Item
1. Financial Statements
SEAFARER
EXPLORATION CORP.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
September 30, 2020
|
|
|
December 31, 2019
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
51,072
|
|
|
$
|
618,537
|
|
Prepaid expenses
|
|
|
42,206
|
|
|
|
159,510
|
|
Deposits
|
|
|
750
|
|
|
|
750
|
|
Total current assets
|
|
|
94,028
|
|
|
|
778,797
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
184,651
|
|
|
|
199,695
|
|
Intangible assets, trademarks
|
|
|
675
|
|
|
|
-
|
|
Right to use asset
|
|
|
45,516
|
|
|
|
8,001
|
|
Investment in P & S, Inc.
|
|
|
78,000
|
|
|
|
78,000
|
|
Total Assets
|
|
$
|
402,870
|
|
|
$
|
1,064,493
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Deficit
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
320,984
|
|
|
$
|
287,089
|
|
Convertible notes payable, net of discounts of $34,011 and $17,935, respectively
|
|
|
10,989
|
|
|
|
33,065
|
|
Convertible notes payable, related parties, net of discounts of $79,731 and $57,413, respectively
|
|
|
30,869
|
|
|
|
19,787
|
|
Convertible notes payable, in default
|
|
|
308,300
|
|
|
|
328,300
|
|
Convertible notes payable, in default - related parties
|
|
|
527,900
|
|
|
|
399,700
|
|
Notes payable, in default
|
|
|
135,000
|
|
|
|
175,000
|
|
Notes payable, in default - related parties
|
|
|
18,500
|
|
|
|
18,500
|
|
Shareholder loan
|
|
|
1,500
|
|
|
|
1,500
|
|
Lease liability, current
|
|
|
14,187
|
|
|
|
8,079
|
|
Total current liabilities
|
|
|
1,368,229
|
|
|
|
1,271,020
|
|
|
|
|
|
|
|
|
|
|
Lease liability, long-term
|
|
|
31,471
|
|
|
|
-
|
|
Total Liabilities
|
|
|
1,399,700
|
|
|
|
1,271,020
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders Deficit
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par values - 50,000,000 shares authorized; 67 shares issued
|
|
|
|
|
|
|
|
|
Series A - 7 shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Series B - 60 shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.0001 par value - 9,900,000,000 shares authorized; 5,037,765,834 and 4,761,162,383 shares issued and outstanding at September 30, 2020 and December 31, 2019 , respectively
|
|
|
502,523
|
|
|
|
474,863
|
|
Common stock to be issued, $0.0001 par value, 1,500,000 and 11,620,000 shares outstanding September 30, 2020 and December 31, 2019, respectively
|
|
|
150
|
|
|
|
1,162
|
|
Additional paid in capital
|
|
|
17,812,011
|
|
|
|
16,581,432
|
|
Accumulated deficit
|
|
|
(19,311,514
|
)
|
|
|
(17,263,984
|
)
|
Total Stockholders Deficit
|
|
|
(996,830
|
)
|
|
|
(206,527
|
)
|
Total Liabilities and Stockholders Deficit
|
|
$
|
402,870
|
|
|
$
|
1,064,493
|
|
See accompanying notes to the financial statements.
SEAFARER
EXPLORATION CORP.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
For the Three Months Ended
September 30
|
|
|
For the Nine Months Ended
September 30
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service income
|
|
$
|
2,182
|
|
|
$
|
9,100
|
|
|
$
|
6,382
|
|
|
$
|
12,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting and contractor expenses
|
|
|
388,779
|
|
|
|
361,080
|
|
|
|
941,048
|
|
|
|
852,342
|
|
Research and development
|
|
|
95,460
|
|
|
|
210,134
|
|
|
|
373,769
|
|
|
|
327,935
|
|
General and administrative expense
|
|
|
54,837
|
|
|
|
-
|
|
|
|
140,624
|
|
|
|
107,062
|
|
Vessel maintenance and dockage
|
|
|
48,042
|
|
|
|
29,189
|
|
|
|
163,369
|
|
|
|
71,176
|
|
Professional fees
|
|
|
26,293
|
|
|
|
26,000
|
|
|
|
117,611
|
|
|
|
78,575
|
|
Travel and entertainment expense
|
|
|
19,435
|
|
|
|
15,730
|
|
|
|
52,056
|
|
|
|
43,405
|
|
Rent expense
|
|
|
10,898
|
|
|
|
9,100
|
|
|
|
32,196
|
|
|
|
28,596
|
|
Depreciation expense
|
|
|
5,015
|
|
|
|
-
|
|
|
|
15,045
|
|
|
|
-
|
|
Total operating expenses
|
|
|
648,759
|
|
|
|
651,233
|
|
|
|
1,835,718
|
|
|
|
1,509,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
|
(646,577
|
)
|
|
|
(642,133
|
)
|
|
|
(1,829,336
|
)
|
|
|
(1,496,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(51,311
|
)
|
|
|
(55,908
|
)
|
|
|
(195,071
|
)
|
|
|
(146,187
|
)
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
(5,274
|
)
|
|
|
(34,375
|
)
|
|
|
(5,274
|
)
|
Gain on settlement of accounts payable
|
|
|
1,252
|
|
|
|
-
|
|
|
|
1,252
|
|
|
|
-
|
|
Gain on disposal of asset
|
|
|
5,500
|
|
|
|
-
|
|
|
|
5,500
|
|
|
|
-
|
|
Dividend income
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
4,500
|
|
|
|
4,500
|
|
Total other expenses, net
|
|
|
(43,059
|
)
|
|
|
(59,682
|
)
|
|
|
(218,194
|
)
|
|
|
(146,961
|
)
|
Net loss
|
|
$
|
(689,636
|
)
|
|
$
|
(701,815
|
)
|
|
$
|
(2,047,530
|
)
|
|
$
|
(1,643,452
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
4,985,602,633
|
|
|
|
4,304,008,551
|
|
|
|
4,886,341,827
|
|
|
|
4,012,673,236
|
|
See accompanying notes to the financial statements.
SEAFARER
EXPLORATION CORP.
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
|
(UNAUDITED)
|
|
|
Series
A Preferred Stock
|
|
|
Series
B Preferred Stock
|
|
|
Common
Stock
|
|
|
Common
Stock to be Issued
|
|
|
Additional
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid
in Capital
|
|
|
Deficit
|
|
|
Total
|
|
Balance
December 31, 2019
|
|
|
7
|
|
|
$
|
-
|
|
|
|
60
|
|
|
$
|
-
|
|
|
|
4,761,162,383
|
|
|
$
|
474,863
|
|
|
|
11,620,000
|
|
|
$
|
1,162
|
|
|
$
|
16,581,432
|
|
|
$
|
(17,263,984
|
)
|
|
$
|
(206,527
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,900,000
|
|
|
|
890
|
|
|
|
-
|
|
|
|
-
|
|
|
|
51,610
|
|
|
|
-
|
|
|
|
52,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to convert
notes payable and accrued interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39,781,082
|
|
|
|
3,978
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80,108
|
|
|
|
-
|
|
|
|
84,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion
feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
51,000
|
|
|
|
-
|
|
|
|
51,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,348,366
|
|
|
|
535
|
|
|
|
-
|
|
|
|
-
|
|
|
|
84,895
|
|
|
|
-
|
|
|
|
85,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares reclassed from
common stock to be issued
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,120,000
|
|
|
|
1,012
|
|
|
|
(10,120,000
|
)
|
|
|
(1,012
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(742,644
|
)
|
|
|
(742,644
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2020
|
|
|
7
|
|
|
|
-
|
|
|
|
60
|
|
|
|
-
|
|
|
|
4,825,311,831
|
|
|
|
481,278
|
|
|
|
1,500,000
|
|
|
|
150
|
|
|
|
16,849,045
|
|
|
|
(18,006,628
|
)
|
|
|
(676,155
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,100,000
|
|
|
|
9,110
|
|
|
|
5,714,286
|
|
|
|
571
|
|
|
|
372,418
|
|
|
|
-
|
|
|
|
382,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
737,308
|
|
|
|
74
|
|
|
|
676,204
|
|
|
|
68
|
|
|
|
11,070
|
|
|
|
-
|
|
|
|
11,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for charitable
contribution
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,600
|
|
|
|
-
|
|
|
|
9,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(615,250
|
)
|
|
|
(615,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance June 30, 2020
|
|
|
7
|
|
|
|
-
|
|
|
|
60
|
|
|
|
-
|
|
|
|
4,918,149,139
|
|
|
|
490,562
|
|
|
|
7,890,490
|
|
|
|
789
|
|
|
|
17,242,133
|
|
|
|
(18,621,878
|
)
|
|
|
(888,394
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
92,700,001
|
|
|
|
9,270
|
|
|
|
-
|
|
|
|
-
|
|
|
|
274,930
|
|
|
|
-
|
|
|
|
284,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion
feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
151,100
|
|
|
|
-
|
|
|
|
151,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,526,204
|
|
|
|
2,052
|
|
|
|
-
|
|
|
|
-
|
|
|
|
143,848
|
|
|
|
-
|
|
|
|
145,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares reclassed from
common stock to be issued
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,390,490
|
|
|
|
639
|
|
|
|
(6,390,490
|
)
|
|
|
(639
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(689,636
|
)
|
|
|
(689,636
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
September 30, 2020
|
|
|
7
|
|
|
$
|
-
|
|
|
|
60
|
|
|
$
|
-
|
|
|
|
5,037,765,834
|
|
|
$
|
502,523
|
|
|
|
1,500,000
|
|
|
$
|
150
|
|
|
$
|
17,812,011
|
|
|
$
|
(19,311,514
|
)
|
|
$
|
(996,830
|
)
|
See accompanying notes to the financial statements.
SEAFARER
EXPLORATION CORP.
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019
|
(UNAUDITED)
|
|
|
Series
A Preferred Stock
|
|
|
Series
B Preferred Stock
|
|
|
Common
Stock
|
|
|
Common
Stock to be Issued
|
|
|
Additional
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid
in Capital
|
|
|
Deficit
|
|
|
Total
|
|
Balance
December 31, 2018
|
|
|
7
|
|
|
$
|
-
|
|
|
|
60
|
|
|
$
|
-
|
|
|
|
3,518,252,964
|
|
|
$
|
350,573
|
|
|
|
23,192,857
|
|
|
$
|
2,319
|
|
|
$
|
13,109,751
|
|
|
$
|
(14,954,819
|
)
|
|
$
|
(1,492,176
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
346,066,667
|
|
|
|
34,607
|
|
|
|
-
|
|
|
|
-
|
|
|
|
327,243
|
|
|
|
-
|
|
|
|
361,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to convert
notes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,284,938
|
|
|
|
128
|
|
|
|
-
|
|
|
|
-
|
|
|
|
900
|
|
|
|
-
|
|
|
|
1,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion
feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,500
|
|
|
|
-
|
|
|
|
10,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
96,220,616
|
|
|
|
9,622
|
|
|
|
-
|
|
|
|
-
|
|
|
|
202,028
|
|
|
|
-
|
|
|
|
211,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for financing
cost
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000,000
|
|
|
|
500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,000
|
|
|
|
-
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(360,386
|
)
|
|
|
(360,386
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2019
|
|
|
7
|
|
|
|
-
|
|
|
|
60
|
|
|
|
-
|
|
|
|
3,966,825,185
|
|
|
|
395,430
|
|
|
|
23,192,857
|
|
|
|
2,319
|
|
|
|
13,657,422
|
|
|
|
(15,315,205
|
)
|
|
|
(1,260,034
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
160,028,572
|
|
|
|
16,003
|
|
|
|
3,500,000
|
|
|
|
350
|
|
|
|
427,547
|
|
|
|
-
|
|
|
|
443,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares reclassed from
common stock to be issued
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23,192,857
|
|
|
|
2,319
|
|
|
|
(23,192,857
|
)
|
|
|
(2,319
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to convert
notes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,869,220
|
|
|
|
1,887
|
|
|
|
-
|
|
|
|
-
|
|
|
|
88,295
|
|
|
|
-
|
|
|
|
90,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to convert
accounts payable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,000,000
|
|
|
|
700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,300
|
|
|
|
-
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion
feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,100
|
|
|
|
-
|
|
|
|
25,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,850,000
|
|
|
|
785
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73,090
|
|
|
|
-
|
|
|
|
73,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(581,251
|
)
|
|
|
(581,251
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
June 30, 2019
|
|
|
7
|
|
|
|
-
|
|
|
|
60
|
|
|
|
-
|
|
|
|
4,183,765,834
|
|
|
|
417,124
|
|
|
|
3,500,000
|
|
|
|
350
|
|
|
|
14,277,754
|
|
|
|
(15,896,456
|
)
|
|
|
(1,201,228
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
129,034,759
|
|
|
|
12,903
|
|
|
|
3,400,000
|
|
|
|
340
|
|
|
|
391,947
|
|
|
|
-
|
|
|
|
405,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclass from common
stock to be issued
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,500,000
|
|
|
|
350
|
|
|
|
(3,500,000
|
)
|
|
|
(350
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to convert
notes payable and accrued interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,806,585
|
|
|
|
3,781
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,940
|
|
|
|
-
|
|
|
|
204,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion
feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
67,375
|
|
|
|
-
|
|
|
|
67,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26,300,000
|
|
|
|
2,630
|
|
|
|
-
|
|
|
|
-
|
|
|
|
201,950
|
|
|
|
-
|
|
|
|
204,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for charitable
contributions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,000,000
|
|
|
|
400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,500
|
|
|
|
-
|
|
|
|
32,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(701,815
|
)
|
|
|
(701,815
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
September 30, 2019
|
|
|
7
|
|
|
$
|
-
|
|
|
|
60
|
|
|
$
|
-
|
|
|
|
4,384,407,178
|
|
|
$
|
437,188
|
|
|
|
3,400,000
|
|
|
$
|
340
|
|
|
$
|
15,172,466
|
|
|
$
|
(16,598,271
|
)
|
|
$
|
(988,277
|
)
|
See accompanying notes to the financial statements.
SEAFARER
EXPLORATION CORP.
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
For the Nine Months Ended
September 30
|
|
|
|
2020
|
|
|
2019
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(2,047,530
|
)
|
|
$
|
(1,643,452
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
15,045
|
|
|
|
-
|
|
Amortization of right of use asset
|
|
|
8,001
|
|
|
|
-
|
|
Amortization of beneficial conversion feature and loan fees
|
|
|
175,606
|
|
|
|
73,397
|
|
Common stock issued for services
|
|
|
178,666
|
|
|
|
432,114
|
|
Common stock issued for a charitable contribution
|
|
|
9,700
|
|
|
|
32,900
|
|
Common stock issued for loan fees
|
|
|
-
|
|
|
|
7,500
|
|
Gain on disposal of asset
|
|
|
(5,500
|
)
|
|
|
-
|
|
Gain on settlement of accounts payable
|
|
|
(1,252
|
)
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
34,375
|
|
|
|
5,274
|
|
Decrease (increase) in:
|
|
|
|
|
|
|
|
|
Prepaid expenses and deposits
|
|
|
146,804
|
|
|
|
-
|
|
Increase (decrease) in:
|
|
|
|
|
|
|
|
|
Accounts payable & accrued expenses
|
|
|
33,896
|
|
|
|
(68,450
|
)
|
Operating lease liabilities
|
|
|
-
|
|
|
|
(10,710
|
)
|
Net cash used by operating activities
|
|
|
(1,452,189
|
)
|
|
|
(1,171,427
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Application for trademark
|
|
|
(675
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(675
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Increase in bank overdraft
|
|
|
-
|
|
|
|
(2,919
|
)
|
Proceeds from the issuance of common stock
|
|
|
718,799
|
|
|
|
1,210,940
|
|
Proceeds from the issuance convertible notes payable
|
|
|
45,000
|
|
|
|
62,000
|
|
Proceeds from the issuance convertible notes payable, related party
|
|
|
161,600
|
|
|
|
44,100
|
|
Payments on convertible notes payable
|
|
|
-
|
|
|
|
(46,500
|
)
|
Payments on notes payable
|
|
|
(40,000
|
)
|
|
|
-
|
|
Payments to shareholders
|
|
|
-
|
|
|
|
(5,048
|
)
|
Net cash provided by financing activities
|
|
|
885,399
|
|
|
|
1,262,573
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
|
|
|
(567,465
|
)
|
|
|
91,146
|
|
CASH, BEGINNING OF PERIOD
|
|
|
618,537
|
|
|
|
-
|
|
CASH, END OF PERIOD
|
|
$
|
51,070
|
|
|
$
|
91,146
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Non-cash operating and financing activities:
|
|
|
|
|
|
|
|
|
Convertible debt and accrued interest converted to common stock
|
|
$
|
84,086
|
|
|
$
|
296,435
|
|
Operating lease liabilities and right of use asset
|
|
$
|
(142
|
)
|
|
$
|
22,572
|
|
Beneficial conversion feature on convertible notes payable
|
|
$
|
202,100
|
|
|
$
|
102,975
|
|
Stock issued for prepaid services
|
|
$
|
29,500
|
|
|
$
|
164,267
|
|
Accounts payable paid with common stock
|
|
$
|
-
|
|
|
$
|
7,500
|
|
See accompanying notes to the financial statements.
SEAFARER
EXPLORATION CORP.
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(Unaudited)
|
The
accompanying condensed consolidated financial statements of Seafarer Exploration Corp. (Seafarer or the Company)
are unaudited, but in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) necessary
to fairly state the Companys financial position, results of operations, and cash flows as of and for the dates and periods
presented. The condensed consolidated financial statements of the Company are prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP) for interim financial information.
These
unaudited condensed consolidated financial statements should be read in conjunction with the Companys audited financial
statements and footnotes included in the Companys Report on Form 10-K for the year ended December 31, 2019, filed with
the Securities and Exchange Commission (the Commission) on April 3, 2020. The results of operations for the nine
month period ended September 30, 2020 are not necessarily indicative of the results that may be expected for the entire year ending
December 31, 2020 or for any future period.
NOTE
1 – DESCRIPTION OF BUSINESS
Seafarer
Exploration Corp., 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 and with Marine Archaeology Partners, LLC (MAP), with the formation
of Seafarers Quest, LLC for the purpose of exploring a shipwreck site off of Melbourne Beach, Florida. Under the partnership
with MAP, Seafarer is the designated manager of Seafarers Quest, LLC.
The
Companys wholly owned subsidiary Blockchain LogisTech, LLC, was formed on April 4, 2018 and began operations in 2019. Blockchain
LogisTech, LLC 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 2 permit was renewed on
January 14, 2019 for a period of three years. The Area 1 permit was renewed on March 1, 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.
Blockchain
Software Services Referral Agreement
Blockchain
LogisTech, LLC, 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 LogisTech, LLC also has
a reseller agreement with a separate company that sells a blockchain related security product.
NOTE
2 – GOING CONCERN
These
condensed 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, which raises 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 November
16, 2020. Managements plans include raising capital through the equity markets 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. At September 30, 2020, the Company had a working capital deficit of $1,274,201. 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 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 condensed 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 condensed 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 seriously negatively affect 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 is presented to assist in understanding the Companys condensed consolidated
financial statements. The condensed 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 and have been consistently applied in the preparation of the condensed consolidated financial
statements.
Principles
of Consolidation
The
condensed consolidated financial statements of the Company include the accounts of the Company and Blockchain LogisTech, LLC,
which is a wholly owned subsidiary. Intercompany accounts and transactions have been eliminated in consolidation.
Cash
and Cash Equivalents
For
purposes of the statements 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 September 30, 2020
and December 31, 2019. Financial instruments that potentially subject the Company to concentration of credit risk consist principally
of cash deposits.
Research
and Development Expenses
Expenditures
for research and development are expensed as incurred. The Company incurred research and development expenses of $373,769 and
$327,935 respectively, for the nine months ended September 30, 2020 and 2019 and $95,460 and $210,134 respectively, for the three
months ended September 30, 2020 and 2019.
Revenue
Recognition
Effective
January 1, 2018, the Company adopted 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 LogisTech, LLC has made to a provider of software services when
payment for a referral is received from the provider of software services. The Company also has a sales referral agreement with
a limited liability company that provides product/system development services. The Company receives referral fees when payment
is received from the provider of the product/system development services. To date service revenue in the segment footnote from its core
historic and shipwreck recovery operations and at this point in time is unable to determine how revenue will be recognized due
to a lack of visibility as to how the Company will be compensated for its services.
Earnings
Per Share
The
Company has adopted FASB ASC 260-10 which provides for 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 nine month periods ended September 30, 2020 and 2019 were excluded from
the dilutive loss per share calculation as they would be antidilutive due to the net loss. As of September 30, 2020 and 2019,
there were 654,492,154 and 545,722,872 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 and cash equivalents, receivables, accounts payable, notes
payable and other payables, approximate their fair values because of the short maturity of these instruments.
Property
and Equipment
Property
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. As of September 30, 2020, this is the only capital asset owned by the Company.
Depreciation
expense was $15,045 and $0 respectively, for nine month periods ended September 30, 2020 and 2019 and $5,015 and $0 respectively,
for three month periods ended September 30, 2020 and 2019.
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 nine month periods ended September
30, 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 nine month periods ended September
30, 2020 and 2019 include useful life of property and equipment, valuation allowances against deferred tax assets and fair value
of non cash equity transactions.
Segment
Information
Beginning
in 2019, Seafarers wholly owned subsidiary, Blockchain LogisTech, LLC began operations, generated revenue and incurred
expenses. The business of Blockchain LogisTech, LLC 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 LogisTech, LLC and Seafarer
were separate reportable segments (see Note 10).
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, and indexed debt. 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 No. 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 on the 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.
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 AND 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 three and nine month periods ended September 30, 2020 and 2019, the Company recorded $4,601
and $3,945 and $4,601 and $11,835, respectively, as operating lease expense, which is included in rent expense on the condensed
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. 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 ASC Topic 842, Leases (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 ASC 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 September 30, 2020 are summarized below:
|
|
September 30, 2020
|
|
|
|
(Unaudited)
|
|
Office lease (remaining lease term of 3 months)
|
|
$
|
48,957
|
|
Less accumulated amortization
|
|
|
(3,441
|
)
|
Right-of-use assets, net
|
|
$
|
45,516
|
|
Amortization
on the right -of -use asset is included in rent expense on the condensed consolidated statements of operations.
Operating
Lease liabilities are summarized below:
|
|
September 30, 2020
|
|
|
|
(Unaudited)
|
|
Office lease
|
|
$
|
45,658
|
|
Less: current portion
|
|
|
(14,187
|
)
|
Long term portion
|
|
$
|
31,471
|
|
Maturity
of lease liabilities are as follows:
Year ended December 31, 2020
|
|
$
|
4,459
|
|
Year ended December 31, 2021
|
|
|
18,103
|
|
Year ended December 31, 2022
|
|
|
18,641
|
|
Year ended December 31, 2023
|
|
|
11,801
|
|
Total future minimum lease payments
|
|
|
52,284
|
|
Less: Present value discount
|
|
|
(6,626
|
)
|
Lease liability
|
|
$
|
45,658
|
|
Right-of-use
assets at December 31, 2019 are summarized below:
|
|
December 31, 2019
|
|
Office lease (remaining lease term of 12 months)
|
|
$
|
22,575
|
|
Less accumulated amortization
|
|
|
(14,574
|
)
|
Right-of-use assets, net
|
|
$
|
8,001
|
|
Amortization
on the right-of-use asset is included in rent expense on the condensed consolidated statements of operations.
Operating
Lease liabilities are summarized below:
|
|
December 31, 2019
|
|
Office lease
|
|
$
|
8,079
|
|
Less: current portion
|
|
|
(8,079
|
)
|
Long term portion
|
|
$
|
-
|
|
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 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 nine month periods ended September 30, 2020 and 2019 of $3,000, which have been presented as dividend income on the
condensed consolidated statements of operations.
In
August of 2020 the Company and P&S entered into a new agreement under which the Company and P&S agreed to wind down their
relationship, with Seafarer agreeing to exchange 10,000 common shares of P&S for 60,000,000 shares of its common stock, effectively
reversing the original transaction. The actual exchange of shares had not yet occurred at September 30, 2020.
The
Company has an active 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 nine month periods ended September
30, 2020 and 2019 P&S paid a total of $4,200 and $12,600, respectively, of referral fees to the Company. These amounts are
included in services income in the condensed consolidated statements of operations.
NOTE
6 – CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
Upon
inception, the Company evaluates each financial instrument to determine whether it meets the definition of conventional
convertible debt under ASC 470.
Convertible
Notes Payable
The
following tables reflect the convertible notes payable at September 30, 2020 and December 31, 2019:
|
|
Issue Date
|
|
Maturity Date
|
|
September 30, 2020
|
|
|
December 30, 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
|
|
|
|
|
34,011
|
|
|
|
17,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance convertible notes payable
|
|
|
|
$
|
10,989
|
|
|
$
|
33,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue Date
|
|
Maturity Date
|
|
September 30, 2020
|
|
|
December 30, 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
|
|
|
|
79,731
|
|
|
|
57,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance convertible notes payable - related parties
|
|
$
|
30,869
|
|
|
$
|
19,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue Date
|
|
Maturity Date
|
|
September 30, 2020
|
|
|
December 30, 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
|
|
September 30, 2020
|
|
|
December 30, 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
|
|
$
|
878,058
|
|
|
$
|
780,852
|
|
|
|
|
|
Notes
Payable
The
following tables reflect the notes payable at September 30, 2020 and December 31, 2019:
|
|
Issue Date
|
|
Maturity Date
|
|
September 30, 2020
|
|
|
December 30, 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
|
|
|
25,000
|
|
|
|
65,000
|
|
|
6.00%
|
|
|
11/29/17
|
|
11/29/19
|
|
|
105,000
|
|
|
|
105,000
|
|
|
2.06%
|
Balance notes payable - default
|
|
|
$
|
135,000
|
|
|
$
|
175,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue Date
|
|
Maturity Date
|
|
September 30, 2020
|
|
|
December 30, 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
|
|
|
$
|
153,500
|
|
|
$
|
193,500
|
|
|
|
New
Convertible Notes Payable Issued During the Nine Month Period Ended September 30, 2020
During
the nine month period ended September 30, 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.
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.
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.
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.
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.
During
the nine month period ended September 30, 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.
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.
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
$0.0010 per share.
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.
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.
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.
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.
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.
Note
Conversions
During
the nine month period ended September 30, 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 September 30, 2020.
During
the nine month period ended September 30, 2019:
A
lender converted the principal and accrued interest for a convertible promissory note outstanding with a principal balance of
$1,000 into 1,284,938 shares of the Companys common stock. The remaining principal balance of this note was $0 at September
30, 2019.
The
Company issued 18,869,220 shares of common stock to settle $90,182 of accrued interest owed on fourteen convertible notes payable.
The
Company issued 37,806,585 shares of common stock to settle $199,497 of principal and accrued interest owed on four convertible
notes payable and one note payable. The remaining principal balance of all of these note was $0 at September 30, 2019. Due to
the extinguishment of the one note payable with common stock a loss in the amount of $5,274 was recognized upon settlement.
Repayment
of Promissory Note
During
the nine month period ended September 30, 2020, the Company repaid a total of $40,000 of the principal of a promissory note with
an original principal balance of $75,000 that was due on December 14, 2018. The remaining principal balance of the note at September
30, 2020 was $25,000.
Shareholder
Loan
At
September 30, 2020 and December 31, 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.
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.
The
convertible notes that have been issued by the Company are convertible at the lenders option. These convertible notes represent
significant potential dilution to the Companys current shareholders as the convertible price of these notes is generally
lower than the current market price of the Companys shares. As such, when these notes are converted into shares of the
Companys common stock, there is typically a highly dilutive effect on current shareholders and it is very possible that
such dilution may significantly negatively affect the trading price of the Companys common stock.
NOTE
7 – STOCKHOLDERS DEFICIT
Common
Stock Issuances
During
the nine month period ended September 30, 2020, the Company issued or is to issue the following shares of common stock:
|
-
|
192,700,001
restricted shares for total proceeds of $718,799.
|
|
-
|
39,781,082
restricted shares to settle $84,086 of principal and accrued interest owed on various convertible notes payable and one note payable.
|
|
-
|
26,611,878
vested and non-forfeitable restricted shares for services provided by consultants, contractors, and other service providers. The
Company determined the fair value of the shares issued using the stock price on date of issuance. Compensation expense is recognized
as the services are provided to the Company.
|
|
-
|
16,510,490
restricted shares reclassed from common stock to be issued.
|
|
-
|
1,000,000
shares valued at $9,700 issued as charitable contribution to a separate charity. The Company determined the fair value of the
shares issued using the stock price on date of issuance.
|
During
the nine month period ended September 30, 2019, the Company issued the following shares of common stock:
|
-
|
642,029,999
restricted shares for total proceeds of $1,210,940.
|
|
-
|
130,370,616
fully vested and non-forfeitable restricted 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 issuance. Compensation expense is recognized as the services are provided to the Company.
|
|
-
|
57,960,743
restricted shares to settle $290,679 of principal and accrued interest owed on various convertible notes payable and one note
payable.
|
|
-
|
7,000,000
restricted shares to settle an account payable in the amount of $7,000.
|
|
-
|
5,000,000
restricted 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.
|
|
-
|
4,000,000
restricted shares issued as charitable contributions to three separate charities. The Company determined the fair value of the
shares issued using the stock price on date of issuance. For the three and nine month periods ended September 30, 2019, we incurred
$32,900 and $32,900 of charitable donation expense for stock which is included in general and administrative expenses in the statement
of operations.
|
Series
A Preferred Stock
At
September 30, 2020 and December 31, 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.
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.
Warrants
and Options
The
Company did not issue any warrants or options during the nine month periods ended September 30, 2020, and 2019.
At
September 30, 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 September 30, 2020:
|
|
Number
of Shares
|
|
|
Term
|
|
September
30, 2020
|
|
Exercise
Price
|
11/10/12
to 11/20/22
|
|
4,000,000
|
|
0.0050
|
|
|
4,000,000
|
|
|
NOTE
8 – 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 Marine Archaeology Partners, LLC (MAP), with the
formation of Seafarers Quest, LLC for the purpose of exploring a shipwreck site off of Melbourne Beach, Florida.
Seafarer owns 50% of Seafarers Quest, LLC and is handling the operations on behalf of Seafarers Quest. To date
there has been no significant financial activity in Seafarers Quest. Under the partnership with MAP, Seafarer is the
designated manager of Seafarers 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 were previously issued in the name of a
partner that is no longer active, the Company is in the process of working with the various State of Florida agencies
involved to update and consolidate all of the permits solely under the Companys name. The State of Florida Bureau of
Archeological Research (FBAR) had temporarily ordered the Company not to disturb the bottom while the changes and
updates to the Companys permits were in process.
Certain
Other Agreements
See
Note 4 Operating Lease Right-of-Use Assets and Operating Lease Liabilities.
NOTE
9 – RELATED PARTY TRANSACTIONS
During
the nine month period ended September 30, 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.
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.
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.
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.
During
the nine month period ended September 30, 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.
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.
The
Companys Board of Directors had previously approved a compensation package including a salary for its CEO. The Company
began paying its CEO a salary of $10,000 per month in April of 2020. For the nine month periods ended September 30, 2020 and 2019
the Company has paid its CEO $$60,000 and $0, respectively and these amounts are included in general and administrative expense
in the condensed consolidated statements of operations.
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 to assess 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 nine month periods ended September 30, 2020 and 2019 the Company paid the related party consultant $37,000 and
$62,289, respectively, which is included in consulting and contracting expense in the condensed consolidated statements
of operations. At September 30, 2020 and December 31, 2019, the Company owed the related party consultant $0 for services rendered.
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 nine month periods ended September 30, 2020 and
2019 the Company paid the related party consultant $5,243 and $17,011, respectively, which is included in consulting and
contracting expense in the condensed consolidated statements of operations. At September 30, 2020 and December 31, 2019, the
Company owed the related party consultant $475 and $2,978, respectively, for services rendered.
Blockchain
LogisTech, LLC has an agreement with a person related to the Companys CEO to provide marketing and administrative consulting
services. During the nine month period ended September 30, 2020 the Company paid the related party consultant fees $11,250 for
services rendered. During the nine month periods ended September 30, 2020 and 2019 the Company paid the related party consultant
$11,250 and $0, respectively, which is included in consulting and contracting expense in the condensed consolidated statements
of operations. At September 30, 2020 and December 31, 2019, the Company owed the related party consultant $0 for services rendered.
Shareholder
Loans
At
September 30, 2020 and December 31, 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.
At
September 30, 2020, the following promissory notes and shareholder loans were outstanding to related parties:
See
Note 6 convertible notes payable – related parties, convertible notes payable – related parties, in default, and notes
payable - related parties, in default.
NOTE
10 – SEGMENT INFORMATION
Seafarers
wholly owned subsidiary Blockchain LogisTech, LLC began operations in 2019 by providing referrals to P&S (please see Note
5 - Investment in Probability and Statistics, Inc.) in exchange for referral fees for closed business.
Due
to Blockchain LogisTech, LLC 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 LogisTech, LLCs and Seafarer Exploration Corp. operate as separate segments of the business. As such, the
Company has presented the income (loss) from operations during the nine month period ended September 30, 2020 and 2019 incurred
by the two separate segments below.
Substantially
all of the assets held by the Company are for its shipwreck exploration and recovery business. All proceeds received from sales
of common stock and issuance of convertible notes payable and notes payable are used in the shipwreck and exploration recovery
business.
During
the nine month periods ended September 30, 2020 and 2019, Blockchain LogisTech, LLCs revenues of $4,200 and $12,600, respectively,
were 65.8% and 100%, respectively, of the consolidated revenues of Seafarer.
Segment
information relating to the Companys two operating segments for the nine month period ended September 30, 2020 is as follows:
|
|
September 30, 2020
|
|
September 30, 2020
|
|
September 30, 2020
|
|
|
Blockchain LogisTech, LLC
|
|
Seafarer Exploration Corp.
|
|
Consolidated
|
Service revenues
|
|
$4,200
|
|
$2,182
|
|
$6,382
|
|
|
|
|
|
|
|
Total operating expenses
|
|
15,185
|
|
1,820,533
|
|
1,835,718
|
|
|
|
|
|
|
|
Net loss from operations
|
|
($10,985)
|
|
($1,818,351)
|
|
($1,829,336)
|
Segment
information relating to the Companys two operating segments for the nine month period ended September 30, 2019 is as follows:
|
|
September 30, 2019
|
|
September 30, 2019
|
|
September 30, 2019
|
|
|
Blockchain LogisTech, LLC
|
|
Seafarer Exploration Corp.
|
|
Consolidated
|
Service revenues
|
|
$12,600
|
|
-
|
|
$12,600
|
|
|
|
|
|
|
|
Total operating expenses
|
|
-
|
|
1,509,091
|
|
1,509,091
|
|
|
|
|
|
|
|
Net loss from operations
|
|
$12,600
|
|
($1,509,718)
|
|
($1,496,491)
|
NOTE
11 – SUBSEQUENT EVENTS
Subsequent
to September 30, 2020, the Company issued or has agreed to issue shares of its common stock as follows:
|
(i)
|
77,450,000
shares of restricted common stock issued under subscription agreements for proceeds of approximately $195,225 to be used for
general corporate purposes, working capital and repayment of debt;
|
|
(ii)
|
5,000,000
shares paid to lease a vessel; and
|
|
(ii)
|
2,980,943
shares of restricted common stock were issued for services.
|
Per
the new share exchange agreement from August of 2020 the Company exchanged 10,000 common shares of P&S for 60,000,000 shares
of its common stock, effectively reversing the original transaction. The 60,000,000 shares that the Company received were returned
to the treasury and then cancelled.
Item
2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD
LOOKING STATEMENTS
The
following discussion contains certain forward-looking statements that are subject to business and economic risks and uncertainties,
and which speak only as of the date of this annual report. No one should place strong or undue reliance on any forward-looking
statements. The use in this Form 10-Q of such words as believes, plans, anticipates,
expects, intends, and similar expressions are intended to identify forward-looking statements, but
are not the exclusive means of identifying such statements. The Companys actual results or actions may differ materially
from these forward-looking statements due to many factors and the success of the Company is dependent on our efforts and many
other factors including, primarily, our ability to raise additional capital. Such factors include, among others, the following:
our ability to continue as a going concern, general economic and business conditions; competition; success of operating initiatives;
our ability to raise capital and the terms thereof; changes in business strategy or development plans; future revenues; the continuity,
experience and quality of our management; changes in or failure to comply with government regulations or the lack of government
authorization to continue our projects; and other factors referenced in the Form 10-Q. This Item should be read in conjunction
with the consolidated financial statements, the related notes and with the understanding that the Companys actual
future results may be materially different from what is currently expected or projected by the Company.
We
caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Such
forward-looking statements are based on the beliefs and estimates of our management, as well as on assumptions made by and information
currently available to us at the time such statements were made. Forward looking statements are subject to a variety of risks
and uncertainties, which could cause actual events or results to differ from those reflected in the forward looking statements,
including, without limitation, the failure to successfully locate cargo and artifacts from shipwreck sites and a number of other
risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements, either
as a result of the matters set forth or incorporated in this Report generally and certain economic and business factors, some
of which may be beyond our control.
We
disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated events.
Overview
General
The
Companys principal business plan is to develop the infrastructure and technology to engage in the archaeologically-sensitive
exploration, recovery and conservation of historic shipwrecks. Once artifacts have been properly conserved, they may be made available
for scientific research and allowed to be displayed for the public. The Companys secondary business is to attempt to develop
revenue streams to support its historic shipwreck exploration and recovery operations.
The
Company has investigated various technologies and non-scientific equipment to help better explore or document our shipwreck sites.
To the present date, none of these technologies have been proven to work with the exception of the SeaSearcher, which has been
developed to scan historic shipwreck sites for potential artifacts. The Company will continue to experiment with unproven technologies
and will actively work with third parties, consultants and scientists to develop its own proprietary technology which will result
in considerable expenses.
The
Company continues to review revenue producing opportunities including joint ventures and partnerships with other companies and
potentially governmental agencies. Blockchain LogisTech, LLC, 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.
There
is a possibility that the Company will be forced to cease its operations if it is not successful in eventually locating and recovering
valuable artifacts and treasure or cant build a revenue stream in excess of its expenses. If the Company were to cease
its operations, and not find or engage another business entity, then it is likely that there would be complete loss of all capital
invested in or borrowed by the Company. As such, an investment in Seafarer is highly speculative and very risky.
This
type of business venture is highly speculative in nature and carries an excessive amount of risk. An investment in the Companys
securities is very risky and should only be considered by those investors or lenders who do not require liquidity and who can
afford to suffer a complete and total loss of their investment.
There
is currently a limited trading market for the Companys securities. It is impossible for the Company to assure that when
and if an active-trading market in its shares will be established, or whether any such market will be sustained or sufficiently
liquid to enable holders of shares of the Companys common stock to liquidate their investment in our company.
The
sale of unregistered and restricted securities by current shareholders, including shares issued to consultants, independent contractors,
Board members and shares issued to settle convertible promissory notes or to settle other loans and debt, may cause a significant
decline in the market price of the Companys securities. Furthermore, in recent years regulatory agencies have made it very
difficult for broker dealers to accept stock certificates from issuers of low priced stocks and the Company believes that it will
become even more challenging to deposit stock certificates and this trend may continue for the foreseeable future.
Moreover,
in the past few years several major brokerage firms have indicated that they will not allow their clients to deposit low priced
stocks. Some clearing firms who used to clear low priced securities for multiple brokerage firms have closed or been acquired,
resulting in fewer brokerage firms that are willing or able to accept lower priced securities for deposit. Unless an investor
has a large and well-established relationship with a brokerage firm, it may be extremely difficult and potentially expensive to
deposit lower priced securities. An investor should consider consulting with professional financial advisers before making an
investment in our securities.
Plan
of Operation
The
Company has taken the following steps to implement its business plan:
|
●
|
To
date, the Company has devoted its time towards establishing its business to develop the infrastructure capable of researching,
exploring, recovering and conserving historic shipwrecks. The Company has performed some research, exploration and recovery activities.
|
|
●
|
Spent
considerable time and capital researching potential shipwrecks, including obtaining information from foreign archives.
|
|
●
|
The
Company has generated limited revenues to date, including some nominal revenue from dividends and our business goals continue
to evolve.
|
|
●
|
The
Company continues to review revenue producing opportunities including joint ventures with other companies and potentially governmental
agencies. The Company is actively looking to work with revenue producing companies. These opportunities have been slow to develop,
but the Company will continue to pursue those endeavors that it believes have the potential to increase the value of the Companys
shares.
|
|
●
|
The
Company has investigated various types of equipment and technology to expedite the process of finding artifacts other than iron
or ferrous metals. Most have been of no help, but the Company continues to explore new technology. The Company has developed its
own proprietary technology, the SeaSearcher, and will attempt to continue to develop additional proprietary technologies or work
with third parties to develop technologies to aid in its exploration and recovery operations. Development of technologies will
require additional time and financing. The cost of developing the new technology has, to date, been very expensive.
|
|
●
|
The
Company has investigated media opportunities and will continue to evaluate different media strategies.
|
Melbourne
Beach Shipwreck Site
There
is a purported historic shipwreck site in the waters off of Melbourne Beach, Florida that the Company has been investigating.
Seafarer and MAP, are partners in Seafarers Quest, LLC. Under such agreement, Seafarer is responsible for costs of permitting,
exploration and recovery, and is entitled to 80% and MAP 20% of artifacts recovered from the site after the State of Florida receives
its share, which is anticipated to be 20% under any future recovery permits. Seafarer is the designated manager of Seafarers
Quest, LLC. The permits for two areas on the site, designated as Areas 1 and 2, were renewed in 2019 for an additional 3 years.
There are no recovery permits for the site that have been applied for or issued as of the date of this filing and it will be necessary
to be granted a recovery permit in order to recover any artifacts or treasure that are located on the site.
Juno
Beach Shipwreck Site
The
Company has previously performed some exploration and recovery operations at what it believes to be a potential historic shipwreck
site located off of the coast of Florida in northern Palm Beach County, more specifically in an area known as Juno Beach
(the Juno Beach Shipwreck). The Company had previously obtained a recovery permit from the State of Florida for
the Juno Beach site. In November 2017, the Company was granted final judgment on its federal admiralty claim for the Juno Beach
shipwreck site. The Company does not currently have a permit from the State of Florida for the Juno Beach shipwreck site. The
State of Florida has requested that the Company submit a new recovery permit application for the Juno Beach shipwreck site. Even
if there are valuable artifacts and/or treasure located at the site, recovering them may be difficult due to a variety of challenges
that include, but are not limited to; inclement weather, hazardous ocean conditions, large amounts of sand that cover large areas
of the site, lack of the necessary equipment to be able to dig deep enough into the sand, etc.
Even
if there are valuable artifacts and/or treasure located at the site, recovering them may be difficult due to a variety of challenges
that include, but are not limited to; inclement weather, hazardous ocean conditions, large amounts of sand that cover large areas
of the site, lack of the necessary equipment to be able to dig deep enough into the sand, etc.
There
are very strict international, federal and state laws that govern the exploration and recovery of historic shipwrecks. While the
Company has been able to obtain some permits, there is no guarantee that the Company will be able to secure future permits or
enter into agreements with government agencies in order to explore and salvage historic shipwrecks. There is a risk that government
entities may enact legislation that is so strict that any recovery of artifacts and cargo from historic shipwrecks will be nearly
impossible. Additionally, permits and agreements with governmental agencies to conduct historic shipwreck exploration and recovery
operations are expensive to obtain and maintain, both in terms of both direct costs and ongoing compliance costs. It is also entirely
possible that the Company will not be successful in obtaining title or permission to excavate certain wrecks.
It
is possible that permits that are sought for potential future international projects may never be issued, and if issued, may not
be legal or honored by the entities that issued them. Governmental agencies may require various types of permits to explore shipwreck
sites, and the permitting process is often lengthy and complex. Obtaining permits and entering into agreements with governmental
and quasi-governmental agencies to conduct historic shipwreck exploration and recovery operations is generally a very complex,
time consuming, and expensive process. Furthermore, the process of entering into agreements and/or obtaining permits may be subject
to lengthy delays, possibly in excess of a year. Some governmental agencies may refuse to issue permits to the Company for recovery
of artifacts or intentionally delay the permitting process.
The
reasons for a lengthy permitting process may be due to a number of potential factors including but not limited to requests by
permitting agencies for additional information, submitted applications that need to be revised or updated, newly discovered information
that needs to be added to an application or agreement, changes to either the agreement or permit terms or revisions to other information
contained in the permit, excessive administrative time lags at permitting agencies, etc. Existing permits and agreements may be
put on hold or suspended without notice for lengthy periods of time due to administrative issues and disagreements over the terms
and conditions. The length of time it takes to obtain permits, enter into agreements, or rectify any conditions that are causing
a permit to be suspended or on hold may cause the Company to expend significant resources while gearing up to do work with little
or no visibility as to timing.
The
Company regularly reviews opportunities to perform exploration and recovery operations at purported historic shipwreck sites.
The Company currently does have some specific plans to perform exploration and recovery operations at other shipwreck sites in
the future, however these plans are subject to change based on a number of factors. The Company is actively reviewing other potential
historic shipwreck sites, including sites located internationally, for possible exploration and recovery. Should the Company decide
that it will pursue exploration and recovery activities at other potential shipwreck sites, it may be necessary to obtain various
permits as well as environmental permits.
The
Company continually monitors media rights for potential revenue opportunities. The Company has had discussions with media entities
to further understand the advantages offered. Management believes media can represent a potential future revenue opportunity for
the Company, if the right circumstances arise.
This
type of business venture is extremely speculative in nature and carries a tremendous amount of risk. An investment in the Companys
securities is speculative and very risky and should only be considered by those investors or lenders who do not require near-term
liquidity and who can afford to suffer a complete and total loss of their investment.
Limited
Operating History
The
Company has generated only minimal revenue from operations and does not expect to report any significant revenue from operations
for the foreseeable future.
At
September 30, 2020, the Company had a working capital deficit of $1,274,201.
The
Companys working capital deficit increased from $492,223 at December 31, 2019 to $1,274,201 at September 30, 2020. The
Companys large working capital deficit indicates that there is still substantial risk to the viability of the Company due
to the fact that the Company does not generate meaningful cash flow from its operations and therefore has no predictable means
to pay its debt. 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.
Since
inception, the Company has funded its operations through common stock issuances and loans in order to meet its strategic objectives;
however, there can be no assurance that the Company will be able to obtain further funds to continue with its efforts to establish
a new business. There is a very significant risk that the Company will be unable to obtain financing to fund its operation and
as such the Company may be forced to cease operations at any time which would likely result in a complete loss of all capital
that has been invested in and/or borrowed by the Company to date.
The
Company expects to continue to incur significant operating losses and to generate negative cash flow from operating activities,
while building out its infrastructure in order to explore and salvage historic shipwreck sites and establishing itself in the
marketplace. Based on our historical rate of expenditures, the Company expects to expend its available cash in less than one
month from November 16, 2020.
The
Companys ability to eliminate operating losses and to generate positive cash flow from operations in the future will depend
upon a variety of factors, many of which it is unable to control. If the Company is unable to implement its business plan successfully,
it may not be able to eliminate operating losses, generate positive cash flow or achieve or sustain profitability, which may have
a material adverse effect on the Companys business, operations, and financial results, as well as its ability to make payments
on its debt obligations, and the Company may be forced to cease operations.
The
Companys lack of operating cash flow and reliance on the sale of its commons stock and loans to fund operations is extremely
risky. If the Company is unable to continue to raise capital or obtain loans or other financing on terms that are acceptable to
the Company, or at all, then it is highly likely that the Company will be forced to cease operations. If the Company ceases its
operations, then it is highly likely that all capital invested in and/or borrowed by the Company will be lost.
Summary
of Nine Months Ended September 30, 2020 and 2019 Results of Operations
The
Companys net loss for the nine month period ended September 30, 2020 was $2,047,530 versus $1,643,452 for the nine month
period ended September 30, 2019, an increase of approximately 25%. The increase in net losses in 2020 was primarily due to increases
in vessel maintenance expense, consulting and contractor expenses, research and development expenses, general and administrative
expenses and professional fees.
During
the nine month period ended September 30, 2020, consulting and contractor fees were $941,048 compared to $852,342 during the nine
month period ended September 30, 2019, an increase of approximately 10%. Vessel maintenance expenses were $163,369 during the
nine month period in 2020 versus $71,176 during the same period in 2019, an increase of approximately 130%. The increase in vessel
maintenance expenses in 2020 was primarily due to the Company extensively utilizing multiple vessels during its exploration activities,
including the Discovery which was purchased in late 2019. These vessels require ongoing maintenance and repairs that have increased
due to heavy use. Research and development was $373,769 in 2020 versus research and development expenses of $327,935 in 2019,
an increase of approximately 14%. The increase in research and development expenses is attributable to further development of
the Companys SeaSearcher autonomous underwater device. During the nine month period ended September 30, 2020, the Company
incurred professional fees related expenses of $117,611 versus $78,575 during nine month period ended September 30, 2019, an increase
of approximately 50%. Professional fees increased primarily due to an increase in legal fees. General and administrative expenses
for the nine month period ended September 30, 2020 were $140,642 compared to $107,062 for the nine month period ended September
30, 2019, an increase of approximately 31%. Depreciation expense was $15,045 for the nine month period ended September 30, 2020
and $0 in 2019. The Company purchased a vessel in late 2019 and began recording depreciation in 2020, there was no depreciation
expense in 2019. Rent expense was $32,196 in 2020 versus $28,596 in 2019, a 13% year-over-year increase. Travel and entertainment
expenses for the nine month period ended September 30, 2020 were $52,056 versus $43,405 for the nine month period ended September
30, 2019, an increase of approximately 20%. Interest expense for the nine month period ended September 30, 2020 was $195,071 versus
$146,187 for the same period in 2019, an increase of approximately 33%. The increase in interest expense was due to an increase
in amortization of interest relating to the beneficial conversion features of several convertible notes. Loss on extinguishment
of debt was $34,375 during the nine month period ended September 30, 2020 versus $5,274 during the same period in 2019. Gain on
settlement of accounts payable was $1,252 during the nine month period ended September 30, 2020 versus $0 in the same period in
2019. Gain on disposal of asset was $5,500 during the nine month period ended September 30, 2020 versus $0 in the same period
in 2019. The Company had dividend income of $4,500 during the nine month periods ended September 30, 2020 and 2019.
Summary
of Three Months Ended September 30, 2020 and 2019 Results of Operations
The
Companys net loss for the three month period ended September 30, 2020 was $689,636 as compared to a net loss of $701,815
during the three month period ended September 30, 2019, a decrease of approximately 2%.
During
the three month period ended September 30, 2020 consulting and contractor fees were $388,779 as compared to $361,080 for the three
month period ended September 30, 2019, an increase of approximately 8%. Vessel maintenance and dockage was $48,042 during the
three month period ended September 30, 2020 versus $29,189 during the same period in 2019, an increase of 65% in 2019. Research
and development expenses were $95,460 during the three month period ended September 30, 2020 versus $210,134 during the same period
in 2019. During the three month period ended September 30, 2020, professional fees were $26,293 as compared to $26,000 during
the three month period ended September 30, 2019, an increase of approximately 1%. The general and administrative expenses for
the three month period ended September 30, 2020 were $54,837 as compared to $0 during the three month period ended September 30,
2019. Depreciation expense was $5,015 for the three month period ended September 30, 2020 and $0 in 2019. Depreciation expense
increased due to the Company purchasing a new vessel to be used in its operations at the end of 2019. Rent expense was $10,898
during the three month period ended September 30, 2020 versus $9,100 for the same period in 2019, an increase of approximately
20%. The Company incurred travel and entertainment expenses of $19,435 during three month period ended September 30, 2020 as compared
to $15,730 during three month period ended September 30, 2019, an approximate 24% increase on a quarter-over-quarter basis. Interest
expense was $51,311 during the three month period ended September 30, 2020 versus $55,908 during the three month period ended
September 30, 2019, an decrease of approximately 8%. Loss on extinguishment of debt was $0 during the three month period ended
September 30, 2020 versus $5,274 during the same period in 2019. Gain on settlement of accounts payable was $1,252 during the
three month period ended September 30, 2020 versus $0 in the same period in 2019. Gain on disposal of asset was $5,500 during
the three month period ended September 30, 2020 versus $0 in the same period in 2019. The Company had dividend income of $1,500
during the three month periods ended September 30, 2020 and 2019.
Revenue
The
Companys core business involving the exploration and recovery of historic shipwrecks has not generated any revenues to
date and is not expected to generate any significant revenues for the foreseeable future. During the nine month periods ended
September 30, 2020 and 2019, the Company generated $6,382 and $12,600 in revenue respectively, which is shown as service income
on the accompanying condensed consolidated statements of operations. During the three month periods ended September 30, 2020 and
2019, the Company generated $2,182 and $9,100 in revenue respectively, which is shown as service income on the accompanying condensed
consolidated statements of operations.
Liquidity
and Capital Resources
At
September 30, 2020, we had cash in the bank of $51,072. During the nine month period ended September 30, 2020 we incurred a net
loss of $2,047,530. At September 30, 2020, we had $94,028 in current assets and $1,368,229 in current liabilities, leaving us
a working capital deficit of $1,274,201.
Lack
of Liquidity
A
major financial challenge and significant risk facing the Company is a lack of positive cash flow and liquidity. The Company continued
to operate with significant debt and a working capital deficit, $1,274,201, during the nine month period ended September 30, 2020.
This working capital deficit indicates that the Company is unable to meet its short-term liabilities with its current
assets. This working capital deficit is extremely risky for the Company as it may be forced to cease its operations due to its
inability to meet its current obligations. If the Company is forced to cease its operations then it is highly likely that all
capital invested in and/or borrowed by the Company will be lost.
The
expenses associated with being a small publicly traded company attempting to develop the infrastructure to explore and salvage
historic shipwrecks recovery are extremely prohibitive, especially given that the Company does not currently generate any revenues
and does not expect to generate any revenues in the near future. There are ongoing expenses associated with operations that are
incurred whether the Company is conducting shipwreck recovery operations or not. Vessel maintenance, particularly as the Company
utilizes multiple vessels in its exploration operations, upkeep expenses and docking fees are continuous and unavoidable regardless
of the Companys operational status. Management anticipates the Company may need to put the vessel in dry dock in order
for additional repairs to be made. These repairs and maintenance are expensive and have a negative impact on the Companys
cash position.
In
addition to the operations expenses, a publicly traded company also incurs the significant recurring corporate expenses related
to maintaining publicly traded status, which include, but are not limited to accounting, legal, audit, executive, administrative,
corporate communications, rent, telephones, etc. The recurring expenses associated with being a publicly traded company are very
burdensome for smaller public companies such as Seafarer. This lack of liquidity creates a very risky situation for the Company
in terms of its ability to continue operating, which in turn makes owning shares of the Companys common stock extremely
risky and highly speculative. The Companys lack of liquidity may cause the Company to be forced to cease operations at
any time which would likely result in a complete loss of all capital invested in or borrowed by the Company to date.
Due
to the fact that the Company does not generate any revenues and does not expect to generate revenues for the foreseeable future
the Company must rely on outside equity and debt funding. The combination of both the ongoing operational and corporate expenses,
even during times when there is little or no exploration or salvage activities taking place as well as the need for outside financing,
creates a very risky situation for the Company and its shareholders. This working capital shortfall and lack of access to cash
to fund corporate activities is extremely risky and may force the Company to cease its operations which would more than likely
result in a complete loss of all capital invested in or loaned to the Company to date.
If
the Company is unable to secure additional financing, our business may fail and our stock price will likely be materially adversely
affected.
Lack
of Revenues and Cash Flow/Significant Losses from Operations
The
exploration and recovery of historic shipwrecks requires a multi-year, multi-stage process and it may be many years before any
significant revenue is generated from exploration and recovery activities, if ever. The Company does not believe that it will
generate any significant revenues in the near future. The Company believes that it may be several years before it is able to generate
any cash flow from its operations, if any are ever generated at all. Without revenues and cash flow the Company does not have
reliable cash flow to pay its expenses. The Company relies on outside financing in the form of equity and debt and it is possible
that the Company may not be able to obtain outside financing in the future. If the Company is not able to obtain financing it
would more than likely be forced to cease operations and all of the capital that has been invested in or borrowed by the Company
would be lost.
The
Company has experienced a net loss in every fiscal year since inception. The Companys losses from operations were $1,829,336
for the nine month period ended September 30, 2020 and $1,496,491 for the nine month period ended September 30, 2019. The Company
believes that it will continue to generate losses from its operations for the foreseeable future and the Company may not be able
to generate a profit in the long-term, or ever.
Based
on these financial results, the Company may not be able to continue as a going concern. The reports of our independent auditors
for the years ended December 31, 2019 and 2018 raises substantial doubt as to our ability to continue as a going concern. As discussed
in Note 2 to our condensed consolidated financial statements for the nine month period ended September 30, 2020, we have experienced
operating losses in every year since our inception resulting in an accumulated deficit. If the Company is not able to continue
as a going concern, it is highly likely that all capital invested in the Company or borrowed by the Company will be lost.
Furthermore,
if the Company is unable to secure additional financing, our business may fail or our operating results and our stock price may
be materially adversely affected. The raising of additional financing would in all likelihood result in dilution or reduction
in the value of the Companys securities.
Additionally,
the ongoing effects of the COVID-19 global pandemic may cause the Company to be unable to obtain financing to fund its business
and operations. 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 its operations which would likely result in the Company not surviving which would result in a complete loss of all capital
invested in the Company.
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 regarding several loans 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.
The
convertible notes that have been issued by the Company are convertible at the lenders option. These convertible notes represent
significant potential dilution to the Companys current shareholders as the convertible price of these notes is generally
lower than the current market price of the Companys shares. As such when these notes are converted into equity there is
typically a highly dilutive effect on current shareholders and very high probability that such dilution may significantly negatively
affect the trading price of the Companys common stock. Furthermore, management intends to have discussions or has already
had discussions with several of the promissory note holders who do not currently have convertible notes regarding converting their
notes into equity. Any such amended agreements to convert promissory notes into equity would more than likely have a highly dilutive
effect on current shareholders and there is a very high probability that such dilution may significantly negatively affect the
trading price of the Companys common stock. Some of these note holders have already amended their notes and converted the
notes into equity. Based on conversations with other note holders, the Company believes that additional note holders will amend
their notes to contain a convertibility clause and eventually convert the notes into equity.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation
of these financial statements requires us to make estimates and judgments which affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosures of contingent assets and liabilities (see Note 3, Significant Accounting Policies,
contained in the notes to the Companys condensed consolidated financial statements for the nine month periods ended September
30, 2020 and 2019 contained in this filing). On an ongoing basis, we evaluate our estimates. We base our estimates on historical
experience and on various other assumptions which we believe to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying value of assets and liabilities which are not readily apparent from other sources.
Actual results may differ from these estimates based upon different assumptions or conditions; however, we believe that our estimates
are reasonable.
Off-balance
Sheet Arrangements
None.