NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – DESCRIPTION OF BUSINESS
Seafarer
Exploration Corp. (Seafarer or the Company), was incorporated on May 28, 2003 in the State of Delaware.
The
principal business of the Company is to engage in the archaeologically-sensitive exploration, documentation, recovery, and conservation
of historic shipwrecks with the objective of exploring and discovering Colonial-era shipwrecks for future generations to be able
to appreciate and understand.
In
March of 2014, Seafarer entered into a partnership with Marine Archaeology Partners, LLC (MAP), with the formation
of Seafarers Quest, LLC (SQ) for the purpose of exploring a shipwreck site off of Melbourne Beach, Florida.
Under the partnership with MAP, Seafarer is the designated manager of SQ.
The
Companys wholly owned subsidiary Blockchain LogisTech, LLC (Blockchain), was formed on April 4, 2018 and
began operations in 2019. Blockchain provides customer referrals to a blockchain related software services company.
Florida
Division of Historical Resources Agreements/Permits
The
Company successfully renewed its permits for both Areas 1 and 2 for the Melbourne Beach site. The Area 1 permit was renewed
on March 1, 2019 for a period of three years. The Area 2 permit was renewed on January 14, 2019 for a period of three
years.
Federal
Admiralty Judgement
As
previously noted on its form 8-K filed on November 22, 2017, Seafarer was granted, through the United States District Court for
the Southern District of Florida, a final judgment for its federal admiralty claim on the Juno Beach shipwreck site. The Company
is not currently conducting operations at the Juno Beach shipwreck site.
Blockchain
Software Services Referral Agreements
Blockchain
has a strategic partnership to provide referrals to a blockchain software services provider and receive referral fees when the
referrals lead to closed business for the blockchain software services company. Blockchain also has a reseller agreement with
a separate company that sells a blockchain related security product.
NOTE
2 – GOING CONCERN
These
consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize
its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred
net losses since inception and has an accumulated deficit of $19,924,797 as of December 31, 2020. During the year ended December
31, 2020, the Company used $2,660,813 in its operations and at December 31, 2020, the Company had a working capital deficit of
$1,158,747. These factors raise substantial doubt about the Companys ability to continue as a going concern. Based on its
historical rate of expenditures, the Company expects to expend its available cash in less than one month from April 12, 2021. Managements
plans include raising capital through the issuance of common stock and debt to fund operations and, eventually, the generation
of revenue through its business. The Company does not expect to generate any significant revenues for the foreseeable future.
The Company is in immediate need of further working capital and is seeking options, with respect to financing, in the form of
debt, equity or a combination thereof.
Failure
to raise adequate capital and generate adequate revenues could result in the Company having to curtail or cease operations. The
Companys ability to raise additional capital through the future issuances of the common stock is unknown. Additionally,
even if the Company does raise sufficient capital to support its operating expenses and generate adequate revenues, there can
be no assurances that the revenue will be sufficient to enable it to develop to a level where it will generate profits and cash
flows from operations. These matters raise substantial doubt about the Companys ability to continue as a going concern;
however, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of business. These consolidated financial statements
do not include any adjustments relating to the recovery of the recorded assets or the classifications of the liabilities that
might be necessary should the Company be unable to continue as a going concern.
Covid-19
Disclosure
The
COVID-19 global pandemic may have a serious negative affect on the Companys operations and business. It is possible that
this ongoing global pandemic may cause the Company to have to significantly delay or suspend its operations, which would likely
result in a material adverse impact on its business and financial positions.
Furthermore,
the Company may be unable to raise sufficient capital due to COVID-19s effects on the general economy and the capital markets.
If the Company is not able to obtain financing due to COVID-19, then it is highly likely that it will be forced to cease operations.
Smaller companies such as Seafarer, who lack significant revenues, earnings and cash flows as well as who lack diversified business
operations are particularly vulnerable to having to potentially cease operations due to the effects of COVID-19. If the Company
were to be unable to raise capital and cease its operations then it would be highly likely that the Company would not survive
and lenders and investors would suffer a complete loss of all capital loaned to or invested in the Company.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of Seafarer Exploration Corp. is presented to assist in understanding the Companys
consolidated financial statements. The consolidated financial statements and notes are representations of the Companys
management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles
generally accepted in the United States of America (GAAP) and have been consistently applied in the preparation
of the consolidated financial statements.
Principles
of Consolidation
The
consolidated financial statements of the Company include the accounts of the Company and Blockchain which is a wholly owned subsidiary.
Intercompany accounts and transactions have been eliminated in consolidation.
Cash
and Cash Equivalents
For
purposes of the consolidated statement of cash flows, the Company considers all highly liquid investments and short-term debt
instruments with original maturities of three months or less to be cash equivalents. There were no cash equivalents at December
31, 2020 and 2019. Financial instruments that potentially subject the Company to concentration of credit risk consist principally
of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up
to $250,000. At December 31, 2020, the Company did not have deposits in excess of the FDIC insured limit.
Research
and Development Expenses
Expenditures
for research and development are expensed as incurred. The Company incurred research and development expenses of $463,468 and
$444,002 for the years ended December 31, 2020 and 2019, respectively.
Revenue
Recognition
The
Company recognizes revenue in accordance with the Financial Accounting Standards Boards (FASB) Accounting
Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606)
and all the related amendments. The Company elected to adopt this guidance using the modified retrospective method. The adoption
of this guidance did not have a material effect on the Companys financial position, results of operations or cash flows.
The
core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers
in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates
may be required within the revenue recognition process than required under GAAP, including identifying performance obligations
in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction
price to each separate performance obligation.
The
Company recognizes revenue from the referrals that Blockchain has made to providers of software services when payment for a referral
is received from the provider of software services. Blockchain, at its sole discretion and with no specific sales quotas or targets,
provides referrals of potential end users to the software service providers and is paid a referral fee only after the software
services providers receive payment from the end user.
The
Company also has a separate sales referral agreement, with no sales quotas or specific goals or targets, with a limited
liability company that provides product/system engineering and development services. The Companys performance obligation is
met when the payment from the customer is received by the provider of the development services, which is at a point in time. The
Company receives referral fees when payment is received from the provider of the product/system development services which is
when the Company recognizes revenue under the agreement.
Earnings
Per Share
The
Company has adopted the FASB ASC 260-10, which provides for the calculation of basic and diluted earnings
per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders
by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of
securities that could share in the earnings of an entity.
The
potentially dilutive common stock equivalents for the years ended December 31, 2020 and 2019 were excluded from the dilutive loss
per share calculation as they would be antidilutive due to the net loss. As of December 31, 2020 and 2019, there were approximately
663,053,249 and 593,177,150 shares of common stock underlying our outstanding convertible notes payable and warrants, respectively.
Fair
Value of Financial Instruments
The
carrying amounts of financial assets and liabilities, such as cash, accounts payable, accrued expenses, convertible notes payable
and payables, approximate their fair values because of the short maturity of these instruments.
Property,
Plant and Equipment
Property,
plant and equipment are recorded at historical cost. Depreciation is computed on the straight-line method over the estimated useful
lives of the respective assets. During the year ended December 31, 2019, the Company purchased a vessel with an estimated useful
life of ten years. During the year ended December 31, 2020 the Company purchased a vehicle with an estimated useful life of seven
years. As of December 31, 2020, these are the only capital assets owned by the Company.
Depreciation
expense was $20,379 and $1,003 for the years ended December 31, 2020 and 2019, which is included in operating expenses in the
accompanying consolidated statements of operations.
Impairment
of Long-Lived Assets
In
accordance with ASC 360-10, the Company, on a regular basis, reviews the carrying amount of long-lived assets for the existence
of facts or circumstances, both internally and externally, that suggest impairment. The Company determines if the carrying amount
of a long-lived asset is impaired based on anticipated undiscounted cash flows, before interest, from the use of the asset. In
the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset.
Fair value is determined based on appraised value of the assets or the anticipated cash flows from the use of the asset, discounted
at a rate commensurate with the risk involved. There were no impairment charges recorded during the years ended December 31, 2020
and 2019.
Use
of Estimates
The
process of preparing consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions regarding
certain types of assets, liabilities, revenues, and expenses. Significant estimates for the years ended December 31, 2020 and
2019 include useful life of property, plant and equipment, valuation allowances against deferred tax assets and the fair value
of non cash equity transactions.
Segment
Information
During
2019, Seafarers wholly owned subsidiary, Blockchain began operations, generated revenue and incurred expenses. The business
of Blockchain has no relation to the Companys shipwreck exploration and recovery operations other than common ownership.
As such, the Company concluded that the operations of Blockchain and Seafarer Exploration were separate reportable segments as
of the years ended December 31, 2020 and 2019 (see Note 11 – Segment Information).
Convertible
Notes Payable
The
Company accounts for convertible notes deemed conventional and conversion options embedded in non-conventional convertible notes
which qualify as equity under ASC 815, in accordance with the provisions of ASC 470-20, which provides guidance on accounting
for convertible securities with beneficial conversion features. ASC 470-10 addresses classification determination for specific
obligations, such as short-term obligations expected to be refinanced on a long-term basis, due-on-demand loan arrangements, callable
debt, sales of future revenue, increasing rate debt, debt that includes covenants, revolving credit agreements subject to lock-box
arrangements and subjective acceleration clauses. Accordingly, the Company records, as a discount to convertible notes, the intrinsic
value of such conversion options based upon the differences between the fair value of the underlying common stock at the commitment
date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements
are amortized over the term of the related debt.
Stock
Based Compensation
The
Company applies the fair value method of FASB ASC 718, Share Based Payment, in accounting for its stock-based
compensation. The standard states that compensation cost is measured at the grant date based on the fair value of the award and
is recognized over the service period, which is usually the vesting period. The Company values stock-based compensation at the
market price for the Companys common stock and other pertinent factors at the grant date.
Fully
vested and non-forfeitable shares issued prior to the services being performed are classified as prepaid expenses.
Leases
In
February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The updated
guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated
guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance
in ASC 606.
On
January 1, 2019, the Company adopted ASU 2016-02, applying the package of practical expedients to leases that commenced before
the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain
leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the
inception of a contract the Company assessed whether the contract is, or contains, a lease. The Companys assessment is
based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right
to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to
direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its
relative stand-alone price to determine the lease payments.
Operating
lease right of use (ROU) assets represents the right to use the leased asset for the lease term and operating lease
liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement
date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information
available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is
amortized on a straight-line basis over the lease term and is presented in operating expenses on the consolidated statements of
operations.
As
permitted under the new guidance, the Company has made an accounting policy election not to apply the recognition provisions of
the new guidance to short term leases (leases with a lease term of twelve months or less that do not include an option to purchase
the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments
for short term leases on a straight-line basis over the lease term.
Investments
The
Company follows ASC 325-20, Cost Method Investments (ASC 325-20), to account for its ownership interest in
noncontrolled entities. Under ASC 325-20, equity securities that do not have readily determinable fair values (i.e., non-marketable
equity securities) and are not required to be accounted for under the equity method are typically carried at cost (i.e., cost
method investments). Investments of this nature are initially recorded at cost. Income is recorded for dividends received that
are distributed from net accumulated earnings of the noncontrolled entity subsequent to the date of investment. Dividends received
in excess of earnings subsequent to the date of investment are considered a return of investment and are recorded as reductions
in the cost of the investment. Investments are written down only when there is clear evidence that a decline in value that is
other than temporary has occurred.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized.
Recent
Accounting Pronouncements
All
other recent accounting pronouncements issued by the FASB, did not or are not believed by management to have a material impact
on the Companys present or future consolidated financial statements.
NOTE
4 – OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES
Operating
lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement
date. The interest rate used to determine the present value is the incremental borrowing rate, estimated to be 6%, as the interest
rate implicit in most of the Companys leases are not readily determinable. Operating lease expense is recognized on a straight-line
basis over the lease term. During the years ended December 31, 2020 and 2019, the Company recorded $10,398 and $15,780, respectively,
as operating lease expense, which is included in rent expense on the consolidated statements of operations.
The
Company leases 823 square feet of office space located at 14497 North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. During
the year ended December 31, 2019 and through June 30, 2020 the Company paid $1,252 per month to lease the office space. The Company
entered into an amended lease agreement commencing on July 1, 2020 through July 31, 2023 with base month rents of $1,475 from
July 1, 2020 to June 30, 2021, $1,519 from July 1, 2021 to June 30, 2022, $1,564 from July 1, 2022 to June 30, 2023 and $1,611
from July 1, 2023 to July 31, 2023. Under the terms of the lease there may be additional fees charged above the base monthly rental
fee.
In
adopting Topic 842, the Company has elected the package of practical expedients, which permit it not to reassess
under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company
did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter is not applicable to the
Company. As permitted under the new guidance, the Company has made an accounting policy election not to apply the recognition
provisions of the new guidance to short term leases (leases with a lease term of twelve months or less that do not include an
option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize
the lease payments for short term leases on a straight-line basis over the lease term. On January 1, 2019, upon adoption of Topic
842, the Company recorded right-of-use assets and lease liabilities of $22,575. On July 1, 2020, upon renewal of the lease, the
Company recorded a right-of-use asset and lease liability of $48,957.
Right-of-use
assets at December 31, 2020 and 2019 are summarized below:
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Office lease
|
|
$
|
48,957
|
|
|
$
|
22,575
|
|
Less accumulated amortization
|
|
|
(6,966
|
)
|
|
|
(14,574
|
)
|
Right of use assets, net
|
|
$
|
41,991
|
|
|
$
|
8,001
|
|
Amortization
on the right -of -use asset is included in rent expense on the consolidated statements of operations.
Operating
lease liabilities are summarized below:
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Office lease
|
|
$
|
42,274
|
|
|
$
|
8,079
|
|
Less: current portion
|
|
|
(14,680
|
)
|
|
|
(8,079
|
)
|
Long term portion
|
|
$
|
27,594
|
|
|
$
|
-
|
|
Maturity
of lease liabilities are as follows:
Year ended December 31, 2021
|
|
$
|
18,103
|
|
Year ended December 31, 2022
|
|
|
18,641
|
|
Year ended December 31, 2023
|
|
|
11,080
|
|
Total future minimum lease payments
|
|
|
47,824
|
|
Less: Present value discount
|
|
|
(5,550
|
)
|
Lease liability
|
|
$
|
42,274
|
|
The
Company also has an operating lease for a house located in Palm Bay, Florida that it leases on a month-to-month basis for $1,300
per month. The Company uses the house to store equipment and gear and to provide temporary work-related living quarters for its
divers, personnel, consultants and independent contractors involved in its exploration and recovery operations. The Company also
pays a rental fee for a space in a park on an as needed basis.
NOTE
5 – INVESTMENT IN PROBABILITY AND STATISTICS, INC.
The
Company entered into a share exchange agreement with Probability and Statistics, Inc. (P&S), a privately held
corporation, in August of 2018.
Under
the terms of the share exchange agreement, the Company agreed to issue 60,000,000 shares of its restricted common stock to P&S
in exchange for 10,000 common shares of P&S, or a 1% interest. All shares issued by both parties under the agreement have
all rights and entitlements as the common stock of every other shareholder of such share class.
The
investment in P&S was valued at $78,000 based on the fair value of the Companys shares issued to P&S on the date
of the share exchange agreement and is being accounted for as a cost method investment. The Company received dividends from P&S
during the years ended December 31, 2020 and 2019 of $4,500 and $6,000 respectively, which have been presented as dividend income
on the consolidated statements of operations.
In
August of 2020, the Company and P&S entered into a new agreement to effectively unwind the previous share exchange agreement.
Under the terms of the new agreement, Seafarer agreed to exchange 10,000 shares of P&S for 60,000,000 shares of its common
stock. As a result of the transaction in August of 2020, the Company realized a gain on investment of $354,000.
Seafarer
also has an agreement with P&S to receive referral fees. Under the terms of the agreement, P&S has agreed to pay a 7%
referral fee to the Company when P&S receives cash flows from providing blockchain software services to entities that were
referred by the Company. The agreement is ongoing and has no expiration date. During the years ended December 31, 2020 and 2021,
P&S paid a total of $4,200 and $14,000, respectively, of referral fees to the Company. These amounts are included in service
income in the consolidated statements of operations.
NOTE 6 –
CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
Convertible
Notes Payable
The
following table reflects the convertible notes payable as of December 31, 2020 and 2019:
|
|
Issue
Date
|
|
Maturity
Date
|
|
December
31, 2020
|
|
|
December
31, 2019
|
|
|
Rate
|
|
Conversion
Price
|
|
|
|
|
|
|
Principal
Balance
|
|
|
Principal
Balance
|
|
|
|
|
|
Convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/04/19
|
|
03/04/20
|
|
$
|
-
|
|
|
$
|
25,000
|
|
|
6.00%
|
|
0.00300
|
|
|
09/04/19
|
|
03/04/20
|
|
|
-
|
|
|
|
26,000
|
|
|
6.00%
|
|
0.00300
|
|
|
09/01/20
|
|
03/01/21
|
|
|
45,000
|
|
|
|
-
|
|
|
6.00%
|
|
0.00300
|
Face value
|
|
|
45,000
|
|
|
|
51,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less unamortized
discounts
|
|
|
(13,425
|
)
|
|
|
(17,935
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance convertible
notes payable
|
|
$
|
31,575
|
|
|
$
|
33,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue
Date
|
|
Maturity Date
|
|
December
31, 2020
|
|
|
December 31, 2019
|
|
|
Rate
|
|
Conversion
Price
|
|
|
|
|
|
|
Principal
Balance
|
|
|
Principal
Balance
|
|
|
|
|
|
Convertible notes payable - related
parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/17/19
|
|
04/17/20
|
|
$
|
-
|
|
|
$
|
12,000
|
|
|
6.00%
|
|
0.00300
|
|
|
11/12/19
|
|
05/12/20
|
|
|
-
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.00250
|
|
|
11/26/19
|
|
05/26/20
|
|
|
-
|
|
|
|
25,200
|
|
|
6.00%
|
|
0.00300
|
|
|
12/03/19
|
|
06/03/20
|
|
|
-
|
|
|
|
15,000
|
|
|
6.00%
|
|
0.00300
|
|
|
08/06/20
|
|
02/06/21
|
|
|
25,200
|
|
|
|
-
|
|
|
6.00%
|
|
0.00350
|
|
|
08/06/20
|
|
02/06/21
|
|
|
35,000
|
|
|
|
-
|
|
|
6.00%
|
|
0.00350
|
|
|
08/14/20
|
|
02/14/21
|
|
|
50,400
|
|
|
|
-
|
|
|
6.00%
|
|
0.00350
|
Face value
|
|
|
110,600
|
|
|
|
77,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less unamortized
discounts
|
|
|
(24,431
|
)
|
|
|
(57,413
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance convertible
notes payable - related parties
|
|
$
|
86,169
|
|
|
$
|
19,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue
Date
|
|
Maturity
Date
|
|
December
31, 2020
|
|
|
December
31, 2019
|
|
|
Rate
|
|
Conversion
Price
|
|
|
|
|
|
|
Principal
Balance
|
|
|
Principal
Balance
|
|
|
|
|
|
Convertible
notes payable - in default
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
08/28/09
|
|
11/01/09
|
|
$
|
4,300
|
|
|
$
|
4,300
|
|
|
10.00%
|
|
0.01500
|
|
|
11/20/12
|
|
05/20/13
|
|
|
50,000
|
|
|
|
50,000
|
|
|
6.00%
|
|
0.00500
|
|
|
01/19/13
|
|
07/30/13
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.00400
|
|
|
02/11/13
|
|
08/11/13
|
|
|
9,000
|
|
|
|
9,000
|
|
|
6.00%
|
|
0.00600
|
|
|
09/25/13
|
|
03/25/14
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
0.01250
|
|
|
10/04/13
|
|
04/04/14
|
|
|
50,000
|
|
|
|
50,000
|
|
|
6.00%
|
|
0.01250
|
|
|
10/30/13
|
|
10/30/14
|
|
|
50,000
|
|
|
|
50,000
|
|
|
6.00%
|
|
0.01250
|
|
|
05/15/14
|
|
11/15/14
|
|
|
40,000
|
|
|
|
40,000
|
|
|
6.00%
|
|
0.00700
|
|
|
10/13/14
|
|
04/13/15
|
|
|
-
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.00500
|
|
|
09/18/15
|
|
03/18/16
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.00200
|
|
|
04/04/16
|
|
10/04/16
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
0.00100
|
|
|
07/19/16
|
|
07/19/17
|
|
|
4,000
|
|
|
|
4,000
|
|
|
6.00%
|
|
0.00150
|
|
|
08/24/16
|
|
02/24/17
|
|
|
-
|
|
|
|
20,000
|
|
|
6.00%
|
|
0.00100
|
|
|
03/06/18
|
|
09/06/18
|
|
|
6,000
|
|
|
|
6,000
|
|
|
6.00%
|
|
0.00060
|
|
|
02/06/18
|
|
11/07/18
|
|
|
6,000
|
|
|
|
6,000
|
|
|
6.00%
|
|
0.00060
|
|
|
10/29/18
|
|
04/29/19
|
|
|
3,000
|
|
|
|
3,000
|
|
|
6.00%
|
|
0.00070
|
|
|
01/03/19
|
|
07/03/19
|
|
|
1,000
|
|
|
|
1,000
|
|
|
6.00%
|
|
0.00100
|
|
|
03/16/19
|
|
09/16/19
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
0.00100
|
|
|
09/04/19
|
|
03/04/20
|
|
|
25,000
|
|
|
|
-
|
|
|
6.00%
|
|
0.00300
|
Balance convertible notes payable - in default
|
|
$
|
308,300
|
|
|
$
|
328,300
|
|
|
|
|
|
|
|
Issue
Date
|
|
Maturity
Date
|
|
December
31, 2020
|
|
|
December
31, 2019
|
|
|
Rate
|
|
Conversion
Price
|
|
|
|
|
|
|
Principal
Balance
|
|
|
Principal
Balance
|
|
|
|
|
|
Convertible
notes payable - related parties, in default
|
|
|
|
|
|
|
|
|
|
|
|
01/09/09
|
|
01/09/10
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
10.00%
|
|
0.01500
|
|
|
01/25/10
|
|
01/25/11
|
|
|
6,000
|
|
|
|
6,000
|
|
|
6.00%
|
|
0.00500
|
|
|
01/18/12
|
|
07/18/12
|
|
|
50,000
|
|
|
|
50,000
|
|
|
8.00%
|
|
0.00400
|
|
|
01/19/13
|
|
07/30/13
|
|
|
15,000
|
|
|
|
15,000
|
|
|
6.00%
|
|
0.00400
|
|
|
07/26/13
|
|
01/26/14
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
0.01000
|
|
|
01/17/14
|
|
07/17/14
|
|
|
31,500
|
|
|
|
31,500
|
|
|
6.00%
|
|
0.00600
|
|
|
05/27/14
|
|
11/27/14
|
|
|
7,000
|
|
|
|
7,000
|
|
|
6.00%
|
|
0.00700
|
|
|
07/21/14
|
|
01/25/15
|
|
|
17,000
|
|
|
|
17,000
|
|
|
6.00%
|
|
0.00800
|
|
|
10/16/14
|
|
04/16/15
|
|
|
21,000
|
|
|
|
21,000
|
|
|
6.00%
|
|
0.00450
|
|
|
07/14/15
|
|
01/14/16
|
|
|
9,000
|
|
|
|
9,000
|
|
|
6.00%
|
|
0.00300
|
|
|
01/12/16
|
|
07/12/16
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.00200
|
|
|
05/10/16
|
|
11/10/16
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.00050
|
|
|
05/10/16
|
|
11/10/16
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.00050
|
|
|
05/20/16
|
|
11/20/16
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.00050
|
|
|
07/12/16
|
|
01/12/17
|
|
|
2,400
|
|
|
|
2,400
|
|
|
6.00%
|
|
0.00060
|
|
|
01/26/17
|
|
03/12/17
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.00050
|
|
|
02/14/17
|
|
08/14/17
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.00075
|
|
|
08/16/17
|
|
09/16/17
|
|
|
3,000
|
|
|
|
3,000
|
|
|
6.00%
|
|
0.00080
|
|
|
03/14/18
|
|
05/14/18
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.00070
|
|
|
04/04/18
|
|
06/04/18
|
|
|
3,000
|
|
|
|
3,000
|
|
|
6.00%
|
|
0.00070
|
|
|
04/11/18
|
|
06/11/18
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.00070
|
|
|
05/08/18
|
|
07/08/18
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.00070
|
|
|
05/30/18
|
|
08/30/18
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.00070
|
|
|
06/12/18
|
|
09/12/18
|
|
|
3,000
|
|
|
|
3,000
|
|
|
6.00%
|
|
0.00070
|
|
|
06/20/18
|
|
09/12/18
|
|
|
500
|
|
|
|
500
|
|
|
6.00%
|
|
0.00070
|
|
|
01/09/18
|
|
01/09/19
|
|
|
12,000
|
|
|
|
12,000
|
|
|
6.00%
|
|
0.00060
|
|
|
08/27/18
|
|
02/27/19
|
|
|
2,000
|
|
|
|
2,000
|
|
|
6.00%
|
|
0.00070
|
|
|
10/02/18
|
|
04/02/19
|
|
|
1,000
|
|
|
|
1,000
|
|
|
6.00%
|
|
0.00080
|
|
|
10/23/18
|
|
04/23/19
|
|
|
4,200
|
|
|
|
4,200
|
|
|
6.00%
|
|
0.00070
|
|
|
11/07/18
|
|
05/07/19
|
|
|
2,000
|
|
|
|
2,000
|
|
|
6.00%
|
|
0.00080
|
|
|
11/14/18
|
|
05/14/19
|
|
|
8,000
|
|
|
|
8,000
|
|
|
6.00%
|
|
0.00080
|
|
|
01/08/19
|
|
07/08/19
|
|
|
7,000
|
|
|
|
7,000
|
|
|
6.00%
|
|
0.00080
|
|
|
04/25/19
|
|
12/23/19
|
|
|
20,000
|
|
|
|
20,000
|
|
|
6.00%
|
|
0.00400
|
|
|
06/07/19
|
|
12/07/19
|
|
|
5,100
|
|
|
|
5,100
|
|
|
6.00%
|
|
0.00300
|
|
|
09/17/19
|
|
04/17/20
|
|
|
12,000
|
|
|
|
-
|
|
|
6.00%
|
|
0.00300
|
|
|
11/12/19
|
|
05/12/20
|
|
|
25,000
|
|
|
|
-
|
|
|
6.00%
|
|
0.00250
|
|
|
11/26/19
|
|
05/26/20
|
|
|
25,200
|
|
|
|
-
|
|
|
6.00%
|
|
0.00300
|
|
|
12/03/19
|
|
06/03/20
|
|
|
15,000
|
|
|
|
-
|
|
|
6.00%
|
|
0.00300
|
|
|
01/07/20
|
|
06/20/20
|
|
|
51,000
|
|
|
|
-
|
|
|
6.00%
|
|
0.00300
|
Balance
convertible notes payable - related parties, in default
|
|
$
|
527,900
|
|
|
$
|
399,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
all convertible notes payable
|
|
$
|
953,944
|
|
|
$
|
780,852
|
|
|
|
|
|
Notes
Payable
The
following tables reflect the notes payable at December 31, 2020 and 2019:
|
|
Issue Date
|
|
Maturity Date
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
Rate
|
|
|
|
|
|
|
Principal Balance
|
|
|
Principal Balance
|
|
|
|
Notes payable - in default
|
|
|
|
|
|
|
|
|
|
|
|
|
04/27/11
|
|
04/27/12
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
6.00%
|
|
|
12/14/17
|
|
12/14/18
|
|
|
20,000
|
|
|
|
65,000
|
|
|
6.00%
|
|
|
11/29/17
|
|
11/29/19
|
|
|
105,000
|
|
|
|
105,000
|
|
|
2.06%
|
Balance notes payable - default
|
|
$
|
130,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue Date
|
|
Maturity Date
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
Rate
|
|
|
|
|
|
|
Principal Balance
|
|
|
Principal Balance
|
|
|
|
Notes payable - related parties, in default
|
|
|
|
|
|
|
|
|
|
|
|
|
02/24/10
|
|
02/24/11
|
|
$
|
7,500
|
|
|
$
|
7,500
|
|
|
6.00%
|
|
|
10/06/15
|
|
11/15/15
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
|
02/08/18
|
|
04/09/18
|
|
|
1,000
|
|
|
|
1,000
|
|
|
6.00%
|
Balance notes payable - related parties, in default
|
|
$
|
18,500
|
|
|
$
|
18,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance all notes payable
|
|
$
|
148,500
|
|
|
$
|
193,500
|
|
|
|
The
convertible notes payable are convertible into a fixed number of shares and with no down round protection features. The Company
accounted for the beneficial conversion features based on the intrinsic value at the date of issuance. During the years ended
December 31, 2020 and 2019, the Company recognized beneficial conversion features totaling $202,100 and $168,175, respectively.
The discount from the beneficial conversion features are being amortized through charges to interest expense over the term of
the convertible notes payable. For the years ended December 31, 2020 and 2019, the Company recorded interest expense related to
the amortization of debt discounts in the amount of approximately $240,000 and $101,000 which is included in interest expense
on the consolidated statements of operations.
New
Convertible Notes Payable Issued During the Years Ended December 31, 2020 and 2019
During
the year ended December 31, 2020, the Company entered into the following Convertible Notes Payable and Notes Payable Agreements:
In
January of 2020, the Company entered into a convertible promissory note agreement in the amount of $51,000 with a related party
who is a member of the Board of Directors. This note pays interest at a rate of 6% per annum and the principal and accrued interest
was due on or before June 30, 2020. The note is unsecured and is convertible at the lenders option into shares of the Companys
common stock at a rate of $0.003 per share. This note is currently in default due to non payment of principal and interest.
In
August of 2020, the Company entered into a convertible promissory note agreement in the amount of $25,200 with a related party
who is a member of the Board of Directors. This note pays interest at a rate of 6% per annum and the principal and accrued interest
was due on or before February 6, 2021. The note is unsecured and is convertible at the lenders option into shares of the
Companys common stock at a rate of $0.0035 per share. This note went into default subsequent to December 31, 2020.
In
August of 2020, the Company entered into a convertible promissory note agreement in the amount of $35,000 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest was due on or before February 6, 2021.
The note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate
of $0.0035 per share. This note went into default subsequent to December 31, 2020.
In
August of 2020, the Company entered into a convertible promissory note agreement in the amount of $50,400 with a related party
who is a member of the Board of Directors. This note pays interest at a rate of 6% per annum and the principal and accrued interest
was due on or before February 14, 2021. The note is unsecured and is convertible at the lenders option into shares of the
Companys common stock at a rate of $0.0035 per share. This note went into default subsequent to December 31, 2020.
In
September of 2020, the Company entered into a convertible promissory note agreement in the amount of $45,000 with an individual.
This note pays interest at a rate of 6% per annum and the principal and accrued interest was due on or before March 1, 2021. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.003 per share. This note went into default subsequent to December 31, 2020.
During
the year ended December 31, 2019 the Company entered into the following Convertible Notes Payable and Notes Payable Agreements:
In
January of 2019, the Company entered into a convertible promissory note agreement in the amount of $1,000 with an individual.
This loan pays interest at a rate of 6% per annum and the principal and accrued interest was due on or before July 3, 2019. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.001 per share. This note is currently in default due to non payment of principal and interest.
In
January of 2019, the Company entered into a convertible promissory note agreement in the amount of $7,000 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest was due on or before July 8, 2019. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.008 per share. This note is currently in default due to non payment of principal and interest.
In
March of 2019, the Company entered into a convertible promissory note agreement in the amount of $10,000 with an individual. This
loan pays interest at a rate of 6% per annum and the principal and accrued interest was due on or before September 16, 2019. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.001 per share. This note is currently in default due to non payment of principal and interest.
In
April of 2019, the Company entered into a convertible promissory note agreement in the amount of $20,000 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest was due on or before October 23, 2019.
The note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate
of $0.004 per share. This note is currently in default due to non payment of principal and interest.
In
June of 2019, the Company entered into a convertible promissory note agreement in the amount of $5,100 with a related party. This
note pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before December 7, 2019. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.003 per share. This note is currently in default due to non payment of principal and interest.
In
September of 2019, the Company entered into a convertible promissory note agreement in the amount of $25,000 with an individual.
This loan pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before March 4, 2020. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.003 per share. This note is currently in default due to non payment of principal and interest.
In
September of 2019, the Company entered into a convertible promissory note agreement in the amount of $26,000 with an individual.
This loan pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before March 4, 2020. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.003 per share. This note is currently in default due to non payment of principal and interest.
In
September of 2019, the Company entered into a convertible promissory note agreement in the amount of $12,000 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before April 17, 2020.
The note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate
of $0.003 per share. This note is currently in default due to non payment of principal and interest.
In
November of 2019, the Company entered into a convertible promissory note agreement in the amount of $25,000 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before May 12, 2020. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.0025 per share. This note is currently in default due to non payment of principal and interest.
In
November of 2019, the Company entered into a convertible promissory note agreement in the amount of $25,200 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before May 26, 2020. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.003 per share. This note is currently in default due to non payment of principal and interest.
In
December of 2019, the Company entered into a convertible promissory note agreement in the amount of $15,000 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before June 3, 2020. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.003 per share. This note is currently in default due to non payment of principal and interest.
Note
Conversions
During
the year ended December 31, 2020:
The
Company issued 39,781,082 shares of restricted common stock to settle $84,086 of principal and accrued interest owed on three
convertible notes payable. The remaining principal balance of all of these notes was $0 at December 31, 2020.
During
the year ended December 31, 2019:
The
Company issued 62,638,873 shares of common stock to settle $309,689 of principle and accrued interest owed on various convertible
notes payable and one note payable.
Repayment
of Promissory Note
During
the year ended December 31, 2020, the Company repaid a total of $45,000 of the principal of a promissory note that was due on
December 14, 2018 with an original principal balance of $75,000 and a principal balance outstanding of $65,000 at December 31,
2019. The remaining principal balance of the note at December 31 2020 was $20,000.
Shareholder
Loan
At
December 31, 2020 and 2019, the Company had a loan outstanding to its CEO in the amount of $1,500. The loan has a 2% annual rate
of interest and an option to convert the loan into restricted shares of the Companys common stock at $0.0005.
Collateralized
Promissory Notes
Two
convertible notes outstanding with related parties, dated January 9, 2009 and January 18, 2012 are collateralized by Company assets.
Convertible
Notes Payable and Notes Payable, in Default
The
Company does not have additional sources of debt financing to refinance its convertible notes payable and notes payable that are
currently in default. If the Company is unable to obtain additional capital, such lenders may file suit, including suit to foreclose
on the assets held as collateral for the obligations arising under the secured notes. If any of the lenders file suit to foreclose
on the assets held as collateral, then the Company may be forced to significantly scale back or cease its operations, which would
more than likely result in a complete loss of all capital that has been invested in or borrowed by the Company. The fact that
the Company is in default of several promissory notes held by various lenders makes investing in the Company or providing any
loans to the Company extremely risky with a very high potential for a complete loss of capital.
NOTE
7 – STOCKHOLDERS DEFICIT
The
Companys total authorized capital stock consists of 9,900,000,000 shares of common stock, $0.0001 par value per share.
Preferred
Stock
The
Company is authorized to issue 50,000,000 shares of preferred stock.
Series
A Preferred Stock
At
December 31, 2020 and 2019, the Company had seven shares of Series A preferred stock issued and outstanding. Each share of Series
A preferred stock has the right to convert into 214,289 shares of the Companys common stock. In the event of a liquidation,
Series A have preference.
Series
B Preferred Stock
On
February 10, 2014, the Board of Directors of the Company under the authority granted under Article V of the Articles of Incorporation,
defined and created a new preferred series of shares from the 50,000,000 authorized preferred shares. Pursuant to Article V, the
Board of Directors has the power to designate such shares and all powers and matters concerning such shares. Such share class
shall be designated Preferred Class B. The preferred class was created for 60 Preferred Class B shares. Such shares each have
a voting power equal to one percent of the outstanding shares issued (totaling 60%) at the time of any vote action as necessary
for share votes under Florida law, with or without a shareholder meeting. Such shares are non-convertible to common stock of the
Company and are not considered as convertible under any accounting measure. Such shares shall only be held by the Board of Directors
as a Corporate body, and shall not be placed into any individual name. Such shares were considered issued at the time of this
resolutions adoption, and do not require a stock certificate to exist, unless selected to do so by the Board for representational
purposes only. Such shares are considered for voting as a whole amount, and shall be voted for any matter by a majority vote of
the Board of Directors. Such shares shall not be divisible among the Board members, and shall be voted as a whole either for or
against such a vote upon the vote of the majority of the Board of Directors. In the event that there is any vote taken which results
in a tie of a vote of the Board of Directors, the vote of the Chairman of the Board shall control the voting of such shares. Such
shares are not transferable except in the case of a change of control of the Corporation when such shares shall continue to be
held by the Board of Directors. Such shares have the authority to vote for all matters that require a share vote under Florida
law and the Articles of Incorporation.
Common
Stock Issuances
During
the years ended December 31, 2020 and 2019, the Company issued the following shares of common stock:
|
|
2020
|
|
|
2019
|
|
Common stock issued for cash
|
|
|
425,777,619
|
|
|
|
953,596,664
|
|
Common stock issued for services
|
|
|
136,842,821
|
|
|
|
151,481,025
|
|
Common stock issued to convert notes payable and accrued interest
|
|
|
39,781,082
|
|
|
|
62,638,873
|
|
Stock issued for charitable contributions
|
|
|
1,000,000
|
|
|
|
6,000,000
|
|
Stock issued for purchase of vehicle
|
|
|
1,000,000
|
|
|
|
-
|
|
Shares cancelled and returned to treasury
|
|
|
(60,000,000
|
)
|
|
|
-
|
|
Shares reclassed from common stock to be issued
|
|
|
10,120,000
|
|
|
|
-
|
|
Stock issued to convert accounts payable
|
|
|
-
|
|
|
|
7,000,000
|
|
Common stock issued for financing costs
|
|
|
-
|
|
|
|
5,000,000
|
|
Purchase of vessel
|
|
|
-
|
|
|
|
34,000,000
|
|
Shares reclassed from common stock to be issued
|
|
|
-
|
|
|
|
23,192,857
|
|
Total
|
|
|
554,521,522
|
|
|
|
1,242,909,419
|
|
Common
Stock Issuances
During
the year ended December 31, 2020, the Company issued or is to issue the following shares of restricted common stock:
|
-
|
425,777,619
shares for total proceeds of $1,299,024.
|
|
-
|
136,842,821
shares for services provided by consultants, contractors, advisory members, board members, and other service providers. The
Company determined the fair value of the shares issued using the stock price on date of grant or issuance. Compensation expense
is recognized as the services are provided to the Company. For the year ended December 31, 2020, the Company incurred $751,416
of compensation expense for stock issued for services and have prepaid expenses of $123,039 at December 31, 2020 for stock
issued prior to services being performed. The Company recorded unearned compensation of $67,058 on its consolidated balance
sheet for the year ended December 31, 2020.
|
|
-
|
39,781,082
shares to settle $84,086 of principle and accrued interest owed on various convertible notes payable and one note payable.
|
|
-
|
1,000,000
shares valued at $6,000 for the purchase of a vehicle. The Company determined the fair value of the shares issued for the purchase
of the vehicle using the stock price on the date of the bill of sale.
|
|
-
|
1,000,000
shares valued at $9,700 issued as charitable contributions to a charity. The Company determined the fair value of the shares issued
using the stock price on date of issuance.
|
|
-
|
60,000,000
shares were cancelled and returned to the treasure (See Note 5 – Investment in Probability and Statistics, Inc.).
|
|
-
|
10,120,000
restricted shares reclassed from common stock to be issued.
|
During
the year ended December 31, 2019, the Company issued or is to issue the following shares of restricted common stock:
|
-
|
953,596,664
shares for total proceeds of $2,166,692. As of December 31, 2019, 9,620,000 shares of restricted common stock remain to be
issued.
|
|
-
|
62,638,873
shares to settle $309,689 of principle and accrued interest owed on various convertible notes payable and one note payable
|
|
-
|
7,000,000
shares to settle an account payable in the amount of $7,000. This resulted in a loss on extinguishment of approximately $42,000
which is included in the loss on extinguishment of debt on the consolidated statements of operations.
|
|
-
|
151,481,025
shares for services provided by consultants, contractors, advisory members, board members, and other service providers. As of
December 31, 2019, 2,000,000 shares of restricted common stock remain to be issued. The Company determined the fair value of the
shares issued using the stock price on date of grant or issuance. Compensation expense is recognized as the services are provided
to the Company. For the year ended December 31, 2019, the Company incurred $486,607 of compensation expense for stock issued for
services and have prepaid expenses of $159,510 at December 31, 2019 for stock issued prior to services being performed.
|
|
-
|
5,000,000 shares to one of our convertible note payable lenders as a penalty for failure to repay the convertible note when due. The fair value of these shares was determined to be $7,500 based on the market price of the stock on date issued in accordance with the convertible note payable agreement which is included in interest expense on the consolidated statements of operations.
|
|
-
|
6,000,000 shares valued at $49,100 issued as charitable
contributions to four separate charities. The Company determined the fair value of the shares issued using the stock price on
date of issuance.
|
|
-
|
34,000,000 shares valued at $200,600 for the purchase
of a vessel. The Company determined the fair value of the shares issued for the vessel using the stock price on the date of issuance.
|
|
-
|
23,192,857 shares to be issued.
|
Warrants
and Options
The
Company did not issue any warrants or options during the years ended December 31, 2020, and 2019.
At
December 31, 2020, the Company had warrants to purchase a total of 4,000,000 shares of its restricted common stock outstanding.
The
following table shows the warrants outstanding at December 31, 2020 and 2019:
|
|
Number of
|
|
Weighted Average
|
|
Weighted Average
|
|
Average
|
|
|
Warrants
|
|
Exercise Price
|
|
Remaining Life (Years)
|
|
Intrinsic Value
|
Outstanding, December 31, 2018
|
|
33,000,000
|
|
$0.0199
|
|
1.27
|
|
$-
|
Granted
|
|
-
|
|
-
|
|
-
|
|
-
|
Forfeited or expired
|
|
(25,000,000)
|
|
0.025
|
|
-
|
|
-
|
Exercised
|
|
-
|
|
-
|
|
-
|
|
-
|
Outstanding, December 31, 2019
|
|
8,000,000
|
|
0.004
|
|
1.83
|
|
0.0038
|
Exercisable, December 31, 2019
|
|
8,000,000
|
|
0.004
|
|
1.83
|
|
0.0038
|
Granted
|
|
-
|
|
-
|
|
-
|
|
-
|
Forfeited or expired
|
|
(4,000,000)
|
|
0.003
|
|
-
|
|
0.0033
|
Exercised
|
|
-
|
|
-
|
|
-
|
|
-
|
Outstanding, December 31, 2020
|
|
4,000,000
|
|
0.005
|
|
1.92
|
|
0.0013
|
Exercisable, December 31, 2020
|
|
4,000,000
|
|
$0.005
|
|
1.92
|
|
$0.0013
|
NOTE 8
– INCOME TAXES
On
December 22, 2017, the United States signed into law the Tax Cuts and Jobs Act (the Act), a tax reform bill which,
among other items, reduces the current federal income tax rate to 21% from 34%. The rate reduction is effective January 1, 2018,
and is permanent.
At
December 31, 2020 and 2019, the Company had available Federal and state net operating loss carry forwards (NOLs)
to reduce future taxable income. The amounts available were approximately $19,925,000 and $16,900,000, respectively, for Federal
purposes. The potential tax benefit arising from the NOLs of approximately $14,600,000 from the period prior to the Acts
effective date will begin to expire in 2033. The potential tax benefit arising from the net operating loss carryforward of approximately
$4,184,000 generated from the period following the Acts effective date can be carried forward indefinitely within the annual
usage limitations. Given the Companys history of net operating losses, management has determined that it is more likely
than not that the Company will not be able to realize the tax benefit of the carryforwards. Accordingly, the Company has not recognized
a deferred tax asset for this benefit.
The
Company adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a
tax return should be recorded in the financial statements. Under this guidance, the Company may recognize the tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such
a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized
upon ultimate settlement. This guidance also provides guidance on derecognition, classification, interest and penalties on income
taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2020 and 2019, the Company did not
have a liability for unrecognized tax benefits.
The
valuation allowance at December 31, 2020 was approximately $4,184,000. The net change in valuation allowance during the year ended
December 31, 2020 was $635,000. In assessing the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred income tax assets will not be realized.
The
Companys policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31,
2020 and 2019, the Company has not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2016
through 2020 remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company is preparing
and reviewing information for tax returns for past years. Due to the Companys lack of revenue since inception management
does not believe that there is any income tax liability for past years. There are currently no open federal or state tax years
under audit.
Upon
the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated
with the use of the carry forwards and will recognize a deferred tax asset at that time.
The
items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes
are as follows:
|
|
For the Year
|
|
|
For the Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Income tax at federal statutory rate
|
|
|
(21.00
|
)%
|
|
|
(21.00
|
)%
|
State tax, net of federal effect
|
|
|
(3.96
|
)%
|
|
|
(3.96
|
)%
|
|
|
|
(23.96
|
)%
|
|
|
(23.96
|
)%
|
Valuation allowance
|
|
|
23.96
|
%
|
|
|
23.96
|
%
|
Effective rate
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
As
of December 31, 2020 and 2019, the Companys only significant deferred income tax asset was a cumulative estimated net tax
operating loss of approximately $19,925,000 and $16,900,000, respectively, that is available to offset future taxable income,
if any, in future periods, subject to expiration and other limitations imposed by the Internal Revenue Service. Management has
considered the Companys operating losses incurred to date and believes that a full valuation allowance against the deferred
tax assets is required as of December 31, 2020 and 2019.
NOTE
9 – COMMITMENTS AND CONTINGENCIES
Agreement
to Explore a Shipwreck Site Located off of Melbourne Beach, Florida
In March of 2014, Seafarer entered into a partnership
and with MAP, with the formation of Seafarer’s Quest, LLC for the purpose of exploring a shipwreck site off of Melbourne Beach,
Florida. Seafarer owns 50% of Seafarer’s Quest, LLC and is handling the operations on behalf of Seafarer’s Quest. To date
there has been no significant financial activity in Seafarer’s Quest. Under the partnership with MAP, Seafarer is the designated
manager of Seafarer’s Quest, LLC and is responsible for the costs of permitting, exploration and recovery. Seafarer is entitled
to receive 80% and MAP is entitled to receive 20% of artifacts and treasure recovered from the site after the State of Florida receives
its share, which is anticipated to be 20% under any future recovery permits. The permits with the State of Florida for two areas on the
site, designated as Areas 1 and 2, were renewed in 2019 for an additional 3 years. There are currently no recovery permits for the site
that have been applied for or issued as of the date of this filing. It will be necessary to be granted a recovery permit in order to recover
any artifacts and treasure that may potentially be located on the site. The required, affiliated environmental permits from the U.S. Army
Corps of Engineers (“USACE”) and Florida Department of Environmental Protection (“FLDEP’) were previously issued
in the name of a partner that is no longer active. In 2020 Seafarer workedwith the various State of Florida governmental agencies involved
to update and consolidate all of these environmental permits solely under the Company’s name. The State of Florida Bureau of Archeological
Research (“FBAR”) had ordered the Company not to disturb the ocean’s bottom while the changes and updates to the Company’s
permits were in process. Some requests of change are questionable to the Company. Since the issuance of the USACE and FLDEP environmental
permits, FBAR has continued to stop or delay ground disturbance in Seafarer’s legally permitted area with ongoing questions and
requests.
Certain
Other Agreements
See
Note 4 Operating Lease Right-of-Use Assets and Operating Lease Liabilities.
NOTE
10 – RELATED PARTY TRANSACTIONS
During
the year ended December 31, 2020, the Company has had extensive dealings with related parties including the following:
In
January of 2020, the Company entered into a convertible promissory note agreement in the amount of $51,000 with a related party
who is a member of the Board of Directors. This note pays interest at a rate of 6% per annum and the principal and accrued interest
was due on or before June 30, 2020. The note is unsecured and is convertible at the lenders option into shares of the Companys
common stock at a rate of $0.003 per share. This note is currently in default due to non payment of principal and interest
upon maturity.
In
August of 2020, the Company entered into a convertible promissory note agreement in the amount of $25,200 with a related party
who is a member of the Board of Directors. This note pays interest at a rate of 6% per annum and the principal and accrued interest
was due on or before February 6, 2021. The note is unsecured and is convertible at the lenders option into shares of the
Companys common stock at a rate of $0.0035 per share. This note went into default subsequent to December 31, 2020.
In
August of 2020, the Company entered into a convertible promissory note agreement in the amount of $35,000 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest was due on or before February 6, 2021.
The note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate
of $0.0035 per share. This note went into default subsequent to December 31, 2020.
In
August of 2020, the Company entered into a convertible promissory note agreement in the amount of $50,400 with a related party
who is a member of the Board of Directors. This note pays interest at a rate of 6% per annum and the principal and accrued interest
was due on or before February 14, 2021. The note is unsecured and is convertible at the lenders option into shares of the
Companys common stock at a rate of $0.0035 per share. This note went into default subsequent to December 31, 2020.
In
December of 2020, the Company extended the term of previous agreements with four individuals to continue serving as members of
the Companys Board of Directors. Two of the individuals are related to the Companys CEO. Under the agreement, the
Directors agreed to provide various services to the Company including making recommendations for both the short term and the long
term business strategies to be employed by the Company, monitoring and assessing the Companys business and to advise the
Companys Board of Directors with respect to an appropriate business strategy on an ongoing basis, commenting on proposed
corporate decisions and identifying and evaluating alternative courses of action, making suggestions to strengthen the Companys
operations, identifying and evaluating external threats and opportunities to the Company, evaluating and making ongoing recommendations
to the Board with respect for one year and may be terminated by either the Company or the Director by providing written notice
to the other party. The previous agreement also terminates automatically upon the death, resignation or removal of the Directors.
Under the terms of the agreement, the Company agreed to compensate the Board members via payment of 5,000,000 restricted shares
of its common stock each, an aggregate total of 20,000,000 shares, and to negotiate future compensation on a year-by-year basis.
The Company also agreed to reimburse the individuals for preapproved expenses.
During
the year ended December 31, 2019, the Company has had extensive dealings with related parties including the following:
In
January of 2019, the Company extended the term of previous agreements with four individuals to continue serving as members of
the Companys Board of Directors. Two of the individuals are related to the Companys CEO. Under the agreement, the
Directors agreed to provide various services to the Company including making recommendations for both the short term and the long
term business strategies to be employed by the Company, monitoring and assessing the Companys business and to advise the
Companys Board of Directors with respect to an appropriate business strategy on an ongoing basis, commenting on proposed
corporate decisions and identifying and evaluating alternative courses of action, making suggestions to strengthen the Companys
operations, identifying and evaluating external threats and opportunities to the Company, evaluating and making ongoing recommendations
to the Board with respect for one year and may be terminated by either the Company or the Director by providing written notice
to the other party. The previous agreement also terminates automatically upon the death, resignation or removal of the Directors.
Under the terms of the agreement, the Company agreed to compensate two of the individuals via payment of 22,000,000 restricted
shares of its common stock each, and two of the individuals via payment of 3,666,667 shares of the Companys restricted
common stock, an aggregate total of 51,333,334 shares, and to negotiate future compensation on a year-by-year basis. The Company
also agreed to reimburse the individuals for preapproved expenses.
In
January of 2019, the Company entered into a convertible promissory note agreement in the amount of $7,000 with a person who is
related to the Companys CEO. This note pays interest at a rate of 6% per annum and the principal and accrued interest were
due on or before July 8, 2019. The note is unsecured and is convertible at the lenders option into shares of the Companys
common stock at a rate of $0.008 per share. This note is currently in default due to non payment of principal and interest upon
maturity.
In
April of 2019, the Company entered into a convertible promissory note agreement in the amount of $20,000 with a person who is
related to the Companys CEO. This note pays interest at a rate of 6% per annum and the principal and accrued interest were
due on or before October 23, 2019. The note is unsecured and is convertible at the lenders option into shares of the Companys
common stock at a rate of $0.004 per share. This note is currently in default due to non payment of principal and interest upon
maturity.
In
June of 2019, the Company entered into a convertible promissory note agreement in the amount of $5,100 with a person who is related
to the Companys CEO. This note pays interest at a rate of 6% per annum and the principal and accrued interest are due on
or before December 7, 2019. The note is unsecured and is convertible at the lenders option into shares of the Companys
common stock at a rate of $0.003 per share. This note is currently in default due to non payment of principal and interest upon
maturity.
In
August of 2019 the Company issued 5,000,000 shares of its restricted common stock with a market value of $34,500 to a person who
is related to the Companys CEO for providing various services to the Company that had he had previously not been compensated
for due to the Company lacking sufficient financing to pay for the services. The services included logo and business card designs,
website content and press release creation and editing, creation and art design of marketing materials, assistance with website
revisions and other creative and design services. The estimated value of the services was $52,000.
In
September of 2019, the Company entered into a convertible promissory note agreement in the amount of $12,000 with a person who
is related to the Companys CEO. This note pays interest at a rate of 6% per annum and the principal and accrued interest
are due on or before April 17, 2020. The note is unsecured and is convertible at the lenders option into shares of the
Companys common stock at a rate of $0.003 per share. This note is currently in default due to non payment of principal
and interest upon maturity.
In
November of 2019, the Company entered into a convertible promissory note agreement in the amount of $25,000 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before May 12, 2020. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.0025 per share. This note is currently in default due to non payment of principal and interest upon maturity.
In
November of 2019, the Company entered into a convertible promissory note agreement in the amount of $25,200 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before May 26, 2020. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.003 per share. This note is currently in default due to non payment of principal and interest upon maturity.
In
December of 2019, the Company extended the term of previous agreements with four individuals to continue serving as members of
the Companys Board of Directors through December 31, 2020. Two of the individuals are related to the Companys CEO.
Under the agreement, the Directors agreed to provide various services to the Company including making recommendations for both
the short term and the long term business strategies to be employed by the Company, monitoring and assessing the Companys
business and to advise the Companys Board of Directors with respect to an appropriate business strategy on an ongoing basis,
commenting on proposed corporate decisions and identifying and evaluating alternative courses of action, making suggestions to
strengthen the Companys operations, identifying and evaluating external threats and opportunities to the Company, evaluating
and making ongoing recommendations to the Board with respect for one year and may be terminated by either the Company or the Director
by providing written notice to the other party. The previous agreement also terminates automatically upon the death, resignation
or removal of the Directors. Under the terms of the agreement, the Company agreed to compensate all four of the directors with
4,000,000 restricted shares of its common stock each, an aggregate total of 16,000,000 shares, and to negotiate future compensation
on a year-by-year basis. The Company also agreed to reimburse the individuals for preapproved expenses.
In
December of 2019, the Company entered into a convertible promissory note agreement in the amount of $15,000 with a related party.
This note pays interest at a rate of 6% per annum and the principal and accrued interest are due on or before June 3, 2020. The
note is unsecured and is convertible at the lenders option into shares of the Companys common stock at a rate of
$0.003 per share. This note is currently in default due to non payment of principal and interest upon maturity.
On
various dates during the year ended December 31, 2019 the Company repaid its CEO a total of $5,048 principal and accrued interest
to repay various outstanding loans.
Additional
related party transactions:
The
Company has an informal consulting agreement with a limited liability company that is owned and controlled by a person who is
related to the Companys CEO to pay the related party limited liability company a minimum of $4,000 per month plus periodic
bonuses to provide general business consulting and assessing the Companys business and to advise management with respect
to an appropriate business strategy on an ongoing basis, commenting on proposed corporate decisions, perform period background
research including background checks and provide investigative information on individuals and companies and to assist, when needed,
as an administrative specialist to perform various administrative duties and clerical services including reviewing the Companys
agreements and books and records. The consultant provides the services under the direction and supervision of the Companys
CEO. During the years ended December 31, 2020 and 2019, the Company paid the related party consultant fees of $58,000 and $76,289,
respectively, for services rendered. These fees are recorded as an expense in consulting and contractor expenses in the accompanying
consolidated statements of operations. At December 31, 2020 and 2019, the Company owed the related party limited liability company
$0.
The
Company has an ongoing agreement with a limited liability company that is owned and controlled by a person who is related to the
Companys CEO to provide stock transfer agency services. During the years ended December 31, 2020 and 2019 the Company paid
the related party limited liability company fees of $11,295 and $17,619, respectively, for services rendered. These fees are recorded
as an expense in consulting and contractor expenses in the accompanying consolidated statements of operations. During the years
ended December 31, 2020 and 2019, the Company also paid the related party limited liability 1,000,000 and 0 shares of the Companys
restricted common stock, valued at $5,100, and $0, respectively, as a bonus. All of the fees paid to the related party limited
liability company are recorded as an expense in consulting and contractor expenses in the accompanying consolidated statements
of operations. At December 31, 2020 and 2019, the Company owed the related party limited liability company $0 and $2,978, respectively,
which is included in accounts payable and accrued expenses on the consolidated balance sheets.
During
the years ended December 31, 2020 and 2019, the Company paid a related party consultant cash fees of $18,750 and $4,250, respectively
for marketing and administrative services rendered to the Companys Blockchain subsidiary. Additionally, during the years
ended December 31, 2020 and 2019, the Company paid the related party consultant 6,000,000 shares, valued at $30,600, and 0 shares,
respectively, of the Companys restricted common stock as further compensation to offset cash payments for extra work and
as a retention bonus. All of the fees paid to the related party consultant are recorded as an expense in consulting and contractor
expenses in the accompanying consolidated statements of operations.
NOTE
11 –SEGMENT INFORMATION
Seafarers
wholly owned subsidiary Blockchain began operations in 2019 by providing referrals to P&S (See Note 5 - Investment in Probability
and Statistics, Inc.) in exchange for referral fees for closed business.
Due
to Blockchain starting operations which have no relation to the Companys shipwreck and exploration recovery business, the
Company evaluated this business and its impact upon the existing corporate structure. The Company has determined that Blockchain
and Seafarer Exploration Corp. operate as separate segments of the business. As such, the Company has presented the income (loss)
from operations during the years ended December 31, 2020 and 2019 incurred by the two separate segments below.
During
the years ended December 31, 2020 and 2019, Blockchain revenues of $4,200 and $14,000, respectively, were 39.6% and 100%, respectively,
of the consolidated revenues of the Company.
Segment
information relating to the Companys two operating segments for the year ended December 31, 2020 is as follows:
|
|
December 31, 2020
|
|
|
December 31, 2020
|
|
|
December 31, 2020
|
|
|
|
Blockchain LogisTech, LLC
|
|
|
Seafarer Exploration Corp.
|
|
|
Consolidated
|
|
Service revenues
|
|
$
|
4,200
|
|
|
$
|
6,422
|
|
|
$
|
10,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
23,469
|
|
|
|
2,686,359
|
|
|
|
2,709,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
$
|
(19,269
|
)
|
|
$
|
(2,679,937
|
)
|
|
$
|
(2,699,206
|
)
|
Segment
information relating to the Companys two operating segments for the year ended December 31, 2019 is as follows:
|
|
December 31, 2019
|
|
|
December 31, 2019
|
|
|
December 31, 2019
|
|
|
|
Blockchain LogisTech, LLC
|
|
|
Seafarer Exploration Corp.
|
|
|
Consolidated
|
|
Service revenues
|
|
$
|
14,000
|
|
|
$
|
-
|
|
|
$
|
14,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
5,626
|
|
|
|
2,059,245
|
|
|
|
2,064,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
$
|
8,374
|
|
|
$
|
(2,059,245
|
)
|
|
$
|
(2,050,871
|
)
|
NOTE
12 – SUBSEQUENT EVENTS
Subsequent
to December 31, 2020 the Company sold or issued shares of its restricted common stock as follows:
|
(i)
|
sales
of 55,850,000 shares of common stock under subscription agreements for proceeds of $171,600; and
|
|
(ii)
|
issuance
of 8,734,640 shares of common stock to settle the $20,303 of accrued interest of three convertible notes payable.
|
Subsequent
to December 31, 2020 the following convertible notes payable went into default:
|
1)
|
A
convertible note payable originally due February 6, 2021 with a face amount of $25,200;
|
|
2)
|
A
convertible note payable originally due February 6, 2021 with a face amount of $35,000;
|
|
3)
|
A
convertible note payable originally due February 14, 2021 with a face amount of $50,400; and
|
|
4)
|
A
convertible note payable originally due March 1, 2021 with a face amount of $45,200.
|