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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q/A
Amendment
No. 1
(Mark
One)
|
x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For
the quarterly period ended
March 31, 2022
or
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For
the transition period from _________ to __________.
Commission
File Number
000-29461

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
o No
x
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
x
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 x 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 |
x |
|
Smaller
reporting company |
x |
|
|
|
|
Emerging
growth company |
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
As of
May 16, 2022, there were
6,572,020,846 shares of the registrant’s common stock,
$.0001 par value per share, outstanding.
EXPLANATORY
NOTE
The
purpose of this amendment on Form 10-Q/A to Seafarer Exploration
Corp's Quarterly Report on Form 10-Q for the period ended March 31,
2022, filed with the Securities and Exchange Commission on May 16,
2022 is solely to furnish the Inline eXtensible Business Reporting
Language (iXBRL) data under Exhibit 101 and 104 to the Form 10-Q in
accordance with Rule 405 of Regulation S-T and a few immaterial
typos were updated.
No
other changes have been made to the Form 10-Q. This Amendment No. 1
to the Form 10-Q speaks as of the original filing date of the Form
10-Q, 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-Q.
SEAFARER
EXPLORATION CORP.
Form 10-Q
For the Quarterly Period Ended March 31, 2022
TABLE OF CONTENTS
Part I: Financial Information
Statements
in this Form 10-Q Quarterly Report may be “forward-looking
statements.” Forward-looking statements include, but are not
limited to, statements that express our intentions, beliefs,
expectations, strategies, predictions or any other statements
relating to our future activities or other future events or
conditions. These statements are based on our current expectations,
estimates and projections about our business based, in part, on
assumptions made by our management. These assumptions are not
guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecasted in the forward-looking statements due to numerous
factors, including those risks discussed in this Form 10-Q
Quarterly Report, under “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and in other
documents which we file with the Securities and Exchange
Commission.
In
addition, such statements could be affected by risks and
uncertainties related to our financial condition, factors that
affect our industry, market and customer acceptance, changes in
technology, fluctuations in our quarterly results, our ability to
continue and manage our growth, liquidity and other capital
resource issues, compliance with government regulations and
permits, agreements with third parties to conduct operations,
competition, fulfillment of contractual obligations by other
parties and general economic conditions. Any forward-looking
statements speak only as of the date on which they are made, and we
do not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date of this
Form 10-Q Quarterly Report, except as required by Federal
Securities law.
Item I. Financial Statements
SEAFARER
EXPLORATION CORP. |
CONSOLIDATED BALANCE SHEETS |
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
|
|
Unaudited |
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
55,204 |
|
|
$ |
81,801 |
|
Prepaid expenses |
|
|
3,000 |
|
|
|
3,000 |
|
Deposits |
|
|
750 |
|
|
|
750 |
|
Total current assets |
|
|
58,954 |
|
|
|
85,551 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
171,156 |
|
|
|
176,476 |
|
Right of use asset |
|
|
23,029 |
|
|
|
27,011 |
|
Total Assets |
|
$ |
253,139 |
|
|
$ |
289,038 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
457,214 |
|
|
$ |
517,038 |
|
Deferred revenue |
|
|
140,000 |
|
|
|
140,000 |
|
Convertible notes payable, related parties, net of discounts of
$2,984 and $3,864, respectively |
|
|
3,016 |
|
|
|
2,136 |
|
Convertible notes payable, in default |
|
|
235,300 |
|
|
|
235,300 |
|
Convertible notes payable, in default - related parties |
|
|
638,500 |
|
|
|
638,500 |
|
Notes payable |
|
|
- |
|
|
|
50,000 |
|
Notes payable, in default |
|
|
128,000 |
|
|
|
128,000 |
|
Notes payable, in default - related parties |
|
|
18,500 |
|
|
|
18,500 |
|
Shareholder loan |
|
|
7,900 |
|
|
|
7,900 |
|
Lease liability, current |
|
|
16,876 |
|
|
|
16,876 |
|
Total current liabilities |
|
|
1,645,306 |
|
|
|
1,754,250 |
|
|
|
|
|
|
|
|
|
|
Lease liability, long-term |
|
|
6,745 |
|
|
|
10,718 |
|
Total Liabilities |
|
|
1,652,051 |
|
|
|
1,764,968 |
|
|
|
|
|
|
|
|
|
|
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
March 31, 2022 and December 31, 2021 |
|
|
- |
|
|
|
- |
|
Series B -
60 shares issued and outstanding at
March 31, 2022 and December 31, 2021 |
|
|
- |
|
|
|
- |
|
Common stock, $0.0001
par value -
9,900,000,000 shares authorized; 6,477,020,846 and
6,191,318,579 shares issued and outstanding at March 31, 2022 and
December 31, 2021, respectively |
|
|
647,803 |
|
|
|
617,632 |
|
Common stock to be issued, $0.0001
par value,
23,750,000 and
37,750,000 shares outstanding at March 31, 2022 and December
31, 2021, respectively |
|
|
2,375 |
|
|
|
3,775 |
|
Unearned compensation |
|
|
(179,366 |
) |
|
|
(261,536 |
) |
Additional paid in capital |
|
|
21,428,911 |
|
|
|
20,714,410 |
|
Accumulated deficit |
|
|
(23,298,635 |
) |
|
|
(22,550,211 |
) |
Total Stockholders’ Deficit |
|
|
(1,398,912 |
) |
|
|
(1,475,930 |
) |
Total Liabilities and Stockholders’ Deficit |
|
$ |
253,139 |
|
|
$ |
289,038 |
|
See
accompanying notes to the consolidated financial
statements.
SEAFARER
EXPLORATION CORP. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Revenue: |
|
|
|
|
|
|
|
|
Service income |
|
$ |
3,089 |
|
|
$ |
8,703 |
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
Consulting and contractor expenses |
|
|
487,698 |
|
|
|
243,202 |
|
General and administrative expense |
|
|
81,418 |
|
|
|
119,933 |
|
Research and development |
|
|
61,419 |
|
|
|
71,254 |
|
Vessel maintenance and dockage |
|
|
51,269 |
|
|
|
26,827 |
|
Professional fees |
|
|
22,001 |
|
|
|
13,575 |
|
Travel and entertainment expense |
|
|
15,569 |
|
|
|
17,467 |
|
Rent expense |
|
|
11,234 |
|
|
|
9,111 |
|
Depreciation expense |
|
|
5,465 |
|
|
|
5,465 |
|
Total operating expenses |
|
|
736,073 |
|
|
|
506,834 |
|
|
|
|
|
|
|
|
|
|
Net loss from operations |
|
|
(732,984 |
) |
|
|
(498,131 |
) |
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(15,440 |
) |
|
|
(54,103 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
(37,346 |
) |
Total other income (expenses) |
|
|
(15,440 |
) |
|
|
(91,449 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(748,424 |
) |
|
$ |
(589,580 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
5,645,802,431 |
|
|
|
5,354,828,011 |
|
See
accompanying notes to the consolidated financial
statements.
SEAFARER
EXPLORATION CORP. |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICIT |
FOR
THE THREE MONTHS ENDED MARCH 31, 2022 |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned |
|
|
|
Additional |
|
|
Accumulated |
|
|
|
|
|
|
Series A Preferred Stock |
|
|
Series B Preferred Stock |
|
|
Common Stock |
|
|
Common Stock to be Issued |
|
|
Compensation |
|
|
|
Paid in Capital |
|
|
Deficit |
|
|
Total |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2021 |
|
|
7 |
|
|
$ |
- |
|
|
|
60 |
|
|
$ |
- |
|
|
|
6,176,318,579 |
|
|
$ |
617,632 |
|
|
|
3,77,50,000 |
|
|
$ |
3,775 |
|
|
$ |
(261,536 |
) |
|
$ |
20,714,410 |
|
|
$ |
(22,550,211 |
) |
|
$ |
(1,475,930 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for
cash |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
328,000,000 |
|
|
|
32,800 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
631,200 |
|
|
|
- |
|
|
|
664,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services, committed
in prior period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
14,000,000 |
|
|
|
1,400 |
|
|
|
(14,000,000 |
) |
|
|
(1,400 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
19,885,913 |
|
|
|
2,089 |
|
|
|
- |
|
|
|
- |
|
|
|
(3,300 |
) |
|
|
77,183 |
|
|
|
- |
|
|
|
75,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of shares |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(61,183,646 |
) |
|
|
(6,118 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,118 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of unearned
compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
85,470 |
|
|
|
- |
|
|
|
- |
|
|
|
85,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(748,424 |
) |
|
|
(748,424 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2022 |
|
|
7 |
|
|
$ |
- |
|
|
|
60 |
|
|
$ |
- |
|
|
|
6,477,020,846 |
|
|
$ |
647,803 |
|
|
|
23,750,000 |
|
|
$ |
2,375 |
|
|
$ |
(179,366 |
) |
|
$ |
21,428,911 |
|
|
$ |
(23,298,635 |
) |
|
$ |
(1,398,912 |
) |
See
accompanying notes to the consolidated financial
statements.
SEAFARER
EXPLORATION CORP. |
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT |
FOR
THE THREE MONTHS ENDED MARCH 31, 2021 |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned |
|
|
Additional |
|
|
Accumulated |
|
|
|
|
|
|
Series A Preferred Stock |
|
|
Series B Preferred Stock |
|
|
Common Stock |
|
|
Common Stock to be Issued |
|
|
Compensation |
|
|
Paid in Capital |
|
|
Deficit |
|
|
Total |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2020 |
|
|
7 |
|
|
$ |
- |
|
|
|
60 |
|
|
$ |
- |
|
|
|
5,315,683,905 |
|
|
$ |
530,315 |
|
|
|
1,500,000 |
|
|
$ |
150 |
|
|
$ |
(67,058 |
) |
|
$ |
18,514,376 |
|
|
$ |
(19,924,797 |
) |
|
$ |
(947,014 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for
cash |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
75,850,000 |
|
|
|
7,585 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
191,965 |
|
|
|
- |
|
|
|
199,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to convert notes payable
and accrued interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,734,640 |
|
|
|
872 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
56,776 |
|
|
|
- |
|
|
|
57,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of unearned
compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
18,801 |
|
|
|
- |
|
|
|
- |
|
|
|
18,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(589,580 |
) |
|
|
(589,580 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2021 |
|
|
7 |
|
|
$ |
- |
|
|
|
60 |
|
|
$ |
- |
|
|
|
5,400,268,545 |
|
|
$ |
538,772 |
|
|
|
1,500,000 |
|
|
$ |
150 |
|
|
$ |
(48,257 |
) |
|
$ |
18,763,117 |
|
|
$ |
(20,514,377 |
) |
|
$ |
(1,260,595 |
) |
See
accompanying notes to the consolidated financial
statements.
SEAFARER
EXPLORATION CORP. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(748,424 |
) |
|
$ |
(589,580 |
) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
5,465 |
|
|
|
5,465 |
|
Amortization of right of use asset |
|
|
- |
|
|
|
3,609 |
|
Amortization of beneficial conversion feature and loan fees |
|
|
880 |
|
|
|
37,856 |
|
Amortization of unearned compensation |
|
|
85,470 |
|
|
|
18,801 |
|
Common stock issued for services |
|
|
75,972 |
|
|
|
- |
|
Loss
on extinguishment of debt |
|
|
- |
|
|
|
37,346 |
|
Decrease (increase) in: |
|
|
|
|
|
|
|
|
Prepaid expenses and deposits |
|
|
- |
|
|
|
32,770 |
|
Increase (decrease) in: |
|
|
|
|
|
|
|
|
Accounts payable & accrued expenses |
|
|
(59,814 |
) |
|
|
11,985 |
|
Deferred revenue |
|
|
- |
|
|
|
140,000 |
|
Operating lease liabilities |
|
|
- |
|
|
|
(3,468 |
) |
Net cash used by operating activities |
|
|
(640,451 |
) |
|
|
(305,216 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(145 |
) |
|
|
- |
|
Net cash used in investing activities |
|
|
(145 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from the issuance of common stock |
|
|
663,999 |
|
|
|
199,550 |
|
Payments on notes payable |
|
|
(50,000 |
) |
|
|
- |
|
Net cash provided by financing activities |
|
|
613,999 |
|
|
|
199,550 |
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH |
|
|
(26,597 |
) |
|
|
(105,666 |
) |
CASH, BEGINNING OF PERIOD |
|
|
81,801 |
|
|
|
186,873 |
|
CASH, END OF PERIOD |
|
$ |
55,204 |
|
|
$ |
81,207 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
Cash paid for interest expense |
|
$ |
- |
|
|
$ |
- |
|
Cash paid for income taxes |
|
$ |
- |
|
|
$ |
- |
|
See
accompanying notes to the consolidated financial
statements.
SEAFARER
EXPLORATION CORP. |
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS |
(Unaudited) |
|
The
accompanying unaudited consolidated financial statements of
Seafarer Exploration Corp. (“Seafarer” or the “Company”) are
unaudited, but in the opinion of management, reflect all
adjustments (consisting only of normal recurring adjustments)
necessary to fairly state the Company’s financial position, results
of operations, and cash flows as of and for the dates and periods
presented. The consolidated financial statements of the Company are
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) for interim
financial information.
These
unaudited consolidated financial statements should be read in
conjunction with the Company’s audited consolidated financial
statements and footnotes included in the Company’s Report on Form
10-K for the year ended December 31, 2021, filed with the
Securities and Exchange Commission (the “Commission”) on March 31,
2022. The results of operations for the three month period ended
March 31, 2022 are not necessarily indicative of the results that
may be expected for the entire year ending December 31, 2022 or for
any future period.
NOTE
1 – DESCRIPTION
OF BUSINESS
Seafarer
Exploration Corp. (“Seafarer” or the “Company”), was incorporated
on May 28, 2003 in the State of Delaware.
The
principal business of the Company is to engage in the
archaeologically-sensitive exploration, documentation, recovery,
and conservation of historic shipwrecks with the objective of
exploring and discovering Colonial-era shipwrecks for future
generations to be able to appreciate and understand.
In
March of 2014, Seafarer entered into a partnership with Marine
Archaeology Partners, LLC (“MAP”), with the formation of 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 services company. The Company is evaluating
Blockchain’s business opportunities and does not believe that
Blockchain will generate any significant revenues for the
foreseeable future.
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 three month
period ended March 31, 2022. Management is reviewing potential
alternate plans for Blockchain and believes that it is highly
unlikely that Blockchain will generate revenue during
2022.
NOTE
2 – GOING
CONCERN
These
unaudited 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 $23,298,635
as of
March 31, 2022. During the three month period ended March 31, 2022,
the Company’s net loss was $748,424
and
at March 31, 2022, the Company had a working capital deficit of
$1,586,352.
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 May 16, 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 unaudited consolidated financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal
course of business. These unaudited 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 forty 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 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 March 31, 2022
and December 31, 2021. Financial instruments that potentially
subject the Company to concentration of credit risk consist
principally of cash deposits. Accounts at each institution are
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to
$250,000. At March 31, 2022, 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 $61,419
and $71,254
for the three month periods ended March 31, 2022 and 2021,
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.
The
Company recognizes revenue when cash is received or when it has met
its obligations per the terms of a contract or agreement for
services. Payments received for services are recorded as deferred
revenue and are recognized as revenue when the services have been
provided.
During
the three month period ended March 31, 2021 the Company entered
into an agreement to provide scanning services using its
SeaSearcher technology to a corporation involved in searching for
historic shipwreck material. Under the terms of the agreement the
Company received an upfront payment of $140,000 which has been
included in the accompanying consolidated balance sheets at March
31, 2022 and December 31, 2021 as deferred revenue.
Earnings Per Share
The
Company has adopted the FASB ASC 260-10, Earnings per Share,
which provides for the calculation of “basic” and “diluted”
earnings per share. Basic earnings per share includes no dilution
and is computed by dividing net income or loss available to common
stockholders by the weighted average common shares outstanding for
the period. Diluted earnings per share reflect the potential
dilution of securities that could share in the earnings of an
entity.
The
potentially dilutive common stock equivalents for the three month
periods ended March 31, 2022 and 2021 were excluded from the
dilutive loss per share calculation as they would be antidilutive
due to the net loss. As of March 31, 2022 and 2021, there were
approximately
661,579,069 and
662,700,583 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.
Depreciation
expense was $5,465
for the three month periods ended March 31, 2022 and 2021, which is
included in operating expenses in the accompanying consolidated
statements of operations.
Impairment of Long-Lived Assets
In
accordance with ASC 360-10, Impairment and Disposal of Long
Lived Assets, the Company, on a regular basis, reviews the
carrying amount of long-lived assets for the existence of facts or
circumstances, both internally and externally, that suggest
impairment. The Company determines if the carrying amount of a
long-lived asset is impaired based on anticipated undiscounted cash
flows, before interest, from the use of the asset. In the event of
impairment, a loss is recognized based on the amount by which the
carrying amount exceeds the fair value of the asset. Fair value is
determined based on appraised value of the assets or the
anticipated cash flows from the use of the asset, discounted at a
rate commensurate with the risk involved. There were no impairment
charges recorded during the three month periods ended March 31,
2022 and 2021.
Use of Estimates
The
process of preparing consolidated financial statements in
conformity with GAAP requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and
expenses. Significant estimates for the three month periods ended
March 31, 2022 and 2021 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
three month periods ended March 31, 2022 and 2021 (see Note 10 –
Segment Information).
Convertible Notes
Payable
The
Company accounts for convertible notes deemed conventional and
conversion options embedded in non-conventional convertible notes
which qualify as equity under ASC 815, Derivatives and
Hedging, in accordance with the provisions of ASC 470-20,
Debt with Conversion and Other Options, 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. 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
The
Company accounts for leases under Accounting Standards Update
(“ASU”) 2016-02. At the inception of a contract the Company
assesses 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 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, 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
AND RIGHT-OF-USE ASSETS AND OPERATING LEASE
LIABILITIES
Operating
lease right-of-use assets and liabilities are recognized at the
present value of the future lease payments at the lease
commencement date. The interest rate used to determine the present
value is the incremental borrowing rate, estimated to be 6%, as the
interest rate implicit in most of the Company’s leases are not
readily determinable. Operating lease expense is recognized on a
straight-line basis over the lease term. During the three month
periods ended March 31, 2022 and 2021, the Company recorded
$4,601
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. The
Company entered into an amended lease agreement commencing on July
1, 2020 through July 31, 2023 with base month rents of $1,475
from July 1, 2020 to June 30, 2021, $1,519
from July 1, 2021 to June 30, 2022, $1,564
from July 1, 2022 to June 30, 2023 and $1,611
from July 1, 2023 to July 31, 2023. Under the terms of the lease
there may be additional fees charged above the base monthly rental
fee.
On
July 1, 2020, upon renewal of the lease, the Company recorded a
right-of-use asset and lease liability of $48,957.
Right-of-use
assets at March 31, 2022 and December 31, 2021 are summarized
below:
Schedule of right-of- use
assets
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
Office lease |
|
$ |
48,957 |
|
|
$ |
48,957 |
|
Less
accumulated amortization |
|
|
(25,928 |
) |
|
|
(21,946 |
) |
Right of use
assets, net |
|
$ |
23,029 |
|
|
$ |
27,011 |
|
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
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
Office lease |
|
$ |
23,621 |
|
|
$ |
27,594 |
|
Less: current
portion |
|
|
(16,876 |
) |
|
|
(16,876 |
) |
Long term
portion |
|
$ |
6,745 |
|
|
$ |
10,718 |
|
Maturity
of lease liabilities are as follows:
Schedule of Maturity of lease
liabilities
|
|
|
|
|
Year ended December 31, 2022 |
|
$ |
14,049 |
|
Year ended December 31, 2023 |
|
|
11,081 |
|
Total future minimum lease
payments |
|
|
25,130 |
|
Less: Present
value discount |
|
|
(1,509 |
) |
Lease
liability |
|
$ |
23,621 |
|
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 – CONVERTIBLE NOTES
PAYABLE AND NOTES PAYABLE
Upon
inception, the Company evaluates each financial instrument to
determine whether it meets the definition of “conventional
convertible” debt under ASC 470.
Convertible
Notes Payable
The
following tables reflect the convertible notes payable at March 31,
2022 and December 31, 2021:
Schedule of Convertible Notes
Payable
|
|
Issue
Date |
|
Maturity
Date |
|
March
31,
2022 |
|
December
31,
2021 |
|
Rate |
|
Conversion
Price |
|
|
|
|
|
|
|
Principal
Balance |
|
Principal
Balance |
|
|
|
|
|
Convertible
notes payable - related parties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable, Face Value |
|
10/13/21 |
|
04/13/22 |
|
$ |
3,000 |
|
|
$ |
3,000 |
|
|
|
2.00 |
% |
|
0.0020 |
|
Notes payable, Face Value |
|
11/10/21 |
|
05/10/22 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
2.00 |
% |
|
0.0020 |
|
Face
value |
|
|
|
|
|
|
6,000 |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
unamortized discounts |
|
|
|
|
|
|
(2,984) |
|
|
|
(3,864) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
convertible notes payable - related parties |
|
|
|
|
|
$ |
3,016 |
|
|
$ |
2,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue Date |
|
Maturity
Date |
|
March 31,
2022 |
|
|
December 31,
2021 |
|
|
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 |
|
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 |
|
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 |
|
01/03/19 |
|
07/03/19 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
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 |
|
|
$ |
235,300 |
|
|
|
|
|
|
|
|
|
|
Issue Date |
|
Maturity
Date |
|
March 31,
2022 |
|
|
December 31,
2021 |
|
|
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 |
|
|
|
25,200 |
|
|
|
6.00 |
% |
|
0.0035 |
|
Notes payable, Face Value |
|
08/06/20 |
|
02/06/21 |
|
|
35,000 |
|
|
|
35,000 |
|
|
|
6.00 |
% |
|
0.0035 |
|
Notes payable, Face Value |
|
08/14/20 |
|
02/14/21 |
|
|
50,400 |
|
|
|
50,400 |
|
|
|
6.00 |
% |
|
0.0035 |
|
Balance convertible notes payable - related parties, in
default |
|
|
|
|
|
$ |
638,500 |
|
|
$ |
638,500 |
|
|
|
|
|
|
|
|
Balance all convertible notes payable |
|
|
|
|
|
$ |
876,816 |
|
|
$ |
875,936 |
|
|
|
|
|
|
|
|
Notes
Payable
The
following tables reflect the notes payable at March 31, 2022 and
December 31, 2021:
Schedule of Notes Payable
|
|
Issue
Date |
|
Maturity
Date |
|
March
31,
2022 |
|
|
December
31,
2021 |
|
|
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 |
|
March
31,
2022 |
|
|
December
31,
2021 |
|
|
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 |
|
|
|
18,000 |
|
|
6.00% |
|
Notes payable, Face Value |
|
11/29/17 |
|
11/29/19 |
|
|
105,000 |
|
|
|
105,000 |
|
|
2.06% |
|
Balance
notes payable – default |
|
|
|
|
|
$ |
128,000 |
|
|
$ |
128,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue
Date |
|
Maturity
Date |
|
March
31,
2022 |
|
|
December
31,
2021 |
|
|
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 |
|
|
|
|
|
$ |
146,500 |
|
|
$ |
196,500 |
|
|
|
|
New
Convertible Notes Payable Issued During the three Month Period
Ended March 31, 2022 and 2021
During
the three month periods ended March 31, 2022 and 2021, the Company
did not issue any new convertible notes payable or notes payable
Agreements.
Repayment
of Promissory Note
During
the three month period ended March 31, 2022, the Company repaid a
total of $50,000 of the principal of a promissory note with an
original principal balance of $50,000 that was due on January 8,
2022.
Note
Conversions
There
were no conversions of convertible promissory notes during the
three month period ended March 31, 2022.
During
the three month period ended March 31, 2021, the Company issued
8,734,640 shares of restricted common stock to a related party to
settle $20,302 of accrued interest owed on sixteen convertible
notes payable.
Shareholder
Loan
At
March 31, 2022 and 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%. |
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
6 – STOCKHOLDERS’
DEFICIT
Series
A Preferred Stock
At
March 31, 2022 and December 31, 2021, 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.
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 three month periods ended March 31, 2022 and 2021, the Company
issued or is to issue the following shares of common
stock:
Schedule of Common stock
activity
|
|
2022 |
|
|
2021 |
|
Common
stock issued for cash |
|
|
328,000,000 |
|
|
|
75,850,000 |
|
Common
stock issued for services |
|
|
19,885,913 |
|
|
|
- |
|
Common
stock issued to convert notes payable and accrued
interest |
|
|
- |
|
|
|
8,734,640 |
|
Cancellation
of shares |
|
|
(61,183,646) |
|
|
|
- |
|
Common
stock issued for services, committed in prior period |
|
|
14,000,000 |
|
|
|
- |
|
Total |
|
|
300,702,267 |
|
|
|
84,584,640 |
|
Warrants
and Options
The
Company did not issue any warrants or options during the three
month periods ended March 31, 2022 and 2021.
The
following table shows the warrants outstanding at March 31,
2022:
Schedule of Warrants Outstanding
|
|
|
|
|
|
|
|
Weighted Average |
|
|
|
|
|
|
Number
of |
|
|
Weighted Average |
|
|
Remaining Life |
|
|
Average |
|
|
|
Warrants |
|
|
Exercise Price |
|
|
(Years) |
|
|
Intrinsic Value |
|
Outstanding, March
31, 2022 |
|
|
4,000,000 |
|
|
$ |
0.0050 |
|
|
|
0.58 |
|
|
$ |
0.0010 |
|
Exercisable, March 31, 2022 |
|
|
4,000,000 |
|
|
$ |
0.0050 |
|
|
|
0.58 |
|
|
$ |
0.0010 |
|
NOTE
7 – COMMITMENTS AND
CONTINGENCIES
Agreement to Explore a Shipwreck Site Located off of Melbourne
Beach, Florida
In
March of 2014, Seafarer entered into a partnership 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
8 – RELATED PARTY
TRANSACTIONS
During
the three month period ended March 31, 2022, the Company has had
extensive dealings with related parties including the
following:
See
additional related party transactions below.
During
the three month period ended March 31, 2021, the Company has had
extensive dealings with related parties including the
following:
The
Company issued
8,734,640 shares of restricted common stock to a related
party to settle $20,302 of accrued interest owed on sixteen
convertible notes payable.
Additional
related party transactions:
The
Company has an informal consulting agreement with a limited
liability company that is owned and controlled by a person who is
related to its CEO to provide general business consulting services
including periodically assessing the Company’s business and
advising management with respect to an appropriate business
strategy on an ongoing basis, commenting on proposed corporate
decisions, perform period background research including background
checks and provide investigative information on individuals and
companies and to assist, when needed, as an administrative
specialist to perform various administrative duties and clerical
services including reviewing the Company’s agreements and books and
records. The consultant provides the services under the direction
and supervision of the Company’s CEO. During the three month
periods ended March 31, 2022 and 2021, the Company paid the related
party limited liability company consulting fees of $11,000 and
$3,000, respectively, for services rendered. These fees are
recorded as an expense in consulting and contractor expenses in the
accompanying consolidated statements of operations.
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
three month periods ended March 31, 2022 and 2021 the Company paid
the related party limited liability company fees of $4,700 and
$5,375, 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 three month periods ended March 31, 2022 and 2021, the Company
paid a related party consultant fees of $9,000 and $10,000,
respectively for consulting services for social media. 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.
Shareholder
Loan
At
March 31, 2022 and 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%. |
At
March 31, 2022, 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
9 – 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 three month periods ended March 31, 2022 and 2021
incurred by the two separate segments below.
During
the three month periods ended March 31, 2022 and 2021, Blockchain
did not generate any revenues.
Segment
information relating to the Company’s two operating segments for
the three month period ended March 31, 2022 is as
follows:
Schedule of Segment Reporting Information, by
Segment
Segment
information relating to the Company’s two operating segments for
the three month period ended March 31, 2021 is as
follows:
|
|
March 31, 2021 |
|
|
March 31, 2021 |
|
|
March
31, 2021 |
|
|
|
Blockchain LogisTech, LLC |
|
|
Seafarer Exploration Corp. |
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
Service revenues |
|
$ |
- |
|
|
$ |
8,703 |
|
|
$ |
8,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses |
|
|
10,258 |
|
|
|
496,576 |
|
|
|
506,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from
operations |
|
$ |
(10,258 |
) |
|
$ |
(487,873 |
) |
|
$ |
(498,131 |
) |
NOTE
10 – SUBSEQUENT
EVENTS
Subsequent
to March 31, 2022, the Company issued or has agreed to issue shares
of its common stock as follows:
|
(i) |
sales
of 90,000,000 shares of restricted common stock under subscription
agreements for proceeds of $180,000; and |
|
(ii) |
issuance
of 5,000,000 shares of restricted common stock to service
providers. |
Subsequent
to March 31, 2022 the following loans went into default:
|
1) |
A
loan due to a related party in the amount of $3,000 was due April
13, 2022; and |
|
2) |
A
loan due to a related party in the amount of $3,000 was due May 10,
2022.
|
Item 2. 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-Q of such words as
“believes”, “plans”, “anticipates”, “expects”, “intends”, and
similar expressions are intended to identify forward-looking
statements, but are not the exclusive means of identifying such
statements. The 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-Q. This Item should be read in
conjunction with the consolidated 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 shipwreck sites and a
number of other risks and uncertainties. Actual results could
differ materially from those projected in the forward-looking
statements, either as a result of the matters set forth or
incorporated in this Report generally and certain economic and
business factors, some of which may be beyond our
control.
We
disclaim any obligation subsequently to revise any forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or
unanticipated events.
Overview
General
The
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 2022 or 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 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 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
issuance and subsequent sale of restricted securities, after the
restrictive legend has been removed pursuant to regulatory rules
and restrictions such as Rule 144, by current shareholders,
including shares issued under subscription agreements, shares
issued to service providers, as well as shares issued to settle
convertible promissory notes or to settle other loans and debt, is
potentially very highly dilutive and may cause a very 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
fourteen years.
Plan
of Operation
The
Company has taken the following steps to implement its business
plan:
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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. |
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Spent
considerable time and capital researching potential shipwrecks,
including obtaining information from foreign archives. |
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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. |
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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. |
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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. |
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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. |
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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.
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 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 May 16, 2022.
At
March 31, 2022 and December 31, 2021, the Company had working
capital deficits of $1,586,352 and $1,668,699 respectively. The
working capital deficit decreased by $82,347, from December 31,
2021. Despite the decrease since December 31, 2021, the Company’s
working capital deficit, along with its lack of meaningful cash
flows from operations with which to service the debt, indicates
that there is substantial risk to the continued viability of the
Company and a high degree of risk that the Company could become
insolvent. The Company is in immediate need of further working
capital and is seeking options, with respect to financing, in the
form of debt, equity or a combination thereof.
Since
inception, the Company has funded its operations through common
stock issuances and loans in order to meet its strategic
objectives; however, there can be no assurance that the Company
will be able to obtain further funds to continue with its efforts
to establish a new business. There is a very significant risk that
the Company will be unable to obtain financing to fund its
operations 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
the Company is 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 common stock and loans to fund operations is
extremely risky. If the Company is unable to continue to raise
capital or obtain loans or other financing on terms that are
acceptable to the Company, or at all, then it is highly likely that
the Company will be forced to cease operations. If the Company
ceases its operations, then it is highly likely that all capital
invested in and/or borrowed by the Company will be lost.
Summary
of the Three Month Period Ended March 31, 2022 Results of
Operations Compared to the Three Month Period Ended March 31, 2021
Results of Operations
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 three month periods ended March 31,
2022 and 2021, the Company generated $3,089 and $8,703 of revenue
respectively, which is shown as service income on the accompanying
consolidated statements of operations.
Operating
Expenses
Operating
expenses were $736,073 for the three month period ended March 31,
2022 versus $506,834 for the same period in 2021, an increase of
45%. The increase in operating expenses in 2022 was primarily due
to increases in consulting and contractor expenses, and vessel
related expenses. Consulting and contractor expense was $487,698
for the three month period ended March 31, 2022 versus $243,202 for
the same period in 2021, an increase of nearly 101%. The Company
incurred vessel related expenses of $51,269 during the three month
period ended March 31, 2022 versus $26,827 during the three month
period ended March 31, 2021, a decrease of approximately 91%.
Research and development expenses were $61,419 in 2022 versus
$71,254 in 2021. The Company’s research and development expenses
were related to the development of its SeaSearcher autonomous
underwater device. The Company believes that it will continue to
expend significant resources to further develop the SeaSearcher and
to begin developing next generation versions of the technology.
During the three month period ended March 31, 2022, professional
fees were $22,001 as compared to $13,575 during the three month
period ended March 31, 2021, an increase of approximately 62%.
During the three month period ended March 31, 2022, general and
administrative expenses were $81,418 as compared to $119,933 during
the three month period ended March 31, 2021, a decrease of 32%.
Depreciation expense was $5,465 during the three month period ended
March 31, 2022 versus $5,465 for the same period in 2021. Rent
expense was $11,234 during the three month period ended March 31,
2022 versus $9,111 for the same period in 2021, an increase of
approximately 23%. The Company incurred travel and entertainment
expenses of $15,569 during the three month period ended March 31,
2022 as compared to $17,467 during the three month period ended
March 31, 2021, an approximate 11% decrease on a
quarter-over-quarter basis.
Other
Income (Expenses)
Other
income (expense) was $(15,440) during the three month period ended
March 31, 2022 versus $(91,449) during the three month period ended
March 31, 2021, a decrease of $76,009. The 83% decrease in other
expense in 2022 was primarily due to a decrease in interest
expense. Interest expense for the three month period ended March
31, 2022 was $15,440 versus $54,103 for the same period in 2021, a
decrease of approximately 71%. Loss on extinguishment of debt was
$0 during the three month period ended March 31, 2022 versus
$37,346 during the same period in 2021.
Net
Losses
The
Company’s net loss for the three months ended March 31, 2022 and
2021 was $748,424, and $589,580, respectively, a year-over-year
increase of approximately 33%.
Cash
Flows from Operating Activities
For
the three month period ended March 31, 2022 net cash flows used in
operating activities was $640,451.
For
the three month period ended March 31, 2021 net cash flows used in
operating activities was $305,216.
Cash
Flows from Investing Activities
For
the three month period ended March 31, 2022 net cash flows used in
investing activities was $(145).
For
the three month period ended March 31, 2021 net cash flows used in
investing activities was $0.
Cash
Flows from Financing Activities
For
the three month period ended March 31, 2022 net cash provided by
financing activities was 613,999.
For
the three month period ended March 31, 2021 net cash provided by
financing activities was $199,550.
Liquidity
and Capital Resources
At
March 31, 2022, the Company had $55,204 cash in the bank. During
the three month periods ended March 31, 2022 and 2021 the Company
incurred net losses of $784,424 and $589,580 respectively. At March
31, 2022, the Company had $58,954 in current assets and $1,645,306
in current liabilities, leaving the Company a working capital
deficit of $1,586,352.
Lack
of Liquidity
A
major financial challenge and significant risk facing the Company
is a lack of positive cash flow and liquidity. The Company
continued to operate with significant debt and a working capital
deficit during the three month period ended March 31, 2022. 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 three month
period ended March 31, 2022, we have experienced operating losses
in every year since our inception resulting in an accumulated
deficit. If the Company is not able to continue as a going concern,
it is highly likely that all capital invested in the Company or
borrowed by the Company will be lost.
The
Company has experienced a net loss in every fiscal year since
inception. The Company’s losses from operations were $732,984 for
the three month period ended March 31, 2022 and $498,131 for the
three month period ended March 31, 2021. The Company believes that
it will continue to generate losses from its operations for the
foreseeable future and the Company may not be able to generate a
profit in the long-term, or ever.
Additionally,
the ongoing effects of the COVID-19 global pandemic may cause the
Company to be unable to obtain financing to fund its business and
operations. If the Company is not able to obtain financing due to
COVID-19 then it is highly likely that it will be forced to cease
its operations which would likely result in the Company not
surviving which would result in a complete loss of all capital
invested in the Company.
Convertible
Notes Payable and Notes Payable, in Default
The
Company does not have additional sources of debt financing to
refinance its convertible notes payable and notes payable that are
currently in default. If the Company is unable to obtain additional
capital, such lenders may file suit, including suit to foreclose on
the assets held as collateral for the obligations arising under the
secured notes. If any of the lenders file suit to foreclose on the
assets held as collateral, then the Company may be forced to
significantly scale back or cease its operations which would more
than likely result in a complete loss of all capital that has been
invested in or borrowed by the Company. The fact that the Company
is in default regarding several loans held by various lenders makes
investing in the Company or providing any loans to the Company
extremely risky with a very high potential for a complete loss of
capital.
The
convertible notes that have been issued by the Company are
convertible at the 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 three month periods ended March 31, 2022 and
2021 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 3. Quantitative and Qualitative Disclosures About
Market Risk
Not
required for smaller reporting companies.
Item 4. Controls and Procedures
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 March 31, 2022.
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
March 31, 2022, 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 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.
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 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 March 31, 2022 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
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 three month period ended March 31,
2022.
Part II. Other Information
Item 1. 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 61,183,646 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.
Item 1A. Risk Factors
Not
required for smaller reporting companies.
Item 2. Recent Sales and Other Issuances of Unregistered
Securities
During
the three month period ended March 31, 2022, the Company issued
19,885,913 shares for various services. 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 three month period ended March 31, 2022,
the Company entered into subscription agreements to sell
328,000,000 shares of its restricted common stock in exchange for
proceeds of $664,000. The proceeds received were used for general
corporate purposes and working capital.
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.
Repurchase
of Securities
During
the three month period ended March 31, 2022, 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.
Stock
Option Grants
The
Company does not have any compensatory stock option grants
outstanding at this time.
Warrants
The
Company did not issue any warrants during the three month period
ended March 31, 2022. Please see Note 7 - Stockholders’ Deficit for
a list of warrants outstanding at March 31, 2022.
Item 3. Defaults Upon Senior Securities
The
Company has several promissory notes and loans that are currently
in default to non-payment of principle and interest. See Note 6 –
Convertible Notes Payable and Notes Payable for a listing of the
debt obligations of the Company that are in default.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None
Item 6. Exhibits
Set
forth below is a list of the exhibits to this quarterly report on
Form 10-Q.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
|
SEAFARER
EXPLORATION CORP. |
|
|
|
Date:
May 18, 2022 |
By: |
/s/
Kyle Kennedy |
|
|
Kyle
Kennedy |
|
|
President,
Chief Executive Officer, and Chairman of the Board
(Principal Executive Officer and Principal Accounting
Officer) |
|
|
|
Date:
May 18, 2022 |
By: |
/s/
Charles Branscum |
|
|
Charles
Branscum, Director |
|
|
|
Date:
May 18, 2022 |
By: |
/s/
Robert L. Kennedy |
|
|
Robert
L. Kennedy, Director |
|
|
|
Date:
May 18, 2022 |
By: |
/s/
Thomas Soeder |
|
|
Thomas
Soeder, Director |
|
|
|
Date:
May 18, 2022 |
By: |
/s/
Bradford Clark |
|
|
Bradford
Clark, Director |
Seafarer Exploration (PK) (USOTC:SFRX)
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