What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-31 compared with 2021-04-15 · 61 added, 517 removed, 13 unchanged (98% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock has been quoted on the OTC pink sheets under the symbol “BSFC”

since February 18, 2020.

There has been

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 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

the foreseeable future.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

common stock was quoted on the OTC pink sheets under the symbol “BSFC” from February 18, 2020 until November 2, 2021.

common stock began trading on the NASDAQ Capital Market on November 3, 2021.

The last reported sales price of our common stock on the NASDAQ Capital

Market on March 30, 2022 was $2.09.

of March 31, 2022, the Company had 92 stockholders of record.

connection with the Merger, holders of 15,750,000 shares of common stock were prohibited, subject to certain exceptions, from disposing

of or hedging any shares of common stock or securities convertible or exercisable for shares of common stock during an 18-month period

for Restricted Holders and 12-month period for Pre-Merger Holders, after the Merger in excess of 50% of all of the common stock held

by (or issuable to) them and at a price below $2.20 per share.

Thereafter, such Holders may not sell, dispose or otherwise transfer more

than one-third of the common stock held by such Holder in any two-month period.

connection with our underwritten common stock public offering in November 2021, 3,120,000 shares of common stock subject to a 10-year

option at an exercise price of $2.00 per share granted to Christopher Constable, our former chief financial officer and director, are

subject to a lock-up and may not be sold, disposed of or otherwise transferred until May 3, 2022.

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

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

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.

Our Loan and Security Agreement

with Lighthouse contains terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock.

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

1 unchanged sentence

Compensation Plan Information

Plan category

securities to be

2 unchanged sentences

future issuance

Equity compensation plans

approved by security holders

Equity compensation plans approved by security holders

4,408,430 (1)

Equity compensation plans not approved

by security holders

Equity compensation plans not approved by security holders

(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, 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.

Constable, our former chief financial officer and director, which shares are subject to a lock-up until May 3, 2022 (ii) 10-year

options to purchase an aggregate of 580,000 shares of common stock at an exercise price of $2.00 per share to certain employees,

(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;

(iv) 3-year options to purchase an aggregate of 500,000 shares of common stock at an exercise price

of $2.00 per share to the Company’s directors;

(v) 4-year options to purchase an aggregate of 176,417 shares of common stock

at an exercise price of $2.30 per share an employee;

and (vi) 3-year options to purchase an aggregate of 7,013 shares of common stock

at an exercise price of $6.00 per share to Silvia Alana, the Company’s Chief Financial Officer.

Sales of Unregistered Securities

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.

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.

October 7, 2021, we issued 10,000 shares of common stock to an investor upon exercise of a warrant purchased in the Merger in 2018.

October 17, 2021, we issued 5,000 shares of common stock to an investor upon exercise of a warrant purchased in a private offering.

October 27, 2021, we issued an aggregate of 44,000 shares of common stock to two investors upon exercise of warrants purchased in the

Merger in 2018.

October 28, 2021, we issued 10,000 shares of common stock to an investor upon exercise of a warrant purchased in the Merger in 2018.

October 29, 2021, we issued an aggregate 50,000 shares of common stock to two investors upon exercise of warrants purchased in the Merger

November 2, 2021, we issued an aggregate of 52,000 shares of common stock to six investors upon exercise of warrants purchased in Merger

November 3, 2021, we issued 2,000 shares of common stock to an investor upon exercise of a warrant purchased in the merger in 2018.

November 4, 2021, we issued an aggregate 35,250 shares of common stock to two investors upon exercise of warrants purchased in the Merger

November 5, 2021, we issued 150,000 shares of common stock to an investor upon exercise of a warrant purchased in the Merger in 2018.

November 5, 2021, we issued 800,000 shares of common stock to Newbridge Securities Corporation (“Newbridge”), as underwriters’

representative, in connection with our underwritten public offering.

November 5, 2021, we issued a warrant to purchase an aggregate of 56,000 shares of common stock at an exercise price of $5.00

per share to Newbridge.

Such warrant is exercisable on a date which is 180 days from the closing of the underwritten offering and expires

on November 11, 2024.

November 8, 2021, we issued 12,500 shares of common stock to an investor upon exercise of a warrant purchased in a private offering.

November 10, 2021 and December 31, 2021, the Company issued 52,326 and 18,405 shares of common stock, respectively, to Intelligent Investments

I LLC for legal services provided to the Company.

December 31, 2021, the Company issued 5,000 shares of common stock to TraDigital Marketing Group for consulting services provided to

December 31, 2021, we issued 10,992 shares of common stock to each of Nubar Herian and John Keeler, 15,107 shares of common stock

to each of Timothy McLellan and Trond Ringstad and 19,909 shares of common stock to Jeffrey Guzy for serving as directors of the Company.

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

SELECTED FINANCIAL DATA

are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide

the information under this Item.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking

following management’s discussion and analysis should be read in conjunction with our historical financial statements and

the related notes thereto.

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

of our plans, objectives, expectations and intentions.

Any statements that are not statements of historical fact are forward-looking

When used, the words “believe,”

“plan,”

“intend,”

“anticipate,”

“target,”

“estimate,”

“expect”

and the like, and/or future tense or conditional constructions (“will,”

“may,”

“could,”

“should,”

etc.), or similar expressions, identify certain of these forward-looking

These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors,”

above, that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.

Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements

as a result of several factors.

We do not undertake any obligation to update forward-looking statements to reflect events or circumstances

occurring after the date of this Annual Report.

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

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

which cannot be accurately predicted, including the duration and scope of the pandemic, governmental and business responses to

the pandemic and the impact on the global economy, our customers’

demand for our products, and our ability to provide our

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.

In the opinion of management, all material adjustments necessary

to present fairly the results of operations for such periods have been included in these audited financial statements.

adjustments are of a normal recurring nature.

of Operations

following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be

read in conjunction with, the audited financial statements and related notes elsewhere in this Annual Report.

Ended December 31, 2020 compared to the Year Ended December 31, 2019

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, 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.

Cost of goods sold for the twelve months ended December 31, 2020 decreased to $12,623,576 as compared to $20,610,000

for the twelve months ended December 31, 2019.

The decrease is primarily attributable to the revenue decline.

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 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.

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 is attributable to purchases of fixed

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

Operating Expense.

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

$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.

Cash used in financing activities for the twelve months ended December 31, 2020 was $4,800,635

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

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

Company had cash of $337,687 as of December 31, 2020, of which $282,043 was restricted cash.

At December 31, 2020, the Company

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

primary sources of liquidity consisted of inventory of $1,832,661 and accounts receivable of $1,082,468 at December 31, 2020.

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

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.

The full impact of the COVID-19 outbreak

continues to evolve, is highly uncertain and subject to change.

The Company is not able to estimate the effects of the COVID-19

outbreak on its operations or financial condition in the next 12 months.

However, while significant uncertainty remains, the Company

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 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

January 2006 through May 2017, Keeler & Co issued 6% demand promissory notes in the aggregate principal amount of $2,910,000

to John Keeler, our Chief Executive Officer and Executive Chairman.

As of December 31, 2020, approximately $1,299,000 of principal

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

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 (“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

shares of common stock to secure the Company’s obligations under the note.

The Kenar Note matured on July 26, 2019 and was

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

The Lobo Note bears interest at the rate

of 18% per annum.

The Lobo Note may be prepaid in whole or in part without penalty.

John Keeler, the Company’s Executive

Chairman and Chief Executive Officer, pledged 1,000,000 shares of common stock of the Company to secure the Company’s obligations

under the Lobo Note.

The Lobo Note matured on August 2, 2019 and was extended through December 2, 2019 on the same terms and conditions.

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 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 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

Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810, Consolidation ,

when a reporting entity is the primary beneficiary of an entity that is a variable interest entity (“VIE”), as defined

in ASC 810, the VIE must be consolidated into the financial statements of the reporting entity.

The determination of which owner

is the primary beneficiary of a VIE requires management to make significant estimates and judgments about the rights, obligations,

and economic interests of each interest holder in the VIE.

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.

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.

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

Blue Star Export Co.

(“Bicol”) and John Keeler Real Estate Holding (“JK Real Estate”), in light of ASC

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 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

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.

Moreover, Bacolod and Bicol have other customers besides the

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

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 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’

The Company had in-transit inventory of approximately $522,000 and $1,958,000 as of December 31, 2020 and December

31, 2019, respectively.

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.

write-downs are charged to cost of goods sold.

The Company recorded an inventory allowance of approximately $71,400 for the year

ended December 31, 2020 as compared to $40,784 for the year ended December 31, 2019.

to Suppliers and Related Party

the normal course of business, the Company may advance payments to its suppliers, including 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.

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),”

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.

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 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.

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.

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

We recognized the cumulative effect of initially applying the new lease standard as an adjustment to the opening balance

of retained earnings.

The comparative information has not been restated and continues to be reported under the lease accounting

standard in effect for those periods.

new lease standard requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations.

the practical expedients permitted under the transition guidance of the new standard that retained the lease classification and

initial direct costs for any leases that existed prior to adoption of the standard.

We did not reassess whether any contracts

entered into prior to adoption are leases or contain leases.

categorize leases with contractual terms longer than twelve months as either operating or finance.

Finance leases are generally

those leases that would allow us to substantially utilize or pay for the entire asset over its estimated life.

Assets acquired

under finance leases are recorded in property and equipment, net.

All other leases are categorized as operating leases.

not have any finance leases as of December 31, 2020.

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

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

available to us.

Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord

incentives, plus any direct costs from executing the leases.

Lease assets are tested for impairment in the same manner as long-lived

assets used in operations.

Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful

life or the lease term.

we have the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased

asset, and it is reasonably certain that we will exercise the option, we consider these options in determining the classification

and measurement of the lease.

Costs associated with operating lease assets are recognized on a straight-line basis within operating

expenses over the term of the lease.

table below presents the lease-related assets and liabilities recorded on the balance sheets.

Operating lease assets

Operating lease

cash flow information related to leases were as follows:

December 31, 2020

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.

Weighted-average

remaining lease term

Operating leases

Weighted-average

discount rate

of lease liabilities as of December 31, 2020, were as follows:

Total lease payments

of lease payments representing interest

Present value

of future minimum lease payments

obligations under leases

Non-current obligations

Adopted Accounting Pronouncements

2019-12 Income Taxes (Topic 740)

December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU

2019-12”), which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain

exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020,

with early adoption permitted.

The Company is currently evaluating the impact of this standard on its consolidated financial statements

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

currently have no off-balance sheet arrangements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under

are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information

under this Item.

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