Item
I. Financial Statements
| SEAFARER
EXPLORATION CORP. |
| CONSOLIDATED BALANCE SHEETS |
| | |
March 31, 2023 | |
December 31, 2022 |
| | |
| Unaudited | | |
| | |
| Assets | |
| | | |
| | |
| Current assets | |
| | | |
| | |
| Cash | |
$ | 173,341 | | |
$ | 177,409 | |
| Deposits | |
| 750 | | |
| 750 | |
| Total current assets | |
| 174,091 | | |
| 178,159 | |
| | |
| | | |
| | |
| Property, plant and equipment, net | |
| 151,296 | | |
| 154,761 | |
| Finance right of use asset | |
| 116,341 | | |
| — | |
| Operating right of use asset | |
| 6,056 | | |
| 10,464 | |
| Total Assets | |
$ | 447,784 | | |
$ | 343,384 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’ Deficit | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 652,848 | | |
$ | 624,574 | |
| Deferred revenue | |
| 140,000 | | |
| 140,000 | |
| Convertible notes payable, related parties, net of discounts of $0 and $3,864, respectively | |
| — | | |
| 40,000 | |
| Convertible notes payable, in default | |
| 235,300 | | |
| 235,300 | |
| Convertible notes payable, in default - related parties | |
| 684,500 | | |
| 644,500 | |
| Notes payable, in default | |
| 113,000 | | |
| 118,000 | |
| Notes payable, in default - related parties | |
| 18,500 | | |
| 18,500 | |
| Shareholder loan | |
| 5,000 | | |
| 7,400 | |
| Operating lease liability, current | |
| 6,272 | | |
| 10,807 | |
| Finance lease liability, current | |
| 17,870 | | |
| — | |
| Total current liabilities | |
| 1,871,668 | | |
| 1,839,081 | |
| | |
| | | |
| | |
| Finance lease liability, long-term | |
| 100,050 | | |
| — | |
| Total Liabilities | |
| 1,973,340 | | |
| 1,839,081 | |
| | |
| | | |
| | |
| Commitments and contingencies (Note 7) | |
| | | |
| | |
| | |
| | | |
| | |
| Stockholders’ Deficit | |
| | | |
| | |
| Preferred stock, $0.0001 par values - 50,000,000 shares authorized; 67 shares issued | |
| | | |
| | |
| Series A - 7 shares issued and outstanding | |
| — | | |
| — | |
| Series B - 60 shares issued and outstanding | |
| — | | |
| — | |
| Common stock, $0.0001 par value - 9,900,000,000 shares authorized; 7,499,729,658 and 7,172,668,896 shares issued and outstanding at March 31, 2023 and December 31, 2022 | |
| 749,973 | | |
| 717,268 | |
| Common stock to be issued, $0.0001 par value, 28,871,211 and 71,969,820 shares outstanding at March 31, 2023 and December 31, 2022, respectively | |
| 2,888 | | |
| 7,197 | |
| Unearned compensation | |
| (226,948 | ) | |
| (488 | ) |
| Additional paid in capital | |
| 24,106,713 | | |
| 22,947,138 | |
| Accumulated deficit | |
| (26,158,182 | ) | |
| (25,166,812 | ) |
| Total Stockholders’ Deficit | |
| (1,525,556 | ) | |
| (1,495,697 | ) |
| Total Liabilities and Stockholders’ Deficit | |
$ | 447,784 | | |
$ | 343,384 | |
See
accompanying notes to the unaudited consolidated financial statements.
SEAFARER EXPLORATION CORP. |
| CONSOLIDATED
STATEMENTS OF OPERATIONS |
| (UNAUDITED) |
| |
|
|
|
|
|
|
|
| | |
For the Three Months Ended March 31, |
| | |
2023 | |
2022 |
| Revenue: | |
| |
|
| Service income | |
$ | — | | |
$ | 3,089 | |
| Total revenue | |
| — | | |
| 3,089 | |
| | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | |
| Consulting and contractor expenses | |
| 519,486 | | |
| 487,698 | |
| Vessel maintenance and dockage | |
| 194,819 | | |
| 51,269 | |
| General and administrative expenses | |
| 153,379 | | |
| 81,418 | |
| Research and development | |
| 32,100 | | |
| 61,419 | |
| Professional Fees | |
| 28,056 | | |
| 22,100 | |
| Travel
and entertainment expense |
|
|
21,184 |
|
|
|
15,569 |
|
| Rent expense | |
| 13,769 | | |
| 11,234 | |
| Depreciation and amortization expense | |
| 11,588 | | |
| 5,465 | |
| Total operating expenses | |
| 974,381 | | |
| 736,073 | |
| | |
| | | |
| | |
| Net loss from operations | |
| (974,381 | ) | |
| (732,984 | ) |
| | |
| | | |
| | |
| Other income (expense) | |
| | | |
| | |
| Interest expense | |
| (16,989 | ) | |
| (15,440 | ) |
| Total other income (expenses) | |
| (16,989 | ) | |
| (15,440 | ) |
| | |
| | | |
| | |
| Net loss | |
$ | (991,370 | ) | |
$ | (748,424 | ) |
| | |
| | | |
| | |
| Basic and diluted loss per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| | |
| | | |
| | |
| Weighted average shares outstanding | |
| 7,358,073,442 | | |
| 5,645,802,431 | |
See
accompanying notes to the unaudited consolidated financial statements.
| SEAFARER
EXPLORATION CORP. |
| CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT |
| FOR
THE THREE MONTHS ENDED MARCH 31, 2023 |
| (UNAUDITED) |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
| |
| |
| |
|
| | |
Series A Preferred Stock | |
Series B Preferred Stock | |
Common Stock | |
Common Stock to be Issued | |
Unearned
Compensation | |
Additional
Paid in Capital | |
Accumulated
Deficit | |
Total |
| | |
Shares | |
Amount | |
Shares | |
Amount | |
Shares | |
Amount | |
Shares | |
Amount | |
| |
| |
| |
|
| Balance December 31, 2022 | |
| 7 | | |
$ | — | | |
| 60 | | |
$ | — | | |
| 7,172,668,896 | | |
$ | 717,268 | | |
| 71,929,820 | | |
$ | 7,197 | | |
$ | (488 | ) | |
$ | 22,947,138 | | |
$ | (25,166,812 | ) | |
$ | (1,495,697 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common stock issued for cash | |
| — | | |
| — | | |
| — | | |
| — | | |
| 228,859,347 | | |
| 22,885 | | |
| (40,083,333 | ) | |
| (4,008 | ) | |
| — | | |
| 507,123 | | |
| — | | |
| 526,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock issued as charitable donation | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,000,000 | | |
| 100 | | |
| — | | |
| — | | |
| — | | |
| 7,100 | | |
| — | | |
| 7,200 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock issued for services | |
| — | | |
| — | | |
| — | | |
| — | | |
| 97,201,415 | | |
| 9,720 | | |
| (3,015,276 | ) | |
| (301 | ) | |
| (280,800 | ) | |
| 645,352 | | |
| — | | |
| 373,971 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Amortization of unearned compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 54,340 | | |
| — | | |
| — | | |
| 54,340 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (991,370 | ) | |
| (991,370 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance March 31, 2023 | |
| 7 | | |
$ | — | | |
| 60 | | |
$ | — | | |
| 7,499,729,658 | | |
$ | 749,973 | | |
| 28,871,211 | | |
$ | 2,888 | | |
$ | (226,948 | ) | |
$ | 24,106,713 | | |
$ | (26,158,182 | ) | |
$ | (1,525,556 | ) |
See
accompanying notes to the unaudited consolidated financial statements.
| SEAFARER
EXPLORATION CORP. |
| CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT |
| FOR
THE THREE MONTHS ENDED MARCH 31, 2022 |
| (UNAUDITED) |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| | |
| |
| | |
Series
A Preferred Stock | |
Series
B Preferred Stock | |
Common
Stock | |
Common
Stock to be Issued | |
Unearned
Compensation | |
Additional
Paid in
Capital | |
Accumulated
Deficit | |
Total |
| | |
Shares | |
Amount | |
Shares | |
Amount | |
Shares | |
Amount | |
Shares | |
Amount | |
| |
| |
| |
|
| Balance December 31, 2021 | |
| 7 | | |
$ | — | | |
| 60 | | |
$ | — | | |
| 6,176,318,579 | | |
$ | 617,632 | | |
| 37,750,000 | | |
$ | 3,775 | | |
$ | (261,536 | ) | |
$ | 20,714,410 | | |
$ | (22,550,211 | ) | |
$ | (1,475,930 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 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 unaudited consolidated financial statements.
| SEAFARER
EXPLORATION CORP. |
| CONSOLIDATED
STATEMENTS OF CASH FLOWS |
| (UNAUDITED) |
| |
|
|
|
|
|
|
|
| | |
For the Three Months Ended
March
31, |
| | |
2023 | |
2022 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net Loss | |
$ | (991,370 | ) | |
$ | (748,424 | ) |
| | |
| | | |
| | |
| Adjustments to reconcile net loss to net cash used by operating
activities: | |
| | | |
| | |
| Depreciation | |
| 5,465 | | |
| 5,465 | |
| Amortization of beneficial conversion feature and loan fees | |
| — | | |
| 880 | |
| Amortization of right of use asset, finance | |
| 6,123 | | |
| — | |
| Amortization of unearned compensation | |
| 54,340 | | |
| 85,470 | |
| Common stock issued for services | |
| 373,971 | | |
| 75,972 | |
| Change
in operating assets and liabilities |
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses | |
| 33,790 | | |
| (59,814 | ) |
| Net cash used in operating activities | |
| (517,681 | ) | |
| (640,451 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| Purchase of property, plant and equipment | |
| (2,000 | ) | |
| (145 | ) |
| Net cash used in investing activities | |
| (2,000 | ) | |
| (145 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds from the issuance of common stock | |
| 526,000 | | |
| 663,999 | |
| Payments on notes payable | |
| (5,000 | ) | |
| (50,000 | ) |
| Payments
on leased equipment |
|
|
(2,987 |
) |
|
|
— |
|
| Payments on shareholder loans | |
| (2,400 | ) | |
| — | |
| Net cash provided by financing activities | |
| 515,613 | | |
| 613,999 | |
| | |
| | | |
| | |
| NET CHANGE IN CASH | |
| (4,068 | ) | |
| (26,597 | ) |
| CASH, BEGINNING OF PERIOD | |
| 177,409 | | |
| 81,801 | |
| CASH, END OF PERIOD | |
$ | 173,341 | | |
$ | 55,204 | |
| | |
| | | |
| | |
| Supplemental disclosure of cash flow information | |
| | | |
| | |
| Cash paid for interest expense | |
$ | — | | |
$ | — | |
| Cash paid for income taxes | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Non-cash operating and financing activities: | |
| | | |
| | |
| Financing lease liabilities and right
of use asset | |
$ | 122,464 | | |
$ | — | |
| Stock issued for prepaid services | |
$ | 280,800 | | |
$ | — | |
See
accompanying notes to the unaudited 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 unaudited 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, 2022, filed with the Securities and
Exchange Commission (the “Commission”) on March 31, 2023. The results of operations for the three month period ended March
31, 2023 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2023 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. The Company is evaluating Blockchain’s business opportunities and does not believe that Blockchain will generate any revenues
for the foreseeable future.
The
Company formed a wholly owned subsidiary, Exploration Studios, LLC, in May 2018 in order to explore media strategies and opportunities.
Exploration Studios, LLC has not yet commenced operations.
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, 2022. 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 Judgment
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.
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 $26,158,182 as of March 31, 2023. During the three month period ended March 31, 2023,
the Company’s net loss was $991,370 and at March 31, 2023, the Company had a working capital deficit of $1,699,199. 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 19, 2023. 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.
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 2022 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 unaudited consolidated
financial statements. The unaudited 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 unaudited consolidated financial statements.
Principles
of Consolidation
The
unaudited 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, 2023 and December
31, 2022. 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,
2023, 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 $32,100 and $61,419
for the three month periods ended March 31, 2023 and 2022, 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
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
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 unaudited consolidated balance sheets at March 31, 2023 and December 31, 2022 as
deferred revenue as the services have not yet been provided.
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, 2023 and 2022 were excluded from the dilutive
loss per share calculation as they would be antidilutive due to the net loss. As of March 31, 2023 and 2022, there were approximately
717,620,292 and 661,579,069 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 on property, plant and
equipment was $5,465 for the three month periods ended March 31, 2023 and 2022, 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, 2023 and 2022.
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, 2023
and 2022 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 historic 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, 2023 and 2022 (see Note 9 – Segment Information).
Convertible
Debentures
The
Company adopted the guidance in Accounting Standards Updated (“ASU”) 2020-06, Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity on January 1, 2022. ASU 2020-06 simplifies an issuer’s accounting for convertible
instruments and its application of the derivatives scope exception for contracts in its own equity. Additionally, ASU 2020-06 removes
the requirements for accounting for beneficial conversion features. The Company adopted ASU 2020-06 utilizing the modified retrospective
method, which resulted in an immaterial impact to the Company.
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 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.
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 – RIGHT-OF-USE ASSETS AND OPERATING AND FINANCE LEASE LIABILITIES
Operating
Leases
Operating
lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement
date. The interest rate used to determine the present value is the incremental borrowing rate, estimated to be 10%, as the interest rate
implicit in most of the 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, 2023 and 2022, 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, 2023 and December 31, 2022 are summarized below:
Schedule of right-of- use assets
| | |
March
31, 2023 | | |
December
31, 2022 | |
| Office lease | |
$ | 48,957 | | |
$ | 48,957 | |
| Less accumulated amortization | |
| (42,901 | ) | |
| (38,493 | ) |
| Right of use assets, net | |
$ | 6,056 | | |
$ | 10,464 | |
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, 2023 | | |
December
31, 2022 | |
| Office lease | |
$ | 6,272 | | |
$ | 10,807 | |
| Less: current portion | |
| (6,272 | ) | |
| (10,807 | ) |
| Long term portion | |
$ | - | | |
$ | - | |
Maturity
of lease liabilities are as follows:
Schedule of Maturity of lease liabilities
| |
| | |
| Year ended December 31, 2023 | |
$ | 6,352 | |
| Total future minimum lease payments | |
| 6,352 | |
| Less: Present value discount | |
| (80 | ) |
| Lease liability | |
$ | 6,272 | |
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.
Finance
Leases
Commencing during
the quarter ended March 31, 2023, the Company entered into the following leases:
| · | Vehicle lease –
monthly lease payments of $1,167 for 60 months amortized over 5 years at 12% |
| · | Vessel lease - monthly
lease payments of $1,557 for 60 months amortized over 5 years at 12% |
Finance right
of use assets are summarized below:
| | |
As of | | |
As of | |
| | |
March 31, | | |
December 31, | |
| | |
2023 | | |
2022 | |
| Vehicle lease | |
$ | 52,464 | | |
$ | - | |
| Vessel lease | |
| 70,000 | | |
| - | |
| Finance right of use asset before Accumulated Amortization | |
| 122,464 | | |
| - | |
| Less accumulated amortization | |
| (6,123 | ) | |
| - | |
| Finance right of use asset | |
$ | 116,341 | | |
$ | - | |
Finance
lease liabilities are summarized below:
Schedule of Finance Lease Liabilities
| | |
As of | | |
As of | |
| | |
March 31, | | |
December 31, | |
| | |
2023 | | |
2022 | |
| Vehicle lease | |
$ | 50,518 | | |
$ | - | |
| Vessel lease | |
| 67,402 | | |
| - | |
| Total Lease Liabilities | |
| 117,920 | |
| - | |
| Less: current portion | |
| (17,870 | ) | |
| - | |
| Long term portion | |
$ | 100,050 | | |
$ | - | |
Schedule of Future minimum lease payments
| | |
Total | |
| Year Ended December 31, 2023 | |
$ | 21,792 | |
| Year Ended December 31, 2024 | |
| 32,690 | |
| Year Ended December 31, 2025 | |
| 32,690 | |
| Year Ended December 31, 2026 | |
| 32,690 | |
| Year Ended December 31, 2027 | |
| 32,690 | |
| Year Ended December 31, 2028 | |
| 2,724 | |
| Total future minimum lease payments | |
| 155,276 | |
| Less imputed interest | |
| (37,356 | ) |
| PV of payments | |
$ | 117,920 | |
Expenses
incurred with respect to the Company’s finance leases during the three months ended March 31, 2023 and 2022 which are included in
general and administrative expenses on the consolidated statements of operations are set forth below.
| | |
March 31, | | |
March 31, | |
| | |
2023 | | |
2022 | |
| Finance lease amortization | |
$ | 6,123 | | |
$ | - | |
| Finance lease interest | |
| 3,629 | | |
| - | |
| Total finance lease expense | |
$ | 9,752 | | |
$ | - | |
The
weighted average remaining lease term and the weighted average discount rate on the finance leases at March 31, 2023 and 2022 are set
forth below.
| | |
March 31, | | |
March 31, | |
| | |
2023 | | |
2022 | |
| Weighted average remaining lease term | |
| 4.75 years | | |
| - | |
| Weighted average discount rate | |
| 12% | | |
| - | |
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, 2023 and December 31, 2022:
Schedule
of Convertible Notes Payable
| | |
Issue
Date | |
Maturity
Date | |
March
31,
2023 | | |
December
31,
2022 | | |
Rate | | |
Conversion
Price |
| | |
| |
| |
Principal
Balance | | |
Principal
Balance | | |
| | |
|
| Convertible
notes payable - related parties | |
| | | |
| | | |
|
| | |
| |
| |
| | | |
| | | |
| | | |
|
| Notes payable, Face Value | |
07/06/22 | |
01/06/23 | |
$ | - | | |
$ | 20,000 | | |
| 6.00 | % | |
0.0015 |
| Notes payable, Face Value | |
07/29/22 | |
01/28/23 | |
| - | | |
| 10,000 | | |
| 6.00 | % | |
0.0020 |
| Notes payable, Face Value | |
08/04/22 | |
02/04/23 | |
| - | | |
| 10,000 | | |
| 6.00 | % | |
0.0020 |
| Face value | |
| |
| |
| - | | |
| 40,000 | | |
| | | |
|
| | |
| |
| |
| | | |
| | | |
| | | |
|
| Less
unamortized discounts | |
| - | | |
| - | | |
| | | |
|
| | |
| |
| |
| | | |
| | | |
| | | |
|
| Balance
convertible notes payable - related parties | |
$ | - | | |
$ | 40,000 | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
|
| | |
Issue
Date | |
Maturity
Date | |
March
31,
2023 | | |
December
31,
2022 | | |
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 | |
02/06/18 | |
11/07/18 | |
| 6,000 | | |
| 6,000 | | |
| 6.00 | % | |
0.0006 |
| Notes payable, Face Value | |
03/06/18 | |
09/06/18 | |
| 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,
2023 | | |
December
31,
2022 | | |
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 | |
01/09/18 | |
01/09/19 | |
| 12,000 | | |
| 12,000 | | |
| 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 | |
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 |
| Notes payable, Face Value | |
10/31/21 | |
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 |
| Notes payable, Face Value | |
07/06/22 | |
01/06/23 | |
| 20,000 | | |
| - | | |
| 6.00 | % | |
0.0015 |
| Notes payable, Face Value | |
07/29/22 | |
01/28/23 | |
| 10,000 | | |
| - | | |
| 6.00 | % | |
0.0020 |
| Notes payable, Face Value | |
08/04/22 | |
02/04/23 | |
| 10,000 | | |
| - | | |
| 6.00 | % | |
0.0020 |
| | |
| |
| |
| | | |
| | | |
| | | |
|
| Balance convertible
notes payable - related parties, in default | |
$ | 684,500 | | |
$ | 644,500 | | |
| | | |
|
| | |
| |
| |
| | | |
| | | |
| | | |
|
| Balance all
convertible notes payable | |
$ | 919,800 | | |
$ | 919,800 | | |
| | | |
|
Notes
Payable
The
following tables reflect the notes payable at March 31, 2023 and December 31, 2022:
Schedule of Notes Payable
| | |
Issue
Date | |
Maturity
Date | |
March
31,
2023 | | |
December
31,
2022 | | |
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 | |
| 3,000 | | |
| 8,000 | | |
| 6.00 | % |
| Notes payable, Face Value | |
11/29/17 | |
11/29/19 | |
| 105,000 | | |
| 105,000 | | |
| 2.06 | % |
| Balance notes
payable – default | |
| |
$ | 113,000 | | |
$ | 118,000 | | |
| | |
| | |
| |
| |
| | | |
| | | |
| | |
| | |
Issue
Date | |
Maturity
Date | |
March
31,
2023 | | |
December
31,
2022 | | |
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 | |
$ | 131,500 | | |
$ | 136,500 | | |
| | |
New
Convertible Notes Payable Issued During the three Month Periods Ended March 31, 2023 and 2022
During
the three month periods ended March 31, 2023 and 2022, 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, 2023, the Company repaid a total of $5,000 of the principal of a note payable with an original
principal balance of $75,000 that was due on December 14, 2018. The remaining principal balance of the note at March 31, 2023 was $3,000.
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 periods ended March 31, 2023 and 2022.
Shareholder
Loan
At
March 31, 2023 the Company had the following loans outstanding to its CEO in the total amount of $5,000 as follows:
| |
- |
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; and |
| |
|
|
| |
- |
A
loan due on September 9, 2022 with a remaining balance of $3,500, and an interest rate of 1%. |
| |
|
|
At
December 31, 2022 the Company had the following loans outstanding to its CEO in the total amounts of $7,400 as follows:
| |
- |
A
loan with no due date with a remaining balance of $1,500 and an interest rate of 2% and a conversion rate of $0.0005; |
| |
|
|
| |
- |
A
loan due on January 22, 2022 with a remaining balance of $1,400 and an interest rate of 1%; |
| |
|
|
| |
- |
A
loan due on January 26, 2022 with a remaining balance of $1,000 and an interest rate of 1%; and |
| |
|
|
| |
- |
A
loan due on September 9, 2022 with a remaining balance of $3,500, 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, 2023 and December 31, 2022, 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.
Warrants
and Options
The
Company did not issue any warrants or options during the three month periods ended March 31, 2023 and 2022.
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 extended in early 2022 for an indefinite time period pending
formal renewal. 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.
Vessel
and Trailer Rental and Purchase Agreement
In
January of 2023, the Company entered into a rental and purchase agreement for a vessel and trailer. Under the terms of the agreement,
the Company has the right to exclusive use of the vessel, a thirty four foot King Cat manufactured by Baha Cruisers, and trailer to be
able to haul the vessel. The Company agreed to make a one time payment of 15,000,000 shares of its restricted common stock, with an agreed
upon value of $30,000 for the purposes of the valuation of the vessel and trailer, and pay $1,557 per month for sixty months. The Company
and the owner of the vessel and trailer agreed that the price of the shares for the purposes of the share price calculation was $0.002.
Once the Company has paid the amount totaling the agreed upon purchase price of $100,000, the owner of the vessel agreed to transfer
the title and ownership of the vessel and trailer to the Company.
Vehicle
Rental and Purchase Agreement
In
January of 2023, the Company entered into a rental and purchase agreement for a vehicle for use in the Company’s operations to tow
vessels and other equipment. Under the terms of the agreement, the Company has the right to exclusive use of the vehicle, a 2021 Dodge
RAM 3500. The Company agreed to make a one time payment of 11,242,350 shares of its restricted common stock, with an agreed upon value
of $22,485 for the purposes of the valuation of the truck, and pay $1,167 per month for sixty two months. Once the Company has an amount
totaling the payoff amount, $52,464, to the seller, the seller agreed to transfer title and ownership of the vehicle to the Company.
Certain
Other Agreements
See
Note 4 Operating Lease Right-of-Use Assets and Operating Lease Liabilities.
NOTE
8 – RELATED PARTY TRANSACTIONS
In
January of 2023, the Company extended the term of previous agreements with four individuals to continue serving as members of the Company’s
Board of Directors. Two of the individuals are related to the Company’s CEO. Under the agreement, the Directors agreed to provide
various services to the Company including making recommendations for both the short term and the long term business strategies to be
employed by the Company, monitoring and assessing the Company’s business and to advise the Company’s Board of Directors with
respect to an appropriate business strategy on an ongoing basis, commenting on proposed corporate decisions and identifying and evaluating
alternative courses of action, making suggestions to strengthen the Company’s operations, identifying and evaluating external threats
and opportunities to the Company, evaluating and making ongoing recommendations to the Board with respect for one year and may be terminated
by either the Company or the Director by providing written notice to the other party. The previous agreement also terminates automatically
upon the death, resignation or removal of the Directors. Under the terms of the agreement, the Company agreed to compensate the Board
members via payment of 10,000,000 restricted shares of its common stock each, an aggregate total of 30,000,000 shares, and to negotiate
future compensation on a year-by-year basis. The Company also agreed to reimburse the individuals for preapproved expenses.
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 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.
The consultant provides the services under the direction and supervision of the Company’s CEO. During the three month periods ended
March 31, 2023 and 2022, the Company paid the related party limited liability company consulting fees of $9,000 and $11,000, respectively,
for services rendered. These fees are recorded as an expense in consulting and contractor expenses in the accompanying consolidated statements
of operations. At March 31, 2023 and December 31, 2022, the Company owed the related party limited liability company $3,000 and $3,000, respectively.
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, 2023 and 2022 the Company paid the related
party limited liability company fees of $0 and $4,700, respectively, for services rendered. These fees are recorded as an expense in
consulting and contractor expenses in the accompanying consolidated statements of operations. At March 31, 2023 and December 31, 2022, the Company owed the related party limited liability company $9,803 and $3,975, respectively.
During
the three month periods ended March 31, 2023 and 2022, the Company paid a related party consultant fees of $12,000 and $9,000, 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. At March 31, 2023 and December 31, 2022, the Company owed the related party limited liability company $3,000 and $3,000, respectively.
During
the three month periods ended March 31, 2023 and 2022, the Company paid a person who is related to the Company’s CEO fees of $1,192
and $0, respectively, for clerical services.
Shareholder
Loan
See
Note 6 convertible notes payable – related parties, convertible notes payable – related parties, in default, and notes payable
- related parties, in default.
At
March 31, 2023, 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 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, 2023 and 2022 incurred by the two separate segments below.
During
the three month periods ended March 31, 2023 and 2022, Blockchain revenues were $0 and were 0% of the consolidated revenues of the Company.
Segment
information relating to the Company’s two operating segments for the three month period ended March 31, 2023 is as follows:
Schedule of Segment Reporting Information, by Segment
| | |
March 31,
2023 | | |
March 31,
2023 | | |
March 31,
2023 | |
| | |
Blockchain
LogisTech, LLC | | |
Seafarer
Exploration Corp. | | |
Consolidated | |
| Service revenues | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | |
| Total operating expenses | |
| - | | |
| 974,381 | | |
| 974,381 | |
| | |
| | | |
| | | |
| | |
| Net loss from operations | |
$ | - | | |
$ | (974,381 | ) | |
$ | (974,381 | ) |
Segment
information relating to the Company’s two operating segments for the three month period ended March 31, 2022 is as follows:
| | |
March 31,
2022 | | |
March 31,
2022 | | |
March 31,
2022 | |
| | |
Blockchain
LogisTech, LLC | | |
Seafarer
Exploration Corp. | | |
Consolidated | |
| Service revenues | |
$ | - | | |
$ | 3,089 | | |
$ | 3,089 | |
| | |
| | | |
| | | |
| | |
| Total operating expenses | |
| 10 | | |
| 736,063 | | |
| 736,073 | |
| | |
| | | |
| | | |
| | |
| Net loss from operations | |
$ | (10 | ) | |
$ | (732,974 | ) | |
$ | (732,984 | ) |
NOTE
10 – SUBSEQUENT EVENTS
Subsequent
to March 31, 2023, the Company issued or has agreed to issue shares of its common stock as follows:
| |
(i) |
sales of 36,016,667 shares of the Company’s restricted common stock
under subscription agreements for proceeds of $73,475; and |
| |
(ii) |
issuance
of 600,000 shares of restricted common stock to a service provider. |
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-K of such words as “believes”, “plans”, “anticipates”, “expects”, “intends”,
and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.
The Company’s actual results or actions may differ materially from these forward-looking statements due to many factors and the
success of the Company is dependent on our efforts and many other factors including, primarily, our ability to raise additional capital.
Such factors include, among others, the following: our ability to continue as a going concern, general economic and business conditions;
competition; success of operating initiatives; our ability to raise capital and the terms thereof; changes in business strategy or development
plans; future revenues; the continuity, experience and quality of our management; changes in or failure to comply with government regulations
or the lack of government authorization to continue our projects; and other factors referenced in the Form 10-K. This Item should be
read in conjunction with the financial statements, the related notes and with the understanding that the Company’s actual future
results may be materially different from what is currently expected or projected by the Company.
We
caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Such forward-looking
statements are based on the beliefs and estimates of our management, as well as on assumptions made by and information currently available
to us at the time such statements were made. Forward looking statements are subject to a variety of risks and uncertainties, which
could cause actual events or results to differ from those reflected in the forward looking statements, including, without limitation,
the failure to successfully locate cargo and artifacts from the Juno Beach shipwreck site and a number of other risks and uncertainties.
Actual results could differ materially from those projected in the forward-looking statements, either as a result of the matters set
forth or incorporated in this Report or due to certain economic and business factors, some of which may be beyond our control.
We
disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such
statements or to reflect the occurrence of anticipated or unanticipated events.
Overview
General
The
Company’s principal business plan is to develop the infrastructure and technology to engage in the archaeologically-sensitive exploration,
recovery and conservation of historic shipwrecks and to eventually monetize the recovery of the shipwrecks without selling the treasure
by creating revenue through media and technology alternatives for different industry sectors. Once artifacts have been properly conserved,
they may be made available for scientific research and allowed to be displayed for the public. The Company’s secondary business
is to attempt to develop revenue streams to support its historic shipwreck exploration and recovery operations. Such revenue streams
will complement the technology developed by Seafarer.
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.
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 a very high degree of risk. An investment in the Company’s
securities is very risky and should only be considered by those investors or lenders who do not require liquidity and who can afford
to suffer a complete and total loss of their investment.
There
is currently a limited trading market for the Company’s securities. It is impossible for the Company to assure that when and if
an active-trading market in its shares will be established, or whether any such market will be sustained or sufficiently liquid to enable
holders of shares of the Company’s common stock to liquidate their investment in our company.
The
sale of restricted securities by current shareholders, including shares issued to consultants, independent contractors, Board members,
as well as shares issued to settle convertible promissory notes or to settle other loans and debt, are highly dilutive. The issuance
of shares for financings, to settle debt, as compensation, or for other reasons may cause a significant decline in the market price of
the Company’s securities. Furthermore, in recent years regulatory agencies have made it very difficult for broker dealers to accept
stock certificates from issuers of low priced stocks and the Company believes that it may become even more challenging to deposit stock
certificates and this trend may continue for the foreseeable future.
Moreover,
in the past few years several major securities brokerage firms have indicated that they will not allow their clients to deposit stock
certificates of low priced stocks. Some securities clearing firms who used to clear low priced securities for multiple brokerage firms
have shut down or been acquired, resulting in fewer brokerage firms that are willing or able to accept lower priced securities for deposit.
Unless an investor has a large and well-established relationship with a brokerage firm, it may be extremely difficult and potentially
expensive to deposit lower priced securities. An investor should consider consulting with professional financial advisers before making
an investment in our securities.
Plan
of Operation
The
Company has taken the following steps to implement its business plan:
| |
● |
To
date, the Company has devoted its time towards establishing its business to develop the infrastructure capable of researching, exploring,
recovering and conserving historic shipwrecks. The Company has performed some research, exploration and recovery activities. |
| |
● |
Spent
considerable time and capital researching potential shipwrecks, including obtaining information from foreign archives. |
| |
● |
The
Company has worked in combination with its technology development partner, Wild Manta, to build a research and conservation lab with
full x-ray equipment and detailed metal identification analysis. |
| |
● |
The
Company has generated very limited revenues to date. Management does not believe that the Company will generate any significant revenues
for the foreseeable future. |
| |
● |
The
Company continues to review revenue producing opportunities including joint ventures with other companies. The Company is actively
looking to work with revenue producing companies. These opportunities have been slow to develop, but the Company will continue to
pursue those endeavors that it believes have the potential to increase the value of the Company’s shares. |
| |
● |
The
Company has investigated various types of equipment and technology to expedite the process of finding artifacts other than iron or
ferrous metals. Most have been of no help, but the Company continues to explore new technologies. The Company has developed its own
proprietary technology, the SeaSearcher, and will attempt to continue to develop additional proprietary technologies or work with
third parties to develop technologies to aid in its exploration and recovery operations. Development of technologies will require
additional time and financing. The cost of developing the new technology has, to date, been very expensive for a small company. |
| |
● |
The
Company has investigated media opportunities to develop content centered on its specific historic shipwreck exploration and recovery
activities as well as the historic shipwreck and related historical period genre in general and will continue to evaluate various
media strategies. |
Other
Information
There
are very strict international, federal and state laws that govern the exploration and recovery of historic shipwrecks. While the Company
has been able to obtain some permits, there is no guarantee that the Company will be able to secure future permits or enter into agreements
with government agencies in order to explore and salvage historic shipwrecks. Seafarer believes they are the only company to be issued
a full recovery permit by FBAR since 1986, other than one entity with an Admiralty Claim. This demonstrates the difficulty of obtaining
a recovery permit from FBAR. There is a risk that government entities may enact legislation that is so strict that any recovery of artifacts
and cargo from historic shipwrecks will be nearly impossible. Additionally, permits and agreements with governmental agencies to conduct
historic shipwreck exploration and recovery operations are expensive, in terms of both direct costs and ongoing compliance costs. It
is also possible that the Company will not be successful in obtaining title or permission to excavate certain wrecks, even if the law
allows it. It is possible that permits that are sought for potential future international projects may never be issued, and if issued,
may not be legal or honored by the entities that issued them. For the above reasons, the Company has extended its research into shipwrecks
outside of State waters.
It
is possible that permits that are sought for potential future international projects may never be issued, and if issued, may not be legal
or honored by the entities that issued them. Governmental agencies may require various types of permits to explore shipwreck sites, and
the permitting process is often lengthy and complex. Obtaining permits and entering into agreements with governmental and quasi-governmental
agencies to conduct historic shipwreck exploration and recovery operations is generally a very complex, time consuming, and expensive
process. Furthermore, the process of entering into agreements and/or obtaining permits may be subject to lengthy delays, possibly in
excess of a year. Some governmental agencies may refuse to issue permits to the Company for recovery of artifacts or intentionally delay
the permitting process, or go beyond their authority and request halting of ground disturbance.
The
reasons for a lengthy permitting process may be due to a number of potential factors including but not limited to requests by permitting
agencies for additional information, submitted applications that need to be revised or updated, newly discovered information that needs
to be added to an application or agreement, changes to either the agreement or permit terms or revisions to other information contained
in the permit, excessive administrative time lags at permitting agencies, work halts based on biased predispositions with no authority
given by rule 1A-31, etc. Existing permits and agreements may be put on hold or suspended without notice for lengthy periods of time
due to administrative issues and disagreements over the terms and conditions. The length of time it takes to obtain permits, enter into
agreements, or rectify any conditions that are causing a permit to be suspended or on hold may cause the Company to expend significant
resources while gearing up to do work with little or no visibility as to timing. An example of delays implemented by FBAR for Seafarer’s
permitted Area 2 in Melbourne Beach, Seafarer was prevented from performing certain activities authorized under the permit for 747 days
out of the 1,095 days during the course of the last three year permit for Area 2 even though the permit was active.
The
Company regularly reviews opportunities to perform exploration and recovery operations at purported historic shipwreck sites. The Company
currently does have some specific plans to perform exploration and recovery operations at other shipwreck sites in the future, however
these plans are subject to change based on a number of factors. The Company is actively reviewing other potential historic shipwreck
sites, including sites located internationally, for possible exploration and recovery. Should the Company decide that it will pursue
exploration and recovery activities at other potential shipwreck sites, it may be necessary to obtain various permits as well as environmental
permits.
The
Company continually monitors media rights for potential revenue opportunities. The Company has had discussions with media entities to
further understand the potential advantages offered. Management believes various forms of media can represent a potential future revenue
opportunity for the Company, if the right circumstances arise.
This
type of business venture is extremely speculative in nature and carries a tremendous amount of risk. An investment in the Company’s
securities is highly speculative and very risky and should only be considered by those investors or lenders who do not require near-term
liquidity and who can afford to suffer a complete and total loss of their investment.
Results
of Operations
We
have generated only minimal revenue from operations and do not expect to report any significant revenue from operations for the foreseeable
future. We have incurred recurring losses to date. Our consolidated financial statements have been prepared assuming that we will continue
as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification
of liabilities that might be necessary should we be unable to continue in operation.
The
Company expects to continue to incur significant operating losses and to generate negative cash flow from operating activities, while
building out its infrastructure in order to explore and salvage historic shipwreck sites and establishing itself in the marketplace.
Based on our historical rate of expenditures, the Company expects to expend its available cash in less than one month from May 19,
2023.
At
March 31, 2023 and December 31, 2022, the Company had working capital deficits of $1,699,199 and $1,660,992 respectively. The working
capital deficit increased by $38,207 from December 31, 2022. The Company’s working capital deficit, along with its lack of 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 within a very short period of time. 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, 2023 Results of Operations Compared to the Three Month Period Ended March 31, 2022 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, 2023
and 2022, the Company generated $0 and $3,089 of revenue respectively, which is shown as service income on the accompanying consolidated
statements of operations.
Operating
Expenses
Operating expenses were $974,381 for the three month period ended March
31, 2023 versus $736,073 for the same period in 2022, an increase of 32%. The increase in operating expenses in 2023 was primarily due
to an increase in vessel related expenses and general and administrative expenses. The inflationary environment has continued to pressure
costs relating to vessel fuel, consulting and contractor expenses and other expenses. Consulting and contractor expense was $519,486 for
the three month period ended March 31, 2023 versus $487,698 for the same period in 2022, an increase of 7%. The Company incurred vessel
related expenses of $194,819 during the three month period ended March 31, 2023 versus $51,269 during the three month period ended March
31, 2022, an increase of approximately 280%. The increase in vessel related expenses was due to the Company entering into a rental and
purchase agreement for a vessel and trailer. Research and development expenses were $32,100 in 2023 versus $61,419 in 2022, a decrease
of 48% in 2023. The Company’s research and development expenses were related to the continued development of its SeaSearcher autonomous
underwater device. The decrease in research and development expenses in 2023 was a result of the Company focusing on the practical use
of the SeaSearcher as opposed to new and early research and development of the technology which is more expensive and time consuming.
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, 2023, professional fees were $28,056 as compared
to $22,001 during the three month period ended March 31, 2022 an increase of approximately 27%. Professional fees fluctuate based on the
use of professional service providers. During the three month period ended March 31, 2023, general and administrative expenses were $153,379
as compared to $81,418 during the three month period ended March 31, 2022, an increase of 88%. General and administrative expenses primarily
increased due to the Company entering into an agreement to lease a truck to haul its vessels and also due to increased costs for web hosting
and Internet services. Depreciation and amortization expense was $11,588 during the three month period ended March 31, 2023 versus $5,465
for the same period in 2022, an increase of 112%. Depreciation and amortization expense increased due to the Company entering into agreement
to lease a vessel, trailer and truck. Rent expense was $13,769 during the three month period ended March 31, 2023 versus $11,234 for the
same period in 2022, an increase of approximately 23%, mostly due to increases in the cost of rents. The Company incurred travel and entertainment
expenses of $21,184 during the three month period ended March 31, 2023 as compared to $15,569 during the three month period ended March
31, 2022, an approximate 36% increase on a quarter-over-quarter basis, entertainment and travel expenses may fluctuate due to inflationary
increase in costs.
Other
Income (Expenses)
Other income (expense) was $(16,989) during the three
month period ended March 31, 2023 versus $(15,440) during the three month period ended March 31, 2022, an increasee of $1,549. The 10%
increase in other expense in 2023 was due to an increase in interest expense.
Net
Losses
The
Company’s net loss for the three months ended March 31, 2023 and 2022 was $991,370, and $784,424, respectively, a year-over-year
increase of approximately 26%.
Cash
Flows from Operating Activities
For
the three month period ended March 31, 2023 net cash flows used in operating activities was $517,681.
For
the three month period ended March 31, 2022 net cash flows used in operating activities was $640,451.
Cash
flows used in operating activities decreased in 2023 due to reconciling the increase in common stock issued for services and a decrease
in amortization of unearned compensation.
Cash
Flows from Investing Activities
For
the three month period ended March 31, 2023 net cash flows used in investing activities was $2,000.
For
the three month period ended March 31, 2022 net cash flows used in investing activities was $145.
Cash
flows used in investing activities nominally increased in 2023.
Cash
Flows from Financing Activities
For
the three month period ended March 31, 2023 net cash provided by financing activities was $515,613.
For
the three month period ended March 31, 2022 net cash provided by financing activities was $613,999.
Cash
flows provided by financing activities primarily decreased in 2023 due to a decrease in the proceeds from the issuance of common stock.
Liquidity
and Capital Resources
At
March 31, 2023, the Company had $173,341 cash in the bank. During the three month periods ended March 31, 2023 and 2022 the Company incurred
net losses of $991,370 and $784,424 respectively. At March 31, 2023, the Company had $174,091 in current assets and $1,873,290 in current
liabilities, leaving the Company a working capital deficit of $1,699,199.
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, 2023. 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, 2022 and 2021 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, 2023, 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 $974,381 for
the three month period ended March 31, 2023 and $732,984 for the three month period ended March 31, 2022. 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.
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, 2023 and 2022 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.
