RegistrationNo. 333-[  ]

 

Asfiled with the Securities and Exchange Commission on November 18, 2024

 

 

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

FORMS-1

 

REGISTRATIONSTATEMENT UNDER THE SECURITIES ACT OF 1933

 

BLUESTAR FOODS CORP.

(Exactname of registrant as specified in its charter)

 

Delaware		3510		82-4270040
(State or jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

 

JohnKeeler

ChiefExecutive Officer and Executive Chairman

BlueStar Foods Corp.

3000NW 109th Avenue

Miami,Florida 33172

(305)836-6858

 

(Name,address, including zip code, and telephone number, including area code, of agent for service)

 

Copiesto:

 

MarkCrone, Esq.

JosephLaxague, Esq.

TheCrone Law Group, P.C.

420Lexington Avenue, Suite 2446

NewYork, New York 10170

mcrone@cronelawgroup.com

jlaxague@cronelawgroup.com

Telephone:(646) 861-7891

 

Approximatedate of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933 check the following box. ☒

 

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check thefollowing box and list the Securities Act registration statement number of the earlier effective registration statement for the sameoffering. ☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reportingcompany or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

	Large accelerated filer	☐	Accelerated filer	☐
	Non-accelerated filer	☒	Smaller reporting company	☒
			Emerging growth company	☐

 

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

 

THEREGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THEREGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVEIN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATEAS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

 

 

 

Theinformation in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registrationstatement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor doesit seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION

DATED NOVEMBER 18, 2024

 

BLUESTAR FOODS CORP.

1,350,000shares of Common Stock

 

Thisprospectus relates to the potential offer and resale by the Selling Stockholders identified in this prospectus or their permitted transferees(the “Selling Stockholders”) of 1,350,000 shares of our common stock, $0.0001 par value per share, (the “Common Stock”)consisting of (i) up to 1,000,000 shares issuable upon conversion of the principal and accrued interest at maturity of convertible promissorynotes in the aggregate principal amount of $550,000 issued to Jefferson Street Capital, LLC (“Jefferson”) and Quick Capital,LLC (“Quick Capital”) in August 2024 (the “Private Placement Offering”), and (ii) up to 350,000 shares issuablepursuant to that certain purchase agreement (the “ELOC Purchase Agreement”) dated May 16, 2023, by and between ClearThinkCapital Partners, LLC (“ClearThink”) and us. See the section of this prospectus entitled “Offering” for a descriptionof the transactions and the section entitled “Selling Stockholders” for additional information about the Selling Stockholders.

 

Theregistration of the shares of our Common Stock covered by this prospectus does not necessarily mean that any shares of our Common Stockwill be sold by any of the Selling Stockholders, and we cannot predict when or in what amounts any of the Selling Stockholders may sellany of our shares of Common Stock offered by this prospectus.

 

TheSelling Stockholders, or their respective transferees, pledgees, donees or other successors-in-interest, may sell the Common Stock throughpublic or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiatedprices. The Selling Stockholders may sell any, all or none of the securities offered by this prospectus, and we do not know when or inwhat amount the Selling Stockholders may sell their shares of Common Stock hereunder following the effective date of this registrationstatement. We provide more information about how a Selling Stockholders may sell its shares of Common Stock in the section titled “Planof Distribution” on page 34.

 

Thereis currently a limited public trading market for our Common Stock.

 

OurCommon Stock is listed on the Nasdaq Capital Market under the symbol “BSFC.” The last reported sale price of our common stockon the Nasdaq Capital Market on November 14, 2024, was $0.2747 per share. ClearThink is an “underwriter” withinthe meaning of Section 2(a)(11) of the Securities Act. The additional Selling Stockholders are or may be an “underwriter”within the meaning of Section 2(a)(11) of the Securities Act.

 

Weare registering the shares of Common Stock on behalf of the Selling Stockholders, to be offered and sold by them from time to time. Wewill not receive any proceeds from the sale of the Common Stock by the Selling Stockholders in the offering described in this prospectus.We have agreed to bear all of the expenses incurred in connection with the registration of the Common Stock. The Selling Stockholderswill pay or assume discounts, commissions, fees of underwriters, selling brokers or dealer managers and similar expenses, if any, incurredfor the sale of the Common Stock.

 

Investingin our securities involves a high degree of risk. Before making any investment decision, you should carefully review and consider allthe information in this prospectus and the documents incorporated by reference herein, including the risks and uncertainties describedunder “Risk Factors” beginning on page 14.

 

NEITHERTHE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINEDIF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

Wemay amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entireprospectus and any amendments or supplements carefully before you make your investment decision.

 

Thedate of this prospectus is _________, 2024.

 

 

BLUESTAR FOODS CORP.

 

TABLEOF CONTENTS

 

	Page
Special Note About Forward-Looking Statements	4
Prospectus Summary	5
Risk Factors	14
Use of Proceeds	30
Determination of the Offering Price	30
Market Price of and Dividends on the Company’s Common Equity and Related Stockholder Matters	30
Selling Stockholders	30
Plan of Distribution	34
Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Description of Business	48
Management	56
Executive Compensation	59
Director Compensation	65
Security Ownership of Certain Beneficial Owners & Management	66
Certain Relationships and Related Transactions, and Corporate Governance	67
Description of Securities	68
Shares Eligible for Future Sale	74
Legal Matters	75
Experts	75
Additional Information	75
Financial Statements	F-1

 

Youshould rely only on the information contained in this prospectus. Neither we, nor the Selling Stockholders have authorized anyone toprovide information different from that contained in this prospectus. The Selling Stockholders are offering to sell, and seeking offersto buy, shares of Common Stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectusis accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our CommonStock.

 

 

CAUTIONARYNOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Thisprospectus and any documents incorporated by reference herein and therein may contain forward looking statements that involve significantrisks and uncertainties. All statements other than statements of historical fact contained in this prospectus and the documents incorporatedby reference herein, including statements regarding future events, our future financial performance, business strategy, and plans andobjectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statementsby terminology including “anticipates,” “believes,” “can,” “continue,” “could,”“estimates,” “expects,” “intends,” “may,” “plans,” “potential,”“predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Althoughwe do not make forward looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy.These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlinedunder “Risk Factors” or elsewhere in this prospectus and the documents incorporated by reference herein, which may causeour or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-lookingstatements. Moreover, we operate in a highly regulated, very competitive, and rapidly changing environment. New risks emerge from timeto time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or theextent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in anyforward-looking statements.

 

Wehave based these forward-looking statements largely on our current expectations and assumptions about future events and financial trendsthat we believe may affect our financial condition, results of operations, business strategy, short term and long term business operations,and financial needs. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual resultsto differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differencesinclude, but are not limited to, those discussed in this prospectus, and in particular, the risks discussed below and under the heading“Risk Factors” and those discussed in other documents we file with the SEC which are incorporated by reference herein.

 

Weundertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as requiredby law. In light of the significant risks, uncertainties and assumptions that accompany forward-looking statements, the forward-lookingevents and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from thoseanticipated or implied in the forward-looking statement.

 

Youshould not place undue reliance on any forward-looking statement, each of which applies only as of the date of this prospectus. Exceptas required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of thisprospectus to conform our statements to actual results or changed expectations.

 

Anyforward-looking statement you read in this prospectus, or any document incorporated by reference reflects our current views with respectto future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, operating results,growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because such statements speakonly as to the date when made. We assume no obligation to publicly update or revise these forward-looking statements for any reason,or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if newinformation becomes available in the future, except as otherwise required by applicable law. You are advised, however, to consult anyfurther disclosures we make on related subjects in our reports on Forms 10-Q, 8-K, and 10-K filed with the SEC. You should understandthat it is not possible to predict or identify all risk factors. Consequently, you should not consider any such list to be a completeset of all potential risks or uncertainties.

 

 

PROSPECTUSSUMMARY

 

Weare an international sustainable marine protein company that owns and operates several portfolio companies with an emphasis on environmental,social and governance values. We seek to create a vertically integrated seafood company that offers customers high quality products whilemaintaining a focus on our core values of delivering food safety, traceability and certified resource sustainability. Our companies include:

 

	John Keeler & Co., Inc. (“Keeler & Co.”) doing business as Blue Star Foods, which imports, packages and sells refrigerated pasteurized crab meat sourced primarily from Southeast Asia and other premium seafood products;
	Coastal Pride Seafood, LLC (“Coastal Pride”) which imports pasteurized and fresh crab meat sourced primarily from Mexico and Latin America and sells premium branded label crab meat throughout North America;
	Taste of BC Aquafarms, Inc. (“TOBC”), a land-based recirculating aquaculture systems (“RAS”) salmon farming operation, which sells its steelhead salmon to distributors in Canada; and
	Afritex Ventures Inc., (“AFVFL”), a Florida corporation and wholesaler of food products.

 

Wedistribute our imported blue and red swimming crabmeat in the United States under the brand names Blue Star, Pacifika, Oceanica, Crab& Go Premium Seafood, First Choice, Good Stuff and Coastal Pride Fresh and steelhead salmon and rainbow trout fingerlings producedby TOBC under the brand name Little Cedar Falls.

 

BlueStar is packed with only high quality Portunus Pelagicus species crab and is produced under exacting specifications and quality controlrequirements.

 

Pacifikais a quality brand for the price conscious end user. The Portunus Haanii crab meat is packed in China and is ideal for upscale platepresentations.

 

Oceanicais made from the Portunus Haanii crab, which is caught and processed in Vietnam. It is an affordable choice to help reduce food costwithout sacrificing the look/taste of dishes.

 

Crab+ Go Premium Seafood is geared towards millennials as part of the trend toward pre-packaged, grab-and-go items. The product is packagedin flexible foil pouches.

 

LubkinBrand is packed with quality Portunus Pelagicus species crab in the Philippines and Indonesia.

 

FirstChoice is a quality brand packed with Portunus Haanii crab meat from Malaysia.

 

GoodStuff is a premium brand packed with high quality Callinectes species crab from Mexico.

 

CoastalPride Fresh is packed with Callinectes Sapidus from Venezuela and the United States.

 

 

Steelheadsalmon and rainbow trout fingerlings are produced by TOBC under the Little Cedar Falls brand. The fish are sashimi grade and only soldas a fresh item, usually reaching end users within days of harvest.

 

CompetitiveStrengths

 

Sustainableand Traceable Product Sourcing. We believe that our greatest point of differentiation from other seafood companies is our effortsto ensure that our seafood products are ethically sourced in a method that is consistent with our core values and those of our customers.

 

ProprietaryBrands. We have created several brands of crab meat that are well regarded amongst our customers and are differentiated by productquality and price point.

 

Eco-FriendlyPackaging. Another major point of differentiation from our competitors is our use of sustainable and ethical packaging. Our greenpouches for Eco-Fresh crab meat are patented in the United States, Europe, Thailand, the Philippines and Indonesia under patent Nos.1526091B1 and US Patents 8,337,922 and 8,445,046. We believe since their introduction in 2003, these pouches have saved in excess of a millionmetric tons of carbon dioxide emissions versus metal can packaging material.

 

Weintend to grow our business in several ways, including:

 

Ourlong-term strategy is to create a vertically integrated seafood company that offers customers high quality products while maintaininga focus on our core values of delivering food safety, traceability and certified resource sustainability. We plan to grow the Companyorganically by continuing to increase our customer base and by introducing new high-value product lines and categories, as well as strategicallyacquiring companies that focus on additional species and proprietary technologies that we believe we can integrate into a larger, diversifiedcompany.

 

Growingour existing businesses. The three current existing businesses each have different pathways to organic growth, including by increasingtheir reliable access to sustainably sourced marine product and supplying to a larger and more diversified customer base. Our key objectiveis to optimize the management of the companies across all companies, specifically in the marketing, sourcing and financing departments.

 

StrategicAcquisitions. We will continue to seek opportunities to acquire companies that allow us to expand into new territories, diversifyour species product categories, and where operational synergies with our existing companies may exist. We believe that we may have theability to layer on a sustainability model to certain companies that operate in a more traditional way, with an opportunity to increasemargins by selling a more premium product.

 

Scalingthe RAS Business. We have an internal goal to reach production of 21,000 metric tons of steelhead salmon by 2028. If we can successfullyaccess the necessary funding through the equity capital markets and through certain debt facilities, we hope to build a series of 1,500metric ton and 3,000 metric ton facilities throughout strategic locations in British Columbia, Canada, where TOBC is currently based.

 

Wepurchase crab meat directly from six processors with which we have long-standing relationships, that have agreed to source their productin a sustainable manner. All crab meat is sourced under the Company’s FDA approved HACCP Plan. Additionally, all suppliers arecertified grade A by the BRC and are audited annually to ensure safety and quality.

 

TheCompany had four major suppliers located in the United States, Canada and China which accounted for approximately 82% of the Company’stotal purchases during the year ended December 31, 2023. The Company’s largest supplier is located in Miami and accounted for 35%of the Company’s total purchases in the year ended December 31, 2023.

 

 

TheCompany’s products are sold in the United States and Canada. Its primary current source of revenue is purchasing blue and red swimmingcrab meat primarily from our largest supplier in Miami and distributing it in the United States and Canada under several brand namessuch as Blue Star, Oceanica, Pacifika, Crab & Go, Lubkin’s Coastal Pride, First Choice, Good Stuff, Coastal Pride Fresh andTOBC steelhead salmon and rainbow trout fingerlings produced under the brand name Little Cedar Falls.

 

TheCompany stores its crab meat inventory at a third-party facility in Miami, Florida and distribution takes place from this facility.

 

TheCompany has a sales team based throughout the United States who sell directly to customers, most of whom are in the food service andretail industry and also manage a network of regional and national brokers, that cover both the retail and wholesale segments. The salesteam and brokers help to pull the products through the system by creating demand at the end user level and pulling the demand throughour distributor customers. The Company sells to retail customers either directly or via distributors that specialize in the retail segment.

 

TheCompany does not own its own fleet of trucks and utilizes less than truckload freight shipping (“LTL”) national freight carriersto deliver its products to its customers. LTL is used for the transportation of small freight or when freight does not require the useof an entire trailer. When shipping LTL, the Company pays for a portion of a standard truck trailer, and other shippers and their shipmentsfill the unoccupied space.

 

RecentEvents

 

NASDAQCompliance

 

OnOctober 8, 2024, the “Company received a notice letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC(“Nasdaq”) notifying the Company that, based upon the closing bid price of theCompany’s common stock, par value $0.0001 per share for the last 30 consecutive business days, the Company is not currently incompliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market,as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”), which matter serves as a basis for delistingthe Company’s securities from Nasdaq.

 

Aspreviously reported on a Current Report on Form 8-K filed on June 12, 2024, the Company is subject to a Mandatory Panel Monitor for aperiod of one year, or until June 11, 2025. As such, the Company is not eligible for a compliance period. The Company requested a hearingwith the Hearings Panel (the “Panel”), on October 16, 2024. The hearing date is set for December 11, 2024. The hearing requestwill stay the suspension of the Company’s securities and the filing of the Form 25-NSE pending the Panel’s decision. Thefee for the hearing was $20,000.

 

AfritexServices Agreement Expiration

 

OnFebruary 1, 2024, the Company entered into a ninety-day Master Services Agreement (the “Services Agreement”) with AfritexVentures, Inc. a Texas corporation (“Afritex”), pursuant to which the Company will be responsible for all of Afritex’soperations and finance functions. The Company will provide Afritex with working capital in order to sustain operations and will purchasecertain inventory listed in the Services Agreement. In consideration for its services, during the term of the Services Agreement, theCompany will be entitled to all of the revenue and profits earned by Afritex. Under the Services Agreement, Afritex may not sell or otherwiseuse as consideration any of its intellectual property without the Company’s consent. The Company must maintain certain commercialliability insurance during the term of the Services Agreement. The Services Agreement also provides that the Company may not solicitAfritex employees for 24 months nor circumvent existing business relationships of Afritex for three years, after the term of the ServicesAgreement. The term of the Services Agreement will automatically extend for three thirty-day periods, if Afritex’s outstandingdebt is not greater than $325,000. The Company automatically extended the Service Agreement to August 31, 2024 after which it expired.

 

Lind Waiver and Acknowledge Agreement

 

OnAugust 3, 2024 the Company and Lind Global Fund II LP (“Lind”) entered into a waiver and acknowledgement agreement (the “WaiverAgreement”).

 

TheCompany and Lind previously entered into that certain Securities Purchase Agreement, dated as of May 20, 2023, as amended on July 27,2023 pursuant to which the Company issued Lind a senior convertible promissory note in the principal amount of $300,000.

 

TheCompany has engaged in an at-the-market offering in connection with which HC Wainwright & Co, LLC or an affiliate thereof will actas placement agent (the “HCW ATM”).

 

Pursuantto the Waiver Agreement, it is agreed, solely as it relates to the HCW ATM to the wavier of Sections 3.4(a)(v) (Adjustments for Issuanceof Additional Shares of Common Stock) and 4.1(f) (Prohibited Transactions) of the note and Section 5.9 (Prohibited Transactions) of theSecurities Purchase Agreement. The waiver is subject to the following conditions: (i) the Company may not make any sales of securitiesunder the HCW ATM until 3 Trading Days have elapsed from the date that the terms of this Agreement are publicly announced, (ii) for theperiod beginning on the date hereof and ending on that the day that is 60 days thereafter, the aggregate amount of gross proceeds receivableunder the HCW ATM for the sale of securities by the Company may not exceed $1,000,000, and (iii) for the period beginning on the datethat is 61 days following the date hereof and ending on that the day that is 150 days thereafter, the aggregate amount of total grossproceeds receivable under the HCW ATM for the sale of securities by the Company may not exceed an additional $1,000,000. Additionally,on the date that is the earlier of (i) the date that gross the proceeds for the sale of securities by the Company under the HCW ATM equalsor is in excess of $500,000.00, or (ii) the date that is 120 days from the date hereof, the Company shall pay to Lind $100,000.00 andan additional $3,000.00 for the Lind’s legal expenses relating to the preparation of this Agreement.

 

Ifthe Company sells securities prior to the date permitted, in excess of the amounts agreed to, or if the Company fails to make the paymentsas required the Waiver Agreement will be deemed to have not been given.

 

 

1800Diagonal Notes

 

OnSeptember 9, 2024, pursuant to a securities purchase agreement, the Company issued to 1800 Diagonal Lending LLC, a Virginia limited liabilitycompany (“Diagonal”) a convertible promissory note in the principal amount of $179,400 with an original issue discount of$23,400 (the “September Diagonal Note”). The September Diagonal Note has a one-time interest payment of $23,322 paid uponissuance and a maturity date of June 15, 2025. The proceeds from the September Diagonal Note are for general working capital. Upon theoccurrence of an event of default as described in the September Diagonal Note, the note will become immediately due and payable at adefault interest rate of 22% of the then outstanding principal amount of the note. The September Diagonal Note has an initial paymentof $131,769 due on March 15, 2025, with monthly payments of $23,651 due   on the 15^th of every month thereafteruntil June 15, 2025.

 

Afteran occurrence of an event of default, as described in the note, Diagonal will have the right to convert all or any part of the outstandingand unpaid amount of the September Diagonal Note into shares of the Company’s common stock at a conversion price of 65% of themarket price. While the September Diagonal Note remains outstanding, the Company may not, without Diagonal’s written consent, sell,lease, or otherwise dispose of any significant portion of its assets except in the ordinary course of business. The Company will reserve1,533,333 shares of its Common Stock to provide for the issuance of shares upon the full conversion of the September Diagonal Note. Theoutstanding balance on the September Diagonal Note was $179,400 as of the date of this prospectus.

 

OnOctober 1, 2024, pursuant to a securities purchase agreement, the Company issued to Diagonal a convertible promissory note in the principalamount of $121,900 with an original issue discount of $15,900 (the “October Diagonal Note”). The October Diagonal Note hasa one-time interest payment of $14,628 paid upon issuance and a maturity date of June 30, 2025. The proceeds from the sale of the OctoberDiagonal Note are for general working capital. Upon the occurrence of an event of default as described in the October Diagonal Note,the note will become immediately due and payable at a default interest rate of 22% of the then outstanding principal amount of the note.The October Diagonal Note has mandatory monthly payments of $15,170  beginning on October 30, 2024, and due on the 30^thof every month thereafter until February 28, 2025.

 

Afteran occurrence of an event of default, as described in the note, Diagonal will have the right to convert all or any part of the outstandingand unpaid amount of the October Diagonal Note into shares of the Company’s common stock at a conversion price of 75% of the marketprice. The Company may not, without Diagonal’s written consent, sell, lease, or otherwise dispose of any significant portion ofits assets except in the ordinary course of business. The Company will reserve 1,427,233 shares of its Common Stock to provide for theissuance of shares upon the full conversion of the October Diagonal Note. The outstanding balance on the October Diagonal Note was $108,356as of the date of this prospectus.

 

 

VendorAgreement

 

OnNovember 12, 2024 the Company entered into a vendor agreement with Low Tide LLC (“LT”). The term of the agreement is 180days, with will be automatically renewed for additional successive 180 day terms unless either party gives 90 days written notice toterminate to the other.

 

LThas developed products, including but not limited to seafood, under the Wicked Tuna brand using its licensing rights from Pilgrim andthe Toby Keith brand, (collectively the “Products”). We will, with LT, promote and sell the Products.

 

TheCompany may, at its discretion, provide funding for the inventory to fulfill a purchase order (each a “PO”) for the Productssold, and the parties will each receive the following:

 

(i)

As relates to Wicked Tuna, if the Company obtains a PO of a Product from its customers, we will pay LT a five percent (5%) margin on the Net Sales Amount. Net Sales Amount shall mean gross sales less returns and promotions and freight allowance.

 

(ii)

As relates to the Toby Keith brand, if LT obtains a PO for the Products from its customers and the Company funds the purchase of the inventory to fulfil the PO, the Company shall receive a fee of one percent (1%) of the amount funded per month from LT from the first day of each month that the amount remains outstanding plus an allocation expense which shall be a direct pass through of cost which shall be calculated to include the cost of the product as well expenses associated with transportation, storage and miscellaneous expenses. The Company will be paid directly by LT’s customers. Thereafter, the Company will pay LT its portion within 48 hours of receiving funds for each PO.

 

Theparties agreed to certain customary covenants, including those relating to confidentiality and litigation. The parties also agreed tocertain mutual indemnification provisions for breaches or inaccuracies in their respective representations and warranties or covenants.

 

 

Weare a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantageof certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. Wewill remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our Common Stock heldby non-affiliates equals or exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenuesequaled or exceeded $100 million during such completed fiscal year and the market value of our Common Stock held by non-affiliates equalsor exceeds $700 million as of the end of that year’s second fiscal quarter.

 

CorporateInformation

 

Wewere incorporated on October 17, 2017 in the State of Delaware as a blank check company to be used as a vehicle to pursue a businesscombination. Prior to the Merger, we engaged in organizational efforts. Following the Merger, we discontinued our prior activitiesof seeking a business for a merger or acquisition and acquired the business of John Keeler & Co. Inc., d/b/a Blue Star Foods, aFlorida corporation formed on May 5, 1995. Our executive offices are located at 3000 NW 109th Avenue, Miami, Florida 33172 and ourtelephone number is (305) 836-6858. Our website address is https://bluestarfoods.com/. Except for any documents that areincorporated by reference into this prospectus that may be accessed from our website, the information available on or through ourwebsite is not part of this prospectus.

 

TheOffering

 

ClearThinkELOC Purchase Agreement

 

OnMay 16, 2023, the Company entered into a Purchase Agreement (the “ELOC Purchase Agreement”) with ClearThink Capital Partners,LLC (“ClearThink”). Pursuant to the ELOC Purchase Agreement, ClearThink has agreed to purchase from the Company, from timeto time upon delivery by the Company to ClearThink of request notices (each a “Request Notice”), and subject to the otherterms and conditions set forth in the ELOC Purchase Agreement, up to an aggregate of $10,000,000 of the Company’s Common Stock.The purchase price of the shares of Common Stock to be purchased under the ELOC Purchase Agreement will be equal to 80% of the two lowestdaily VWAPs during a valuation period of six trading days, beginning three trading days preceding the draw down or put notice to threetrading days commencing on the first trading day following delivery and clearing of the delivered shares. Each purchase under the ELOCPurchase Agreement will be in a minimum amount of $25,000 and a maximum amount equal to the lesser of (i) $1,000,000 and (ii) 300% ofthe average daily trading value of the Common Stock over the ten days preceding the Request Notice date. In addition, pursuant to theELOC Purchase Agreement, the Company agreed to issue to ClearThink 1,250 restricted shares of the Company’s Common Stock as a “CommitmentFee.” The ELOC Purchase Agreement has a maturity date of May 16, 2025.

 

Theissuance of shares to ClearThink are subject to a beneficial ownership limitation so that in no event will shares be issued which wouldresult in ClearThink beneficially owning, together with its affiliates, more than 9.99% of the Company’s outstanding shares ofCommon Stock.

 

TheCompany may not deliver to ClearThink a Request Notice if we are in default. Events of default include:

 

(a)the effectiveness of a registration statement registering the resale of the Securities lapses for any reason for a period of ten (10)consecutive business days or for more than an aggregate of thirty (30) business days in any 365-day period, with certain exceptions;

 

(b)the suspension of the Common Stock from trading on the principal market for a period of one (1) business day, provided that the Companymay not direct ClearThink to purchase any shares of Common Stock during any such suspension;

 

 

(c)the delisting of the Common Stock from The OTCQB, provided, however, that the Common Stock is not immediately thereafter trading on theNew York Stock Exchange, The Nasdaq Global Market, The Nasdaq Global Select Market, the NYSE American (or nationally recognized successorto any of the foregoing);

 

(d)if the exchange cap is reached unless and until stockholder approval is obtained;

 

(e)the failure for any reason by the transfer agent to issue shares to ClearThink within three (3) business days after the applicable purchasedate on which ClearThink is entitled to receive such shares;

 

(f)the Company breaches any representation, warranty, covenant or other term or condition under any of their transaction documents withClearThink;

 

(g)if any person commences a proceeding against the Company pursuant to or within the meaning of any bankruptcy law or if the Company commencesa proceeding within the meaning of any bankruptcy law;

 

(h)if at any time the Company is not eligible to transfer its Common Stock electronically as DWAC shares.

 

TheELOC Purchase Agreement terminates as follows:

 

(a)If pursuant to or within the meaning of any bankruptcy law, the Company commences a voluntary case or any Person commences a proceedingagainst the Company, a custodian is appointed for the Company or for all or substantially all of its property, or the Company makes ageneral assignment for the benefit of its creditors, any of which would be an event of default, and shall automatically terminate withoutany liability or payment to the Company without further action or notice by any person;

 

(b)In the event that the commencement of the ELOC Purchase Agreement shall not have occurred on or before December 31, 2023;

 

(c)for any reason or for no reason by delivering notice to ClearThink electing to terminate;

 

(d)automatically on the date that the Company sells and ClearThink purchases the full available amount under the ELOC Purchase Agreement;

 

(e)May 16, 2025.

 

ClearThink,its agents, representatives or affiliates, will not in any manner whatsoever, enter into or effect directly or indirectly, any (i) “shortsale” of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Common Stock.

 

Itis possible that we may not have access to the full amount available to us under the ELOC Purchase Agreement. We have also indemnifiedClearThink pursuant to the ELOC Purchase Agreement.

 

Inconnection with the ELOC Purchase Agreement, the Company entered into a Registration Rights Agreement with ClearThink under which theCompany agreed to file a registration statement with the Securities and Exchange Commission covering the shares of Common Stock issuableunder the ELOC Purchase Agreement.

 

OnMay 16, 2023, the Company and ClearThink also entered into a Securities Purchase Agreement (the “SPA”) under which ClearThinkhas agreed to purchase from the Company an aggregate of 1,000 shares of the Company’s restricted Common Stock for a total purchaseprice of $200,000 in four closings. The first closing occurred on the execution date of the SPA and the second, third, and fourth closingsshall be within 60 days after the first closing.

 

August2024 Private Placement Offering

 

InAugust, 2024, the Company entered into securities purchase agreements (each a “Securities Purchase Agreement”) with eachof Quick Capital, LLC, a Wyoming limited liability company (“Quick Capital”) and Jefferson Street Capital, LLC, a New Jerseylimited liability company (“Jefferson”) whereby we issued promissory notes in the aggregate principal amount of $550,000(the “August Private Placement Offering”).

 

 

TheCompany agreed to issue to each of Quick Capital and Jefferson up to 19,650 shares of our Common Stock as a “CommitmentFee”

 

Aspart of the August Private Placement Offering, the Company issued two promissory notes each in the principal amount of $275,000 withan original issue discount of $25,000 (the “Private Placement Notes”). The Private Placement Notes have a one-time interestpayment of $27,500. Thereafter, any principal amount of interest which is not paid upon maturity will accrue at a rate of the lesserof (i) sixteen percent (16%) per annum, or (ii) the maximum amount permitted by law from the due date thereof until the same is paid.The Private Placement Notes have a maturity date of 10 months after issuance and the proceeds from the notes are for general corporatepurposes. The Company agreed to issue to each of Quick Capital and Jefferson 19,650 shares of Common Stock as additional considerationfor entering into Private Placement Notes.

 

Theinvestors have the right, at any time on or following the earlier of (i) the date that any of the shares are registered for resale undera registration statement of the Company or (ii) the date that is six (6) months after the issue date, to convert all or any portion ofthe then outstanding and unpaid principal and interest into fully paid and non-assessable shares of our Common Stock. The conversionprice shall be $1.50, subject to adjustments. We have agreed to reserve a sufficient number of Common Stock (initially, 2,000,000 shares)for issuance upon conversion of the Private Placement Notes in accordance with their terms.

 

Ifan event of default occurs under the Private Placement Notes, the investors have the right to convert all amounts outstanding under thenotes at any time thereafter into shares of Common Stock at the lesser of (i) the then applicable conversion price under the notes or(ii) the Market Price. “Market Price” shall mean 85% of the lowest VWAP on any trading day during the ten (10) trading daysprior to the respective conversion date. “VWAP” means, for any security as of any date, the dollar volume-weighted averageprice for such security on the principal market during the period beginning at 9:30 a.m., Eastern Standard Time, and ending at 4:00 p.m.,Eastern Standard Time, as reported by Quotestream or other similar quotation service provider designated by the investors.

 

TheCompany may prepay the Private Placement Notes at any time with fifteen (15) trading days prior written notice (the “PrepaymentNotice Period”). During the Prepayment Notice Period, the investor shall have the right to convert all or any portion of the PrivatePlacement Notes pursuant to the terms of the notes, including the amount of the Private Placement Notes to be prepaid. If the Companyexercises its right to prepay the notes, the Company shall make payment to the investor of an amount in cash equal to the sum of: (i)100% multiplied by the principal amount then outstanding plus (ii) accrued and unpaid interest on the principal amount to thePrepayment Notice Date, and (iii) $750 to reimburse the investor for administrative fees.

 

Ifthe Company delivers a prepayment notice and fails to pay the applicable prepayment amount, the Company shall forever forfeit its rightto prepay any part of the Private Placement Notes.

 

ThePrivate Placement Notes have mandatory monthly payments of $43,200. The initial payments were made on November 9, 2024 and November12, 2024, respectively.

 

TheCompany’s failure to comply with the material terms of the Private Placement Notes will be considered an event of default and theprincipal sum of the Private Placement Notes will become immediately due and payable at an amount equal to the principal amount thenoutstanding plus accrued interest (including any default interest) through the date of full repayment multiplied by 135%, as well asall costs, all without demand, presentment or notice, unless expressly waived by the investor.

 

Theinvestors may assign their rights to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transactionor to any of its affiliates without the consent of the Company.

 

 

Whilethe Private Placement Notes remain outstanding, we shall not, without the investor’s written consent (i) (a) pay, declare or setapart for such payment, any dividend or other distribution on shares of capital stock other than dividends on shares of Common Stocksolely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other paymentor distribution with respect to its capital stock except for distributions pursuant to any shareholders’ rights plan which is approvedby a majority of the Company’s disinterested directors, (ii) redeem, repurchase or otherwise acquire (whether for cash or in exchangefor property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock ofthe Company or any warrants, rights or options to purchase or acquire any such shares, or repay any indebtedness of the investor (iii)advance any loans made in the ordinary course of business in excess of $100,000, (iv) sell, lease or otherwise dispose of any significantportion of our assets outside the ordinary course of business, and (v) enter into any transaction or arrangement structured in accordancewith, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) or Section 3(a)(10) of the Securities Act.

 

Inconjunction with the August Private Placement Offering, the Company entered into a registration rights agreement with each of Quick Capitaland Jefferson. The Company agreed to file a registration statement with the Securities and Exchange Commission to register the re-saleof the maximum number of shares of Common Stock covered in the August Private Placement Offering within sixty (60) calendar days fromthe date of execution. The Securities Purchase Agreements and Private Placement Notes are collectively referred to herein as the AugustTransaction Documents.

 

SUMMARYOF THE OFFERING

 

Thefollowing is a summary of the shares being offered by the Selling Stockholders:

 

Common Stock offered by Selling Stockholders		1,350,000 shares of our common stock, $0.0001 par value per share, (the “Common Stock”) consisting of (i) up to 1,000,000 shares issuable upon conversion of the principal and accrued interest at maturity of convertible promissory notes in the aggregate principal amount of $550,000 issued collectively to Jefferson Street Capital, LLC (“Jefferson”) and Quick Capital, LLC (“Quick Capital”) in August 2024 (the “Private Placement Offering”), and (iii) up to 350,000 shares issuable pursuant to that certain purchase agreement (the “ELOC Purchase Agreement”) dated May 16, 2023, by and between ClearThink Capital Partners, LLC (“ClearThink”) and us.
Common Stock outstanding prior to the offering		7,934,270shares
Nasdaq Capital Market Symbol		BSFC
Use of proceeds		We will not receive any proceeds from the sale of shares of our Common Stock by the Selling Stockholders.
Risk factors		You should carefully read “Risk Factors” in this prospectus for a discussion of factors that you should consider before deciding to invest in our Common Stock.

 

Thenumber of shares of our Common Stock that will be outstanding immediately after this offering is based on 7,934,270 shares ofCommon Stock outstanding as of November 15, 2024 and excludes an aggregate of 529,699 shares of Common Stock issuable uponthe exercise of stock options and warrants as follows:

 

	●	4,220 shares of our common stock issuable upon the exercise of stock options;
	●	12,205 shares of our common stock issuable upon exercise of warrants; and

 

●

513,274shares of our common stock that may be issued uponconversion of a secured, two-year, interest-free convertible promissory note that we issued to Lind Global Fund II LP on July 27, 2023, each of which is subjectto potential anti-dilution adjustment as a result of this offering.

 

 

RISKFACTORS

 

Investingin our Common Stock involves a high degree of risk. Before investing in our Common Stock, you should carefully consider the risks describedbelow, as well as the other information in this prospectus, including our consolidated financial statements and the related notes. Inaddition, we may face additional risks and uncertainties not currently known to us, or which as of the date of this registration statementwe might not consider significant, which may adversely affect our business. If any of the following risks occur, our business, financialcondition and results of operations could be materially adversely affected. In such case, the trading price of our Common Stock coulddecline due to any of these risks or uncertainties, and you may lose part or all of your investment.

 

RisksRelated to Our Business and Industry

 

Theoperation of our planned digital banking platform may subject us to costs and risks associated with various laws and regulations, includingthose relating to data privacy, security and protection. Developments in these and other laws and regulations could harm our business,financial condition or results of operations.

 

Futureacquisitions may have an adverse effect on our ability to manage our business.

 

Selectiveacquisitions currently form part of our strategy to further expand our business. If we are presented with appropriate opportunities,we may acquire additional businesses, services or products that are complementary to our core business. Future acquisitions and the subsequentintegration of new companies into ours would require significant attention from management. Future acquisitions would also expose usto potential risks, including risks associated with the assimilation of new operations, services and personnel, unforeseen or hiddenliabilities, the diversion of resources from our existing businesses and technologies, the inability to generate sufficient revenue tooffset the costs and expenses of acquisitions and potential loss of, or harm to, relationships with employees as a result of integrationof new businesses. The diversion of our management’s attention and any difficulties encountered in any integration process couldhave a material adverse effect on our ability to manage our business.

 

Thevalue of crab meat is subject to fluctuation which may result in volatility of our results of operations and the value of an investmentin the Company.

 

Ourbusiness is dependent upon the sale of a commodity which value is subject to fluctuation. Our net sales and operating results vary significantlydue to the volatility of the value of the crab meat that we sell which may result in the volatility of the market price of our CommonStock.

 

Amaterial decline in the population and biomass of crab meat that we sell in the fisheries from which we obtain our crab meat would materiallyand adversely affect our business.

 

Thepopulation and biomass of crab meat are subject to natural fluctuations which are beyond our control and which may be exacerbated bydisease, reproductive problems or other biological issues and may be affected by changes in weather and the global environment. The overallhealth of a crab or other fish is difficult to measure, and fisheries management is still a relatively inexact science. Since we areunable to predict the timing and extent of fluctuations in the population and biomass of our products, we are unable to engage in anymeasures that might alleviate the adverse effects of these fluctuations. Any such fluctuation which results in a material decline inthe population and biomass in the fisheries from which we obtain our crab meat would materially and adversely affect our business. Ouroperations are also subject to the risk of variations in supply.

 

 

Weare subject to the risk of product contamination and product liability claims.

 

Thesales of our products may involve the risk of injury to consumers. Such injuries may result from tampering by unauthorized personnel,product contamination or spoilage, including the presence of foreign objects, substances, chemicals, or residues introduced during thepacking, storage, handling or transportation phases. While we are subject to governmental inspection and regulations and believe ourfacilities comply in all material respects with all applicable laws and regulations, including internal product safety policies, we cannotbe sure that consumption of our products will not cause a health-related illness in the future or that we will not be subject to claimsor lawsuits relating to such matters. Even if a product liability claim is unsuccessful, the negative publicity surrounding any assertionthat our products caused illness or injury could adversely affect our reputation with existing and potential customers and our brandimage.

 

Asignificant portion of our revenues are derived from a single product, crab meat, and therefore we are highly susceptible to changesin market demand, which may be affected by factors over which we have limited or no control.

 

Asignificant portion of our revenues are derived from a single product, crab meat. We therefore are highly susceptible to changes in marketdemand, which may be impacted by factors over which we have limited or no control. Factors that could lead to a decline in market demandfor crab meat include economic conditions and evolving consumer preferences. A substantial downturn in market demand for crab meat mayhave a material adverse effect on our business and on our results of operations.

 

RisksRelated to Our Industry and TOBC’s RAS Operations

 

Regulationof the fishing industry may have an adverse impact on our business.

 

Theinternational community has been aware of and concerned with the worldwide problem of depletion of natural fish stocks. In the past,these concerns have resulted in the imposition of quotas that subject individual countries to strict limitations on the amount of seafoodthat is allowed to be caught or harvested. Environmental groups have been lobbying for additional limitations. If international organizationsor national governments were to impose additional limitations on crab meat or the seafood products we sell, this could have a negativeimpact on our results of operations.

 

Segmentsof the seafood industry in which we operate are competitive, and our inability to compete successfully could adversely affect our business,results of operations and financial condition.

 

Wecompete with major integrated seafood companies such as Tri Union Frozen Products, Inc. (Chicken of the Sea Frozen Foods), Phillips Foods,Inc., Harbor Seafood, Inc., and Twin Tails Seafood Corp. in our traditional sustainable seafood business and our primary competitorsin our RAS business are Aquabounty, Atlantic Sapphire, Aquacon, Nordic Aquafarms, Whole Oceans, West Coast Salmon and Pure Salmon. Someof our competitors have the benefit of marketing their products under brand names that have better market recognition than ours or havestronger marketing and distribution channels than we do. Increased competition as to any of our products could result in price reduction,reduced margins and loss of market share, which could negatively affect our profitability. An increase in imported products in the UnitedStates at low prices could also negatively affect our profitability.

 

Ourinsurance coverage may be inadequate to cover losses we may incur or to fully replace a significant loss of assets.

 

Ourinvolvement in the fishing industry may result in liability for pollution, property damage, personal injury or other hazards. Althoughwe believe we have obtained insurance in accordance with industry standards to address such risks, such insurance has limitations onliability and/or deductible amounts that may not be sufficient to cover the full extent of such liabilities or losses. In addition, suchrisks may not, in all circumstances, be insurable or, in certain circumstances, we may choose not to obtain insurance to protect againstspecific risks due to the high premiums associated with such insurance or for other reasons. The payment of such uninsured liabilitieswould reduce the funds available to us. If we suffer a significant event or occurrence that is not fully insured, or if the insurer ofsuch event is not solvent, we could be required to divert funds from capital investment or other uses towards covering any liabilityor loss for such events.

 

 

Ouroperations, revenue and profitability could be adversely affected by changes in laws and regulations in the countries where we do business.

 

Thegovernments of countries into which we sell our products, from time to time, consider regulatory proposals relating to raw materials,food safety and markets, and environmental regulations, which, if adopted, could lead to disruptions in distribution of our productsand increase our operational costs, which, in turn, could affect our profitability. To the extent that we increase our product pricesas a result of such changes, our sales volume and revenues may be adversely affected.

 

Furthermore,these governments may change import regulations or impose additional taxes or duties on certain imports from time to time. These regulationsand fees or new regulatory developments may have a material adverse impact on our operations, revenue and profitability. If one or moreof the countries into which we sell our products bars the import or sale of crab meat or related products, our available market wouldshrink significantly, adversely impacting our results of operations and growth potential.

 

Adecline in discretionary consumer spending may adversely affect our industry, our operations and ultimately our profitability.

 

Luxuryproducts, such as premium grade crab meat, are discretionary purchases for consumers. Any reduction in consumer discretionary spendingor disposable income may affect the crab meat industry significantly. Many economic factors outside of our control could affect consumerdiscretionary spending, including the financial markets, consumer credit availability, prevailing interest rates, energy costs, employmentlevels, salary levels, and tax rates. Any reduction in discretionary consumer spending could materially adversely affect our businessand financial condition.

 

Ourbusiness is affected by the quality and quantity of the salmon that is harvested by TOBC.

 

Wesell our products in a highly competitive market. The ability of TOBC to successfully sell its salmon and the price therefor, is highlydependent on the quality of the salmon. A number of factors can negatively affect the quality of the salmon sold, including the qualityof the broodstock, water conditions in the farm, the food and additives consumed by the fish, population levels in the tanks, and theamount of time that it takes to bring a fish to harvest, including transportation and processing. Optimal growing conditions cannot alwaysbe assured. Although fish grown in RAS production systems are not subject to the disease and parasite issues that can affect salmon grownin ocean pens, there is the potential for organisms that are ubiquitous to freshwater environments to become pathogenic if the fish aresubjected to stressful conditions or there is an issue with biomass management.

 

Highstandards for the quality of the product are maintained and if we determine that a harvest has not met such standards, we may be requiredto reduce inventory and write down the value of the harvest to reflect net realizable value. Sub-optimal conditions could lead to smallerharvests and or lower quality fish. Conversely, if we experience better than expected growth rates, we may not be able to process andbring our fish to market in a timely manner, which may result in overcrowding that can cause negative health impacts and/or require cullingour fish population.

 

Furthermore,if our salmon is perceived by the market to be of lower quality than other available sources of salmon or other fish, we may experiencereduced demand for our product and may not be able to sell our products at the prices that we expect or at all.

 

Aswe continue to expand our operations and build new farms, we potentially may face additional challenges with maintaining the qualityof our products. We cannot guarantee that we will not face quality issues in the future, any of which could cause damage to our reputation,and a loss of consumer confidence in our products, which could have a material adverse effect on our business results and the value ofour brands.

 

 

Ashutdown, damage to any of our farms, or lack of availability of power, fuel, oxygen, eggs, water, or other key components needed forour operations, could result in our prematurely harvesting fish, a loss of a material percentage of our fish in production, a delay inour commercialization plans, and a material adverse effect on our operations, business results, reputation, and the value of our brands.

 

Aninterruption in the power, fuel, oxygen supply, water quality systems, or other critical infrastructure of an aquaculture facility formore than a short period of time could lead to the loss of a large number of fish. A shutdown of or damage to our farm due to naturaldisaster, shortages of key components to our operations due to a pandemic, reduction in water supply, contamination of our aquifers,interruption in services, or human interference could require us to prematurely harvest some or all of the fish or could result in aloss of our fish in production.

 

Wealso are dependent on egg availability. If we had a disruption in our ability to purchase eggs, we would not be able to continue to stockour farm. We cannot guarantee that any disruptions might not occur in the future, any of which could cause loss of salmon to sell, damageto our reputation, loss of consumer confidence in our products and company, and lost revenues, all of which could have a material adverseeffect on our business results.

 

Thesuccessful development of our TOBC business depends on TOBC’s ability to efficiently and cost-effectively produce and sell salmonat large commercial scale.

 

Ourbusiness plans depend on our ability to increase our production capacity through the development of larger farms. We have limited experienceconstructing, ramping up, and managing such large, commercial-scale facilities, and we may not have anticipated all of the factors orcosts that could affect our production, harvest, sale, and delivery of salmon at such a scale. Our salmon may not perform as expectedwhen raised at very large commercial scale, we may encounter operational challenges, control deficiencies may surface, our vendors mayexperience capacity constraints, or our production cost and timeline projections may prove to be inaccurate. Any of these could decreaseprocess efficiency, create delays, and increase our costs. We are also subject to volatility in market demand and prices, such as thedisruption of the salmon market including reduction in market prices for salmon.

 

Inaddition, competitive pressures, customer volatility and the possible inability to secure established and ongoing customer partnershipsand contracts, may result in a lack of buyers for our fish. Customers of our fish may not wish to follow our terms and conditions ofsale, potentially resulting in a violation of labeling or disclosure laws, improper food handling, nonpayment for product, and similarissues. The competitive landscape for salmon may create challenges in securing competitive pricing for our salmon to reach our competitivegoals. In addition, it is possible that we may not be able to service our customers to meet their expectations regarding fish quality,ongoing harvest supply availability, order processing fill rate, on time or correct deliveries, potential issues with third party processors,and other factors, which could impact our relationships with customers, our reputation, and our business results.

 

RisksRelated to Our Reliance on Third Parties

 

Weare dependent on third parties for our operations and our business may be affected by supply chain interruptions and delays.

 

Ourbusiness is dependent upon our relationships with vendors in Southeast Asia and Latin America for co-packing, processing and shippingproduct to us. If for any reason these companies became unable or unwilling to continue to provide services to us, this would likelylead to a temporary interruption in our ability to import our products until we found another entity that could provide these services.Moreover, if supply chain delays occur, our product will arrive late which will adversely impact our revenue. Failure to find a suitablereplacement, even on a temporary basis, would have an adverse effect on our results of operations.

 

Wedo not have long-term agreements with many of our customers and suppliers.

 

Manyof our customers and suppliers operate through purchase orders. Though we have long-term business relationships with many of our customersand suppliers and alternative sources of supply for key items, we do not have long-term agreements with such customers and suppliersand cannot be sure that any of these customers or suppliers will continue to do business with us on the same basis or on terms that arefavorable to us. The termination or modification of any of these relationships may adversely affect our business, financial performanceand results of operations.

 

 

RisksRelated to Our Financial Condition and Capital Requirements

 

Ourindependent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concernin its report on our audited financial statements.

 

Thereport from our independent registered public accounting firm for the year ended December 31, 2023 includes an explanatory paragraphstating that the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubtabout its ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its abilityto increase revenues, execute on its business plan to acquire complimentary companies, raise capital and continue to sustain adequateworking capital to finance its operations. If we are unable to do so, our financial condition and results of operations will be materiallyand adversely affected and we may be unable to continue as a going concern.

 

Weface risks related to the current global economic environment which could harm our business, financial condition and results of operations.

 

Thestate of the global economy continues to be uncertain. The current global economic conditions and uncertain credit markets, concernsregarding the availability of credit pose a risk that could impact our international relationships, as well as our ability to managenormal commercial relationships with our customers, suppliers and creditors, including financial institutions. Global trade issues andthe impositions of tariffs could also have an adverse effect on our international business activities. If the current global economicenvironment deteriorates, our business could be negatively affected.

 

Wemay need to raise additional capital to fund our existing commercial operations and develop and commercialize new products and expandour operations.

 

Basedon our current business plan, we believe the net proceeds from our underwritten offering, together with our current cash and cash equivalentsand cash receipts from sales will enable us to conduct our planned operations for at least the next 12 months. If our available cashbalances, net proceeds from the offering and anticipated cash flow from operations are insufficient to satisfy our liquidity requirementsincluding because of lower demand for our products or due to other risks described herein, we may seek to sell Common Stock or preferredstock or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debtfinancing.

 

Wemay consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financingopportunities or for other reasons, including to:

 

	●	increase our sales and marketing efforts and address competitive developments;
	●	provide for supply and inventory costs;
	●	fund development and marketing efforts of any future products or additional features to then-current products;
	●	acquire, license or invest in new technologies;
	●	acquire or invest in complementary businesses or assets; and
	●	finance capital expenditures and general and administrative expenses

 

Ourpresent and future funding requirements will depend on many factors, including:

 

	●	our ability to achieve revenue growth and improve gross margins;
	●	the cost of expanding our operations and offerings, including our sales and marketing efforts;
	●	the effect of competing market developments; and
	●	costs related to international expansion.

 

 

Thevarious ways we could raise additional capital carry potential risks. If we raise funds by issuing equity securities, dilution to ourstockholders could result. Any equity securities issued also could provide for rights, preferences or privileges senior to those of holdersof our Common Stock. If we raise funds by issuing debt securities, those debt securities would have rights, preferences and privilegessenior to those of holders of our Common Stock. The terms of debt securities issued or borrowings pursuant to a credit agreement couldimpose significant restrictions on our operations. If we raise funds through collaborations and licensing arrangements, we might be requiredto relinquish significant rights or grant licenses on terms that are not favorable to us.

 

Weincur significant costs as a result of operating as a public company and our management devotes substantial time to public company compliance.

 

Asa public company, we incur significant legal, accounting and other expenses due to our compliance with regulations and disclosure obligationsapplicable to us, including compliance with the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), and theDodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) as well as rules implemented by the SEC.Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform maylead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways wecannot currently anticipate, the manner in which we operate our business. Our management and other personnel devote a substantial amountof time to monitoring of and compliance with, public company reporting obligations. These rules and regulations cause us to incur significantlegal and financial compliance costs and make some activities more time consuming and costly.

 

Tocomply with the requirements of being a public company, we may need to undertake various actions, including implementing internal controlsand procedures. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control overfinancial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensurethat information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reportedwithin the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the SecuritiesExchange Act of 1934 is accumulated and communicated to our principal executive and financial officers. Any failure to develop or maintaineffective controls could harm our operating results, cause us to fail to meet our reporting obligations or result in a restatement ofprior period financial statements. In the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that ourinternal control over financial reporting is perceived as inadequate or that we are unable to produce timely or accurate financial statements,investors may lose confidence in our operating results and the price of our Common Stock could decline. In addition, if we are unableto continue to meet these requirements, our Common Stock may not be able to continue to meet the eligibility requirements for the NASDAQStock Market

 

Ourindependent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control overfinancial reporting until the later of our second annual report or the first annual report required to be filed with the SEC followingthe date we are no longer an “emerging growth company” as defined in the JOBS Act depending on whether we choose to relyon certain exemptions set forth in the JOBS Act. If we are unable to assert that our internal control over financial reporting is effective,or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal controlover financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which could harmour business.

 

RisksRelated to Administrative, Organizational and Commercial Operations and Growth

 

Wemay be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.

 

Weanticipate growth in our business operations. This future growth could create a strain on our organizational, administrative and operationalinfrastructure, including manufacturing operations, quality control, technical support and customer service, sales force management andgeneral and financial administration. Our ability to manage our growth properly will require us to continue to improve our operational,financial and management controls, as well as our reporting systems and procedures. If we are unable to manage our growth effectively,we may be unable to execute our business plan, which could have a material adverse effect on our business and our results of operations.

 

 

Ifwe are unable to support demand for our current and our future products, including ensuring that we have adequate resources to meet increaseddemand and mitigate any supply chain delays our business could be harmed.

 

Asour commercial operations and sales volume grow, we will need to continue to increase our workflow capacity for processing, customerservice, billing and general process improvements and expand our internal quality assurance program, and mitigate any supply chain delayswe could have with our vendors, among other things. We may also need to purchase additional equipment and increase our manufacturing,maintenance, software and computing capacity to meet increased demand. We cannot assure you that any of these increases in scale, expansionof personnel, purchase of equipment or process enhancements will be successfully implemented.

 

Theloss of our Executive Chairman and Chief Executive Officer or our inability to attract and retain highly skilled officers and key personnelcould negatively impact our business.

 

Oursuccess depends on the skills, experience and performance of John Keeler, our Executive Chairman and Chief Executive Officer. The individualand collective efforts of such individual will be important as we continue to develop and expand our commercial activities. The lossor incapacity of Mr. Keeler could negatively impact our operations if we experience difficulties in hiring qualified successors. Qualifiedemployees periodically are in great demand and may be unavailable in the time frame required to satisfy our customers’ requirements.Expansion of our business could require us to employ additional personnel. There can be no assurance that we will be able to attractand retain sufficient numbers of skilled employees in the future. The loss of personnel or our inability to hire or retain sufficientpersonnel at competitive rates could impair the growth of our business.

 

Ifwe were sued for product liability or professional liability, we could face substantial liabilities that exceed our resources.

 

Themarketing and sale of our products could lead to the filing of product liability claims alleging that our product made users ill. A productliability claim could result in substantial damages and be costly and time-consuming for us to defend.

 

Wemaintain product liability insurance, but this insurance may not fully protect us from the financial impact of defending against productliability claims. Any product liability claim brought against us, with or without merit, could increase our insurance rates or preventus from securing insurance coverage in the future. Additionally, any product liability lawsuit could lead to regulatory investigations,product recalls or withdrawals, damage our reputation or cause current vendors, suppliers and customers to terminate existing agreementsand potential customers and partners to seek other suppliers, any of which could negatively impact our results of operations.

 

Weface risks associated with our international business.

 

Ourinternational business operations are subject to a variety of risks, including:

 

	●	difficulties with managing foreign and geographically dispersed operations;
	●	having to comply with various U.S. and international laws, including export control laws and the FCPA, and anti-money laundering laws;
	●	changes in uncertainties relating to foreign rules and regulations;
	●	tariffs, export or import restrictions, restrictions on remittances abroad, imposition of duties or taxes that limit our ability to import product;
	●	limitations on our ability to enter into cost-effective arrangements with distributors, or at all;
	●	fluctuations in foreign currency exchange rates;

 

 

	●	imposition of limitations on production, sale or export in foreign countries;
	●	imposition of limitations on or increase of withholding and other taxes on remittances and other payments by foreign processors or joint ventures;
	●	imposition of differing labor laws and standards;
	●	economic, political or social instability in foreign countries and regions;
	●	an inability, or reduced ability, to protect our intellectual property, including any effect of compulsory licensing imposed by government action;
	●	availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us;
	●	difficulties in recruiting and retaining personnel, and managing international operations;
	●	less developed infrastructure; and impositions on operations as a result of the COVID-19 pandemic.

 

Ifwe expand into other target markets, we cannot assure you that our expansion plans will be realized, or if realized, be successful. Weexpect each market to have particular regulatory and funding hurdles to overcome and future developments in these markets, includingthe uncertainty relating to governmental policies and regulations, could harm our business. If we expend significant time and resourceson expansion plans that fail or are delayed, our reputation, business and financial condition may be harmed.

 

Ourresults may be impacted by changes in foreign currency exchange rates.

 

Currently,the majority of our international sales contracts are denominated in U.S. dollars. We pay certain of our suppliers in a foreign currencyand we may pay others in the future in foreign currency. As a result, an increase in the value of the U.S. dollar relative to foreigncurrencies could require us to reduce our selling price or risk making our product less competitive in international markets or our costscould increase. Also, if our international sales increase, we may enter into a greater number of transactions denominated in non-U.S.dollars, which could expose us to foreign currency risks, including changes in currency exchange rates.

 

Alarger portion of our revenues may be denominated in other foreign currencies if we expand our international operations. Conducting businessin currencies other than U.S. dollars subjects us to fluctuations in currency exchange rates that could have a negative impact on ouroperating results. Fluctuations in the value of the U.S. dollar relative to other currencies impact our revenues, cost of revenues andoperating margins and result in foreign currency translation gains and losses.

 

Wecould be negatively impacted by violations of applicable anti-corruption laws or violations of our internal policies designed to ensureethical business practices.

 

Weoperate in a number of countries throughout the world, including in countries that do not have as strong a commitment to anti-corruptionand ethical behavior that is required by U.S. laws or by corporate policies. We are subject to the risk that we, our U.S. employees orour employees located in other jurisdictions or any third parties that we engage to do work on our behalf in foreign countries may takeaction determined to be in violation of anti-corruption laws in any jurisdiction in which we conduct business. Any violation of anti-corruptionlaws or regulations could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certainjurisdictions and might harm our business, financial condition or results of operations. Further, detecting, investigating and resolvingactual or alleged violations is expensive and can consume significant time and attention of our senior management.

 

 

Wedepend on our information technology systems, and any failure of these systems could harm our business.

 

Wedepend on information technology and telecommunications systems for significant elements of our operations. We have developed proprietysoftware for the management and operation of our business. We have installed and expect to expand a number of enterprise software systemsthat affect a broad range of business processes and functional areas, including for example, systems handling human resources, financialcontrols and reporting, contract management, regulatory compliance and other infrastructure operations.

 

Informationtechnology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or networkfailures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of our servers arepotentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautionarymeasures we have taken to prevent unanticipated problems that could affect our information technology and telecommunications systems,failures or significant downtime of our information technology or telecommunications systems or those used by our third-party serviceproviders could prevent us from providing support services and product to our customers and managing the administrative aspects of ourbusiness. Any disruption or loss of information technology or telecommunications systems on which critical aspects of our operationsdepend could harm our business.

 

Ouroperations are vulnerable to interruption or loss due to natural or other disasters, power loss, strikes and other events beyond ourcontrol.

 

Weconduct a significant portion of our activities, including administration and data processing, at facilities located in Southern Floridathat have experienced major hurricanes and floods which could affect our facilities, significantly disrupt our operations, and delayor prevent product shipment during the time required to repair, rebuild or replace damaged processing facilities. Our suppliers in SoutheastAsia and Latin America are also vulnerable to natural disasters which could disrupt their operations and their ability to supply productto us. If any of our customers’ facilities are negatively impacted by a disaster, product shipments could be delayed. Additionally,customers may delay purchases of products until operations return to normal. Even if we and/or our suppliers are able to quickly respondto a disaster, the ongoing effects of the disaster could create some uncertainty in the operations of our business. In addition, ourfacilities may be subject to a shortage of available electrical power and other energy supplies. Any shortages may increase our costsfor power and energy supplies or could result in blackouts, which could disrupt the operations of our affected facilities and harm ourbusiness.

 

RisksRelated to Intellectual Property

 

Ourintellectual property rights are valuable, and any inability to adequately protect, or uncertainty regarding validity, enforceabilityor scope of them could undermine our competitive position and reduce the value of our products, services and brand, and litigation toprotect our intellectual property rights may be costly.

 

Weattempt to strengthen and differentiate our product portfolio by developing new and innovative products and product improvements. Asa result, our patents, trademarks, trade secrets, copyrights and other intellectual property rights are important assets to us. Variousevents outside of our control pose a threat to our intellectual property rights as well as to our products and services. For example,effective intellectual property protection may not be available in countries in which our products are sold. Also, although we have registeredour trademark in various jurisdictions, our efforts to protect our proprietary rights may not be sufficient or effective. Any significantimpairment of our intellectual property rights could harm our business or our ability to compete. Litigation might be necessary to protectour intellectual property rights and any such litigation may be costly and may divert our management’s attention from our corebusiness. An adverse determination in any lawsuit involving our intellectual property is likely to jeopardize our business prospectsand reputation. Although we are not aware of any of such litigation, we have no insurance coverage against litigation costs, and we wouldbe forced to bear all litigation costs if we cannot recover them from other parties. All foregoing factors could harm our business, financialcondition, and results of operations. Any unauthorized use of our intellectual property could harm our operating results.

 

 

Wemay be exposed to infringement or misappropriation claims by third parties, which, if determined against us, could adversely affect ourbusiness and subject us to significant liability to third parties.

 

Oursuccess mainly depends on our ability to use and develop our technology and product designs without infringing upon the intellectualproperty rights of third parties. We may be subject to litigation involving claims of patent infringement or violations of other intellectualproperty rights of third parties. Holders of patents and other intellectual property rights potentially relevant to our product offeringsmay be unknown to us, which may make it difficult for us to acquire a license on commercially acceptable terms. There may also be technologieslicensed to us and that we rely upon that are subject to infringement or other corresponding allegations or claims by third parties whichmay damage our ability to rely on such technologies. In addition, although we endeavor to ensure that companies that work withus possess appropriate intellectual property rights or licenses, we cannot fully avoid the risks of intellectual property rights infringementcreated by suppliers of components used in our products or by companies we work with in cooperative research and development activities.Our current or potential competitors may obtain patents that will prevent, limit or interfere with our ability to make, use or sell ourproducts. The defense of intellectual property claims, including patent infringement suits, and related legal and administrative proceedingscan be both costly and time consuming, and may significantly divert the efforts and resources of our technical personnel and management.These factors could effectively prevent us from pursuing some or all of our business operations and result in our customers or potentialcustomers deferring, canceling or limiting their purchase or use of our products, which may have a material adverse effect on our business,financial condition and results of operations.

 

Ourcommercial success will depend in part on our success in obtaining and maintaining issued patents and other intellectual property rightsin the United States and elsewhere. If we do not adequately protect our intellectual property, competitors may be able to use our processesand erode or negate any competitive advantage we may have, which could harm our business.

 

Wecannot provide any assurances that any of our patents have, or that any of our pending patent applications that mature into issued patentswill include, claims with a scope sufficient to protect our products, any additional features we develop or any new products. Patents,if issued, may be challenged, deemed unenforceable, invalidated or circumvented.

 

Furthermore,though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability andit may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products. Competitorsmay also be able to design around our patents. Other parties may develop and obtain patent protection for more effective technologies,designs or methods. We may not be able to prevent the unauthorized disclosure or use of our knowledge or trade secrets by consultants,suppliers, vendors, former employees and current employees. The laws of some foreign countries do not protect our proprietary rightsto the same extent as the laws of the United States, and we may encounter significant problems in protecting our proprietary rights inthese countries. If any of these developments were to occur, they each could have a negative impact on our sales.

 

Ifwe are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.

 

Werely upon copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees,consultants and third parties, to protect our confidential and proprietary information. In addition to contractual measures, we try toprotect the confidential nature of our proprietary information using physical and technological security measures. Such measures maynot, for example, in the case of misappropriation of a trade secret by an employee or third party with authorized access, provide adequateprotection for our proprietary information. Our security measures may not prevent an employee or consultant from misappropriating ourtrade secrets and providing them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy toprotect our interests fully. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensiveand time-consuming, and the outcome is unpredictable. In addition, trade secrets may be independently developed by others in a mannerthat could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to bedisclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position couldbe harmed.

 

 

Wemay not be able to enforce our intellectual property rights throughout the world.

 

Thelaws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Manycompanies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions.This could make it difficult for us to stop the infringement or the misappropriation of our intellectual property rights. Many foreigncountries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countrieslimit the enforceability of patents against third parties, including government agencies or government contractors. In these countries,patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensiveand time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, andwe will not have the benefit of patent protection in such countries.

 

Proceedingsto enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts from other aspects ofour business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition,changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequateprotection for our technology and the enforcement of intellectual property.

 

Thirdparties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated tradesecrets.

 

Althoughwe try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us,we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used ordisclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties.Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages,we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigationcould result in substantial costs and be a distraction to management and other employees.

 

RisksRelated to Regulatory Matters

 

Ourproducts and operations are subject to government regulation and oversight both in the United States and abroad, and our failure to complywith applicable requirements could harm our business.

 

TheFDA and other government agencies regulate, among other things, with respect to our products and operations:

 

	●	design, development and manufacturing;
	●	testing, labeling, content and language of instructions for use and storage;
	●	product safety;
	●	marketing, sales and distribution;
	●	record keeping procedures;
	●	advertising and promotion;
	●	recalls and corrective actions; and
	●	product import and export.

 

Theregulations to which we are subject are complex and have tended to become more stringent over time. Regulatory changes could result inrestrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales.

 

 

Thefailure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions suchas:

 

	●	warning letters;
	●	fines;
	●	injunctions;
	●	civil penalties;
	●	termination of distribution;
	●	recalls or seizures of products;
	●	delays in the introduction of products into the market; and
	●	total or partial suspension of production.

 

Wemay also be required to take corrective actions, such as installing additional equipment or taking other actions, each of which couldrequire us to make substantial capital expenditures. We could also be required to indemnify our employees in connection with any expensesor liabilities that they may incur individually in connection with regulatory action against them. As a result, our future business prospectscould deteriorate due to regulatory constraints, and our profitability could be impaired by our obligation to provide such indemnificationto our employees.

 

Anyof these sanctions could result in higher than anticipated costs or lower than anticipated sales and harm our reputation, business, financialcondition and results of operations.

 

Productliability claims could divert management’s attention from our business, be expensive to defend and result in sizeable damage awardsagainst us that may not be covered by insurance.

 

RisksRelating to Our Common Stock

 

Theprice of our Common Stock may be volatile and may be influenced by numerous factors, some of which are beyond our control.

 

Factorsthat could cause volatility in the market price of our Common Stock include:

 

	●	actual or anticipated fluctuations in our financial condition and operating results;
	●	actual or anticipated changes in our growth rate relative to our competitors;
	●	commercial success and market acceptance of our products;
	●	success of our competitors in commercializing products;
	●	strategic transactions undertaken by us;
	●	additions or departures of key personnel;
	●	product liability claims;
	●	prevailing economic conditions;

 

 

	●	disputes concerning our intellectual property or other proprietary rights;
	●	U.S. or foreign regulatory actions affecting us or our industry;
	●	sales of our Common Stock by our officers, directors or significant stockholders;
	●	future sales or issuances of equity or debt securities by us;
	●	business disruptions caused by natural disasters; and
	●	issuance of new or changed securities analysts’ reports or recommendations regarding us.

 

Inaddition, the stock markets in general have experienced extreme volatility that have been often unrelated to the operating performanceof the issuer. These broad market fluctuations may negatively impact the price or liquidity of our Common Stock. In the past, when theprice of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer.If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attentionof our management would be diverted from the operation of our business.

 

Youmay experience dilution of your ownership interests because of the future issuance of additional shares of our Common Stock or preferredstock or other securities that are convertible into or exercisable for our Common Stock or preferred stock.

 

Ifour existing stockholders exercise warrants or sell, or indicate an intention to sell, substantial amounts of our Common Stock in thepublic market, the price of our Common Stock could decline. The perception in the market that these sales may occur could also causethe price of our Common Stock to decline.

 

Inthe future, we may issue authorized but previously unissued equity securities, resulting in the dilution of the ownership interests ofthe then current stockholders. We are authorized to issue an aggregate of 100,000,000 shares of Common Stock and 5,000,000 shares of“blank check” preferred stock. We may issue additional shares of our Common Stock or other securities that are convertibleinto or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, future sales of our securitiesfor capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our Common Stock maycreate downward pressure on the trading price of the Common Stock. We may need to raise additional capital in the near future to meetour working capital needs, and there can be no assurance that we will not be required to issue additional shares, warrants or other convertiblesecurities in the future in conjunction with the capital raising efforts, including at a price (or exercise prices) below the price youpaid for your stock.

 

Managementmay have broad discretion as to the use of the proceeds from offerings of its securities and may not use the proceeds effectively.

 

Becausethe Company may not designate the amount of net proceeds from offerings to be used for any particular purpose, management may have broaddiscretion as to the application of the net proceeds and could use them for purposes other than those contemplated at the time of suchoffering. Management may use net proceeds for corporate purposes that may not improve the Company’s financial condition or marketvalue.

 

Ifwe fail to comply with the Nasdaq Capital Market listing requirements, we will be subject to potential delisting from the Nasdaq CapitalMarket.

 

OurCommon Stock has been approved for listing on NASDAQ under the symbol “BSFC.” However, if we fail to comply with NASDAQ’srules for continued listing, including, without limitation, minimum market capitalization and other requirements, NASDAQ may take stepsto delist our shares. Failure to maintain our listing, or de-listing from NASDAQ, would make it more difficult for shareholders to sellour Common Stock and more difficult to obtain accurate price quotations on our Common Stock. This could have an adverse effect on theprice of our Common Stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for anyfinancing we may need in the future, may also be materially and adversely affected if our Common Stock is not traded on a national securitiesexchange. Additionally, our loan or other agreements, may contain covenants to maintain the listing of our Common Stock on NASDAQ. Accordingly,failure to maintain such listing may constitute a default under such agreements.

 

 

Weare subject to a Discretionary Panel Monitor until June 11, 2025 as it pertains to the minimum bid price requirement and failure to maintaincompliance with this standard could result in delisting and adversely affect the market price and liquidity of our Common Stock.

 

OurCommon Stock is currently traded on the Nasdaq Capital Market under the symbol “BSFC.” If we fail to meet any of the continuedlisting standards of NASDAQ, our Common Stock will be delisted. These continued listing standards include specifically enumerated criteria,such as a $1.00 minimum closing bid price.

 

OnOctober 8, 2024, the Company received a notice letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC(“Nasdaq”) notifying the Company that, based upon the closing bid price of the Company’s common stock, par value $0.0001per share (“Common Stock”), for the last 30 consecutive business days, the Company is not currently in compliance with therequirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in NasdaqListing Rule 5550(a)(2) (the “Minimum Bid Requirement”), which matter serves as a basis for delisting the Company’ssecurities from Nasdaq.

 

Aspreviously reported on a Current Report on Form 8-K filed on June 12, 2024, the Company is subject to a Mandatory Panel Monitor for aperiod of one year, or until June 11, 2025. As such, the Company is not eligible for a compliance period. The Company requesteda hearing with the Hearings Panel (the “Panel”) on October 16, 2024. The hearing date is set for December 11, 2024.The hearing request will stay the suspension of the Company’s securities and the filing of the Form 25-NSE pending the Panel’sdecision. The fee for the hearing was $20,000.

 

OurCommon Stock may be deemed a “penny stock” which may reduce the value of an investment in the stock.

 

Rule15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equitysecurity that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certainexceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’saccount for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction,setting forth the identity and quantity of the penny stock to be purchased.

 

Inorder to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial informationand investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks aresuitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating therisks of transactions in penny stocks.

 

Thebroker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating tothe penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination;and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally,brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. If our Common Stockis or becomes subject to the “penny stock” rules, it may be more difficult for investors to dispose of our Common Stock andcause a decline in the market value of our Common Stock.

 

Disclosurealso has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about commissionspayable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remediesavailable to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recentprice information for the penny stock held in the account and information on the limited market in penny stocks.

 

 

Thesales practice requirements of the Financial Industry Regulatory Authority’s (“FINRA”) may limit a stockholder’sability to buy and sell our Common Stock.

 

FINRAhas adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believingthat the investment is suitable for that customer. Prior to recommending speculative or low-priced securities to their non-institutionalcustomers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status,investment objectives and other information. Under interpretations of these rules, FINRA has indicated its belief that there is a highprobability that speculative or low-priced securities will not be suitable for at least some customers. If these FINRA requirements areapplicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customersbuy our Common Stock, which may limit the ability of our stockholders to buy and sell our Common Stock and could have an adverse effecton the market for and price of our Common Stock.

 

Ouroperating results for a particular period may fluctuate significantly or may fall below the expectations of investors or securities analysts,each of which may cause the price of our Common Stock to fluctuate or decline.

 

Weexpect our operating results to be subject to fluctuations. Our operating results will be affected by numerous factors, including:

 

	●	variations in the level of expenses related to future development plans;
	●	fluctuations in value of the underlying commodity;
	●	inability to procure sufficient quantities to meet demand due to the scarcity of the product available from its suppliers;
	●	level of underlying demand for our products and any other products we sell;
	●	any intellectual property infringement lawsuit or opposition, interference or cancellation proceeding in which we may become involved;
	●	regulatory developments affecting us or our competitors; and
	●	the continuing effects of the COVID-19 pandemic.

 

Ifour operating results for a particular period fall below the expectations of investors or securities analysts, the price of our CommonStock could decline substantially. Furthermore, any fluctuations in our operating results may, in turn, cause the price of our CommonStock to fluctuate substantially. We believe that comparisons of our financial results from various reporting periods are not necessarilymeaningful and should not be relied upon as an indication of our future performance

 

Issuanceof stock to fund our operations may dilute your investment and reduce your equity interest.

 

Wemay need to raise capital in the future to fund the development of our seafood business. Any equity financing may have significant dilutiveeffect to stockholders and a material decrease in our stockholders’ equity interest in us. Equity financing, if obtained, couldresult in substantial dilution to our existing stockholders. At its sole discretion, our board of directors may issue additional securitieswithout seeking stockholder approval, and we do not know when we will need additional capital or, if we do, whether it will be availableto us.

 

Provisionsof our charter documents or Delaware law could delay or prevent an acquisition of the Company, even if such an acquisition would be beneficialto our stockholders, which could make it more difficult for you to change management.

 

Provisionsin our certificate of incorporation and our bylaws may discourage, delay or prevent a merger, acquisition or other change in controlthat stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares.In addition, these provisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management bymaking it more difficult to replace or remove our board of directors.

 

 

Inaddition, Delaware law prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder,generally a person who, together with its affiliates, owns, or within the last three years has owned, 15% or more of our voting stock,for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the businesscombination is approved in a prescribed manner. Accordingly, Delaware law may discourage, delay or prevent a change in control of thecompany. Furthermore, our certificate of incorporation will specify that the Court of Chancery of the State of Delaware will be the soleand exclusive forum for most legal actions involving actions brought against us by stockholders. We believe this provision benefits usby providing increased consistency in the application of Delaware law by chancellors particularly experienced in resolving corporatedisputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdensof multi-forum litigation. However, the provision may have the effect of discouraging lawsuits against our directors and officers. Theenforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legalproceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forumprovisions contained in our certificate of incorporation to be inapplicable or unenforceable in such action.

 

Wedo not anticipate paying any cash dividends on our common stock in the foreseeable future therefore capital appreciation, if any, ofour common stock will be your sole source of gain for the foreseeable future.

 

Wehave never declared or paid cash dividends on our Common Stock. We do not anticipate paying any cash dividends on our common stock inthe foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growthof our business. In addition, our current loan and security agreement with Lighthouse contains, and our future loan arrangements, ifany, may contain, terms prohibiting or limiting the amount of dividends that may be declared or paid on our Common Stock. As a result,capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

 

RisksRelated to this Offering

 

Wecould face significant penalties for our failure to comply with the terms of our outstanding convertible notes.

 

Ourconvertible notes contain positive and negative covenants and customary events of default including requiring us in many cases to timelyfile SEC reports. In the event we fail to timely file our SEC reports in the future, or any other events of defaults occur under thenotes, we could face significant penalties and/or liquidated damages and/or the conversion price of such notes could be adjusted downwardsignificantly, all of which could have a material adverse effect on our results of operations and financial condition, or cause any investmentin the Company to decline in value or become worthless.

 

Certainof our outstanding convertible promissory notes include favored nations rights.

 

Certainof our outstanding convertible promissory notes include provisions which provide that, so long as such notes are outstanding, the Companyshall not enter into any public or private offering of its securities (including securities convertible into shares of our Common Stock)with any individual or entity that has the effect of establishing rights or otherwise benefiting such other investor in a manner morefavorable in any material respect to such other investor than the rights and benefits established in favor of the holder of our convertiblenotes unless, in any such case, the holder has been provided with such rights and benefits pursuant to a definitive written agreementor agreements between the Company and the holder. Such favored nations provisions could be triggered in the future and could materiallychange the terms of the notes. In the event any favored nations provisions of the notes are triggered, it may cause the terms of suchnotes to be materially amended in favor of the holders thereof, cause significant dilution to existing shareholders, and otherwise havea material adverse effect on the Company.

 

 

USEOF PROCEEDS

 

Wewill not receive any proceeds from the sales of shares of our Common Stock by the Selling Stockholders.

 

DETERMINATIONOF OFFERING PRICE

 

TheSelling Stockholders will offer shares of our Common Stock at the prevailing market prices or privately negotiated prices. The offeringprice of our Common Stock does not necessarily bear any relationship to our book value, assets, past operating results, financial conditionor any other established criteria of value. Our Common Stock may not trade at the market prices in excess of the offering prices forCommon Stock in any public market, will be determined in the marketplace and may be influenced by many factors, including the depth andliquidity of the market for our Common Stock.

 

MARKETPRICE OF AND DIVIDENDS ON THE COMPANY’S

COMMONEQUITY AND RELATED STOCKHOLDER MATTERS

 

MarketInformation

 

OurCommon Stock is quoted on the Nasdaq Capital Market under the symbol “BSFC.” On November 14, 2024, the closing priceon Nasdaq of our Common Stock was $0.2747.

 

Holders

 

Asof November 15, 2024, there were 68 holders of record of our Common Stock.

 

DividendPolicy

 

Wehave not paid any dividends since our incorporation and do not anticipate the payment of dividends in the foreseeable future. At present,our policy is to retain earnings, if any, to develop and market our products and implement our business plan. The payment of dividendsin the future will depend upon, among other factors, our earnings, capital requirements, and operating financial conditions.

 

SELLINGSTOCKHOLDERS

 

Thisprospectus relates to the potential offer and resale by the Selling Stockholders identified in this prospectus or their permitted transferees(the “Selling Stockholders”) of 1,350,000 shares of our common stock, $0.0001 par value per share, (the “Common Stock”)consisting of (i) up to 1,000,000 shares issuable upon conversion of the principal and accrued interest at maturity of convertible promissorynotes in the aggregate principal amount of $550,000 issued to each of Jefferson Street Capital, LLC (“Jefferson”) and QuickCapital, LLC (“Quick Capital”) in August 2024 (the “Private Placement Offering”), and (iii) up to 350,000 sharesissuable pursuant to that certain purchase agreement (the “ELOC Purchase Agreement”) dated May 16, 2023, by and between ClearThinkCapital Partners, LLC (“ClearThink”) and us.

 

ClearThinkELOC Purchase Agreement

 

OnMay 16, 2023, the Company entered into a Purchase Agreement (the “ELOC Purchase Agreement”) with ClearThink Capital Partners,LLC (“ClearThink”). Pursuant to the ELOC Purchase Agreement, ClearThink has agreed to purchase from the Company, from timeto time upon delivery by the Company to ClearThink of request notices (each a “Request Notice”), and subject to the otherterms and conditions set forth in the ELOC Purchase Agreement, up to an aggregate of $10,000,000 of the Company’s Common Stock.The purchase price of the shares of Common Stock to be purchased under the ELOC Purchase Agreement will be equal to 80% of the two lowestdaily VWAPs during a valuation period of six trading days, beginning three trading days preceding the draw down or put notice to threetrading days commencing on the first trading day following delivery and clearing of the delivered shares. Each purchase under the ELOCPurchase Agreement will be in a minimum amount of $25,000 and a maximum amount equal to the lesser of (i) $1,000,000 and (ii) 300% ofthe average daily trading value of the Common Stock over the ten days preceding the Request Notice date. In addition, pursuant to theELOC Purchase Agreement, the Company agreed to issue to ClearThink 1,250 restricted shares of the Company’s Common Stock as a “CommitmentFee.” The ELOC Purchase Agreement has a maturity date of May 16, 2025.

 

Theissuance of shares to ClearThink are subject to a beneficial ownership limitation so that in no event will shares be issued which wouldresult in ClearThink beneficially owning, together with its affiliates, more than 9.99% of the Company’s outstanding shares ofcommon stock.

 

 

TheCompany may not deliver to ClearThink a Request Notice if we are in default. Events of default include:

 

(a)the effectiveness of a registration statement registering the resale of the Securities lapses for any reason for a period of ten (10)consecutive business days or for more than an aggregate of thirty (30) business days in any 365-day period, with certain exceptions;

 

(b)the suspension of the Common Stock from trading on the principal market for a period of one (1) business day, provided that the Companymay not direct ClearThink to purchase any shares of Common Stock during any such suspension;

 

(c)the delisting of the Common Stock from The OTCQB, provided, however, that the Common Stock is not immediately thereafter trading on theNew York Stock Exchange, The Nasdaq Global Market, The Nasdaq Global Select Market, the NYSE American (or nationally recognized successorto any of the foregoing);

 

(d)if the exchange cap is reached unless and until stockholder approval is obtained;

 

(e)the failure for any reason by the transfer agent to issue shares to ClearThink within three (3) business days after the applicable purchasedate on which ClearThink is entitled to receive such shares;

 

(f)the Company breaches any representation, warranty, covenant or other term or condition under any of their transaction documents withClearThink;

 

(g)if any person commences a proceeding against the Company pursuant to or within the meaning of any bankruptcy law or if the Company commencesa proceeding within the meaning of any bankruptcy law;

 

(h)if at any time the Company is not eligible to transfer its Common Stock electronically as DWAC shares.

 

TheELOC Purchase Agreement terminates as follows:

 

(a)If pursuant to or within the meaning of any bankruptcy law, the Company commences a voluntary case or any Person commences a proceedingagainst the Company, a custodian is appointed for the Company or for all or substantially all of its property, or the Company makes ageneral assignment for the benefit of its creditors, any of which would be an event of default and shall automatically terminate withoutany liability or payment to the Company without further action or notice by any person;

 

(b)In the event that the commencement of the ELOC Purchase Agreement shall not have occurred on or before December 31, 2023;

 

(c)for any reason or for no reason by delivering notice to ClearThink electing to terminate;

 

(d)automatically on the date that the Company sells and ClearThink purchases the full available amount under the ELOC Purchase Agreement;

 

(e)May 16, 2025.

 

ClearThink,its agents, representatives or affiliates, will not in any manner whatsoever, enter into or effect directly or indirectly, any (i) “shortsale” of the Common Stock or (ii) hedging transaction, which establishes a net short position with respect to the Common Stock.

 

Itis possible that we may not have access to the full amount available to us under the ELOC Purchase Agreement. We have also indemnifiedClearThink pursuant to the ELOC Purchase Agreement.

 

Inconnection with the ELOC Purchase Agreement, the Company entered into a Registration Rights Agreement with ClearThink under which theCompany agreed to file a registration statement with the Securities and Exchange Commission covering the shares of Common Stock issuableunder the ELOC Purchase Agreement.

 

 

OnMay 16, 2023, the Company and ClearThink also entered into a Securities Purchase Agreement (the “SPA”) under which ClearThinkhas agreed to purchase from the Company an aggregate of 1,000 shares of the Company’s restricted Common Stock for a total purchaseprice of $200,000 in four closings. The first closing occurred on the execution date of the SPA and the second, third, and fourth closingsshall be within 60 days after the first closing.

 

August2024 Private Placement Offering

 

InAugust, 2024, the Company entered into securities purchase agreements (each a “Securities Purchase Agreement”) with eachof Quick Capital, LLC, a Wyoming limited liability company (“Quick Capital”) and Jefferson Street Capital, LLC, a New Jerseylimited liability company (“Jefferson”) whereby we issued promissory notes in the aggregate principal amount of $550,000(the “August Private Placement Offering”).

 

TheCompany agreed to issue to each of Quick Capital and Jefferson up to 19,650 shares of our Common Stock as a “CommitmentFee”

 

Aspart of the August Private Placement Offering, the Company issued two promissory notes each in the principal amount of $275,000 withan original issue discount of $25,000 (the “Private Placement Notes”). The Private Placement Notes have a one-time interestpayment of $27,500. Thereafter, any principal amount of interest which is not paid upon maturity will accrue at a rate of the lesserof (i) sixteen percent (16%) per annum, or (ii) the maximum amount permitted by law from the due date thereof until the same is paid.The Private Placement Notes have a maturity date of 10 months after issuance and the proceeds from the notes are for general corporatepurposes. The Company agreed to issue to each of Quick Capital and Jefferson 19,650 shares of Common Stock as additional considerationfor entering into Private Placement Notes.

 

Theinvestors have the right, at any time on or following the earlier of (i) the date that any of the shares are registered for resale undera registration statement of the Company or (ii) the date that is six (6) months after the issue date, to convert all or any portion ofthe then outstanding and unpaid principal and interest into fully paid and non-assessable shares of our Common Stock. The conversionprice shall be $1.50, subject to adjustments. We have agreed to reserve a sufficient number of Common Stock (initially, 2,000,000 shares)for issuance upon conversion of the Private Placement Notes in accordance with their terms.

 

Ifan event of default occurs under the Private Placement Notes, the investors have the right to convert all amounts outstanding under thenotes at any time thereafter into shares of Common Stock at the lesser of (i) the then applicable conversion price under the notes or(ii) the Market Price. “Market Price” shall mean 85% of the lowest VWAP on any trading day during the ten (10) trading daysprior to the respective conversion date. “VWAP” means, for any security as of any date, the dollar volume-weighted averageprice for such security on the principal market during the period beginning at 9:30 a.m., Eastern Standard Time, and ending at 4:00 p.m.,Eastern Standard Time, as reported by Quotestream or other similar quotation service provider designated by the investors.

 

TheCompany may prepay the Private Placement Notes at any time with fifteen (15) trading days prior written notice (the “PrepaymentNotice Period”). During the Prepayment Notice Period, the investor shall have the right to convert all or any portion of the PrivatePlacement Notes pursuant to the terms of the notes, including the amount of the Private Placement Notes to be prepaid. If the Companyexercises its right to prepay the notes, the Company shall make payment to the investor of an amount in cash equal to the sum of: (i)100% multiplied by the principal amount then outstanding plus (ii) accrued and unpaid interest on the principal amount to thePrepayment Notice Date, and (iii) $750 to reimburse the investor for administrative fees.

 

Ifthe Company delivers a prepayment notice and fails to pay the applicable prepayment amount, the Company shall forever forfeit its rightto prepay any part of the Private Placement Notes.

 

ThePrivate Placement Notes have mandatory monthly payments of $43,200. The initial payments are due on November 9, 2024 and November 12,2024, respectively.

 

 

TheCompany’s failure to comply with the material terms of the Private Placement Notes will be considered an event of default and theprincipal sum of the Private Placement Notes will become immediately due and payable at an amount equal to the principal amount thenoutstanding plus accrued interest (including any default interest) through the date of full repayment multiplied by 135%, as well asall costs, all without demand, presentment or notice, unless expressly waived by the investor.

 

Theinvestors may assign their rights to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transactionor to any of its affiliates without the consent of the Company.

 

Whilethe Private Placement Notes remain outstanding, we shall not, without the investor’s written consent (i) (a) pay, declare or setapart for such payment, any dividend or other distribution on shares of capital stock other than dividends on shares of Common Stocksolely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other paymentor distribution with respect to its capital stock except for distributions pursuant to any shareholders’ rights plan which is approvedby a majority of the Company’s disinterested directors, (ii) redeem, repurchase or otherwise acquire (whether for cash or in exchangefor property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock ofthe Company or any warrants, rights or options to purchase or acquire any such shares, or repay any indebtedness of the investor (iii)advance any loans made in the ordinary course of business in excess of $100,000, (iv) sell, lease or otherwise dispose of any significantportion of our assets outside the ordinary course of business, and (v) enter into any transaction or arrangement structured in accordancewith, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) or Section 3(a)(10) of the Securities Act.

 

Inconjunction with the August Private Placement Offering, the Company entered into a registration rights agreement with each of Quick Capitaland Jefferson. The Company agreed to file a registration statement with the Securities and Exchange Commission to register the re-saleof the maximum number of shares of Common Stock covered in the August Private Placement Offering within sixty (60) calendar days fromthe date of execution. The Securities Purchase Agreements and Private Placement Notes are collectively referred to herein as the AugustTransaction Documents.

 

TheSelling Stockholders, may, from time to time, offer and sell pursuant to this prospectus any or all of the shares referred to above.The Selling Stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt fromthe registration requirements of the Securities Act.

 

TheSelling Stockholders may sell some, all or none of its shares. We do not know how long the Selling Stockholders will hold the sharesbefore selling them, and we currently have no agreements, arrangements or understandings with the Selling Stockholders regarding thesale of any of the shares.

 

Beneficialownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act. The percentage of shares beneficiallyowned prior to the offering is based on 7,934,270 shares of our Common Stock outstanding as of November 15, 2024.

 

Thefollowing table sets forth the shares beneficially owned, as of November 15, 2024 by the Selling Stockholders prior to the offeringcontemplated by this prospectus, the number of shares that the Selling Stockholders may offer and sell from time to time under this prospectusand the number of shares which the Selling Stockholders would own beneficially if all such offered shares are sold.

 

Name of Selling Stockholders		Beneficial Ownership Before the Offering				Shares of Common Stock Included in Prospectus				Beneficial Ownership After the Offering				Percentage of Ownership After the Offering
ClearThink Capital Partners, LLC (5)			350,000				350,000	(1)(2)			-				*
Jefferson Street Capital, LLC (6)			500,000				500,000	(1)(3)			-				*
Quick Capital, LLC (7)			500,000				500,000	(1)(4)			-				*

 

*less than 1%

 

(1)Such amount of Common Stock is solely for the purposes of making a good faith estimate as to the number of shares issuable to be registered.

 

 

(2)Represents up to 350,000 shares of our Common Stock issuable pursuant to the ELOC Purchase Agreement.

 

(3)Represents up to 500,000 shares of our Common Stock issuable pursuant to the August Private Placement.

 

(4)Represents up to 500,000 shares of our Common Stock issuable pursuant to the August Private Placement.

 

(5)Brian Loper, the Managing Member of ClearThink Capital Partners, LLC has sole voting and dispositive power over the shares of CommonStock held by ClearThink Capital Partners, LLC. The principal business address of ClearThink Capital Partners, LLC is 10 Times Square,Floor 5, New York, NY 10018.

 

(6)Brian Goldberg, the Managing Member of Jefferson Street Capital, LLC has sole voting and dispositive power over the shares of CommonStock held by Jefferson Street Capital, LLC. The principal business address of Jefferson Street Capital, LLC is 208 Lenox Ave., #236,Westfield, NJ 07090.

 

(7)Eilon Natan, the Managing Member of Quick Capital, LLC has sole voting and dispositive power over the shares of Common Stock held byQuick Capital, LLC. The principal business address of Quick Capital, LLC is 66 West Flagler Street, Suite 900 #2292, Miami, FL 33130.

 

Otherthan as disclosed above, none of the Selling Stockholders has had a material relationship with us or any of our affiliates other thanas a stockholder at any time within the past three years.

 

PLANOF DISTRIBUTION

 

TheSelling Stockholders and any of their respective pledgees, assignees and successors-in-interest may, from time to time, sell any or allof their securities covered hereby on any trading market, stock exchange or other trading facility on which the securities are tradedor in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of thefollowing methods when selling securities:

 

	●	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	●	block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;
	●	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	●	an exchange distribution in accordance with the rules of the applicable exchange;
	●	privately negotiated transactions;
	●	settlement of short sales;
	●	in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;
	●	through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
	●	a combination of any such methods of sale; or
	●	any other method permitted pursuant to applicable law.

 

TheSelling Stockholders may also sell securities under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Broker-dealersengaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissionsor discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not inexcess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup ormarkdown in compliance with FINRA IM-2440.

 

 

Inconnection with the sale of the securities covered hereby, the Selling Stockholders may enter into hedging transactions with broker-dealersor other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions theyassume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loanor pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into optionor other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require thedelivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealeror other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

ClearThinkis an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act and will be subject to the prospectus deliveryrequirements of the Securities Act, including Rule 172 thereunder. The additional Selling Stockholders and any broker-dealers or agentsthat are involved in selling the securities will or may be deemed to be “underwriters” within the meaning of the SecuritiesAct in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resaleof the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

 

Inaddition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be soldunder Rule 144 rather than under this prospectus. ClearThink will pay any underwriting discounts and selling commissions that may relateto the sale of their shares. We will pay certain fees and expenses incurred by us incident to the registration of the securities.

 

Weintend to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholderswithout registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement forus to be in compliance with the current public information requirement under Rule 144 under the Securities Act or any other rule of similareffect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other ruleof similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicablestate securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registeredor qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and iscomplied with.

 

Underapplicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneouslyengage in market making activities with respect to the Common Stock for the applicable restricted period, as defined in Regulation M,prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of theExchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of theCommon Stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholdersand are informing the Selling Stockholders of the need to deliver a copy of this prospectus to each purchaser at or prior to the timeof the sale (including by compliance with Rule 172 under the Securities Act).

 

PennyStock Rules

 

Ourshares of Common Stock are subject to the “penny stock” rules of the Exchange Act. In general terms, “penny stock”is defined as any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rules providethat any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchangemeeting specified criteria set by the SEC, authorized for quotation from the NASDAQ stock market, issued by a registered investment company,and excluded from the definition on the basis of price (at least $5.00 per share), or based on the issuer’s net tangible assetsor revenues. In the last case, the issuer’s net tangible assets must exceed $3,000,000 if in continuous operation for at leastthree years or $5,000,000 if in operation for less than three years, or the issuer’s average revenues for each of the past threeyears must exceed $6,000,000.

 

 

Tradingin shares of penny stock is subject to additional sales practice requirements for broker-dealers who sell penny stocks to persons otherthan established customers and accredited investors. Accredited investors, in general, include individuals with assets in excess of $1,000,000or annual income exceeding $200,000 (or $300,000 together with their spouse), and certain institutional investors. For transactions coveredby these rules, broker-dealers must make a special suitability determination for the purchase of the security and must have receivedthe purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock,the rules require the delivery prior to the first transaction, of a risk disclosure document relating to the penny stock. A broker-dealeralso must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for thesecurity. Finally, monthly statements must be sent disclosing recent price information for the penny stocks. These rules may restrictthe ability of broker-dealers to trade or maintain a market in our Common Stock, to the extent it is penny stock, and may affect theability of stockholders to sell their shares.

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Youshould read the following discussion together with our consolidated financial statements and the related notes included elsewhere inthis prospectus. This discussion contains forward-looking statements that are based on our current expectations, estimates and projectionsabout our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-lookingstatements. All share and per share amounts in this section have been retrospectively adjusted for all periods presented to reflect thereverse stock split effectuated on May 20, 2024.

 

Overview

 

Weare an international seafood company that imports, packages and sells refrigerated pasteurized crab meat, and other premium seafood products.Our current source of revenue is from importing blue and red swimming crab meat primarily from Indonesia, the Philippines and China anddistributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika, Crab & Go, FirstChoice, Good Stuff and Coastal Pride Fresh, and steelhead salmon and rainbow trout fingerlings produced under the brand name Little CedarFarms for distribution in Canada. The crab meat which we import is processed in six out of the ten plants available throughout SoutheastAsia. Our suppliers are primarily via co-packing relationships, including two affiliated suppliers. We sell primarily to food servicedistributors. We also sell our products to wholesalers, retail establishments and seafood distributors.

 

RecentEvents

 

ReverseSplit

 

OnMay 7, 2024, the Company’s board of directors approved, and on April 30, 2024, at a special meeting of the stockholders, holdersof approximately 62.9% of the Company’s voting power, approved the granting of authority to the Board to amend the Company’sCertificate 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 in its sole discretion.

 

TheBoard determined to effectuate a 1:50 reverse stock split (the “Reverse Stock Split”) and on May 20, 2024 the Company amendedits Certificate of Incorporation to effect the Reverse Stock Split. All shares and per share amounts in the financial statements havebeen retrospectively adjusted for all periods presented to reflect the Reverse Stock Split.

 

AgileLoans

 

OnMay 9, 2024 the Company entered into a subordinated business loan and security agreement with Agile Lending, LLC and Agile Capital Funding,LLC as collateral agent (collectively “Agile”), which provides for a term loan to the Company in the form of a promissorynote in the aggregate principal amount of $210,000 (the “May Agile Loan”). The May Agile Loan will accrue principal and interestof $84,000 and has a maturity date of November 22, 2024. Commencing May 17, 2024, the Company is required to make weekly payments of$10,500 until the maturity date. As of the date of this prospectus, the Company has paid off the principal totaling $210,000.

 

 

TheCompany shall have the right to make a full prepayment or partial prepayment of the May Agile Loan. Upon prepayment of any principalamount, the Company is obligated to pay a make-whole premium payment on account of such principal so paid, which shall be equal to theaggregate and actual amount of interest (at the contract rate of interest) that would be paid through the maturity date.

 

Inthe event of a default (as described in the May Agile Loan), the Agile Loan shall accrue interest at a fixed per annum rate equal tothe rate that is otherwise applicable thereto plus an additional 5%. The Company also agreed to pay Agile an administration fee of $10,000upon execution.

 

Whilethe May Agile Loan remains outstanding, the Company will grant Agile a continuing security interest in its Collateral (defined as allproperties, rights and assets of the Company), wherever located, whether now owned or hereafter acquired or arising, and all proceedsand products thereof.

 

TheCompany shall use some of the proceeds of the May Agile Loan to pay off its existing loan balance of $116,658 for the loan funded byAgile on June 26, 2023. The rest of the proceeds will be used for general corporate purposes.

 

OnJuly 25, 2024 the Company entered into a second subordinated business loan and security agreement with Agile which provides for a termloan to the Company in the form of a promissory note in the aggregate principal amount of $210,000 (the “July Agile Loan”).The July Agile Loan will accrue principal and interest of $84,000 and has a maturity date of January 31, 2025. Commencing August 2, 2024,the Company is required to make weekly payments of $10,889 until the maturity date. The proceeds of the July Agile Loan will be usedfor general corporate purposes.

 

Allthe other terms and provision of the July Agile Loan are exactly the same as the May Agile Loan.

 

FirstFireNote

 

OnMay 17, 2024, the Company entered into a promissory note with FirstFire Global Opportunities Fund, LLC, a Delaware limited liabilitycompany (“FirstFire”), pursuant to which the Company issued a promissory note in the principal amount of $240,000 with anoriginal discount of $40,000 (the “FirstFire Note”). The FirstFire Note accrues interest at a rate of 19% per annum and hasa maturity date of April 17, 2025. The proceeds from the FirstFire Note are for general corporate purposes.

 

TheFirstFire Note has mandatory monthly payments due the 17th of each month. The initial payment on August 17, 2024 is $185,600. Monthlypayments from September 2024 – December 2024 are $22,000. Monthly payments from January 2025 - April 2025 are $3,000. The Companymay prepay the FirstFire Note at any time without penalty. The Company’s failure to comply with the material terms of the FirstFireNote will be considered an event of default and the principal sum of the FirstFire Note will become immediately due and payable at anamount equal to 150% times the sum of (i) the then outstanding principal amount of the note plus (ii) accrued and unpaid interest onthe unpaid principal amount of the note to the date of payment plus (iii) default interest, plus (iv) any other amounts owed to FirstFire.As of the date of this prospectus, the FirstFire Note has been paid in its entirety and the balance on the note of $0.

 

Afterthe occurrence of an event of default, at any time, FirstFire shall have the right to convert all or any part of the outstanding andunpaid amount of the FirstFire Note into fully paid and non-assessable shares of our common stock. The conversion price shall be 61%multiplied by the Market Price (as defined in the FirstFire Note). While the FirstFire Note remains outstanding, we will reserve 40,000shares of our common stock free from preemptive rights, to provide for the issuance upon the full conversion of the FirstFire Note. Theshares will be subject to Rule 144.

 

Whilethe FirstFire Note remains outstanding, we shall not, without FirstFire’s written consent, sell, lease, or otherwise dispose ofany significant portion of our assets outside the ordinary course of business.

 

 

LindWaiver and Acknowledge Agreement

 

OnAugust 3, 2024 the Company and Lind Global Fund II LP (“Lind”) entered into a waiver and acknowledgement agreement (the “WaiverAgreement”).

 

TheCompany and Lind previously entered into that certain Securities Purchase Agreement, dated as of May 20, 2023, as amended on July 27,2023 pursuant to which the Company issued Lind a senior convertible promissory note in the principal amount of $300,000.

 

TheCompany has engaged in an at-the-market offering in connection with which HC Wainwright & Co, LLC as acted asplacement agent (the “HCWATM”)

 

Pursuantto the Waiver Agreement, it is agreed, solely as it relates to the HCW ATM to the wavier of Sections 3.4(a)(v) (Adjustments for Issuanceof Additional Shares of Common Stock) and 4.1(f) (Prohibited Transactions) of the note and Section 5.9 (Prohibited Transactions) of theSecurities Purchase Agreement. The waiver is subject to the following conditions: (i) the Company may not make any sales of securitiesunder the HCW ATM until 3 Trading Days have elapsed from the date that the terms of this Agreement are publicly announced, (ii) for theperiod beginning on the date hereof and ending on that the day that is 60 days thereafter, the aggregate amount of gross proceeds receivableunder the HCW ATM for the sale of securities by the Company may not exceed $1,000,000, and (iii) for the period beginning on the datethat is 61 days following the date hereof and ending on that the day that is 150 days thereafter, the aggregate amount of total grossproceeds receivable under the HCW ATM for the sale of securities by the Company may not exceed an additional $1,000,000. Additionally,on the date that is the earlier of (i) the date that gross the proceeds for the sale of securities by the Company under the HCW ATM equalsor is in excess of $500,000.00, or (ii) the date that is 120 days from the date hereof, the Company shall pay to Lind $100,000.00 andan additional $3,000.00 for the Lind’s legal expenses relating to the preparation of this Agreement.

 

Ifthe Company sells securities prior to the date permitted, in excess of the amounts agreed to, or if the Company fails to make the paymentsas required the Waiver Agreement will be deemed to have not been given. We are a “smaller reporting company” as defined inItem 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including,among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the lastday of the fiscal year in which (1) the market value of our Common Stock held by non-affiliates equals or exceeds $250 million as ofthe end of that year’s second fiscal quarter, or (2) our annual revenues equaled or exceeded $100 million during such completedfiscal year and the market value of our Common Stock held by non-affiliates equals or exceeds $700 million as of the end of that year’ssecond fiscal quarter.

 

August2024 Private Placement Offering

 

InAugust, 2024, the Company entered into securities purchase agreements (each a “Securities Purchase Agreement”) with eachof Quick Capital, LLC, a Wyoming limited liability company (“Quick Capital”) and Jefferson Street Capital, LLC a New Jerseylimited liability company (“Jefferson”) whereby it will issue promissory notes in the aggregate principal amount of $550,000(the “August Private Placement Offering”).

 

TheCompany agreed to issue to each of Quick Capital and Jefferson up to 19,650 shares of our common stock as a “CommitmentFee”

 

Aspart of the August Private Placement Offering, the Company issued two promissory notes each in the principal amount of $275,000 withan original issue discount of $25,000 (the “Private Placement Notes”). The Private Placement Notes have a one-time interestpayment of $27,500. Thereafter, any principal amount of interest which is not paid upon maturity will accrue at a rate of the lesserof (i) sixteen percent (16%) per annum and (ii) the maximum amount permitted by law from the due date thereof until the same is paid.The Private Placement Notes have a maturity date of 10 months after issuance and the proceeds from the notes are for general corporatepurposes. The Company agreed to issue to each of Quick Capital and Jefferson 19,650 shares of common stock as additional considerationfor entering into Private Placement Notes.

 

 

Theinvestors have the right, at any time on or following the earlier of (i) the date that any of the shares are registered for resale undera registration statement of the Company or (ii) the date that is six (6) months after the issue date, to convert all or any portion ofthe then outstanding and unpaid principal and interest into fully paid and non-assessable shares of our common stock. The conversionprice shall be $1.50, subject to adjustments. We have agreed to reserve a sufficient number of common stock (initially, 2,000,000 shares)for issuance upon conversion of the Private Placement Notes in accordance with their terms.

 

TheCompany may prepay the Private Placement Notes at any time with fifteen (15) trading days prior written notice (the “PrepaymentNotice Period”). During the Prepayment Notice Period, the investor shall have the right to convert all or any portion of the PrivatePlacement Notes pursuant to the terms of the note, including the amount of the Private Placement Notes to be prepaid. If the Companyexercises its right to prepay the notes in accordance with their terms, the Company shall make payment to the investor of an amount incash equal to the sum of: (i) 100% multiplied by the principal amount then outstanding plus (ii) accrued and unpaid interest onthe principal amount to the prepayment notice date, and (iii) $750 to reimburse the investor for administrative fees.

 

Ifthe Company delivers a prepayment notice and fails to pay the applicable prepayment amount, the Company shall forever forfeit its rightto prepay any part of the Private Placement Notes.

 

ThePrivate Placement Notes have mandatory monthly payments of $43,200. The initial payments are due on November 9, 2024 and November 12,2024, respectively.

 

TheCompany’s failure to comply with the material terms of the Private Placement Notes will be considered an event of default and theprincipal sum of the Private Placement Notes will become immediately due and payable at an amount equal to the principal amount thenoutstanding plus accrued interest (including any default interest) through the date of full repayment multiplied by 135%, as well asall costs, all without demand, presentment or notice, unless expressly waived by the investor.

 

Theinvestor may assign its rights to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transactionfrom Quick Capital or to any of its affiliates without the consent of the Company.

 

Whilethe Private Placement Notes remain outstanding, we shall not, without the investor’s written consent (i) (a) pay, declare or setapart for such payment, any dividend or other distribution on shares of capital stock other than dividends on shares of common stocksolely in the form of additional shares of common stock or (b) directly or indirectly or through any subsidiary make any other paymentor distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approvedby a majority of the Company’s disinterested directors, (ii) redeem, repurchase or otherwise acquire (whether for cash or in exchangefor property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock ofthe Company or any warrants, rights or options to purchase or acquire any such shares, or repay any indebtedness of Quick Capital, (iii)advance any loans made in the ordinary course of business in excess of $100,000, (iv) sell, lease or otherwise dispose of any significantportion of its assets outside the ordinary course of business, and (v) enter into any transaction or arrangement structured in accordancewith, based upon, or related or pursuant to, in whole or in part, either Section 3(a)(9) or Section 3(a)(10) of the Securities Act.

 

Inconjunction with the August Private Placement Offering, the Company entered into a registration rights agreement (each a “RegistrationRights Agreement”) with each of Quick Capital and Jefferson. The Company agreed to file a registration statement with the Securitiesand Exchange Commission to register the re-sale of the maximum number of shares of common stock covered in the August Private PlacementOffering within sixty (60) calendar days from the date of execution.

 

1800Diagonal Notes

 

OnSeptember 9, 2024, pursuant to a securities purchase agreement, the Company issued to 1800 Diagonal Lending LLC, a Virginia limited liabilitycompany (“Diagonal”) a convertible promissory note in the principal amount of $179,400 with an original issue discount of$23,400 (the “September Diagonal Note”). The September Diagonal Note has a one-time interest payment of $23,322 paid uponissuance and a maturity date of June 15, 2025. The proceeds from the September Diagonal Note are for general working capital. Upon theoccurrence of an event of default as described in the September Diagonal Note, the note will become immediately due and payable at adefault interest rate of 22% of the then outstanding principal amount of the note. The September Diagonal Note has an initial paymentof $131,769 due on March 15, 2025, with monthly payments of $23,651 due on the 15^th of every month thereafter until June 15,2025.

 

Uponthe occurrence of an event of default, as described in the note, Diagonal will have the right to convert all or any part of the outstandingand unpaid amount of the Second Diagonal Note into shares of the Company’s common stock at a conversion price of 65% of the marketprice. While the September Diagonal Note remains outstanding, the Company may not, without Diagonal’s written consent, sell, lease,or otherwise dispose of any significant portion of its assets except in the ordinary course of business. The Company will reserve 1,533,333shares of its Common Stock to provide for the issuance of shares upon the full conversion of the September Diagonal Note. The outstandingbalance on the September Diagonal Note was $179,400 as of the date of this prospectus.

 

OnOctober 1, 2024, pursuant to a securities purchase agreement, the Company issued to Diagonal a convertible promissory note in the principalamount of $121,900 with an original issue discount of $15,900 (the “October Diagonal Note”). The October Diagonal Note hasa one-time interest payment of $14,628 paid upon issuance and a maturity date of June 30, 2025. The proceeds from the sale of the OctoberDiagonal Note are for general working capital. Upon the occurrence of an event of default as described in the October Diagonal Note,the note will become immediately due and payable at a default interest rate of 22% of the then outstanding principal amount of the note.The October Diagonal Note has mandatory monthly payments of $15,170 beginning on October 30, 2024, and due on the 30^th ofevery month thereafter until February 28, 2025.

 

Uponthe occurrence of an event of default, as described in the note, Diagonal will have the right to convert all or any part of the outstandingand unpaid amount of the October Diagonal Note into shares of the Company’s common stock at a conversion price of 75% of the marketprice. The Company may not, without Diagonal’s written consent, sell, lease, or otherwise dispose of any significant portion ofits assets except in the ordinary course of business. The Company will reserve 1,427,233 shares of its Common Stock to provide for theissuance of shares upon the full conversion of the October Diagonal Note. The outstanding balance on the October Diagonal Note was $108,356as of the date of this prospectus.

 

NASDAQCompliance

 

OnOctober 18, 2024, the Company received a notice letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC(“Nasdaq”) notifying the Company that, based upon the closing bid price of the Company’s common stock, par value $0.0001per share (“Common Stock”), for the last 30 consecutive business days, the Company is not currently in compliance with therequirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in NasdaqListing Rule 5550(a)(2) (the “Minimum Bid Requirement”), which matter serves as a basis for delisting the Company’ssecurities from Nasdaq.

 

 

Aspreviously reported on a Current Report on Form 8-K filed on June 12, 2024, the Company is subject to a Mandatory Panel Monitor for aperiod of one year, or until June 11, 2025. As such, the Company is not eligible for a compliance period. The Company requesteda hearing with the Hearings Panel (the “Panel”), on October 12, 2024. The hearing date is set for December 11,2024. The hearing request will stay the suspension of the Company’s securities and the filing of the Form 25-NSE pending thePanel’s decision. The fee for the hearing was $20,000.

 

VendorAgreement

 

OnNovember 12, 2024 the Company entered into a vendor agreement with Low Tide LLC (“LT”). The term of the agreement is 180days, with will be automatically renewed for additional successive 180 day terms unless either party gives 90 days written notice toterminate to the other.

 

LThas developed products, including but not limited to seafood, under the Wicked Tuna brand using its licensing rights from Pilgrim andthe Toby Keith brand, (collectively the “Products”). We will, with LT, promote and sell the Products.

 

TheCompany may, at its discretion, provide funding for the inventory to fulfill a purchase order (each a “PO”) for the Productssold, and the parties will each receive the following:

 

(i)

As relates to Wicked Tuna, if the Company obtains a PO of a Product from its customers, we will pay LT a five percent (5%) margin on the Net Sales Amount. Net Sales Amount shall mean gross sales less returns and promotions and freight allowance.

 

(ii)

As relates to the Toby Keith brand, if LT obtains a PO for the Products from its customers and the Company funds the purchase of the inventory to fulfill the PO, the Company shall receive a fee of one percent (1%) of the amount funded per month from LT from the first day of each month that the amount remains outstanding plus an allocation expense which shall be a direct pass through of cost which shall be calculated to include the cost of the product as well expenses associated with transportation, storage and miscellaneous expenses. The Company will be paid directly by LT’s customers. Thereafter, the Company will pay LT its portion within 48 hours of receiving funds for each PO.

 

Theparties agreed to certain customary covenants, including those relating to confidentiality and litigation. The parties also agreed tocertain mutual indemnification provisions for breaches or inaccuracies in their respective representations and warranties or covenants.

 

Resultsof Operations

 

Thefollowing discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read inconjunction with, the financial statements and accompanying notes elsewhere in this prospectus.

 

Threemonths ended September 30, 2024 and 2023

 

NetRevenue. Revenue for the three months ended September 30, 2024 decreased 43.4% to $884,283 as compared to $1,561,679 for the threemonths ended September 30, 2023 as a result of a decrease in poundage sold.

 

Costof Goods Sold. Cost of goods sold for the three months ended September 30, 2024 decreased to $887,850 as compared to $1,586,478 forthe three months ended September 30, 2023. This decrease is attributable to the decrease in the poundage sold in the cost of goods.

 

GrossProfit (Loss). Gross (loss) for the three months ended September 30, 2024 decreased to $3,567 as compared to gross (loss) of $24,799in the three months ended September 30, 2023. This decrease is attributable to the decrease the inventory reserve and decrease of cost.

 

CommissionsExpense. Commissions expense increased to $11,429 for the three months ended September 30, 2024 from $423 for the three months endedSeptember 30, 2023. This increase was due to the commission expense for our new subsidiary.

 

Salariesand Wages Expense. Salaries and wages expense decreased to $271,542 for the three months ended September 30, 2024 as compared to$301,393 for the three months ended September 30, 2023. This decrease is mainly attributable to a strategic reduction in salaries completedin the year end December 31, 2023.

 

Depreciationand Amortization. Depreciation and amortization expense decreased to $1,535 for the three months ended September 30, 2024 as comparedto $2,754 for the three months ended September 30, 2023. This decrease is attributable to lower depreciation on fixed assets purchased,not including the capitalization of recently acquired assets during the three months ended September 30, 2024.

 

OtherOperating Expense. Other operating expense increased to $631,722 for the three months ended September 30, 2024 from $410,913 forthe three months ended September 30, 2023. This increase is mainly attributable to legal and professional expenses related to our businessoperations.

 

OtherIncome (Expense). Other (expense) decreased for the three months ended September 30, 2024 to other income of $18 from other (expense)of $1,902 for the three months ended September 30, 2023. This decrease is mainly attributable to the collections by Coastal Pride ofreceivables existing prior to the acquisition of Coastal Pride by the Company.

 

InterestIncome. Interest income decreased to $0 for the three months ended September 30, 2024 from $16 for the three months ended September30, 2023. The decrease is attributable to no interest earned for the three months ended September 30, 2024.

 

Losson Settlement of Debt. Loss on settlement of debt decreased to $0 for the three months ended September 30, 2024 from $144,169 forthe three months ended September 30, 2023. The decrease is attributable to the Lind notes settlement in the prior year.

 

Changein Fair Value of Derivative and Warrant Liabilities. Change in fair value of derivative and warrant liabilities decreased to $33,806for the three months ended September 30, 2024 from $1,240,214 for the three months ended September 30, 2023. The decrease is attributableto the fair value measurement for the derivative liability and warrant liability for the three months ended September 30, 2024.

 

 

InterestExpense. Interest expense decreased to $439,176 for the three months ended September 30, 2024 from $799,690 for the three monthsended September 30, 2023. The decrease is attributable to the amortization of the Lind convertible debt discount associated with theconversion payments made during the three months ended September 30, 2024.

 

NetLoss. Net loss was $1,325,147 for the three months ended September 30, 2024 as compared to $445,813 for the three months ended September30, 2023. The increase in net loss is primarily attributable to the change in fair value of derivative and warrant liabilities.

 

Ninemonths ended September 30, 2024 and 2023

 

NetRevenue. Revenue for the nine months ended September 30, 2024 decreased 3.8% to $4,921,170 as compared to $5,115,680 for the ninemonths ended September 30, 2023 as a result of the decrease in the poundage sold.

 

Costof Goods Sold. Cost of goods sold for the nine months ended September 30, 2024 decreased to $4,459,458 as compared to $4,775,102for the nine months ended September 30, 2023. This decrease is attributable to the decrease in the poundage sold in the cost of goods.

 

GrossProfit (Loss). Gross profit for the nine months ended September 30, 2024 increased to $461,712 as compared to gross profit of $340,578in the nine months ended September 30, 2023. This increase is attributable to the decrease of cost .

 

CommissionsExpense. Commissions expense increased to $15,650 for the nine months ended September 30, 2024 from $2,169 for the nine months endedSeptember 30, 2023. This increase was due to the commission expense for our new subsidiary.

 

Salariesand Wages Expense. Salaries and wages expense decreased to $868,781 for the nine months ended September 30, 2024 as compared to $1,298,358for the nine months ended September 30, 2023. This decrease is attributable to a strategic reduction in salaries completed in the yearend December 31, 2023.

 

Depreciationand Amortization. Depreciation and amortization expense decreased to $4,211 for the nine months ended September 30, 2024 as comparedto $33,091 for the nine months ended September 30, 2023. This decrease is attributable to lower depreciation on fixed assets purchased,not including the capitalization of recently acquired assets during the nine months ended September 30, 2024.

 

OtherOperating Expense. Other operating expense increased to $2,026,787 for the nine months ended September 30, 2024 from $1,773,702 forthe nine months ended September 30, 2023. This increase is mainly attributable to increase of legal and professional expenses relatedto our business operations.

 

OtherIncome. Other income increased for the nine months ended September 30, 2024 to $49,680 from $25,292 for the nine months ended September30, 2023. This increase is mainly attributable to the collections by Coastal Pride of receivables existing prior to the acquisition ofCoastal Pride by the Company.

 

InterestIncome. Interest income decreased to $0 for the nine months ended September 30, 2024 from $40 for the nine months ended September30, 2023. The decrease is attributable to no interest earned for the nine months ended September 30, 2024.

 

Losson Settlement of Debt. Loss on settlement of debt decreased to $0 for the nine months ended September 30, 2024 from $977,138 forthe nine months ended September 30, 2023. The decrease is attributable to the Lind notes settlement in prior year.

 

Changein Fair Value of Derivative and Warrant Liabilities. Change in fair value and derivative and warrant liabilities decreased to $210,680for the nine months ended September 30, 2024 from $1,339,791 for the nine months ended September 30, 2023. The decrease is attributableto the fair value measurement for the derivative liability and warrant liability for the nine months ended September 30, 2024.

 

 

InterestExpense. Interest expense increased to $1,645,492 for the nine months ended September 30, 2024 from $1,470,143 for the nine monthsended September 30, 2023. The increase is attributable to the amortization of debt discount and interest paid and accrued on the notes.

 

NetLoss. Net loss was $4,260,209 for the nine months ended September 30, 2024 as compared to $3,848,950 for the nine months ended September30, 2023. The increase in net loss is primarily attributable to the change in fair value of derivative and warrant liabilities and theinterest expense.

 

Liquidityand Capital Resources

 

TheCompany had cash of $72,697 as of September 30, 2024. At September 30, 2024, the Company had a working capital surplus of $2,527,851,including the Company’s primary sources of liquidity consisted of inventory of $2,366,056 and accounts receivable of $1,316,093.

 

TheCompany has historically financed its operations through the cash flow generated from operations, capital investment, notes payable anda working capital line of credit.

 

Cash(Used in) Operating Activities. Cash used in operating activities during the nine months ended September 30, 2024 was $4,285,630as compared to cash used in operating activities of $3,112,126 for the nine months ended September 30, 2023. The increase is primarilyattributable to decrease in payables and customer refunds of $1,981,764, offset by the increase in inventory of $3,289,924 for the ninemonths ended September 30, 2024 compared with the nine months ended September 30, 2023.

 

Cash(Used in) Investing Activities. Cash used in investing activities for the nine months ended September 30, 2024 was $94,152 as comparedto cash used in investing activities of $132,551 for the nine months ended September 30, 2023. The decrease was mainly attributable tothe decrease in the purchase of fixed assets.

 

CashProvided by Financing Activities. Cash provided by financing activities for the nine months ended September 30, 2024 was $4,350,018as compared to cash provided by financing activities of $3,667,373 for the nine months ended September 30, 2023. The increase is mainlyattributable to proceeds from short-term loans and proceeds from share issuances.

 

JohnKeeler Promissory Notes

 

FromJanuary 2006 through May 2017, Keeler & Co issued 6% demand promissory notes in the aggregate principal amount of $2,910,000 to JohnKeeler, our Chief Executive Officer and Executive Chairman. As of September 30, 2024, approximately $0 of principal remains outstandingand approximately $4,435 of interest was paid under the notes during the nine months ended September 30, 2024. After satisfaction ofthe terms of the subordination, the Company may prepay the notes at any time first against interest due thereunder. If an event of defaultoccurs under the notes, interest will accrue at 18% per annum and if not paid within ten days of payment becoming due, the holder ofthe note is entitled to a late fee of 5% of the amount of payment not timely made. The Company made principal payments of $165,620 duringthe nine months ended September 30, 2024.

 

LindGlobal Fund II LP note

 

OnMay 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 exercisablefor five years at an exercise price of $2.45 per share, for the aggregate funding amount of $1,000,000. The Lind Warrant includes cashlessexercise and full ratchet anti-dilution provisions. In connection with the issuance of the Lind Note and the Lind Warrant, the Companypaid Lind a $50,000 commitment fee. The proceeds from the sale of the Note and Warrant were for general working capital purposes.

 

OnJuly 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 orderto permit the issuance of further senior convertible promissory notes in the aggregate principal amount of up to $1,800,000 and warrantsin such aggregate amount as the Company and Lind shall mutually agree.

 

Pursuantto the Purchase Agreement Amendment, the Company issued to Lind a two-year, interest free convertible promissory note in the principalamount of $300,000 and a warrant to purchase 175,234 shares of common stock of the Company, for the aggregate amount of $250,000. Inconnection with the issuance of the note and the warrant, the Company paid a $12,500 commitment fee. The proceeds from the sale of thenote and warrant are for general working capital purposes.

 

Duringthe nine months ended September 30, 2024, the Company made aggregate principal payments on the Lind Note of $1,144,900 through the issuanceof an aggregate of 571,531 shares of common stock. As of September 30, 2024, the outstanding balance on the Lind Note was $355,100, netof debt discount of $160,056.

 

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

 

NetSales. 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 December31, 2022 as a result of a decrease in poundage sold during the year ended December 31, 2023.

 

Costof Goods Sold. Cost of goods sold for the year ended December 31, 2023 decreased to $5,966,452 as compared to $13,419,133 for theyear ended December 31, 2022. This decrease is attributable to the decrease in poundage sold in the cost of goods.

 

GrossProfit (Loss). Gross profit for the year ended December 31, 2023 is $158,077 as compared to gross loss of $651,988 for the year endedDecember 31, 2022. This increase is attributable to higher market prices and lower cost of goods sold in comparison to the year endedDecember 31, 2022.

 

GrossProfit (Loss) Margin. Gross profit margin for the year ended December 31, 2023 is 2.6% as compared to gross loss margin of 5.1% forthe year ended December 31, 2022. This increase is attributable to higher market prices and lower cost of goods sold in comparison tothe year ended December 31, 2022.

 

CommissionsExpenses. Commissions expenses decreased to $2,169 for the year ended December 31, 2023 from $24,482 for the year ended December31, 2022. The decrease is attributable to lower commissionable revenues.

 

Salariesand Wages Expense. Salaries and wages decreased to $1,858,004 for the year ended December 31, 2023 as compared to $2,032,457 forthe year ended December 31, 2022. This decrease is primarily attributable to a strategic reduction in salaries for the year ended December31, 2023.

 

 

Depreciationand Amortization. Depreciation and amortization expense decreased to $4,521 for the year ended December 31, 2023 as compared to $584,386for the year ended December 31, 2022. This decrease is attributable to lower depreciation due to the impairment of fixed assets and intangibleassets in the year ended December 31, 2022.

 

ImpairmentLoss. Impairment loss decreased to $0 for the year ended December 31, 2023 as compared to $5,797,906 for the year ended December31, 2022. This decrease is attributable to the impairment recognized on TOBC for the year ended December 31, 2022.

 

OtherOperating Expense. Other operating expenses increased 0.1% to $2,525,661 for the year ended December 31, 2023 as compared to $2,522,764for the year ended December 31, 2022. This increase is mainly attributable to an increase in legal and professional fees related to ourbusiness operations.

 

OtherIncome. 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 lower collections received by Coastal Pride from previously written off receivables.

 

Losson Conversion of Debt. Loss on conversion of debt increased to $977,188 for the year ended December 31, 2023 from $57,085 for theyear ended December 31, 2022. This increase is attributable to the additional payments made to Lind by the issuance of common stock dueto a decrease in the Repayment Share Price.

 

Changein 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 2023Lind notes embedded conversion feature due to the variable conversion price on the agreements.

 

InterestExpense. Interest expense increased to $1,771,942 for the year ended December 31, 2023 as compared to $1,678,097 for the year endedDecember 31, 2022. This increase is mainly attributable to the amortization of the Lind convertible debt discount.

 

NetLoss. 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 forthe year ended December 31, 2022. The decrease in net loss is primarily attributable to decreases in salaries and wages, decreases indepreciation and amortization, recognition of impairment losses for TOBC and Coastal Pride in 2022 that no longer applied in 2023 anddecreases of other expenses of legal and professional fees.

 

Liquidityand Capital Resources

 

TheCompany had cash of $24,163 as of December 31, 2023. 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 deficitof $3,013,281 at December 31, 2022, including $893,000 in stockholder loans. The Company’s primary sources of liquidity consistedof inventory of $2,608,521 and accounts receivable of $534,195 at December 31, 2023. The increase in working capital was due primarilyto decreases of inventory of $2,023,631 and accounts receivable of $270,881 netted against the decreases in the working capital lineof credit of $1,776,068 and maturities of short-term debt of $3,439,557.

 

TheCompany has historically financed its operations through the cash flow generated from operations, loans from stockholders and other relatedparties as well as a working capital line of credit and the sale of equity in private offerings.

 

Cash(Used in) Operating Activities. Cash used in operating activities during the year ended December 31, 2023 was $3,530,662 as comparedto cash used in operating activities of $3,618,811 for the year ended December 31, 2022, representing a decrease of $88,149. The decreaseis primarily attributable to a decrease in inventory of $5,455,560 netted against the decreases in deferred income of $62,336, accountsreceivable netted against other current assets of $3,036,916 and decrease in payables netted against other current liabilities of $2,094,395for the year ended December 31, 2023.

 

 

Cash(Used in) Investing Activities. 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 duringthe year ended December 31, 2023 compared to the acquisition of the soft-shell crab operations by Coastal Pride for the year ended December31, 2022.

 

CashProvided by Financing Activities. Cash provided by financing activities for the year ended December 31, 2023 was $3,676,355 as comparedto cash provided by financing activities of $3,075,400 for the year ended December 31, 2022. This increase is mainly attributable toin the private placement offering completed in September 2023.

 

WorkingCapital Line of Credit

 

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

 

Theadvance 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. The inventory portionof 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 in three instalments of $16,667 in March, April and May 2021 andpaid an additional facility fee of $25,000 on March 31, 2022. In an effort to increase imports to meet customer demand, on January 14,2022, the maximum inventory advance under the line of credit was adjusted from 50% to 70% until June 30, 2022, 65% until July 31, 2022,60% until August 31, 2022, 55% until September 30, 2022, at a monthly fee of 0.25% on the portion of the loan in excess of the 50% advance.On July 29, 2022, the Loan Agreement was further amended to set the annual interest rate on the outstanding principal amount at 4.75%above the prime rate and to reduce the monthly required cash flow requirements beginning July 31, 2022. The amendment also updated themaximum inventory advance under the line of credit to 60% from August 1, 2022 through December 31, 2022 and 50% thereafter.

 

Theline of credit was secured by a first priority security interest on all the assets of each Borrower. Pursuant to the terms of a guarantyagreement, the Company guaranteed the obligations of the Borrowers under the note and John Keeler, Executive Chairman and Chief ExecutiveOfficer of the Company, provided a personal guaranty of up to $1,000,000 to Lighthouse.

 

OnJune 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 feesincurred in connection with the line of credit of approximately $4,991. Upon the repayment of the total outstanding indebtedness owingto Lighthouse, the Loan Agreement and all other related financing agreements and documents entered into in connection with the Loan Agreementwere deemed terminated.

 

Duringthe year ended December 31, 2023, cash proceeds from the working capital line of credit totaled $2,405,034 and cash payments to the workingcapital line of credit totaled $4,182,971.

 

JohnKeeler Promissory Notes

 

FromJanuary 2006 through May 2017, Keeler & Co issued 6% demand promissory notes in the aggregate principal amount of $2,910,000 to JohnKeeler, our Chief Executive Officer and Executive Chairman. As of December 31, 2023, approximately $165,600 of principal remains outstandingand approximately $50,500 of interest was paid under the notes during the year ended December 31, 2023. These notes are subordinatedto the Lighthouse note. After satisfaction of the terms of the subordination, the Company may prepay the notes at any time first againstinterest due thereunder. If an event of default occurs under the notes, interest will accrue at 18% per annum and if not paid withinten 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. TheCompany made principal payments of $157,380 during the year ended December 31, 2023. During the year ended December 31, 2023, the Companyissued 79,167 shares of its common stock to settle $570,000 principal of the subordinated notes.

 

 

UnderwrittenOffering

 

OnSeptember 11, 2023, the Company offered and sold in a “best efforts” public offering pursuant to a registration statementon Form S-1, which was declared effective by the SEC on September 7, 2023, an aggregate of 13,800 shares of common stock, together withSeries A-1 warrants to purchase up to 214,823 shares of common stock and Series A-2 warrants to purchase up to 214,823 shares of commonstock (collectively, the “Common Warrants”) and 201,023 pre-funded warrants (the “Pre-Funded Warrants”).

 

Eachshare of common stock and Pre-Funded Warrants were sold together with a Series A-1 common stock purchase warrant to purchase one shareof 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-FundedWarrant and accompanying Common Warrants are immediately separable and were issued separately. The public offering price for each shareof common stock and accompanying Common Warrants was $0.4655. Each Common Warrant has an exercise price per share of $23.275 and willbe 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 anniversaryof the effective date of the Warrant Stockholder Approval. The Series A-2 common stock purchase warrants will expire on the eighteen-monthanniversary of the effective date of the Warrant Stockholder Approval. The Pre-Funded Warrants are exercisable immediately, may be exercisedat any time until all of the Pre-Funded Warrants are exercised in full, and have an exercise price of $0.01. The Warrant StockholderApproval has not yet been obtained.

 

Theshares of common stock, Common Warrants and Pre-Funded Warrants were sold pursuant to a securities purchase agreement. H.C. Wainwright& Co., LLC acted as placement agent for the offering and received a fee of 7% of the gross proceeds, reimbursement of $35,000 innon-accountable expenses and $100,000 for legal fees and out-of-pocket expenses.

 

2021Underwritten Offering

 

OnNovember 2, 2021, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Newbridge SecuritiesCorporation (“Newbridge”), as representative of the underwriters listed therein (the “Underwriters”), pursuantto which the Company agreed to sell to the Underwriters in a firm commitment underwritten public offering (the “Offering”)an aggregate of 16,000 shares of the Company’s common stock, at a public offering price of $250.00 per share. In addition, theUnderwriters were granted an over-allotment option (the “Over-allotment Option”) for a period of 45 days to purchase up toan additional 2,400 shares of common stock. The Offering closed on November 5, 2021 and the common stock began trading on the NASDAQCapital Market under the symbol “BSFC” on November 3, 2021. The Over-allotment Option was not exercised by the Underwriters.

 

Thenet proceeds to the Company from the Offering, after deducting the underwriting discount, the underwriters’ fees and expenses andthe Company’s estimated Offering expenses, were approximately $3,600,000. The Company used the net proceeds from the Offering forgeneral corporate purposes, including working capital, operating expenses, and capital expenditures. The Company may also use a portionof the net proceeds to acquire or make investments in businesses, products, and offerings, although the Company does not have agreementsor commitments for any material acquisitions or investments at this time.

 

Inaddition, pursuant to the terms of the Underwriting Agreement and related “lock-up” agreements, each director, executiveofficer, and beneficial owners of over 10% of the Company’s common stock (for a period of 180 days after the date of the finalprospectus relating to the Offering), have agreed, subject to customary exceptions, not to sell, transfer or otherwise dispose of securitiesof the Company, without the prior written consent of Newbridge.

 

OnNovember 5, 2021, in connection with the November 2, 2021 Offering, the Company issued a warrant to purchase an aggregate of 56 sharesof common stock at an exercise price of $5,000.00 per share to Newbridge. Such warrant expires on November 11, 2024.

 

 

LindGlobal Fund II LP investment

 

OnJanuary 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 inthe 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 exerciseprice of $4.50 per share, subject to customary adjustments (1,000 shares of common stock at an exercise price of $4,500 per shareafter taking into account the Company’s Reverse Stock Split). The warrant provides for cashless exercise and for full ratchet anti-dilutionif the Company issues securities at less than $4.50 per share (exercise price of $4,500 per share after taking into account the Company’sReverse Stock Split). In connection with the issuance of the note and the warrant, the Company paid a $150,000 commitment fee to Lindand approximately $87,000 of debt issuance costs.

 

Theoutstanding principal under the note is payable commencing July 24, 2022, in 18 consecutive monthly installments of $333,333, at theCompany’s option, in cash or shares of common stock at a price (the “Repayment Share Price”) based on 90% of the fivelowest volume weighted average prices (“VWAP”) during the 20-days prior to the payment date with a floor price of $1.50 pershare (the “Floor Price”) (floor price of $1,500 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 additionto shares, the Company will pay Lind an additional amount in cash as determined pursuant to a formula contained in the note.

 

Inconnection with the issuance of the note, the Company granted Lind a first priority security interest and lien on all of its assets,including a pledge on its shares in John Keeler & Co. Inc., its wholly-owned subsidiary, pursuant to a security agreement and a stockpledge agreement with Lind, dated January 24, 2022. Each subsidiary of the Company also granted a second priority security interest inall of its respective assets.

 

Thenote 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 then line of credit facility withLighthouse. The Company also agreed not to issue or sell any securities with a conversion, exercise or other price based on a discountto the trading prices of the Company’s stock or to grant the right to receive additional securities based on future transactionsof the Company on terms more favorable than those granted to Lind, with certain exceptions.

 

Ifthe Company fails to maintain the listing and trading of its common stock, the note will become due and payable and Lind may convertall or a portion of the outstanding principal at the lower of the then current conversion price and 80% of the average of the 3-day VWAPduring the 20 days prior to delivery of the conversion notice.

 

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

 

Thenote is convertible into common stock at $5.00 per share ($5,000 per share after taking into account the Company’s Reverse StockSplit), subject to certain adjustments, at any time after the earlier of six months from issuance or the date the registration statementis effective; provided that no such conversion may be made that would result in beneficial ownership by Lind and its affiliates of morethan 4.99% of the Company’s outstanding shares of common stock. If shares are issued by the Company at less than the conversionprice, the conversion price will be reduced to such price.

 

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

 

OnMay 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 8,701 shares of common stock of the Company commencing six months after issuance and exercisablefor five years at an exercise price of $122.50 per share, for the aggregate funding amount of $1,000,000. The Lind Warrant includes cashlessexercise and full ratchet anti-dilution provisions. In connection with the issuance of the Lind Note and the Lind Warrant, the Companypaid Lind a $50,000 commitment fee. The proceeds from the sale of the Note and Warrant are for general working capital purposes.

 

 

OnJuly 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 orderto permit the issuance of further senior convertible promissory notes in the aggregate principal amount of up to $1,800,000 and warrantsin such aggregate amount as the Company and Lind shall mutually agree.

 

Pursuantto the Purchase Agreement Amendment, the Company issued to Lind a two-year, interest free convertible promissory note in the principalamount of $300,000 and a warrant to purchase 3,505 shares of common stock of the Company commencing six months after issuance and exercisablefor five years at an exercise price of $67.00 per share, for the aggregate amount of $250,000. In connection with the issuance of thenote and the warrant, the Company paid a $12,500 commitment fee. The proceeds from the sale of the note and warrant are for general workingcapital purposes.

 

AgileLoan

 

Inorder to refinance interest due on the June 14, 2023 note issued to Agile, on January 2, 2024, the Company, and Keeler & Co. enteredinto a subordinated business loan and security agreement with Agile and Agile Capital as collateral agent, which provides for a termloan 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 loan. A default interest rate of 5% will become effective upon the occurrence ofan event of default. In connection with the loan, Agile was issued a subordinated secured promissory note, dated January 2, 2024, inthe principal amount of $122,491 which note is secured by all of the Borrower’s assets, including receivables.

 

ClearThinkTerm Loan

 

OnJanuary 18, 2024, the Company entered into the Revenue-Based Factoring MCA Plus Agreement with ClearThink which provides, among otherthings, for a 33-week term loan in the principal amount of $200,000 (with an additional one-time commitment fee of $50,000). Interestaccrues at the rate of 25% per annum with an additional 5% default interest rate in the event of circumstances described in the agreementor $50,000 will be added to the principal amount and accrue after principal is paid. The Company is required to make biweekly paymentsof $14,706, commencing February 1, 2024 for the term of the Agreement. On January 25, 2024, the Company issued 7,092 shares of commonstock to ClearThink as a commitment fee.

 

ReverseStock Split

 

OnMay 20, 2024, we filed a certificate of amendment to our amended and restated articles of incorporation with the Secretary of State ofthe State of Delaware to effect the 1-for-50 Reverse Stock Split, which became effective the same day. The Reverse Stock Split did notchange the Company’s current authorized number of shares of Common Stock, or its par value. The Reverse Stock Split also did notchange the Company’s authorized, or issued, and outstanding, number of shares of preferred stock, or its par value. Unless expresslystated in this registration statement, all share and per share information included herein has been adjusted to account for the ReverseStock Split.

 

Off-BalanceSheet Arrangements

 

Wecurrently have no off-balance sheet arrangements.

 

 

DESCRIPTIONOF BUSINESS

 

Overview

 

Weare an international seafood company based in Miami, Florida that imports, packages and sells refrigerated pasteurized crab meat, andother premium seafood products. Our current source of revenue is from purchasing blue and red swimming crab meat primarily from our largestsupplier in Miami 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, and steelhead salmon and rainbow trout fingerlings produced under thebrand name Little Cedar Farms for distribution in Canada. The crab meat which we import is processed in 13 plants throughout SoutheastAsia. Our suppliers are primarily via co-packing relationships, including two affiliated suppliers. We sell primarily to food servicedistributors. We also sell our products to wholesalers, retail establishments and seafood distributors.

 

Weseek to create a vertically integrated seafood company that offers customers high quality products while maintaining a focus on our corevalues of delivering food safety, traceability and certified resource sustainability. Our companies include:

 

	John Keeler & Co., Inc. (“Keeler & Co.”) doing business as Blue Star Foods, which imports, packages and sells refrigerated pasteurized crab meat sourced primarily from Southeast Asia and other premium seafood products;
	Coastal Pride Seafood, LLC (“Coastal Pride”) which imports pasteurized and fresh crab meat sourced primarily from Mexico and Latin America and sells premium branded label crab meat throughout North America;
	Taste of BC Aquafarms, Inc. (“TOBC”), a land-based recirculating aquaculture systems (“RAS”) salmon farming operation, which sells its steelhead salmon to distributors in Canada; and
	Afritex Ventures Inc., (“AVI”), a commercial manufacturer of food products.

 

Strategy

 

Ourlong-term strategy is to create a vertically integrated seafood company that offers customers high quality products while maintaininga focus on our core values of delivering food safety, traceability and certified resource sustainability.

 

Weplan to grow the Company organically by continuing to increase our customer base and by introducing new high-value product lines andcategories, as well as strategically acquiring companies that focus on additional species and proprietary technologies that we believewe can integrate into a larger, diversified company.

 

OperatingCompanies

 

Weoperate through the following subsidiary companies:

 

Keeler& Co., doing business as Blue Star Foods, is an international seafood company that imports, packages and sells refrigerated pasteurizedcrab meat sourced primarily from Southeast Asia and other premium seafood products.

 

Keeler& Co. purchases the majority of our crab product (Portunus Pelagicus and Portunus Haanii) from processors which source the crab meatfrom local fishermen in Indonesia, the Philippines, Thailand, Vietnam, Sri Lanka and India, to whom we pay a premium in order to outfittheir boats with a proprietary GPS-based system. This system allows us to trace where the crab product originates and ensure that onlymature crabs are being harvested by the use of collapsible traps and not gill nets.

 

Thecrab meat is purchased directly from processors with whom we have long-standing relationships, that have agreed to source their productin a sustainable manner. All crab meat is sourced under the Company’s U.S Food & Drug Administration (“FDA”) approvedHazard Analysis Critical Control Point (“HACCP”) Plan. Additionally, all suppliers are certified by the British Retail Consortium(the “BRC”) and are audited annually to ensure safety and quality of our product.

 

 

Theimported crab meat is processed in six out of the ten plants available throughout Southeast Asia. Our suppliers are primarily via co-packingrelationships, including two affiliated suppliers. We sell primarily to food service distributors. We also sell our products to wholesalers,retail establishments and seafood distributors.

 

Wehave created a technology platform that tracks the product through its entire chain of custody and collects and transmits various datato the Company in real-time, from the loading site to the packing plant, through the sorting and pasteurization process and the exportingprocess to the end customer. Our technology allows our customers access to their “Scan on Demand” QR code-enabled traceabilityapplication.

 

Ourpremium proprietary brands, Blue Star, Pacifika and Oceanica are differentiated in terms of quality and price point.

 

Webelieve that we utilize best-in-class technology, in both resource sustainability management and ecological packaging.

 

CoastalPride is a seafood company, based in Beaufort, South Carolina, that imports pasteurized and fresh crab meat (Portunus Pelagicus,Portunus Haanii and Callinectes) sourced primarily from Mexico and Latin America and sells premium branded label crab meat throughoutNorth America.

 

Ithas three premium branded label products, First Choice, Good Stuff and Coastal Pride Fresh.

 

TOBCis a land-based recirculating aquaculture system (“RAS”) farming operation located in Nanaimo, British Columbia, Canadawith an annual production capacity of approximately 100 tons. It produces steelhead salmon and rainbow trout fingerlings under the brandname Little Cedar Farms for distribution in Canada.

 

TOBC’sRAS facility has been operated as a model farm for the development of salmon RAS technology. We currently intend to refine this modelfarm into a 150-ton standardized module that will be replicated in the development of future farms. The next facility we hope to build,subject to sufficient resources, will have 10 such modules, for a total production capacity of 1,500 tons.

 

Thecurrent RAS facility is in an insulated, bio-secure structure in which culture conditions are controlled. The primary RAS system is composedof thirteen culture tanks, a drum filter, a fluidized sand bed biofilter and a low head oxygenator and employs an efficient gravity fedlow head arrangement which reduces energy use as compared to other RAS designs. Additionally, there are two independent partial reusefinishing tank systems.

 

Weeklyharvests of approximately two tons of salmon are stunned and bled at the farm and then processed as fresh iced head on gutted (“HOG”)fish at a Canadian Food Inspection Agency approved processing facility. Currently, TOBC sells its salmon mainly to two wholesale seafooddistributors in Canada.

 

Eggsare purchased from two primary suppliers and are hatched approximately every eight weeks. TOBC’s hatchery is composed of a recirculatingsystem that utilizes an upwelling “heath stack” incubator and five tanks with moving bed biofiltration. The fish are thentransferred to the main RAS system approximately 12 weeks post hatch. TOBC’s feed is largely terrestrial based from grains andother non-marine ingredients.

 

Webelieve that the faster life cycle from birth to harvesting of our salmon, as compared to conventional salmon, allows it to be producedmore economically in contained, land-based RAS farms. Although RAS farms require greater capital investment than the sea cage approach,we believe that the higher costs are offset by more efficient growth and a shorter transportation distance to market.

 

On February 1, 2024, weentered into a ninety-day Master Services Agreement (the “Services Agreement”) with Afritex Ventures, Inc. a Texas corporation(“Afritex”), pursuant to which we will be responsible for all of Afritex’s operations and finance functions. We willprovide Afritex with working capital in order to sustain operations and will purchase certain inventory listed in the Services Agreement.In consideration for our services, during the term of the Services Agreement, we will be entitled to all of the revenue and profits earnedby Afritex. The Company automatically extended the Services Agreement to August 31, 2024 after which it expired.

 

BrandedProducts

 

Wedistribute our imported blue and red swimming crabmeat in the United States under the brand names Blue Star, Pacifika, Oceanica, Crab& Go Premium Seafood, First Choice, Good Stuff and Coastal Pride Fresh and steelhead salmon and rainbow trout fingerlings producedby TOBC under the brand name Little Cedar Falls.

 

 

BlueStar is packed with only high quality Portunus Pelagicus species crab and is produced under exacting specifications and quality controlrequirements.

 

Pacifikais a quality brand for the price conscious end user. The Portunus Haanii crab meat is packed in China and is ideal for upscale platepresentations.

 

Oceanicais made from the Portunus Haanii crab, which is caught and processed in Vietnam. It is an affordable choice to help reduce food costwithout sacrificing the look/taste of dishes.

 

Crab+ Go Premium Seafood is geared towards millennials as part of the trend toward pre-packaged, grab-and-go items. The product is packagedin flexible foil pouches.

 

LubkinBrand is packed with quality Portunus Pelagicus species crab in the Philippines and Indonesia.

 

FirstChoice is a quality brand packed with Portunus Haanii crab meat from Malaysia.

 

GoodStuff is a premi