459,149 from $2,709,009 for the twelve months ended December 31, 2018

to $3,168,158 for the twelve months ended December 31, 2019.

The increase is primarily attributable to a settlement with a supplier

of $388,199 that occurred in the twelve months ended December 31, 2018.,.

However, expenses paid related to service providers

increased from approximately $826,100 for the twelve months ended December 31, 2018 to approximately $1,116,400 for the twelve

months ended December 31, 2019, primarily due to legal and investment banking fees for private placement and merger related activities.

These costs include $397,000 and $530,000 paid in stock for the twelve months ended December 31, 2019 and December 31, 2018, respectively.

Interest expense increased from $1,009,106 for the twelve months ended December 31, 2018 to $1,068,796 for the twelve

months ending December 31, 2019.

This increase is attributable to related party notes of $1,100,000 borrowed during the twelve

months ended December 31, 2019 with total interest paid on such notes of $174,600.

Additionally, interest paid to ACF decreased

15.3% from $817,500 during the twelve months ended December 31, 2018 to $692,400 for the twelve months ended December 31, 2019

Income/(Loss).

The Company generated a net loss of $5,021,703 for the twelve months ended December 31, 2019 as compared to

the net loss of $2,277,116 for the twelve months ended December 31, 2018.

The increased loss can be primarily attributed to the

decrease in revenue, and margin percentage, combined with the increased non-cash costs related to stock incentives, during the

twelve months ending December 31, 2019.

Other operating expenses decreased 44.5% to $1,639,484 for the twelve months ended December

31, 2020 as compared to $2,953,069 for the twelve months ended December 31, 2019.

The decrease is attributable the Company’s

overhead reduction efforts in all fixed expenses related to its operations.

Other income increased to $891,667 for the twelve months ended December 31, 2020 from $0 for the twelve months ended

December 31, 2019.

This increase is primarily attributable to the payroll protection program loan forgiveness obtained from US

Century Bank, sale of equipment and tariff and prepaid tax reimbursements.

Fee Expense (Non-Cash) .

Forbearance fee expense increased to $2,655,292 for the twelve months ended December 31, 2020 from

$0 for the twelve months ended December 31, 2019, which represents a one-time, non-cash expense related to the issuance of common

stock as a forbearance fee.

Interest expense decreased to $870,303 for the twelve months ended December 31, 2020 as compared to $1,068,796 for

the twelve months ended December 31, 2019.

This decrease is attributable to a decrease in the aggregate principal amount of loans

outstanding to $8,158,106 as of December 31, 2020 from $11,510,968 as of December 31, 2019.

The Company had a net loss of $4,437,434 for the twelve months ended December 31, 2020 as compared to the net loss of

$5,021,703 for the twelve months ended December 31, 2019.

The decrease in net loss is primarily attributable to reduction in salaries

and wages, interest and other operating expenses.

Net loss as of December 31, 2020 includes a non-cash expense related to a forbearance

fee of $2,655,292 and not considering this expense, net loss would have decreased to $1,782,142 for the twelve months ended December

Provided by Operating Activities.

Cash provided by operating activities during the twelve months ended December 31, 2020 was

$1,577,164 as compared to cash provided of $3,641,738 for the twelve months ended December 31, 2018, representing a decrease of

The decrease is attributable to an increase in the net loss of $2,744,587 for the twelve months ended December 31,

This is offset by a $1,078,012 increase in non-cash expenses for the twelve months ended December 31, 2019 as compared to

twelve months ended December 31, 2018.

Cash generated from Accounts Receivable for the twelve months ended December 31, 2019 increased

$1,633,345 as compared to the twelve months ended December 31, 2018, while cash generated from inventory decreased $3,416,443

from $5,220,684 for the twelve months ended December 31, 2108 to $1,804,241 for the twelve months ended December 31, 2019.

used in Accounts Payable activities decreased from $1,001,820 for the twelve months ended December 31, 2018 to $457,576 for the

twelve months ended December 31, 2109.

The Company used $146,316 for the twelve months ended December 31, 2109 in advances from

an affiliated supplier as compared to usage of $1,139,619 for the twelve months ended December 31, 2018.

Used in Investing Activities.

Cash used in investing activities for the twelve months ended December 31, 2019 was $269,705

as compared to $26,681 cash used for the twelve months ended December 31, 2018.

The Company utilized $260,667 during the twelve

months ending December 31, 2019 to complete the Coastal Pride acquisition.

$4,575,575 as compared to cash provided of $1,577,164 for the twelve months ended December 31, 2019, representing an increase

of $2,998,411.

The increase is primarily attributable to a decrease in the net loss of $584,269 for the twelve months ended

December 31, 2020.

Cash generated from Accounts Receivable for the twelve months ended December 31, 2020 decreased $1,574,929

as compared to the twelve months ended December 31, 2019, while cash generated from Inventory increased $4,219,232 for

the twelve months ended December 31, 2020 as compared to the twelve months ended December 31, 2019.

Cash used in Accounts Payable

activities increased $1,415,648 for the twelve months ended December 31, 2020 as compared to the twelve months ended December

The Company used $14,049 for the twelve months ended December 31, 2020 in advances from Bacolod as compared to usage

of $146,316 for the twelve months ended December 31, 2019.

Provided by (Used in) Investing Activities.

Cash provided by investing activities for the twelve months ended December 31,

2020 was $343,237 as compared to $269,705 cash used in investing activities for the twelve months ended December 31, 2019.

The Company received $407,198 in cash proceeds from the sale of equipment for the twelve months ended December 31, 2020.

Used in Financing Activities.

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as compared to cash used in financing activities of $1,509,014 for the twelve months ended December 31, 2019.

The primary use

of cash was a reduction in the outstanding line of credit of $2,447,649 as of December 31, 2019, as compared to a decrease of

$3,905,425 as of December 31, 2018.

The Company also received $972,500 in net proceeds from Related Party Notes Payable for the

twelve months ended December 31, 2019 as compared to $0 in the twelve months ended December 31, 2018.

use of cash was a reduction in the outstanding line of credit with ACF of $5,112,061 for the twelve months ended December

31, 2020, as compared to a decrease of $1,347,648 for the twelve months ended December 31, 2019.

and Capital Resources

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At December 31, 2020, the Company

had a working capital deficit of $2,786,086 including $2,910,136 in stockholder loans that are subordinated to ACF as compared

to a working capital deficit of $1,146,937 at December 31, 2018, also including $2,910,136 in stockholder loans.

had a working capital deficit of $2,527,059 including $1,299,712 in stockholder loans that were subordinated to ACF as compared

to a working capital deficit of $2,786,086 at December 31, 2019, including $2,910,136 in stockholder loans.

The Company’s

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The decrease in working capital was due primarily to a decrease of inventory of $6,151,831 and accounts receivable of $988,895,

an the increase of Accounts Payable of $372,725 and Related Party notes payable of $972,500 as opposed to a decrease in the working

capital line of credit of $1,285,757.

Company has historically financed its operations through the cash flow generated from operations, loans from John Keeler and other

related parties as well as a working capital line of credit and the sale of equity in private offerings.

and the decrease of accounts payable of $1,920,976 and related party notes payable of $1,610,424 as compared to a decrease in

the working capital line of credit of $5,112,061.

Company has historically financed its operations through the cash flow generated from operations, loans from stockholders and

other related parties as well as a working capital line of credit and the sale of equity in private offerings.

COVID-19 pandemic has caused significant disruptions to the global financial markets.

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However, while significant uncertainty remains, the Company

believes that the COVID-19 outbreak may have a negative impact the ability to raise financing and access capital.

believes that the COVID-19 outbreak will have a negative impact the ability to raise financing and access capital.

Capital Line of Credit

Company entered into a $14,000,000 revolving line of credit with ACF Finco I, LP (“ACF”) 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, November

8, 2018, July 29, 2019, and November 26, 2019 and is secured by all of the assets of Keeler & Co.

The line of credit bears

interest at a rate equal to the greater of (i) the 3-month LIBOR rate plus 9.25%, (ii) the prime rate plus 6.0%, and (iii) a fixed

rate of 6.5%.

As of December 31, 2019, the line of credit bears interest rate of 11.164%.

During the year ended December 31, 2019,

the Company failed to meet certain financial covenants.

Company entered into a $14,000,000 revolving line of credit with ACF 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, November 8, 2018, July 29,

2019, November 26, 2019 and May 7, 2020 and was secured by all of the assets of Keeler & Co.

The interest rate under

the line of credit was equal to the greater of (i) the 3-month LIBOR rate plus 9.25%, (ii) the prime rate plus 6.0%, and (iii)

a fixed rate of 6.5%.

As of December 31, 2020, the interest rate was 12.48%.

March 31, 2021, Keeler & Co.

and Coastal Pride entered into a loan and security agreement (“Loan Agreement”) with

Lighthouse pursuant to the terms of the Loan Agreement, Lighthouse made available to Keeler & Co.

and Coastal Pride (together,

the “Borrowers”) a $5,000,000 revolving line of credit for a term of thirty-six months, renewable annually for one-year

periods thereafter.

Amounts due under the line of credit are represented by a revolving credit note issued to Lighthouse by the

advance rate of the revolving line of credit is 85% with respect to eligible accounts receivable and the lower of 60% of the Borrowers’

eligible inventory, or 80% of the net orderly liquidation value, subject to an inventory sublimit of $2,500,000.

The inventory

portion of the loan will never exceed 50% of the outstanding balance.

Interest on the line of credit is the prime rate (with a

floor of 3.25%), plus 3.75%.

The Borrowers paid Lighthouse a facility fee of $50,000 and will pay an additional facility fee of

$25,000 on each anniversary of March 31, 2021.

line of credit is secured by a first priority security interest on all the assets of each Borrower.

Pursuant to the terms of a

guaranty agreement, the Company guaranteed the obligations of the Borrowers under the note and John Keeler, Executive Chairman

and Chief Executive Officer of the Company, provided a personal guaranty of up to $1,000,000 to Lighthouse.

Borrowers utilized $784,450 borrowed from Lighthouse to repay all the outstanding indebtedness owed to the ACF as of March 31,

As a result, all obligations owed to ACF were satisfied and the loan agreement with ACF was terminated.

Keeler Promissory Notes

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remains outstanding and approximately $174,000 of interest was paid under the notes.

These notes have been subordinated to ACF

and are subject to certain restrictions pursuant to a subordination agreement.

After satisfaction of the terms of the subordination,

the Company can prepay the notes at any time first against interest due thereunder.

If an event of default occurs under the notes,

interest will accrue at 18% per annum and if not paid within 10 days of payment becoming due, the holder of the note is entitled

to a late fee of 5% of the amount of payment not timely made.

These notes are subordinated to the Lighthouse

After satisfaction of the terms of the subordination, the Company may prepay the notes at any time first against interest

due thereunder.

If an event of default occurs under the notes, interest will accrue at 18% per annum and if not paid within 10

days of payment becoming due, the holder of the note is entitled to a late fee of 5% of the amount of payment not timely made.

March 26, 2019, the Company issued a four-month promissory note in the principal amount of $1,000,000 (the “Kenar Note”)

to Kenar Overseas Corp., a company registered in Panama (the “Lender”).

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.

to Kenar Overseas Corp., a company registered in Panama (“Kenar”).

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 Chief Executive Officer and Executive Chairman pledged 5,000,000

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extended on a month-to-month basis and on November 19, 2019, the Kenar Note was extended to March 31, 2020 on the same terms and

May 21, 2020, the Kenar Note was amended to (i) set the maturity date at March 31, 2021 (unless extended to September 30, 2021

at the Lender’s sole option), (ii) provide that the Company use one-third of any capital raise from the sale of its equity

to reduce the outstanding principal under the Kenar Note, (iii) set the interest rate at 18% per annum, payable monthly commencing

October 1, 2020, and (iv) to reduce the number of pledged shares by Mr.

May 21, 2020, the Kenar Note was amended to (i) extend the maturity date to March 31, 2021, (ii) provide that the Company use

one-third of any capital raise from the sale of its equity to reduce the outstanding principal under the Kenar Note, (iii) set

the interest rate at 18% per annum, payable monthly commencing October 1, 2020, and (iv) reduce the number of pledged shares by

Keeler to 4,000,000.

As consideration therefor, the Company

has agreed to issue 1,021,266 shares of its Common Stock to Kenar.

The outstanding principal amount of the note at December

31, 2019 was $872,500.

As consideration therefor, the Company issued 1,021,266 shares of Common Stock to Kenar on May 27, 2020.

The outstanding principal amount of the note at December 31, 2020 was $872,500.

April 2, 2019, the Company issued a four-month unsecured promissory note in the principal amount of $100,000 (the “Lobo

Note”) to Lobo Holdings, LLC, a stockholder in the Company (“Lobo”).

Note”) to Lobo Holdings, LLLP, a stockholder of the Company (“Lobo”).

The Lobo Note bears interest at the rate

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On November 15, 2019, the Company paid off the Lobo Note with the issuance to Lobo of an unsecured promissory note in the principal

amount of $100,000 which bears interest at the rate of 15%, may be prepaid in whole or in part without penalty, and matures on

March 31, 2020On April 1, 2020 the Company paid off the November 15, 2019 Lobo Note with the issuance to Lobo of a six-month unsecured

promissory note in the principal amount of $100,000, which accrues interest at the rate of 10% per annum and may be prepaid in

whole or in part without penalty.

amount of $100,000 which accrued interest at the rate of 15% per annum and matured on March 31, 2020.

On April 1, 2020, the Company

paid off the November 15, 2019 Lobo Note with the issuance to Lobo of a six-month unsecured promissory note in the principal amount

of $100,000, which accrued interest at the rate of 10% per annum and matured on October 1, 2020.

On October 1, 2020, the Company

paid off the April 1, 2020 note with the issuance of a three-month unsecured promissory note in the principal amount of $100,000,

which bears interest at the rate of 10% per annum and matured on December 31, 2020.

On January 1, 2021, the Company paid off the

October 1, 2020 note with the issuance of a six-month unsecured promissory note in the principal amount of $100,000, which bears

interest at the rate of 10% per annum and matures on June 30, 2021.

Protection Program Loan

April 17, 2020, the Company was granted a loan in the principal amount of $344,762 from U.S.

Century Bank under the Paycheck Protection

The loan accrues interest at 1% and matures two years from the date of issuance.

Monthly payments are $19,401.96 commencing

seven months from the date of issuance.

The loan may be prepaid under certain conditions.

April 17, 2020, the Company received proceeds of $344,762 and issued an unsecured promissory note to US Century Bank in the principal

amount of $344,762 in connection with the Payroll Protection Program of the CARES Act (“PPP Loan”).

The note accrues

interest at 1% per annum, matures two years from the date of issuance and is fully guaranteed by the Small Business Administration

(“SBA”) and may be forgiven provided certain criteria are met.

The Company is required to make monthly payments of

approximately $19,401 beginning November 17, 2020.

In September 2020, the Company applied for the loan forgiveness by SBA through

US Century Bank for the full amount which was granted on November 16, 2020.

March 2, 2021, the Company received proceeds of $371,944 and issued an unsecured promissory note to US Century in the principal

amount of $371,944 in connection with a PPP Loan.

The note accrues interest at 1.0% per annum, matures five years from the date

of issuance and is fully guaranteed by the SBA and may be forgiven provided certain criteria are met.

The Company may apply for

forgiveness after August 17, 2021 and may be required to make monthly payments of approximately $8,500 beginning June 2, 2022.

Accounting Policies and Estimates

of Goodwill and Other Intangible Assets

and other intangible assets include the cost of the acquired business in excess of the fair value of the tangible net assets recorded

in connection with an acquisition.

Other intangible assets include customer relationships, non-compete agreements, and trademarks.

For goodwill, our policy is to assess for impairment at year-end.

For other intangible assets with definite lives, we assess for

impairment only if events occur that indicate that the carrying amount of an asset may not be recoverable.

we assess the recoverability of goodwill and indefinite-lived intangibles by determining whether the fair values exceed the carrying

values of these assets.

Our testing may be performed utilizing either a qualitative or quantitative assessment;

however, if a

qualitative assessment is performed and we determine that the fair value of a reporting unit is more likely than not (i.e., a

likelihood of more than 50 percent) to be less than its carrying amount, a quantitative test is performed.

using a quantitative test, we arrive at our estimates of fair value using a discounted cash flow analysis.

Our assessment for

impairment of goodwill and definitive-lived intangible assets compared the fair value of the reporting unit to the corresponding

carrying value.

If the carrying value of the asset exceeds its fair value, an impairment loss is recognized in an amount equal

to the excess.

Based on our year-end 2020 annual impairment analysis for goodwill and intangibles assets, we concluded that it

is more likely than not that the fair value of goodwill and intangible assets exceeded its carrying value.

No impairment was recorded

for goodwill and intangible assets.

fair value conclusions as of December 31, 2020 are highly sensitive to changes in the assumptions used in the income approach,

which include forecasted revenues, perpetual growth rates, among others, all of which require significant judgments by management.

value of the reporting unit is therefore determined using significant unobservable inputs, or level 3 in the fair value hierarchy.

The Company has used recent historical performance, current forecasted financial information, and broad-based industry and economic

statistics as a basis to estimate the key assumptions utilized in the forecasted cash flow model.

These key assumptions are inherently

uncertain and require a high degree of estimation and judgment and are subject to change based on future changes, industry and

global economic and geo-political conditions, and the timing and success of the implementation of current strategic initiatives.

The impact of the COVID-19 pandemic on estimated future cash flows is uncertain and will largely depend on the outcome of future

events, which could result in goodwill impairments going forward.

Interest Entity

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most significantly impact Strike and the obligation to absorb losses or the right to receive benefits from Strike.

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 consolidated Strike in its financial statements as of April 1, 2014, the effective date of the controlling interest

the third quarter of 2020, the Company determined that Strike was no longer a VIE because there was a verbal agreement with Strike

that terminated the original agreement to hold the inventory on consignment and Strike has not engaged in transactions with the

Company or its subsidiaries in 2020.

Company also evaluated its interest in three related party entities that are under common control with the Company, Bacolod, Bicol

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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.

The Company leased its office and warehouse facility from JK Real Estate, a landlord that

is a related party through common family beneficial ownership until December 31, 2020.

Company determined that Bacolod and Bicol are not VIE’s as they do not meet the criteria to be considered a VIE per ASC

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Moreover, Bacolod and Bicol have other customers besides the

Even if the Company is no longer Bacolod or Bicol’s customer, they would be able to sustain their operations from

selling their inventory to their other customers.

As the Company concluded that Bacolod and Bicol are not VIE’s and the

Company is not deemed their primary beneficiary, Bacolod or Bicol is not consolidated with the Company’s financial statements.

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.

Company which will allow them to sustain their operations from selling their inventory to their other customers.

As the Company

concluded that Bacolod and Bicol are not VIE’s and the Company is not deemed their primary beneficiary, Bacolod or Bicol

is not consolidated with the Company’s financial statements.

Company no longer leases its office and warehouse facility from JK Real Estate and no longer guarantees the mortgage on the facility.

On December 31, 2020, this facility was sold to an unrelated third-party purchaser and the lease was terminated.

Substantially

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the specific identification method.

Inventory is valued at the lower of cost or market, using the first-in, first-out method.

Inventory is valued at the lower of cost or net realizable value, cost being determined

using the first-in, first-out method.

is purchased cost and freight shipping point and becomes the Company’s asset and liability upon leaving the suppliers’

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of business and these credits are also reflected against future shipments.

of December 31, 2019 and December 31, 2018, the balance due from Bacolod for future shipments was approximately $1,286,000 and

$1,139,619, respectively.

The 2019 balance represents approximately five to six months of purchases from the supplier.

of December 31, 2020, and December 31, 2019, the balance due from Bacolod for future shipments was approximately $1,300,000

and $1,286,000, respectively.

No new purchases have been made from Bacolod since November 2020.

Cost of revenue related to

inventories purchased from Bacolod represented approximately $1,280,000 and $9,531,000 of total cost of revenue for the twelve

months ended December 31, 2020 and 2019, respectively.

with the January 1, 2018 adoption of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),”

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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

The Company’s source of revenue is from importing blue and red swimming crab meat primarily from Indonesia, the Philippines

and China and distributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika,

Crab & Go, First Choice, Good Stuff and Coastal Pride Fresh.

We sell primarily to food service distributors.

our products to wholesalers, retail establishments and seafood distributors.

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.

(1) identify the contract(s) with a customer by receipt of purchase orders and confirmations

sent by the Company which includes a required line of credit approval process, (2) identify the performance obligations in the

contract which includes shipment of goods to the customer FOB shipping point or destination, (3) determine the transaction price

which initiates with the purchase order received from the customer and confirmation sent by the Company and will include discounts

and allowances by customer if any, (4) allocate the transaction price to the performance obligations in the contract which is

the shipment of the goods to the customer and transaction price determined in step 3 above and (5) recognize revenue when (or

as) the entity satisfies a performance obligation which is when the Company transfers control of the goods to the customers by

shipment or delivery of the products.

Company elected an accounting policy to treat shipping and handling activities as fulfillment activities.

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recognized, unless the payment is for distinct goods or services received from the customer.

Adopted Accounting Pronouncements

January 1, 2019, we adopted Accounting Standards Codification 842 and all the related amendments using the modified retrospective

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Our leases generally have terms that range from three years for equipment

and five to twenty years for property.

We elected the accounting policy to include both the lease and non-lease components of

our agreements as a single component and account for them as a lease.

and six to seven years for property.

We elected the accounting policy to include both the lease and non-lease components of our

agreements as a single component and account for them as a lease.

liabilities are recognized at the present value of the fixed lease payments using a discount rate based on similarly secured borrowings

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Operating lease

Operating lease liabilities

Operating lease

cash flow information related to leases were as follows:

December 31, 2020

used in operating activities:

assets recognized in exchange for lease obligations:

Cash used in operating activities:

ROU assets recognized in exchange for

lease obligations:

Operating leases

table below presents the remaining lease term and discount rates for operating leases.

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Non-current obligations

Issued Accounting Pronouncements

Adopted Accounting Pronouncements

2019-12 Income Taxes (Topic 740)

December 2019, the FASB issued ASU No.

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and related disclosure.

2016-13 Financial Instruments –

Credit Losses (Topic 326)

June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

Instruments, which requires entities to use a forward-looking, expected loss model to estimate credit losses.

It also requires

entities to consider additional disclosures related to credit quality of trade and other receivables, including information related

to management’s estimate of credit allowances.

ASU 2016-13 was further amended in November 2018 by ASU 2018-19, Codification

Improvements to Topic 236, Financial Instrument-Credit Losses.

For public business entities that are U.S.

Securities and Exchange

Commission (SEC) filers excluding smaller reporting companies, the amendments are effective for fiscal years beginning after December

15, 2019, including interim periods within those fiscal years.

For all other public business entities, the amendments are effective

for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

On October 16, 2019,

FASB voted to delay implementation of ASU No.

2016-13, “Financial Instruments-Credit Losses (Topic 326) - Measurement of

Credit Losses on Financial Instruments.”

For all other entities, the amendments are now effective for fiscal years beginning

after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

Early adoption is permitted

for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

The Company continues to evaluate

the impact of these amendments to the Company’s financial position and results of operations and currently expect no material

impact of the adoption of the amendments on the Company’s consolidated financial statements.

Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity