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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
Amendment No. 1
(Mark
One)
|
x |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For
year ended
December 31, 2021
|
o |
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 |
Commission File Number
000-29461

SEAFARER EXPLORATION CORP. |
(Exact
name of registrant as specified in its charter) |
Florida |
90-0473054 |
(State
or other jurisdiction of incorporation or
organization) |
(I.R.S.
Employer Identification No.) |
14497 N. Dale Mabry Highway,
Suite 209-N,
Tampa,
Florida
33618 |
(Address
of principal executive offices) (Zip code) |
|
(813)
448-3577 |
Registrant’s
telephone number |
|
Securities
registered pursuant to Section 12(g) of the
Act: |
Common
Stock, par value $0.0001 per share |
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes
oNo
o
Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes o
No o
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes o No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this
Form 10-K. o
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes x No
o
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer |
o |
|
Accelerated
filer |
o |
|
|
|
|
|
Non-accelerated Filer |
o |
|
Smaller
reporting company |
x |
|
|
|
|
Emerging
growth company |
o |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. o
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes o No
x
The
aggregate market value of the voting common equity held by
non-affiliates of the registrant was approximately $18,166,559
as of the last business day of the registrant’s most recently
completed second fiscal quarter, based upon the closing sale price
on the OTC:BB reported for such date. Shares of common stock held
by each officer and director, and by each person who owns 10% or
more of the outstanding common stock, have been excluded in that
such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for
other purposes.
As of
March 31, 2022 the Registrant had
6,477,020,847 outstanding shares of its common stock,
$0.0001 par value.
EXPLANATORY NOTE
The purpose of this amendment on Form 10-K/A to Seafarer
Exploration Corp's Annual Report on Form 10-K for the year ended
December 31, 2021, filed with the Securities and Exchange
Commission on March 31, 2022 is solely to furnish the Inline
eXtensible Business Reporting Language (iXBRL) data under Exhibit
101 and 104 to the Form 10-K in accordance with Rule 405 of
Regulation S-T.
No other changes have been made to the Form 10-K. This Amendment
No. 1 to the Form 10-K speaks as of the original filing date of the
Form 10-K, does not reflect events that may have occurred
subsequent to the original filing date, and does not modify or
update in any way disclosures made in the original Form 10-K.
SEAFARER
EXPLORATION CORP.
ANNUAL
REPORT ON FORM 10-K
TABLE
OF CONTENTS
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND ASSOCIATED
RISKS
Statements
in this Form 10-K under “Item 1. Business”, “Item 2. Properties”,
“Item 3. Legal Proceedings”, “Item 7. Management’s Discussions and
Analysis of Financial Condition and Results of Operations” and
elsewhere constitute “forward-looking statements”. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Seafarer Exploration Corp., a
company organized under the laws of Florida, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. 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-K.
The
use in this Form 10-K 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 success of the
Company is dependent on our efforts and many other factors
including, primarily, our ability to raise additional
capital.
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
based on 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 historic 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 or as a result of certain economic and
business factors, some of which may be beyond our
control.
We
disclaim any obligation to subsequently 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.
As
used in this Form 10-K, the terms “we,” “us,” “our,” “Seafarer,”
and the “Company” mean Seafarer Exploration Corp. unless otherwise
indicated.
PART I
Item 1. Business.
Summary
Seafarer
Exploration Corp. (“the Company” or “Seafarer”), a Florida
Corporation, was incorporated on May 28, 2003. The Company formerly
operated under the name Organetix, Inc. (“Organetix”). The
Company’s principal business plan is to develop the infrastructure
to engage in archaeological research, archaeologically-sensitive
exploration, recovery and conservation of historic shipwrecks and
to eventually monetize the recovery of the shipwrecks without
selling the treasure. The business plan includes in-depth archival
research and translation of historical documents from archives and
repositories from around the world. The plan also includes the
development of various new technologies which will improve
efficiencies of both time and accuracy, as well as create a smaller
operational footprint. Advanced technologies are badly needed in
the field of archaeology which appear to have fallen decades behind
other sciences.
The
exploration and recovery of historic shipwrecks is by nature
speculative, and there is a high degree of risk inherent in this
type of business venture. The exploration and recovery of historic
shipwrecks involves a multi-year, multi-stage process and it may
take several years and/or be prohibitively expensive to locate and
recover valuable artifacts, if any are ever located at all, from
historic shipwreck sites. It is for those reasons that Seafarer and
others feel it is mandatory to invent new advanced
technologies.
There
are a number of other significant challenges and risks regarding
this type of business venture that make it risky with potential
that the Company could fail. If the Company were to cease its
operations, it is likely that there would be complete loss of all
capital invested in and/or borrowed by the Company to
date.
The
Company is also actively researching, exploring and testing new
technology to help more accurately understand current and future
wreck sites in an unobtrusive manner. Up to the date of this
filing, all tests of new and unproven technology and methods have
failed with the exception of the Company’s proprietary SeaSearcher
device which is still in development. Additional scientists have
been hired as consultants to assist in these endeavors. The ongoing
cost of SeaSearcher development is substantial and is an additional
financial hurdle for the Company to bear. Seafarer believes the
advancement of this technology is imperative to the advancement of
the field of archaeology.
The
Company regularly reviews opportunities to perform exploration and
recovery operations at purported historic shipwreck sites; however,
the Company does have specific plans to perform exploration and
recovery operations at other shipwreck sites at the present time.
The Company is actively reviewing other potential historic
shipwreck sites 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 permits as well as environmental permits. Some potential
shipwreck sites are outside of State waters which will be very
advantageous to Seafarer since state permitting agencies will not
be able to continuously hamper or slow Seafarer’s operations, as
demonstrated in the past.
Limited
Revenue and Significant Operating Losses
The
Company expects to continue to incur significant operating losses
and to generate negative cash flows from operating activities while
developing the necessary infrastructure and technology for the
investigation of historic shipwreck sites.
The
Company’s 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. Based on
our historical rate of expenditures, the Company expects to expend
its available cash in three months or less from March 31,
2022. 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 would materially and adversely affect its 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 its operations. If the Company is not able to continue to
raise capital, then it will be forced to cease its operations,
which would likely result in both the complete loss of all capital
invested in and loans provided to the Company.
The
Company’s Auditor has Substantial Doubts as to the Company’s
Ability to Continue as a Going Concern.
Our
auditors’ reports on all of our past fourteen years of consolidated
financial statements expresses an opinion that substantial doubt
exists as to whether we can continue as an ongoing business. The
lack of significant revenues from operations to date raises
substantial doubt about our ability to continue as a going concern.
The accompanying audited consolidated financial statements do not
include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and
classification of liabilities that might result from the outcome of
this uncertainty.
The
Company has not generated any meaningful revenue since inception.
Our future is dependent upon our ability to obtain financing to
continue our exploration activities. We may seek additional funds
through private placements of our common stock. For the past
several years the Company’s auditors have issued an opinion that
substantial doubt exists as to whether the Company can continue as
a going concern, making it more challenging for the Company to
obtain financing from investors. If the Company becomes unable to
obtain financing, then it is very likely that the it will be forced
to cease operations and all capital invested in or loaned to the
Company will be lost. Our consolidated financial statements do not
include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts of and
classification of liabilities that might be necessary in the event
we cannot continue in existence.
Companies
such as Seafarer that do not generate significant cash flow to
cover expenses must rely on outside financing, which carries a very
high degree of risk due to the fact that it may become extremely
challenging or impossible to obtain such outside financing. We
cannot guarantee we will be successful in generating revenue in the
future or be successful in raising funds through the sale of shares
to pay for the Company’s business plan and expenditures. During the
years ended December 31, 2021 and 2020, we did not generate any
significant revenues from continuing operations. Failure to
generate revenue or to raise funds could cause us to go out of
business, which would result in the complete loss of capital
invested in the Company.
General
It
has been estimated by the United Nations Educational, Scientific
and Cultural Organization (“UNESCO”) that there are over three
million undiscovered shipwrecks around the world and some of these
shipwrecks were lost with verifiable cargoes that contained
valuable materials, including artifacts and treasure. However, many
of these shipwrecks may have very little archaeological or
historical value, and furthermore, a high percentage of these
shipwrecks would not have been carrying valuable cargo including
artifacts or treasure.
The
Company’s principal business plan is to develop the infrastructure
and technology to engage in the archaeologically-sensitive
exploration, recovery and conservation of historic shipwrecks and
develop new technologies to vastly improve archaeology. Once
artifacts have been properly conserved, they will be made available
for scientific research and allowed to be displayed for the
public.
The
Company believes it may eventually be conducting archaeological
research around the world and potentially supporting governmental
or quasi-governmental organizations, universities and affiliated
research groups and private research entities in the documentation
and survey of historic shipwrecks based on their discretion. The
business plan also includes in-depth archival research and
translation of historical documents from various international
archives and repositories. These translations of archival research
will be made available to the country of origin, the State of
Florida, university researchers, and other responsible academic
parties upon reasonable request. In addition to the research, there
is periodic ongoing education of personnel involved in the
Company’s operations. The Company works with archaeologists to
attempt to further ensure all sensitive archaeological guidelines
are met or exceeded. Seafarer has the internal ability to invent
and build advanced technology which should ultimately revolutionize
the field of archaeology. Seafarer feels this is imperative to its
ongoing business plan.
The
Company has investigated various technologies and non-scientific
equipment to help better explore or document historic shipwreck
sites. To the present date, none of these technologies have been
proven to have any efficacy with the exception of the SeaSearcher.
The SeaSearcher has however experienced technical issues during the
development phase that are expensive both in terms of repairs and
down time. The Company will continue to experiment with unproven
technologies and will actively work with third parties, consultants
and scientists to develop its own proprietary technology which will
result in extra expenses to the Company. These development expenses
will continue indefinitely.
The
exploration and recovery of historic shipwrecks involves a
multi-year, multi-stage process, making new technology a must. It
may take many years and/or be prohibitively expensive to locate, if
any are ever located at all, and recover valuable artifacts from
historic shipwrecks. Locating and recovering valuable artifacts is
very difficult, expensive, and rare which is why the Company is
developing the SeaSearcher at significant expense. If the Company
is not able to locate artifacts or treasure with significant value,
then there is a high probability that the Company will face adverse
consequences which would likely result in the loss of both all
capital invested in or loaned to the Company.
There
are a number of significant issues and challenges including, but
not limited to, government regulation and/or the Company’s
inability to secure permits and contracts, lack of financing, lack
of revenue and cash flow and continued losses from operations that
make the exploration and recovery of historic shipwrecks
a speculative business venture. There is also significant
expense involved in research and ongoing educational programs.
Research expenses may involve paying scientists for translations,
and research dues and fees for various historical entities such as
archives, travel and accommodations, and research materials, as
well as developmental expenses for the SeaSearcher and the
continued expense of teaching our divers archaeology.
Furthermore,
underwater recovery operations are inherently difficult and
dangerous and may be delayed or suspended by weather, sea
conditions or other natural hazards. In addition, even though sea
conditions in a particular search location may be somewhat
predictable, the possibility exists that unexpected conditions may
occur, and already have occurred, that adversely affect the
Company’s operations. It is also possible that natural hazards may
prevent or significantly delay search and recovery
operations.
In
addition to natural hazards there may be constant repair and
maintenance issues with historic shipwreck exploration and recovery
vessels. The Company’s past primary exploration vessel was an older
vessel that was originally used in other capacities and has been
converted for use in historic shipwreck exploration and recovery
operations. The repairs, maintenance and upkeep of vessels, is time
consuming and can be very expensive and there may be significant
periods of vessel down time that results from needed repairs being
made or a lack of current financing to make repairs to the vessel.
With the recent addition of two boats to the Company’s fleet, the
maintenance and repair costs have increased significantly. Because
of the above reasons, the Company’s BOD determined it was in the
best interest of the Company to sell the boat, which happened in
2021.
Even
if the Company is able to obtain permits for shipwreck projects,
there is a possibility that the shipwrecks may have already been
salvaged, may not be located, or may not have had anything valuable
on board at the time that they sank. The potential advantage of the
new technology is designed to eliminate or greatly reduce these
risks. It is the Company’s intent to find shipwrecks where
available research suggests there were not any previous recovery
efforts or past recovery efforts failed or were not completed. In
the event that valuable artifacts are located and recovered, it is
possible that the cost of recovery will exceed the value of the
artifacts recovered. It is also possible that other entities,
including both private parties and governmental entities, will
assert conflicting claims and challenge the Company’s rights to the
recovered artifacts.
Moreover,
there is the possibility that should the Company be successful in
locating and recovering artifacts that have significant
archeological and/or monetary value, that a country whose ship was
salvaged may attempt to claim ownership of the artifacts by
pursuing litigation. In the event that the Company is able to make
a valid claim to artifacts or other items at a shipwreck site,
there is a risk of theft of such items at sea, both before or after
the recovery or while the artifacts are in transit to a safe
destination, as well as when stored in a secured location. Such
thefts may not be adequately covered by insurance. Based on a
number of these and other potential issues the Company could spend
a great deal of time and invest a large sum in a specific shipwreck
project and receive very little or no salvage claim or revenue for
its work. The Company does have plans for security at sea, however
it may never implement such plans if it is not feasibly
possible.
There
is currently a limited trading market for our securities. We cannot
assure when and if an active-trading market in our shares will be
established, or whether any such market will be sustained or
sufficiently liquid to enable holders of shares of our common stock
to liquidate their investment in our company. The ability to
deposit restricted shares has also become increasingly more
difficult over the past several years. Some clearing firms who used
to clear low priced securities for multiple brokerage firms have
closed or been acquired, resulting in fewer brokerage firms that
are willing or able to accept lower priced securities for deposit.
Unless an investor has a large and well-established relationship
with a brokerage firm, it will be very 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. Furthermore, the sale of
unregistered and restricted securities by current shareholders,
including shares issued to consultants and shares issued to settle
convertible promissory notes and to settle debt, may cause a
significant drop in the market prices of the Company’s securities.
Also, because the Company primarily finances the operations with
the sale of securities, an increase to the authorized shares may
need to be done from time to time.
Accordingly,
an investment in Seafarer’s securities is speculative and extremely
risky and should only be considered by those investors who do not
require liquidity and who can afford to suffer a total loss of
their investment. An investor should consult with professional
advisers before making an investment in our securities.
Competition
There
are a number of competing entities who are engaged in various
aspects of the exploration and salvage of historic shipwrecks, and
in the future other competitors may emerge. Some of these companies
are publicly traded companies and there are a number of small
private companies, as well as some loosely affiliated groups and
individuals, who claim to be in this business as well. Some of
these entities may be better capitalized and may have greater
resources to devote to the pursuit of locating and salvaging
historic shipwrecks. Very few of these competing entities may also
have significantly more experience than the Company in the
exploration and recovery of historic shipwrecks. The Company could
be at a material competitive disadvantage as compared to competing
entities that are better capitalized, have more resources and/or
who possess greater experience in the business. The Company will,
and has, actively considered working with other entities in this
industry sector.
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
revenue is generated from exploration and recovery activities, if
ever. Without significant 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, then it would more than likely be forced to cease
operations and all capital invested in the Company or borrowed by
the Company will be lost. If the Company is unable to secure
additional financing or meaningful revenues, our business may fail
and our stock price may be adversely affected which could result in
a complete total of investment capital. The raising of additional
financing will, as it has over the last several years, result in
dilution of the Company’s current shareholders or a significant
decrease in the value of the Company’s securities.
In addition, the expenses associated with operating a small
publicly traded company engaged in the historic shipwreck recovery
business are exorbitantly high. The cost of operations may include
the cost of buying or leasing vessels, regular vessel maintenance
and upkeep, ongoing vessel repairs due to wear and tear and damage
by natural or human causes, docking fees, fuel, upgrades, equipment
costs, personnel costs, insurance, registration costs, permitting,
temporary lodging and provisions for divers and other personnel. In
addition to the operating expenses, a publicly traded company also
incurs the significant recurring costs of maintaining publicly
traded status, which include, but are not limited to
administrative, accounting, audit, executive, legal, including
legal expenses required in answering FBAR comments, shutdowns, and
administrative appeals.
The additional delays to the Company’s operational goals and
objectives as a result of FBAR prohibiting ground disturbing work
for periods of time have been harmful as the Company must still
cover overhead and fixed expenses while some activities are
temporary on hiatus. These combined expenses are particularly
burdensome for a smaller public company. The recurring expenses
associated with being a publicly traded company focused on the
exploration and recovery of historic shipwrecks may cause the
Company to be at a significant competitive disadvantage when
compared to some of its competitors who are private companies or
public companies who are not fully reporting.
Due to these and other factors, 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. As
discussed in Note 2 – Going Concern to our consolidated financial
statements for the years ended December 31, 2021 and 2020, we have
experienced operating losses in every year since our inception
resulting in an accumulated deficit. Based on our financial results
as of December 31, 2021, there are substantial doubts about the
Company’s ability to continue as a going concern. If the Company is
not able to continue as a going concern, it is 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 Company’s net losses were $2,625,414 for the year
ended December 31, 2021 and $2,660,813 for the year ended December
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.
Governmental
Regulation
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. Seafarer believes they are the only
company to be issued a full recovery permit by FBAR since 1986,
other than one entity with an Admiralty Claim. This demonstrates
the difficulty of obtaining a recovery permit from FBAR. 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, in terms of both
direct costs and ongoing compliance costs. It is also possible that
the Company will not be successful in obtaining title or permission
to excavate certain wrecks, even if the law allows it. 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. For the above
reasons, the Company has extended its research into shipwrecks
outside of State waters.
The
laws and regulations regarding the exploration and recovery of
historic shipwrecks in waters controlled by the State of Florida
are complex. A large amount of time and expense is required to
comply with the existing laws and regulations. For example, the
State of Florida has, in the past, proposed new rules and
regulations regarding the exploration and recovery of shipwrecks in
Florida waters. The Company believes any new rules and regulations
that are implemented into law would likely increase the cost of
compliance and potentially force the Company to cease its
operations. It is possible that the State of Florida may enact
additional laws that ultimately make it impossible to conduct
business as a commercial shipwreck exploration and recovery firm.
It may also be possible that the State of Florida attempts to enact
legislation which altogether bans the commercial exploration and
recovery of historic shipwrecks in State controlled
waters.
There
is a possibility that new governmental regulations could be enacted
at any time at the international, federal or state level that would
make it impossible for the Company to continue to attempt to locate
and salvage historic shipwrecks. Governmental regulation at all
levels may substantially increase the costs and expenses incurred
by the Company to obtain permits and agreements and comply with the
regulations and represent a significant risk to the Company and all
companies engaged in the commercial exploration and recovery of
historical shipwrecks. This again reflects the need of the Company
to continue exploration outside of State waters.
Furthermore,
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. Moreover,
the process of entering into agreements and/or obtaining permits
may be subject to lengthy delays, and in some cases 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 utilizing administrative requirements as a
tactic to hamper and delay the process.
The
reasons for a lengthy permitting process and delays of existing
permits 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, requests for core sampling, requests for
carbon dating, changes to either the agreement or permit terms or
revisions to other information contained in the permit, excessive
administrative time lags at permitting agencies, overly aggressive
interpretation of statutes by permitting authorities to attempt to
hamper private entities engaged in the exploration and recovery of
historic shipwrecks and related archaeological materials, etc. The
length of time it takes to obtain permits or enter into agreements,
and the administrative time lag by permitting agencies with regards
to permitting issues may result in the Company having to expend
significant resources while waiting to perform exploration and
recovery work with little or no visibility as to the timing of
resolving such permitting issues. An example of delays implemented
by FBAR for Area 2 in Melbourne Beach, during the course of the
last three year permit for Area 2, Seafarer was prevented from
performing certain activities integral to the fulfilment of its
exploration and recovery activities for a total of 747 days out of
the 1095 days available.
There
are also strict environmental regulations associated with the
exploration and recovery of historical shipwrecks. In order to
explore and recover shipwreck materials that are located in state
regulated waters, the Company must obtain permission from both
federal and state environmental agencies in order to conduct
operations. There is always the possibility that the Company could
be denied access to a historic shipwreck site based on federal or
state environmental concerns.
Business
Continuity Plan
Due
to current events involving the global COVID-19 pandemic, Seafarer
Exploration Corp. established a Business Continuity Group (“BCG”)
consisting of members of our Board of Directors, our CEO, and key
advisors to monitor current events as they relate to our business
and to be prepared to respond to any potential threats or issues in
order to protect the Company. Seafarer’s BCG periodically reviews
developments concerning how the Company would respond to events
that significantly disrupt the economy and its business.
As a
part of its business continuity plan, Seafarer maintains a back
office for some of its corporate records and information at the
residence of our CEO. Our CEO has agreed to allow his residence to
be used as temporary office space, if the need arises, at no charge
to the Company.
Litigation
The
Company has been engaged in various litigations in the past and has
prevailed in every case (please see Item 3. Legal Proceedings
below). In the future the Company could be subject to litigations,
although none are known or expected at this time. Potential future
litigations could materially affect our ability to operate our
business, which would negatively impact our results of operations
and financial condition.
Historic
Shipwreck Exploration and Recovery in Florida
The
Company operates year-round, with some years having better diving
in the winter and some years in the summer. Good weather conditions
may allow operations to extend into the fall and winter months at
certain historic shipwreck sites. Inclement weather and hazardous
ocean conditions may hamper year round historical shipwreck
exploration and recovery efforts when the Company is operating in
waters off of the coast of Florida and significantly limit the
amount of days that the Company is able to conduct
operations.
Other
factors that may hinder the Company’s ability to conduct year round
operations include a lack of financing, the expiration of permits
and agreements or the need to renew or enter into permits and
agreements with various governmental or quasi-governmental
agencies, and delays caused by FBAR stopping ground disturbances
for debatable reasons. Permits were renewed in 2019 for Area 1 and
Area 2 off of Melbourne Beach for a period of three years. During
down times, the Company’s operations personnel may, among other
duties, spend time researching sites, training in archaeology,
reviewing site plans, maps, charts, and other related information
and performing maintenance, overhaul, cleaning, etc. The 2019
permits are currently in the renewal process for Areas 1 and 2 for
the years 2022 through 2025.
Juno
Beach
The Company has previously performed some exploration and recovery
operations at what it believes to be a shipwreck site located off
of the coast of Florida in northern Palm Beach County, more
specifically in an area known as “Juno Beach” (the “Juno Beach
Shipwreck”). The Company had previously obtained a recovery permit
from the State of Florida for the Juno Beach site. The recovery
permit expired in April of 2014. In March of 2015, Seafarer was
awarded full rights to the Juno site pursuant to a court order,
erasing all rights of the Company’s previous partner with regards
to the site. The Juno site was arrested permanently to Seafarer by
the U.S. Marshal’s offices in July of 2017 and in November 2017 the
Company was granted final judgment on its federal admiralty claim
for the Juno Beach shipwreck site (See Item 3 below).
From November 2017 until July 2021, the FBAR hadrequested that
Seafarer submit new recovery permit applications on three separate
occassions. Two of the recovery applications were denied for
reasons Seafarer found objectionable. After submitting the third
recovery application, the FBAR correctly determined that they did
not have the authority to issue the recovery permit all along
because the U.S. Government gave the Juno site solely, truly, and
exclusively to Seafarer by way of an Admiralty Claim. The Admiralty
Claim was originally provided to FBAR in November 2017. However,
FBAR delayed Seafarer’s operations from continuing in Juno Beach
until July 2021, a period of approximately three years and eight
months.
The Company believes it is possible the Juno Beach Shipwreck site
may potentially contain remnants of a sunken 1500s era ship;
however, the Company does not have definitive evidence of the
ship’s country of origin. Due to the fact that the Company does not
currently have sufficient data to positively identify the potential
Juno Beach shipwreck, or its country of origin, it is not possible
to determine whether or not the ship was originally carrying cargo
of any significant value.
With data from the Master Site Plan from entries by a Florida state
archaeologist from 1988 who has since retired, which were withheld
from Seafarer for several years, Seafarer feels more confident a
1500s era shipwreck is quite possibly within our Admiralty Claim in
Juno Beach, although we do not know whether it contained anything
of value. The Company has determined that a large portion of the
magnetometer survey of the Juno Beach Shipwreck site that was
originally provided by the Company’s past partner on the site was
intentionally deleted. A lot of shipwreck material and remnants
including pottery, cannon balls, musket balls, ballast stones,
nails, spikes, wood and scattered pieces of a sunken ship have all
been found in the deleted area of a magnetometer survey.
The Company will attempt to complete a SeaSearcher survey of the
entire deleted area when certain conditions are met. There is also
a possibility that there are no artifacts of significant value
located at the Juno Beach shipwreck site. Even if there are
valuable artifacts and/or treasure located at the site, recovering
them may be difficult due to a variety of challenges that include,
but are not limited to; inclement weather, hazardous ocean
conditions, large amounts of sand that cover large areas of the
site, strong multiple layer currents etc.
Melbourne
Beach
There
is a purported historic shipwreck site located in the waters off of
Melbourne Beach, Florida that the Company has been investigating.
In February 2013, the Company signed an agreement with a third
party who previously explored this site for the right to
investigate the site. In March of 2014, Seafarer entered into a
partnership and ownership with Marine Archaeology Partners, LLC
(“MAP”), with the formation of Seafarer’s Quest, LLC (“SQ). SQ was
formed in the State of Florida for the purpose of permitting,
exploration and recovery of artifacts from a designated area on the
east coast of Florida. Such site area is from a defined, contracted
area by a separate entity, which a portion of such site is
designated from a previous contracted holding through the State of
Florida. Under such agreement, Seafarer is responsible for costs of
permitting, exploration and recovery, and is entitled to 60% of
such artifact recovery. Seafarer has 50% ownership and is the
designated management of SQ. In November of 2019, the Company and
MAP agreed to modify the partnership agreement so that the Company
receives 80% and MAP receives 20% of any artifacts that are
recovered after the state of Florida receives its anticipated 20%
under any potential future recovery permits, which none such
recovery permits have been applied for or issued as of the date of
this filing.
In
July of 2014, SQ received a 1A-31 Exploration Permit with a Dig and
Identify modification, which gives us written authority to excavate
and identify artifacts (the “Permit”) from the Florida Division of
Historical Resources for an area identified as Area 2 off of
Melbourne Beach, Florida. The Permit was active for three years
from the date of issuance. Seafarer on behalf of SQ, has been
primarily focusing its operations on this site when the weather
permits. the Company has utilized additional owned and rented
vessels in order to perform search and identify operations at this
site. Inclement weather and difficult sea conditions have hampered
the Company’s ability to perform exploration operations at this
site to date, including the previously discussed delays involving
FBAR. An archeologist with the technical skills, knowledge, and
experience from around the world was hired to help ensure the
integrity of the work. The Company has applied for permits from the
State of Florida for two additional areas that were formerly
permitted solely by an affiliate of MAP. The Permit for one of the
additional areas was given to the Company on July 6, 2016 and
identified as Area 1. The permits for Areas 1 and 2 were renewed in
2019 for an additional three years. It will be necessary to be
granted a recovery permit in order to recover any artifacts and
treasure that are located on the site. On October 7, 2020, the
Company received a new permit from the Florida Department of
Environmental Protection (the “FDEP”) for Areas 1 and 2 at the
behest of the FBAR. The FDEP permit is valid for 5 years. A permit
transfer was completed, transferring a U.S. Army Corps of Engineers
permit for Areas 1 and 2 from MAP to SQ. This transfer was done at
the behest of the FBAR and the permit is valid until
2025.
Per
Florida Statutes, Seafarer made a timely request for renewal of the
2019 permit for Area 2 on July 29, 2021. In January of 2022,
Seafarer received notification from the Florida Division of
Historical Resources (“FDHR”) that its permit for Area 2, which was
set to expire on January 19, 2022, has been continued indefinitely
while the renewal request was being processed. The existing permits
will continue until the renewal is finalized or
rejected.
Per
Florida Statutes, Seafarer made a timely request for renewal of the
2019 permit for Area 1 on July 29, 2021. On March 2, 2022, Seafarer
received notification that the permit would continue indefinitely
with the same terms as Area 2.
Certain
Agreements
Agreement to Explore a Shipwreck Site Located off of Melbourne
Beach, Florida
In
March of 2014, Seafarer entered into a partnership and ownership
with MAP with the formation of SQ. SQ was formed in the State of
Florida for the purpose of permitting, exploration and recovery of
artifacts from a designated area on the east coast of Florida. Such
site area is from a defined, contracted area by a separate entity,
which a portion of such site is designated from a previous
contracted holding through the State of Florida. Under such
agreement, Seafarer is responsible for costs of permitting,
exploration and recovery, and is entitled to 80% of such artifact
recovery after the state of Florida has taken their 20% under any
future recovery permits. Seafarer has a 50% ownership, with
designated management of the SQ coming from Seafarer. As of
December 31, 2021, the partnership has had no operations. Seafarer
is responsible for managing the site on behalf of SQ.
Florida Division of Historical Resources
Agreements/Permits
The
Company currently has two separately permitted Melbourne Beach area
sites, called Area 1 and Area 2, that it is exploring. 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. The Company submitted a permit renewal application for
Area 2 on July 29, 2021 that the State of Florida has yet to act
upon. The State of Florida has granted the Area 2 permit an
extension until the State of Florida acts upon the submitted
renewal application.
Agreement with Probability and Statistics, Inc.
In
2018 Seafarer acquired a 1% ownership position in Probability and
Statistics, Inc. (“P&S) for an exchange of shares of Seafarer’s
restricted common stock. During the year ended December 31, 2020,
Seafarer and P&S agreed to essentially unwind the previous
share exchange agreement by entering into a new share exchange
agreement where Seafarer and P&S effectively reversed the
transaction from 2018, see Note 5 – Investment in Probability and
Statistics, Inc. The shares of Seafarer’s restricted common stock
have been returned to treasury.
Item 1A. Risk Factors.
Not
required for smaller reporting companies.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Corporate
Office
The
Company leases 823 square feet of office space located at 14497
North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. The
Company entered into an amended lease agreement commencing on July
1, 2020 through July 31, 2023 with base month rents of $1,475 from
July 1, 2020 to June 30, 2021, $1,519 from July 1, 2021 to June 30,
2022, $1,564 from July 1, 2022 to June 30, 2023 and $1,611 from
July 1, 2023 to July 31, 2023. Under the terms of the lease there
may be additional fees charged above the base monthly rental
fee.
Operations/Dive
House
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 $1,350
per month. The Company uses the house to store equipment and gear
and to provide work-related living quarters for its divers,
personnel, consultants and independent contractors involved in its
exploration and recovery operations. The Company also leases a
house in Palm Bay for $525 per month to store equipment.
Item 3. Legal Proceedings.
On
September 3, 2014, the Company filed a lawsuit against Darrel
Volentine, of California. Mr. Volentine was sued in two counts of
libel per se under Florida law, as well as a count for injunction
against the Defendant to exclude and prohibit internet postings.
Such lawsuit was filed in the Circuit Court in Hillsborough County,
Florida. Such suit is based upon internet postings on www.investorshub.com. On or
about October 15, 2015, the Company and Volentine entered into a
stipulation whereby Volentine admitted to his tortious conduct,
however the stipulated damages agreed to were rejected by the
Court, and the Company is proceeding to trial on damages against
Volentine in a non-jury trial on December 1, 2015. The Defendant is
the subject of a contempt of court motion which was heard on April
7, 2016, whereby the Court found a violation and modified the
injunction against the Defendant, and imposed other matters of
potential penalties against the Defendant. The Court also awarded
attorney’s fees against the Defendant on behalf of Seafarer for
such motion. The Defendant subsequently attempted to have such
ruling, evidence and testimony attacked through a motion heard
before the Court on October 24, 2016. The Court dismissed the
Defendant’s motion after presentation of the Defendant’s case at
the hearing. The Plaintiff has set the matter for entry of the
attorney’s fees amount due from the Defendant for hearing in
December 2016. As well the Plaintiff has set for hearing its motion
for sanctions in the form of attorney’s fees for frivolous filing
of the October 24th motion, which motion is also set for hearing in
December 2016. The Plaintiff filed a renewed and amended motion for
punitive damages in the case on September 11, 2016, which has not
been set for hearing. The Defendant had also filed a motion for
summary judgment on the matter of notice entitlement pre-suit,
which motion is pending before the Court. The Plaintiff filed a
motion for sanctions against the Defendant for the motion for
summary judgment being frivolous under existing law, and such
motion is pending ruling on the motion. On December 7, 2016, the
Court held a hearing on the Defendant’s motion for sanctions, and
essentially attempting to rehear the motion for contempt against
the Defendant. The Court dismissed the Defendant’s motions, and
renewed the ability of the Company to seek attorney’s fees on such
matter, which hearing has not been set at present. On February 28,
2017, the Court entered an Order denying the Defendant’s motion for
summary judgment. The Company has filed a motion for punitive
damages in March 2021 to be added to the cause of action and to be
heard by the Court. The counsel for Volentine filed a motion to
withdraw which was granted on March 7, 2021, and Volentine was
given 60 days to obtain new counsel or proceed without such. The
Company is seeking to get such matter to trial as soon as possible.
Volentine, as of the date of this publication, has not obtained new
counsel.
On
April 17, 2020, the Company filed a lawsuit in the Circuit Court in
and for Hillsborough County, Florida against Michael Torres
(“Torres”), regarding fraud, fraud in the inducement, breach of
contract and civil theft under Florida law, as well as for
injunctive relief to cancel shares issued. Such shares are
currently locked up with the transfer agent pending ruling of the
Court. The civil theft claim seeks triple the damages for monies
paid to Torres, plus attorney’s fees and costs. Torres filed a
motion to dismiss which was denied by the Circuit Court on July 28,
2020. Torres filed a general denial in an answer. Seafarer was in
the discovery phase of the case when both sides agreed to a
mediation of the matter. Mediation of the case occurred in
January 2021, and the parties reached a confidential settlement
agreement which is formally being entered, which includes
cancellation of all shares issued to Torres. The case will
officially be closed with entry of the final judgment accepting the
settlement.
On
January 18, 2022, Seafarer received notification from the Circuit
Court of the Thirteenth Judicial Circuit that 61,183,645 restricted
common shares from the Defendant could be returned to the
Plaintiff. On January 19, 2022, such shares were returned to the
treasury stock of Seafarer and accounted for by Seafarer’s transfer
agent. The settlement also included “Defendant (Torres) has agreed
and hereby it is recognized by the Court that Defendant has made a
full retraction of his assertions…” and agreed to pay back an
undisclosed amount of money to Seafarer and agreed to pay
back an undisclosed amount of money to Seafarer that the Company
does not anticipate being able to collect.
Item 4. Mine Safety Disclosures.
None.
PART II
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities.
Market
Information
Our
common stock is presently quoted on the Pink Sheets under the
symbol “SFRX”, as reflected below, though the current trading
volume is small. No assurance can be given that any market for our
common stock will continue in the future or be maintained. If an
“established trading market” ever develops in the future, the sale
of “restricted securities” (common stock) pursuant to Rule 144 of
the Securities and Exchange Commission by members of management,
consultants, promissory note holders or others may have a
substantial adverse impact on any such market and the sale of
restricted securities by management or others may significantly
depress the market price of the Company’s shares.
We
cannot assure when and if an active-trading market in our shares
will be established, or whether any such market will be sustained
or sufficiently liquid to enable holders of shares of our common
stock to liquidate their investment in our company. If an active
public market should develop in the future, the sale of restricted
securities that have had the restrictive legend removed by current
shareholders may be highly dilutive and could potentially have a
substantial negative impact on any such market.
The
Company’s share price is quoted on the Pink Sheets. Accordingly, an
investment in our securities should only be considered by those
investors who do not require liquidity and can afford to suffer a
complete loss of their investment. An investor should strongly
consider consulting with professional advisers before making such
an investment.
Furthermore,
the price of our common stock may be subject to a very high degree
of volatility, which makes owning shares of our common stock highly
risky. Our stock price fluctuated between $0.0079 and $0.0023 for
the year ended December 31, 2021, and $0.0031 and $0.0179 for the
year ended December 31, 2020. The price of our shares may fluctuate
significantly despite the absence of any apparent reason. In
addition, our stock is thinly traded, leading to even greater
volatility. You should expect this volatility to continue into the
foreseeable future.
The
range of high and low intraday prices for our common stock during
each quarter for 2021 and 2020 is shown below. The over-the-counter
quotations reflect inter-dealer prices, with retail mark-up,
mark-down or commission and may not necessarily represent actual
transactions. Such prices were determined from information derived
from www.nasdaq.com and do not necessarily reflect transactions,
retail markups, markdowns or commissions.
Quarter
Ended |
High
Price |
Low
Price |
March
31, 2020 |
0.0179 |
0.0072 |
June
30, 2020 |
0.0120 |
0.0055 |
September
30, 2020 |
0.0089 |
0.0031 |
December
31, 2020 |
0.0080 |
0.0042 |
March
31, 2021 |
0.00079 |
0.0046 |
June
30, 2021 |
0.0070 |
0.0029 |
September
30, 2021 |
0.0067 |
0.0032 |
December
31, 2021 |
0.0050 |
0.0023 |
Penny
Stock
Our
stock is considered to be a penny stock. Our stock is subject to
certain provisions of the Securities Exchange Act of 1934 (the
“Exchange Act”), commonly referred to as the “penny stock” rules as
defined in Rule 3a51-1. A penny stock is generally defined to
be any equity security that has a market price less than $5.00 per
share, subject to certain exceptions. Since our stock is
deemed to be a penny stock, trading is subject to additional sales
practice requirements of broker-dealers.
Consequently,
penny stock rules may restrict the ability or willingness of
broker-dealers to trade and/or maintain a market in our common
stock. Also, prospective investors may not want to get involved
with the additional administrative requirements, which may have a
material adverse effect on the trading of our shares. In recent
years the ability to deposit restricted shares at broker-dealers
has become increasingly difficult with burdensome administrative
requirements.
The
SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in penny stocks. Penny stocks are
generally equity securities with a market price of less than $5.00,
other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current
price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock
rules require a broker-dealer, prior to a transaction in a penny
stock, to deliver a standardized risk disclosure document prepared
by the SEC, that: (a) contains a description of the nature and
level of risk in the market for penny stocks in both public
offerings and secondary trading; (b) contains a description of the
broker’s or dealer’s duties to the customer and of the rights and
remedies available to the customer with respect to a violation of
such duties or other requirements of the securities laws; (c)
contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance
of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions;
(e) defines significant terms in the disclosure document or in the
conduct of trading in penny stocks; and (f) contains such other
information and is in such form, including language, type size and
format, as the SEC shall require by rule or regulation.
The
broker-dealer also must provide, prior to effecting any transaction
in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and
its salesperson in the transaction; (c) the number of shares to
which such bid and ask prices apply, or other comparable
information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market
value of each penny stock held in the customer’s
account.
In
addition to the “penny stock” rules described above, FINRA has
adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior
to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable
efforts to obtain information about the customer’s financial
status, tax status, investment objectives and other information.
Under interpretations of these rules, FINRA believes that there is
a high probability that speculative low priced securities will not
be suitable for at least some customers. The FINRA requirements
make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy
and sell our stock and may have an adverse effect on the market for
our shares.
Additionally,
investors in penny stocks should be aware that in recent years the
ability to deposit restricted shares has become significantly more
difficult and expensive due to burdensome administrative
requirements and finding broker-dealers willing to accept deposits
of low priced securities.
Approximate
Number of Holders of Common Stock
As of
March 31, 2022, there were approximately 2,054 shareholders of
record of our common stock.
Transfer
Agent
The
Company’s stock transfer agent is ClearTrust, LLC (“ClearTrust”).
ClearTrust’s address is 16540 Pointe Village Drive, Suite 205,
Lutz, Florida 33558 and their telephone number is (813) 235-4490.
ClearTrust is owned and controlled by a person who is related to
the Company’s CEO.
Dividend
Policy
The
Company did not declare cash dividends during the years ended
December 31, 2021 and 2020. It is not anticipated that cash
dividends will be paid at any time in the foreseeable future as the
Company intends to retain earnings, if any, for use in the
development of its business. The payment of dividends is contingent
upon the Company’s future earnings, if any, the Company’s financial
condition and its capital requirements, general business conditions
and other factors.
Equity
Compensation Plans
The
Company has not established any formal equity compensation plans as
of the date of this Annual Report on Form 10-K; however, the
Company reserves the right to do so at a later date.
Reports
to Security Holders
Seafarer
Exploration Corp. is a reporting company pursuant to the Securities
and Exchange Act of 1934. As such, the Company makes available its
annual report which includes audited financial statements, and its
quarterly reports which include unaudited financial
statements.
Recent
Sales and Other Issuances of Unregistered Securities
During
the year ended December 31, 2021, the Company issued 79,337,336
shares for various consulting services for board of directors’
fees, advisory council fees, and fees to other service providers.
The Company believes that the issuance of the securities was exempt
from registration under the Securities Act of 1933, as amended, in
reliance on Section 4(2) of the Securities Act as a
transaction by an issuer not involving any public offering and
based on the fact that such securities were issued for services to
sophisticated or accredited investors and persons who are
thoroughly familiar with the Company’s proposed business by virtue
of their affiliation with the Company.
On
various dates during the year ended December 31, 2021, the Company
entered into subscription agreements to sell 720,353,061 shares of
its restricted common stock in exchange for proceeds of $1,530,110.
The proceeds received were used for general corporate purposes,
working capital and the repayment of debt.
Exemptions
from Registration for Sales of Restricted
Securities.
The
issuance of securities referenced above were issued to persons who
the Company believes were either “accredited investors,” or
“sophisticated investors” who, by reason of education, business
acumen, experience or other factors, were fully capable of
evaluating the risks and merits of an investment in us; and each
had prior access to all material information about us. None of
these transactions involved a public offering. An appropriate
restrictive legend was placed on each certificate that has been
issued, prohibiting public resale of the shares, except subject to
an effective registration statement under the Securities Act of
1933, as amended (the “Act”) or in compliance with Rule 144. The
Company believes that the offer and sale of these securities was
exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) under the Securities Act of 1933 (the
“Act”) thereof, and/or Regulation D. There may be additional
exemptions available to the Company.
Issuance
of Securities Due to Conversion of Notes and to Settle
Debt
During
the year ended December 31, 2021, the Company issued 59,944,277
shares of restricted common stock to settle $283,202 of principal
and accrued interest owed on various convertible notes payable. The
Company also issued 1,000,000 shares of restricted common stock as
an equity kicker to a convertible note holder. The Company believes
that the offer and sale of these securities were exempt from the
registration requirements of the Securities Act pursuant to
Sections 3(a)(9) under the Securities Act of 1933, as
amended.
Repurchase
of Securities
During
the years ended December 31, 2021 and 2020, the Company did not
purchase any shares of its common stock and the Company is not
likely to purchase any shares in the foreseeable future.
Warrants
The
Company did not issue any warrants during the years ended December
31, 2021 and 2020. Please see Note 7 – Stockholders’ Deficit for a
list of warrants outstanding at December 31, 2021 and
2020.
Item 6. Selected Financial Data.
Not
required for smaller reporting companies.
Item 7. Management’s 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-K 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 Company’s 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-K. This Item should be read in
conjunction with the financial statements, the related notes
and with the understanding that the Company’s 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 the Juno Beach
shipwreck site 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 or due to certain economic and
business factors, some of which may be beyond our
control.
We
disclaim any obligation subsequently to revise any forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or
unanticipated events.
Overview
General
The
Company’s principal business plan is to develop the infrastructure
and technology to engage in the archaeologically-sensitive
exploration, recovery and conservation of historic shipwrecks and
to eventually monetize the recovery of the shipwrecks without
selling the treasure by creating revenue through media and
technology alternatives for different industry sectors. Once
artifacts have been properly conserved, they may be made available
for scientific research and allowed to be displayed for the public.
The Company’s secondary business is to attempt to develop revenue
streams to support its historic shipwreck exploration and recovery
operations. Such revenue streams will complement the technology
developed by Seafarer.
The
Company has received from the Florida Department of State a notice
of lack of authority to permit or deny recovery activities on the
unidentified shipwreck on Juno Beach. The Florida Bureau of
Archaeological Research (the “Bureau”), Division of Historical
Resources, Florida Department of State stated to Seafarer “The
shipwreck is non-permittable pursuant to Rule 1A-31.0045(2),
F.A.C.” The Bureau cited an order dated November 14,
2017 where the United States District Court entered
a Final Order of Court Default and Final Judgement Granting Award
for Admiralty in Rem. The District Court’s order ruled “Seafarer is
hereby the true, sole, and exclusive owner of the Defendant
Shipwrecked Vessel and having exclusive right to conduct recovery
operation on the Defendant Shipwrecked Vessel and any items
recovered therefrom.” Additional permitting will still be necessary
with the Florida Department of Environmental Protection and the
U.S. Army Corps of Engineers. Applications have been made to both
entities.
In
order to potentially find more efficient methods to explore and
document historical shipwrecks, the Company has investigated
various technologies and non-scientific methodologies. 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 ongoing developmental work and improvements to the
SeaSearcher have been expensive and Management anticipates that the
expenses for these development costs will continue to be incurred
for the foreseeable future. Advances in algorithms and artificial
intelligence (AI) will continue indefinitely while the present
model can be currently used in the field. 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 Blockchain’s progress and it has
not generated any revenues during 2021.
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 can’t 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 Company’s
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 Company’s 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 Company’s 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
Company’s 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. The Company
is a current and fully reporting company and has been for almost 14
years.
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 worked in combination with its technology development
partner, Wild Manta Labs, to build a research and conservation lab
with full x-ray equipment and detailed metal identification
analysis. |
|
● |
The
Company has generated very limited revenues to date. Management
does not believe that the Company will generate any significant
revenues for the foreseeable future. |
|
● |
The
Company continues to review revenue producing opportunities
including joint ventures with other companies. 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 Company’s
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 technologies. 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 for a small
company. |
|
● |
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. Seafarer believes they are the only
company to be issued a full recovery permit by FBAR since 1986,
other than one entity with an Admiralty Claim. This demonstrates
the difficulty of obtaining a recovery permit from FBAR. 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, in terms of both
direct costs and ongoing compliance costs. It is also possible that
the Company will not be successful in obtaining title or permission
to excavate certain wrecks, even if the law allows it. 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. For the above
reasons, the Company has extended its research into shipwrecks
outside of State waters.
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. An
example of delays implemented by FBAR for Seafarer’s permitted Area
2 in Melbourne Beach, Seafarer was prevented from performing
certain activities authorized under the permit for 747 days out of
the 1095 days during the course of the last three year permit for
Area 2 even though the permit was active.
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 Company’s
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
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 March 31, 2022.
At
December 31, 2021 and 2020 the Company had working capital deficits
of $1,668,699 and $1,158,747 respectively. The working capital
deficit increased by $509,952, a percentage increase of
approximately 44%, from 2020 to 2021. The year-over-year increase
in the Company’s working capital deficit may indicate that there is
substantial risk to the continued viability of the Company and a
high degree of risk that the Company could become insolvent due to
this significant working capital deficit and the lack of meaningful
cash flow from its operations. The Company is in immediate need of
further working capital and is seeking options, with respect to
financing, in the form of debt, equity or a combination
thereof.
Since
inception, the Company has funded its operations through common
stock issuances and loans in order to meet its strategic
objectives; however, there can be no assurance that the Company
will be able to obtain further funds to continue with its efforts
to establish a new business. There is a very significant risk that
the Company will be unable to obtain financing to fund its
operation and as such the Company may be forced to cease operations
at any time which would likely result in a complete loss of all
capital that has been invested in and/or borrowed by the Company to
date.
The
Company’s 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 Company’s 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 Company’s lack of operating cash flow and reliance on the sale
of its commons stock and loans to fund operations is extremely
risky. If the Company is unable to continue to raise capital or
obtain loans or other financing on terms that are acceptable to the
Company, or at all, then it is highly likely that the Company will
be forced to cease operations. If the Company ceases its
operations, then it is very highly likely that all capital invested
in and/or borrowed by the Company will be lost.
Summary
of the Year Ended December 31, 2021 Results of Operations Compared
to Year Ended December 31, 2020
Revenue
The
Company’s 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 years ended December 31, 2021 and
2020, the Company generated $23,761 and $10,622 in revenue
respectively, which is shown as service income on the accompanying
consolidated statements of operations.
Net
Losses
The
Company’s net loss for the years ended December 31, 2021 and 2020
was $2,625,414, and $2,660,813, respectfully, a year-over-year
decrease of approximately 1.33%.
Operating
Expenses
Operating
expenses were $2,369,381 for the year ended December 31, 2021
versus $2,709,828 for the year ended December 31, 2020, a decrease
of 12.6%. The decrease in operating expenses in 2021 was primarily
due to decreases in consulting and contractor expenses, vessel
maintenance and dockage expenses, and professional fees. During the
year ended December 31, 2021, consulting and contractor expenses
were $1,234,353 compared to $1,542,145 during the year ended
December 31, 2020, a decrease of 20.0%. The primary reason for the
decrease in consulting and contractor expenses was that the Company
did not use as much labor in its operations and had lower overall
consulting expenses. Vessel maintenance expenses were $109,182
during 2021 versus $193,844 during the same period in 2020, a
decrease of 43.7%. The Company made fewer major repairs to its
exploration and recovery vessels in 2021 and did not use its
previous main salvage vessel which was kept in dry dock due to
extensive repair issues. Research and development expenses were
$439,816 in 2021 versus research and development expenses of
$463,468 in 2020, a decrease of approximately 5.1%. The Company’s
research and development expenses were related to the development
of its SeaSearcher autonomous underwater device and related
technology. 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 year ended December 31, 2021, the Company incurred professional
fee related expenses of $83,196 versus $136,786 during the year
ended December 31, 2020, a decrease of 39.2%. In 2021 the Company
paid fewer legal fees than it did during 2020 due to lower usage of
legal services for permitting issues, which is the primary reason
for the year-over-year decrease in professional fees. General and
administrative expenses for the year ended December 31, 2021 were
$376,696 compared to $244,328 for the year ended December 31, 2020,
an increase of 54.2%. General and administrative fees increased in
2021 due to a higher salary being paid to the Company’s CEO.
Depreciation expense was $21,860 for the year ended December 31,
2021 and $20,379 in 2020. Rent expense was $41,182 in 2021 versus
$$41,986 in 2020, a 1.9% year-over-year decrease. Travel and
entertainment expenses for the year ended December 31, 2021 were
$63,096 versus $66,892 for the year ended December 31, 2020, a
decrease of 5.7%.
Other
Income (Expenses)
Other
income (expense) was $(279,794) during the year ended December 31,
2021 versus $38,393 during the year ended December 31, 2020, a
change of $318,187. The 828.8% increase in other income (expense)
in 2021 was primarily due to a large decrease in the disposal of an
investment and decrease in interest expense. Gain on disposal of
investment was $0 during the year ended December 31, 2021 versus
$354,000 in the same period in 2020, see Note 5 – Investment in
Probability and Statistics, Inc. Interest expense for the year
ended December 31, 2021 was $177,499 versus $286,720 for the same
period in 2020, a decrease of 38.1%. The decrease in interest
expense was due to a decrease in amortization of interest relating
to the beneficial conversion features of several convertible notes.
Loss on extinguishment of debt was $121,847 during the year ended
December 31, 2021 versus $34,375 during the same period in 2020.
Net loss on settlement of accounts payable was $448 during the year
ended December 31, 2021 versus $4,512 for the same period in 2020.
Gain on sale of asset was $20,000 during the year ended December
31, 2021 versus $5,500 in the same period in 2020. The Company
received dividend income of $0 and $4,500 during the years ended
December 31, 2021 and 2020, respectively.
Cash
Flows from Operating Activities
For
the year ended December 31, 2021 net cash flows used in operating
activities was $1,715,582.
For
the year ended December 31, 2020 net cash flows used in operating
activities was $1,885,788.
Cash
Flows from Investing Activities
For
the year ended December 31, 2021 net cash flows from investing
activities was $20,000. The increase in net cash flow from
investing activities is attributable to the proceeds received from
the sale of a vessel.
For
the year ended December 31, 2020 net cash flows from investing
activities was $(6,500).
Cash
Flows from Financing Activities
For
the year ended December 31, 2021 net cash provided by financing
activities was $1,590,510.
For
the year ended December 31, 2020 net cash provided by financing
activities was $1,460,624.
Liquidity
and Capital Resources
At
December 31, 2021, the Company had $81,801 cash in the bank. During
the years ended December 31, 2021 and 2020 the Company incurred net
losses of $2,625,414 and $2,660,813, respectively. At December 31,
2021, the Company had $85,551 in current assets and $1,754,250 in
current liabilities, leaving the Company a working capital deficit
of $1,668,699.
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 year ended December 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, upkeep
expenses and docking fees are continuous and unavoidable regardless
of the Company’s operational status. Management anticipates that
the vessels utilized by the Company in its operations will need
continuous and unavoidable repairs and maintenance, particularly if
the Company ramps up its operational footprint and is working on
more than one site simultaneously as anticipated. These repairs and
maintenance are expensive and have a negative impact on the
Company’s 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 Company’s common stock extremely risky and
highly speculative. The Company’s 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 Company’s 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, 2021 and 2020 raises substantial doubt
as to our ability to continue as a going concern. As discussed in
Note 2 to our consolidated financial statements for the years ended
December 31, 2021 and 2020, we have experienced operating losses in
every year since our inception resulting in an accumulated deficit.
Our independent auditors believe, based on our financial results as
of December 31, 2021, that such results raised substantial doubts
about the Company’s ability 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
Company has experienced a net loss in every fiscal year since
inception. The Company’s losses from operations were $2,345,620 for
the year ended December 31, 2021 and $2,699,206 for the year ended
December 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 positive cash flow or a
profit in the long-term, or ever.
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 lender’s option. These convertible notes
represent significant potential dilution to the Company’s current
shareholders as the convertible price of these notes is generally
lower than the current market price of the Company’s 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 Company’s 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 Company’s common stock. Some of these note holders
have already amended their notes and converted the notes into
equity. Based on conversations with other note holders, the Company
believes that additional note holders will amend their notes to
contain a convertibility clause and eventually convert the notes
into equity.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation
of these financial statements requires us to make estimates and
judgments which affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosures of contingent assets
and liabilities (see Note 3, Significant Accounting Policies,
contained in the notes to the Company’s consolidated financial
statements for the years ended December 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.
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.
Not
required.
Item 8. Financial Statements.
SEAFARER
EXPLORATION CORP.
CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER
31, 2021 AND 2020
TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Stockholders of Seafarer Exploration
Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
Seafarer Exploration Corp. (the Company) as of December 31, 2021
and 2020, and the related consolidated statements of operations,
stockholders’ deficit, and cash flows for each of the years in the
two-year period ended December 31, 2021, and the related notes and
schedules (collectively referred to as the financial statements).
In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of
December 31, 2021 and 2020, and the results of its operations and
its cash flows for each of the years in the two-year period ended
December 31, 2021, in conformity with accounting principles
generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a
Going Concern
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 2, the Company has incurred net
losses and negative cash flow from operations since inception.
These factors, and the need for additional financing in order for
the Company to meet its business plans raises substantial doubt
about the Company’s ability to continue as a going concern. Our
opinion is not modified with respect to that matter.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audit. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audit, we are required to obtain an
understanding of internal control over financial reporting, but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis
for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising
from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee
and that: (1) relate to accounts or disclosures that are material
to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
3001
N. Rocky Point Dr. East Suite 200 ● Tampa, Florida 33607 ●
813.367.3527 |
Convertible Notes Payable
As described in Note 3 to the Company’s consolidated financial
statements, 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. 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.
We identified the Company’s application of the accounting for
convertible notes as a critical audit matter. The principal
considerations for our determination of this critical audit matter
related to the significant number of transactions which could
potentially require a high degree of subjectivity in the Company’s
judgments in determining the qualitative factors. Auditing these
judgments and assumptions by the Company involves auditor judgment
due to the nature and extent of audit evidence and effort required
to address these matters.
The
primary procedures we performed to address these critical audit
matters included the following:
|
· |
We obtained debt related agreements and performed the following
procedures: |
|
- |
Reviewed agreements for all relevant terms. |
|
- |
Tested management’s identification and treatment of agreement
terms. |
|
- |
Recalculated the fair value of each conversion feature based on
the terms in the agreements. |
|
- |
Assessed the
terms and evaluated the appropriateness of management’s application
of their accounting policies, along with their use of estimates, in
the determination of the amortization of the debt discount. |
Stock Based Compensation
As described in Note 3 to the Company’s consolidated financial
statements, the Company accounts for stock based compensation by
applying the fair value method of ASC 718, which 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 company’s 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.
We identified the Company’s application of the accounting for stock
based compensation as a critical audit matter. The principal
considerations for our determination of this critical audit matter
related to the significant number of transactions which could
potentially require a high degree of subjectivity in the Company’s
judgments in determining the qualitative factors. Auditing these
judgments and assumptions by the Company involves auditor judgment
due to the nature and extent of audit evidence and effort required
to address these matters.
The
primary procedures we performed to address this critical audit
matter included the following:
|
· |
We obtained equity related agreements and performed the
following procedures: |
|
- |
Reviewed agreements for all relevant terms. |
|
- |
Tested management’s identification and treatment of agreement
terms. |
|
- |
Recalculated
the fair value of each award based on the market price determined
based on the terms in the agreements. |
|
- |
Assessed the
terms and evaluated the appropriateness of management’s application
of their accounting policies, along with their use of estimates, in
the determination of any portion that should be classified as a
prepaid expense. |

We have served as the Company’s auditor since 2020.
Tampa, Florida
March 31, 2022
SEAFARER
EXPLORATION CORP. |
CONSOLIDATED BALANCE SHEETS |
|
|
December 31, 2021 |
|
|
December 31, 2020 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
81,801 |
|
|
$ |
186,873 |
|
Prepaid expenses |
|
|
3,000 |
|
|
|
123,039 |
|
Deposits |
|
|
750 |
|
|
|
750 |
|
Total current assets |
|
|
85,551 |
|
|
|
310,662 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
176,476 |
|
|
|
197,336 |
|
Right of use asset |
|
|
27,011 |
|
|
|
41,991 |
|
Total Assets |
|
$ |
289,038 |
|
|
$ |
549,989 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
517,038 |
|
|
$ |
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
$3,864 and $24,431, respectively |
|
|
2,136 |
|
|
|
86,169 |
|
Convertible notes payable, in default |
|
|
235,300 |
|
|
|
308,300 |
|
Convertible notes payable, in default - related parties |
|
|
638,500 |
|
|
|
527,900 |
|
Notes payable |
|
|
50,000 |
|
|
|
- |
|
Notes payable, in default |
|
|
128,000 |
|
|
|
130,000 |
|
Notes payable, in default - related parties |
|
|
18,500 |
|
|
|
18,500 |
|
Shareholder loan |
|
|
7,900 |
|
|
|
1,500 |
|
Lease liability, current |
|
|
16,876 |
|
|
|
14,680 |
|
Total current liabilities |
|
|
1,754,250 |
|
|
|
1,469,409 |
|
|
|
|
|
|
|
|
|
|
Lease liability, long-term |
|
|
10,718 |
|
|
|
27,594 |
|
Total Liabilities |
|
|
1,764,968 |
|
|
|
1,497,003 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Preferred stock, $0.0001
par values -
50,000,000 shares authorized;
67 shares issued |
|
|
|
|
|
|
|
|
Series A -
7 shares issued and outstanding at
December 31, 2021 and 2020 |
|
|
- |
|
|
|
- |
|
Series B -
60 shares issued and outstanding at
December 31, 2021 and 2020 |
|
|
- |
|
|
|
- |
|
Common stock, $0.0001
par value -
9,900,000,000 shares authorized;
6,176,318,579 and
5,315,683,905 shares issued and outstanding at
December 31, 2021 and 2020, respectively |
|
|
617,632 |
|
|
|
530,315 |
|
Common stock to be issued, $0.0001
par value,
37,750,000 and
1,500,000 shares outstanding at December 31, 2021 and 2020,
respectively |
|
|
3,775 |
|
|
|
150 |
|
Unearned compensation |
|
|
(261,536 |
) |
|
|
(67,058 |
) |
Additional paid in capital |
|
|
20,714,410 |
|
|
|
18,514,376 |
|
Accumulated deficit |
|
|
(22,550,211 |
) |
|
|
(19,924,797 |
) |
Total Stockholders’ Deficit |
|
|
(1,475,930 |
) |
|
|
(947,014 |
) |
Total Liabilities and Stockholders’ Deficit |
|
$ |
289,038 |
|
|
$ |
549,989 |
|
See
accompanying notes to the consolidated financial
statements.
SEAFARER
EXPLORATION CORP. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended
December 31, |
|
|
|
2021 |
|
|
2020 |
|
Revenue: |
|
|
|
|
|
|
|
|
Service income |
|
$ |
23,761 |
|
|
$ |
10,622 |
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
Consulting and contractor expenses |
|
|
1,234,353 |
|
|
|
1,542,145 |
|
Research and development |
|
|
439,816 |
|
|
|
463,468 |
|
General and administrative expense |
|
|
376,696 |
|
|
|
244,328 |
|
Vessel maintenance and dockage |
|
|
109,182 |
|
|
|
193,844 |
|
Professional fees |
|
|
83,196 |
|
|
|
136,786 |
|
Travel and entertainment expense |
|
|
63,096 |
|
|
|
66,892 |
|
Depreciation expense |
|
|
21,860 |
|
|
|
20,379 |
|
Rent expense |
|
|
41,182 |
|
|
|
41,986 |
|
Total operating expenses |
|
|
2,369,381 |
|
|
|
2,709,828 |
|
|
|
|
|
|
|
|
|
|
Net loss from operations |
|
|
(2,345,620 |
) |
|
|
(2,699,206 |
) |
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(177,499 |
) |
|
|
(286,720 |
) |
Loss
on extinguishment of debt |
|
|
(121,847 |
) |
|
|
(34,375 |
) |
Net
loss on settlement of accounts payable |
|
|
(448 |
) |
|
|
(4,512 |
) |
Gain
on sale of asset |
|
|
20,000 |
|
|
|
5,500 |
|
Gain
on disposal of investment |
|
|
- |
|
|
|
354,000 |
|
Dividend income |
|
|
- |
|
|
|
4,500 |
|
Total other income (expenses) |
|
|
(279,794 |
) |
|
|
38,393 |
|
|
|
|
|
|
|
|
|
|
Provision for income tax |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,625,414 |
) |
|
$ |
(2,660,813 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
5,645,802,431 |
|
|
|
4,946,696,428 |
|
See
accompanying notes to the consolidated financial
statements.
SEAFARER
EXPLORATION CORP. |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICIT |
FOR
THE YEARS ENDED DECEMBER 31, 2021 AND 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Preferred Stock |
|
|
Series B Preferred Stock |
|
|
Common Stock |
|
|
Common Stock to be Issued |
|
|
Unearned
Compensation |
|
|
Additional
Paid in Capital |
|
|
Accumulated
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 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
425,777,619 |
|
|
|
42,578 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,256,446 |
|
|
|
- |
|
|
|
1,299,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
136,842,821 |
|
|
|
13,684 |
|
|
|
- |
|
|
|
- |
|
|
|
(67,058 |
) |
|
|
804,790 |
|
|
|
- |
|
|
|
751,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares cancelled and returned to treasury in exchange for
cancellation of Investment in P & S, Inc. |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(60,000,000 |
) |
|
|
(6,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(426,000 |
) |
|
|
- |
|
|
|
(432,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for purchase of vehicle |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,000,000 |
|
|
|
100 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,900 |
|
|
|
- |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for charitable contribution |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,000,000 |
|
|
|
100 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
9,600 |
|
|
|
- |
|
|
|
9,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to convert NP and Accrued Interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
39,781,082 |
|
|
|
3,978 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
80,108 |
|
|
|
- |
|
|
|
84,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares reclassed from common stock to be issued |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,120,000 |
|
|
|
1,012 |
|
|
|
(10,120,000 |
) |
|
|
(1,012 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
202,100 |
|
|
|
- |
|
|
|
202,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,660,813 |
) |
|
|
(2,660,813 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
720,353,061 |
|
|
|
72,035 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,458,075 |
|
|
|
- |
|
|
|
1,530,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to convert notes payable and accrued interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
59,944,277 |
|
|
|
5,993 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
277,209 |
|
|
|
- |
|
|
|
283,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
79,337,336 |
|
|
|
9,189 |
|
|
|
36,250,000 |
|
|
|
3,625 |
|
|
|
(273,500 |
) |
|
|
458,568 |
|
|
|
- |
|
|
|
197,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of unearned compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
79,022 |
|
|
|
- |
|
|
|
- |
|
|
|
79,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity kicker |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,000,000 |
|
|
|
100 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
182 |
|
|
|
- |
|
|
|
282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,000 |
|
|
|
- |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,625,414 |
) |
|
|
(2,625,414 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2021 |
|
|
7 |
|
|
$ |
- |
|
|
|
60 |
|
|
$ |
- |
|
|
|
6,176,318,579 |
|
|
$ |
617,632 |
|
|
|
37,750,000 |
|
|
$ |
3,775 |
|
|
$ |
(261,536 |
) |
|
$ |
20,714,410 |
|
|
$ |
(22,550,211 |
) |
|
$ |
(1,475,930 |
) |
See
accompanying notes to the consolidated financial
statements.
SEAFARER
EXPLORATION CORP. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended
December 31, |
|
|
|
2021 |
|
|
2020 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,625,414 |
) |
|
$ |
(2,660,813 |
) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
21,860 |
|
|
|
20,379 |
|
Amortization of beneficial conversion feature and loan fees |
|
|
39,992 |
|
|
|
239,592 |
|
Amortization of unearned compensation |
|
|
79,022 |
|
|
|
- |
|
Common stock issued for services |
|
|
197,882 |
|
|
|
751,416 |
|
Common stock issued for a charitable contribution |
|
|
- |
|
|
|
9,700 |
|
Gain
on sale of asset |
|
|
- |
|
|
|
(5,500 |
) |
Gain
on disposal of investment |
|
|
- |
|
|
|
(354,000 |
) |
Loss
on extinguishment of debt |
|
|
121,847 |
|
|
|
34,375 |
|
Net
loss on settlement of accounts payable |
|
|
448 |
|
|
|
4,512 |
|
Decrease (increase) in: |
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
120,039 |
|
|
|
36,471 |
|
Increase (decrease) in: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
188,742 |
|
|
|
38,080 |
|
Deferred revenue |
|
|
140,000 |
|
|
|
- |
|
Net cash from operating activities |
|
|
(1,715,582 |
) |
|
|
(1,885,788 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
- |
|
|
|
(12,000 |
) |
Proceeds from sale of asset |
|
|
20,000 |
|
|
|
5,500 |
|
Net cash from investing activities |
|
|
20,000 |
|
|
|
(6,500 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from the issuance of common stock |
|
|
1,530,110 |
|
|
|
1,299,024 |
|
Proceeds from the issuance of convertible notes payable |
|
|
- |
|
|
|
206,600 |
|
Proceeds from the issuance of convertible notes payable, related
party |
|
|
6,000 |
|
|
|
- |
|
Proceeds from the issuance of notes payable |
|
|
50,000 |
|
|
|
- |
|
Payments on notes payable |
|
|
(2,000 |
) |
|
|
(45,000 |
) |
Proceeds from shareholders |
|
|
6,400 |
|
|
|
- |
|
Net cash provided by financing activities |
|
|
1,590,510 |
|
|
|
1,460,624 |
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH |
|
|
(105,072 |
) |
|
|
(431,664 |
) |
CASH, BEGINNING OF PERIOD |
|
|
186,873 |
|
|
|
618,537 |
|
CASH, END OF PERIOD |
|
$ |
81,801 |
|
|
$ |
186,873 |
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
283,202 |
|
|
$ |
84,086 |
|
Operating lease liabilities and right of use asset |
|
$ |
- |
|
|
$ |
48,957 |
|
Beneficial conversion feature on convertible notes payable |
|
$ |
6,000 |
|
|
$ |
202,100 |
|
Stock issued for prepaid services |
|
$ |
- |
|
|
$ |
220,650 |
|
Stock issued to purchase vehicle |
|
$ |
- |
|
|
$ |
6,000 |
|
See
accompanying notes to the consolidated financial
statements.
SEAFARER
EXPLORATION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
NOTE
1 – DESCRIPTION
OF BUSINESS
Seafarer
Exploration Corp. (“Seafarer” or the “Company”), was incorporated
on May 28, 2003 in the State of Delaware.
The
principal business of the Company is to engage in the
archaeologically-sensitive exploration, documentation, recovery,
and conservation of historic shipwrecks with the objective of
exploring and discovering Colonial-era shipwrecks for future
generations to be able to appreciate and understand.
In
March of 2014, Seafarer entered into a partnership with Marine
Archaeology Partners, LLC (“MAP”), with the formation of Seafarer’s
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
Company’s 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 service 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. Per Florida Statutes,
Seafarer made a timely request for renewal of the 2019 permit for
Area 2 on July 29, 2021. In January of 2022, Seafarer received
notification from the Florida Division of Historical Resources
(“FDHR”) that its permit for Area 2, which was set to expire on
January 19, 2022, has been continued indefinitely while the renewal
request was being processed. The existing permits will continue
until the renewal is finalized or rejected. Per Florida Statutes,
Seafarer made a timely request for renewal of the 2019 permit for
Area 1 on July 29, 2021. On March 2, 2022, Seafarer received
notification that the permit would continue indefinitely with the
same terms as Area 2.
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
conducting limited exploration operations at the Juno Beach
shipwreck site while it awaits updated permitting from the Army
Corp of Engineers and the Florida Department of Environmental
Protection.
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.
Blockchain did not generate any revenues during the year ended
December 31, 2021. Management is reviewing potential alternate
plans for Blockchain and believes that it is highly unlikely that
Blockchain will generate revenue in 2022.
NOTE
2 – GOING
CONCERN
These
consolidated financial statements have been prepared on a going
concern basis, which assumes the Company will be able to realize
its assets and discharge its liabilities in the normal course of
business for the foreseeable future. The Company has incurred net
losses since inception and has an accumulated deficit of $22,550,211
as of December 31, 2021. During the year ended December 31, 2021,
the Company’s net loss was $2,625,414
and at December 31, 2021, the Company had a working capital deficit
of $1,668,699.
These factors raise substantial doubt about the Company’s 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 March 31, 2022. Management’s 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
Company’s 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
Company’s ability to continue as a going concern; however, the
accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of
business. These consolidated financial statements do not include
any adjustments relating to the recovery of the recorded assets or
the classifications of the liabilities that might be necessary
should the Company be unable to continue as a going
concern.
Covid-19
Disclosure
The
COVID-19 global pandemic may have a serious negative affect on the
Company’s 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-19’s 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.
Current
Economic Conditions
The
Company and certain of its advisors are closely monitoring current
domestic economic conditions. Of particular concern is the rate of
inflation that has been reported as being near a 40 year high and
had recently increased nearly 7% on a year-over-year basis from
2020 to 2021 and the rising cost of fuel. The increasing inflation
in the overall economy may lead to higher interest rates which may
make it more expensive or potentially more challenging for the
Company to access financing. Additionally, the Company’s vessels
use large amounts of fuel when in operation and the recent rise in
the per gallon cost of gasoline will cause an increase in the
Company’s operating expenses. The increase in the cost of fuel may
hamper the Company’s ability to conduct operations.
NOTE
3 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of Seafarer Exploration
Corp. is presented to assist in understanding the Company’s
consolidated financial statements. The consolidated financial
statements and notes are representations of the Company’s
management, who are responsible for their integrity and
objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America
(“GAAP”) and have been consistently applied in the preparation of
the consolidated financial statements.
Principles of Consolidation
The
consolidated financial statements of the Company include the
accounts of the Company and Blockchain which is a wholly owned
subsidiary. Intercompany accounts and transactions have been
eliminated in consolidation.
Cash and Cash Equivalents
For
purposes of the consolidated 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 December 31,
2021 and 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 December
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 $439,816
and $463,468
for the years ended December 31, 2021 and 2020,
respectively.
Revenue Recognition
The
Company recognizes revenue in accordance with the Financial
Accounting Standards Board’s (“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 Company’s 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 Company’s performance obligation is met when the
payment from the customer is received by the provider of the
development services, which is at a point in time. The Company
receives referral fees when payment is received from the provider
of the product/system development services which is when the
Company recognizes revenue under the agreement.
Earnings Per Share
The
Company has adopted FASB ASC 260-10, which provides for the
calculation of “basic” and “diluted” earnings per share. Basic
earnings per share includes no dilution and is computed by dividing
net income or loss available to common stockholders by the weighted
average common shares outstanding for the period. Diluted earnings
per share reflect the potential dilution of securities that could
share in the earnings of an entity.
The
potentially dilutive common stock equivalents for the years ended
December 31, 2021 and 2020 were excluded from the dilutive loss per
share calculation as they would be antidilutive due to the net
loss. As of December 31, 2021 and 2020, there were approximately
648,056,162 and
663,053,249 shares of common stock underlying our
outstanding convertible notes payable and warrants,
respectively.
Fair Value of Financial Instruments
The
carrying amounts of financial assets and liabilities, such as cash,
accounts payable, accrued expenses, convertible notes payable and
payables, approximate their fair values because of the short
maturity of these instruments.
Property, Plant and Equipment
Property,
plant and equipment are recorded at historical cost. Depreciation
is computed on the straight-line method over the estimated useful
lives of the respective assets. During the year ended December 31,
2019, the Company purchased a vessel with an estimated useful life
of ten years. During the year ended December 31, 2020 the Company
purchased a vehicle with an estimated useful life of seven years.
As of December 31, 2021, these are the only capital assets owned by
the Company.
Depreciation
expense was $21,860
and $20,379
for the years ended December 31, 2021 and 2020, respectively, which
is included in operating expenses in the accompanying consolidated
statements of operations.
Impairment of Long-Lived Assets
In
accordance with ASC 360-10, the Company, on a regular basis,
reviews the carrying amount of long-lived assets for the existence
of facts or circumstances, both internally and externally, that
suggest impairment. The Company determines if the carrying amount
of a long-lived asset is impaired based on anticipated undiscounted
cash flows, before interest, from the use of the asset. In the
event of impairment, a loss is recognized based on the amount by
which the carrying amount exceeds the fair value of the asset. Fair
value is determined based on the appraised value of the assets or
the anticipated cash flows from the use of the asset, discounted at
a rate commensurate with the risk involved. There were no
impairment charges recorded during the years ended December 31,
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 years ended December 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, Seafarer’s wholly owned subsidiary, Blockchain began
operations, generated revenue and incurred expenses. The business
of Blockchain has no relation to the Company’s shipwreck
exploration and recovery operations other than common ownership. As
such, the Company concluded that the operations of Blockchain and
Seafarer Exploration were separate reportable segments as of the
years ended December 31, 2021 and 2020 (see Note 11 – Segment
Information).
Convertible Notes Payable
The
Company accounts for convertible notes deemed conventional and
conversion options embedded in non-conventional convertible notes
which qualify as equity under ASC 815, in accordance with the
provisions of ASC 470-20, which provides guidance on accounting for
convertible securities with beneficial conversion features. ASC
470-10 addresses classification determination for specific
obligations, such as short-term obligations expected to be
refinanced on a long-term basis, due-on-demand loan arrangements,
callable debt, sales of future revenue, increasing rate debt, debt
that includes covenants, revolving credit agreements subject to
lock-box arrangements and subjective acceleration clauses.
Accordingly, the Company records, as a discount to convertible
notes, the intrinsic value of such conversion options based upon
the differences between the fair value of the underlying common
stock at the commitment date of the note transaction and the
effective conversion price embedded in the note. Debt discounts
under these arrangements are amortized over the term of the related
debt.
Stock Based Compensation
The
Company applies the fair value method of FASB ASC 718, “Share
Based Payment”, in accounting for its stock-based compensation.
The standard states that compensation cost is measured at the grant
date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. The
Company values stock-based compensation at the market price for the
Company’s common stock and other pertinent factors at the grant
date.
Fully
vested and non-forfeitable shares issued prior to the services
being performed are classified as prepaid expenses.
Leases
In
February 2016, the FASB issued Accounting Standards Update (“ASU”)
2016-02, Leases (Topic 842). The updated guidance requires
lessees to recognize lease assets and lease liabilities for most
operating leases. In addition, the updated guidance requires that
lessors separate lease and non-lease components in a contract in
accordance with the new revenue guidance in ASC 606.
On
January 1, 2019, the Company adopted ASU 2016-02, applying the
package of practical expedients to leases that commenced before the
effective date whereby the Company elected to not reassess the
following: (i) whether any expired or existing contracts contain
leases and; (ii) initial direct costs for any existing leases. For
contracts entered into on or after the effective date, at the
inception of a contract the Company assessed whether the contract
is, or contains, a lease. The Company’s assessment is based on: (1)
whether the contract involves the use of a distinct identified
asset, (2) whether the Company obtains the right to substantially
all the economic benefit from the use of the asset throughout the
period, and (3) whether it has the right to direct the use of the
asset. The Company will allocate the consideration in the contract
to each lease component based on its relative stand-alone price to
determine the lease payments.
Operating
lease right of use (“ROU”) assets represents the right to use the
leased asset for the lease term and operating lease liabilities are
recognized based on the present value of the future minimum lease
payments over the lease term at commencement date. As most leases
do not provide an implicit rate, the Company uses an incremental
borrowing rate based on the information available at the adoption
date in determining the present value of future payments. Lease
expense for minimum lease payments is amortized on a straight-line
basis over the lease term and is presented in operating expenses on
the consolidated statements of operations.
As
permitted under the new guidance, the Company has made an
accounting policy election not to apply the recognition provisions
of the new guidance to short term leases (leases with a lease term
of twelve months or less that do not include an option to purchase
the underlying asset that the lessee is reasonably certain to
exercise); instead, the Company will recognize the lease payments
for short term leases on a straight-line basis over the lease
term.
Investments
The
Company follows ASC 325-20, Cost Method Investments (“ASC
325-20”), to account for its ownership interest in noncontrolled
entities. Under ASC 325-20, equity securities that do not have
readily determinable fair values (i.e., non-marketable equity
securities) and are not required to be accounted for under the
equity method are typically carried at cost (i.e., cost method
investments). Investments of this nature are initially recorded at
cost. Income is recorded for dividends received that are
distributed from net accumulated earnings of the noncontrolled
entity subsequent to the date of investment. Dividends received in
excess of earnings subsequent to the date of investment are
considered a return of investment and are recorded as reductions in
the cost of the investment. Investments are written down only when
there is clear evidence that a decline in value that is other than
temporary has occurred.
Income Taxes
Income
taxes are computed using the asset and liability method. Under the
asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the
financial reporting and tax bases of assets and liabilities and are
measured using the currently enacted tax rates and laws. A
valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be
realized.
Recent Accounting Pronouncements
All
other recent accounting pronouncements issued by the FASB, did not
or are not believed by management to have a material impact on the
Company’s present or future consolidated financial
statements.
NOTE
4 – OPERATING LEASE
RIGHT-OF-USE ASSETS AND OPERATING LEASE
LIABILITIES
Operating
lease right-of-use assets and liabilities are recognized at the
present value of the future lease payments at the lease
commencement date. The interest rate used to determine the present
value is the incremental borrowing rate, estimated to be 6%, as the
interest rate implicit in most of the Company’s leases are not
readily determinable. Operating lease expense is recognized on a
straight-line basis over the lease term. During the years ended
December 31, 2021 and 2020, the Company recorded $18,403
and $10,398,
respectively, as operating lease expense, which is included in rent
expense on the consolidated statements of operations.
The
Company leases 823 square feet of office space located at 14497
North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. During
the year ended December 31, 2019 and through June 30, 2020 the
Company paid $1,252 per month to lease the office space. The
Company entered into an amended lease agreement commencing on July
1, 2020 through July 31, 2023 with base month rents of $1,475 from July 1, 2020 to June 30,
2021, $1,519
from July 1, 2021 to June 30, 2022, $1,564
from July 1, 2022 to June 30, 2023 and $1,611
from July 1, 2023 to July 31, 2023. Under the terms of the lease
there may be additional fees charged above the base monthly rental
fee.
In
adopting Topic 842, the Company has elected the ‘package of
practical expedients’, which permit it not to reassess under the
new standard its prior conclusions about lease identification,
lease classification and initial direct costs. The Company did not
elect the use-of-hindsight or the practical expedient pertaining to
land easements; the latter is not applicable to the Company. As
permitted under the new guidance, the Company has made an
accounting policy election not to apply the recognition provisions
of the new guidance to short term leases (leases with a lease term
of twelve months or less that do not include an option to purchase
the underlying asset that the lessee is reasonably certain to
exercise); instead, the Company will recognize the lease payments
for short term leases on a straight-line basis over the lease term.
On January 1, 2019, upon adoption of Topic 842, the Company
recorded right-of-use assets and lease liabilities of $22,575. On
July 1, 2020, upon renewal of the lease, the Company recorded a
right-of-use asset and lease liability of $48,957.
Right-of-use
assets at December 31, 2021 and 2020 are summarized
below:
Schedule of right-of- use assets
|
|
December 31, 2021 |
|
|
December 31, 2020 |
|
Office lease |
|
$ |
48,957 |
|
|
$ |
48,957 |
|
Less accumulated
amortization |
|
|
(21,946 |
) |
|
|
(6,966 |
) |
Right of use
assets, net |
|
$ |
27,011 |
|
|
$ |
41,991 |
|
Amortization
on the right -of -use asset is included in rent expense on the
consolidated statements of operations.
Operating
lease liabilities are summarized below:
Schedule of operating lease
liabilities
|
|
December 31, 2021 |
|
|
December 31, 2020 |
|
Office lease |
|
$ |
27,594 |
|
|
$ |
42,274 |
|
Less: current
portion |
|
|
(16,876 |
) |
|
|
(14,680 |
) |
Long term
portion |
|
$ |
10,718 |
|
|
$ |
27,594 |
|
Maturity
of lease liabilities are as follows:
Schedule of Maturity of lease
liabilities
|
|
|
|
|
Year ended December 31, 2022 |
|
$ |
18,641 |
|
Year ended December 31, 2023 |
|
|
11,080 |
|
Total future minimum lease
payments |
|
|
29,721 |
|
Less: Present
value discount |
|
|
(2,127 |
) |
Lease
liability |
|
$ |
27,594 |
|
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 Company’s shares issued to P&S on the date of the share
exchange agreement and is being accounted for as a cost method
investment. The Company received dividends from P&S during the
years ended December 31, 2021 and 2020 of $0 and $4,500
respectively, which have been presented as dividend income on the
consolidated statements of operations.
In
August of 2020, the Company and P&S entered into a new
agreement to effectively unwind the previous share exchange
agreement. Under the terms of the new agreement, Seafarer agreed to
exchange 10,000 shares of P&S for 60,000,000 shares of its
common stock. As a result of the transaction in August of 2020, the
Company realized a disposal of investment of $354,000.
Seafarer
also has an agreement with P&S to receive referral fees. Under
the terms of the agreement, P&S has agreed to pay a 7% referral
fee to the Company when P&S receives cash flows from providing
blockchain software services to entities that were referred by the
Company. The agreement is ongoing and has no expiration date,
however the Company does not anticipate that it will receive any
referral fees from P&S in the future. During the years ended
December 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 consolidated statements of
operations.
NOTE 6 –
CONVERTIBLE NOTES
PAYABLE AND NOTES PAYABLE
Convertible
Notes Payable
PAYABLE
The
following table reflects the convertible notes payable as of
December 31, 2021 and 2020:
Schedule of Convertible Notes
Payable
|
|
Issue Date |
|
Maturity
Date |
|
December 31,
2021 |
|
|
December 31,
2020 |
|
|
Rate |
|
|
Conversion
Price |
|
|
|
|
|
|
|
Principal
Balance |
|
|
Principal
Balance |
|
|
|
|
|
|
|
Convertible notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable, Face
Value |
|
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 |
|
December
31,
2021 |
|
December
31,
2020 |
|
Rate |
|
Conversion
Price |
|
|
|
|
|
|
Principal
Balance |
|
Principal
Balance |
|
|
|
|
Convertible
notes payable - related parties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable, Face Value |
|
08/06/20 |
|
02/06/21 |
|
$ |
— |
|
|
$ |
25,200 |
|
|
|
6.00% |
|
|
0.0035 |
Notes payable, Face Value |
|
08/06/20 |
|
02/06/21 |
|
|
— |
|
|
|
35,000 |
|
|
|
6.00% |
|
|
0.0035 |
Notes payable, Face Value |
|
08/14/20 |
|
02/14/21 |
|
|
— |
|
|
|
50,400 |
|
|
|
6.00% |
|
|
0.0035 |
Notes
payable, Face Value |
|
10/13/21 |
|
04/13/22 |
|
|
3,000 |
|
|
|
— |
|
|
|
2.00% |
|
|
0.0020 |
Notes payable, Face Value |
|
11/10/21 |
|
05/10/22 |
|
|
3,000 |
|
|
|
— |
|
|
|
2.00% |
|
|
0.0020 |
Face
value |
|
|
|
|
|
|
6,000 |
|
|
|
110,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
unamortized discounts |
|
|
|
|
|
|
(3,864 |
) |
|
|
(24,431 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
convertible notes payable - related parties |
|
|
|
|
|
$ |
2,136 |
|
|
$ |
86,169 |
|
|
|
|
|
|
|
|
|
Issue
Date |
|
Maturity
Date |
|
December
31,
2021 |
|
|
December
31,
2020 |
|
|
|
Rate |
|
|
Conversion
Price |
|
|
|
|
|
|
|
Principal
Balance |
|
|
Principal
Balance |
|
|
|
|
|
|
|
|
|
Convertible
notes payable - in default |
|
Notes
payable, Face Value |
|
08/28/09 |
|
11/01/09 |
|
$ |
4,300 |
|
|
$ |
4,300 |
|
|
|
10.00% |
|
|
|
0.0150 |
|
Notes
payable, Face Value |
|
11/20/12 |
|
05/20/13 |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
6.00% |
|
|
|
0.0050 |
|
Notes
payable, Face Value |
|
01/19/13 |
|
07/30/13 |
|
|
5,000 |
|
|
|
5,000 |
|
|
|
6.00% |
|
|
|
0.0040 |
|
Notes
payable, Face Value |
|
02/11/13 |
|
08/11/13 |
|
|
9,000 |
|
|
|
9,000 |
|
|
|
6.00% |
|
|
|
0.0060 |
|
Notes
payable, Face Value |
|
09/25/13 |
|
03/25/14 |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
6.00% |
|
|
|
0.0125 |
|
Notes
payable, Face Value |
|
10/04/13 |
|
04/04/14 |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
6.00% |
|
|
|
0.0125 |
|
Notes
payable, Face Value |
|
10/30/13 |
|
10/30/14 |
|
|
- |
|
|
|
50,000 |
|
|
|
6.00% |
|
|
|
0.0125 |
|
Notes
payable, Face Value |
|
05/15/14 |
|
11/15/14 |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
6.00% |
|
|
|
0.0070 |
|
Notes
payable, Face Value |
|
09/18/15 |
|
03/18/16 |
|
|
25,000 |
|
|
|
25,000 |
|
|
|
6.00% |
|
|
|
0.0020 |
|
Notes
payable, Face Value |
|
04/04/16 |
|
10/04/16 |
|
|
- |
|
|
|
10,000 |
|
|
|
6.00% |
|
|
|
0.0010 |
|
Notes
payable, Face Value |
|
07/19/16 |
|
07/19/17 |
|
|
4,000 |
|
|
|
4,000 |
|
|
|
6.00% |
|
|
|
0.0015 |
|
Notes
payable, Face Value |
|
03/06/18 |
|
09/06/18 |
|
|
6,000 |
|
|
|
6,000 |
|
|
|
6.00% |
|
|
|
0.0006 |
|
Notes
payable, Face Value |
|
02/06/18 |
|
11/07/18 |
|
|
6,000 |
|
|
|
6,000 |
|
|
|
6.00% |
|
|
|
0.0006 |
|
Notes
payable, Face Value |
|
10/29/18 |
|
04/29/19 |
|
|
- |
|
|
|
3,000 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
01/03/19 |
|
07/03/19 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
6.00% |
|
|
|
0.0010 |
|
Notes
payable, Face Value |
|
03/16/19 |
|
09/16/19 |
|
|
- |
|
|
|
10,000 |
|
|
|
6.00% |
|
|
|
0.0010 |
|
Notes
payable, Face Value |
|
09/04/19 |
|
03/04/20 |
|
|
25,000 |
|
|
|
25,000 |
|
|
|
6.00% |
|
|
|
0.0030 |
|
Balance
convertible notes payable - in default |
|
$ |
235,300 |
|
|
$ |
308,300 |
|
|
|
|
|
|
|
|
|
|
|
Issue
Date |
|
Maturity
Date |
|
December
31,
2021 |
|
|
December
31,
2020 |
|
|
|
Rate |
|
|
|
Conversion
Price |
|
|
|
|
|
|
|
Principal
Balance |
|
|
Principal
Balance |
|
|
|
|
|
|
|
|
|
Convertible
notes payable - related parties, in default |
|
Notes
payable, Face Value |
|
01/09/09 |
|
01/09/10 |
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
|
10.00% |
|
|
|
0.0150 |
|
Notes
payable, Face Value |
|
01/25/10 |
|
01/25/11 |
|
|
6,000 |
|
|
|
6,000 |
|
|
|
6.00% |
|
|
|
0.0050 |
|
Notes
payable, Face Value |
|
01/18/12 |
|
07/18/12 |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
8.00% |
|
|
|
0.0040 |
|
Notes
payable, Face Value |
|
01/19/13 |
|
07/30/13 |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
6.00% |
|
|
|
0.0040 |
|
Notes
payable, Face Value |
|
07/26/13 |
|
01/26/14 |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
6.00% |
|
|
|
0.0100 |
|
Notes
payable, Face Value |
|
01/17/14 |
|
07/17/14 |
|
|
31,500 |
|
|
|
31,500 |
|
|
|
6.00% |
|
|
|
0.0060 |
|
Notes
payable, Face Value |
|
05/27/14 |
|
11/27/14 |
|
|
7,000 |
|
|
|
7,000 |
|
|
|
6.00% |
|
|
|
0.0070 |
|
Notes
payable, Face Value |
|
07/21/14 |
|
01/25/15 |
|
|
17,000 |
|
|
|
17,000 |
|
|
|
6.00% |
|
|
|
0.0080 |
|
Notes
payable, Face Value |
|
10/16/14 |
|
04/16/15 |
|
|
21,000 |
|
|
|
21,000 |
|
|
|
6.00% |
|
|
|
0.0045 |
|
Notes
payable, Face Value |
|
07/14/15 |
|
01/14/16 |
|
|
9,000 |
|
|
|
9,000 |
|
|
|
6.00% |
|
|
|
0.0030 |
|
Notes
payable, Face Value |
|
01/12/16 |
|
07/12/16 |
|
|
5,000 |
|
|
|
5,000 |
|
|
|
6.00% |
|
|
|
0.0020 |
|
Notes
payable, Face Value |
|
05/10/16 |
|
11/10/16 |
|
|
5,000 |
|
|
|
5,000 |
|
|
|
6.00% |
|
|
|
0.0005 |
|
Notes
payable, Face Value |
|
05/10/16 |
|
11/10/16 |
|
|
5,000 |
|
|
|
5,000 |
|
|
|
6.00% |
|
|
|
0.0005 |
|
Notes
payable, Face Value |
|
05/20/16 |
|
11/20/16 |
|
|
5,000 |
|
|
|
5,000 |
|
|
|
6.00% |
|
|
|
0.0005 |
|
Notes
payable, Face Value |
|
07/12/16 |
|
01/12/17 |
|
|
2,400 |
|
|
|
2,400 |
|
|
|
6.00% |
|
|
|
0.0006 |
|
Notes
payable, Face Value |
|
01/26/17 |
|
03/12/17 |
|
|
5,000 |
|
|
|
5,000 |
|
|
|
6.00% |
|
|
|
0.0005 |
|
Notes
payable, Face Value |
|
02/14/17 |
|
08/14/17 |
|
|
25,000 |
|
|
|
25,000 |
|
|
|
6.00% |
|
|
|
0.0008 |
|
Notes
payable, Face Value |
|
08/16/17 |
|
09/16/17 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
6.00% |
|
|
|
0.0008 |
|
Notes
payable, Face Value |
|
03/14/18 |
|
05/14/18 |
|
|
25,000 |
|
|
|
25,000 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
04/04/18 |
|
06/04/18 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
04/11/18 |
|
06/11/18 |
|
|
25,000 |
|
|
|
25,000 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
05/08/18 |
|
07/08/18 |
|
|
25,000 |
|
|
|
25,000 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
05/30/18 |
|
08/30/18 |
|
|
25,000 |
|
|
|
25,000 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
06/12/18 |
|
09/12/18 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
06/20/18 |
|
09/12/18 |
|
|
500 |
|
|
|
500 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
01/09/18 |
|
01/09/19 |
|
|
12,000 |
|
|
|
12,000 |
|
|
|
6.00% |
|
|
|
0.0006 |
|
Notes
payable, Face Value |
|
08/27/18 |
|
02/27/19 |
|
|
2,000 |
|
|
|
2,000 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
10/02/18 |
|
04/02/19 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
6.00% |
|
|
|
0.0008 |
|
Notes
payable, Face Value |
|
10/23/18 |
|
04/23/19 |
|
|
4,200 |
|
|
|
4,200 |
|
|
|
6.00% |
|
|
|
0.0007 |
|
Notes
payable, Face Value |
|
11/07/18 |
|
05/07/19 |
|
|
2,000 |
|
|
|
2,000 |
|
|
|
6.00% |
|
|
|
0.0008 |
|
Notes
payable, Face Value |
|
11/14/18 |
|
05/14/19 |
|
|
8,000 |
|
|
|
8,000 |
|
|
|
6.00% |
|
|
|
0.0008 |
|
Notes
payable, Face Value |
|
01/08/19 |
|
07/08/19 |
|
|
7,000 |
|
|
|
7,000 |
|
|
|
6.00% |
|
|
|
0.0008 |
|
Notes
payable, Face Value |
|
04/25/19 |
|
12/23/19 |
|
|
20,000 |
|
|
|
20,000 |
|
|
|
6.00% |
|
|
|
0.0040 |
|
Notes
payable, Face Value |
|
06/07/19 |
|
12/07/19 |
|
|
5,100 |
|
|
|
5,100 |
|
|
|
6.00% |
|
|
|
0.0030 |
|
Notes
payable, Face Value |
|
09/17/19 |
|
04/17/20 |
|
|
12,000 |
|
|
|
12,000 |
|
|
|
6.00% |
|
|
|
0.0030 |
|
Notes
payable, Face Value |
|
11/12/19 |
|
05/12/20 |
|
|
25,000 |
|
|
|
25,000 |
|
|
|
6.00% |
|
|
|
0.0025 |
|
Notes
payable, Face Value |
|
11/26/19 |
|
05/26/20 |
|
|
25,200 |
|
|
|
25,200 |
|
|
|
6.00% |
|
|
|
0.0030 |
|
Notes
payable, Face Value |
|
12/03/19 |
|
06/03/20 |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
6.00% |
|
|
|
0.0030 |
|
Notes
payable, Face Value |
|
01/07/20 |
|
06/20/20 |
|
|
51,000 |
|
|
|
51,000 |
|
|
|
6.00% |
|
|
|
0.0030 |
|
Notes
payable, Face Value |
|
08/06/20 |
|
02/06/21 |
|
|
25,200 |
|
|
|
- |
|
|
|
6.00% |
|
|
|
0.0035 |
|
Notes
payable, Face Value |
|
08/06/20 |
|
02/06/21 |
|
|
35,000 |
|
|
|
- |
|
|
|
6.00% |
|
|
|
0.0035 |
|
Notes
payable, Face Value |
|
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 |
|
$ |
875,936 |
|
|
$ |
953,944 |
|
|
|
|
|
|
|
|
|
Notes
Payable
The
following tables reflect the notes payable at December 31, 2021 and
2020:
Schedule of Notes Payable
|
|
Issue Date |
|
Maturity
Date |
|
December 31,
2021 |
|
|
December 31,
2020 |
|
|
Rate |
|
|
|
|
|
|
Principal
Balance |
|
|
Principal
Balance |
|
|
|
Notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable, Face
Value |
|
12/08/21 |
|
01/08/22 |
|
$ |
50,000 |
|
|
$ |
- |
|
|
6.00% |
Balance notes
payable |
|
|
|
|
|
$ |
50,000 |
|
|
$ |
- |
|
|
|
|
|
Issue
Date |
|
Maturity
Date |
|
December
31,
2021 |
|
|
December
31,
2020 |
|
|
Rate |
|
|
|
|
|
|
Principal
Balance |
|
|
Principal
Balance |
|
|
|
Notes
payable - in default |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable, Face Value |
|
04/27/11 |
|
04/27/12 |
|
$ |
5,000 |
|
|
$ |
5,000 |
|
|
6.00% |
Notes
payable, Face Value |
|
12/14/17 |
|
12/14/18 |
|
|
18,000 |
|
|
|
20,000 |
|
|
6.00% |
Notes
payable, Face Value |
|
11/29/17 |
|
11/29/19 |
|
|
105,000 |
|
|
|
105,000 |
|
|
2.06% |
Balance
notes payable – default |
|
|
|
|
|
$ |
128,000 |
|
|
$ |
130,000 |
|
|
|
|
|
Issue Date |
|
Maturity
Date |
|
December 31,
2021 |
|
|
December 31,
2020 |
|
|
Rate |
|
|
|
|
|
|
Principal
Balance |
|
|
Principal
Balance |
|
|
|
Notes
payable - related parties, in default |
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable,
Face Value |
|
02/24/10 |
|
02/24/11 |
|
$ |
7,500 |
|
|
$ |
7,500 |
|
|
6.00% |
Notes payable, Face
Value |
|
10/06/15 |
|
11/15/15 |
|
|
10,000 |
|
|
|
10,000 |
|
|
6.00% |
Notes payable, Face
Value |
|
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 |
|
|
|
|
|
$ |
196,500 |
|
|
$ |
148,500 |
|
|
|
The
convertible notes payable are convertible into a fixed number of
shares and with no down round protection features. The Company
accounted for the beneficial conversion features based on the
intrinsic value at the date of issuance. During the years ended
December 31, 2021 and 2020, the Company recognized beneficial
conversion features totaling $6,000 and $202,100, respectively. The
discount from the beneficial conversion features are being
amortized through charges to interest expense over the term of the
convertible notes payable. For the years ended December 31, 2021
and 2020, the Company recorded interest expense related to the
amortization of debt discounts in the amount of approximately
$40,000 and $240,000 which is included in interest expense on the
consolidated statements of operations.
New
Convertible Notes Payable Issued During the Years Ended December
31, 2021 and 2020
During
the year ended December 31, 2021, the Company entered into the
following Convertible Notes Payable and Notes Payable
Agreements:
In
October of 2021, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 2% per annum and the principal and accrued interest is due
on or before April 13, 2022. The note is unsecured and is
convertible at the lender’s option into shares of the Company’s
common stock at a rate of $0.0020 per share.
In
November of 2021, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 2% per annum and the principal and accrued interest is due
on or before May 10, 2022. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s common stock at
a rate of $0.0020 per share.
During
the year ended December 31, 2020, the Company entered into the
following Convertible Notes Payable and Notes Payable
Agreements:
In
January of 2020, the Company entered into a convertible promissory
note agreement in the amount of $51,000 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 30, 2020. The note is unsecured and is
convertible at the lender’s option into shares of the Company’s
common stock at a rate of $0.003 per share. This note is currently
in default due to non payment of principal and interest.
In
August of 2020, the Company entered into a convertible promissory
note agreement in the amount of $25,200 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before February 6, 2021. The note is unsecured and is
convertible at the lender’s option into shares of the Company’s
common stock at a rate of $0.0035 per share. This note is currently
in default due to non payment of principal and interest.
In
August of 2020, the Company entered into a convertible promissory
note agreement in the amount of $35,000 with a related party. This
note pays interest at a rate of 6% per annum and the principal and
accrued interest was due on or before February 6, 2021. The note is
unsecured and is convertible at the lender’s option into shares of
the Company’s common stock at a rate of $0.0035 per share. This
note is currently in default due to non payment of principal and
interest.
In
August of 2020, the Company entered into a convertible promissory
note agreement in the amount of $50,400 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before February 14, 2021. The note is unsecured and is
convertible at the lender’s option into shares of the Company’s
common stock at a rate of $0.0035 per share. This note is currently
in default due to non payment of principal and interest.
In
September of 2020, the Company entered into a convertible
promissory note agreement in the amount of $45,000 with an
individual. This note pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before March 1,
2021. The note is unsecured and is convertible at the lender’s
option into shares of the Company’s common stock at a rate of
$0.003 per share. This note is currently in default due to non
payment of principal and interest.
Note
Conversions
During
the year ended December 31, 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 with a total share value of
$57,648.
The
Company issued 15,594,247 shares of restricted common stock to a
convertible note holder to settle $45,000 of the principal balance
and $1,783 of accrued interest on a convertible note payable with a
total share value of $79,530.
The
Company issued 35,615,390 shares of restricted common stock to a
convertible note holder to settle $73,000 of the principal balance
and $28,761 of accrued interest on four convertible notes payable
with a total share value of $146,024.
During
the year ended December 31, 2020:
The
Company issued 39,781,082 shares of restricted common stock to
settle $84,086 of principal and accrued interest owed on three
convertible notes payable. The remaining principal balance of all
of these notes was $0 at December 31, 2020.
Repayment
of Promissory Note
During
the years ended December 31, 2021 and 2020, the Company repaid a
total of $2,000 and $45,000, respectively, of the principal of a
promissory note with an original principal balance of $75,000 that
was due on December 14, 2018. The remaining principal balance of
the note at December 31, 2021 was $18,000.
Shareholder
Loan
At
December 31, 2021, the Company had the following four loans
outstanding to its CEO in the aggregate amount of
$7,900:
|
- |
A
loan with no due date with a $1,500 remaining balance and an
interest rate of 2% and a conversion rate of $0.0005; |
|
- |
A
loan due on October 26, 2021 with a remaining balance of $4,000 and
an interest rate of 1%; |
|
- |
A
loan due on January 22, 2022 with a remaining balance of $1,400 and
an interest rate of 1%; and |
|
- |
A
loan due on January 26, 2022 with a remaining balance of $1,000 and
an interest rate of 1%; |
Repayment
of Shareholder Loan
During
the year ended December 31, 2021 the Company repaid its CEO $2,000
for a loan dated April 26, 2021 that had an original principle
balance of $6,000.
Collateralized
Promissory Notes
Two
convertible notes outstanding with related parties, dated January
9, 2009 and January 18, 2012 are collateralized by Company
assets.
Convertible
Notes Payable and Notes Payable, in Default
The
Company does not have additional sources of debt financing to
refinance its convertible notes payable and notes payable that are
currently in default. If the Company is unable to obtain additional
capital, such lenders may file suit, including suit to foreclose on
the assets held as collateral for the obligations arising under the
secured notes. If any of the lenders file suit to foreclose on the
assets held as collateral, then the Company may be forced to
significantly scale back or cease its operations, which would more
than likely result in a complete loss of all capital that has been
invested in or borrowed by the Company. The fact that the Company
is in default of several promissory notes held by various lenders
makes investing in the Company or providing any loans to the
Company extremely risky with a very high potential for a complete
loss of capital.
NOTE
7 – STOCKHOLDERS’
DEFICIT
The
Company’s total authorized capital stock consists of
9,900,000,000 shares of common stock, $0.0001
par value per share.
Preferred
Stock
The
Company is authorized to issue
50,000,000 shares of preferred stock.
Series
A Preferred Stock
At
December 31, 2021 and 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 Company’s common stock. In the event of
a liquidation, Series A have preference.
Series
B Preferred Stock
On
February 10, 2014, the Board of Directors of the Company under the
authority granted under Article V of the Articles of Incorporation,
defined and created a new preferred series of shares from the
50,000,000 authorized preferred shares. Pursuant to Article V, the
Board of Directors has the power to designate such shares and all
powers and matters concerning such shares. Such share class shall
be designated Preferred Class B. The preferred class was created
for 60 Preferred Class B shares.
Such shares each have a voting power equal to one percent of the
outstanding shares issued (totaling 60%) at the time of any vote
action as necessary for share votes under Florida law, with or
without a shareholder meeting. Such shares are
non-convertible to common stock of the Company and are not
considered as convertible under any accounting measure. Such shares
shall only be held by the Board of Directors as a Corporate body,
and shall not be placed into any individual name. Such shares were
considered issued at the time of this resolution’s adoption, and do
not require a stock certificate to exist, unless selected to do so
by the Board for representational purposes only. Such shares are
considered for voting as a whole amount, and shall be voted for any
matter by a majority vote of the Board of Directors. Such shares
shall not be divisible among the Board members, and shall be voted
as a whole either for or against such a vote upon the vote of the
majority of the Board of Directors. In the event that there is any
vote taken which results in a tie of a vote of the Board of
Directors, the vote of the Chairman of the Board shall control the
voting of such shares. Such shares are not transferable except in
the case of a change of control of the Corporation when such shares
shall continue to be held by the Board of Directors. Such shares
have the authority to vote for all matters that require a share
vote under Florida law and the Articles of
Incorporation.
Common
Stock Issuances
During
the year ended December 31, 2021, the Company issued or is to issue
the following shares of restricted common stock:
|
- |
720,353,061
restricted shares for total proceeds of $1,530,110. |
|
|
|
|
- |
59,944,277
restricted shares to settle $283,202 of principal and accrued
interest owed on various convertible notes payable. The Company had
a loss on extinguishment of debt totaling $121,847. |
|
|
|
|
- |
79,337,336
restricted shares for services provided by consultants,
contractors, advisory members, board members, and other service
providers with a value of $197,882. 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.
|
|
|
|
|
- |
1,000,000
restricted shares issued as a financing fee to a convertible
promise note holder. |
|
|
|
During
the year ended December 31, 2020, the Company issued or is to issue
the following shares of restricted common stock:
|
- |
425,777,619
shares for total proceeds of $1,299,024. |
|
|
|
|
- |
136,842,821
restricted shares for services provided by consultants,
contractors, advisory members, board members, and other service
providers. The Company determined the fair value of the shares
issued using the stock price on date of grant or issuance.
Compensation expense is recognized as the services are provided to
the Company. For the year ended December 31, 2020, the Company
incurred $751,416 of compensation expense for stock issued for
services and have prepaid expenses of $123,039 at December 31, 2020
for stock issued prior to services being performed. The Company
recorded unearned compensation of $67,058 on its consolidated
balance sheet for the year ended December 31, 2020. |
|
|
|
|
- |
39,781,082
shares to settle $84,086 of principle and accrued interest owed on
various convertible notes payable and one note payable. |
|
- |
1,000,000
shares valued at $6,000 for the purchase of a vehicle. The Company
determined the fair value of the shares issued for the purchase of
the vehicle using the stock price on the date of the bill of
sale. |
|
|
|
|
- |
1,000,000
shares valued at $9,700 issued as charitable contributions to a
charity. The Company determined the fair value of the shares issued
using the stock price on date of issuance. |
|
|
|
|
- |
60,000,000
shares were cancelled and returned to the treasure (See Note 5 –
Investment in Probability and Statistics, Inc.). |
|
|
|
|
- |
10,120,000
restricted shares reclassed from common stock to be
issued. |
Warrants
and Options
The
Company did not issue any warrants or options during the years
ended December 31, 2021 and 2020.
At
December 31, 2021, the Company had warrants to purchase a total of
4,000,000 shares of its restricted common stock
outstanding.
The
following table shows the warrants outstanding at December 31, 2021
and 2020:
Schedule of Warrants Outstanding
|
|
Number
of |
|
|
Weighted Average |
|
|
Weighted Average |
|
|
Average |
|
|
|
Warrants |
|
|
Exercise Price |
|
|
Remaining Life (Years) |
|
|
Intrinsic Value |
|
Outstanding, December 31, 2019 |
|
|
8,000,000 |
|
|
$ |
0.0040 |
|
|
|
1.83 |
|
|
$ |
0.0038 |
|
Granted |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Forfeited or
expired |
|
|
(4,000,000 |
) |
|
|
0.0030 |
|
|
|
- |
|
|
|
0.0033 |
|
Exercised |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outstanding, December 31, 2020 |
|
|
4,000,000 |
|
|
$ |
0.0050 |
|
|
|
1.92 |
|
|
$ |
0.0013 |
|
Exercisable, December 31,
2020 |
|
|
4,000,000 |
|
|
$ |
0.0050 |
|
|
|
1.92 |
|
|
$ |
0.0013 |
|
Granted |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Forfeited or
expired |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outstanding, December 21, 2021 |
|
|
4,000,000 |
|
|
$ |
0.0050 |
|
|
|
0.92 |
|
|
$ |
0.0010 |
|
Exercisable,
December 21, 2021 |
|
|
4,000,000 |
|
|
$ |
0.0050 |
|
|
|
0.92 |
|
|
$ |
0.0010 |
|
NOTE 8
– INCOME
TAXES
At
December 31, 2021 and 2020, the Company had available Federal and
state net operating loss carry forwards (“NOLs”) to reduce future
taxable income. The amounts available were approximately $22,600,000
and $19,925,000,
respectively, for Federal purposes. The potential tax benefit
arising from the NOLs of approximately $14,600,000 from the period
prior to the Act’s effective date will begin to expire in 2033. The
potential tax benefit arising from the net operating loss
carryforward of approximately $5,414,960 generated from the period
following the Act’s effective date can be carried forward
indefinitely within the annual usage limitations. Given the
Company’s history of net operating losses, management has
determined that it is more likely than not that the Company will
not be able to realize the tax benefit of the carryforwards.
Accordingly, the Company has not recognized a deferred tax asset
for this benefit.
The
Company adopted FASB guidelines that address the determination of
whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under this
guidance, the Company may recognize the tax benefit from an
uncertain tax position only if it is more likely than not that the
tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a
greater than fifty percent likelihood of being realized upon
ultimate settlement. This guidance also provides guidance on
derecognition, classification, interest and penalties on income
taxes, accounting in interim periods and requires increased
disclosures. As of December 31, 2021 and 2020, the Company did not
have a liability for unrecognized tax benefits.
The
valuation allowance at December 31, 2021 was $5,414,960. The
net change in valuation allowance during the year ended December
31, 2021 was $1,230,960. In assessing the realizability of deferred
tax assets, management considers whether it is more likely than not
that some portion or all of the deferred income tax assets will not
be realized.
The
Company’s policy is to record interest and penalties on uncertain
tax provisions as income tax expense. As of December 31, 2021 and
2020, the Company has not accrued interest or penalties related to
uncertain tax positions. Additionally, tax years 2018 through 2020
remain open to examination by the major taxing jurisdictions to
which the Company is subject. The Company is preparing and
reviewing information for tax returns for past years. Due to the
Company’s lack of revenue since inception management does not
believe that there is any income tax liability for past years.
There are currently no open federal or state tax years under
audit.
Upon
the attainment of taxable income by the Company, management will
assess the likelihood of realizing the tax benefit associated with
the use of the carry forwards and will recognize a deferred tax
asset at that time.
The
items accounting for the difference between income taxes computed
at the federal statutory rate and the provision for income taxes
are as follows:
Schedule of Income taxes computed at the federal
statutory rate and the provision for income
taxes
Deferred
income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax
purposes.
As of
December 31, 2021 and 2020, the Company’s only significant deferred
income tax asset was a cumulative estimated net tax operating loss
of approximately $22,600,000
and $19,925,000,
respectively, that is available to offset future taxable income, if
any, in future periods, subject to expiration and other limitations
imposed by the Internal Revenue Service. Management has considered
the Company’s operating losses incurred to date and believes that a
full valuation allowance against the deferred tax assets is
required as of December 31, 2021 and 2020.
NOTE
9 – COMMITMENTS AND
CONTINGENCIES
Agreement to Explore a Shipwreck Site Located off of Melbourne
Beach, Florida
In
March of 2014, Seafarer entered into a partnership and with MAP,
with the formation of Seafarer’s Quest, LLC for the purpose of
exploring a shipwreck site off of Melbourne Beach, Florida.
Seafarer owns 50% of Seafarer’s Quest, LLC and is handling the
operations on behalf of Seafarer’s Quest. To date there has been no
significant financial activity in Seafarer’s Quest. Under the
partnership with MAP, Seafarer is the designated manager of
Seafarer’s Quest, LLC and is responsible for the costs of
permitting, exploration and recovery. Seafarer is entitled to
receive 80% and MAP is entitled to receive 20% of artifacts and
treasure recovered from the site after the State of Florida
receives its share, which is anticipated to be 20% under any future
recovery permits. The permits with the State of Florida for two
areas on the site, designated as Areas 1 and 2, were renewed in
2019 for an additional 3 years. There are currently no recovery
permits for the site that have been applied for or issued as of the
date of this filing. It will be necessary to be granted a recovery
permit in order to recover any artifacts and treasure that may
potentially be located on the site. The required, affiliated
environmental permits from the U.S. Army Corps of Engineers
(“USACE”) and Florida Department of Environmental Protection
(“FLDEP’) were previously issued in the name of a partner that is
no longer active. In 2020 Seafarer worked with the various State of
Florida governmental agencies involved to update and consolidate
all of these environmental permits solely under the Company’s name.
The State of Florida Bureau of Archeological Research (“FBAR”) had
ordered the Company not to disturb the ocean’s bottom while the
changes and updates to the Company’s permits were in process. Some
requests of change are questionable to the Company. Since the
issuance of the USACE and FLDEP environmental permits, FBAR has
continued to stop or delay ground disturbance in Seafarer’s legally
permitted area with ongoing questions and requests.
Certain Other Agreements
See
Note 4 Operating Lease Right-of-Use Assets and Operating Lease
Liabilities.
NOTE
10 – RELATED PARTY
TRANSACTIONS
During
the year ended December 31, 2021, the Company has had extensive
dealings with related parties including the following:
In
April of 2021, Seafarer’s CEO provided a loan to the Company in the
amount of $6,000.
The loan pays a 1% annual rate of interest, is due and payable on
October 26, 2021 and is not secured.
In
October of 2021, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 2% per annum and the principal and accrued interest is due
on or before April 13, 2022. The note is unsecured and is
convertible at the lender’s option into shares of the Company’s
common stock at a rate of $0.0020 per share.
In
October of 2021, Seafarer’s CEO provided a loan to the Company in
the amount of $1,400. The loan pays a 1% annual rate of interest,
was due and payable on January 25, 2022 and is not
secured.
In
October of 2021, Seafarer’s CEO provided a loan to the Company in
the amount of $1,000. The loan pays a 1% annual rate of interest,
was due and payable on January 26, 2022 and is not
secured.
In
November of 2021, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 2% per annum and the principal and accrued interest is due
on or before May 10, 2022. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s common stock at
a rate of $0.0020 per share.
In
December of 2021, the Company extended the term of previous
agreements with four individuals to continue serving as members of
the Company’s Board of Directors. Two of the individuals are
related to the Company’s CEO. Under the agreement, the Directors
agreed to provide various services to the Company including making
recommendations for both the short term and the long term business
strategies to be employed by the Company, monitoring and assessing
the Company’s business and to advise the Company’s Board of
Directors with respect to an appropriate business strategy on an
ongoing basis, commenting on proposed corporate decisions and
identifying and evaluating alternative courses of action, making
suggestions to strengthen the Company’s operations, identifying and
evaluating external threats and opportunities to the Company,
evaluating and making ongoing recommendations to the Board with
respect for one year and may be terminated by either the Company or
the Director by providing written notice to the other party. The
previous agreement also terminates automatically upon the death,
resignation or removal of the Directors. Under the terms of the
agreement, the Company agreed to compensate the Board members via
payment of 10,000,000 restricted shares of its common stock each,
an aggregate total of 40,000,000 shares, and to negotiate future
compensation on a year-by-year basis. The Company also agreed to
reimburse the individuals for preapproved
expenses.
Additional
related party transactions:
The
Company has an informal consulting agreement with a limited
liability company that is owned and controlled by a person who is
related to the Company’s CEO to pay the related party limited
liability company a variable amount per month plus periodic bonuses
to provide general business consulting and assessing the Company’s
business and to advise management with respect to an appropriate
business strategy on an ongoing basis, commenting on proposed
corporate decisions, perform period background research including
background checks and provide investigative information on
individuals and companies and to assist, when needed, as an
administrative specialist to perform various administrative duties
and clerical services including reviewing the Company’s agreements
and books and records. The consultant provides the services under
the direction and supervision of the Company’s CEO. During the
years ended December 31, 2021 and 2020, the Company paid the
related party consultant fees of $15,000 and $58,000, respectively,
for services rendered. These fees are recorded as an expense in
consulting and contractor expenses in the accompanying consolidated
statements of operations. At December 31, 2021 and 2020, the
Company owed the related party limited liability company
$0.
The
Company has an ongoing agreement with a limited liability company
that is owned and controlled by a person who is related to the
Company’s CEO to provide stock transfer agency services. During the
years ended December 31, 2021 and 2020 the Company paid the related
party limited liability company fees of $12,025
and $11,295
respectively, for services rendered. These fees are recorded as an
expense in consulting and contractor expenses in the accompanying
consolidated statements of operations. During the years ended
December 31, 2021 and 2020, the Company also paid the related party
limited liability 1,000,000 and 0 shares of the Company’s
restricted common stock, valued at $5,100, and $0, respectively, as
a bonus. All of the fees paid to the related party limited
liability company are recorded as an expense in consulting and
contractor expenses in the accompanying consolidated statements of
operations. At December 31, 2021 and 2020, the Company owed the
related party limited liability company $0.
During
the years ended December 31, 2021 and 2020, the Company paid a
related party consultant fees of $38,000
and $18,750
respectively for marketing and administrative services rendered to
the Company’s Blockchain subsidiary. Additionally, during the years
ended December 31, 2021 and 2020, the Company paid the related
party consultant 6,000,000 shares, valued at $30,600,
and
0 shares, respectively, of the Company’s restricted common
stock as further compensation to offset cash payments for extra
work and as a retention bonus. All of the fees paid to the related
party consultant are recorded as an expense in consulting and
contractor expenses in the accompanying consolidated statements of
operations.
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 years ended December 31, 2021 and 2020 the Company paid
a related party individual fees of $8,500 and $0 respectively, for
graphic design services. $5,500 of the fees are recorded as an
expense in consulting and contractor expenses in the accompanying
consolidated statements of operations and $3,000 of the fees were
recorded as a prepaid expense on the accompanying consolidated
balance sheets.
During the years ended December 31, 2021 and 2020 the Company paid
fees of $31,943 and $24,000 to one of its Board members for
business consulting and strategic advisory services that were
separate from his duties as a member of the Company’s Board of
Directors.
During the years ended December 31, 2021 and 2020 the Company paid
fees of $22,000 and $20,000 to a limited liability company
controlled by one of its Board members for business consulting and
strategic advisory services that were separate from his duties as a
member of the Company’s Board of Directors,
During
the year ended December 31, 2020, the Company has had extensive
dealings with related parties including the following:
In
January of 2020, the Company entered into a convertible promissory
note agreement in the amount of $51,000 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 30, 2020. The note is unsecured and is
convertible at the lender’s option into shares of the Company’s
common stock at a rate of $0.003 per share. This note is
currently in default due to non payment of principal and interest
upon maturity.
In
August of 2020, the Company entered into a convertible promissory
note agreement in the amount of $25,200 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before February 6, 2021. The note is unsecured and is
convertible at the lender’s option into shares of the Company’s
common stock at a rate of $0.0035 per share. This note is currently
in default due to non payment of principal and
interest.
In
August of 2020, the Company entered into a convertible promissory
note agreement in the amount of $35,000 with a related party. This
note pays interest at a rate of 6% per annum and the principal and
accrued interest was due on or before February 6, 2021. The note is
unsecured and is convertible at the lender’s option into shares of
the Company’s common stock at a rate of $0.0035 per share. This
note is currently in default due to non payment of principal and
interest.
In
August of 2020, the Company entered into a convertible promissory
note agreement in the amount of $50,400 with a related party who is
a member of the Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before February 14, 2021. The note is unsecured and is
convertible at the lender’s option into shares of the Company’s
common stock at a rate of $0.0035 per share. This note is currently
in default due to non payment of principal and interest.
In
December of 2020, the Company extended the term of previous
agreements with four individuals to continue serving as members of
the Company’s Board of Directors. Two of the individuals are
related to the Company’s CEO. Under the agreement, the Directors
agreed to provide various services to the Company including making
recommendations for both the short term and the long term business
strategies to be employed by the Company, monitoring and assessing
the Company’s business and to advise the Company’s Board of
Directors with respect to an appropriate business strategy on an
ongoing basis, commenting on proposed corporate decisions and
identifying and evaluating alternative courses of action, making
suggestions to strengthen the Company’s operations, identifying and
evaluating external threats and opportunities to the Company,
evaluating and making ongoing recommendations to the Board with
respect for one year and may be terminated by either the Company or
the Director by providing written notice to the other party. The
previous agreement also terminates automatically upon the death,
resignation or removal of the Directors. Under the terms of the
agreement, the Company agreed to compensate the Board members via
payment of 5,000,000 restricted shares of its common stock each, an
aggregate total of 20,000,000 shares, and to negotiate future
compensation on a year-by-year basis. The Company also agreed to
reimburse the individuals for preapproved
expenses.
Shareholder
Loan Repayment
During
the year ended December 31, 2021 the Company repaid its CEO $2,000
for a loan dated April 26, 2021 that had an original principle
balance of $6,000.
At
December 31, 2021, 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
11 –SEGMENT
INFORMATION
Seafarer’s
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
Company’s shipwreck and exploration recovery business, the Company
evaluated this business and its impact upon the existing corporate
structure. The Company has determined that Blockchain and Seafarer
Exploration Corp. operate as separate segments of the business. As
such, the Company has presented the income (loss) from operations
during the years ended December 31, 2021 and 2020 incurred by the
two separate segments below.
During
the years ended December 31, 2021 and 2020, Blockchain revenues of
$0 and $4,200 respectively, were 0% and 39.6%, respectively, of the
consolidated revenues of the Company.
Segment
information relating to the Company’s two operating segments for
the year ended December 31, 2021 is as follows:
Schedule of Segment Reporting Information, by
Segment
Segment
information relating to the Company’s two operating segments for
the year ended December 31, 2020 is as follows:
|
|
December 31, 2020 |
|
|
December 31, 2020 |
|
|
December 31, 2020 |
|
|
|
Blockchain LogisTech, LLC |
|
|
Seafarer Exploration Corp. |
|
|
Consolidated |
|
Service revenues |
|
$ |
4,200 |
|
|
$ |
6,422 |
|
|
$ |
10,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses |
|
|
23,469 |
|
|
|
2,686,359 |
|
|
|
2,709,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from
operations |
|
$ |
(19,269 |
) |
|
$ |
(2,679,937 |
) |
|
$ |
(2,699,206 |
) |
NOTE
12 – SUBSEQUENT
EVENTS
On January 18, 2022, Seafarer received notification from the
Circuit Court of the Thirteenth Judicial Circuit that 61,183,645
restricted common shares from the Defendant could be returned to
the Plaintiff. On January 19, 2022, such shares were returned to
the treasury stock of Seafarer and accounted for by Seafarer’s
transfer agent. The settlement also included “Defendant (Torres)
has agreed and hereby it is recognized by the Court that Defendant
has made a full retraction of his assertions…” and agreed to pay
back an undisclosed amount of money to Seafarer that the Company
does not anticipate being able to collect.
Subsequent to December 31, 2021 the Company sold or issued shares
of its restricted common stock as follows:
|
(i) |
sales
of
328,000,000 shares of restricted common stock under
subscription agreements for proceeds of $664,000;
and |
|
(ii) |
issuance
of 33,885,913 shares of restricted common stock to various service
providers. |
Subsequent to December 31, 2021 the following loans went into
default:
|
1) |
A
loan due to the Company’s CEO in the amount of $1,400 was due
January 25, 2022; and |
|
2) |
A loan due to the Company’s CEO in the amount of $1,000 was due
January 26, 2022.
|
Subsequent to December 31, 2021 the following loans were
repaid:
1) |
A convertible promissory with a face value of $50,000 that was due
January 8, 2022 was paid in full prior to the due date.
|
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures.
None
Item 9A. Controls and Procedures.
(a)
Management’s Annual Report on Internal Control over Financial
Reporting.
Management’s
Responsibility for Controls and Procedures
The
Company’s management is responsible for establishing and
maintaining adequate internal control over the Company’s financial
reporting. The Company’s controls over financial reporting are
designed under the supervision of the Company’s Principal Executive
Officer and Principal Financial Officer to ensure that information
required to be disclosed by the Company in the reports that the
Company files or submits under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), is accumulated and communicated to
the Company’s management, including the Company’s principal
executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
Evaluation
of Disclosure Controls and Procedures
Under
the supervision and with the participation of our principal
executive officer, the Company conducted an evaluation of the
effectiveness of the design and operation of its disclosure
controls and procedures, as such term is defined under Rule
13a-15(e) promulgated under the Exchange Act, as of December 31,
2021. Based on this evaluation, management concluded that our
financial disclosure controls and procedures were not effective so
as to timely record, process, summarize and report financial
information required to be included on our Securities and Exchange
Commission (“SEC”) reports due to the Company’s limited internal
resources and lack of ability to have multiple levels of
transaction review. However, as a result of our evaluation and
review process, management believes that the financial statements
and other information presented herewith are materially
correct.
Internal
Control Over Financial Reporting
As of
December 31, 2021, under the supervision and with the participation
of our management, we conducted an evaluation of the effectiveness
of the design and operations of our internal control over financial
reporting, as defined in Rules 13a-15(f) or 15d-15(f) promulgated
under the Securities Exchange Act of 1934 and based on the criteria
for effective internal control described in Internal Control –
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (as revised). Based on our
evaluation, management concluded that our internal control over
financial reporting was not effective so as to timely record,
process, summarize and report financial information required to be
included on our SEC reports due to the Company’s limited internal
resources and lack of ability to have multiple levels of
transaction review. However, as a result of our evaluation and
review process, management believes that the financial statements
and other information presented herewith are materially
correct.
The
management including its Principal Executive Officer/Principal
Financial Officer, does not expect that its disclosure controls and
procedures, or its internal controls over financial reporting will
prevent all error and all fraud. A control system no matter how
well conceived and operated, can provide only reasonable not
absolute assurance that the objectives of the control system are
met. Further, the design of the control system must reflect the
fact that there are resource constraints, and the benefit of
controls must be considered relative to their costs.
Because
of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been
detected.
The
Company has limited resources and as a result, a material weakness
in financial reporting currently exists, because of our limited
resources and personnel, including those described
below.
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The
Company has an insufficient quantity of dedicated resources and
experienced personnel involved in reviewing and designing internal
controls. As a result, a material misstatement of the interim and
annual financial statements could occur and not be prevented or
detected on a timely basis. |
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We
have not achieved the optimal level of segregation of duties
relative to key financial reporting functions. |
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We do
not have an audit committee or an independent audit committee
financial expert. While not being legally obligated to have an
audit committee or independent audit committee financial expert, it
is the management’s view that to have an audit committee, comprised
of independent board members, and an independent audit committee
financial expert, is an important entity-level control over the
Company’s financial statements. |
A
material weakness is a deficiency (within the meaning of the Public
Company Accounting Oversight Board (PCAOB) auditing standard 5) or
combination of deficiencies in internal control over financial
reporting such that there is a reasonable possibility that a
material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis.
Management has determined that a material weakness exists due to a
lack of segregation of duties, resulting from the Company’s limited
resources and personnel.
Remediation
Efforts to Address Deficiencies in Internal Control Over Financial
Reporting
As a
result of these findings, management, upon obtaining sufficient
capital and operations, intends to take practical, cost-effective
steps in implementing internal controls, including the possible
remedial measures set forth below. As of December 31, 2021, we did
not have sufficient capital and/or operations to implement any of
the remedial measures described below.
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Assessing
the current duties of existing personnel and consultants, assigning
additional duties to existing personnel and consultants, and, in a
cost effective manner, potentially hiring additional personnel to
assist with the preparation of the Company’s financial statements
to allow for proper segregation of duties, as well as additional
resources for control documentation. |
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Assessing
the duties of the existing officers of the Company and, in a cost
effective manner, possibly promote or hire additional personnel to
diversify duties and responsibilities of such executive
officers. |
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Board
to review and make recommendations to shareholders concerning the
composition of the Board of Directors, with particular focus on
issues of independence. The Board of Directors will consider
nominating an audit committee and audit committee financial expert,
which may or may not consist of independent members. |
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Interviewing
and potentially hiring outside consultants that are experts in
designing internal controls over financial reporting based on
criteria established in Internal Control Integrated Framework
issued by Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) (as
revised). |
This
annual report does not include an attestation report of our
registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to
attestation by our registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only
management’s report in this annual report.
(b)
Change in Internal Control Over Financial Reporting
The
Company has not made any change in our internal control over
financial reporting during the year ended December 31,
2021.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate
Governance.
Name |
Age |
Position |
Kyle
Kennedy |
62 |
President,
CEO, Chairman of the Board |
Charles
Branscumb |
61 |
Director |
Robert
L. Kennedy |
|