Item
I. Financial Statements
SEAFARER
EXPLORATION CORP.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
81,207
|
|
|
$
|
186,873
|
|
Prepaid expenses
|
|
|
90,269
|
|
|
|
123,039
|
|
Deposits
|
|
|
750
|
|
|
|
750
|
|
Total current assets
|
|
|
172,226
|
|
|
|
310,662
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
191,871
|
|
|
|
197,336
|
|
Right to use asset
|
|
|
38,382
|
|
|
|
41,991
|
|
Total Assets
|
|
$
|
402,479
|
|
|
$
|
549,989
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Deficit
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
342,468
|
|
|
$
|
350,785
|
|
Deferred
revenue
|
|
|
140,000
|
|
|
|
-
|
|
Convertible notes payable, net of discounts of $0 and $13,425, respectively
|
|
|
-
|
|
|
|
31,575
|
|
Convertible notes payable, related parties, net of discounts of $0 and $24,431, respectively
|
|
|
-
|
|
|
|
86,169
|
|
Convertible notes payable, in default
|
|
|
353,300
|
|
|
|
308,300
|
|
Convertible notes payable, in default - related parties
|
|
|
638,500
|
|
|
|
527,900
|
|
Notes payable, in default
|
|
|
130,000
|
|
|
|
130,000
|
|
Notes payable, in default - related parties
|
|
|
18,500
|
|
|
|
18,500
|
|
Shareholder loan
|
|
|
1,500
|
|
|
|
1,500
|
|
Lease liability, current
|
|
|
15,185
|
|
|
|
14,680
|
|
Total current liabilities
|
|
|
1,639,453
|
|
|
|
1,469,409
|
|
|
|
|
|
|
|
|
|
|
Lease liability, long-term
|
|
|
23,621
|
|
|
|
27,594
|
|
Total Liabilities
|
|
|
1,663,074
|
|
|
|
1,497,003
|
|
|
|
|
|
|
|
|
|
|
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; 5,400,268,545 and 5,315,683,905 shares issued and outstanding at March
31, 2021 and December 31, 2020 , respectively
|
|
|
538,772
|
|
|
|
530,315
|
|
Common stock to be issued, $0.0001 par value, 1,500,000 shares outstanding
|
|
|
150
|
|
|
|
150
|
|
Unearned compensation
|
|
|
(48,257
|
)
|
|
|
(67,058
|
)
|
Additional paid in capital
|
|
|
18,763,117
|
|
|
|
18,514,376
|
|
Accumulated deficit
|
|
|
(20,514,377
|
)
|
|
|
(19,924,797
|
)
|
Total Stockholders Deficit
|
|
|
(1,260,595
|
)
|
|
|
(947,014
|
)
|
Total Liabilities and Stockholders Deficit
|
|
$
|
402,479
|
|
|
$
|
549,989
|
|
See
accompanying notes to the condensed consolidated financial statements.
SEAFARER EXPLORATION CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
For the Three Months Ended March 31
|
|
|
|
2021
|
|
|
2020
|
|
Revenue:
|
|
|
|
|
|
|
Service income
|
|
$
|
8,703
|
|
|
$
|
4,200
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
Consulting and contractor expenses
|
|
|
243,202
|
|
|
|
292,412
|
|
General and administrative expense
|
|
|
119,933
|
|
|
|
18,222
|
|
Research and development
|
|
|
71,254
|
|
|
|
71,420
|
|
Vessel maintenance and dockage
|
|
|
26,827
|
|
|
|
155,426
|
|
Travel and entertainment expense
|
|
|
17,467
|
|
|
|
17,763
|
|
Professional fees
|
|
|
13,575
|
|
|
|
54,253
|
|
Rent expense
|
|
|
9,111
|
|
|
|
11,767
|
|
Depreciation expense
|
|
|
5,465
|
|
|
|
5,015
|
|
Total operating expenses
|
|
|
506,834
|
|
|
|
626,278
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
|
(498,131
|
)
|
|
|
(622,078
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(54,103
|
)
|
|
|
(87,691
|
)
|
Loss on extinguishment of debt
|
|
|
(37,346
|
)
|
|
|
(34,375
|
)
|
Dividend income
|
|
|
-
|
|
|
|
1,500
|
|
Total other incoem (expenses)
|
|
|
(91,449
|
)
|
|
|
(120,566
|
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(589,580
|
)
|
|
$
|
(742,644
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
5,354,828,011
|
|
|
|
4,786,398,989
|
|
See
accompanying notes to the condensed consolidated financial statements.
SEAFARER
EXPLORATION CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2021
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
Additional
|
|
|
Accumulated
|
|
|
|
|
|
|
Series A Preferred Stock
|
|
|
Series B Preferred Stock
|
|
|
Common Stock
|
|
|
Common Stock to be Issued
|
|
|
Compensation
|
|
|
Paid in Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2020
|
|
|
7
|
|
|
$
|
-
|
|
|
|
60
|
|
|
$
|
-
|
|
|
|
5,315,683,905
|
|
|
$
|
530,315
|
|
|
|
1,500,000
|
|
|
$
|
150
|
|
|
$
|
(67,058
|
)
|
|
$
|
18,514,376
|
|
|
$
|
(19,924,797
|
)
|
|
$
|
(947,014
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,850,000
|
|
|
|
7,585
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
191,965
|
|
|
|
-
|
|
|
|
199,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to convert notes payable and accrued interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,734,640
|
|
|
|
872
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
56,776
|
|
|
|
-
|
|
|
|
57,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of unearned compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,801
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(589,580
|
)
|
|
|
(589,580
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2021
|
|
|
7
|
|
|
$
|
-
|
|
|
|
60
|
|
|
$
|
-
|
|
|
|
5,400,268,545
|
|
|
$
|
538,772
|
|
|
|
1,500,000
|
|
|
$
|
150
|
|
|
$
|
(48,257
|
)
|
|
$
|
18,763,117
|
|
|
$
|
(20,514,377
|
)
|
|
$
|
(1,260,595
|
)
|
See
accompanying notes to the condensed consolidated financial statements.
SEAFARER
EXPLORATION CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2020
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
Additional
|
|
|
Accumulated
|
|
|
|
|
|
|
Series A Preferred Stock
|
|
|
Series B Preferred Stock
|
|
|
Common Stock
|
|
|
Common Stock to be Issued
|
|
|
Compensation
|
|
|
Paid in Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
See
accompanying notes to the condensed consolidated financial statements.
SEAFARER
EXPLORATION CORP.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
For the Three Months Ended March 31
|
|
|
|
2021
|
|
|
2020
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(589,580
|
)
|
|
$
|
(742,644
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
5,465
|
|
|
|
5,015
|
|
Amortization of right of use asset
|
|
|
3,609
|
|
|
|
3,817
|
|
Amortization of beneficial conversion feature and loan fees
|
|
|
37,856
|
|
|
|
81,436
|
|
Common stock issued for services
|
|
|
-
|
|
|
|
64,140
|
|
Loss on extinguishment of debt
|
|
|
37,346
|
|
|
|
34,375
|
|
Reduction of contra-equity due to amortization
|
|
|
18,801
|
|
|
|
-
|
|
Decrease (increase) in:
|
|
|
|
|
|
|
|
|
Prepaid expenses and deposits
|
|
|
32,770
|
|
|
|
26,302
|
|
Increase (decrease) in:
|
|
|
|
|
|
|
|
|
Accounts payable & accrued expenses
|
|
|
11,985
|
|
|
|
13,009
|
|
Deferred
revenue
|
|
|
140,000
|
|
|
|
-
|
|
Operating lease liabilities
|
|
|
(3,468
|
)
|
|
|
(3,856
|
)
|
Net cash used in operating
activities
|
|
|
(305,216
|
)
|
|
|
(518,406
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of common stock
|
|
|
199,550
|
|
|
|
52,500
|
|
Proceeds from the issuance convertible notes payable, related party
|
|
|
-
|
|
|
|
51,000
|
|
Payments on notes payable
|
|
|
-
|
|
|
|
(15,000
|
)
|
Net cash provided by financing activities
|
|
|
199,550
|
|
|
|
88,500
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
|
|
|
(105,666
|
)
|
|
|
(429,906
|
)
|
CASH, BEGINNING OF PERIOD
|
|
|
186,873
|
|
|
|
618,537
|
|
CASH, END OF PERIOD
|
|
$
|
81,207
|
|
|
$
|
188,631
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
20,302
|
|
|
$
|
84,086
|
|
Beneficial conversion feature on convertible notes payable
|
|
$
|
-
|
|
|
$
|
51,000
|
|
Stock issued for prepaid services
|
|
$
|
-
|
|
|
$
|
24,000
|
|
See
accompanying notes to the condensed consolidated financial statements.
SEAFARER
EXPLORATION CORP.
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(Unaudited)
|
|
The
accompanying unaudited 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 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 consolidated financial
statements and footnotes included in the Companys Report on Form 10-K for the year ended December 31, 2020, filed with the Securities
and Exchange Commission (the Commission) on April 12, 2021. The results of operations for the three month period ended
March 31, 2021 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2021 or for
any future period.
NOTE
1 – DESCRIPTION OF BUSINESS
Seafarer
Exploration Corp. (Seafarer or the Company), was incorporated on May 28, 2003 in the State of Delaware.
The
principal business of the Company is to engage in the archaeologically-sensitive exploration, documentation, recovery, and conservation
of historic shipwrecks with the objective of exploring and discovering Colonial-era shipwrecks for future generations to be able to appreciate
and understand.
In
March of 2014, Seafarer entered into a partnership with Marine Archaeology Partners, LLC (MAP), with the formation of Seafarers
Quest, LLC (SQ) for the purpose of exploring a shipwreck site off of Melbourne Beach, Florida. Under the partnership with
MAP, Seafarer is the designated manager of SQ.
The
Companys wholly owned subsidiary Blockchain LogisTech, LLC (Blockchain), was formed on April 4, 2018 and began operations
in 2019. Blockchain provides customer referrals to a blockchain related software services company.
Florida
Division of Historical Resources Agreements/Permits
The
Company successfully renewed its permits for both Areas 1 and 2 for the Melbourne Beach site. The Area 1 permit was renewed on March
1, 2019 for a period of three years. The Area 2 permit was renewed on January 14, 2019 for a period of three years.
Federal
Admiralty Judgement
As
previously noted on its form 8-K filed on November 22, 2017, Seafarer was granted, through the United States District Court for the Southern
District of Florida, a final judgment for its federal admiralty claim on the Juno Beach shipwreck site. The Company is not currently
conducting operations at the Juno Beach shipwreck site.
Blockchain
Software Services Referral Agreements
Blockchain
has a strategic partnership to provide referrals to a blockchain software services provider and receive referral fees when the referrals
lead to closed business for the blockchain software services company. Blockchain also has a reseller agreement with a separate company
that sells a blockchain related security product.
NOTE
2 – GOING CONCERN
These
unaudited 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 and has an accumulated deficit of $20,514,377 as of March 31, 2021. During the three month period
ended March 31, 2021, the Companys net loss was $589,580 and at March 31, 2021, the Company had a working capital deficit of $1,467,227.
These factors raise substantial doubt about the Companys ability to continue as a going concern. Based on its historical rate
of expenditures, the Company expects to expend its available cash in less than one month from May 14, 2021. Managements plans
include raising capital through the issuance of common stock and debt to fund operations and, eventually, the generation of revenue through
its business. The Company does not expect to generate any significant revenues for the foreseeable future. The Company is in immediate
need of further working capital and is seeking options, with respect to financing, in the form of debt, equity or a combination thereof.
Failure
to raise adequate capital and generate adequate revenues could result in the Company having to curtail or cease operations. The Companys
ability to raise additional capital through the future issuances of the common stock is unknown. Additionally, even if the Company does
raise sufficient capital to support its operating expenses and generate adequate revenues, there can be no assurances that the revenue
will be sufficient to enable it to develop to a level where it will generate profits and cash flows from operations. These matters raise
substantial doubt about the Companys ability to continue as a going concern; however, the accompanying unaudited 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 unaudited 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 have a serious negative affect on the Companys operations and business. It is possible that this
ongoing global pandemic may cause the Company to have to significantly delay or suspend its operations, which would likely result in
a material adverse impact on its business and financial positions.
Furthermore,
the Company may be unable to raise sufficient capital due to COVID-19s effects on the general economy and the capital markets.
If the Company is not able to obtain financing due to COVID-19, then it is highly likely that it will be forced to cease operations.
Smaller companies such as Seafarer, who lack significant revenues, earnings and cash flows as well as who lack diversified business operations
are particularly vulnerable to having to potentially cease operations due to the effects of COVID-19. If the Company were to be unable
to raise capital and cease its operations then it would be highly likely that the Company would not survive and lenders and investors
would suffer a complete loss of all capital loaned to or invested in the Company.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of Seafarer Exploration Corp. is presented to assist in understanding the Companys
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 GAAP 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 which is a wholly owned
subsidiary. Intercompany accounts and transactions have been eliminated in consolidation.
Cash
and Cash Equivalents
For
purposes of the condensed consolidated 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 March 31, 2021
and December 31, 2020. Financial instruments that potentially subject the Company to concentration of credit risk consist principally
of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.
At March 31, 2021, the Company did not have deposits in excess of the FDIC insured limit.
Research
and Development Expenses
Expenditures
for research and development are expensed as incurred. The Company incurred research and development expenses of $71,254 and $71,420
for the three month periods ended March 31, 2021 and 2020, respectively.
Revenue
Recognition
The
Company recognizes revenue in accordance with the Financial Accounting Standards Boards (FASB) Accounting Standards
Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606) and all
the related amendments. The Company elected to adopt this guidance using the modified retrospective method. The adoption of this guidance
did not have a material effect on the Companys financial position, results of operations or cash flows.
The
core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers
in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASC
606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required
within the revenue recognition process than required under GAAP, including identifying performance obligations in the contract, estimating
the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance
obligation.
The
Company recognizes revenue from the referrals that Blockchain has made to providers of software services when payment for a referral
is received from the provider of software services. Blockchain, at its sole discretion and with no specific sales quotas or targets,
provides referrals of potential end users to the software service providers and is paid a referral fee only after the software services
providers receive payment from the end user.
The
Company also has a separate sales referral agreement, with no sales quotas or specific goals or targets, with a limited liability company
that provides product/system engineering and development services. The Companys performance obligation is met when the payment
from the customer is received by the provider of the development services, which is at a point in time. The Company receives referral
fees when payment is received from the provider of the product/system development services which is when the Company recognizes revenue
under the agreement.
The
Company recognizes revenue when cash is received or when it has met its obligations per the terms of a contract or agreement for services.
Payments received for services are recorded as deferred revenue and are recognized as revenue when the services have been provided.
During
the three month period ended March 31, 2021 the Company entered into an agreement to provide scanning services using its SeaSearcher
technology to a corporation involved in searching for historic shipwreck material. Under the terms of the agreement the Company received
an upfront payment of $140,000 which has been included in the accompanying condensed consolidated balance sheet at March 31, 2021 as
deferred revenue.
Earnings
Per Share
The
Company has adopted the FASB ASC 260-10, which provides for the calculation of basic and diluted earnings
per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders
by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities
that could share in the earnings of an entity.
The
potentially dilutive common stock equivalents for the three month periods ended March 31, 2021 and 2020 were excluded from the dilutive
loss per share calculation as they would be antidilutive due to the net loss. As of March 31, 2021 and 2020, there were approximately
662,700,583 and 595,913,777 shares of common stock underlying our outstanding convertible notes payable and warrants, respectively.
Fair
Value of Financial Instruments
The
carrying amounts of financial assets and liabilities, such as cash, accounts payable, accrued expenses, convertible notes payable and
payables, approximate their fair values because of the short maturity of these instruments.
Property,
Plant and Equipment
Property,
plant and equipment are recorded at historical cost. Depreciation is computed on the straight-line method over the estimated useful lives
of the respective assets. During the year ended December 31, 2019, the Company purchased a vessel with an estimated useful life of ten
years. During the year ended December 31, 2020, the Company purchased a vehicle with an estimated useful life of ten years. As of March
31, 2021, these are the only capital assets owned by the Company.
Depreciation
expense was $5,465 and $5,015 for the three month periods ended March 31, 2021 and 2020, respectively, which is included in operating
expenses in the accompanying condensed consolidated statements of operations.
Impairment
of Long-Lived Assets
In
accordance with ASC 360-10, the Company, on a regular basis, reviews the carrying amount of long-lived assets for the existence of facts
or circumstances, both internally and externally, that suggest impairment. The Company determines if the carrying amount of a long-lived
asset is impaired based on anticipated undiscounted cash flows, before interest, from the use of the asset. In the event of impairment,
a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined based
on appraised value of the assets or the anticipated cash flows from the use of the asset, discounted at a rate commensurate with the
risk involved. There were no impairment charges recorded during the three month periods ended March 31, 2021 and 2020.
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 three month periods ended March 31, 2021
and 2020 include useful life of property, plant and equipment, valuation allowances against deferred tax assets and the fair value of
non cash equity transactions.
Segment
Information
During
2019, Seafarers wholly owned subsidiary, Blockchain began operations, generated revenue and incurred expenses. The business of
Blockchain has no relation to the Companys shipwreck exploration and recovery operations other than common ownership. As such,
the Company concluded that the operations of Blockchain and Seafarer Exploration were separate reportable segments as of the three month
periods ended March 31, 2021 and 2020 (see Note 10 – Segment Information).
Convertible
Notes Payable
The
Company accounts for convertible notes deemed conventional and conversion options embedded in non-conventional convertible notes which
qualify as equity under ASC 815, in accordance with the provisions of ASC 470-20, which provides guidance on accounting for convertible
securities with beneficial conversion features. ASC 470-10 addresses classification determination for specific obligations, such as short-term
obligations expected to be refinanced on a long-term basis, due-on-demand loan arrangements, callable debt, sales of future revenue,
increasing rate debt, debt that includes covenants, revolving credit agreements subject to lock-box arrangements and subjective acceleration
clauses. Accordingly, the Company records, as a discount to convertible notes, the intrinsic value of such conversion options based upon
the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective
conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt.
Stock
Based Compensation
The
Company applies the fair value method of FASB ASC 718, Share Based Payment, in accounting for its stock-based compensation.
The standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. The Company values stock-based compensation at the market price for the Companys
common stock and other pertinent factors at the grant date.
Fully
vested and non-forfeitable shares issued prior to the services being performed are classified as prepaid expenses.
Leases
The
Company accounts for leases under Accounting Standards Update (ASU) 2016-02. At the inception of a contract the Company
assessed whether the contract is, or contains, a lease. The Companys assessment is based on: (1) whether the contract involves
the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the
use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the
consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments.
Operating
lease right of use (ROU) assets represents the right to use the leased asset for the lease term and operating lease liabilities
are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases
do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date
in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over
the lease term and is presented in operating expenses on the condensed consolidated statements of operations.
As
permitted under the new guidance, the Company has made an accounting policy election not to apply the recognition provisions of the guidance
to short term leases (leases with a lease term of twelve months or less that do not include an option to purchase the underlying asset
that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a
straight-line basis over the lease term.
Investments
The
Company follows ASC 325-20, Cost Method Investments (ASC 325-20), to account for its ownership interest in noncontrolled
entities. Under ASC 325-20, equity securities that do not have readily determinable fair values (i.e., non-marketable equity securities)
and are not required to be accounted for under the equity method are typically carried at cost (i.e., cost method investments). Investments
of this nature are initially recorded at cost. Income is recorded for dividends received that are distributed from net accumulated earnings
of the noncontrolled entity subsequent to the date of investment. Dividends received in excess of earnings subsequent to the date of
investment are considered a return of investment and are recorded as reductions in the cost of the investment. Investments are written
down only when there is clear evidence that a decline in value that is other than temporary has occurred.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities
are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using
the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available
evidence, are not expected to be realized.
Recent
Accounting Pronouncements
All
other recent accounting pronouncements issued by the FASB, did not or are not believed by management to have a material impact on the
Companys present or future consolidated financial statements.
NOTE
4 – OPERATING LEASE 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 10%, 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 month periods ended March 31, 2021 and 2020, the Company recorded $4,601 and $3,945, 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. Through
June 30, 2020 the Company paid $1,252 per month to lease the office space. The Company entered into an amended lease agreement commencing
on July 1, 2020 through July 31, 2023 with base month rents of $1,475 from July 1, 2020 to June 30, 2021, $1,519 from July 1, 2021 to
June 30, 2022, $1,564 from July 1, 2022 to June 30, 2023 and $1,611 from July 1, 2023 to July 31, 2023. Under the terms of the lease
there may be additional fees charged above the base monthly rental fee.
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 March 31, 2021 and December 31, 2020 are summarized below:
|
|
March 31, 2020
|
|
|
December 31, 2020
|
|
Office lease
|
|
$
|
48,957
|
|
|
$
|
48,957
|
|
Less accumulated amortization
|
|
|
(10,575
|
)
|
|
|
(6,966
|
)
|
Right of use assets, net
|
|
$
|
38,382
|
|
|
$
|
41,991
|
|
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:
|
|
March 31, 2020
|
|
|
December 31, 2020
|
|
Office lease
|
|
$
|
38,806
|
|
|
$
|
42,274
|
|
Less: current portion
|
|
|
(15,185
|
)
|
|
|
(14,680
|
)
|
Long term portion
|
|
$
|
23,621
|
|
|
$
|
27,594
|
|
Maturity
of lease liabilities are as follows:
Year ended December 31, 2021
|
|
$
|
13,643
|
|
Year ended December 31, 2022
|
|
|
18,641
|
|
Year ended December 31, 2023
|
|
|
11,081
|
|
Total future minimum lease payments
|
|
|
43,365
|
|
Less: Present value discount
|
|
|
(4,559
|
)
|
Lease liability
|
|
$
|
38,806
|
|
The
Company also has an operating lease for a house located in Palm Bay, Florida that it leases on a month-to-month basis for $1,300 per
month. The Company uses the house to store equipment and gear and to provide temporary work-related living quarters for its divers, personnel,
consultants and independent contractors involved in its exploration and recovery operations. The Company also pays a rental fee for a
space in a park on an as needed basis.
NOTE
5 – INVESTMENT IN PROBABILITY AND STATISTICS, INC.
The
Company entered into a share exchange agreement with Probability and Statistics, Inc. (P&S), a privately held corporation,
in August of 2018.
Under
the terms of the share exchange agreement, the Company agreed to issue 60,000,000 shares of its restricted common stock to P&S in
exchange for 10,000 common shares of P&S, or a 1% interest. All shares issued by both parties under the agreement have all rights
and entitlements as the common stock of every other shareholder of such share class.
The
investment in P&S was valued at $78,000 based on the fair value of the Companys shares issued to P&S on the date of the
share exchange agreement and was accounted for as a cost method investment. The Company received dividends from P&S during the three
month periods ended March 31, 2021 and 2020 of $0 and $1,500 respectively, 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 to effectively unwind the previous share exchange agreement. Under
the terms of the new agreement, Seafarer agreed to exchange 10,000 shares of P&S for 60,000,000 shares of its common stock. As a
result of the transaction in August of 2020, the Company realized a gain on investment of $354,000. The investment in P&S was $0
and $0 on the accompanying condensed consolidated balance sheets at March 31, 2021 and December 31, 2020.
Seafarer
also has an agreement with P&S to receive referral fees. Under the terms of the agreement, P&S has agreed to pay a 7% referral
fee to the Company when P&S receives cash flows from providing blockchain software services to entities that were referred by the
Company. The agreement is ongoing and has no expiration date. During the three month periods ended March 31, 2021 and 2020, P&S paid
a total of $0 and $4,200, respectively, of referral fees to the Company. These amounts are included in service 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 March 31, 2021 and December 31, 2020:
|
|
Issue Date
|
|
Maturity
Date
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
Rate
|
|
Conversion
Price
|
|
|
|
|
|
|
Principal
Balance
|
|
|
Principal
Balance
|
|
|
|
|
|
Convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09/01/20
|
|
03/01/21
|
|
$
|
-
|
|
|
$
|
45,000
|
|
|
6.00%
|
|
0.0030
|
Face value
|
|
|
|
|
-
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less unamortized discounts
|
|
|
|
|
-
|
|
|
|
(13,425
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance convertible notes payable
|
|
|
|
$
|
-
|
|
|
$
|
31,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue Date
|
|
Maturity
Date
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
Rate
|
|
Conversion
Price
|
|
|
|
|
|
|
Principal
Balance
|
|
|
Principal
Balance
|
|
|
|
|
|
Convertible notes payable - related parties
|
|
|
|
|
|
|
|
|
|
|
|
08/06/20
|
|
02/06/21
|
|
$
|
-
|
|
|
$
|
25,200
|
|
|
6.00%
|
|
0.0035
|
|
|
08/06/20
|
|
02/06/21
|
|
|
-
|
|
|
|
35,000
|
|
|
6.00%
|
|
0.0035
|
|
|
08/14/20
|
|
02/14/21
|
|
|
-
|
|
|
|
50,400
|
|
|
6.00%
|
|
0.0035
|
Face value
|
|
|
|
-
|
|
|
|
110,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less unamortized discounts
|
|
|
|
-
|
|
|
|
(24,431
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance convertible notes payable - related parties
|
$
|
-
|
|
|
$
|
86,169
|
|
|
|
|
|
|
|
Issue Date
|
|
Maturity
Date
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
Rate
|
|
Conversion
Price
|
|
|
|
|
|
|
Principal
Balance
|
|
|
Principal
Balance
|
|
|
|
|
|
Convertible notes payable - in default
|
|
|
08/28/09
|
|
11/01/09
|
|
$
|
4,300
|
|
|
$
|
4,300
|
|
|
10.00%
|
|
0.0150
|
|
|
11/20/12
|
|
05/20/13
|
|
|
50,000
|
|
|
|
50,000
|
|
|
6.00%
|
|
0.0050
|
|
|
01/19/13
|
|
07/30/13
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.0040
|
|
|
02/11/13
|
|
08/11/13
|
|
|
9,000
|
|
|
|
9,000
|
|
|
6.00%
|
|
0.0060
|
|
|
09/25/13
|
|
03/25/14
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
0.0125
|
|
|
10/04/13
|
|
04/04/14
|
|
|
50,000
|
|
|
|
50,000
|
|
|
6.00%
|
|
0.0125
|
|
|
10/30/13
|
|
10/30/14
|
|
|
50,000
|
|
|
|
50,000
|
|
|
6.00%
|
|
0.0125
|
|
|
05/15/14
|
|
11/15/14
|
|
|
40,000
|
|
|
|
40,000
|
|
|
6.00%
|
|
0.0070
|
|
|
10/13/14
|
|
04/13/15
|
|
|
-
|
|
|
|
-
|
|
|
6.00%
|
|
0.0050
|
|
|
09/18/15
|
|
03/18/16
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.0020
|
|
|
04/04/16
|
|
10/04/16
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
0.0010
|
|
|
07/19/16
|
|
07/19/17
|
|
|
4,000
|
|
|
|
4,000
|
|
|
6.00%
|
|
0.0015
|
|
|
08/24/16
|
|
02/24/17
|
|
|
-
|
|
|
|
-
|
|
|
6.00%
|
|
0.0010
|
|
|
03/06/18
|
|
09/06/18
|
|
|
6,000
|
|
|
|
6,000
|
|
|
6.00%
|
|
0.0006
|
|
|
02/06/18
|
|
11/07/18
|
|
|
6,000
|
|
|
|
6,000
|
|
|
6.00%
|
|
0.0006
|
|
|
10/29/18
|
|
04/29/19
|
|
|
3,000
|
|
|
|
3,000
|
|
|
6.00%
|
|
0.0007
|
|
|
01/03/19
|
|
07/03/19
|
|
|
1,000
|
|
|
|
1,000
|
|
|
6.00%
|
|
0.0010
|
|
|
03/16/19
|
|
09/16/19
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
0.0010
|
|
|
09/04/19
|
|
03/04/20
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.0030
|
|
|
09/01/20
|
|
03/01/21
|
|
|
45,000
|
|
|
|
-
|
|
|
6.00%
|
|
0.0030
|
Balance convertible notes payable - in default
|
|
$
|
353,300
|
|
|
$
|
308,300
|
|
|
|
|
|
|
|
Issue Date
|
|
Maturity
Date
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
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%
|
|
0.0150
|
|
|
01/25/10
|
|
01/25/11
|
|
|
6,000
|
|
|
|
6,000
|
|
|
6.00%
|
|
0.0050
|
|
|
01/18/12
|
|
07/18/12
|
|
|
50,000
|
|
|
|
50,000
|
|
|
8.00%
|
|
0.0040
|
|
|
01/19/13
|
|
07/30/13
|
|
|
15,000
|
|
|
|
15,000
|
|
|
6.00%
|
|
0.0040
|
|
|
07/26/13
|
|
01/26/14
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
0.0100
|
|
|
01/17/14
|
|
07/17/14
|
|
|
31,500
|
|
|
|
31,500
|
|
|
6.00%
|
|
0.0060
|
|
|
05/27/14
|
|
11/27/14
|
|
|
7,000
|
|
|
|
7,000
|
|
|
6.00%
|
|
0.0070
|
|
|
07/21/14
|
|
01/25/15
|
|
|
17,000
|
|
|
|
17,000
|
|
|
6.00%
|
|
0.0080
|
|
|
10/16/14
|
|
04/16/15
|
|
|
21,000
|
|
|
|
21,000
|
|
|
6.00%
|
|
0.0045
|
|
|
07/14/15
|
|
01/14/16
|
|
|
9,000
|
|
|
|
9,000
|
|
|
6.00%
|
|
0.0030
|
|
|
01/12/16
|
|
07/12/16
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.0020
|
|
|
05/10/16
|
|
11/10/16
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.0005
|
|
|
05/10/16
|
|
11/10/16
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.0005
|
|
|
05/20/16
|
|
11/20/16
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.0005
|
|
|
07/12/16
|
|
01/12/17
|
|
|
2,400
|
|
|
|
2,400
|
|
|
6.00%
|
|
0.0006
|
|
|
01/26/17
|
|
03/12/17
|
|
|
5,000
|
|
|
|
5,000
|
|
|
6.00%
|
|
0.0005
|
|
|
02/14/17
|
|
08/14/17
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.0008
|
|
|
08/16/17
|
|
09/16/17
|
|
|
3,000
|
|
|
|
3,000
|
|
|
6.00%
|
|
0.0008
|
|
|
03/14/18
|
|
05/14/18
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.0007
|
|
|
04/04/18
|
|
06/04/18
|
|
|
3,000
|
|
|
|
3,000
|
|
|
6.00%
|
|
0.0007
|
|
|
04/11/18
|
|
06/11/18
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.0007
|
|
|
05/08/18
|
|
07/08/18
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.0007
|
|
|
05/30/18
|
|
08/30/18
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.0007
|
|
|
06/12/18
|
|
09/12/18
|
|
|
3,000
|
|
|
|
3,000
|
|
|
6.00%
|
|
0.0007
|
|
|
06/20/18
|
|
09/12/18
|
|
|
500
|
|
|
|
500
|
|
|
6.00%
|
|
0.0007
|
|
|
01/09/18
|
|
01/09/19
|
|
|
12,000
|
|
|
|
12,000
|
|
|
6.00%
|
|
0.0006
|
|
|
08/27/18
|
|
02/27/19
|
|
|
2,000
|
|
|
|
2,000
|
|
|
6.00%
|
|
0.0007
|
|
|
10/02/18
|
|
04/02/19
|
|
|
1,000
|
|
|
|
1,000
|
|
|
6.00%
|
|
0.0008
|
|
|
10/23/18
|
|
04/23/19
|
|
|
4,200
|
|
|
|
4,200
|
|
|
6.00%
|
|
0.0007
|
|
|
11/07/18
|
|
05/07/19
|
|
|
2,000
|
|
|
|
2,000
|
|
|
6.00%
|
|
0.0008
|
|
|
11/14/18
|
|
05/14/19
|
|
|
8,000
|
|
|
|
8,000
|
|
|
6.00%
|
|
0.0008
|
|
|
01/08/19
|
|
07/08/19
|
|
|
7,000
|
|
|
|
7,000
|
|
|
6.00%
|
|
0.0008
|
|
|
04/25/19
|
|
12/23/19
|
|
|
20,000
|
|
|
|
20,000
|
|
|
6.00%
|
|
0.0040
|
|
|
06/07/19
|
|
12/07/19
|
|
|
5,100
|
|
|
|
5,100
|
|
|
6.00%
|
|
0.0030
|
|
|
09/17/19
|
|
04/17/20
|
|
|
12,000
|
|
|
|
12,000
|
|
|
6.00%
|
|
0.0030
|
|
|
11/12/19
|
|
05/12/20
|
|
|
25,000
|
|
|
|
25,000
|
|
|
6.00%
|
|
0.0025
|
|
|
11/26/19
|
|
05/26/20
|
|
|
25,200
|
|
|
|
25,200
|
|
|
6.00%
|
|
0.0030
|
|
|
12/03/19
|
|
06/03/20
|
|
|
15,000
|
|
|
|
15,000
|
|
|
6.00%
|
|
0.0030
|
|
|
01/07/20
|
|
06/20/20
|
|
|
51,000
|
|
|
|
51,000
|
|
|
6.00%
|
|
0.0030
|
|
|
08/06/20
|
|
02/06/21
|
|
|
25,200
|
|
|
|
-
|
|
|
6.00%
|
|
0.0035
|
|
|
08/06/20
|
|
02/06/21
|
|
|
35,000
|
|
|
|
-
|
|
|
6.00%
|
|
0.0035
|
|
|
08/14/20
|
|
02/14/21
|
|
|
50,400
|
|
|
|
-
|
|
|
6.00%
|
|
0.0035
|
Balance convertible notes payable - related parties, in default
|
|
$
|
638,500
|
|
|
$
|
527,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance all convertible notes payable
|
|
$
|
991,800
|
|
|
$
|
953,944
|
|
|
|
|
|
Notes
Payable
The
following tables reflect the notes payable at March 31, 2021 and December 31, 2020:
|
|
Issue Date
|
|
Maturity
Date
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
Rate
|
|
|
|
|
|
|
Principal
Balance
|
|
|
Principal
Balance
|
|
|
|
Notes payable - in default
|
|
|
|
|
|
|
|
|
|
|
|
|
04/27/11
|
|
04/27/12
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
6.00%
|
|
|
12/14/17
|
|
12/14/18
|
|
|
20,000
|
|
|
|
20,000
|
|
|
6.00%
|
|
|
11/29/17
|
|
11/29/19
|
|
|
105,000
|
|
|
|
105,000
|
|
|
2.06%
|
Balance notes payable - default
|
|
$
|
130,000
|
|
|
$
|
130,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue Date
|
|
Maturity
Date
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
Rate
|
|
|
|
|
|
|
Principal
Balance
|
|
|
Principal
Balance
|
|
|
|
Notes payable - related parties, in default
|
|
|
|
|
|
|
|
|
|
|
|
|
02/24/10
|
|
02/24/11
|
|
$
|
7,500
|
|
|
$
|
7,500
|
|
|
6.00%
|
|
|
10/06/15
|
|
11/15/15
|
|
|
10,000
|
|
|
|
10,000
|
|
|
6.00%
|
|
|
02/08/18
|
|
04/09/18
|
|
|
1,000
|
|
|
|
1,000
|
|
|
6.00%
|
Balance notes payable - related parties, in default
|
|
$
|
18,500
|
|
|
$
|
18,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance all notes payable
|
|
$
|
148,500
|
|
|
$
|
148,500
|
|
|
|
New
Convertible Notes Payable Issued During the three Month Period Ended March 31, 2021 and 2020
During
the three month period ended March 31, 2021, the Company did not enter into any Convertible Notes Payable or Notes Payable Agreements:
During
the three month period ended March 31, 2020, the Company entered into the following Convertible Notes Payable and Notes Payable Agreements:
In
January of 2020, the Company entered into a convertible promissory note agreement in the amount of $51,000 with a related party who is
a member of the Board of Directors. This note pays interest at a rate of 6% per annum and the principal and accrued interest was due
on or before June 30, 2020. The note is unsecured and is convertible at the lenders option into shares of the Companys
common stock at a rate of $0.003 per share.
Note
Conversions
During
the three month period ended March 31, 2021:
The
Company issued 8,734,640 shares of restricted common stock to a related party to settle $20,302 of accrued interest owed on sixteen convertible
notes payable.
During
the three month period ended March 31, 2020:
The
Company issued 39,781,082 shares of restricted common stock to settle $84,086 of principal and accrued interest owed on three convertible
notes payable.
Shareholder
Loan
At
March 31, 2021 and December 31, 2020, the Company had a loan outstanding to its CEO in the amount of $1,500. The loan has a 2% annual
rate of interest and an option to convert the loan into restricted shares of the Companys common stock at $0.0005.
Collateralized
Promissory Notes
Two
convertible notes outstanding with related parties, dated January 9, 2009 and January 18, 2012 are collateralized by Company assets.
Convertible
Notes Payable and Notes Payable, in Default
The
Company does not have additional sources of debt financing to refinance its convertible notes payable and notes payable that are currently
in default. If the Company is unable to obtain additional capital, such lenders may file suit, including suit to foreclose on the assets
held as collateral for the obligations arising under the secured notes. If any of the lenders file suit to foreclose on the assets held
as collateral, then the Company may be forced to significantly scale back or cease its operations, which would more than likely result
in a complete loss of all capital that has been invested in or borrowed by the Company. The fact that the Company is in default of several
promissory notes held by various lenders makes investing in the Company or providing any loans to the Company extremely risky with a
very high potential for a complete loss of capital.
NOTE
7 – STOCKHOLDERS DEFICIT
Common
Stock Issuances
During
the three month periods ended March 31, 2021 and 2020, the Company issued or is to issue the following shares of common stock:
|
|
2021
|
|
|
2020
|
|
Common stock issued for cash
|
|
|
75,850,000
|
|
|
|
8,900,000
|
|
Common stock issued for services
|
|
|
-
|
|
|
|
5,348,366
|
|
Common stock issued to convert notes payable and accrued interest
|
|
|
8,734,640
|
|
|
|
39,781,082
|
|
Shares reclassed from common stock to be issued
|
|
|
-
|
|
|
|
10,120,000
|
|
Total
|
|
|
84,584,640
|
|
|
|
64,149,448
|
|
During
the three month period ended March 31, 2020, the Company issued or is to issue the following shares of common stock:
- 75,850,000
restricted shares for total proceeds of $199,550.
- 8,734,640
restricted shares to settle $20,302 of principal and accrued interest owed on various convertible notes payable and one note payable.
The Company had a loss on extinguishment of debt totaling $37,346.
During
the three month period ended March 31, 2020, the Company issued or is to issue the following shares of common stock:
- 8,900,000
restricted shares for total proceeds of $52,500.
- 5,348,366
fully 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. For the three month period ended March 31, 2020, the Company incurred $16,055 of compensation
expense for stock issued for services and have prepaid expenses of $133,208 at March 31, 2020 for stock issued prior to services being
performed.
- 39,781,082
restricted shares to settle $84,086 of principal and accrued interest owed on various convertible notes payable and one note payable.
- 10,120,000
restricted shares reclassed from common stock to be issued.
Series
A Preferred Stock
At
March 31, 2021 and December 31, 2020, 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 three month periods ended March 31, 2021 and 2020.
The
following table shows the warrants outstanding at March 31, 2021:
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Number of
|
|
|
Weighted Average
|
|
|
Remaining Life
|
|
Average
|
|
|
|
Warrants
|
|
|
Exercise Price
|
|
|
(Years)
|
|
Intrinsic Value
|
|
Outstanding, March 31, 2021
|
|
|
4,000,000
|
|
|
$
|
0.0050
|
|
|
1.58
|
|
$
|
0.0010
|
|
Exercisable, March 31, 2021
|
|
|
4,000,000
|
|
|
$
|
0.0050
|
|
|
1.58
|
|
$
|
0.0010
|
|
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 Archeology 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 from the U.S. Army Corps of Engineers (USACE) and Florida Department
of Environmental Protection (FLDEP) were previously issued in the name of a partner that is no longer active. In 2020 Seafarer
worked with the various State of Florida governmental agencies involved to update and consolidate all of these environmental permits
solely under the Companys name. The State of Florida Bureau of Archeological Research (FBAR) had ordered the Company
not to disturb the oceans bottom while the changes and updates to the Companys permits were in process. Some requests of
change are questionable to the Company. Since the issuance of the USACE and FLDEP environmental permits, FBAR has continued to stop or
delay ground disturbance in Seafarers legally permitted area with ongoing questions and requests.
Certain
Other Agreements
See
Note 4 Operating Lease Right-of-Use Assets and Operating Lease Liabilities.
NOTE
9 – RELATED PARTY TRANSACTIONS
During
the three month period ended March 31, 2021, the Company has had extensive dealings with related parties including the following:
The
Company issued 8,734,640 shares of restricted common stock to a related party to settle $20,302 of accrued interest owed on sixteen convertible
notes payable.
During
the three month period ended March 31, 2020, the Company has had extensive dealings with related parties including the following:
In
January of 2020, the Company entered into a convertible promissory note agreement in the amount of $51,000 with a related party who is
a member of the Board of Directors. This note pays interest at a rate of 6% per annum and the principal and accrued interest was due
on or before June 30, 2020. The note is unsecured and is convertible at the lenders option into shares of the Companys
common stock at a rate of $0.003 per share. This note is currently in default due to non payment of principal and interest upon
maturity.
Additional
related party transactions:
The
Company has an informal consulting agreement with a limited liability company that is owned and controlled by a person who is related
to its CEO to provide general business consulting services including periodically assessing the Companys business and advising
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 three month periods ended March 31, 2021 and 2020, the Company paid the related party limited liability company consulting
fees of $3,000 and $19,000, respectively, for services rendered. These fees are recorded as an expense in consulting and contractor expenses
in the accompanying consolidated statements of operations. At March 31, 2021 and December 31, 2020, the Company owed the related party
limited liability company $1,425 and $0, respectively, which is included in accounts payable and accrued expenses on the consolidated
balance sheets
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 three month periods ended March 31, 2021 and 2020 the Company paid the related
party limited liability company fees of $5,375 and $3,270, respectively, for services rendered. These fees are recorded as an expense
in consulting and contractor expenses in the accompanying consolidated statements of operations. All of the fees paid to the related
party limited liability company are recorded as an expense in consulting and contractor expenses in the accompanying consolidated statements
of operations. At March 31, 2021 and December 31, 2020, the Company owed the related party limited liability company $0 and $2,978, respectively,
which is included in accounts payable and accrued expenses on the consolidated balance sheets.
During
the three month periods ended March 31, 2021 and 2020, the Company paid a related party consultant fees of $10,000 and $3,750, respectively
for marketing and administrative services rendered to the Companys Blockchain subsidiary. All of the fees paid to the related
party consultant are recorded as an expense in consulting and contractor expenses in the accompanying consolidated statements of operations.
At March 31, 2021 and December 31, 2020, the Company owed the related party consultant $0 and $2,500, respectively, which is included
in accounts payable and accrued expenses on the consolidated balance sheets.
Shareholder
Loan
At
March 31, 2021 and December 31, 2020, 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
March 31, 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 began operations in 2019 by providing referrals to P&S (See Note 5 - Investment in Probability
and Statistics, Inc.) in exchange for referral fees for closed business.
Due
to Blockchain starting operations which have no relation to the Companys shipwreck and exploration recovery business, the Company
evaluated this business and its impact upon the existing corporate structure. The Company has determined that Blockchain and Seafarer
Exploration Corp. operate as separate segments of the business. As such, the Company has presented the income (loss) from operations
during the three month periods ended March 31, 2021 and 2020 incurred by the two separate segments below.
During
the three month periods ended March 31, 2021 and 2020, Blockchain revenues of $0 and $4,200, respectively, were 0% and 100%, respectively,
of the consolidated revenues of the Company.
Segment
information relating to the Companys two operating segments for the three month period ended March 31, 2021 is as follows:
|
|
March 31, 2021
|
|
|
March 31, 2021
|
|
|
March 31, 2021
|
|
|
|
Blockchain LogisTech, LLC
|
|
|
Seafarer Exploration Corp.
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
Service revenues
|
|
$
|
0
|
|
|
$
|
8,703
|
|
|
$
|
8,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
10,258
|
|
|
|
496,576
|
|
|
|
506,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
$
|
(10,258
|
)
|
|
$
|
(487,873
|
)
|
|
$
|
(498,131
|
)
|
Segment
information relating to the Companys two operating segments for the three month period ended March 31, 2020 is as follows:
|
|
March 31, 2020
|
|
|
March 31, 2020
|
|
|
March 31, 2020
|
|
|
|
Blockchain LogisTech, LLC
|
|
|
Seafarer Exploration Corp.
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
Service revenues
|
|
$
|
4,200
|
|
|
$
|
0
|
|
|
$
|
4,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
6,730
|
|
|
|
619,548
|
|
|
|
626,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from operations
|
|
($
|
2,530
|
)
|
|
($
|
619,548
|
)
|
|
($
|
622,078
|
)
|
NOTE
11 – SUBSEQUENT EVENTS
Subsequent
to March 31, 2021, the Company issued or has agreed to issue shares of its common stock as follows (Unaudited):
|
(i)
|
sales
of 52,866,666 shares of common stock under subscription agreements for proceeds of $117,600;
|
|
(ii)
|
issuance
of 15,594,247 shares of common stock to settle $45,000 of principal and $1,783 of accrued interest of one convertible notes payable
and
|
|
(iii)
|
13,233,334
shares of restricted common stock were issued for services.
|
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 condensed 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
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 both ferrous and nonferrous 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 has and 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 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. COVID-19,
pricing issues, long sales cycles, and various other reasons have considerably slowed Blockchains progress.
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 to offset 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 restricted securities by current shareholders, including shares issued to consultants, independent contractors, Board
members, as well as shares issued to settle convertible promissory notes or to settle other loans and debt, are highly dilutive
and 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 may 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 stock certificates
of low priced stocks. Some securities clearing firms who used to clear low priced securities for multiple brokerage firms have
shut down 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 other business.
|
|
●
|
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 to develop content centered on its specific historic shipwreck exploration and recovery
activities as well as the historic shipwreck and related historical period genre in general and will continue to evaluate various
media strategies.
|
Other
Information
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, 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, or go beyond their authority and request halting of ground disturbance.
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, work halts based on biased predispositions
with no authority given by rule 1A-31, 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 potential advantages offered. Management believes various forms of 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 highly 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.
Results
of Operations
We
have generated only minimal revenue from operations and do not expect to report any significant revenue from operations for the
foreseeable future. We have incurred recurring losses to date. Our condensed consolidated financial statements have been prepared
assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability
and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
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 May 14, 2021.
At
March 31, 2021 and December 31, 2020, the Company had working capital deficits of $1,467,227 and $1,158,741 respectively. The Companys
working capital deficit, along with its lack of meaningful cash flows from operations with which to service the debt, indicates that
there is substantial risk to the continued viability of the Company and a high degree of risk that the Company could become insolvent.
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
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.
If
we are unable to secure additional financing, our business may fail and our stock price will likely be materially adversely affected.
The Companys lack of operating cash flow and reliance on the sale of its common 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 the Three Month Period Ended March 31, 2021 Results of Operations Compared to the Three Month Period Ended March 31, 2020
Results of Operations
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 three month periods ended March 31, 2021
and 2020, the Company generated $8,703 and $4,200 of revenue respectively, which is shown as service income on the accompanying condensed
consolidated statements of operations.
Operating
Expenses
Operating
expenses were $506,834 for the three month period ended March 31, 2021 versus $626,278 for the same period in 2020, a decrease of 19%.
The decrease in operating expenses in 2021 was primarily due to decreases in vessel maintenance and dockage expenses, consulting and
contractor expenses, and professional fees. Consulting and contractor expense was $243,202 for the three month period ended March 31,
2021 versus $292,414 for the same period in 2020, a decrease of nearly 17%. The Company incurred vessel related expenses of $26,827 during
the three month period ended March 31, 2021 versus $155,426 during the three month period ended March 31, 2020, a decrease of approximately
83%. Research and development expenses were $71,254 in 2021 versus $71,420 in 2020. The Companys research and development expenses
were related to the development of its SeaSearcher autonomous underwater device. The Company believes that it will continue to expend
significant resources to further develop the SeaSearcher and to begin developing next generation versions of the technology. During the
three month period ended March 31, 2021, professional fees were $13,575 as compared to $54,253 during the three month period ended March
31, 2020, a decrease of approximately 75%. During the three month period ended March 31, 2021, general and administrative expenses were
$119,933 as compared to $18,222 during the three month period ended March 31, 2020, an increase of 558%. Depreciation expense was $5,465
during the three month period ended March 31, 2021 versus $5,015 for the same period in 2020. Rent expense was $9,111 during the three
month period ended March 31, 2021 versus $11,767 for the same period in 2020, a decrease of approximately 23%. The Company incurred travel
and entertainment expenses of $17,467 during the three month period ended March 31, 2021 as compared to $17,763 during the three month
period ended March 31, 2020, an approximate 2% decrease on a quarter-over-quarter basis.
Other
Income (Expenses)
Other
income (expense) was $91,449 during the three month period ended March 31, 2021 versus $120,566 during the three month period ended March
3, a decrease of $29,117. The 24% decrease in other income (expense) in 2021 was primarily due to a decrease in interest expense. Interest
expense for the three month period ended March 31, 2021 was $54,103 versus $87,691 for the same period in 2020, a decrease of approximately
38%. Loss on extinguishment of debt was $37,346 during the three month period ended March 31, 2021 versus $34,375 during the same period
in 2020. The Company received dividend income of $0 and $1,500 during the three month periods ended March 31, 2021 and 2020, respectively.
Net
Losses
The
Companys net loss for the three months ended March 31, 2021 and 2020 was $589,580, and $742,644, respectively, a year-over-year
decrease of approximately 21%.
Cash
Flows from Operating Activities
For
the three month period ended March 31, 2021 net cash flows used in operating activities was $305,216.
For
the three month period ended March 31, 2020 net cash flows used in operating activities was $518,406.
Cash
Flows from Investing Activities
For
the three month period ended March 31, 2021 net cash flows used in investing activities was $0.
For
the three month period ended March 31, 2020 net cash flows used in investing activities was $0.
Cash
Flows from Financing Activities
For
the three month period ended March 31, 2021 net cash provided by financing activities was $199,550.
For
the three month period ended March 31, 2020 net cash provided by financing activities was $88,500.
Liquidity
and Capital Resources
At
March 31, 2021, the Company had $81,207 cash in the bank. During the three month periods ended March 31, 2021 and 2020 the Company incurred
net losses of $589,580 and $742,644 respectively. At March 31, 2021, the Company had $172,226 in current assets and $1,639,453 in current
liabilities, leaving the Company a working capital deficit of $1,467,227.
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 during the three month period ended March 31, 2021. 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 significant
revenues and does not expect to generate any significant 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
for an older vessel such as the Companys main salvage vessel, 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 operation 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
it must rely on outside equity and debt funding. The combination of the ongoing operating expenses that must be met even during
times when there is little or no exploration or recovery activities taking place, and corporate expenses, creates a very risky
situation for the Company and its shareholders in terms of the need to access external financing to fund operations. 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.
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.
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.
The
Company may not be able to continue as a going concern. 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. The report of our independent auditors
for the years ended December 31, 2020 and 2019 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 three month period ended March 31, 2021, 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.
The
Company has experienced a net loss in every fiscal year since inception. The Companys losses from operations were $498,131 for
the three month period ended March 31, 2021 and $622,078 for the three month period ended March 31, 2020. 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.
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 condensed 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 three month
periods ended March 31, 2021 and 2020 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.
Management
is aware that certain changes in accounting estimates employed in generating financial statements can have the effect of making
the Company look more or less profitable than it actually is. Management does not believe that the Company has made any such changes
in accounting estimates.
Off-balance
Sheet Arrangements
None.