10-Q

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:

June 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission

file number: 000-55903

BLUE

STAR FOODS CORP.

(Exact name of registrant as specified in its charter)

Delaware	82-4270040
(State<br> or other jurisdiction of<br><br> <br>incorporation<br> or organization)	(IRS<br> Employer<br><br> <br>Identification<br> No.)

3000 NW 109th Avenue

Miami, Florida 33172

(Address of principal executive offices)

(860) 633-5565

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Title<br> of each class	Trading<br> Symbol(s)	Name<br> of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company 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.

Large<br> accelerated filer	☐	Accelerated<br> filer	☐
Non-accelerated Filer	☒	Smaller<br> reporting company	☒
		Emerging<br> Growth Company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As

of August 16, 2021, there were 23,337,541 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

BLUE

STAR FOODS CORP.

FORM

10-Q

FOR

THE QUARTERLY PERIOD ENDED JUNE 30, 2021

TABLE

OF CONTENTS

		PAGE
PART<br> I - FINANCIAL INFORMATION
Item<br> 1.	Financial<br> Statements (Unaudited)	4
Item<br> 2.	Management’s<br> Discussion and Analysis of Financial Condition and Results of Operations	20
Item<br> 3.	Quantitative<br> and Qualitative Disclosures About Market Risk	25
Item<br> 4.	Controls<br> and Procedures	25
PART<br> II - OTHER INFORMATION
Item<br> 1.	Legal<br> Proceedings	26
Item<br> 1A.	Risk<br> Factors	26
Item<br> 2.	Unregistered<br> Sales of Equity Securities and Use of Proceeds	26
Item<br> 3.	Defaults<br> Upon Senior Securities	27
Item<br> 4.	Mine<br> Safety Disclosures	27
Item<br> 5.	Other<br> Information	27
Item<br> 6.	Exhibits	27
SIGNATURES		28

| 2 |

| --- |

---

CAUTIONARY

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements include, among others, those statements including the words “believes”, “anticipates”, “expects”, “intends”, “estimates”, “plans” and words of similar import. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Forward-looking statements are based on our current expectations and assumptions regarding our business, potential target businesses, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include changes in local, regional, national or global political, economic, business, competitive, market (supply and demand) and regulatory conditions and the following:

●	Our<br> ability to raise capital when needed and on acceptable terms and conditions;
●	Our<br> ability to make acquisitions and integrate acquired businesses into our company;
●	Our<br> ability to attract and retain management with experience in the business of importing, packaging and selling of seafood;
●	Our<br> ability to negotiate, finalize and maintain economically feasible agreements with suppliers and customers;
●	The<br> availability of crab meat and other premium seafood products we sell;
●	The<br> intensity of competition;
●	Changes<br> in the political and regulatory environment and in business and fiscal conditions in the United States and overseas; and
●	The<br> effect of COVID-19 on our operations and the capital markets.

A description of these and other risks and uncertainties that could affect our business appears in the section captioned “Risk Factors” in our Registration Statement on Form S-1 which we filed with the Securities and Exchange Commission (“SEC”) on August 2, 2021. The risks and uncertainties described under “Risk Factors” are not exhaustive.

Given these uncertainties, readers of this Quarterly Report on Form 10-Q (“Quarterly Report”) are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

All references in this Quarterly Report to the “Company”, “Blue Star Foods”, “we”, “us”, or “our”, are to Blue Star Foods Corp. (formerly AG Acquisition Group II, Inc.), a Delaware corporation, and its consolidated subsidiaries, John Keeler & Co., Inc., d/b/a Blue Star Foods, a Florida corporation, and its wholly-owned subsidiaries, Coastal Pride Seaford, LLC, a Florida limited liability company (“Coastal Pride”) and Taste of BC Aquafarms, Inc., a corporation formed under the laws of the Province of British Columbia, Canada (“TOBC”).

| 3 |

| --- |

PART

I – FINANCIAL INFORMATION

ITEM

1. FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the SEC, and should be read in conjunction with the audited financial statements and notes thereto contained in our Annual Report, as updated in subsequent filings we have made with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

Blue

Star Foods Corp.

CONSOLIDATED

BALANCE SHEETS

			DECEMBER<br> 31, 2020
ASSETS
CURRENT ASSETS
Cash and cash<br> equivalents	1,630,732		$	55,644
Restricted cash	-			282,043
Accounts receivable, net	610,355			1,082,468
Inventory, net	582,762			1,832,661
Advances to related party	1,299,984			1,299,984
Other<br> current assets	250,795			176,925
Total Current Assets	4,374,628			4,729,725
RELATED PARTY LONG-TERM RECEIVABLE	455,545			455,545
FIXED ASSETS, net	2,045,375			20,064
RIGHT OF USE ASSET	85,300			99,472
INTANGIBLE ASSETS, net
Trademarks	1,166,432			788,614
Customer relationships	2,551,770			1,145,831
Non-compete<br> agreements	121,649			29,171
Total Intangible Assets	3,839,851			1,963,616
GOODWILL	924,672			445,395
OTHER ASSETS	139,349			108,088
TOTAL<br> ASSETS	11,864,720		$	7,821,905
LIABILITIES AND STOCKHOLDERS’ EQUITY<br> (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accruals	542,918		$	1,607,490
Working capital line of<br> credit	631,958			1,805,907
Current maturities of long-term<br> debt	92,986			-
Current maturities of lease<br> liabilities	29,960			29,337
Current maturities of related<br> party long-term notes	764,657			195,000
Related party notes payable	972,500			972,500
Related party notes payable<br> - subordinated	1,299,712			1,299,712
Other<br> current liabilities	1,168,740			1,346,838
Total Current Liabilities	5,503,431			7,256,784
LONG-TERM LIABILITY
Long-term lease liability	54,976			69,844
Long-term debt	353,512			-
Related<br> party long-term notes	460,000			515,000
Other long-term liabilities	97,376			-
TOTAL LIABILITIES	6,469,295			7,841,628
STOCKHOLDERS’ EQUITY (DEFICIT)
Series A 8% cumulative<br> convertible preferred stock, 0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding as of June 30, 2021, and<br> 1,413 shares issued and outstanding as of December 31, 2020	-			-
Common stock, 0.0001<br> par value, 100,000,000<br> shares authorized; 23,119,041<br> shares issued and outstanding as of June 30, 2021, and<br> 19,580,721 shares<br> issued and outstanding as of December 31, 2020	2,315			1,958
Additional paid-in capital	19,846,182			13,488,836
Accumulated other comprehensive<br> gain	936			-
Accumulated<br> deficit	(14,454,008	)		(13,510,517	)
TOTAL STOCKHOLDERS’<br> EQUITY (DEFICIT)	5,395,425			(19,723	)
TOTAL<br> LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	11,864,720		$	7,821,905

All values are in US Dollars.

The

accompanying notes are an integral part of these unaudited consolidated financial statements

| 4 |

| --- |

Blue

Star Foods Corp.

CONSOLIDATED

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

THREE

AND SIX MONTHS ENDED JUNE 30, 2021 and 2020

	2021			2020			2021			2020
	Three months ended						Six months ended
	(unaudited)						(unaudited)
	2021			2020			2021			2020
REVENUE, NET	$	2,129,389		$	2,865,103		$	4,615,280		$	7,436,717
COST OF REVENUE		1,559,490			2,882,541			3,742,602			7,030,939
GROSS PROFIT		569,899			(17,438	)		872,678			405,778
COMMISSIONS		13,606			25,534			18,400			92,363
SALARIES AND WAGES		228,859			241,072			609,455			650,253
DEPRECIATION AND AMORTIZATION		55,911			153,195			99,990			230,960
OTHER OPERATING EXPENSES		638,585			158,749			955,983			605,182
LOSS FROM OPERATIONS		(367,062	)		(595,988	)		(811,150	)		(1,172,980	)
OTHER INCOME		28,672			-			105,190			-
FORBEARANCE FEE EXPENSE (NON-CASH)		-			(2,655,292	)		-			(2,655,292	)
INTEREST EXPENSE		(98,737	)		(239,653	)		(209,271	)		(516,308	)
NET LOSS		(437,127	)		(3,490,933	)		(915,231	)		(4,344,580	)
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING<br> INTEREST		-			10,817			-			7,577
NET LOSS ATTRIBUTABLE<br> TO BLUE STAR FOODS CORP.	$	(437,127	)	$	(3,501,750	)	$	(915,231	)	$	(4,352,157	)
DIVIDEND ON PREFERRED STOCK		-			28,261			28,260			56,520
NET LOSS ATTRIBUTABLE<br> TO BLUE STAR FOODS CORP. COMMON SHAREHOLDERS	$	(437,127	)	$	(3,530,011	)	$	(943,491	)	$	(4,408,677	)
COMPREHENSIVE INCOME (LOSS):
CHANGE IN FOREIGN CURRENCY<br> TRANSLATION ADJUSTMENT		936			-			936			-
TRANSLATION<br> ADJUSTMENT ATTRIBUTABLE TO NON-CONTROLLING INTEREST		-			9,094			-			23,700
COMPREHENSIVE INCOME<br>(LOSS)	$	936		$	19,911		$	936		$	31,277
COMPREHENSIVE LOSS ATTRIBUTABLE<br> TO BLUE STAR FOODS CORP.	$	(436,191	)	$	(3,501,750	)	$	(914,295	)	$	(4,352,157	)
Loss per basic and diluted common share:
Basic net loss per common<br> share	$	(0.02	)	$	(0.20	)	$	(0.05	)	$	(0.24	)
Basic weighted average common shares outstanding		19,758,871			17,822,158			19,739,841			18,054,611
Fully diluted net loss<br> per common share	$	(0.02	)	$	(0.20	)	$	(0.05	)	$	(0.24	)
Fully diluted weighted average common<br> shares outstanding		19,758,871			17,822,158			19,739,841			18,054,611

The

accompanying notes are an integral part of these unaudited consolidated financial statements

| 5 |

| --- |

Blue

Star Foods Corp.

CONSOLIDATED

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (UNAUDITED)

THREE

AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

	Shares		Amount		Shares	Amount		Capital			Deficit			Income		Deficit			Interest		Deficit
December<br> 31, 2020			$	-		$	1,958	$	13,488,836		$	(13,510,517	)	$	-	$	(19,723	)	$	-	$	(19,723	)
	Series<br>A Preferred Stock .0001 par value				Common<br>Stock .0001 par value			Additional<br> Paid-in			Accumulated			Accumulated<br> Other Comprehensive		Total<br> Blue Star Foods Corp. Stockholders’			Non-Controlling		Total<br> Stockholders’
	Shares		Amount		Shares	Amount		Capital			Deficit			Income		Deficit			Interest		Deficit
December<br> 31, 2020			$	-		$	1,958	$	13,488,836		$	(13,510,517	)	$	-	$	(19,723	)	$	-	$	(19,723	)
Stock<br> based compensation				-			-		30,319			-			-		30,319			-		30,319
Series<br> A preferred 8% dividend issued in common stock				-			1		28,259			(28,260	)		-		-			-		-
Common<br> stock issued to settle related party interest
Common<br> stock issued to settle related party interest, shares
Common<br> stock issued for cash
Common<br> stock issued for cash, shares
Common<br> stock issued to a related party lender
Common<br> stock issued to a related party lender, shares
Common<br> stock issued for service				-			5		96,242			-			-		96,247			-		96,247
Common<br> stock issued to be held in escrow
Common<br> stock issued to be held in escrow, shares
Common<br> stock issued for taste of BC acquisition
Common<br> stock issued for taste of BC acquisition, shares
Preferred<br> stock conversion to Common stock
Preferred<br> stock conversion to Common stock, shares
Comprehensive<br> Income
Net<br> Loss				-			-		-			(478,104	)		-		(478,104	)		-		(478,104	)
March<br> 31, 2021			$	-		$	1,964	$	13,643,656		$	(14,016,881	)	$	-	$	(371,261	)	$	-	$	(371,261	)
Stock<br> based compensation				-			-		66,170			-			-		66,170			-		66,170
Common<br> stock issued to settle related party interest				-			13		266,869			-			-		266,882			-		266,882
Common<br> stock issued for cash				-			129		2,572,871			-			-		2,573,000			-		2,573,000
Common<br> stock issued for service				-			5		231,616			-			-		231,621			-		231,621
Common<br> stock issued to be held in escrow				-			34		793,366			-			-		793,400			-		793,400
Common<br> stock issued for Taste of BC acquisition				-			99		2,271,705			-			-		2,271,804			-		2,271,804
Preferred<br> stock conversion to Common stock		)		-			71		(71	)		-			-		-			-		-
Net<br> Loss				-			-		-			(437,127	)		-		(437,127	)		-		(437,127	)
Comprehensive<br> Income				-			-		-			-			936		936			-		936
June<br> 30, 2021			$	-		$	2,315	$	19,846,182		$	(14,454,008	)	$	936	$	5,395,425		$	-	$	5,395,425

All values are in US Dollars.

	Series<br> A Preferred Stock .0001 par value			Common<br> Stock .0001 par value			Additional<br> Paid-in		Accumulated			Accumulated<br> Other Comprehensive		Total<br> Blue Star Foods Corp. Stockholders’			Non-Controlling			Total<br> Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit			Income		Deficit			Interest			Deficit
December<br> 31, 2019		$	-		$	1,761	$	8,789,021	$	(8,952,466	)	$	-	$	(161,684	)	$	(358,028	)	$	(519,712	)
Stock<br> based compensation			-			-		34,846		-			-		34,846			-			34,846
Common<br> stock issued for cash
Common<br> stock issued for cash, shares
Common<br> stock issued to a related party lender
Common<br> stock issued to a related party lender, shares
Series<br> A preferred 8% dividend issued in common stock			-			1		28,258		(28,259	)		-		-			-			-
Net<br> Loss			-			-		-		(850,407	)		-		(850,407	)		(3,240	)		(853,647	)
Comprehensive<br> Income			-			-		-		-			-		-			14,606			14,606
March<br> 31, 2020		$	-		$	1,762	$	8,852,125	$	(9,831,132	)	$	-	$	(977,245	)	$	(346,662	)	$	(1,323,907	)
Balance, value		$	-		$	1,762	$	8,852,125	$	(9,831,132	)	$	-	$	(977,245	)	$	(346,662	)	$	(1,323,907	)
Stock<br> based compensation			-			-		34,846		-			-		34,846			-			34,846
Common<br> stock issued for cash			-			1		9,999		-			-		10,000			-			10,000
Common<br> stock issued to a related party lender			-			102		2,655,190		-			-		2,655,292			-			2,655,292
Series<br> A preferred 8% dividend issued in common stock			-			1		28,260		(28,261	)		-		-			-			-
Net<br> Income (Loss)			-			-		-		(3,501,750	)		-		(3,501,750	)		10,817			(3,490,933	)
Comprehensive<br> Income			-			-		-		-			-		-			9,094			9,094
June<br> 30, 2020		$	-		$	1,866	$	11,580,420	$	(13,361,143	)	$	-	$	(1,778,857	)	$	(326,751	)	$	(2,105,608	)
Balance, value		$	-		$	1,866	$	11,580,420	$	(13,361,143	)	$	-	$	(1,778,857	)	$	(326,751	)	$	(2,105,608	)

All values are in US Dollars.

The

accompanying notes are an integral part of these unaudited consolidated financial statements

| 6 |

| --- |

Blue Star Foods Corp.

CONSOLIDATED

STATEMENTS OF CASH FLOWS

FOR

THE SIX MONTHS ENDED JUNE 30,

	2021			2020
	Unaudited
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(915,231	)	$	(4,344,580	)
Adjustments to reconcile<br> net loss to net cash provided in operating activities:
Stock based compensation		96,489			69,692
Common stock issued for<br> service		327,868			-
Common stock issued for<br> forbearance fee		-			2,655,292
Depreciation of fixed assets		2,170			18,247
Amortization of right of<br> use asset		-			87,308
Amortization of intangible<br> assets		85,320			81,088
Amortization of loan costs		12,500			51,977
Deferred taxes		-			8,361
Lease expense		14,172			-
Bad debt expense		1,727			13,474
Allowance for inventory<br> obsolescence		375			370,203
Changes in operating assets<br> and liabilities:
Accounts receivables		490,745			726,867
Inventories		1,322,975			4,147,203
Advances to affiliated<br> supplier		-			(18,938	)
Other current assets		(62,504	)		25,553
Right of use liability		(14,245	)		(77,824	)
Other assets		(47,673	)		-
Accounts payable and accruals		(797,690	)		(708,137	)
Other<br> current liabilities		(205,291	)		-
Net Cash Provided by Operating Activities		311,707			3,105,786
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for acquisition		(790,593	)		-
Purchases<br> of fixed assets		-			(47,179	)
Net Cash Used in Investing<br> Activities		(790,593	)		(47,179	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock<br> offering		2,573,000			10,000
Proceeds from working capital<br> line of credit		4,323,678			3,223,081
Proceeds from PPP loan		371,944			-
Proceeds from notes payable		-			388,550
Repayments of working capital<br> line of credit		(5,497,627	)		(6,777,035	)
Payments<br> of loan costs		-			(70,000	)
Net Cash Provided by (Used<br> in) Financing Activities		1,770,995			(3,225,404	)
Effect of Exchange Rate Changes on Cash		936			23,700
NET DECREASE IN CASH,<br> CASH EQUIVALENTS AND RESTRICTED CASH		1,293,045			(143,097	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH<br> - BEGINNING OF PERIOD		337,687			195,810
CASH, CASH EQUIVALENTS<br> AND RESTRICTED CASH - END OF PERIOD	$	1,630,732		$	52,713
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY
Series A preferred 8% dividend<br> issued in common stock		28,260			56,520
Operating lease assets<br> recognized in exchange for operating lease liabilities		-			28,137
Preferred shares conversion to common stock		71
Common stock issued<br> for interest payment		266,882			-
Shares issued for acquisition		3,065,204			-
Related party notes recognized<br> from business acquisition		162,400			-
Supplemental Disclosure of Cash Flow Information
Cash<br> paid for interest	$	339,747		$	516,308

The

accompanying notes are an integral part of these unaudited consolidated financial statements

| 7 |

| --- |

NOTES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note1. Company Overview

Blue Star Foods Corp. (“we”, “our”, the “Company”) is an international seafood company based in Miami, Florida that imports, packages and sells refrigerated pasteurized crab meat, and other premium seafood products. The Company’s main operating business, John Keeler & Co., Inc. (“Keeler & Co.”) was incorporated in the State of Florida in May 1995. The Company was formed under the laws of the State of Delaware. The Company’s current source of revenue is importing blue and red swimming crab meat primarily from Indonesia, Philippines and China and distributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika, Crab & Go, First Choice, Good Stuff and Coastal Pride Fresh, and steelhead salmon produced under the brand name Little Cedar Farms for distribution in Canada.

On November 26, 2019, Keeler & Co., a wholly-owned direct subsidiary of the Company, entered into an Agreement and Plan of Merger and Reorganization (the “Coastal Merger Agreement”) with Coastal Pride Company, Inc., a South Carolina corporation, Coastal Pride Seafood, LLC, a Florida limited liability company and newly-formed, wholly-owned subsidiary of the Purchaser (the “Acquisition Subsidiary” and, upon the effective date of the Merger, the “Surviving Company” or “Coastal Pride”), and The Walter F. Lubkin, Jr. Irrevocable Trust dated January 8, 2003 (the “Trust”), Walter F. Lubkin III (“Lubkin III”), Tracy Lubkin Greco (“Greco”) and John C. Lubkin (“Lubkin”), constituting all of the shareholders of Coastal Pride Company, Inc. immediately prior to the Coastal Merger (collectively, the “Sellers”). Pursuant to the terms of the Coastal Merger Agreement, Coastal Pride Company, Inc. merged with and into the Acquisition Subsidiary, with the Acquisition Subsidiary being the surviving company (the “Coastal Merger”).

Coastal Pride is a seafood company, based in Beaufort, South Carolina, that imports pasteurized and fresh crabmeat sourced primarily from Mexico and Latin America and sells premium branded label crabmeat throughout North America.

| 8 |

| --- |

On

April 27, 2021, the Company entered into a stock purchase agreement (the “Purchase Agreement”) with TOBC, and Steve Atkinson and Janet Atkinson (the “Sellers”), the owners of all of the capital stock of TOBC (the “TOBC Shares”), pursuant to which the Company acquired all of the TOBC Shares from the Sellers for an aggregate purchase price of CAD$4,000,000 for: (i) an aggregate of CAD$1,000,000

in cash (with each Seller receiving a pro rata

amount based upon the total number of TOBC Shares held by such Seller); (ii) promissory notes in the aggregate principal amount of CAD$200,000 (the “Notes”) with the principal amount of each Seller’s Note based on such Seller’s pro rata portion of the TOBC Shares); and (iii) 987,741 shares of the Company’s common stock (representing CAD$2,800,000 of shares based on USD$2.30 per share) with each Seller receiving a pro rata portion of such shares based upon the total number of TOBC Shares held by such Seller.

On

June 24, 2021, the Purchase Agreement was amended (the “Amendment”), to increase the Purchase Price up to an aggregate of CAD$5,000,000

and the acquisition closed. Pursuant to

the Amendment, on August 3, 2021, an aggregate of 344,957

shares of the Company’s common stock (representing

CAD$1,000,000

of additional shares calculated at USD$2.30

per share) was put in escrow until the 24-month anniversary of the closing. If, within 24 months of the closing, TOBC has cumulative revenue of at least CAD$1,300,000, the Sellers will receive all of the escrowed shares. If, as of the 24-month anniversary of the closing, TOBC has cumulative revenue of less than CAD$1,300,000, the Sellers will receive a prorated number of the escrowed shares based on the actual cumulative revenue of TOBC as of such date.

On June 24, 2021, the Company consummated the acquisition of TOBC. As a result of the acquisition, TOBC became a wholly owned subsidiary of the Company.

TOBC is a land-based recirculating aquaculture systems salmon farming operation, based in Nanaimo, British Columbia, Canada, which sells its steelhead salmon to distributors in Canada.

Note2. Basis of Presentation and Summary of Significant Accounting Policies

Basisof Presentation

The following unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The consolidated balance sheet as of December 31, 2020 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on April 15, 2021 for a broader discussion of our business and the risks inherent in such business.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Advancesto Suppliers and Related Party

In the normal course of business, the Company may advance payments to its suppliers, inclusive of Bacolod Blue Star Export Corp. (“Bacolod”), a related party based in the Philippines. These advances are in the form of prepayments for products that will ship within a short window of time. In the event that it becomes necessary for the Company to return products or adjust for quality issues, the Company is issued a credit by the vendor in the normal course of business and these credits are also reflected against future shipments.

As

of June 30, 2021, and December 31, 2020, the balance due from the related party for future shipments was approximately $1,300,000

.

No new purchases have been made from Bacolod during the six months ended June 30, 2021. A permits renewal payment of $8,000

was made to Bacolod during the three months ended

June 30, 2021. Cost of revenue related to inventories purchased from Bacolod represented approximately $126

and $238,000

of total cost of revenue for the six months ended June 30, 2021 and 2020, respectively.

| 9 |

| --- |

RevenueRecognition

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, as such, we record revenue when our customer obtains control of the promised goods or services in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company’s source of revenue is from importing blue and red swimming crab meat primarily from Indonesia, the Philippines and China and distributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika, Crab & Go, First Choice, Good Stuff and Coastal Pride Fresh, and steelhead salmon produced under the brand name Little Cedar Farms for distribution in Canada. The Company sells primarily to food service distributors. The Company also sells its products to wholesalers, retail establishments and seafood distributors.

To determine revenue recognition for the arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (1) identify the contract(s) with a customer by receipt of purchase orders and confirmations sent by the Company which includes a required line of credit approval process, (2) identify the performance obligations in the contract which includes shipment of goods to the customer FOB shipping point or destination, (3) determine the transaction price which initiates with the purchase order received from the customer and confirmation sent by the Company and will include discounts and allowances by customer if any, (4) allocate the transaction price to the performance obligations in the contract which is the shipment of the goods to the customer and transaction price determined in step 3 above and (5) recognize revenue when (or as) the entity satisfies a performance obligation which is when the Company transfers control of the goods to the customers by shipment or delivery of the products.

The Company elected an accounting policy to treat shipping and handling activities as fulfillment activities. Consideration payable to a customer is recorded as a reduction of the arrangement’s transaction price, thereby reducing the amount of revenue recognized, unless the payment is for distinct goods or services received from the customer.

LeaseAccounting

We account for our leases under ASC 842, Leases, which requires all leases to be reported on the balance sheet as right-of-use assets and lease obligations. We elected the practical expedients permitted under the transition guidance that retained the lease classification and initial direct costs for any leases that existed prior to adoption of the standard.

We categorize leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that would allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in property and equipment, net. All other leases are categorized as operating leases. We did not have any finance leases as of June 30, 2021. Our leases generally have terms that range from three years for equipment and five to twenty years for property. We elected the accounting policy to include both the lease and non-lease components of our agreements as a single component and account for them as a lease.

Lease liabilities are recognized at the present value of the fixed lease payments using a discount rate based on similarly secured borrowings available to us. Lease assets are recognized based on the initial present value of the fixed lease payments, reduced by landlord incentives, plus any direct costs from executing the lease. Lease assets are tested for impairment in the same manner as long-lived assets used in operations. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the lease term.

When we have the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that we will exercise the option, we consider these options in determining the classification and measurement of the lease. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease.

| 10 |

| --- |

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

Schedule of Lease-related Assets and Liabilities

	June 30,<br> <br>2021
Assets
Operating lease assets	$	85,300
Liabilities
Current
Operating lease liabilities	$	29,960
Noncurrent
Operating lease liabilities	$	54,976

Supplemental cash flow information related to leases were as follows:

Schedule of Supplemental Cash Flow Information Related to Leases

	Six Months Ended<br> <br>June 30, 2021
Cash paid for amounts included in the measurement<br> of lease liabilities:
Operating cash<br> flows from operating leases	$	14,245
ROU assets recognized in exchange for lease<br> obligations:
Operating leases	$	-

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

Schedule of Remaining Lease Term and Discount Rates for Operating Leases

	June<br> 30, 2021
Weighted-average remaining<br> lease term
Operating leases		2.92<br> years
Weighted-average discount<br> rate
Operating leases		4.3	%

Maturities of lease liabilities as of June 30, 2021, were as follows:

Schedule of Maturities of Lease Liabilities

	Operating<br> Leases
2021 (six months remaining)		16,776
2022		33,552
2023		26,474
2024		15,060
2025		-
Thereafter		-
Total lease payments		91,862
Less: amount of lease<br> payments representing interest		(6,926	)
Present value of future<br> minimum lease payments	$	84,936
Less: current obligations<br> under leases	$	(29,960	)
Non-current obligations	$	54,976

IntangibleAssets and Goodwill

The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed, and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.

| 11 |

| --- |

The Company reviews its indefinite lived intangibles and goodwill for impairment annually or whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with its policies, the Company performed an assessment of indefinite lived intangibles and goodwill and determined there was no impairment for the six months ended June 30, 2021 and 2020.

ForeignCurrency Exchange Rates Risk

We manage our exposure to fluctuations in foreign currency exchange rates through our normal operating activities. Our primary focus is to monitor our exposure to, and manage, the economic foreign currency exchange risks faced by our operations and realized when we exchange one currency for another. Our operations primarily utilize the U.S. dollar and Canadian dollar as their functional currencies. Movements in foreign currency exchange rates affect our financial statements.

Note3. Going Concern

The

accompanying consolidated financial statements and notes have been prepared assuming the Company will continue as a going concern. For the six months ended June 30, 2021, the Company incurred a net loss of $915,231 ,

has an accumulated deficit of $14,454,008

and working capital deficit of $1,128,803

,

with the current liabilities inclusive of $1,299,712

in stockholder loans that are subordinated to

the provider of the working capital facility, and $29,960 in the current portion of the lease liability recognition. These circumstances raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to increase revenues, execute on its business plan to acquire complimentary companies, raise capital, and to continue to sustain adequate working capital to finance its operations. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note4. Debt

WorkingCapital Line of Credit

Keeler & Co

entered into a $14,000,000 revolving line of

credit, pursuant to a loan and security agreement with ACF Finco I, LP (“ACF”) on August 31, 2016, the proceeds of which were used to pay off the prior line of credit, pay new loan costs of approximately $309,000, and provide additional working capital to the Company. This facility is secured by all assets of Keeler & Co. This facility was amended on November 18, 2016, June 19, 2017, October 16, 2017, September 19, 2018, November 8, 2018, July 29, 2019, November 26, 2019 and May 7, 2020.

The

line of credit accrued interest at a rate equal to the greater of 3 Month LIBOR rate plus 9.25%, the Prime rate plus 6.0% or a fixed rate of 6.5%.

The ACF line of credit agreement was subject to the following terms:

●	Borrowing<br> was based on up to 85% of eligible accounts receivable plus the net orderly liquidation value of eligible inventory at the<br> same rate, subject to certain defined limitations.
●	The<br> line was collateralized by substantially all the assets and property of Keeler &<br> Co. and was personally guaranteed by the stockholder of the Company.
●	Keeler<br> & Co. was restricted to specified distribution payments, use of funds, and was required to comply with certain<br> other covenants including certain financial ratios.
●	All<br> cash received by Keeler & Co. was applied against the outstanding loan balance.
●	A<br> subjective acceleration clause allowed ACF to call the note upon a material adverse change.

| 12 |

| --- |

On November 26, 2019, Keeler & Co. entered into the seventh amendment to the loan and security agreement with ACF. This amendment memorialized the acquisition of Coastal Pride and made Coastal Pride a co-borrower to the facility. Additionally, the seventh amendment waived and reset the covenant default that occurred during 2019, extended the term of the facility to 5 years and is subject to early termination by the lender upon defined events of default.

During the nine months ended September 30, 2020, the Keeler

& Co. and Coastal Pride were in violation of its minimum EBITDA covenant as well as exceeding the covenant related to monies advanced to Bacolod by approximately $105,000. The default interest rate increase of 3% was implemented in April 2020.

On May 7, 2020, Keeler & Co. and Coastal Pride entered into an eighth amendment to the loan and security agreement with ACF which acknowledged the execution of a Payroll Protection Program loan, provided a reservation of rights related to a default of the minimum EBITDA covenant.

The Company analyzed the line of credit modification under ASC 470-50-40-21 and determined that the modification did not trigger any additional accounting due to the revolving line of credit remaining unchanged.

As

of December 31, 2020, the line of credit had an outstanding balance of approximately $1,805,000. As of March 31, 2021, the line of credit had an outstanding balance of $0.

On March 31, 2021, Keeler & Co. and Coastal Pride entered into a loan and security agreement (“Loan Agreement”) with Lighthouse pursuant to the terms of the Loan Agreement, Lighthouse made available to Keeler & Co. and Coastal Pride (together, the “Borrowers”) a $5,000,000 revolving line of credit for a term of thirty-six months, renewable annually for one-year periods thereafter. Amounts due under the line of credit are represented by a revolving credit note issued to Lighthouse by the Borrowers.

The

advance rate of the revolving line of credit is 85% with respect to eligible accounts receivable and the lower of 60% of the Borrowers’ eligible inventory, or 80% of the net orderly liquidation value, subject to an inventory sublimit of $2,500,000. The inventory portion of the loan will never exceed 50% of the outstanding balance. Interest on the line of credit is the prime rate (with a floor of 3.25%), plus 3.75%. The Borrowers will pay Lighthouse a facility fee of $50,000 in three instalments of $16,667 in March, April and May 2021 and will pay an additional facility fee of $25,000 on each anniversary of March 31, 2021.

The

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

The

Borrowers utilized $784,450 borrowed from Lighthouse to repay all the outstanding indebtedness owed to the ACF as of March 31, 2021. As a result, all obligations owed to ACF were satisfied and the loan agreement with ACF was terminated. The outstanding balance owed to Lighthouse as of June 30, 2021 amounted to $631,958.

FirstWest Credit Union CEBA Loan

On June 24, 2021, the Company assumed a commercial term loan with First West Credit Union Canada Emergency Business Account (“CEBA”) in the principal amount of CAD$60,000 in connection with the acquisition of TOBC. The loan initially bears no interest and is due on December 31, 2025. The borrower may prepay all or part of the loan commencing November 1, 2022 and if, by December 31, 2022, the Company has paid 75% of the loan amount, the remaining 25% will be forgiven as per the loan agreement. If less than 75% of the loan amount is outstanding by December 31, 2022

,

the then outstanding balance will be converted to interest only monthly payments at 5.0% .

JohnKeeler Promissory Notes – Subordinated

The

Company had unsecured promissory notes outstanding to its stockholder of approximately $1,299,000 of principal and interest expense of $39,100 and $174,000 as of June 30, 2021 and December 31, 2020, respectively. These notes are payable on demand, bear an annual interest rate of 6% and were subordinated to the ACF working capital line of credit until March 31, 2021. Since March 31, 2021, these notes are subordinated to the Lighthouse note. No principal payments were made by the Company during the six months ended June 30, 2021.

KenarNote

On March 26, 2019, the Company issued a four-month unsecured promissory note in the principal amount of $1,000,000 (the “Kenar Note”) to a company controlled by a shareholder, Kenar Overseas Corp., a company registered in Panama (the “Lender”) the term of which was previously extended to March 31, 2020 after which time, on May 21, 2020, the Kenar Note was amended to (i) set the maturity date at March 31, 2021 (unless extended to September 30, 2021 at the Lender’s sole option), (ii) provide that the Company use one-third of any capital raise from the sale of its equity to reduce the outstanding principal under the Kenar Note, (iii) set the interest rate at 18% per annum, payable monthly commencing October 1, 2020, and (iv) to reduce the number of pledged shares by Mr. Keeler to 4,000,000. As consideration for Kenar’s agreement to amend the note, on May 27, 2020, the Company issued 1,021,266 shares of common stock to Kenar. As of the amendment date, the common stock had a value of $2,655,292.

| 13 |

| --- |

The

amendment to the Kenar Note was analyzed under ASC 470-50 and was determined that it will be accounted for as an extinguishment of the old debt and the new debt recorded at fair value with the new effective interest rate of 18%. Additionally, this treatment resulted in the cost of the modification paid in common stock with a value of $2,655,292 charged to other expense as of the date of the amendment.

On April 28, 2021, the Kenar Note was amended to extend the maturity date to May 31, 2021.

The

principal amount of the Kenar Note as of June 30, 2021 was $872,500. Interest expense was approximately $77,800 during the six months ended June 30, 2021.

On

July 6, 2021, the Company entered into a note payoff indemnity agreement with Kenar pursuant to which the Company paid Kenar $918,539 of principal and accrued interest in full satisfaction of the amounts due to Kenar under a Second Loan Amendment, dated April 26, 2021, between the Company and Kenar, and the Kenar Note was extinguished and the shares pledged by Mr. Keeler were released.

LoboNote

On April 2, 2019, the Company issued a four-month unsecured promissory note in the principal amount of $100,000 (the “Lobo Note”) to Lobo Holdings, LLLP, a stockholder in the Company (“Lobo”). The Lobo Note bears interest at the rate of 18% per annum. The Lobo Note may be prepaid in whole or in part without penalty. John Keeler, the Company’s Executive Chairman and Chief Executive Officer, pledged 1,000,000 shares of common stock of the Company to secure the Company’s obligations under the Lobo Note. The Lobo Note matured on August 2, 2019 and was extended through December 2, 2019 on the same terms and conditions. On November 15, 2019, the Company paid off the Lobo Note with the issuance to Lobo of an unsecured promissory note in the principal amount of $100,000 which bears interest at the rate of 15% and matured on March 31, 2020. On April 1, 2020, the Company paid off the November 15, 2019 note with the issuance of a six-month unsecured promissory note in the principal amount of $100,000 which accrued interest at the rate of 10% and matured on October 1, 2020. On October 1, 2020, the Company paid off the April 1, 2020 note with the issuance of a three-month unsecured promissory note in the principal amount of $100,000, which accrued interest at the rate of 10% and matured on December 31, 2020. On January 1, 2021, the Company paid off the October 1, 2020 note with the issuance of a six-month unsecured promissory note in the principal amount of $100,000, which bears interest at the rate of 10% per annum and matures on June 30, 2021. Interest expense was approximately $2,400 during the six months ended June 30, 2021. On July 1, 2021, the Company paid off the January 1, 2021 note with the issuance of a three-month unsecured promissory note in the principal amount of $100,000 which accrues interest at the rate of 10% per annum and matures on September 30, 2021.

WalterLubkin Jr. Note – Subordinated

On

November 26, 2019, the Company issued a five-year unsecured promissory note in the principal amount of $500,000 to Walter Lubkin Jr. as part of the purchase price for the Coastal Pride acquisition. The note bears interest at the rate of 4% per annum and is payable quarterly in an amount equal to the lesser of (i) $25,000 or (ii) 25% of the EBITDA of Coastal Pride, as determined on the first day of each quarter. To date, no payments have been made under the note since the EBITDA generated by Coastal Pride has not required such payment. This note is subordinate to the working capital line of credit. Principal payments are permitted so long as the borrower is not in default of its working capital line of credit. No principal payments were made by the Company during the six months ended June 30, 2021. Interest expense was approximately $9,900 during the six months ended June 30, 2021.

WalterLubkin III Convertible Note – Subordinated

On

November 26, 2019, the Company issued a thirty-nine-month unsecured promissory note in the principal amount of $87,842 to Walter Lubkin III as part the purchase price for the Coastal Pride acquisition. The note bears interest at the rate of 4% per annum. The note is payable in equal quarterly payments over six quarters beginning August 26, 2021. At the election of the holder, at any time after the first anniversary of the issuance of the note, the then outstanding principal and accrued interest may be converted into the Company’s common stock at a rate of $2.00 per share. This note is subordinated to the working capital line of credit. Principal payments are permitted so long as the borrower is not in default of its working capital line of credit. No principal payments were made by the Company during the six months ended June 30, 2021. Interest expense was approximately $1,700 during the six months ended June 30, 2021.

| 14 |

| --- |

TracyGreco Convertible Note – Subordinated

On November 26, 2019, the Company issued a thirty-nine-month unsecured promissory note in the principal amount of $71,372 to Tracy Greco as part of the purchase price for the Coastal Pride acquisition. The note bears interest at the rate of 4% per annum. The note is payable in equal quarterly payments over six quarters beginning August 26, 2021. At the election of the holder, at any time after the first anniversary of the issuance of the note, the then outstanding principal and accrued interest may be converted into the Company’s common stock at a rate of $2.00 per share. This note is subordinated to the working capital line of credit. Principal payments are permitted so long as the borrower is not in default of its working capital line of credit. No principal payments were made by the Company during the six months ended June 30, 2021. Interest expense was approximately $1,400 during the six months ended June 30, 2021.

JohnLubkin Convertible Note – Subordinated

On November 26, 2019, the Company issued a thirty-nine-month unsecured promissory note in the principal amount of $50,786 to John Lubkin as part the Coastal Pride acquisition. The note bears interest at the rate of 4% per annum. The note is payable in equal quarterly payments over six quarters beginning August 26, 2021. At the election of the holder, at any time after the first anniversary of the issuance of the note, the then outstanding principal and accrued interest may be converted into the Company’s common stock at a rate of $2.00 per share. This note is subordinated to the working capital line of credit. Principal payments are permitted so long as the borrower is not in default of its working capital line of credit. No principal payments were made by the Company during the six months ended June 30, 2021. Interest expense was approximately $1,000 during the six months ended June 30, 2021.

StevenAtkinson and Janet Atkinson Promissory Notes – Subordinated

On June 24, 2021, the Company issued a promissory note in the principal amount of CAD$102,000 (USD$82,824) to Janet Atkinson as part of the TOBC acquisition. The note bears no interest and is due on November 30, 2021.

On June 24, 2021, the Company issued a promissory note in the principal amount of CAD$98,000 (USD$79,576) to Steven Atkinson as part of the TOBC acquisition. The note bears no interest and is due on November 30, 2021.

PayrollProtection Program Loan

On March 2, 2021, the Company received proceeds of $371,944 and issued an unsecured promissory note to US Century in the principal amount of $371,944 in connection with a PPP Loan. The note accrues interest at 1.0% per annum, matures five years from the date of issuance and is fully guaranteed by the SBA and may be forgiven provided certain criteria are met.

The Company may apply for forgiveness after

August 17, 2021 and may be required to make monthly payments of approximately $8,500 beginning June 2, 2022 . As of June 30, 2021, the Company recorded interest expense of approximately $1,200.

---

Note5. Business Combination

---

Acquisitionof Taste of BC Aquafarms

On

June 24, 2021, the Company consummated the acquisition of TOBC and TOBC became a wholly owned subsidiary of the Company. The acquisition was accounted for as a business combination under the provisions of ASC 805. The aggregate purchase price of CAD$5,000,000

was paid as follows: (i) an aggregate of CAD$1,000,000

in cash to the Sellers; (ii) promissory notes

in the aggregate principal amount of CAD$200,000

to the Sellers; (iii) 987,741

shares of the Company’s common stock (representing

CAD$2,800,000

of

shares based on USD$2.30

per

share) with each Seller receiving their pro rata portion based on their ownership; and an aggregate of 344,957

shares of the Company’s common stock (representing

CAD$1,000,000

additional shares calculated at USD$2.30

per share) were issued on August 3, 2021 and

put in escrow until June 24, 2023. If, within 24 months of the closing, TOBC has cumulative revenue of at least CAD$1,300,000

,

the Sellers will receive all of the escrowed shares. If, as of the 24-month anniversary of the closing, TOBC has cumulative revenue of less than CAD$1,300,000 , the Sellers will receive a prorated number of the escrowed shares based on the actual cumulative revenue of TOBC as of such date.

The transaction costs incurred in connection with the acquisition of TOBC

amounted to $31,000.

| 15 |

| --- |

FairValue of Consideration Transferred and Recording of Assets Acquired

The following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired, and liabilities assumed. The business combination accounting is not yet complete and the amounts assigned to assets acquired and liabilities assumed are provisional. Therefore, this may result in future adjustments to the provisional amounts as information is obtained about facts and circumstances that existed at the acquisition date.

Schedule of Fair Value of Assets Acquired and Liabilities Assumed

Consideration Paid:
Cash and cash equivalents	$	814,000
Common stock, 987,741 shares of BSFC common<br> stock		2,271,804
Promissory notes to Sellers		162,400
Contingent consideration<br> - Common stock, 344,957<br> shares of BSFC common stock in escrow		793,400
Fair value of total consideration	$	4,041,604
Purchase Price Allocation:
Tangible assets acquired	$	2,157,506
Trademarks		406,150
Customer relationships		1,454,017
Non-compete agreements		97,476
Goodwill		479,277
Liabilities assumed		(552,822	)
Fair market value of<br> net assets acquired	$	4,041,604

In

determining the fair value of the common stock issued, the Company considered the value of the stock as estimated by the Company at the time of closing. The value of USD$2.30 per share of common stock, as provided in the Purchase Agreement, was calculated based on the volume weighted average price of a share of the Company’s common stock on the OTC Markets for the period commencing on April 28, 2020, the date the Company’s common stock started trading on the OTC Markets, through the closing of the acquisition on June 24, 2021.

Liabilities

assumed included three mortgage loans of approximately CAD$490,000 which were paid off by the Company on July 9, 2021. The Company has one commercial loan outstanding for CAD$60,000 which is due on December 31, 2025.

Unaudited**Pro Forma Information

The following unaudited pro forma information assumes the business acquisition occurred on January 1, 2020. For all of the business acquisitions, depreciation and amortization have been included in the calculation of the below pro forma information based upon the actual acquisition costs.

Schedule of Proforma Information

	Six<br> Months Ended <br> June 30, 2021			Six Months<br><br><br><br>Ended<br><br><br><br>June 30, 2020
Revenue	$	4,936,796		$	7,535,578
Net loss attributable<br> to common shareholders	$	(767,791	)	$	(4,368,367	)
Basic and diluted loss<br> per share	$	(0.04	)	$	(0.25	)

The information included in the pro forma amounts is derived from historical information obtained from the Sellers of the business.

| 16 |

| --- |

Note6. Common Stock

On

July 1, 2020, the Company entered into an investment banking engagement agreement, as amended on October 30, 2020, with Newbridge Securities Corporation. In consideration for advisory services, the Company agreed to issue Newbridge a total of 60,000 shares of common stock with a fair value of $138,000 which is amortized to expense over the term of the agreement. The Company recognized stock compensation expense of $69,000 for the six months ended June 30, 2021 in connection with these shares.

On

February 8, 2021, the Company issued 25,000 shares of common stock with a fair value of $25,250 to an investor relations firm for services provided to the Company under an investor relations consulting agreement.

On

March 30, 2021, the Company issued 10,465 shares of common stock with a fair value of $24,697 to the designee of a law firm for services provided to the Company.

On

March 31, 2021, the Company issued 5,000 shares of common stock with a fair value of $11,800 to an investor relations firm for services provided to the Company under an investor relations consulting agreement.

On

March 31, 2021, the Company issued 11,975 shares of common stock to Series A preferred stockholders as a common stock dividend with an aggregate fair value of $28,260 for the three months ended March 31, 2021.

On

April 15, 2021, the Company issued an aggregate of 16,460 shares of common stock to Walter Lubkin Jr., Walter Lubkin III, Tracy Greco and John Lubkin (collectively, the “Coastal Sellers”) in lieu of $39,504 of outstanding interest under promissory notes issued by the Company to the Coastal Sellers in connection with the Coastal Pride acquisition.

On

April 19, 2021, the Company issued 12,500 shares of common stock with a fair value of $25,000 to the designee of a law firm for services provided to the Company.

On

April 29, 2021, the Company issued 105,757 shares of common stock to Kenar Overseas Corp. in lieu of $227,378 of outstanding interest under the Kenar Note.

On

April 30, 2021, the Company issued 5,000 shares of common stock with a fair value of $28,500 to an investor relations firm for services provided to the Company under an investor relations consulting agreement.

On

May 31, 2021, the Company issued 5,000 shares of common stock with a fair value of $31,500 to an investor relations firm for services provided to the Company under an investor relations consulting agreement.

On

June 17, 2021, the Company sold pursuant to subscription agreements an aggregate of 475,000

shares of common stock at $2.00

per share to four accredited investors

in a private offering for

gross proceeds of $950,000 .

On

June 23, 2021, the Company sold pursuant to subscription agreements an aggregate 212,750

shares of common stock at $2.00

per share to twenty-seven accredited investors

in a private offering for

gross proceeds of $425,000 .

On

June 24, 2021, the Company issued 987,741 shares to the sellers of TOBC as partial consideration for the sale of TOBC to the Company.

On

June 30, 2021, the Company issued 5,000 shares of common stock with a fair value of $36,250 to an investor relations firm for services provided to the Company under an investor relations consulting agreement.

On

June 30, 2021, the Company issued 10,465 shares of common stock with a fair value of $75,871 to the designee of a law firm for services provided to the Company.

On

June 30, 2021, the Company issued an aggregate of 706,500

shares of common stock to Series A preferred

stockholders upon conversion of an aggregate 1,413 shares of Series A preferred stock.

On

June 30, 2021, the Company sold pursuant to subscription agreements an aggregate of 598,750

shares of common stock at $2.00

per share to twenty-six accredited investors

in a private offering for

gross proceeds of $1,198,000 .

| 17 |

| --- |

---

Note7. Options

The following table represents option activity for the six months ended June 30, 2021:

Schedule of Option Activity

	Number<br> of Options			Weighted<br> <br> Average <br> Exercise <br> Price		Weighted<br> Average Remaining Contractual <br> Life in <br> Years		Aggregate<br> Intrinsic <br> Value
Outstanding – December<br> 31, 2020		3,810,000		$	2.00		7.87
Exercisable – December 31, 2020		3,280,000		$	2.00		7.87	$	721,600
Granted		676,417		$	-
Forfeited		(63,750	)	$	2.00
Vested		3,431,250
Outstanding – June 30, 2021		4,422,667		$	2.00		7.33
Exercisable – June 30, 2021		3,431,250		$	2.00		7.33	$	18,014,065

The

Company recognized $96,489 of compensation expense for vested stock options issued to contractors and employees during 2019 for the six months ended June 30, 2021.

Note8. Warrants

Schedule of Warrant Activity

	Number<br> of Warrants		Weighted<br> <br><br> Average <br><br> Exercise <br><br> Price		Weighted<br> Average Remaining Contractual <br><br> Life in <br><br> Years		Aggregate<br> Intrinsic <br><br> Value
Outstanding<br> – December 31, 2020		353,250	$	2.40		0.85
Exercisable<br> – December 31, 2020		353,250	$	2.40		0.85	$	-
Granted		1,286,500	$	-
Forfeited<br> or Expired		-	$	-
Outstanding<br> – June 30, 2021		1,639,750	$	2.09		2.39
Exercisable<br> – June 30, 2021		1,639,750	$	2.09		2.39	$	8,467,388

As of June 30, 2021, the Company issued warrants to purchase an aggregate of 1,286,500 shares at an exercise price of $2.00 per share in a private offering to fifty-seven accredited investors that expire in June 2024.

Note9. Commitment and Contingencies

Officelease

The

Company leased its Miami office and warehouse facility from JK Real Estate, a related party through common family beneficial ownership. The lease which had a 20-year term, expiring in July 2021, was terminated on December 31, 2020, upon the sale of the facility. In connection with the sale, the Company retained approximately 4,756 square feet of such space, rent-free for the next 12 months.

The

Company leases approximately 1,600 square feet in Beaufort, South Carolina for the offices of Coastal Pride. This office space consists of two leases with related parties that expire in 2024.

Rental

and equipment lease expenses amounted to approximately $28,400 and $125,000 for the six months ended June 30, 2021 and 2020, respectively.

| 18 |

| --- |

Legal

The Company has reached a settlement agreement with a former employee. Although the agreement is not finalized, the Company has reserved for the entire amount of the settlement.

Note10. COVID-19 Pandemic

On March 11, 2020, the World Health Organization declared that the novel coronavirus (COVID-19) had become a pandemic, and on March 13, 2020, the U.S. President declared a National Emergency concerning the disease. Additionally, in March 2020, state governments in the Company’s geographic operating area began instituting preventative shut down measures in order to combat the novel coronavirus pandemic. The coronavirus and actions taken to mitigate the spread of it have had and are expected to continue to have an adverse impact on the economies and financial markets of the geographical areas in which the Company operates. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted to amongst other provisions, provide emergency assistance for individuals, families and businesses affected by the novel coronavirus pandemic for 2020 and into 2021. The Company’s business not being deemed essential resulted in decreased financial performance that may not be indicative of future financial results. Government-mandated closures of businesses and shipping delays have affected our sales and inventory purchases. The Company continues to face uncertainty and increased risks concerning its employees, customers, supply chain and government regulation. Although the COVID-19 vaccine is currently available to the population in the U.S., cases of the COVID-19 virus continue to raise due to variants of the virus and the long-term effects of this pandemic are yet to be seen. The Company’s sales and supply may continue to be adversely affected due to COVID-19 and plans continue to be developed to ensure a prompt response is given to address the effects of the pandemic.

Note11. Subsequent Events

---

On

July 1, 2021, the Company issued to Lobo an unsecured promissory note in the principal amount of $100,000 which accrues interest at the rate of 10% per annum and matures on September 30, 2021.

On

July 6, 2021, the Company entered into a note payoff indemnity agreement with Kenar pursuant to which the Company paid Kenar $918,539 of principal and accrued interest in full satisfaction of the amounts due to Kenar under a Second Loan Amendment, dated April 26, 2021, between the Company and Kenar. Consequently, the Kenar Note was extinguished, and the shares pledged by Mr. Keeler were released.

On

July 8, 2021, we sold pursuant to subscription agreements an aggregate of 83,750 shares of common stock at a purchase price of $2.00 per share and issued warrants to purchase an aggregate of 83,750 shares at an exercise price of $2.00 per share in a private offering to sixteen accredited investors for gross proceeds of $167,500.

On

July 14, 2021, we sold pursuant to subscription agreements an aggregate of 129,750 shares of common stock at a purchase price of $2.00 per share and issued warrants to purchase an aggregate of 129,750 shares at an exercise price of $2.00 per share in a private offering to four accredited investors for gross proceeds of $259,500.

On

August 3, 2021, the Company issued 5,000

shares of common stock with a fair value of $30,000

to an investor relations firm for services provided to the Company under an investor relations consulting agreement.

| 19 |

| --- |

ITEM

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

Forward-Looking

Statements

Thefollowing management’s discussion and analysis should be read in conjunction with our historical financial statements and the relatednotes thereto. The management’s discussion and analysis contain forward-looking statements, such as statements of our plans, objectives,expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, thewords “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,”“expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,”“should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statementsare subject to risks and uncertainties, including those under “Risk Factors” in our Annual Report filed with the SEC on April15, 2021, as updated in subsequent filings we have made with the SEC that could cause actual results or events to differ materially fromthose expressed or implied by the forward-looking statements. Our actual results and the timing of events could differ materially fromthose anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-lookingstatements to reflect events or circumstances occurring after the date of this Quarterly Report.

Basisof Presentation

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Overview

We are 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 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. The crab meat which we import is processed in 13 plants throughout Southeast Asia. Our suppliers are primarily via co-packing relationships, including two affiliated suppliers. We sell primarily to food service distributors. We also sell our products to wholesalers, retail establishments and seafood distributors.

---

In November 2019, we acquired Coastal Pride, a seafood company, based in Beaufort, South Carolina, that imports pasteurized and fresh crabmeat sourced primarily from Mexico and Latin America and sells premium branded label crabmeat throughout North America

In June 2021, we acquired Taste of BC Aquafarms, Inc., a family-owned and operated land-based recirculating aquaculture systems salmon farming operation, based in Nanaimo, British Columbia, Canada which sells its steelhead salmon to distributors in Canada.

| 20 |

| --- |

COVID-19

The current COVID-19 pandemic has adversely affected our business operations, including disruptions and restrictions on our ability to travel or to distribute our seafood products, as well as temporary closures of our facilities. Any such disruption or delay may impact our sales and operating results. In addition, COVID-19 has resulted in a widespread health crisis that adversely affected the economies and financial markets of many other countries. As a result of COVID-19, the Company has experienced a significant decrease in revenue for the year ended December 31, 2020 and continues to have losses in the six months ended June 30, 2021 although such losses have significantly decreased in comparison to the six months ended June 30, 2020.

As a result of the business interruption experienced to date, management has taken steps to reduce expenses across all areas of its operations, including payroll, marketing, sales and warehousing expenses. The extent to which we are affected by COVID-19 will largely depend on future developments and restrictions which may disrupt interactions with customers, suppliers, staff and advisors which cannot be accurately predicted, including the duration and scope of the pandemic, governmental and business responses to the pandemic and the impact on the global economy, our customers’ demand for our products, and our ability to provide our products. We continue to monitor the effects of the pandemic on our business.

Resultsof Operations

The information set forth below should be read in conjunction with the financial statements and accompanying notes elsewhere in this Report.

Threemonths ended June 30, 2021 and 2020

NetRevenue. Revenue for the three months ended June 30, 2021 decreased 25.7% to $2,129,389 as compared to $2,865,103 for the three months ended June 30, 2020 as a result of a decrease in poundage sold due to the impact of the COVID-19 pandemic.

Costof Goods Sold. Cost of goods sold for the three months ended June 30, 2021 decreased to $1,559,490 as compared to $2,882,541 for the three months ended June 30, 2020. The decrease is attributable to the revenue decline.

GrossProfit. Gross profit margin for the three months ended June 30, 2021 increased to $569,899 as compared to the gross loss of $17,438 in the three months ended June 30, 2020. This increase is attributable to higher market prices and lower cost of goods sold in comparison with the three months ended June 30, 2020.

CommissionsExpense. Commissions expense decreased to $13,606 for the three months ended June 30, 2021 from $25,534 for the three months ended June 30, 2020. This decrease is due to lower commissionable revenues.

Salariesand Wages Expense. Salaries and wages expense decreased to $228,859 for the three months ended June 30, 2021 as compared to $241,072 for the three months ended June 30, 2020. This decrease is mainly attributable to a strategic reduction in salaries and stock-based compensation.

Depreciationand Amortization. Depreciation and amortization expense decreased to $55,911 for the three months ended June 30, 2021 as compared to $153,195 for the three months ended June 30, 2020. The decrease is attributable to lower fixed assets and lower corresponding depreciation recognized.

OtherOperating Expense. Other operating expense increased to $638,585 for the three months ended June 30, 2021 from $158,749 for the three months ended June 30, 2020. This increase is mainly attributable to legal and professional fees and stock compensation expense associated with the TOBC acquisition and a Nasdaq uplisting application.

| 21 |

| --- |

OtherIncome. Other income increased for the three months ended June 30, 2021 to $28,672 from $0 for the three months ended June 30, 2020. This increase is mainly attributable to collections made by Coastal Pride for debt existing prior to the acquisition of Coastal Pride by the Company.

ForbearanceFee Expense (Non-Cash). Forbearance fee expense decreased to $0 for the three months ended June 30, 2021 from $2,655,292 for the three months ended June 30, 2020. This decrease is a result of a one-time, non-cash expense related to the issuance of common stock for a forbearance fee in connection with the Kenar Note in 2020.

InterestExpense. Interest expense decreased to $98,737 for the three months ended June 30, 2021 from $239,653 for the three months ended June 30, 2020. The decrease is attributable to a decrease in loans and line of credit outstanding to $4,141,479 for the three months ended June 30, 2021 from $8,963,605 for the three months ended June 30, 2020.

NetLoss. Net loss was $437,127 for the three months ended June 30, 2021 as compared to a net loss of $3,490,933 for the three months ended June 30, 2020. The decrease in net loss is primarily attributable to reductions of depreciation and amortization, interest and other expenses.

Sixmonths ended June 30, 2021 and 2020

NetRevenue. Revenue for the six months ended June 30, 2021 decreased 37.9% to $4,615,280 as compared to $7,436,717 for the six months ended June 30, 2020 as a result of a decrease in poundage sold due to the impact of the COVID-19 pandemic.

Costof Goods Sold. Cost of goods sold for the six months ended June 30, 2021 decreased to $3,742,602 as compared to $7,030,939 for the six months ended June 30, 2020. The decrease is attributable to the revenue decline.

GrossProfit. Gross profit margin for the six months ended June 30, 2021 increased to $872,678 as compared to $405,778 for the six months ended June 30, 2020. This increase is attributable to higher market prices and lower cost of goods sold in comparison to the six months ended June 30, 2020.

CommissionsExpense. Commissions expense decreased to $18,400 for the six months ended June 30, 2021 from $92,363 for the six months ended June 30, 2020. This decrease is due to lower commissionable revenues.

Salariesand Wages Expense. Salaries and wages expense decreased to $609,455 for the six months ended June 30, 2021 as compared to $650,253 for the six months ended June 30, 2020. This decrease is mainly attributable to a strategic reduction in salaries and stock-based compensation.

Depreciationand Amortization. Depreciation and amortization expense decreased to $99,990 for the six months ended June 30, 2021 as compared to $230,960 for the six months ended June 30, 2020. The decrease is attributable to lower fixed assets and lower corresponding depreciation recognized.

OtherOperating Expense. Other operating expense increased to $955,983 for the six months ended June 30, 2021 from $605,182 for the six months ended June 30, 2020. This increase is mainly attributable to legal and professional fees and stock compensation expense associated with the TOBC acquisition and a Nasdaq uplisting application.

OtherIncome. Other income increased for the six months ended June 30, 2021 to $105,190 from $0 for the six months ended June 30, 2020. This increase is mainly attributable to collections made by Coastal Pride for debt existing prior to the acquisition of Coastal Pride by the Company.

ForbearanceFee Expense (Non-Cash). Forbearance fee expense (non-cash) decreased to $0 for the six months ended June 30, 2021 from $2,655,292 for the six months ended June 30, 2020. This decrease is the result of a one-time, non-cash expense related to the issuance of common stock for a forbearance fee in connection with the Kenar Note in 2020.

| 22 |

| --- |

InterestExpense. Interest expense decreased to $209,271 for the six months ended June 30, 2021 from $516,308 for the six months ended June 30, 2020. The decrease is attributable to a decrease in loans and line of credit outstanding to $4,476,878 for the six months ended June 30, 2021 from $9,928,084 for the six months ended June 30, 2020.

NetLoss. Net loss was $915,231 for the six months ended June 30, 2021 as compared to $4,344,580 for the six months ended June 30, 2020. The decrease in net loss is primarily attributable to reductions of depreciation and amortization, interest and other expenses.

Liquidityand Capital Resources

The Company had cash of $1,630,732 as of June 30, 2021. At June 30, 2021, the Company had a working capital deficit of $1,128,803, including $1,299,712 in stockholder loans that are subordinated to its working capital line of credit, and the Company’s primary sources of liquidity consisted of inventory of $582,762 and accounts receivable of $610,355.

The Company has historically financed its operations through the cash flow generated from operations, capital investment, notes payable and a working capital line of credit.

The COVID-19 pandemic has caused significant disruptions to the global financial markets. The full impact of the COVID-19 outbreak continues to evolve, is highly uncertain and subject to change. The Company is not able to estimate the possible continuing effects of the COVID-19 outbreak on its operations or financial condition for the next 12 months.

Cash Provided by OperatingActivities. Cash provided by operating activities during the six months ended June 30, 2021 was $311,707 as compared to cash provided by operating activities of $3,105,786 for the six months ended June 30, 2020. The decrease is primarily attributable to reductions in inventory of $2,284,228, receivables of $236,122 and other current liabilities of $205,291 for the six months ended June 30, 2021.

CashUtilized in Investing Activities. Cash used for investing activities for the six months ended June 30, 2021 was $790,593 as compared to cash used for investing activities of $47,179 for the six months ended June 30, 2020. The increase was attributable to the acquisition of TOBC for the six months ended June 30, 2021.

Cash Providedby (Utilized in) Financing Activities. Cash provided by financing activities for the six months ended June 30, 2021 was $1,770,995 as compared to cash utilized in financing activities of $3,225,404 for the six months ended June 30, 2020. Reduction of the Company’s revolving working capital line of credit of $1,173,949 was partially offset by the proceeds from the PPP loan of $371,944 for the six months ended June 30, 2021, compared to loan payment and loan costs paid on the working capital line of credit of $3,165,404 for the six months ended June 30, 2020. As of June 30, 2021, the Company had $2,573,000 of proceeds from a common stock private offering.

WorkingCapital Line of Credit

Keeler & Co. entered into a $14,000,000 revolving line of credit with ACF on August 31, 2016, the proceeds of which were used to pay off the prior line of credit, pay new loan costs of approximately $309,000 and provide additional working capital to Keeler & Co. This facility was amended on November 18, 2016, June 19, 2017, October 16, 2017, September 19, 2018, November 8, 2018, July 29, 2019, November 26, 2019 and May 7, 2020 and was secured by all of the assets of Keeler & Co. and Coastal Pride. The interest rate under the line of credit was equal to the greater of (i) the 3-month LIBOR rate plus 9.25%, (ii) the prime rate plus 6.0%, and (iii) a fixed rate of 6.5%. As of December 31, 2020, the interest rate was 12.48%.

On March 31, 2021, Keeler & Co. and Coastal Pride entered into a loan and security agreement (“Loan Agreement”) with Lighthouse pursuant to the terms of the Loan Agreement, Lighthouse made available to Keeler & Co. and Coastal Pride (together, the “Borrowers”) a $5,000,000 revolving line of credit for a term of thirty-six months, renewable annually for one-year periods thereafter. Amounts due under the line of credit are represented by a revolving credit note issued to Lighthouse by the Borrowers.

| 23 |

| --- |

The advance rate of the revolving line of credit is 85% with respect to eligible accounts receivable and the lower of 60% of the Borrowers’ eligible inventory, or 80% of the net orderly liquidation value, subject to an inventory sublimit of $2,500,000. The inventory portion of the loan will never exceed 50% of the outstanding balance. Interest on the line of credit is the prime rate (with a floor of 3.25%), plus 3.75%. The Borrowers will pay Lighthouse a facility fee of $50,000 in three instalments of $16,667 in March, April and May 2021 and will pay an additional facility fee of $25,000 on each anniversary of March 31, 2021.

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

The Borrowers utilized $784,450 of the Lighthouse revolving line of credit to repay all the outstanding indebtedness owed to the ACF as of March 31, 2021. As a result, all obligations owed to ACF were satisfied and the loan agreement with ACF was terminated. The outstanding balance owed to Lighthouse as of June 30, 2021 amounted to $631,958.

JohnKeeler Promissory Notes

From January 2006 through May 2017, Keeler & Co issued 6% demand promissory notes in the aggregate principal amount of $2,910,000 to John Keeler, our Chief Executive Officer and Executive Chairman. As of June 30, 2021 and December 31, 2020, approximately $1,299,000 of principal remains outstanding and approximately $39,100 and $174,000 of interest was paid under the notes, respectively. These notes are subordinated to the Lighthouse note. After satisfaction of the terms of the subordination, the Company may prepay the notes at any time first against interest due thereunder. If an event of default occurs under the notes, interest will accrue at 18% per annum and if not paid within 10 days of payment becoming due, the holder of the note is entitled to a late fee of 5% of the amount of payment not timely made.

KenarNote

On March 26, 2019, the Company issued a four-month promissory note in the principal amount of $1,000,000 (the “Kenar Note”) to Kenar Overseas Corp., a company registered in Panama (“Kenar”). The note bears interest at the rate of 18% per annum during the initial four months which rate will increase to 24% during any extension thereof. The note may be prepaid in whole or in part without penalty. John Keeler, the Company’s Chief Executive Officer and Executive Chairman pledged 5,000,000 shares of common stock to secure the Company’s obligations under the note. The Kenar Note matured on July 26, 2019 and was extended on a month-to-month basis and on November 19, 2019, the Kenar Note was extended to March 31, 2020 on the same terms and conditions.

On May 21, 2020, the Kenar Note was amended to (i) extend the maturity date to March 31, 2021, (ii) provide that the Company use one-third of any capital raise from the sale of its equity to reduce the outstanding principal under the Kenar Note, (iii) set the interest rate at 18% per annum, payable monthly commencing October 1, 2020, and (iv) reduce the number of pledged shares by Mr. Keeler to 4,000,000. As consideration therefor, the Company issued 1,021,266 shares of Common Stock to Kenar on May 27, 2020. The outstanding principal amount of the note at March 31, 2021 and December 31, 2020 was $872,500. On April 28, 2021, the Kenar Note was further amended to extend the maturity date to May 31, 2021.

On July 6, 2021, the Company entered into a note payoff indemnity agreement with Kenar pursuant to which the Company paid Kenar $918,539 of principal and accrued interest in full satisfaction of the amounts due to Kenar under the Second Loan Amendment, dated April 26, 2021, between the Company and Kenar, and the Kenar Note was extinguished, and the shares pledged by Mr. Keeler were released.

| 24 |

| --- |

LoboNote

On April 2, 2019, the Company issued a four-month unsecured promissory note in the principal amount of $100,000 (the “Lobo Note”) to Lobo Holdings, LLLP, a stockholder of the Company (“Lobo”). The Lobo Note bears interest at the rate of 18% per annum. The Lobo Note may be prepaid in whole or in part without penalty. John Keeler, the Company’s Executive Chairman and Chief Executive Officer, pledged 1,000,000 shares of common stock of the Company to secure the Company’s obligations under the Lobo Note. The Lobo Note matured on August 2, 2019 and was extended through December 2, 2019 on the same terms and conditions. On November 15, 2019, the Company paid off the Lobo Note with the issuance to Lobo of an unsecured promissory note in the principal amount of $100,000 which accrued interest at the rate of 15% per annum and matured on March 31, 2020. On April 1, 2020, the Company paid off the November 15, 2019 Lobo Note with the issuance to Lobo of a six-month unsecured promissory note in the principal amount of $100,000, which accrued interest at the rate of 10% per annum and matured on October 1, 2020. On October 1, 2020, the Company paid off the April 1, 2020 note with the issuance of a three-month unsecured promissory note in the principal amount of $100,000, which bears interest at the rate of 10% per annum and matured on December 31, 2020. On January 1, 2021, the Company paid off the October 1, 2020 note with the issuance of a six-month unsecured promissory note in the principal amount of $100,000, which bears interest at the rate of 10% per annum and matures on June 30, 2021. On July 1, 2021, the Company paid off the January 1, 2021 note with the issuance of a three-month unsecured promissory note in the principal amount of $100,000 which accrued interest at the rate of 10% per annum and matures on September 30, 2021.

PaycheckProtection Program Loan

On March 2, 2021, the Company received proceeds of $371,944 and issued an unsecured promissory note to US Century in the principal amount of $371,944 in connection with a PPP Loan. The note accrues interest at 1.0% per annum, matures five years from the date of issuance and is fully guaranteed by the SBA and may be forgiven provided certain criteria are met. The Company may apply for forgiveness after August 17, 2021 and may be required to make monthly payments of approximately $8,500 beginning June 2, 2022.

Off-BalanceSheet Arrangements

We currently have no off-balance sheet arrangements.

ITEM

3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM

4. CONTROLS AND PROCEDURES

Evaluationof Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of June 30, 2021, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, based on the material weaknesses discussed below, our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:

● The Company’s lack of an audit committee with a financial expert and thus the Company lacks the board oversight role within the financial reporting process; and

● inadequate segregation of duties consistent with control objectives, including lack of personnel resources and technical accounting expertise within the accounting function of the Company.

Management believes that the material weaknesses that were identified did not have an effect on our financial results. However, management believes that these weaknesses, if not properly remediated, could result in a material misstatement in our financial statements in future periods.

| 25 |

| --- |

Management’sRemediation Initiatives

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to further initiate, the following measures, subject to the availability of required resources:

● We plan to create a position to segregate duties consistent with control objectives and hire personnel resources with technical accounting expertise within the accounting function;

● As of May 5, 2021, we hired a chief financial officer who is also the principal financial officer for SEC filing purposes; and

● On July 19, 2021, the Company established an audit committee and has determined that Jeffrey Guzy is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable Nasdaq rules and regulations.

Going forward, we intend to evaluate our processes and procedures and, where practicable and resources permit, implement changes in order to have more effective internal controls over financial reporting.

Changesin Internal Control over Financial Reporting

During the period covered by this Quarterly Report, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART

II – OTHER INFORMATION

ITEM

1. LEGAL PROCEEDINGS

From time to time, the Company may be party to legal proceedings that arise in the ordinary course of business. There are currently no pending legal proceedings, individually or in the aggregate, that we believe will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

ITEM

1A. RISK FACTORS

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

ITEM

2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Except as set forth below, there were no sales of equity securities sold during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.

On June 30, 2021, we issued an aggregate of 706,500 shares of common stock to Series A preferred stockholders upon the conversion of an aggregate of 1,413 shares of Series A preferred stock.

The above issuance did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe is exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof.

| 26 |

| --- |

ITEM

3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM

4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM

5. OTHER INFORMATION

None.

ITEM

6. EXHIBITS

Exhibit<br><br> <br>No.	Description
31.1	Certification<br> of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the<br> Sarbanes-Oxley Act of 2002
31.2	Certification<br> of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the<br> Sarbanes-Oxley Act of 2002
32.1	Certifications<br> of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of<br> 2002
32.2	Certifications<br> of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of<br> 2002
101.INS	XBRL<br> Instance Document
101.SCH	XBRL<br> Taxonomy Extension Schema Document
101.CAL	XBRL<br> Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL<br> Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL<br> Taxonomy Extension Label Linkbase Document
101.PRE	XBRL<br> Taxonomy Extension Presentation Linkbase Document

| 27 |

| --- |

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BLUE STAR FOODS CORP.
Dated:<br> August 16, 2021	By:	/s/ John Keeler
	Name:	John<br> Keeler
	Title:	Executive<br> Chairman and Chief Executive Officer<br><br> <br>(Principal<br> Executive Officer)
Dated:<br> August 16, 2021	By:	/s/ Silvia Alana
	Name:	Silvia<br> Alana
	Title:	Chief<br> Financial Officer
		(Principal<br> Financial and Accounting Officer)

| 28 |

| --- |

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACTAND RULE 13A-14(A)

OR 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF1934

I, John Keeler, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Blue Star Foods Corp.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
---	---
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
---	---
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 16, 2021	/s/ John Keeler
---	---
	John Keeler
	Executive Chairman and Chief Executive Officer<br><br> <br>(Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACTAND RULE 13A-14(A)

OR 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF1934

I, Silvia Alana, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Blue Star Foods Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
---	---
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
---	---
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 16, 2021	/s/ Silvia Alana
---	---
	Silvia Alana
	Chief Financial Officer<br><br> <br>(Principal Financial and Accounting Officer)

---

---

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Blue Star Foods Corp. (the “Company”), for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Keeler, Executive Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: August 16, 2021	By:	/s/ John Keeler
	Name:	John Keeler
	Title:	Executive Chairman and Chief Executive Officer
		(Principal Executive Officer)

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Blue Star Foods Corp. (the “Company”), for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Silvia Alana, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: August 16, 2021	By:	/s/ Silvia Alana
	Name:	Silvia Alana
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)