What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-04-17 · 274 added, 248 removed, 191 unchanged (73% of the section changed)

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

Forward-Looking

following discussion of the financial condition and results of operations should be read in conjunction with the financial statements

and the notes to those statements appearing in this Annual Report Some of the information contained in this discussion and analysis or

set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking

statements that involve risks and uncertainties.

You should read the “Risk Factors” section of this Annual Report for a discussion

of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking

statements contained in the following discussion and analysis .

The various sections of this discussion contain forward-looking

statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described

throughout this prospectus as well as other matters over which we have no control.

See “Forward-Looking Statements.” Our

actual results may differ materially.

The Company does not undertake any obligation to update forward-looking statements to reflect events

or circumstances occurring after the date of this prospectus.

and the notes to those statements appearing in this Annual Report.

This discussion contains forward-looking statements that are based

on our current expectations, estimates and projections about our business and operations.

Our actual results may differ materially from

those currently anticipated and expressed in such forward-looking statements.

The Company does not undertake any obligation to update

forward-looking statements to reflect events or circumstances occurring after the date of this prospectus.

are an international seafood company that imports, packages and sells refrigerated pasteurized crab meat, and other premium seafood products.

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We also sell our products to wholesalers, retail establishments and seafood distributors.

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.

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 products.

We continue to monitor the effects

of the pandemic on our business.

Notice Letter

Company received a notice letter (the “Notice”) from The NASDAQ Stock Market LLC (“NASDAQ”) notifying the Company

that, based upon the closing bid price of the Company’s common stock for the last 30 consecutive business days, the Company was

not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The NASDAQ

Capital Market (the “Minimum Bid Requirement”).

The Notice has no immediate effect on the continued listing status of the

Company’s common stock on The NASDAQ Capital Market, and, therefore, the Company’s listing remains fully effective.

has until May 16, 2023, to regain compliance.

If the Company does not regain compliance with the Minimum Bid Requirement during the initial

180 calendar day period, the Company may be eligible for an additional 180 calendar day compliance period.

To qualify, the Company would

be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards

for The NASDAQ Capital Market, with the exception of the Minimum Bid Requirement, and would need to provide written notice of its intention

to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

The Company will continue

to actively monitor the closing bid price of its common stock and will seek to regain compliance with all applicable NASDAQ requirements

within the allotted compliance periods.

If the Company does not regain compliance within the allotted compliance periods, including any

extensions that may be granted by NASDAQ, NASDAQ will provide notice that the Company’s common stock will be subject to delisting.

The Company would then be entitled to appeal that determination to a NASDAQ hearings panel.

Company is currently seeking approval from stockholders of an amendment to the Company’s Amended and Restated Certificate of Incorporation

to effect a reverse stock split of its common stock, by a ratio of no less than 1-for-2 and no more than 1-for-50, with the exact ratio

to be determined by its Board of Directors.

There can be no assurance that such approval will be obtained.

Registration Statement

Company filed a registration statement on Form S-3 which was declared effective by the SEC on December 6, 2022 containing a

prospectus registering the offering, issuance and sale of up to $25,000,000 of common stock, preferred stock, debt securities,

warrants, subscription rights and/or units and a sales agreement prospectus covering the offering, issuance and sale of up to

$3,000,000 of common stock that may be issued and sold in an “at the market” offering pursuant to a sales agreement

between the Company and Roth Capital Partners, LLC, as placement agent (“Roth”).

The Company sold an aggregate of

474,106 shares in the offering for net proceeds of $182,982 and 151,284 shares were repurchased from Roth for $76,463.

The offering was terminated on February 2, 2023.

February 10, 2023, the Company entered into an underwriting agreement with Aegis, pursuant to which the Company agreed to sell to

Aegis, in a firm commitment public offering, (i) 8,200,000 shares of common stock for a public offering price of $0.20 per share and

(ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase 800,000 shares of common stock (the “Warrant

Shares”), for a public offering price of $0.199 per Pre-funded Warrant to those purchasers whose purchase of common stock in

the offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning

more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding common stock immediately following the

consummation of the offering.

The Company also granted Aegis an over-allotment option to purchase up to 1,250,000 shares of common

The Pre-funded Warrants have an exercise price of $0.001 per share.

The Pre-funded Warrants were issued in registered form

under a warrant agent agreement between the Company and VStock Transfer, LLC as the warrant agent.

offering closed on February 14, 2023 with gross proceeds to the Company of approximately $1.8 million, before deducting underwriting

discounts and other estimated expenses payable by the Company.

The offering consisted of 9,000,000 shares of common stock and Pre-funded

Warrants to purchase common stock at an exercise price of $0.20 per share (or $0.199 per Pre-funded Warrant after reducing $0.001 attributable

to the exercise price of the Pre-funded Warrants) and was made pursuant to an effective shelf registration statement on Form S-3 (No.

333-268564) previously filed with the SEC on November 25, 2022 and declared effective by the SEC on December 6, 2022, as supplemented

by a preliminary prospectus supplement dated February 9, 2023 and filed with the SEC on February 9, 2023 and a final prospectus supplement

dated February 10, 2023.

January 28, 2023, the Company entered into a one-year supply agreement with Just Food For Dogs, LLC, a California limited liability company

(“JFFD”), and manufacturer of dog food and related products, for the purchase of certain seafood products from the Company.

Under the agreement, JFFD will provide quarterly forecasts of its supply requirements to be filled by the Company.

There is no minimum

order requirement and JFFD can cancel the agreement at any time upon notice to the Company.

JFFD is also entitled to most favored pricing.

The agreement will automatically renew for one-year terms unless terminated by either party within 45 days of the end of the then current

On September 26, 202 3 , the

Company received a letter from NASDAQ notifying the Company that based upon the closing bid price of the Company’s common stock

for the last 30 consecutive business days, the Company was not in compliance with the Minimum

Bid Requirement on The NASDAQ Capital Market, as set forth in NASDAQ Listing Rule 5550(a)(2) .

The Company was provided a compliance period

of 180 calendar days, or until March 24, 2024, to regain compliance with NASDAQ Listing Rule 5550(a)(2).

If at any time before March 24,

2024, the closing bid price of our common stock closed at or above $1.00 per share for a minimum of ten consecutive business days, NASDAQ

will provide written notification that the Company has achieved compliance with the Minimum Bid Requirement and the matter would be resolved.

On March 26, 2024, we received a letter from NASDAQ stating the Company had not regained compliance with the Minimum Bid Requirement and

is not eligible for a second 180-day period because it is not in compliance with NASDAQ’s $5,000,000 minimum stockholders’

equity initial listing requirement.

The Company intends to present a written compliance plan to the NASDAQ hearings panel by April 2,

2024 (which will stay further action by NASDAQ) for its consideration of continued listing of the Company’s common stock on the

NASDAQ Capital Market.

Stockholder’s Equity

Company was notified on November 27, 2023 by NASDAQ that it no longer complied with the minimum $2,500,000 stockholders’ equity

required for continued listing on NASDAQ.

The Company is subject to a Mandatory Panel Monitor for a period of one year, or until October

On December 4, 2023, the Company was granted a hearing with NASDAQ’s

hearings panel, which was scheduled for March 5, 2024.

On March 22, 2024, the NASDAQ hearings panel notified the Company that it had

granted the request of the Company to continue its listing on NASDAQ until May 15, 2024, subject to on or before April 1, 2024, the Company

filing its Form 10-K for the year ended December 31, 2023, and filing its Form 10-Q for the quarter ended March 31, 2024 by

May 15, 2024.

Afritex Agreements

On February 1, 2024, the

Company entered into a ninety-day Master Services Agreement (the “Services Agreement”) with Afritex Ventures, Inc.

corporation (“Afritex”), pursuant to which the Company will be responsible for all of Afritex’s operations and finance

The Company will provide Afritex with working capital in order to sustain operations and will purchase certain inventory listed

in the Services Agreement.

In consideration for its services, during the term of the Services Agreement, the Company will be entitled

to all of the revenue and profits earned by Afritex.

Under the Services Agreement, Afritex may not sell or otherwise use as consideration

any of its intellectual property without the Company’s consent.

The Company must maintain certain commercial liability insurance

during the term of the Services Agreement.

The Services Agreement also provides that the Company may not solicit Afritex employees for

24 months nor circumvent existing business relationships of Afritex for three years, after the term of the Services Agreement.

of the Services Agreement will automatically extend for three thirty-day periods, if Afritex’s outstanding debt is no greater than

In connection with the Services Agreement, on February 12, 2024, the Company

entered into an Intangibles Assets and Machinery Option To Purchase Agreement with Afritex (the “Option Agreement”).

to the Option Agreement, the Company has the option to purchase Afritex’s intangible assets, machinery and equipment set forth in

the Option Agreement for a purchase price of $554,714 for machinery and equipment and 5,000,000 shares of the Company’s common stock

were issued on February 12, 2024

to be held in escrow, for intangible assets.

In addition, for one year from the date of the Option Agreement, Afritex has

an option to purchase up to $1,000,000 shares of the Company’s common stock at a 10% discount to the lowest volume-weighted average

price in the immediately prior five days.

The sale of any shares acquired by Afritex under the Option Agreement are subject to a “leak-out”

provision as set forth in the Option Agreement.

The closing of the Option Agreement is subject to, among other things, the successful

restructuring of Afritex’s accounts payable debts so that no individual debt of $85,000 or aggregate debt of more than $325,000

is outstanding.

The Option Agreement may be terminated if, among others, the closing has not has not occurred within 90 days, unless extended

for two additional 30-day periods at the Company’s sole discretion.

To date, the Company has not exercised

its option to purchase such intangibles assets, machinery and equipment.

January 18, 2024, the Company entered into the Revenue-Based Factoring MCA Plus Agreement with ClearThink which provides, among

other things, for a 33-week term loan in the principal amount of $200,000 (with an additional one-time commitment fee of $50,000).

Interest accrues at the rate of 25% per annum with an additional 5% default interest rate in the event of circumstances described in

the agreement or $50,000 will be added to the principal amount and accrue after principal is paid.

The Company is required to make

biweekly payments of $14,706, commencing February 1, 2024 for the term of the Agreement.

On January 25, 2024, the Company issued

354,610 shares of common stock to ClearThink as a commitment fee.

of Operations

audited financial statements included in this Annual Report for the year ended December 31, 2022 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.

such adjustments are of a normal recurring nature.

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

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Ended December 31, 2023 compared to the Year Ended December 31, 2022

Revenue for the year ended December 31, 2022 increased 28.0% to $12,767,145 as compared to $9,973,264 for the year ended December

31, 2021 as a result of an increase in poundage sold during the year ended December 31, 2022.

Revenue for the year ended December 31, 2023 decreased 52.0% to $6,124,529 as compared to $12,767,145 for the year ended December

31, 2022 as a result of a decrease in poundage sold during the year ended December 31, 2023.

of Goods Sold.

Cost of goods sold for the year ended December 31, 2022 increased to $13,419,133 as compared to $7,979,830 for the

Cost of goods sold for the year ended December 31, 2023 decreased to $5,966,452 as compared to $13,419,133 for the

year ended December 31, 2022.

This increase is attributable to price increases in inventory affecting its related cost of goods.

(Loss) Profit .

Gross loss for the year ended December 31, 2022 is $651,988 as compared to gross profit of $1,993,434 for

This decrease is attributable to the decrease in poundage sold in the cost of goods.

Profit (Loss) .

Gross profit for the year ended December 31, 2023 is $158,077 as compared to gross loss of $651,988 for the year ended

December 31, 2022.

This increase is attributable to higher market prices and lower cost of goods sold in comparison to the year ended

December 31, 2022.

Profit (Loss) Margin.

Gross profit margin for the year ended December 31, 2023 is 2.6% as compared to gross loss margin of 5.1% for

the year ended December 31, 2022.

This increase is attributable to higher cost of goods sold compared to the cost of goods sold in the

year ended December 31, 2021.

(Loss) Profit Margin.

Gross loss margin for the year ended December 31, 2022 is 5.1% as compared to gross profit margin

of 20.0% for the year ended December 31, 2021.

This decrease is attributable to sales price decreases of our product and higher cost

of inventory purchased.

This increase is attributable to higher market prices and lower cost of goods sold in comparison to

the year ended December 31, 2022.

Commissions expenses decreased to $2,169 for the year ended December 31, 2023 from $24,482 for the year ended December

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and Wages Expense .

Salaries and wages increased to $2,032,457 for the year ended December 31, 2022 as compared to $1,827,607 for

Salaries and wages decreased to $1,858,004 for the year ended December 31, 2023 as compared to $2,032,457 for

the year ended December 31, 2022.

This increase is primarily attributable to the full year of salaries for TOBC and new employees.

This decrease is primarily attributable to a strategic reduction in salaries for the year ended December

and Amortization .

Depreciation and amortization expense increased to $584,386 for the year ended December 31, 2022 as compared to

Depreciation and amortization expense decreased to $4,521 for the year ended December 31, 2023 as compared to

$584,386 for the year ended December 31, 2022.

The increase is attributable to higher depreciation and amortization due to the acquisition

of TOBC and soft-shell crab operations.

Impairment loss increased to $5,797,906 for the year ended December 31, 2022 as compared to $374,300 for the year ended

December 31, 2021.

This increase is attributable to the impairments recognized on TOBC and Coastal Pride for goodwill and long-lived

This decrease is attributable to lower depreciation due to the impairment of fixed assets

and intangible assets in the year ended December 31, 2022.

Impairment loss decreased to $0 for the year ended December 31, 2023 as compared to $5,797,906 for the year ended December

This decrease is attributable to the impairment recognized on TOBC for the year ended December 31, 2022.

Operating Expense.

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for the year ended December 31, 2022.

This increase is primarily attributable to legal and professional fees and stock compensation expense

associated with the acquisition of the soft-shell crab operations.

This increase is mainly attributable to an increase in legal and professional fees related to our

business operations.

Other income decreased to $12,708 for the year ended December 31, 2023 from $154,196 for the year ended December 31, 2022.

This decrease is primarily attributable to the payroll protection program loan forgiveness granted in 2021.

This decrease is primarily attributable to lower collections received by Coastal Pride from previously written off receivables.

on Conversion of Debt.

Loss on conversion of debt increased to $57,085 for the year ended December 31, 2022 from $0 for the year

ended December 31, 2021.

This increase is attributable to the additional payments made to Lind by the issuance of common stock due to

a decrease in the Repayment Share Price.

Loss on conversion of debt increased to $977,188 for the year ended December 31, 2023 from $57,085 for the

year ended December 31, 2022.

This increase is attributable to the additional payments made to Lind by the issuance of common stock due

to a decrease in the Repayment Share Price.

Change in Fair Value of Derivatives

and Warrants Liabilities .

Change in fair value of derivatives and warrants liabilities increased to $2,497,088 for the year ended

December 31, 2023 from $0 for the year ended December 31, 2022.

This increase is attributable to the 2023 Lind notes embedded conversion

feature due to the variable conversion price on the agreements.

Interest expense increased to $1,771,942 for the year ended December 31, 2023 as compared to $1,678,097 for the year ended

December 31, 2022.

This increase is attributable to the amortization of the Lind convertible debt discount.

This increase is mainly attributable to the amortization of the Lind convertible debt discount.

The Company had a net loss of $4,471,612 for the year ended December 31, 2023 as compared to a net loss of $13,194,969 for

the year ended December 31, 2022.

The increase in net loss is primarily attributable to an increase in salaries and wages, increases

in depreciation and amortization, recognition of impairment losses for TOBC and Coastal Pride and other expenses in connection with

the acquisition of the soft-shell crab operations and amortization of the Lind convertible debt discount.

The decrease in net loss is primarily attributable to decreases in salaries and wages, decreases in

depreciation and amortization, recognition of impairment losses for TOBC and Coastal Pride in 2022 that no longer applied in 2023 and

decreases of other expenses of legal and professional fees.

and Capital Resources

Company had cash of $24,163 as of December 31, 2023.

At December 31, 2022, the Company had a working capital deficit of $3,013,281, including

$893,000 in stockholder loans that were subordinated to its working capital line of credit, as compared to a working capital surplus

At December 31, 2023, the Company had a working capital surplus of $899,215, including

$165,620 in stockholder loans that were subordinated to its working capital line of credit, as compared to a working capital deficit

of $3,013,281 at December 31, 2022, including $893,000 in stockholder loans.

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of inventory of $2,608,521 and accounts receivable of $534,195 at December 31, 2023.

The decrease in working capital was due primarily

to an increase of inventory of $2,688,711 netted against decreases in accounts receivable of $417,765 and the increase in the maturities

of long-term debt of $3,439,557.

The increase in working capital was due primarily

to decreases of inventory of $2,023,631 and accounts receivable of $270,881 netted against the decreases in the working capital line

of credit of $1,776,068 and maturities of short-term debt of $3,439,557.

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.

of January 27, 2023, the Company issued an aggregate of 322,822 shares of common stock to Roth for the “at the market” offering

pursuant to its sales agreement with Roth.

(Used in) Operating Activities.

Cash used in operating activities during the year ended December 31, 2022 was $3,618,811 as

compared to cash used in operating activities of $4,833,029 for the year ended December 31, 2021, representing a decrease of

The decrease is primarily attributable to an increase in inventory of $3,431,929 netted against the decreases in

deferred income of $62,336, accounts receivable netted against other current assets of $3,448,088 and increase in payables netted

against other current liabilities of $356,399 for the year ended December 31, 2022.

Cash used in operating activities during the year ended December 31, 2023 was $3,530,662 as compared

to cash used in operating activities of $3,618,811 for the year ended December 31, 2022, representing a decrease of $88,149.

is primarily attributable to a decrease in inventory of $5,455,560 netted against the decreases in deferred income of $62,336, accounts

receivable netted against other current assets of $3,036,916 and decrease in payables netted against other current liabilities of $2,094,395

for the year ended December 31, 2023.

(Used in) Investing Activities.

Cash used in investing activities for the year ended December 31, 2022 was $695,275 as compared

to $773,410 cash used in investing activities for the year ended December 31, 2021.

The decrease was attributable to the smaller

acquisition of the soft-shell crab operations by Coastal Pride for the year ended December 31, 2022 compared to the TOBC acquisition

in the year ended December 31, 2021.

Cash used in investing activities for the year ended December 31, 2023 was $159,609 as compared to

$695,275 cash used in investing activities for the year ended December 31, 2022.

The decrease was a result of no acquisitions during

the year ended December 31, 2023 compared to the acquisition of the soft-shell crab operations by Coastal Pride for the year ended December

Provided by Financing Activities.

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to cash provided by financing activities of $3,075,400 for the year ended December 31, 2022.

This decrease is mainly attributable to

private placement offerings in 2021 compared to no such offerings in 2022.

This increase is mainly attributable to

in the private placement offering completed in September 2023.

Capital Line of Credit

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

Financial Corp., a North Carolina corporation (“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 Borrowers.

As of December 31, 2022, the Company was in compliance with all financial covenants

under the Loan Agreement, except for the requirement to maintain a greater than $50,000 cash flow in the months of July, August, September,

October, November and December.

Lighthouse has notified the Borrowers as to this default but has elected not to exercise its rights and

remedies under the loan documents.

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

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.

under the line of credit are represented by a revolving credit note issued to Lighthouse by the Borrowers.

advance rate of the revolving line of credit was 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.

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maximum inventory advance under the line of credit to 60% from August 1, 2022 through December 31, 2022 and 50% thereafter.

As of December

31, 2022, the interest rate was 15.25% which includes a default rate of 3%.

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

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

Pursuant to the terms of a guaranty

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

Borrowers utilized $784,450 of the Lighthouse revolving line of credit to repay the outstanding indebtedness owed to ACF as of March

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

The outstanding balance

owed to Lighthouse as of December 31, 2022 was $1,776,068.

June 16, 2023, the Company terminated the Loan Agreement and paid an aggregate of approximately $108,400 to Lighthouse which included,

as of June 16, 2023, an outstanding principal balance of approximately $93,400, accrued interest of approximately $9,900, and other fees

incurred in connection with the line of credit of approximately $4,991.

Upon the repayment of the total outstanding indebtedness owing

to Lighthouse, the Loan Agreement and all other related financing agreements and documents entered into in connection with the Loan Agreement

were deemed terminated.

the year ended December 31, 2023, cash proceeds from the working capital line of credit totaled $2,405,034 and cash payments to the working

capital line of credit totaled $4,182,971.

Keeler Promissory Notes

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Company made principal payments of $157,380 during the year ended December 31, 2023.

During the year ended December 31, 2023, the Company issued 3,958,333 shares of its common stock to settle $570,000

principal of the subordinated notes.

September 11, 2023, the Company offered and sold in a “best efforts” public offering pursuant to a registration statement on Form S-1,

which was declared effective by the SEC on September 7, 2023, an

aggregate of 690,000 shares of common stock, together with Series A-1 warrants to purchase up to 10,741,139 shares of common stock

and Series A-2 warrants to purchase up to 10,741,139 shares of common stock (collectively, the “Common Warrants”) and

10,051,130 pre-funded warrants (the “Pre-Funded Warrants”).

share of common stock and Pre-Funded Warrants were sold together with a Series A-1 common stock purchase warrant to purchase one

share of common stock and a Series A-2 common stock purchase warrant to purchase one share of common stock.

The shares of

common stock or Pre-Funded Warrant and accompanying Common Warrants are immediately separable and were issued separately.

offering price for each share of common stock and accompanying Common Warrants was $0.4655.

Each Common Warrant has an exercise

price per share of $0.4655 and will be exercisable beginning on the effective date of stockholder approval of the issuance of the

shares upon exercise of the Common Warrants (“Warrant Stockholder Approval”).

The Series A-1 common stock purchase

warrants will expire on the five-year anniversary of the effective date of the Warrant Stockholder Approval.

The Series A-2 common

stock purchase warrants will expire on the eighteen-month anniversary of the effective date of the Warrant Stockholder Approval.

Pre-Funded Warrants are exercisable immediately, may be exercised at any time until all of the Pre-Funded Warrants are exercised in

full, and have an exercise price of $0.01.

The Warrant Stockholder Approval has not yet been obtained.

shares of common stock, Common Warrants and Pre-Funded Warrants were sold pursuant to a securities purchase agreement.

Wainwright & Co., LLC acted as placement agent

for the offering and received a fee of 7% of the gross proceeds, reimbursement of $35,000 in non-accountable expenses and $100,000

for legal fees and out-of-pocket expenses.

2021 Underwritten Offering

November 2, 2021, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Newbridge Securities

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the Company’s estimated Offering expenses, were approximately $3,600,000.

The Company is using the net proceeds from the Offering

for general corporate purposes, including working capital, operating expenses, and capital expenditures.

The Company used the net proceeds from the Offering for

general corporate purposes, including working capital, operating expenses, and capital expenditures.

The Company may also use a portion

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of the Company, without the prior written consent of Newbridge.

November 5, 2021, in connection with the Offering, the Company 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.

November 5, 2021, in connection with the November 2, 2021 Offering, the Company issued a warrant to purchase an aggregate of 2,800

shares of common stock at an exercise price of $100.00 per share to Newbridge.

Such warrant expires on November 11, 2024.

Global Fund II LP investment

January 24, 2022, the Company entered into a securities purchase agreement with Lind Global Fund II LP, a Delaware limited partnership

(“Lind”), pursuant to which the Company issued to Lind a secured, two-year, interest free convertible promissory note in

the principal amount of $5,750,000 and a five-year warrant to purchase 1,000,000 shares of common stock of the Company at an exercise

price of $4.50 per share, subject to customary adjustments.

The warrant provides for cashless exercise and for full ratchet anti-dilution

if the Company issues securities at less than $4.50 per share.

In connection with the issuance of the note and the warrant, the Company

paid a $150,000 commitment fee to Lind and approximately $87,000 of debt issuance costs.

January 24, 2022, the Company entered into a securities purchase agreement with Lind Global Fund II LP, a Delaware limited

partnership (“Lind”), pursuant to which the Company issued to Lind a secured, two-year, interest free convertible

promissory note in the principal amount of $5,750,000 and a five-year warrant to purchase 1,000,000 shares of common stock of the

Company at an exercise price of $4.50 per share, subject to customary adjustments (50,000 shares of common stock at an exercise

price of $90 per share after taking into account the Company’s Reverse Stock Split).

The warrant provides for cashless

exercise and for full ratchet anti-dilution if the Company issues securities at less than $4.50 per share (exercise price of $90 per share after taking into account the Company’s Reverse Stock Split).

In connection with the

issuance of the note and the warrant, the Company paid a $150,000 commitment fee to Lind and approximately $87,000 of debt issuance

outstanding principal under the note is payable commencing July 24, 2022, in 18 consecutive monthly installments of $333,333, at the

Company’s option, in cash or shares of common stock at a price (the “Repayment Share Price”) based on 90% of the five

lowest volume weighted average prices (“VWAP”) during the 20-days prior to the payment date with a floor price of $1.50 per

share (the “Floor Price”), or a combination of cash and stock provided that if at any time the Repayment Share Price is deemed

to be the Floor Price, then in addition to shares, the Company will pay Lind an additional amount in cash as determined pursuant to a

formula contained in the note.

Company’s option, in cash or shares of common stock at a price (the “Repayment Share Price”) based on 90% of the

five lowest volume weighted average prices (“VWAP”) during the 20-days prior to the payment date with a floor price of

$1.50 per share (the “Floor Price”) (floor price of $30 per share after taking into account the Company’s Reverse Stock Split), or a combination of cash and stock provided that if at any time the Repayment

Share Price is deemed to be the Floor Price, then in addition to shares, the Company will pay Lind an additional amount in cash as

determined pursuant to a formula contained in the note.

connection with the issuance of the note, the Company granted Lind a first priority security interest and lien on all of its assets,

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note is mandatorily payable prior to maturity if the Company issues any preferred stock (with certain exceptions described in the note)

or, if the Company or its subsidiaries issues any indebtedness other than certain amounts under the current line of credit facility with

or, if the Company or its subsidiaries issues any indebtedness other than certain amounts under the then line of credit facility with

The Company also agreed not to issue or sell any securities with a conversion, exercise or other price based on a discount

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the Company engages in capital raising transactions, Lind has the right to purchase up to 10% of the new securities.

note is convertible into common stock at $5.00 per share, subject to certain adjustments, at any time after the earlier of six months

from issuance or the date the registration statement is effective;

provided that no such conversion may be made that would result in

beneficial ownership by Lind and its affiliates of more than 4.99% of the Company’s outstanding shares of common stock.

are issued by the Company at less than the conversion price, the conversion price will be reduced to such price.

a change of control of the Company, as defined in the note, Lind has the right to require the Company to prepay 10% of the outstanding

principal amount of the note.

The Company may prepay the outstanding principal amount of the note, provided Lind may convert up to 25%

of the principal amount of the note at a price per share equal to the lesser of the Repayment Share Price or the conversion price.

Note contains certain negative covenants, including restricting the Company from certain distributions, stock repurchases, borrowing,

sale of assets, loans and exchange offers.

an event of default as described in the note, the note will become immediately due and payable at a default interest rate of 125% of

the then outstanding principal amount.

Upon a default, all or a portion of the outstanding principal amount may be converted into shares

of common stock by Lind at the lower of the conversion price and 80% of the average of the three lowest daily VWAPs.

the year ended December 31, 2022, the Company made principal payments on the note totaling $1,666,666 through the issuance of an

aggregate of 666,666 shares of common stock and cash payments of $1,175,973 which included $899,999 principal payments and

additional payments requested by Lind pursuant to the terms of the note.

note is convertible into common stock at $5.00 per share ($100 per share after taking into account the Company’s Reverse Stock Split), subject to certain adjustments, at any time after the earlier of six

months from issuance or the date the registration statement is effective;

provided that no such conversion may be made that would

result in beneficial ownership by Lind and its affiliates of more than 4.99% of the Company’s outstanding shares of common

If shares are issued by the Company at less than the conversion price, the conversion price will be reduced to such

September 15, 2023, the Company paid $2,573,142 to Lind and the note was extinguished.

May 30, 2023, the Company entered into a securities purchase agreement with Lind pursuant to which the Company issued to Lind a secured,

two-year, interest free convertible promissory note in the principal amount of $1,200,000 (the “Lind Note”) and a warrant

(the “Lind Warrant”) to purchase 435,035 shares of common stock of the Company commencing six months after issuance and exercisable

for five years at an exercise price of $2.45 per share, for the aggregate funding amount of $1,000,000.

The Lind Warrant includes cashless

exercise and full ratchet anti-dilution provisions.

In connection with the issuance of the Lind Note and the Lind Warrant, the Company

paid Lind a $50,000 commitment fee.

The proceeds from the sale of the Note and Warrant are for general working capital purposes.

July 27, 2023, the Company, entered into a First Amendment to the securities purchase agreement (the “Purchase Agreement Amendment”)

with Lind, pursuant to which the Company amended the securities purchase agreement, entered into with Lind as of May 30, 2023 in order

to permit the issuance of further senior convertible promissory notes in the aggregate principal amount of up to $1,800,000 and warrants

in such aggregate amount as the Company and Lind shall mutually agree.

to the Purchase Agreement Amendment, the Company issued to Lind a two-year, interest free convertible promissory note in the principal

amount of $300,000 and a warrant to purchase 175,234 shares of common stock of the Company commencing six months after issuance and exercisable

for five years at an exercise price of $1.34 per share, for the aggregate amount of $250,000.

In connection with the issuance of the

note and the warrant, the Company paid a $12,500 commitment fee.

The proceeds from the sale of the note and warrant are for general working

capital purposes.

In order to refinance interest due on the June 14,

2023 note issued to Agile, on January 2, 2024, the Company, and Keeler & Co.

entered into a subordinated business loan and security

agreement with Agile and Agile Capital as collateral agent, which provides for a term loan to the Company in the amount of $122,491 which

principal and interest (of $48,996) is due on May 31, 2024.

Commencing January 5, 2024, the Company is required to make weekly payments

of $7,795 until the due date.

The loan may be prepaid subject to a prepayment fee.

An administrative agent fee of $5,833 was paid on the

A default interest rate of 5% will become effective upon the occurrence of an event of default.

In connection with the loan, Agile

was issued a subordinated secured promissory note, dated January 2, 2024, in the principal amount of $122,491 which note is secured by

all of the Borrower’s assets, including receivables.

ClearThink Term Loan

On January 18, 2024, the Company

entered into the Revenue-Based Factoring MCA Plus Agreement with ClearThink which provides, among other things, for a 33-week term

loan in the principal amount of $200,000 (with an additional one-time commitment fee of $50,000).

Interest accrues at the rate of

25% per annum with an additional 5% default interest rate in the event of circumstances described in the agreement or $50,000 will

be added to the principal amount and accrue after principal is paid.

The Company is required to make biweekly payments of $14,706,

commencing February 1, 2024 for the term of the Agreement.

On January 25, 2024, the Company issued 354,610 shares of common stock to

ClearThink as a commitment fee.

Accounting Policies and Estimates

of Goodwill and Long-Lived Assets

and long-lived assets include the cost of the acquired business in excess of the fair value of the net assets recorded

in connection with an acquisition.

and long-lived assets include the cost of the acquired business in excess of the fair value of the net assets recorded in connection

with an acquisition.

Long-lived assets include customer relationships, non-compete agreements, trademarks and fixed assets.

goodwill, our policy is to assess for impairment at year-end or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

For long-lived assets, 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 long-lived assets by determining whether the fair values exceed the carrying values of

these assets.

For long-lived assets, we use the income method, which uses a forecast of the expected future net cash flows

associated with each asset.

These cash flows are then adjusted to present value by applying an appropriate discount rate that

reflects the risk factors associated with the cash flow streams.

Our goodwill 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.

For goodwill,

our policy is to assess for impairment at year-end or whenever events or changes in circumstances indicate that the carrying value may

not be recoverable.

For long-lived assets, 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 long-lived assets by determining whether the fair values exceed the carrying values of these

For long-lived assets, we use the income method, which uses a forecast of the expected future net cash flows associated with

These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors

associated with the cash flow streams.

Our goodwill 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 long-lived assets compared the fair value of the reporting unit to the corresponding carrying value.

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

impairment analysis for goodwill and long-lived assets was completed for Coastal Pride and TOBC due to the lower forecasted revenues

and gross losses recognized in the year ended December 31, 2022 as a result of the effect of the COVID-19 pandemic on the Company’s business.

year-end 2022 annual impairment analysis for goodwill and long-lived assets, we recorded an impairment loss on customer

relationships, trademarks, non-compete agreements and fixed assets of $1,595,677, $1,006,185, $78,116 and $1,873,619, respectively,

related to Coastal Pride and TOBC.

For goodwill, the analysis concluded an impairment of $1,244,309 related to Coastal Pride and

TOBC for year ended December 31, 2022.

Our assessment for impairment

of goodwill and long-lived 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.

An annual impairment analysis

for goodwill and long-lived assets was completed for Coastal Pride and TOBC due to the lower forecasted revenues and gross losses recognized

in the year ended December 31, 2022 as a result of the effect of the COVID-19 pandemic on the Company’s business.

year-end 2022 annual impairment analysis for goodwill and long-lived assets, we recorded an impairment loss on customer relationships,

trademarks, non-compete agreements and fixed assets of $1,595,677, $1,006,185, $78,116 and $1,873,619, respectively, related to Coastal

Pride and TOBC.

For goodwill, the analysis concluded an impairment of $1,244,309 related to Coastal Pride and TOBC for year ended December

No impairment was recognized for the year ended December 31, 2023.

fair value conclusions as of December 31, 2022 are highly sensitive to changes in the assumptions used in the income approach, which

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lower of cost or net realizable value based on its assessment of market conditions, inventory turnover and current stock levels.

Inventory write-downs

are charged to cost of goods sold.

For the year ended December 31, 2022, the Company recorded an inventory adjustment to reduce the carrying value of inventory to the lower

of cost or net realizable value in the amount of $743,218 which was charged to cost of goods sold.

write-downs are charged to cost of goods sold.

The Company recorded an inventory allowance of $176,000 for the year ended December 31, 2023.

Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, as

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Accounting Pronouncements

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s

Own Equity (Subtopic 815-40).

August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts

in Entity’s Own Equity (Subtopic 815-40).

The ASU simplifies the accounting for certain financial instruments with characteristics

of liabilities and equity.

The FASB reduced the number of accounting models for convertible debt and convertible preferred stock instruments

and made certain disclosure amendments to improve the information provided to users.

In addition, the FASB amended the derivative guidance

for the “own stock” scope exception and certain aspects of the earnings per share (“EPS”) guidance.

The guidance is effective for smaller reporting

companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is

permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

Company adopted the ASU effective January 1, 2022 and applied the provisions of the ASU to the convertible note issued during the

year ended December 31, 2022.

2016-13 Financial Instruments – Credit Losses (Topic 326)

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

As this ASU became effective on January 1, 2023,

the Company continues to evaluate the impact of these amendments to the Company’s financial position and results of operations

and currently expects no material impact of the adoption of the amendments on the Company’s consolidated financial

The Company adopted this ASU related to its trade receivables

on January 1, 2023 and determined there was no material impact from the adoption of the ASU on the Company’s consolidated

financial statements.

March 29, 2023, the Company’s board of directors approved, and on May 10, 2023, at a special meeting of the stockholders, holders

of approximately 87% of the Company’s voting power, approved the granting of authority to the Board to amend the Company’s

Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of the Company’s common stock,

by a ratio of not less than 1-for-2 and not more than 1-for-50, with the exact ratio to be determined by the Board.

June 9, 2023, the Company amended its Certificate of Incorporation to effect a one-for-twenty reverse stock split, which became effective

on June 21, 2023.

All share and per share amounts in this Annual Report have been restated for all periods presented to reflect the Reverse

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 7. Management’s Discussion and Analysis