NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The
accompanying unaudited condensed consolidated financial statements
of Seafarer Exploration Corp. (“Seafarer” or the
“Company”) are unaudited, but in the opinion of
management, reflect all adjustments (consisting only of normal
recurring adjustments) necessary to fairly state the
Company’s financial position, results of operations, and cash
flows as of and for the dates and periods presented. The
consolidated financial statements of the Company are prepared in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”) for interim financial
information.
These
unaudited condensed consolidated financial statements should be
read in conjunction with the Company’s audited financial
statements and footnotes included in the Company’s Report on
Form 10-K for the year ended December 31, 2018, filed with the
Securities and Exchange Commission (the “Commission”)
on April 16, 2019. The results of operations for the three and six
month periods ended June 30, 2019 are not necessarily indicative of
the results that may be expected for the entire year ending
December 31, 2019 or for any future period.
NOTE 1 - DESCRIPTION OF BUSINESS
Seafarer
Exploration Corp. (the “Company”), formerly Organetix,
Inc. (“Organetix”), 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. The Company's
wholly owned subsidiary Blockchain LogisTech, LLC, which was formed
on April 4, 2018 and began operations in 2019, has a strategic
partnership to provide referrals to a provider of blockchain
related software services. The Company is also actively seeking
revenue generating opportunities in order to generate revenue
streams to support its historic shipwreck exploration and recovery
operations.
NOTE 2 - GOING CONCERN
These condensed consolidated financial statements have been
prepared on a going concern basis, which assumes the Company will
be able to realize its assets and discharge its liabilities in the
normal course of business for the foreseeable future. The Company
has incurred net losses since inception, which raises substantial
doubt about the 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
August 14, 2019. Management's plans include raising capital through
the equity markets to fund operations and, eventually, the
generation of revenue through its business. The Company does not
expect to generate any revenues for the foreseeable future. At June
30, 2019, the Company had a working capital deficit of $1,294,652.
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 condensed consolidated financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal
course of business. These 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.
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
condensed consolidated financial statements. The condensed
consolidated financial statements and notes are representations of
the Company’s management, who are responsible for their
integrity and objectivity. These accounting policies conform to
accounting principles generally accepted in the United States of
America and have been consistently applied in the preparation of
the condensed consolidated financial statements.
Principles of Consolidation
The
consolidated financial statements of the Company include the
accounts of Blockchain LogisTech, LLC which is a wholly owned
subsidiary. Intercompany accounts and transactions have been
eliminated in consolidation.
Cash and Cash Equivalents
For
purposes of the statement 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 June 30, 2019 and December 31,
2018.
Revenue Recognition
Effective
January 1, 2018, the Company adopted ASC Topic 606, “Revenue
from Contracts with Customers” (“ASC 606”) and
all the related amendments. The Company elected to adopt this
guidance using the modified retrospective method. The adoption of
this guidance did not have a material effect on the Company’s
financial position, results of operations or cash
flows.
The
core principle of ASC 606 requires that an entity recognize revenue
to depict the transfer of promised goods or services to customers
in an amount that reflects the consideration to which the company
expects to be entitled in exchange for those goods or services. ASC
606 defines a five-step process to achieve this core principle and,
in doing so, it is possible more judgment and estimates may be
required within the revenue recognition process than required under
U.S. 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.
Earnings Per Share
The
Company has adopted the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards
Codification (“ASC”) 260-10 which provides for
calculation of "basic" and "diluted" earnings per share. Basic
earnings per share includes no dilution and is computed by dividing
net income or loss available to common stockholders by the weighted
average common shares outstanding for the period. Diluted earnings
per share reflect the potential dilution of securities that could
share in the earnings of an entity.
The potentially dilutive common stock equivalents for the six
months ended June 30, 2019 and 2018 were excluded from the dilutive
loss per share calculation as they would be antidilutive due to the
net loss. As of June 30, 2019 and 2018, there were 553,309,220 and
558,089,442 shares of common stock underlying our outstanding
convertible notes payable and warrants, respectively.
Fair Value of Financial Instruments
The
carrying amounts of financial assets and liabilities, such as cash
and cash equivalents, receivables, accounts payable, notes payable
and other payables, approximate their fair values because of the
short maturity of these instruments.
Impairment of Long-Lived Assets
In
accordance with ASC 360-10, the Company, on a regular basis,
reviews the carrying amount of long-lived assets for the existence
of facts or circumstances, both internally and externally, that
suggest impairment. The Company determines if the carrying amount
of a long-lived asset is impaired based on anticipated undiscounted
cash flows, before interest, from the use of the asset. In the
event of impairment, a loss is recognized based on the amount by
which the carrying amount exceeds the fair value of the asset. Fair
value is determined based on appraised value of the assets or the
anticipated cash flows from the use of the asset, discounted at a
rate commensurate with the risk involved. There were no impairment
charges recorded during the quarters ended June 30, 2019 and
2018.
Use of Estimates
The
process of preparing condensed consolidated financial statements in
conformity with accounting principles generally accepted in the
United States of America requires the use of estimates and
assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to
unsettled transactions and events as of the date of the condensed
consolidated financial statements. Accordingly, upon settlement,
actual results may differ from estimated amounts.
Convertible Notes Payable
The
Company accounts for conversion options embedded in convertible
notes in accordance with ASC 815. ASC 815 provides comprehensive
guidance on derivative and hedging transactions. It sets forth the
definition of a derivative instrument and specifies how to account
for such instruments, including derivatives embedded in hybrid
instruments. In addition, ASC 815 establishes when reporting
entities, in certain limited, well-defined circumstances, may apply
hedge accounting to a relationship involving a designated hedging
instrument and hedged exposure. Hedge accounting provides an
alternative, special way of accounting for such relationships. ASC
815 also provides guidance on how reporting entities determine
whether an instrument is (1) indexed to the reporting
entity’s own stock and (2) considered to be settled in the
reporting entity’s own stock. Such a determination will
dictate whether an instrument should be accounted for as debt or
equity and the appropriate accounting for the instrument. Finally,
ASC 815 addresses the accounting for non-exchange-traded weather
derivatives. ASC 815 generally requires companies to bifurcate
conversion options embedded in convertible notes from their host
instruments and to account for them as free standing derivative
financial instruments. ASC 815 provides for an exception to this
rule when convertible notes, as host instruments, are deemed to be
conventional, as defined by ASC 815-40. As of June 30, 2019 and
2018, all of the Company’s convertible notes payable were
classified as conventional instruments.
The
Company accounts for convertible notes deemed conventional and
conversion options embedded in non-conventional convertible notes
which qualify as equity under ASC 815, in accordance with the
provisions of ASC 470-20, which provides guidance on accounting for
convertible securities with beneficial conversion features. ASC
470-10 addresses classification determination for specific
obligations, such as short-term obligations expected to be
refinanced on a long-term basis, due-on-demand loan arrangements,
callable debt, sales of future revenue, increasing rate debt, debt
that includes covenants, revolving credit agreements subject to
lock-box arrangements and subjective acceleration clauses, indexed
debt. Accordingly, the Company records, as a discount to
convertible notes, the intrinsic value of such conversion options
based upon the differences between the fair value of the underlying
common stock at the commitment date of the note transaction and the
effective conversion price embedded in the note. Debt discounts
under these arrangements are amortized over the term of the related
debt.
Stock Based Compensation
The
Company applies the fair value method of Financial Accounting
Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 718, “
Share Based Payment
”, in
accounting for its stock-based compensation. This standard states
that compensation cost is measured at the grant date based on the
fair value of the award and is recognized over the service period,
which is usually the vesting period. The Company values stock-based
compensation at the market price for the Company’s common
stock and other pertinent factors at the grant date.
Through
December 31, 2018, the Company accounted for transactions in which
services were received from non-employees in exchange for equity
instruments based on the fair value of the equity instruments
exchanged, in accordance with ASC 505-50, “
Equity Based payments to
Non-employees
”. The Company measured the fair value of
the equity instruments issued based on the fair value of the
Company’s stock on contract execution and recognizes the
value of the award over the service period. The Company adopted ASU
No. 2018-07,
Compensation –
Stock Compensation (Topic 718), Improvements to Nonemployee
Share-Based Payment Accounting,
which is intended to
simplify the accounting for nonemployee share-based payment
transactions by expanding the scope of Topic 718 to include
share-based payment transactions for acquiring goods and services
from nonemployees.
Fully vested and non-forfeitable shares issued prior to the
services being performed are classified as prepaid
expenses.
Leases
In
February 2016, the FASB issued ASU 2016-02,
Leases
(Topic 842). The updated
guidance requires lessees to recognize lease assets and lease
liabilities for most operating leases. In addition, the updated
guidance requires that lessors separate lease and non-lease
components in a contract in accordance with the new revenue
guidance in ASC 606.
On
January 1, 2019, the Company adopted ASU No. 2016-02, applying the
package of practical expedients to leases that commenced before the
effective date whereby the Company elected to not reassess the
following: (i) whether any expired or existing contracts contain
leases and; (ii) initial direct costs for any existing leases. For
contracts entered into on or after the effective date, at the
inception of a contract the Company assessed whether the contract
is, or contains, a lease. The Company’s assessment is based
on: (1) whether the contract involves the use of a distinct
identified asset, (2) whether we obtain 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 assets (“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
use 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
included in general and administrative expenses in the condensed
statements of operations.
Recent Accounting Pronouncements
All
other recent accounting pronouncements issued by the FASB,
including its Emerging Issues Task Force, the American Institute of
Certified Public Accountants, and the Securities and Exchange
Commission 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 – STOCKHOLDERS’ DEFICIT
The
Company’s total authorized capital stock consists of
4,900,000,000 shares of common stock, $0.0001 par value per
share.
Preferred Stock
The
Company is authorized to sell or issue 50,000,000 shares of
preferred stock.
Series A Preferred Stock
At June
30, 2019 and December 31, 2018, the Company had seven shares of
Series A preferred stock issued and outstanding. Each share of
Series A preferred stock has the right to convert into 214,289
shares of the Company’s common
stock.
Series B Preferred Stock
On
February 10, 2014, the Board of Directors of the Company under the
authority granted under Article V of the Articles of Incorporation,
defined and created a new preferred series of shares from the
50,000,000 authorized preferred shares. Pursuant to Article V, the
Board of Directors has the power to designate such shares and all
powers and matters concerning such shares. Such share class shall
be designated Preferred Class B. The preferred class was created
for 60 Preferred Class B shares. Such shares each have a voting
power equal to one percent of the outstanding shares issued
(totaling 60%) at the time of any vote action as necessary for
share votes under Florida law, with or without a shareholder
meeting. Such shares are non-convertible to common stock
of the Company and are not considered as convertible under any
accounting measure. Such shares shall only be held by the Board of
Directors as a Corporate body, and shall not be placed into any
individual name. Such shares were considered issued at the time of
this resolution’s adoption, and do not require a stock
certificate to exist, unless selected to do so by the Board for
representational purposes only. Such shares are
considered for voting as a whole amount, and shall be voted for any
matter by a majority vote of the Board of Directors. Such shares
shall not be divisible among the Board members, and shall be voted
as a whole either for or against such a vote upon the vote of the
majority of the Board of Directors. In the event that there is any
vote taken which results in a tie of a vote of the Board of
Directors, the vote of the Chairman of the Board shall control the
voting of such shares. Such shares are not transferable except in
the case of a change of control of the Corporation when such shares
shall continue to be held by the Board of Directors. Such shares
have the authority to vote for all matters that require a share
vote under Florida law and the Articles of
Incorporation.
Common
Stock Issuances
During
the six month period ended June 30, 2019, the Company issued the
following shares of common stock:
The
Company issued or agreed to issue 506,095,239 shares for total
proceeds of $800,750.
The
Company issued 1,284,938 shares for the conversion of $1,000 of
convertible note principal and $28 of accrued interest for a total
of $1,028.
The Company issued 106,170,616 fully
vested and non-forfeitable common stock shares for services
provided by consultants, contractors, advisory members, board
members, and other service providers (see Note 9). We determined
the fair value of the shares issued using the stock price on date
of issuance. Compensation expense is recognized as the services are
provided to the Company.
For the three and six-month periods
ended June 30, 2019, we incurred $59,325 and $254,175 of
compensation expense for stock issued for services and have prepaid
expenses of $81,733 at June 30, 2019 for stock issued prior to
services being performed.
The
Company issued 5,000,000 shares to one of our convertible note
payable lenders as a penalty for failure to repay the convertible
note when due. The fair value of these shares was determined to be
$7,500 based on the market price of the stock on date issued in
accordance with the convertible note payable
agreement.
The
Company issued 18,869,220 shares to settle $90,182 of accrued
interest owed on fourteen convertible notes payable.
The
Company issued 7,000,000 shares to settle an account payable in the
amount of $7,000.
Warrants and Options
The
Company did not issue any warrants or options during the six month
period ended June 30, 2019.
At June
30, 2019 the Company had warrants to purchase a total of 33,000,000
shares of its restricted common stock outstanding.
The
following table shows the warrants outstanding at June 30,
2019:
|
Number of Shares
|
|
Term
|
June 30, 2018
|
Exercise Price
|
11/10/12 to 11/20/22
|
4,000,000
|
0.0050
|
09/18/15 to 09/18/20
|
4,000,000
|
0.0030
|
09/10/17 to 09/10/19
|
15,000,000
|
0.0250
|
09/10/17 to 09/10/19
|
10,000,000
|
0.0250
|
|
33,000,000
|
|
NOTE 5 – INVESTMENT IN PROBABILITY AND STATISTICS,
INC.
The
Company entered into a share exchange agreement with Probability
and Statistics, Inc. (“P&S”), a privately held
corporation, in August of 2018.
Under
the terms of the share exchange agreement, the Company agreed to
issue 60,000,000 shares of its restricted common stock to P&S
in exchange for 10,000 common shares of P&S or a 1% interest.
All shares issued by both parties under the agreement have all
rights and entitlements as the common stock of every other
shareholder of such share class.
The
investment in P&S was valued at $78,000. The value of the
investment in P&S was accounted for as the total value of the
Company’s shares issued to P&S on the date of the share
exchange agreement.
NOTE 6 - LEASE OBLIGATION
Operations House
The
Company has an operating lease for a house located in Palm Bay,
Florida. 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 term of the lease
agreement commenced on October 1, 2015 and expired on October 31,
2016. The Company pays $1,300 per month to lease the
operations house. The term of the lease expired in October 2016,
the Company is leasing the operations house on a month-to-month
basis and anticipates continuing to lease the house for the
foreseeable future.
NOTE 7 - OPERATING LEASE AND RIGHT-OF-USE ASSETS AND OPERATING
LEASE LIABILITIES
Operating lease right-of-use assets
and liabilities are recognized at the present value of the future
lease payments at the lease commencement date. The interest rate
used to determine the present value is our incremental borrowing
rate, estimated to be 6%, as the interest rate implicit in most of
our leases is not readily determinable. Operating lease expense is
recognized on a straight-line basis over the lease term.
During the three and six months ended June 30, 2019 and 2018, the
Company recorded $3,945 and $0 and $7,890 and $0, respectively, as
operating lease expense which is included in rent expenses on the
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
20, 2017 through June 30, 2020 with base month rents of $1,252 from
July 1, 2017 to June 30, 2018, $1,289 from July 1, 2018 to June 30,
2019, and $1,328 from July 1, 2019 to June 30, 2020. Under the
terms of the lease there may be additional fees charged about the
base monthly rental fee.
In
adopting ASC Topic 842, Leases (Topic 842), the Company has elected
the ‘package of practical expedients’, which permit it
not to reassess under the new standard its prior conclusions about
lease identification, lease classification and initial direct
costs. The Company did not elect the use-of-hindsight or the
practical expedient pertaining to land easements; the latter is not
applicable to the Company. In addition, the Company elected not to
apply ASC Topic 842 to arrangements with lease terms of 12 month or
less. On January 1, 2019, upon adoption of ASC Topic 842, the
Company recorded right-of-use assets and lease liabilities of
$22,575.
Right-of-
use assets are summarized below:
|
|
|
|
Office lease
(remaining lease term of 12 months)
|
$
22,575
|
Less accumulated
amortization
|
(7,151
)
|
Right-of-use
assets, net
|
$
15,424
|
Amortization
on the right -of -use asset is included in rent expense on the
statements of operations.
Operating
Lease liabilities are summarized below:
|
|
|
|
Office
lease
|
$
15,580
|
Less: current
portion
|
(15,580
)
|
Long term
portion
|
-
|
Maturity
of lease liabilities are as follows:
Six months ended
June 30, 2019
|
$
7,968
|
Year ending
2020
|
7,968
|
Less: Present value
discount
|
(356
)
|
Lease
liability
|
$
15,580
|
NOTE 8 - 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 table reflects the convertible notes payable at June 30,
2019:
|
Date
|
Due Date
|
Principal Balance
|
Rate
|
Conversion Rate
|
|
|
|
|
|
|
Convertible notes payable
|
|
|
|
|
|
|
01/03/19
|
07/03/19
|
$1,000
|
6.00%
|
0.00100
|
|
03/16/19
|
09/16/19
|
$10,000
|
6.00%
|
0.00100
|
Subtotal convertible notes payable
|
|
|
$11,000
|
|
|
|
|
|
|
|
|
Less unamortized discounts
|
|
|
$4,248
|
|
|
|
|
|
|
|
|
Balance, convertible notes payable
|
|
|
$6,752
|
|
|
|
|
|
|
|
|
Convertible notes payable - related parties
|
|
|
|
|
|
|
01/08/19
|
07/08/19
|
$7,000
|
6.00%
|
0.00080
|
|
04/25/19
|
12/23/19
|
$20,000
|
6.00%
|
0.00400
|
|
06/07/19
|
12/07/19
|
$5,100
|
6.00%
|
0.00300
|
Sub-Total notes payable - related parties
|
|
|
$32,100
|
|
|
|
|
|
|
|
|
Less unamortized discounts
|
|
|
$12,984
|
|
|
|
|
|
|
|
|
Balance, convertible notes payable - related parties
|
|
|
$19,116
|
|
|
|
|
|
|
|
|
Convertible notes payable - in default
|
|
|
|
|
|
|
08/28/09
|
11/01/09
|
$4,300
|
10.00%
|
0.01500
|
|
04/07/10
|
11/07/10
|
$70,000
|
6.00%
|
0.00800
|
|
11/12/10
|
11/12/11
|
$40,000
|
6.00%
|
0.00500
|
|
10/31/12
|
04/30/13
|
$8,000
|
6.00%
|
0.00400
|
|
11/20/12
|
05/20/13
|
$50,000
|
6.00%
|
0.00500
|
|
01/19/13
|
07/30/13
|
$5,000
|
6.00%
|
0.00400
|
|
02/11/13
|
08/11/13
|
$9,000
|
6.00%
|
0.00600
|
|
09/25/13
|
03/25/14
|
$10,000
|
6.00%
|
0.01250
|
|
10/04/13
|
04/04/14
|
$50,000
|
6.00%
|
0.01250
|
|
10/30/13
|
10/30/14
|
$50,000
|
6.00%
|
0.01250
|
|
05/15/14
|
11/15/14
|
$40,000
|
6.00%
|
0.00700
|
|
10/13/14
|
04/13/15
|
$25,000
|
6.00%
|
0.00500
|
|
06/29/15
|
12/29/15
|
$25,000
|
6.00%
|
0.00300
|
|
09/18/15
|
03/18/16
|
$25,000
|
6.00%
|
0.00200
|
|
04/04/16
|
10/04/16
|
$10,000
|
6.00%
|
0.00100
|
|
07/19/16
|
07/19/17
|
$4,000
|
6.00%
|
0.00150
|
|
08/24/16
|
02/24/17
|
$20,000
|
6.00%
|
0.00100
|
|
03/06/18
|
09/06/18
|
$6,000
|
6.00%
|
0.00060
|
|
02/06/18
|
11/07/18
|
$6,000
|
6.00%
|
0.00060
|
|
10/29/18
|
04/29/19
|
$3,000
|
6.00%
|
0.00070
|
Sub-Total convertible notes payable - in default
|
|
|
$460,300
|
|
|
Convertible notes payable - related parties, in
default
|
|
|
|
|
|
01/09/09
|
01/09/10
|
$10,000
|
10.00%
|
0.01500
|
|
01/25/10
|
01/25/11
|
$6,000
|
6.00%
|
0.00500
|
|
01/18/12
|
07/18/12
|
$50,000
|
8.00%
|
0.00400
|
|
01/19/13
|
07/30/13
|
$15,000
|
6.00%
|
0.00400
|
|
07/26/13
|
01/26/14
|
$10,000
|
6.00%
|
0.01000
|
|
01/17/14
|
07/17/14
|
$31,500
|
6.00%
|
0.00600
|
|
05/27/14
|
11/27/14
|
$7,000
|
6.00%
|
0.00700
|
|
07/21/14
|
01/25/15
|
$17,000
|
6.00%
|
0.00800
|
|
10/16/14
|
04/16/15
|
$21,000
|
6.00%
|
0.00450
|
|
07/14/15
|
01/14/16
|
$9,000
|
6.00%
|
0.00300
|
|
01/12/16
|
07/12/16
|
$5,000
|
6.00%
|
0.00200
|
|
05/10/16
|
11/10/16
|
$5,000
|
6.00%
|
0.00050
|
|
05/10/16
|
11/10/16
|
$5,000
|
6.00%
|
0.00050
|
|
05/20/16
|
11/20/16
|
$5,000
|
6.00%
|
0.00050
|
|
07/12/16
|
01/12/17
|
$2,400
|
6.00%
|
0.00060
|
|
01/26/17
|
03/12/17
|
$5,000
|
6.00%
|
0.00050
|
|
02/14/17
|
08/14/17
|
$25,000
|
6.00%
|
0.00075
|
|
08/16/17
|
09/16/17
|
$3,000
|
6.00%
|
0.00080
|
|
03/14/18
|
05/14/18
|
$25,000
|
6.00%
|
0.00070
|
|
04/04/18
|
06/04/18
|
$3,000
|
6.00%
|
0.00070
|
|
04/11/18
|
06/11/18
|
$25,000
|
6.00%
|
0.00070
|
|
05/08/18
|
07/08/18
|
$25,000
|
6.00%
|
0.00070
|
|
05/30/18
|
08/30/18
|
$25,000
|
6.00%
|
0.00070
|
|
06/12/18
|
09/12/18
|
$3,000
|
6.00%
|
0.00070
|
|
06/20/18
|
09/12/18
|
$500
|
6.00%
|
0.00070
|
|
01/09/18
|
01/09/19
|
$12,000
|
6.00%
|
0.00060
|
|
08/27/18
|
02/27/19
|
$2,000
|
6.00%
|
0.00070
|
|
10/02/18
|
04/02/19
|
$1,000
|
6.00%
|
0.00080
|
|
10/23/18
|
04/23/19
|
$4,200
|
6.00%
|
0.00070
|
|
11/07/18
|
05/07/19
|
$2,000
|
6.00%
|
0.00080
|
|
11/14/18
|
05/14/19
|
$8,000
|
6.00%
|
0.00080
|
Sub-Total convertible notes payable - related parties, in
default
|
|
$367,600
|
|
|
|
|
|
|
|
|
Balance - convertible notes payable
|
|
|
$853,768
|
|
|
Notes Payable
The
following table reflects the notes payable at June 30,
2019:
Date
|
Due Date
|
Principal Balance
|
Rate
|
|
|
|
|
|
|
Notes payable
|
|
|
|
|
11/29/17
|
11/29/19
|
$105,000
|
2.06%
|
NA
|
Balance
|
|
$105,000
|
|
|
|
|
|
|
|
Less unamortized
discounts
|
|
$7,071
|
|
|
|
|
|
|
|
Balance notes
payable
|
|
$97,929
|
|
|
|
|
|
|
|
Notes payable - in default
|
|
|
|
04/27/11
|
04/27/12
|
$5,000
|
6.00%
|
NA
|
06/23/11
|
08/23/11
|
$25,000
|
6.00%
|
NA
|
12/14/17
|
12/14/18
|
$75,000
|
6.00%
|
NA
|
Balance
|
|
$105,000
|
|
|
|
|
|
|
|
Notes
payable - related parties, in default
|
|
|
|
02/24/10
|
02/24/11
|
$7,500
|
6.00%
|
NA
|
10/06/15
|
11/15/15
|
$10,000
|
6.00%
|
NA
|
02/08/18
|
04/09/18
|
$1,000
|
6.00%
|
NA
|
Balance
|
|
$18,500
|
|
|
|
|
|
|
|
Balance - notes payable
|
$221,429
|
|
|
New Convertible Notes Payable and Notes Payable
During
the six month period ended June 30, 2019 the Company entered into
the following Convertible Notes Payable and Notes Payable
Agreements:
In
January of 2019, the Company entered into a convertible promissory
note agreement in the amount of $1,000 with an individual. This
loan pays interest at a rate of 6% per annum and the principal and
accrued interest was due on or before July 3, 2019. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.001 per
share.
In
January of 2019, the Company entered into a convertible promissory
note agreement in the amount of $7,000 with a related party. This
note pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before July 8, 2019. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.008 per
share.
In
March of 2019, the Company entered into a convertible promissory
note agreement in the amount of $10,000 with an individual. This
loan pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before September 16, 2019. The note
is unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.0010 per
share.
In
April of 2019, the Company entered into a convertible promissory
note agreement in the amount of $20,000 with a related party. This
note pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before October 23, 2019. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.004 per
share.
In June
of 2019, the Company entered into a convertible promissory note
agreement in the amount of $5,100 with a related party. This note
pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before December 7, 2019. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.003 per
share.
For the
six month period ended June 30, 2019, the Company recorded a
beneficial conversion feature of $35,600 on the convertible notes
payable issued which was recorded as discount and will be amortized
to interest expense over the related term of the convertible debt.
For the six month period ended June 30, 2019, the Company recorded
amortization of debt discounts of $27,357. For the three month
period ended June 30, 2019, the Company recorded a beneficial
conversion feature of $25,100 on the convertible notes payable
issued which was recorded as discount and will be amortized to
interest expense over the related term of the convertible debt. For
the three month period ended June 30, 2019, the Company recorded
amortization of debt discounts of $17,594.
Note Conversions
During
the three month period ended March 31, 2019:
A
lender converted the principal and accrued interest for a
convertible promissory note outstanding with a principal balance of
$1,000 into 1,284,938 shares of the Company’s common stock.
The remaining principal balance of this note was $0 at June 30,
2019.
During the three month period
ended June 30, 2019:
The
Company issued 18,869,220 shares to settle $90,182 of accrued
interest owed on fourteen convertible notes payable.
Shareholder Loans
At June
30, 2019 the Company had a loan outstanding to its CEO in the
amount of $1,500. The loan has a 2% annual rate of interest and an
option to convert the loan into restricted shares of the
Company’s common stock at $0.0005. During the three month
period ended June 30, 2019 the Company repaid the principal balance
of $200 of a loan owed to its CEO.
Convertible Notes Payable and Notes Payable, in
Default
The
Company does not have additional sources of debt financing to
refinance its convertible notes payable and notes payable that are
currently in default. If the Company is unable to obtain additional
capital, such lenders may file suit, including suit to foreclose on
the assets held as collateral for the obligations arising under the
secured notes. If any of the lenders file suit to foreclose on the
assets held as collateral, then the Company may be forced to
significantly scale back or cease its operations which would more
than likely result in a complete loss of all capital that has been
invested in or borrowed by the Company. The fact that the Company
is in default of several promissory notes held by various lenders
makes investing in the Company or providing any loans to the
Company extremely risky with a very high potential for a complete
loss of capital.
The
convertible notes that have been issued by the Company are
convertible at the 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
shares of the Company’s common stock there is typically a
highly dilutive effect on current shareholders and very possible
that such dilution may significantly negatively affect the trading
price of the Company’s common stock.
NOTE 9 – MATERIAL AGREEMENTS
Agreement to Explore a Shipwreck Site Located off of Brevard
County, Florida
In
March of 2014, Seafarer entered into a partnership and ownership
with Marine Archaeology Partners, LLC, with the formation of
Seafarer’s Quest, LLC. Such LLC was formed in the State of
Florida for the purpose of permitting, exploration and recovery of
artifacts from a designated area on the east coast of Florida. Such
site area is from a defined, contracted area by a separate entity,
which a portion of such site is designated from a previous
contracted holding through the State of Florida. Under such
agreement, Seafarer is responsible for costs of permitting,
exploration and recovery, and is entitled to 60% of such artifact
recovery. Seafarer has a 50% ownership, with designated management
of the LLC coming from Seafarer.
Florida Division of Historical Resources
Agreements/Permits
The
Company successfully renewed its permits for both Areas 1 and 2 for
the Melbourne Beach site. The Area 2 permit was renewed on January
14, 2019 for a period of three years. The Area 1 permit was renewed
on March 1, 2019 for a period of three years.
Federal Admiralty Judgement
As
previously noted on its form 8-K filed on November 22, 2017,
Seafarer was granted, through the United States District Court for
the Southern District of Florida, a final judgment for its federal
admiralty claim on the Juno Beach shipwreck
site.
Agreement with Probability and Statistics, Inc.
Seafarer
acquired a 1% ownership position in Probability and Statistics,
Inc. (P&S) for an exchange of shares of Seafarer’s
restricted common stock (See Note 5).
Certain Other Agreements and Commitments
In
January of 2019, 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 two of the individuals via payment of 22,000,000
restricted shares of its common stock each, and two of the
individuals via payment of 3,666,667 shares of the Company’s
restricted common stock, an aggregate total of 51,333,334 shares,
and to negotiate future compensation on a year-by-year basis. The
Company also agreed to reimburse the individuals for preapproved
expenses.
In
January of 2019 the Company entered into a services agreement with
a limited liability company. Under the terms of the agreement the
limited liability company agreed to provide engineering review and
assessment, systems engineering, program management, technical team
coordination, consultative support, etc. as deemed appropriate by
the Company. The Company agreed to pay the limited liability
company various rates ranging from $35 to $125 per hour depending
on the specific services provided. The term of the agreement is
until January 24, 2020 unless otherwise extended or terminated in
writing by either party.
In
January of 2019 the Company entered into a consulting agreement
with a limited liability company for corporate identity and digital
branding services. Under the terms of the agreement the Company
paid the consultant 5,000,000 shares of its restricted common
stock. The term of the agreement is open ended.
In
February of 2019, the Company issued a consultants 5,300,000 shares
of its restricted common for business consulting and advisory
services.
In February of 2019, the Company issued 12,500,000 shares of its
restricted common stock for past legal services. The attorney
agreed that the payment of the 12,500,000 shares satisfied all
outstanding debts for legal services owed the law
firm.
During
the six month period ended June 30, 2019, the Company issued a
consultant a total of 3,000,000 share its restricted common stock
in conjunction with a consulting agreement from July 2018 for
social media and website management.
During
the six month period ended June 30, 2019, the Company issued a
total of 7,000,000 share its restricted common stock on various
dates under consulting agreements for assistance with procuring a
marina slip, general business consulting and corporate
communications.
During
the six month period ended June 30, 2019, the Company issued a
consultant a total of 3,000,000 shares of its restricted common
stock in conjunction with a consulting agreement from July 2018 for
social media and website management.
In
March of 2019, the Company issued three independent contractors a
total of 600,000 share its restricted common stock as a bonus for
providing services to the Company on favorable terms including the
willingness to defer cash payments for lengthy periods of
time.
In
March of 2019, the Company entered into an independent contractor
agreement with an individual for technology consulting services.
Under the terms of the agreement the Company agreed to issue
3,500,000 shares of the Company’s restricted common stock.
The agreement is effective until the September 16,
2019.
In
March of 2019, the Company entered into an agreement with an
individual to provide continuing technology consulting services
regarding the development of a submersible device for potential use
in the Company’s operations. The Company agreed to pay the
consultant $7,000 per month for three months plus an additional
$3,000 per month in restricted shares of the Company’s
restricted common stock. The Company issued the consultant 987,282
shares of its restricted common stock. The term of the agreement is
for three months until June 6, 2019. The Company terminated its
agreement with the consultant in May of 2019.
In
March of 2019, the Company entered into an agreement with two
individuals to join or rejoin the Company’s advisory council.
Under the advisory council agreement the advisors agreed to provide
various advisory 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 to the Company's business, and providing such other
advisory or consulting services as may be appropriate from time to
time. The term of each of the advisory council agreement is for one
year. In consideration for the performance of the advisory
services, the Company agreed to issue the advisors an aggregate
total of 7,000,000 shares of restricted common stock, 5,000,000
shares to one advisor and 2,000,000 shares to the other advisor. If
the advisors or the Company terminates the advisory council
agreement prior to the expiration of the one year term, the
advisors agreed to return to the Company for cancellation any
portion of the shares that have not vested. Under the advisory
council agreement, the Company has agreed to reimburse the advisors
for pre approved expenses.
In
April of 2019 the Company entered into a consulting agreement with
an individual to provide corporate communications services. Under
the terms of the agreement the Company agreed to pay the consultant
$3,500 per month for three months and a total of 1,000,000 shares
of the Company’s restricted common stock. The Company also
agreed to pay the certain pre approved expenses. The Company issued
all 1,000,000 shares of the stock owed under the
agreement.
In
April and May of 2019 the Company issued 3,950,000 shares of its
restricted common stock to three independent contractors as a bonus
for providing services to the Company on favorable terms including
the willingness to defer cash payments for lengthy periods of
time.
In June
of 2019 the Company entered into a consulting agreement with an
individual for various non-dive related operations management
consulting services related to its exploration and recovery
operations. The term of the agreement is for one month and the
Company issued 2,500,000 shares of its restricted common stock to
the consultant.
In June
of 2019, the Company entered into an agreement with an individual
to join the Company’s advisory council. Under the advisory
council agreement the advisor agreed to provide various advisory
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 to the Company's
business, and providing such other advisory or consulting services
as may be appropriate from time to time. The term of the advisory
council agreement is for one year. In consideration for the
performance of the advisory services, the Company agreed to issue
the advisor a total of 400,000 shares of restricted common stock.
If the advisor or the Company terminates the advisory council
agreement prior to the expiration of the one year term, the
advisors agreed to return to the Company for cancellation any
portion of the shares that have not vested. Under the advisory
council agreement, the Company has agreed to reimburse the advisors
for pre approved 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 the Company’s CEO to pay the related party limited
liability company a minimum of $3,500 per month plus periodic
bonuses to provide general business consulting and assessing the
Company's business and to advise management with respect to an
appropriate business strategy on an ongoing basis, commenting on
proposed corporate decisions, perform period background research
including background checks and provide investigative information
on individuals and companies and to assist, when needed, as an
administrative specialist to perform various administrative duties
and clerical services including reviewing the Company’s
agreements and books and records. The consultant provides the
services under the direction and supervision of the Company’s
CEO. At June 30, 2019 the Company owed the related party consultant
$0 for services rendered. At December 31, 2018 the Company owed the
related party limited liability company $11,150. The consultant
provides the services under the direction and supervision of the
Company’s CEO.
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. At
June 30, 2019 the Company owed the related party limited liability
company $6,577 for services rendered. At December 31, 2018 the
Company owed the related party limited liability company
$4,385.
The
Company has an agreement to pay an individual a minimum monthly fee
of $2,500 per month for archeological consulting
services.
The
Company has an informal agreement to pay an individual consultant a
minimum of $3,500 per month for administrative and shareholder
support and services.
The
Company has an informal consulting agreement to pay a limited
liability company a minimum of $6,500 per month for business
advisory, strategic planning and consulting services, assistance
with financial reporting, IT management, and administrative
services. The Company also agreed to reimburse the consultant for
expenses. The agreement may be terminated by the Company or the
consultant at any time.
NOTE 10 – LEGAL PROCEEDINGS
On June
18, 2013, Seafarer began litigation against Tulco Resources, LLC,
in a lawsuit filed in the Circuit Court in and for Hillsborough
County, Florida. Such suit was filed for against Tulco based upon
for breach of contract, equitable relief and injunctive relief.
Tulco was the party holding the rights under a permit to a treasure
site at Juno Beach, Florida. Tulco and Seafarer had entered into
contracts in March 2008, and later renewed under an amended
agreement on June 11, 2010. Such permit was committed to by Tulco
to be an obligation and contractual duty to which they would be
responsible for payment of all costs in order for the permit to be
reissued. Such obligation is contained in the agreement of March
2008 which was renewed in the June 2010 agreement between Seafarer
and Tulco. Tulco made the commitment to be responsible for payments
of all necessary costs for the gaining of the new permit. Tulco
never performed on such obligation, and Seafarer during the period
of approximately March 2008 and April 2012 had endeavored and even
had to commence a lawsuit to gain such permit which was awarded in
April 2012. Seafarer alleged in its complaint the expenditure of
large amounts of shares and monies for financing and for delays due
to Tulco’s non-performance. Seafarer sought monetary damages
and injunctive relief for the award of all rights held by Tulco to
Seafarer. Seafarer gained a default and final Judgment on such
matter on July 23, 2014. Seafarer is now in position to receive the
renewed permit in Seafarer’s name and rights only, with Tulco
removed per the Order of the Court. On March 4, 2015, the Court
awarded full rights to the Juno sight to Seafarer Exploration,
erasing all rights of Tulco Resources. The Company filed an
Admiralty Claim over such site in the United States District Court.
On October 21, 2016 a hearing on the Admiralty Claim in the United
States District Court for the Southern District of Florida was
held, where the Court Ordered actions to take place for ongoing
admiralty claim. The Court subsequently entered and Order directing
the arrest warrant for such site, and such arrest warrant was
issued by the Clerk of Court. Such arrest warrant was served by the
United States Marshalls Office in Palm Beach, Florida on July 7,
2017. The United States District Court Judge ordered service on the
claim on August 10, 2017. On November 14, 2017, Judge Kenneth Marra
of the United States District Court awarded Seafarer all rights as
the sole owner of the sunken vessel and any items on such
site.
On
September 3, 2014, the Company filed a lawsuit against Darrel
Volentine, of California. Mr. Volentine was sued in two counts of
libel per se under Florida law, as well as a count for injunction
against the Defendant to exclude and prohibit internet postings.
Such lawsuit was filed in the Circuit Court in Hillsborough County,
Florida. Such suit is based upon internet postings on
www.investorshub.com
. On or about October 15, 2015, the Company and Volentine entered
into a stipulation whereby Volentine admitted to his tortious
conduct, however the stipulated damages agreed to were rejected by
the Court. The Defendant is the subject of a contempt of court
motion which was heard on April 7, 2016, whereby the Court found a
violation and modified the injunction against the Defendant, and
imposed other matters of potential penalties against the Defendant.
The Court also awarded attorney’s fees against the Defendant
on behalf of Seafarer for such motion. The Defendant subsequently
attempted to have such ruling, evidence and testimony attacked
through a motion heard before the Court on October 24, 2016. The
Court dismissed the Defendant’s motion after presentation of
the Defendant’s case at the hearing. The Plaintiff had set
the matter for entry of the attorney’s fees amount due from
the Defendant for hearing in December 2016. As well the Plaintiff
has set for hearing its motion for sanctions in the form of
attorney’s fees for frivolous filing of the October 24th
motion, which motion was also set for hearing in December 2016. The
Plaintiff filed a renewed and amended motion for punitive damages
in the case on September 11, 2016, which has not been set for
hearing. The Defendant had also filed a motion for summary judgment
on the matter of notice entitlement pre-suit, which motion is
pending before the Court. The Plaintiff filed a motion for
sanctions against the Defendant for the motion for summary judgment
being frivolous under existing law, and such motion is pending
ruling on the motion. Discovery is ongoing on such case. On
December 7, 2016, the Court held a hearing on the Defendant’s
motion for sanctions, and essentially attempting to rehear the
motion for contempt against the Defendant. The Court dismissed the
Defendant’s motions, and renewed the ability of the Company
to seek attorney’s fees on such matter, which hearing has not
been set at present. On February 28, 2017, the Court entered an
Order denying the Defendant’s motion for summary judgment.
The Company has a pending motion for sanctions related to the
Defendant’s filing of the motion for summary judgment which
has not been set for hearing. The Company will be attempting to set
such matter for trial during 2019.
NOTE 11 – RELATED PARTY TRANSACTIONS
During
the six month period ended June 30, 2019 the Company has had
extensive dealings with related parties including the
following:
In
January of 2019, the Company entered into a convertible promissory
note agreement in the amount of $7,000 with an individual who is
related to the Company’s CEO. This note pays interest at a
rate of 6% per annum and the principal and accrued interest are due
on or before July 8, 2019. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.008 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2019, the Company entered into a convertible promissory
note agreement in the amount of $20,000 with a related party. This
note pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before October 23, 2019. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.004 per
share.
In June
of 2019, the Company entered into a convertible promissory note
agreement in the amount of $5,100 with a related party. This note
pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before December 7, 2019. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.003 per
share.
On
various dates during the six month period ended June 30, 2019 the
Company repaid its CEO a total of $5,048 principal and accrued
interest to repay various outstanding loans.
The
Company has an informal consulting agreement with a limited
liability company that is owned and controlled by a person who is
related to the Company’s CEO to pay the related party limited
liability company a minimum of $3,500 per month plus periodic
bonuses to provide general business consulting and assessing the
Company's business and to advise management with respect to an
appropriate business strategy on anongoing basis, commenting on
proposed corporate decisions, perform period background research
including background checks and provide investigative information
on individuals and companies and to assist, when needed, as an
administrative specialist to perform various administrative duties
and clerical services including reviewing the Company’s
agreements and books and records. The consultant provides the
services under the direction and supervision of the Company’s
CEO. At June 30, 2019 the Company owed the related party consultant
$0 for services rendered. At December 31, 2018 the Company owed the
related party limited liability company $11,150.
The consultant
provides the services under the direction and supervision of the
Company’s CEO.
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. At
June 30, 2019 the Company owed the related party limited liability
company $6,577 for services rendered. At December 31, 2018 the
Company owed the related party limited liability company
$4,385.
At June 30, 2019 the following promissory notes and shareholder
loans were outstanding to related parties:
See
Note 8 convertible notes payable and notes payable - related
parties and related parties in default.
NOTE 12 – SUBSEQUENT EVENTS
Subsequent
to June 30, 2019 the Company sold or issued shares of its common
stock as follows
:
(i)
|
sales
of 43,449,998 shares of common stock under subscription agreements
for approximately $145,000 in proceeds, used for general corporate
purposes, working capital and repayment of debt; and
|
(ii)
|
issuance
of 6,300,000 shares of common stock for services.
|
Subsequent
to June 30, 2019 the following convertible notes payable went into
default:
1)
|
A
convertible note payable originally due July 3, 2019 with a face
amount of $1,000; and
|
2)
|
A
convertible note payable due to a related party originally due July
8, 2019 with a face amount of $7,000.
|