SEAFARER EXPLORATION CORP
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-K
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(Mark
One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For year ended
December 31,
2018
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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SEAFARER EXPLORATION CORP.
(Exact name of registrant as specified in its charter)
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Florida
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90-0473054
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.)
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14497 N. Dale Mabry Highway, Suite 209N, Tampa, Florida
33618
(Address of principal executive offices) (Zip code)
Registrant’s telephone number: (813) 448-3577
Securities registered pursuant to Section 12(g) of the
Act:
Common Stock, par value $0.0001 per
share
1
Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act. Yes
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No
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Indicate by check
mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the
Act. Yes
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No
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Indicate by check
mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes
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No
☐
Indicate by check
mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment
to this Form 10-K.
☐
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
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Large
accelerated filer
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Accelerated
filer
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Non-accelerated
filer
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Smaller
reporting company
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(Do not
check if a smaller reporting company)
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Emerging
growth company
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Indicate by check
mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes
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No
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The
aggregate market value of the voting common equity held by
non-affiliates of the registrant was approximately $7,175,851 as of
the last business day of the registrant’s most recently
completed second fiscal quarter, based upon the closing sale price
on the OTC:BB reported for such date. Shares of common stock held
by each officer and director, and by each person who owns 10% or
more of the outstanding common stock, have been excluded in that
such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for
other purposes.
As of
March 31, 2019 the Registrant had 3,942,094,084 outstanding shares
of its common stock, $0.0001 par value.
2
SEAFARER EXPLORATION CORP.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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Page
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PART
I
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ITEM
1.
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BUSINESS
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5
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ITEM
1A.
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RISK
FACTORS
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10
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ITEM
1B.
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UNRESOLVED
STAFF COMMENTS
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10
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ITEM
2.
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PROPERTIES
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10
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ITEM
3.
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LEGAL
PROCEEDINGS
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11
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ITEM
4.
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MINE SAFETY
DISCLOSURES
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11
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PART
II
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ITEM
5.
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MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
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12
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ITEM
6.
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SELECTED
FINANCIAL DATA
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14
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ITEM
7.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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15
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ITEM
7A.
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QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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21
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ITEM
8.
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FINANCIAL
STATEMENTS
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22
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ITEM
9.
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CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
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23
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ITEM
9A.
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CONTROLS
AND PROCEDURES
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23
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ITEM
9B.
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OTHER
INFORMATION
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24
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PART
III
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ITEM
10.
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DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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25
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ITEM
11.
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EXECUTIVE
COMPENSATION
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26
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ITEM
12.
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
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28
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ITEM
13.
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
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29
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ITEM
14.
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PRINCIPAL
ACCOUNTING FEES AND SERVICES
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35
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PART
IV
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ITEM
15.
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EXHIBITS
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36
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SIGNATURES
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37
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3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND ASSOCIATED
RISKS
Statements in this Form 10-K under "Item 1. Business", "Item 2.
Properties", "Item 3. Legal Proceedings", "Item 7. Management's
Discussions and Analysis of Financial Condition and Results of
Operations" and elsewhere constitute "forward-looking
statements". Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of Seafarer
Exploration Corp., a company organized under the laws of Florida,
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: our
ability to continue as a going concern; general economic and
business conditions; competition; success of operating initiatives;
our ability to raise capital and the terms thereof; changes in
business strategy or development plans; future revenues; the
continuity, experience and quality of our management; changes in or
failure to comply with government regulations or the lack of
government authorization to continue our projects; and other
factors referenced in the Form 10-K.
The use in this Form 10-K of such words as "believes", "plans",
"anticipates", "expects", "intends" and similar expressions are
intended to identify forward-looking statements, but are not the
exclusive means of identifying such statements. The success of the
Company is dependent on our efforts and many other factors
including, primarily, our ability to raise additional
capital.
We caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date
made. Such forward-looking statements are based on the
beliefs and estimates of our management, as well as on assumptions
based on information currently available to us at the time such
statements were made. Forward looking statements are subject
to a variety of risks and uncertainties which could cause actual
events or results to differ from those reflected in the forward
looking statements, including, without limitation, the failure to
successfully locate cargo and artifacts from historic shipwreck
sites and a number of other risks and uncertainties. Actual results
could differ materially from those projected in the forward-looking
statements, either as a result of the matters set forth or
incorporated in this Report or as a result of certain economic and
business factors, some of which may be beyond our
control.
We disclaim any obligation to subsequently revise any
forward-looking statements to reflect events or circumstances after
the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
As used in this Form 10-K, the terms “we,”
“us,” “our,” “Seafarer,” and
the “Company” mean Seafarer Exploration Corp. unless
otherwise indicated.
4
PART I
Item 1. Business.
Summary
Seafarer
Exploration Corp. ("the Company" or "Seafarer"), a Florida
Corporation, was incorporated on May 28, 2003. The Company formerly
operated under the name Organetix, Inc. (“Organetix”).
The Company's principal business plan is to develop the
infrastructure to engage in archaeological research,
archaeologically-sensitive exploration, recovery and conservation
of historic shipwrecks and to eventually monetize the recovery of
the shipwrecks without selling the treasure. The business plan
includes in-depth archival research and translation of historical
documents from archives and repositories from around the
world.
The
exploration and recovery of historic shipwrecks is by nature
speculative, and there is a high degree of risk inherent in this
type of business venture. The exploration and recovery of historic
shipwrecks involves a multi-year, multi-stage process and it may
take several years and/or be prohibitively expensive to locate and
recover valuable artifacts, if any are ever located at all, from
historic shipwreck sites. It is possible that the Company will
never locate any valuable artifacts from historic shipwreck
sites.
There
are a number of other significant challenges and risks regarding
this type of business venture that make it risky with potential
that the Company could fail. If the Company were to cease its
operations, it is likely that there would be complete loss of all
capital invested in and/or borrowed by the Company to
date.
The
Company is also actively researching, exploring and testing new
technology to help more accurately understand current and future
wreck sites in an unobtrusive manner. Up to the date of this
filing, all tests of new and unproven technology and methods have
failed. Additional scientists have been hired as consultants to
assist in these endeavors.
Additionally,
the Company is reviewing a few business opportunities that may
allow it to eventually generate revenue streams to support the
operational expenses of Seafarer. Seafarer has also acquired a 1%
ownership stake in Probability and Statistics, Inc. (P&S) for
an exchange of Seafarer’s restricted stock (See Note 5). The
Company also has a commission only contract with P&S for any
business it brings to P&S. The Company has received a dividend
payment from P&S in the amount of $1,500.
No Revenue and Operating Losses
The
Company expects to continue to incur significant operating losses
and to generate negative cash flows from operating activities while
developing the necessary infrastructure and technology for the
actual investigation of historic shipwreck sites.
The
Company’s ability to eliminate operating losses and to
generate positive cash flow from operations in the future will
depend upon a variety of factors, many of which it is unable to
control. Based on our historical rate of expenditures, the
Company expects to expend its available cash in less than one month
from April 15, 2019. If the Company is unable to implement its
business plan successfully, it may not be able to eliminate
operating losses, generate positive cash flow, or achieve or
sustain profitability, which would materially and adversely affect
its business, operations, and financial results, as well as its
ability to make payments on its debt obligations, and the Company
may be forced to cease its operations.
General
It has
been estimated by the United Nations Educational, Scientific and
Cultural Organization (“UNESCO”) that there are over
three million undiscovered shipwrecks around the world and some of
these shipwrecks were lost with verifiable cargoes that contained
valuable materials, including artifacts and treasure. However, many
of these shipwrecks may have very little archaeological or
historical value, and furthermore, a high percentage of these
shipwrecks would not have been carrying valuable cargo including
artifacts or treasure.
The
Company’s principal business plan is to develop the
infrastructure and technology to engage in the
archaeologically-sensitive exploration, recovery and conservation
of historic shipwrecks. Once artifacts have been properly
conserved, they will be made available for scientific research and
allowed to be displayed for the public.
The
Company believes it may eventually be conducting archaeological
research around the world and potentially supporting governmental
or quasi-governmental organizations, universities and affiliated
research groups and private research entities in the documentation
and survey of historic shipwrecks based on their discretion. The
business plan also includes in-depth archival research and
translation of historical documents from various international
archives and repositories. These translations of archival research
will be made available to the country of origin, the State of
Florida, university researchers, and other responsible academic
parties upon reasonable request.
5
In
addition to the research, there is ongoing education of personnel
involved in operations with the Company. College level courses in
archaeology are being periodically taught in a program to help
educate the personnel in context, work methodology, documentation,
and conservation. It is the Company’s intent to have the
highest educated personnel possible and eventually have all divers
certified. The Company works with archaeologists to further insure
all sensitive archaeological guidelines are met or
exceeded.
The
Company in the past has constantly investigated various
technologies and non-scientific equipment to help better explore or
document our sites. To present date, nothing has been proven to
work. The Company will continue to experiment with unproven
technologies and will actively work with third parties, consultants
and scientists to develop its own proprietary technology which will
result in extra expenses to the Company.
The
exploration and recovery of historic shipwrecks involves a
multi-year, multi-stage process. 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, etc. The length of time it takes to obtain
permits or enter into agreements may cause the Company to expend
significant resources while gearing up to do work with little or no
visibility as to the timing of receiving a permit. It may take many
years and/or be prohibitively expensive to locate, if any are ever
located at all, and recover valuable artifacts from historic
shipwrecks. Locating and recovering valuable artifacts is very
difficult, expensive, and rare. If the Company is not able to
locate artifacts or treasure with significant value, then there is
high probability that the Company will face adverse
consequences.
Underwater
recovery operations are inherently difficult and dangerous and may
be delayed or suspended by weather, sea conditions or other natural
hazards. In addition, even though sea conditions in a particular
search location may be somewhat predictable, the possibility exists
that unexpected conditions may occur, and already have occurred,
that adversely affect the Company’s operations. It is also
possible that natural hazards may prevent or significantly delay
search and recovery operations.
In
addition to natural hazards there may be constant repair and
maintenance issues with historic shipwreck exploration and recovery
vessels, the Company’s primary exploration vessel is an older
vessel that was originally used in other capacities and has been
converted for use in historic shipwreck exploration and recovery
operations. The repairs, maintenance and upkeep of vessels, is time
consuming and has been very expensive and there may be significant
periods of vessel down time that results from needed repairs being
made or a lack of current financing to make repairs to the
vessel.
Furthermore,
there are very strict international, federal and state laws that
govern the exploration and recovery of historic shipwrecks. While
the Company has been able to obtain some permits, there is no
guarantee that the Company will be able to secure future permits or
enter into agreements with government agencies in order to explore
and salvage historic shipwrecks. There is a risk that government
entities may enact legislation that is so strict that any recovery
of artifacts and cargo from historic shipwrecks will be nearly
impossible. Additionally, permits and agreements with governmental
agencies to conduct historic shipwreck exploration and recovery
operations are expensive, in terms of both direct costs and ongoing
compliance costs. It is also entirely possible that the Company
will not be successful in obtaining title or permission to excavate
certain wrecks. It is possible that permits that are sought for
potential future international projects may never be issued, and if
issued, may not be legal or honored by the entities that issued
them.
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.
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, etc. The length of time it takes
to obtain permits or enter into agreements may cause the Company to
expend significant resources while gearing up to do work with
little or no visibility as to the timing of receiving a
permit.
Even if
the Company is able to obtain permits for shipwreck projects, there
is a possibility that the shipwrecks may have already been
salvaged, may not be located, or may not have had anything valuable
on board at the time that they sank. It is the Company’s
intent to find shipwrecks where available research suggests there
were not any previous recovery efforts or past recovery efforts
failed or were not completed. In the event that valuable artifacts
are located and recovered, it is possible that the cost of recovery
will exceed the value of the artifacts recovered. It is also
possible that other entities, including both private parties and
governmental entities, will assert conflicting claims and challenge
the Company’s rights to the recovered artifacts.
6
Moreover,
there is the possibility that should the Company be successful in
locating and recovering artifacts that have significant
archeological and/or monetary value, that a country whose ship was
salvaged may attempt to claim ownership of the artifacts by
pursuing litigation. In the event that the Company is able to make
a valid claim to artifacts or other items at a shipwreck site,
there is a risk of theft of such items at sea, both before or after
the recovery or while the artifacts are in transit to a safe
destination, as well as when stored in a secured location. Such
thefts may not be adequately covered by insurance. Based on a
number of these and other potential issues the Company could spend
a great deal of time and invest a large sum in a specific shipwreck
project and receive very little or no salvage claim or revenue for
its work. The Company does have plans for security at sea, however
it may never implement such plans.
There
are a number of significant issues and challenges including, but
not limited to, government regulation and/or the Company’s
inability to secure permits and contracts, lack of financing, lack
of revenue and cash flow and continued losses from operations that
make the exploration and recovery of historic shipwrecks
a speculative business venture. There is also significant
expense involved in research and ongoing educational programs.
Research expenses involve paying scientists for translations, and
research dues and fees for various historical entities such as
archives, travel and accommodations, and research
materials.
There is currently a limited trading market for our securities. We
cannot assure when and if an active-trading market in our shares
will be established, or whether any such market will be sustained
or sufficiently liquid to enable holders of shares of our common
stock to liquidate their investment in our company. The ability to
deposit restricted shares has also become increasingly more
difficult during the year ended December 31, 2018. Furthermore, the
sale of unregistered and restricted securities by current
shareholders, including shares issued to consultants and shares
issued to settle convertible promissory notes and to settle debt,
may cause a significant drop in the market prices of the
Company’s securities. Also, because the Company primarily
finances the operations with the sale of securities, an increase to
the authorized shares may need to be done from time to
time.
Accordingly,
an investment in Seafarer’s securities is speculative and
extremely risky and should only be considered by those investors
who do not require liquidity and who can afford to suffer a total
loss of their investment. An investor should consult with
professional advisers before making an investment in our
securities.
Competition
There
are a number of competing entities who are engaged in various
aspects of the exploration and salvage of historic shipwrecks, and
in the future other competitors may emerge. Some of these companies
are publicly traded companies and there are a number of small
private companies, as well as some loosely affiliated groups and
individuals, who claim to be in this business as well. Some of
these entities may be better capitalized and may have greater
resources to devote to the pursuit of locating and salvaging
historic shipwrecks. Many of these competing entities may also have
significantly more experience than the Company in the exploration
and recovery of historic shipwrecks. The Company is at a material
competitive disadvantage as compared to competing entities that are
better capitalized, have more resources and/or who possess greater
experience in the business.
Lack of Revenues and Cash Flow/Significant Losses from
Operations
The
exploration and recovery of historic shipwrecks requires a
multi-year, multi-stage process and it may be many years before any
revenue is generated from exploration and recovery activities, if
ever. Without significant revenues and cash flow the Company does
not have reliable cash flow to pay its expenses. The Company relies
on outside financing in the form of equity and debt and it is
possible that the Company may not be able to obtain outside
financing in the future. If the Company is not able to obtain
financing 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.
In
addition, the expenses associated with operating a small publicly
traded company engaged in the historic shipwreck recovery business
are exorbitantly high. The cost of operations may include the cost
of buying or leasing a vessel, regular vessel maintenance and
upkeep, ongoing vessel repairs due to wear and tear and damage by
natural or human causes, docking fees, fuel, upgrades, equipment
costs, personnel costs, insurance, registration costs, permitting,
temporary lodging and provisions for divers and other personnel,
etc. In addition to the operations expenses, a publicly traded
company also incurs the significant recurring costs of maintaining
publicly traded status, which include, but are not limited to
administrative, accounting, audit, executive, legal, etc. These
combined expenses are particularly burdensome for a smaller public
company. The recurring expenses associated with being a publicly
traded company focused on the exploration and recovery of historic
shipwrecks may cause the Company to be at a significant competitive
disadvantage when compared to some of its competitors who are
private companies or public companies who are not fully
reporting.
If the
Company is unable to secure additional financing or meaningful
revenues, 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.
7
The Company may not be able to continue as a going concern. If the
Company is not able to continue as a going concern, it is highly
likely that all capital invested in the Company or borrowed by the
Company will be lost. As discussed in Note 2 to our financial
statements for the year ended December 31, 2018 and 2017, we have
experienced operating losses in every year since our inception
resulting in an accumulated deficit. Based on our financial results
as of December 31, 2018, there are substantial doubts about the
Company’s ability to continue as a going concern. If the
Company is not able to continue as a going concern, it is likely
that all capital invested in the Company or borrowed by the Company
will be lost.
The
Company has experienced a net loss in every fiscal year since
inception. The Company’s net losses from were $1,277,184 for
the year ended December 31, 2018 and $999,847 for the year ended
December 31, 2017. The Company believes that it will continue to
generate losses from its operations for the foreseeable future and
the Company may not be able to generate a profit in the long-term,
or ever.
Governmental Regulation
There
are very strict international, federal and state laws that govern
the exploration and recovery of historic shipwrecks. There is no
guarantee that the Company will be able to secure permits or enter
into agreements with government agencies in order to explore and
recover historic shipwrecks, although the Company has secured
permits in the past. There is a substantial 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, both in terms of direct and ongoing
compliance costs. 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.
The
laws and regulations regarding the exploration and recovery of
historic shipwrecks in waters controlled by the State of Florida
are complex. A large amount of time and expense is required to
comply with the existing laws and regulations. The State of Florida
has, in the past, proposed new rules and regulations regarding the
exploration and recovery of shipwrecks in Florida waters. The
Company believes any new rules and regulations that are implemented
into law would likely increase the cost of compliance and
potentially force the Company to cease its operations. It is
possible that the State of Florida may enact additional laws that
ultimately make it impossible to conduct business as a commercial
shipwreck exploration and recovery firm. It may also be possible
that the State of Florida attempts to enact legislation which
altogether bans the commercial exploration and recovery of historic
shipwrecks in State controlled waters.
There
is a possibility that new governmental regulations could be enacted
at any time at the international, federal or state level that would
make it impossible for the Company to continue to attempt to locate
and salvage historic shipwrecks. Governmental regulation at all
levels may substantially increase the costs and expenses incurred
by the Company to obtain permits and agreements and comply with the
regulations and represent a significant risk to the Company and all
companies engaged in the commercial exploration and recovery of
historical shipwrecks. There is a possibility that governmental
regulation could be enacted that would make it impossible for the
Company to conduct commercial exploration and recovery of historic
shipwrecks anywhere in the world.
There
are also strict environmental regulations associated with the
exploration and recovery of historical shipwrecks. In order to
explore and salvage shipwrecks that are located in state controlled
waters, the Company must obtain permission from both federal
authorities and state environmental agencies in order to conduct
operations. There is always the possibility that the Company could
be denied access to a historic shipwreck site based on federal or
state environmental concerns
Litigation
The
Company has been engaged in various litigations (See “Item 3
Legal Proceedings” below). We could be subject to future
litigations, although none are known or expected, that could
materially affect our ability to operate our business, which would
negatively impact our results of operations and financial
condition, which the Company does not foresee and none currently
exist.
Historic Shipwreck Exploration and Recovery in Florida
The
Company operates year-round, but the best diving for historic
shipwreck exploration and recovery in Florida waters is generally
considered to be the summer months, from approximately the middle
of April through October, although good weather conditions may
allow operations to extend into the fall and winter months at
certain historic shipwreck sites. Inclement weather and hazardous
ocean conditions may hamper year round historical shipwreck
exploration and recovery efforts in Florida waters. It is the
Company’s intention to work continuously all year, as in
years past.
8
Other
factors that may hinder the Company’s ability to conduct year
round operations include a lack of financing, the expiration of
permits and agreements or the need to renew or enter into permits
and agreements with various governmental or quasi-governmental
agencies, and the inability to locate and retain skilled, competent
and experienced personnel. Permits were renewed in Area 1 and Area
2 of Melbourne Beach for a period of 3 years. During down times,
the Company's operations personnel may, among other duties, spend
time researching sites, reviewing site plans, maps, charts, and
other related information and performing maintenance, overhaul,
cleaning, etc.
Juno Beach Shipwreck Site
The
Company has previously performed some exploration and recovery
operations at what it believes to be a shipwreck site located off
of the coast of Florida in northern Palm Beach County, more
specifically in an area known as “Juno Beach” (the
“Juno Beach Shipwreck”). The Company had previously
obtained a recovery permit from the State of Florida for the Juno
Beach site. The recovery permit expired in April of 2014. In March
of 2015, Seafarer was awarded full rights to the Juno site pursuant
to a court order, erasing all rights of the Company’s
previous partner with regards to the site. The Juno site was
arrested permanently to Seafarer by the U.S. Marshal’s
offices in July 7 of 2017 and in November 2017 the Company was
granted final judgment on its federal admiralty claim for the Juno
Beach shipwreck site (See Item 3 below). The Company is preparing
to attempt to renew the permit, however there is no guarantee that
a renewal permit will be issued to the Company.
The
Company believes it is possible the Juno Beach shipwreck site may
potentially contain remnants of a sunken 1500s era ship; however,
the Company does not have definitive evidence of the ship’s
country of origin. Due to the fact that the Company does not
currently have sufficient data to positively identify the potential
Juno Beach shipwreck, or its country of origin, it is not possible
to determine whether or not the ship was originally carrying cargo
of any significant value. To date the Company has not located the
main body of a shipwreck at the Juno Beach site, only a lot of
shipwreck material and remnants including pottery, porcelain,
cannon balls, musket balls, ballast stones, nails, spikes, wood and
scattered pieces of a sunken ship.
The
Company has determined that a large portion of the magnetometer
survey of the Juno Beach Shipwreck site, that was previously given
to the Company and to the State of Florida by the Company’s
past partner on the site, was intentionally deleted from the
survey. The Company will complete a magnetometer survey of the
entire deleted area when certain conditions are met. There is also
possibility that there are no artifacts of significant value
located at the Juno Beach shipwreck site. Even if there are
valuable artifacts and/or treasure located at the site, recovering
them may be difficult due to a variety of challenges that include,
but are not limited to; inclement weather, hazardous ocean
conditions, large amounts of sand that cover large areas of the
site, lack of the necessary equipment to be able to dig deep enough
into the sand, etc.
North Florida Shipwreck Site
There
is a purported historic shipwreck site in the waters off of Brevard
County Florida that the Company desires to investigate. In February
2013, the Company signed an agreement with a third party who has
previously explored this site for the right to investigate the
site. In March of 2014, Seafarer entered into a partnership and
ownership with Marine Archaeology Partners, LLC, 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. There are a significant number of
challenges inherent in the exploration and recovery of historic
shipwrecks, including the possibility that the Company will never
find artifacts of value at the site.
In July
of 2014, Seafarer’s Quest, LLC received a 1A-31 Exploration
Permit with a Dig and Identify modification (the
“Permit”) from the Florida Division of Historical
Resources for an area identified as Area 2 off of Cape Canaveral,
Florida. The Permit was active for three years from the date of
issuance. Seafarer on behalf of Seafarer’s Quest, LLC, has
been primarily focusing its operations on this site when the
weather permits. In addition to the Company’s main salvage
vessel, the Company has utilized additional owned and rented
vessels in order to perform search and identify operations at this
site. Inclement weather and difficult sea conditions have hampered
the Company’s ability to perform exploration operations at
this site to date. An archeologist with the technical skills,
knowledge, and experience from around the world was hired to help
insure the integrity of the work. The Company has applied for
permits from the State of Florida for two additional areas that
were formerly permitted solely by an affiliate of Marine
Archeological Partners, LLC. The Permit for one of the additional
areas was given to the Company on July 6, 2016 and identified as
Area 1. Both permits in Area 1 and Area 2 have been renewed in 2019
for an additional 3 years.
9
The
Company regularly reviews opportunities to perform exploration and
recovery operations at purported historic shipwreck sites; however,
the Company does have specific plans to perform exploration and
recovery operations at other shipwreck sites at the present time.
The Company is actively reviewing other potential historic
shipwreck sites for possible exploration and recovery. Should the
Company decide that it will pursue exploration and recovery
activities at other potential shipwreck sites it may be necessary
to obtain recovery permits as well as environmental
permits.
Certain 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. As of December 31, 2018, the
partnership has had no operations. Seafarer is responsible for
managing the site on behalf of the
partnership.
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.
Item 1A. Risk Factors.
Not
required for smaller reporting companies.
Item 1B. Unresolved Staff Comments.
Not
required for smaller reporting companies.
Item 2. Properties.
Corporate Office
The
Company leases 823 square feet of office space located at 14497
North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. The
Company entered into an amended lease agreement commencing on July
20, 2017 through June 30, 2020 with base monthly 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 above the base monthly rental fee.
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 Company pays $1,300 per
month to lease the operations house. The term of the lease
agreement commenced on October 1, 2015 and expired on October 31,
2016. The Company is currently leasing the operations house on a
month-to-month basis.
10
Item 3. 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 toby
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 inthe 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.
Item 4. Mine Safety Disclosures.
None.
11
PART II
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities.
Market Information
Our
common stock is presently quoted on the Pink Sheets under the
symbol “SFRX”, as reflected below, though the current
trading volume is small. No assurance can be given that any market
for our common stock will continue in the future or be maintained.
If an “established trading market” ever develops in the
future, the sale of “restricted securities” (common
stock) pursuant to Rule 144 of the Securities and Exchange
Commission by members of management, consultants, promissory note
holders or others may have a substantial adverse impact on any such
market and the sale of restricted securities by management or
others may significantly depress the market price of the
Company’s shares.
There
is currently a limited trading market for our securities on the
Pink Sheets. We cannot assure when and if an active-trading market
in our shares will be established, or whether any such market will
be sustained or sufficiently liquid to enable holders of shares of
our common stock to liquidate their investment in our company. If
an active public market should develop in the future, the sale of
unregistered and restricted securities by current shareholders may
have potentially have a substantial negative impact on any such
market.
The
Company’s share price is quoted on the Pink Sheets.
Accordingly, an investment in our securities should only be
considered by those investors who do not require liquidity and can
afford to suffer a total loss of their investment. An investor
should consider consulting with professional advisers before making
such an investment.
Furthermore,
the price of our common stock may be subject to a very high degree
of volatility, which makes owning shares of our common stock highly
risky. Our stock price fluctuated between $0.0007 and $0.0026 for
the year ended December 31, 2018, and $0.0008 and 0.0042 for the
year ended December 31, 2017. The price of our shares may fluctuate
significantly despite the absence of any apparent reason. In
addition, our stock is thinly traded, leading to even greater
volatility. You should expect this volatility to continue into the
foreseeable future.
The
range of high and low bid prices for our common stock during each
quarter for 2018 and 2017 is shown below. The over-the-counter
quotations reflect inter-dealer prices, with retail mark-up,
mark-down or commission and may not necessarily represent actual
transactions. Such prices were determined from information derived
from www.nasdaq.com and do not necessarily reflect transactions,
retail markups, markdowns or commissions.
|
Quarter Ended
|
High Price
|
Low Price
|
|
March
31, 2017
|
0.0042
|
0.0009
|
|
June
30, 2017
|
0.0038
|
0.0014
|
|
September
30, 2017
|
0.0022
|
0.0010
|
|
December
31, 2017
|
0.0020
|
0.0008
|
|
March
31, 2018
|
0.0013
|
0.0007
|
|
June
30, 2018
|
0.0026
|
0.0007
|
|
September
30, 2018
|
0.0025
|
0.0009
|
|
December
31, 2018
|
0.0019
|
0.0009
|
Penny Stock
Our
stock is considered to be a penny stock. Our stock is
subject to certain provisions of the Securities Exchange Act of
1934 (the “Exchange Act”), commonly referred to as the
“penny stock” rules as defined in Rule 3a51-1. A
penny stock is generally defined to be any equity security that has
a market price less than $5.00 per share, subject to certain
exceptions. Since our stock is deemed to be a penny stock,
trading is subject to additional sales practice requirements of
broker-dealers.
Consequently,
penny stock rules may restrict the ability or willingness of
broker-dealers to trade and/or maintain a market in our common
stock. Also, prospective investors may not want to get
involved with the additional administrative requirements, which may
have a material adverse effect on the trading of our shares.
In recent years the ability to deposit restricted shares at
broker-dealers has become increasing difficult with significant
administrative requirements.
12
The SEC
has adopted rules that regulate broker-dealer practices in
connection with transactions in penny stocks. Penny stocks are
generally equity securities with a market price of less than $5.00,
other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current
price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock
rules require a broker-dealer, prior to a transaction in a penny
stock, to deliver a standardized risk disclosure document prepared
by the SEC, that: (a) contains a description of the nature and
level of risk in the market for penny stocks in both public
offerings and secondary trading; (b) contains a description of the
broker's or dealer's duties to the customer and of the rights and
remedies available to the customer with respect to a violation of
such duties or other requirements of the securities laws; (c)
contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance
of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions;
(e) defines significant terms in the disclosure document or in the
conduct of trading in penny stocks; and (f) contains such other
information and is in such form, including language, type size and
format, as the SEC shall require by rule or
regulation.
The
broker-dealer also must provide, prior to effecting any transaction
in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and
its salesperson in the transaction; (c) the number of shares to
which such bid and ask prices apply, or other comparable
information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market
value of each penny stock held in the customer's
account.
In
addition to the “penny stock” rules described above,
FINRA has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities
to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's
financial status, tax status, investment objectives and other
information. Under interpretations of these rules, FINRA believes
that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. The
FINRA requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may
limit your ability to buy and sell our stock and may have an
adverse effect on the market for our shares.
Additionally,
investors in penny stocks should be aware that in recent years the
ability to deposit restricted shares has become significantly more
difficult due burdensome administrative requirements.
Approximate Number of Holders of Common Stock
The
approximate number of record holders of our common stock at March
31, 2019 was 1,899 shareholders of record holding 2,271,297,144
restricted shares in certificated securities and 1,670,796,940
non-restricted shares. There are an indeterminate number of
shareholders holding shares in brokerage accounts.
Transfer Agent
The
Company’s stock transfer agent is ClearTrust, LLC
(“ClearTrust”). ClearTrust’s address is 16540
Pointe Village Drive, Suite 205, Lutz, Florida 33558 and their
telephone number is (813) 235-4490. ClearTrust is owned and
controlled by a person who is related to the Company’s
CEO.
Dividend Policy
The
Company did not declare cash dividends during the years ended
December 31, 2018 and 2017. It is not anticipated that cash
dividends will be paid at any time in the foreseeable future as the
Company intends to retain earnings, if any, for use in the
development of its business. The payment of dividends is contingent
upon the Company's future earnings, if any, the Company's financial
condition and its capital requirements, general business conditions
and other factors.
Equity Compensation Plans
The
Company has not established any formal equity compensation plans as
of the date of this Annual Report on Form 10-K; however, the
Company reserves the right to do so at a later date.
Reports
to Security Holders
Seafarer
Exploration Corp. is a reporting company pursuant to the Securities
and Exchange Act of 1934. As such, the Company makes available its
annual report which includes audited financial statements, and its
quarterly reports which include unaudited financial
statements.
13
Recent
Sales of Unregistered Securities
During
the year ended December 31, 2018, the Company agreed to issue
287,014,220 of its restricted shares of its common stock for
various operations related services, Board of Directors’
services, technology consulting, administrative, accounting and
financial reporting, business advisory services as a retention
bonus and fees for extra services to some independent contractors
and consultants. The Company believes that the issuance of the
securities was exempt from registration under the Securities Act of
1933, as amended, in reliance on Section 4(2) of the
Securities Act as a transaction by an issuer not involving any
public offering and such securities were issued for services
rendered to sophisticated and/or accredited investors.
The
Company issued securities and reported these issuances, which were
not registered under the Securities Act of 1933, as amended (the
“Securities Act”) in our Forms 10-Q for the quarters
ended March 31, 2018, June 30, 2018, and September 30, 2018. On
various dates during the year ended December 31, 2018, the Company
entered into subscription agreements to sell 331,254,949 shares of
its restricted common stock and receive proceeds of $289,101. The
proceeds were used for general corporate purposes, working capital
and the repayment of debt.
Exemptions from Registration for Sales of Restricted
Securities.
The
issuance of securities referenced above were issued to persons who
the Company believes were either “accredited
investors,” or “sophisticated investors” who, by
reason of education, business acumen, experience or other factors,
were fully capable of evaluating the risks and merits of an
investment in us; and each had prior access to all material
information about us. None of these transactions involved a public
offering. An appropriate restrictive legend was placed on each
certificate that has been issued, prohibiting public resale of the
shares, except subject to an effective registration statement under
the Securities Act of 1933, as amended (the “Act”) or
in compliance with Rule 144. The Company believes that the offer
and sale of these securities was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) under
the Securities Act of 1933 (the “Act”) thereof, and/or
Regulation D. There may be additional exemptions available to the
Company.
Issuance of Securities Due to Conversion of Notes and to Settle
Debt
During the year ended December 31, 2018 the Company issued or
agreed to issue 62,100,000 shares of its restricted common stock
for financing,loan origination fees and penalty fees on certain
unpaid promissory notes upon maturity. During the year ended
December 31, 2018, the holders of various convertible promissory
notes with an aggregate face value of $18,546 elected to convert
the principal balance of their notes plus accrued interest of $930
into 16,759,497 shares of the Company’s common stock. The
Company believes that the offer and sale of these securities were
exempt from the registration requirements of the Securities Act
pursuant to Sections 3(a)(9) under the Securities Act of 1933, as
amended.
Repurchase of Securities
During
the years ended December 31, 2018 and 2017, the Company did not
purchase any shares of its common stock and the Company is not
likely to purchase any shares in the foreseeable
future.
Stock Option Grants
The
Company does not have any compensatory stock option grants
outstanding at this time.
Item 6. Selected Financial Data.
Not
required for smaller reporting companies.
14
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
FORWARD LOOKING STATEMENTS
The following discussion contains certain forward-looking
statements that are subject to business and economic risks and
uncertainties, and which speak only as of the date of this annual
report. No one should place strong or undue reliance on any
forward-looking statements. The use in this Form 10-K of such
words as "believes", "plans", "anticipates", "expects", "intends",
and similar expressions are intended to identify forward-looking
statements, but are not the exclusive means of identifying such
statements. The Company’s actual results or actions may
differ materially from these forward-looking statements for 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 generally and certain economic
and business factors, some of which may be beyond our
control.
We disclaim any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after
the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
Overview
General
The
Company’s principal business plan is to develop the
infrastructure and technology to engage in the
archaeologically-sensitive exploration, recovery and conservation
of historic shipwrecks. Once artifacts have been properly
conserved, they may be made available for scientific research and
allowed to be displayed for the public.
The
Company believes it may eventually be conducting archaeological
research around the world and potentially supporting governmental
or quasi-governmental organizations, universities and affiliated
research groups and private research entities in the documentation
of historic shipwrecks based on their discretion. The business plan
also includes in-depth archival research and translation of
historical documents from various international archives and
repositories. These translations of archival research will be made
available to government states, university researchers, and other
responsible academic parties upon reasonable request.
In
addition to the research, the Company intends to maintain periodic
ongoing education of personnel involved in its operations.
Furthermore, the Company has also hired additional archaeologists
on a consulting basis to further the Company’s depth in
archaeology and to further insure that all sensitive archaeological
guidelines are met or exceeded.
The
exploration and recovery of historic shipwrecks involves a
multi-year, multi-stage process. It may take many years and/or be
prohibitively expensive to locate, if any are ever located at all,
and recover valuable artifacts from historic shipwrecks. Locating
and recovering valuable artifacts is very difficult, expensive, and
rare. If the Company is not able to successfully locate artifacts
or treasure with significant value, then there is a high
probability that the Company will face adverse consequences,
including a complete loss of all capital invested in or borrowed by
the Company.
Underwater
recovery operations are inherently difficult and dangerous and may
be delayed or suspended by inclement weather, sea conditions or
other natural hazards. In addition, even though sea conditions in a
particular search location may be somewhat predictable, the
possibility exists that unexpected conditions may occur, and
already have occurred, that adversely affect the Company’s
operations. For safety reasons, the Company chooses to not work in
seas over three feet. To date in 2018 the Company has had limited
days to work because the seas have generally been over three feet.
It is also possible that natural hazards may prevent or
significantly delay search and recovery operations.
15
In
addition to natural hazards there are constant repair and
maintenance issues with historic shipwreck exploration and recovery
vessels, the Company’s primary exploration vessel is an older
vessel that was originally used in other capacities and has been
converted for use in historic shipwreck exploration and recovery
operations. The repairs, maintenance and upkeep of vessels, is time
consuming and has been very expensive and there may be significant
periods of vessel down time, and already has been, that results
from needed repairs being made or a lack of current financing to
make repairs to the vessel.
There
are very restrictive 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
be able to enter into agreements with government agencies in order
to explore and recover historic shipwrecks.
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.
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, etc. The length of time it takes
to obtain permits or enter into agreements may cause the Company to
expend significant resources while gearing up to do work with
little or no visibility as to the timing of receiving a
permit.
It is
also 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. Even if the
Company is able to obtain permits for shipwreck projects there is a
possibility that the shipwrecks may have already been recovered or
may not be found, or may not have had anything valuable on board at
the time that they sank.
It is
the Company’s intent to find shipwrecks where available
research suggests there were not any previous recovery efforts or
past recovery efforts failed or were not completed. In the event
that valuable artifacts are located and recovered, it is possible
that the cost of recovery will exceed the value of the artifacts
recovered. It is also possible that other entities, including both
private parties and governmental entities, will assert conflicting
claims and challenge the Company’s rights to the recovered
artifacts which could lead to lengthy and expensive legal
issues.
Moreover,
there is the possibility that should the Company be successful in
locating and salvaging artifacts that have significant
archeological and/or monetary value, that a country whose ship was
salvaged may attempt to claim ownership of the artifacts by
pursuing litigation. Such litigation, if it were to occur, would
more than likely be very expensive. In the event that the Company
is able to make a valid claim to artifacts or other items at a
shipwreck site, there is a risk of theft of such items at sea, both
before or after the recovery or while the artifacts are in transit
to a safe destination, as well as when stored in a secured
location. Such thefts may not be adequately covered by insurance.
The Company does have plans for security at sea, but may never
implement such plans. Based on a number of these and other
potential issues the Company could spend a great deal of time and
invest a large sum in a specific shipwreck project and receive very
little or no salvage claim or revenue for its work.
There
are a number of significant issues and challenges including, but
not limited to, government regulation and/or the Company’s
inability to secure permits and contracts, lack of financing, lack
of revenue and cash flow and continued losses from operations that
make the exploration and recovery of historic shipwrecks
a speculative business venture that carries a high degree of
risk. There is also significant expense involved in research
and ongoing educational programs. Research expenses involve paying
scientists for translations, dues and fees for various historical
entities such as archives, travel and accommodations, and research
materials.
In the
past the Company has investigated various technologies and
non-scientific equipment to help better explore or document our
sites. To present date, nothing has been proven to work. The
Company will continue to experiment with unproven technologies and
will actively work with third parties or independent contractors to
develop its own proprietary technology. The Company will also
continue to investigate media opportunities.
There
is a possibility that the Company will be forced to cease its
operations if it is not successful in eventually locating valuable
artifacts or treasure. 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
speculative and highly risky.
16
This
type of business venture is extremely speculative in nature and
carries a tremendous amount of risk. An investment in our
securities is speculative and 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 our securities. We cannot
assure when and if an active-trading market in our shares will be
established, or whether any such market will be sustained or
sufficiently liquid to enable holders of shares of our common stock
to liquidate their investment in our company. The sale of
unregistered and restricted securities by current shareholders,
including shares issued to consultants and shares issued to settle
convertible promissory notes or to settle other loans and debt, may
cause a significant decline in the market price of the
Company’s securities. Regulatory agencies are also making it
difficult for broker dealers to accept stock certificates from
issuers of low priced stocks, even though the issuer is fully
reporting and current.
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:
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To
date, the Company has devoted its time towards establishing its
business to develop the infrastructure capable of researching,
exploring, recovering and conserving historic shipwrecks. The
Company has performed some research, exploration and recovery
activities.
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Spent
considerable time and money researching potential shipwrecks
including obtaining information from foreign archives.
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Although
the Company has not generated revenues to date, with the exception
of some nominal revue from dividends, our business goals continue
to evolve. Relationships are being developed with foreign
dignitaries and scientists around the world, as well as with for
profit companies and a local university.
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The
Company continues to review revenue producing opportunities
including joint ventures with other companies and potentially
governmental agencies. These opportunities have been slow to
develop, but the Company will continue to pursue those
endeavors.
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The
Company has investigated various types of equipment and technology
to expedite the process of finding artifacts other than iron or
ferrous metals. Most have been of no help, but the Company
continues to explore new technology. The Company may develop its
own proprietary technology or work with third parties to develop
technology to aid in its exploration and recovery operations, which
will require additional time and financing.
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The
Company has investigated media opportunities and will continue to
evaluate different media strategies.
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The
Company has previously performed some exploration and recovery
operations at what it believes to be a shipwreck site located off
of the coast of Florida in northern Palm Beach County, more
specifically in an area known as “Juno Beach” (the
“Juno Beach Shipwreck”). The Company had previously
obtained a recovery permit from the State of Florida for the Juno
Beach site. The recovery permit expired in April of 2014. In March
of 2015, Seafarer was awarded full rights to the Juno site pursuant
to a court order, erasing all rights of the Company’s
previous partner with regards to the site. The Juno site was
arrested permanently to Seafarer by the U.S. Marshal’s
offices in July 7 of 2017 and in November 2017 the Company was
granted final judgment on its federal admiralty claim for the Juno
Beach shipwreck site. The Company is preparing to attempt to renew
the permit, however there is no guarantee that a renewal permit
will be issued to the Company.
The
Company believes it is possible the Juno Beach shipwreck site may
potentially contain remnants of a sunken 1500s era ship; however,
the Company does not have definitive evidence of the ship’s
country of origin. Due to the fact that the Company does not
currently have sufficient data to positively identify the potential
Juno Beach shipwreck, or its country of origin, it is not possible
to determine whether or not the ship was originally carrying cargo
of any significant value. To date the Company has not located the
main body of a shipwreck at the Juno Beach site, only a lot of
shipwreck material and remnants including pottery, porcelain,
cannon balls, musket balls, ballast stones, nails, spikes,
wood and scattered pieces of a sunken ship.
The
Company has determined that a large part of the magnetometer survey
of the Juno Beach Shipwreck site that was previously provided to
the Company and to the State of Florida by a past partner has an
area that was intentionally deleted from the survey. The Company
will complete a magnetometer survey of the entire deleted area when
certain conditions are met. There is also possibility that there
are no artifacts of significant value located at the Juno Beach
shipwreck site. Even if there are valuable artifacts and/or
treasure located at the site, recovering them may be difficult due
to a variety of challenges that include, but are not limited to;
inclement weather, hazardous ocean conditions, large amounts of
sand that cover large areas of the site, lack of the necessary
equipment to be able to dig deep enough into the sand,
etc.
17
There
is a purported historic shipwreck site in the waters off of Brevard
County Florida that the Company desires to investigate. In February
2013, the Company signed an agreement with a third party who has
previously explored this site for the right to investigate the
site. In March of 2014, Seafarer entered into a partnership and
ownership with Marine Archaeology Partners, LLC, 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. There are a significant number of
challenges inherent in the exploration and recovery of historic
shipwrecks, including the possibility that the Company will never
find artifacts of value at the site.
In July
of 2014, Seafarer’s Quest, LLC received a 1A-31 Exploration
Permit with a Dig and Identify modification (the
“Permit”) from the Florida Division of Historical
Resources for an area identified as Area 2 off of Cape Canaveral,
Florida. The Permit was active for three years from the date of
issuance. Seafarer on behalf of Seafarer’s Quest, LLC, has
been primarily focusing its operations on this site when the
weather permits. In addition to the Company’s main salvage
vessel, the Company has utilized additional owned and rented
vessels in order to perform search and identify operations at this
site. Inclement weather and difficult sea conditions have hampered
the Company’s ability to perform exploration operations at
this site to date. An archeologist with the technical skills,
knowledge, and experience from around the world was hired to help
insure the integrity of the work. The Company has applied for
permits from the State of Florida for two additional areas that
were formerly permitted solely by an affiliate of Marine
Archeological Partners, LLC. The Permit for one of the additional
areas was given to the Company on July 6, 2016 and identified as
Area 1. Both permits for Area 1 and Area 2 have been renewed in
2019 for an additional 3 years.
The
Company regularly reviews opportunities to perform exploration and
recovery operations at purported historic shipwreck sites; however,
the Company does have specific plans to perform exploration and
recovery operations at other shipwreck sites at the present time.
The Company is actively reviewing other potential historic
shipwreck sites for possible exploration and recovery. Should the
Company decide that it will pursue exploration and recovery
activities at other potential shipwreck sites it may be necessary
to obtain recovery permits as well as environmental
permits.
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 is also actively researching, exploring and testing new
technology to help more accurately understand current and future
wreck sites in an unobtrusive manner. Up to the date of this
filing, all tests of new and unproven technology and methods have
failed.
Additionally,
the Company is reviewing a few business opportunities that may
allow it to eventually generate revenue streams to support the
operational expenses of Seafarer. Seafarer has also acquired a 1%
ownership position in Probability and Statistics, Inc. (P&S)
for an exchange of Seafarer’s restricted stock (See Note 5).
The Company also has a commission only contract with P&S for
any business it brings to P&S. The Company has received
dividend payments from P&S.
The
Company continually monitors media rights for potential revenue
opportunities. The Company has talked to multiple media entities to
further understand the advantages offered. Management believes
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 our
securities is speculative and 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.
Limited Operating History
The
Company has not currently generated any revenue from operations and
does not expect to report any significant revenue from operations
for the foreseeable future. Management believes that it is
strategically important to attempt to develop revenue opportunities
in the future to help offset the Company’s negative cash flow
from operations and the necessity of raising capital.
18
The
Company’s working capital deficit increased from $1,126,431
at December 31, 2017 to $1,570,176 at December 31, 2018. This
increase in the Company’s working capital deficit is very
risky. The Company is in immediate need of further working capital
and is seeking options, with respect to financing, in the form of
debt, equity or a combination thereof.
Since
inception, the Company has funded its operations through common
stock issuances and loans in order to meet its strategic
objectives; however, there can be no assurance that the Company
will be able to obtain further funds to continue with its efforts
to establish a new business. There is a very significant risk that
the Company will be unable to obtain financing to fund its
operation and as such the Company may be forced to cease operations
at any time which would likely result in a complete loss of all
capital that has been invested in and/or borrowed by the Company to
date.
The
Company 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 April 12, 2019.
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.
The
Company’s lack of operating cash flow and reliance on the
sale of its commons stock and loans to fund operations is extremely
risky. If the Company is unable to continue to raise capital or
obtain loans or other financing on terms that are acceptable to the
Company, or at all, then it is highly likely that the Company will
be forced to cease operations. If the Company ceases its
operations, then it is likely that all capital invested in and/or
borrowed by the Company will be lost.
Summary of the Year Ended December 31, 2018 Results of
Operations
The
Company’s net loss for the year ended December 31, 2018 was
$1,277,184 as compared to a net loss of $999,847 for the year ended
December 31, 2017, an increase of approximately 27.5%
year-over-year. The increase in net losses in 2018 was primarily
due to increases in consulting and contractor expenses and travel
and entertainment expenses. The Company incurred consulting and
contractor expenses of $747,886 during the year ended December 31,
2018 versus $404,072 for the year ended December 31, 2017, a
year-over-year increase of approximately 85%. The increase in
consulting and contractor fees in 2018 was largely a result of
stock based compensation being paid to several consultants for
strategy and business consulting, advisory council, financial
reporting, technology consulting and research, operations,
archeological services as well as the payment of Board of
Directors’ fees. Travel and entertainment expenses increased
approximately 36.6%, from $40,002 for the year ended December 31,
2017 to $54,636 for the year ended December 31, 2018. The increase
in travel and entertainment in 2018 was primarily due to increased
travel by the Company’s Management and consultants both for
operational purposes and for a higher volume of meetings with
shareholders, investors, advisors and other stakeholders.
Additionally, the Company paid for increased travel for some
independent contractors involved in the operations. Interest
expense for the year ended December 31, 2018 was $228,855 versus
$$264,025 for the same period in 2017. Interest expense decreased
by approximately 13% in 2018 due to the impact of fair value
measurement of various convertible notes. For the year ended
December 31, 2018, the Company incurred professional fees of
$74,340 as compared to $64,552 for the year ended December 31,
2017, a 15% increase in 2018. The Company incurred vessel related
expenses of $58,309 during the year ended December 31, 2018 versus
$70,784 during the year ended December 31, 2017, a decrease of
approximately 17.6%. The Company did incur some expenses for
repairs to the main salvage vessel in 2018, and the Company also
deferred making some repairs, however the Company believes that
extensive repairs will be needed in the foreseeable future on both
the main salvage vessel and some lighter repairs on other vessels
that the Company intends to utilize in its exploration efforts.
During the year ended December 31, 2018, the Company general and
administrative expenses were $59,973 as compared to $62,960 during
the year ended December 31, 2017, a slight decrease of 4.7%. Rent
expense was $34,185 for the year ended December 31, 2018 versus
$41,170 for the same period in 2017, a decrease of approximately
17%. Surveying and site mapping expense was $0 during the year
ended December 31, 2018 as compared to $15,660 during the same
period in 2017. In 2017 the Company paid a third party to provide
proprietary information regarding locations of potential shipwreck
material utilizing a satellite based technology.
Liquidity and Capital Resources
At
December 31, 2018, the Company had $0 cash in the bank.
During the year ended December 31, 2018 and the year ended December
31, 2017, the Company incurred net losses of $1,277,184 and
$999,847, respectively. At December 31, 2018, Seafarer had $2,810
in current assets and $1,572,986 in current liabilities, leaving
the Company a working capital deficit of
$1,570,176.
19
Lack of Liquidity
A major
financial challenge and significant risk facing the Company is a
lack of positive cash flow and liquidity. The Company continued to
operate with significant debt and a working capital deficit during
the year ended December 31, 2018. 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 revenues and
does not expect to generate any revenues in the near future. There
are ongoing expenses associated with operations that are incurred
whether the Company is conducting shipwreck recovery operations or
not. Vessel maintenance, particularly for an older vessel such as
the Company’s main salvage vessel, upkeep expenses and
docking fees are continuous and unavoidable regardless of the
Company’s operational status. Management anticipates the
Company may need to put the vessel in dry dock in order for
additional repairs to be made. These repairs and maintenance are
expensive and have a negative impact on the Company’s cash
position.
In
addition to the operations 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 the
Company must rely on outside equity and debt funding. The
combination of the ongoing operational, even during times when
there is little or no exploration or salvage activities taking
place, and corporate expenses as well as the need for outside
financing creates a very risky situation for the Company and its
shareholders. 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.
If we
are unable to secure additional financing, our business may fail
and our stock price will likely be materially adversely
affected.
Lack of Revenues and Cash Flow/Significant Losses from
Operations
The
exploration and recovery of historic shipwrecks requires a
multi-year, multi-stage process and it may be many years before any
revenue is generated from exploration and recovery activities, if
ever. 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, 2018 and 2017 raises substantial doubt
as to our ability to continue as a going concern. As discussed in
Note 2 to our financial statements for the year ended December 31,
2018 and 2017, we have experienced operating losses in every year
since our inception resulting in an accumulated deficit. Our
independent auditors believe, based on our financial results as of
December 31, 2018, that such results raised substantial doubts
about the Company’s ability to continue as a going concern.
If the Company is not able to continue as a going concern, it is
highly likely that all capital invested in the Company or borrowed
by the Company will be lost.
The
Company has experienced a net loss in every fiscal year since
inception. The Company’s losses from operations were
$1,049,829 for the year ended December 31, 2018 and $733,184 for
the year ended December 31, 2017. 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.
20
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 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
financial statements for the years ended December 31, 2018 and 2017
contained in this filing). On an ongoing basis, we
evaluate our estimates. We base our estimates on
historical experience and on various other assumptions which we
believe to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value
of assets and liabilities which are not readily apparent from other
sources. Actual results may differ from these estimates
based upon different assumptions or conditions; however, we believe
that our estimates are reasonable.
Management
is aware that certain changes in accounting estimates employed in
generating financial statements can have the effect of making the
Company look more or less profitable than it actually
is. Management does not believe that the Company has
made any such changes in accounting estimates.
Off-balance Sheet Arrangements
None.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.
Not
required.
21
Item 8. Financial Statements.
SEAFARER EXPLORATION CORP.
FINANCIAL STATEMENTS
DECEMBER 31, 2018 AND 2017
TABLE OF CONTENTS
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Page
No.
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Report
of Independent Registered Public Accounting Firms
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F-1 -
F-2
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Balance
Sheets
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F-2
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Statements
of Operations
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F-3
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Statements
of Changes in Stockholders’ Deficit
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F-4
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Statements
of Cash Flows
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F-5
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Notes
to Financial Statements
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F-6 -
F-30
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22
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Seafarer Exploration Corp.
Opinion on the Financial Statements
We have
audited the accompanying balance sheets of
Seafarer Exploration Corp. (the
“Company”)
as of December 31, 2018, and the
related statements of operations, stockholders’ deficit, and
cash flows for the year ended December 31, 2018, and the related
notes to the financial statements (collectively referred to as the
financial statements). In our opinion, the financial statements
present fairly, in all material respects, the financial position of
the Company as of December 31, 2018, and the results of its
operations and its cash flows for the year ended December 31, 2018,
in conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audit. We are a
public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the
PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the
purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis
for our opinion.
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company has incurred a net loss
of $1,277,184 for the year ended December 31,
2018. Additionally, the Company has a working capital
deficit of $1,570,176 and an accumulated deficit of $14,954,819 as
of December 31, 2018. These and other factors raise substantial
doubt about the Company’s ability to continue as a going
concern. Management’s plan regarding these matters is also
described in Note 2 to the financial statements. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
D.
Brooks and Associates CPA’s, P.A.
|
We have
served as the Company’s auditor since 2019.
Palm
Beach Gardens, Florida
April
15, 2019
|
|
D.
Brooks and Associates CPA’s, P.A. 4440 PGA Boulevard Suite
104, Palm Beach Gardens, FL 33410 – (561)
429-6225
|
F-1
Report of Independent Registered Public Accounting
Firm
To the
Board of Directors and
Stockholders
of Seafarer Exploration Corp.
Tampa,
Florida
Opinion on the Financial Statements
We have
audited the accompanying balance sheets of Seafarer Exploration
Corp. (the “Company”) at December 31, 2017, and the
related statements of operations, changes in stockholders’
deficit, and cash flows for the year ended December 31, 2017, and
the related notes (collectively referred to as the financial
statements). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 2017, and the results of its operations
and its cash flows for the year ended December 31, 2017, in
conformity with accounting principles generally accepted in the
United States of America.
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As described in Note
2 to the financial statements, the Company has incurred net losses
since inception, which raises substantial doubt about its ability
to continue as a going concern. Management’s plans in regard
to these matters are described in Note 2. The financial statements
do not include any adjustments that might result from the outcome
of this uncertainty. Our opinion is not modified with respect to
this matter.
Basis for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audit. We are a
public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the
PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audit, we are required to obtain an understanding of
internal control over financial reporting, but not for the purpose
of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audit provide a reasonable basis
for our opinion.
|
/s/
Daszkal Bolton LLP
|
|
We have
served as the Company’s auditor since 2016.
Fort
Lauderdale, Florida
April
2, 2018
|
F-2
SEAFARER EXPLORATION CORP.
BALANCE SHEETS
DECEMBER 31, 2018 AND 2017
|
|
December
31,
|
December
31,
|
|
|
2018
|
2017
|
|
Assets
|
||
|
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
-
|
$
62,609
|
|
Prepaid
expenses
|
2,060
|
32,227
|
|
Deposits
and other receivables
|
750
|
750
|
|
Total
current assets
|
2,810
|
95,586
|
|
|
|
|
|
Property
and equipment, net
|
-
|
20,308
|
|
Investment
at cost
|
78,000
|
-
|
|
Total
assets
|
$
80,810
|
$
115,894
|
|
|
|
|
|
Liabilities and Stockholders' Deficit
|
||
|
|
|
|
|
Current
liabilities:
|
|
|
|
Overdraft
|
$
2,919
|
$
-
|
|
Accounts
payable and accrued expenses
|
480,951
|
279,288
|
|
Convertible
notes payable, net of discounts of $1,401 and $-0-
|
1,599
|
-
|
|
Convertible
notes payable, related parties, net of discounts of $7,588 and
$-0-
|
21,612
|
-
|
|
Convertible
notes payable, in default
|
457,300
|
470,300
|
|
Convertible
notes payable, in default - related parties
|
341,000
|
234,500
|
|
Notes
payable, net of discounts of $14,943 and $35,844
|
90,057
|
144,156
|
|
Notes
payable, in default
|
152,500
|
30,000
|
|
Notes
payable, in default - related parties
|
18,500
|
43,750
|
|
Shareholder
loans
|
6,548
|
20,023
|
|
Total
current liabilities
|
1,572,986
|
1,222,017
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
Stockholders'
deficit:
|
|
|
|
Preferred
stock, $0.0001 par values - 50,000,000 shares authorized; 67 shares
issued
|
|
|
|
Series
A - 7 shares issued and outstanding at December 31, 2018 and
2017
|
-
|
-
|
|
Series
B - 60 shares issued and outstanding at December 31, 2018 and
2017
|
-
|
-
|
|
Common stock, $0.0001 par value -
4,900,000,000 shares authorized; 3,518,152,964
and
|
|
|
|
2,784,317,155
shares issued and outstanding at December 31, 2018 and 2017,
respectively
|
350,573
|
278,432
|
|
Common stock to be issued, $0.0001 par value,
|
|
|
|
23,192,857
shares outstanding at December 31, 2018
|
2,319
|
-
|
|
Additional
paid-in capital
|
13,109,751
|
12,293,080
|
|
Accumulated
deficit
|
(14,954,819
)
|
(13,677,635
)
|
|
Total
stockholders' deficit
|
(1,492,176
)
|
(1,106,123
)
|
|
Total
liabilities and stockholders' deficit
|
$
80,810
|
$
115,894
|
See
accompanying notes to the financial statements.
F-3
SEAFARER EXPLORATION CORP.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
|
|
2018
|
2017
|
|
Revenue
|
$
-
|
$
-
|
|
|
|
|
|
Expenses:
|
|
|
|
Consulting
and contractor expenses
|
747,886
|
404,072
|
|
Vessel
maintenance and dockage
|
58,309
|
70,784
|
|
Professional
fees
|
74,340
|
64,552
|
|
General
and administrative expense
|
60,165
|
62,960
|
|
Depreciation
expense
|
20,308
|
33,984
|
|
Rent
expense
|
34,185
|
41,170
|
|
Sureying
and mapping
|
-
|
15,660
|
|
Travel
and entertainment expense
|
54,636
|
40,002
|
|
Total
operating expenses
|
1,049,829
|
733,184
|
|
|
|
|
|
Loss
from operations
|
(1,049,829
)
|
(733,184
)
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
Interest
expense
|
(228,855
)
|
(264,025
)
|
|
Dividend
income
|
1,500
|
|
|
Loss
on extinguishment of debt
|
-
|
(2,638
)
|
|
Total
other income expense
|
(227,355
)
|
(266,663
)
|
|
Net
loss
|
$
(1,277,184
)
|
$
(999,847
)
|
|
|
|
|
|
Net
loss per share - basic and diluted
|
$
-
|
$
-
|
|
Weighted
average common shares outstanding - basic and diluted
|
3,103,881,581
|
2,551,178,960
|
See
accompanying notes to the financial statements.
F-4
SEAFARER EXPLPLORATION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
|
|
Series A
Preferred Stock
|
Series B
Preferred Stock
|
Common
Stock
|
Common Stock
to Be Issued
|
Additional
|
Accumulated
|
Total
|
||||
|
|
Shares
|
Value
|
Shares
|
Value
|
Shares
|
Value
|
Shares
|
Amount
|
Paid-in
Capital
|
Deficit
|
Equity
|
|
Balance
December 31, 2016
|
7
|
$
-
|
60
|
$
-
|
2,194,976,061
|
$
219,498
|
-
|
$
-
|
$
11,485,588
|
$
(12,677,788
)
|
$
(972,702
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash
|
-
|
-
|
-
|
-
|
371,588,889
|
37,159
|
-
|
-
|
356,381
|
-
|
393,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued to convert notes payable
|
-
|
-
|
-
|
-
|
48,239,312
|
4,824
|
-
|
-
|
60,328
|
-
|
65,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued to convert interest
|
-
|
-
|
-
|
-
|
25,562,885
|
2,556
|
-
|
-
|
98,763
|
-
|
101,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
issued for financing cost
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
32,641
|
-
|
32,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
34,984
|
-
|
34,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for board of director fees
|
-
|
-
|
-
|
-
|
40,000,000
|
4,000
|
-
|
-
|
64,000
|
-
|
68,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for advisory fees
|
-
|
-
|
-
|
-
|
38,000,000
|
3,800
|
-
|
-
|
61,700
|
-
|
65,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for consulting expense
|
-
|
-
|
-
|
-
|
19,500,008
|
1,950
|
-
|
-
|
37,200
|
-
|
39,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for legal services
|
-
|
-
|
-
|
-
|
7,500,000
|
750
|
-
|
-
|
18,000
|
-
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for financing cost
|
-
|
-
|
-
|
-
|
38,450,000
|
3,845
|
-
|
-
|
42,995
|
-
|
46,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for repairs
|
-
|
-
|
-
|
-
|
500,000
|
50
|
-
|
-
|
500
|
-
|
550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
-
|
-
|
-
|
-
|
|
|
-
|
-
|
|
(999,847
)
|
(999,847
)
|
|
Balance
December 31, 2017
|
7
|
-
|
60
|
-
|
2,784,317,155
|
278,432
|
-
|
-
|
12,293,080
|
(13,677,635
)
|
(1,106,123
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for cash -
|
-
|
-
|
-
|
-
|
325,004,949
|
32,500
|
6,250,000
|
625
|
255,977
|
-
|
289,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued to
convert notes payable
|
-
|
-
|
-
|
-
|
16,759,497
|
1,676
|
-
|
-
|
17,800
|
-
|
19,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued for
financing cost
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
107,623
|
-
|
107,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for
services
|
-
|
-
|
-
|
-
|
280,071,363
|
26,754
|
6,942,857
|
694
|
291,651
|
-
|
319,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued as
financial costs
|
-
|
-
|
-
|
-
|
52,100,000
|
5,210
|
10,000,000
|
1,000
|
71,620
|
-
|
77,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
purchased with stock (P&S)
|
-
|
-
|
-
|
-
|
60,000,000
|
6,000
|
-
|
-
|
72,000
|
-
|
78,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,277,184
)
|
(1,277,184
)
|
|
Balance December
31, 2018
|
7
|
$
-
|
60
|
$
-
|
3,518,252,964
|
$
350,573
|
23,192,857
|
$
2,319
|
$
13,109,751
|
$
(14,954,819
)
|
$
(1,492,176
)
|
See
accompanying notes to the f
inancial
statements.
F-5
SEAFARER EXPLORATION CORP.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
|
|
December
31,
|
December
31,
|
|
|
2018
|
2017
|
|
Operating
activities
|
|
|
|
Net
loss
|
$
(1,277,184
)
|
$
(999,847
)
|
|
Adjustments to
reconcile net loss to
|
|
|
|
net cash used by
operating activities
|
|
|
|
Depreciation
|
20,308
|
33,984
|
|
Amortization of
beneficial conversion feature and loan fees
|
138,557
|
5,812
|
|
Common stock
issued for services
|
319,100
|
191,950
|
|
Common stock and
warrants issued for non-payment of notes payable
|
63,284
|
2,900
|
|
Decrease
in:
|
|
|
|
Prepaid expenses
and deposits
|
30,167
|
87,569
|
|
Increase
in:
|
|
|
|
Accounts payable
and accrued expenses
|
201,663
|
40,062
|
|
Net cash used by
operating activities
|
(504,105
)
|
(637,570
)
|
|
|
|
|
|
Cash flows from
investing activities
|
-
|
-
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Increase in bank
overdraft
|
2,919
|
-
|
|
Proceeds from the
issuance of common stock
|
289,102
|
393,540
|
|
Proceeds from the
issuance of convertible notes payable
|
15,000
|
265,000
|
|
Payments on
convertible notes payable
|
(10,000
)
|
(45,000
)
|
|
Proceeds
from the issuance convertible notes payable, related
|
|
|
|
party
|
135,700
|
28,000
|
|
Proceeds from
notes payable
|
101,000
|
-
|
|
Payments on notes
payable
|
(53,500
)
|
-
|
|
Proceeds from
notes payable, related party
|
26,000
|
-
|
|
Payments on notes
payable related party
|
(51,250
)
|
-
|
|
Proceeds from
loans to stockholders
|
8,085
|
43,090
|
|
Payments to
shareholders
|
(21,560
)
|
(9,000
)
|
|
Net cash provided
by financing activities
|
441,496
|
675,630
|
|
|
|
|
|
Net increase
(decrease) in cash
|
(62,609
)
|
38,060
|
|
|
|
|
|
Cash -
beginning
|
62,609
|
24,549
|
|
Cash -
ending
|
$
-
|
$
62,609
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Cash paid for
interest expense
|
$
-
|
$
-
|
|
Cash paid for
income taxes
|
$
-
|
$
-
|
|
Noncash operating
and financing activities:
|
|
|
|
Convertible
debt and accrued interest to converted to common
|
|
|
|
stock
|
$
19,476
|
$
68,722
|
|
Acquisition of
investment with 60,000,000 common stock shares
|
$
78,000
|
$
-
|
|
Beneficial
conversion feature on convertible notes payable
|
$
107,623
|
$
-
|
|
Stock issued for
loan origination fees
|
$
19,680
|
$
-
|
See
accompanying notes to the financial statements.
F-6
SEAFARER EXPLORATION CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 Company filed a Certificate of
Domestication to redomicile in the State of Florida on July 26,
2011.
The
principal business of the Company is to engage in the
archaeologically-sensitive exploration, documentation, and recovery
of historic shipwrecks with the objective of exploring and
discovering Colonial-era shipwrecks for future generations to be
able to appreciate and understand.
NOTE 2 - GOING CONCERN
These
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 April 15, 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.
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 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
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 - SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of the Company is
presented to assist in understanding the Company’s financial
statements. The 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 financial statements.
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 are no cash equivalents at December 31, 2018 and
2017.
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
shareholders 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. Basic and diluted losses per share were
the same at the reporting dates, as the inclusion of outstanding
common stock equivalents would have been anti-dilutive, as of
December 31, 2018 and 2017.
As of December 31, 2018, and 2017, the Company’s outstanding
convertible debt and warrants is would result in approximately
546,378,995 and 435,594,101 shares of common stock, respectively.
This amount is not included in the computation of dilutive loss per
share because their impact is
antidilutive.
F-7
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.
Property and Equipment and Depreciation
Fixed
assets are recorded at historical cost. Depreciation is computed on
the straight-line method over the estimated useful lives of the
respective assets. Property and equipment, net consist of the
following at December 31 2018 and 2017, respectively:
|
|
2018
|
2017
|
|
|
|
|
|
Diving
vessel
|
$
326,005
|
$
326,005
|
|
|
|
|
|
Generator
|
7,420
|
7,420
|
|
|
|
|
|
Magnatometer
|
25,000
|
25,000
|
|
|
|
|
|
Less
accumulated depreciation
|
$
(358,425
)
|
(338,117
)
|
|
|
|
|
|
Balance
|
$
0
|
$
20,308
|
Depreciation
expense was $20,308 for the year ended December 31, 2018 and
$33,984 for the year ended and 2017.
F-8
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. ASC 360-10 provides guidance on accounting for
property, plant, and equipment, and the related accumulated
depreciation on those assets. ASC 360-10 also includes guidance on
the impairment or disposal of long-lived assets. ASC 360-10 notes
that long-lived tangible assets include land and land improvements,
buildings, machinery and equipment, and furniture and fixtures. 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. The Company has determined there has been no
impairment in the carrying value of its long-lived assets at
December 31, 2018 and 2017, respectively.
Use of Estimates
The
process of preparing 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 financial statements. Accordingly, upon
settlement, actual results may differ from estimated
amounts.
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.
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 December 31, 2018 and
2017, 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.
F-9
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.
The
Company accounts for transactions in which services are 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 measures the
fair value of the equity instruments issued based on the fair value
of the Company’s stock on contract execution.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) 2016-02, “Leases (Topic 842)”.
Under this guidance, an entity is required to recognize
right-of-use assets and lease liabilities on its balance sheet and
disclose key information about leasing arrangements. This guidance
offers specific accounting guidance for a lessee, a lessor and sale
and leaseback transactions. Lessees and lessors are required to
disclose qualitative and quantitative information about leasing
arrangements to enable a user of the financial statements to assess
the amount, timing and uncertainty of cash flows arising from
leases. This guidance is effective for annual reporting periods
beginning after December 15, 2018, including interim periods
within that reporting period, and requires a modified retrospective
adoption, with early adoption permitted. The Company is currently
evaluating the impact the adoption of this standard will have on
our consolidated financial statements.
In June
2018, the FASB issued 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. The guidance is
effective for fiscal years and interim periods within those years
beginning after December 15, 2018. Early adoption is permitted, but
no earlier than an entity’s adoption date of ASC 606. The
Company is currently evaluating the impact of this new guidance on
its consolidated financial statements and disclosures.
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 – CAPITAL STOCK
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
December 31, 2018 and 2017, 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.
F-10
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 years ended
December 31, 2018
and 2017 the Company issued the following shares of common
stock:
|
|
2018
|
|
2017
|
|
Common shares issued for cash
|
325,004,949
|
|
371,588,889
|
|
Common stock issued to convert notes payable and accrued
interest
|
16,759,497
|
|
73,802,197
|
|
Common stock issued for services
|
280,071,363
|
|
143,950,008
|
|
Common stock issued for financing costs
|
52,100,000
|
|
-
|
|
Investment purchased with stock
|
60,000,000
|
|
-
|
|
Total
|
733,935,809
|
|
589,341,094
|
Common Stock to be Issued
At
December 31, 2018 the Company recorded 6,250,000 shares of common
stock to be issued for cash.
At
December 31, 2018 the Company recorded 6,942,857 shares of common
stock to be issued for services.
At
December 31, 2018 the Company recorded 10,000,000 shares of common
stock to be issued for financing costs.
Warrants and Options
At
December 31, 2018 and 2017 the Company had warrants to purchase a
total of 33,000,000 and 145,333,333 shares respectively of its
restricted common stock outstanding. The following table shows the
warrants outstanding:
|
|
Number of Shares
|
Number of Shares
|
|
|
Term
|
2018
|
2017
|
Exercise Price
|
|
11/10/12 to 11/20/22
|
4,000,000
|
4,000,000
|
0.0050
|
|
09/18/15 to 09/18/20
|
4,000,000
|
4,000,000
|
0.0030
|
|
04/04/16 to 04/04/18
|
-
|
10,000,000
|
0.0020
|
|
07/12/16 to 01/12/18
|
-
|
4,000,000
|
0.0020
|
|
08/31/16 to 08/31/18
|
-
|
25,000,000
|
0.0010
|
|
01/31/17 to 01/31/18
|
-
|
40,000,000
|
0.0040
|
|
02/14/17 to 08/14/18
|
-
|
33,333,333
|
0.0050
|
|
09/10/17 to 09/10/19
|
15,000,000
|
15,000,000
|
0.0250
|
|
09/10/17 to 09/10/19
|
10,000,000
|
10,000,000
|
0.0250
|
|
|
33,000,000
|
145,333,333
|
|
F-11
Warrants Issued and Expired During the Year Ended December 31,
2018
The Company did not issue any warrants during the years ended
December 31, 2018.
During the year ended December 31, 2018,
112,333,333 warrants expired.
Warrants Issued During the Year Ended December 31,
2017
During
the year ended December 31, 2017 the Company issued a total of
98,333,333 warrants to purchase shares of restricted common stock
at prices ranging from $0.004 to $0.025, 40,00,000 warrants were
issued under equity subscription agreements and 58,333,333 under
convertible promissory notes. The warrants issued under convertible
promissory note agreements were valued using the Black-Scholes
model with the following assumptions.
|
|
Year
ended December 31,
|
|
|
2017
|
|
Expected
life in years
|
1 to 5
years
|
|
Stock
price Volatility
|
205.80
%
|
|
Risk
free interest rates
|
1.36
%
|
|
Expected
dividends
|
-
|
|
Forfeiture
rate
|
-
|
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 - INCOME TAXES
At
December 31, 2018 and 2017, the Company had available Federal and
state net operating loss carry forwards to reduce future taxable
income. The amounts available were approximately $14,600,000 and
$13,300,000 for Federal purposes. The Federal carry forwards begin
to expire in 2033. Given the Company’s history of net
operating losses, management has determined that it is more likely
than not that the Company will not be able to realize the tax
benefit of the carryforwards. Accordingly, the Company has not
recognized a deferred tax asset for this benefit.
The
Company adopted FASB guidelines that address the determination of
whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under this
guidance, the Company may recognize the tax benefit from an
uncertain tax position only if it is more likely than not that the
tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a
greater than fifty percent likelihood of being realized upon
ultimate settlement. This guidance also provides guidance on
derecognition, classification, interest and penalties on income
taxes, accounting in interim periods and requires increased
disclosures. As of December 31, 2018 and 2017, the Company did not
have a liability for unrecognized tax benefits.
F-12
The
Company’s policy is to record interest and penalties on
uncertain tax provisions as income tax expense. As of December 31,
2018 and 2017, the Company has not accrued interest or penalties
related to uncertain tax positions. Additionally, tax years 2013
through 2017 remain open to examination by the major taxing
jurisdictions to which the Company is subject. Due to the
Company’s lack of revenue since inception management does not
believe that there is any income tax liability for past years.
There are currently no open federal or state tax years under
audit.
Upon
the attainment of taxable income by the Company, management will
assess the likelihood of realizing the tax benefit associated with
the use of the carry forwards and will recognize a deferred tax
asset at that time.
The
items accounting for the difference between income taxes computed
at the federal statutory rate and the provision for income taxes
are as follows:
|
|
For
the Year Ended
December
31, 2018
|
For
the Year Ended
December
31, 2017
|
|
Income tax at
federal statutory rate
|
(21.00
%)
|
(34.00
%)
|
|
State tax, net of
federal effect
|
(3.96
%)
|
(3.96
%)
|
|
|
(23.96
%)
|
(37.96
%)
|
|
Valuation
allowance
|
23.96
%
|
37.96
%
|
|
Effective
rate
|
0.00
%
|
0.00
%
|
Deferred
income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax
purposes.
As of
December 31, 2018 and 2017, the Company’s only significant
deferred income tax asset was a cumulative estimated net tax
operating loss of approximately $14,600,000 and $13,300,000,
respectively that is available to offset future taxable income, if
any, in future periods, subject to expiration and other limitations
imposed by the Internal Revenue Service. Management has
considered the Company's operating losses incurred to date and
believes that a full valuation allowance against the deferred tax
assets is required as of December 31, 2018 and 2017.
NOTE 7 – LEASE OBLIGATION
Corporate Office
The
Company leases 823 square feet of office space located at 14497
North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. The
Company entered into an amended lease agreement commencing on July
20, 2017 through June 30, 2020 with base monthly 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 above the base monthly rental fee.
As of
December 31, 2018, future minimum rental payments required under
this non-cancelable operating lease total $15,703 for the year
ending December 31, 2019, and $7,967 for the year ending December
31, 2020.
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.
Total
rental expense during the years ended December 31, 2018 and 2017 on
these leases was $34,185 and $41,170.
F-13
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 paragraph 4 of EITF 00-19, which was
superseded by ASC 815, and EITF 05-02, which was superseded by ASC
470.
Convertible Notes Payable
The
following table reflects the convertible notes payable as of
December 31, 2018 and 2017:
|
Issue Date
|
Maturity Date
|
2018
|
2017
|
Rate
|
Conversion Price
|
|
|
|
|
|
|
|
|
Convertible notes payable
|
|
|
|
|
|
|
10/29/18
|
04/29/19
|
$3,000
|
-
|
6.00%
|
0.00070
|
|
Balance
|
|
$3,000
|
$0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable - related parties
|
|
|
|
||
|
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
|
|
Balance
|
|
$29,200
|
$0
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable - in default
|
|
|
|
||
|
08/28/09
|
11/01/09
|
$4,300
|
$4,300
|
10.00%
|
0.01500
|
|
04/07/10
|
11/07/10
|
70,000
|
70,000
|
6.00%
|
0.00800
|
|
11/12/10
|
11/12/11
|
40,000
|
40,000
|
6.00%
|
0.00500
|
|
10/31/12
|
04/30/13
|
8,000
|
8,000
|
6.00%
|
0.00400
|
|
11/20/12
|
05/20/13
|
50,000
|
50,000
|
6.00%
|
0.00500
|
|
01/19/13
|
07/30/13
|
5,000
|
5,000
|
6.00%
|
0.00400
|
|
02/11/13
|
08/11/13
|
9,000
|
9,000
|
6.00%
|
0.00600
|
|
09/25/13
|
03/25/14
|
10,000
|
10,000
|
6.00%
|
0.01250
|
|
10/04/13
|
04/04/14
|
50,000
|
50,000
|
6.00%
|
0.01250
|
|
10/30/13
|
10/30/14
|
50,000
|
50,000
|
6.00%
|
0.01250
|
|
05/15/14
|
11/15/14
|
40,000
|
40,000
|
6.00%
|
0.00700
|
|
10/13/14
|
04/13/15
|
25,000
|
25,000
|
6.00%
|
0.00500
|
|
06/29/15
|
12/29/15
|
25,000
|
25,000
|
6.00%
|
0.00300
|
|
09/18/15
|
03/18/16
|
25,000
|
25,000
|
6.00%
|
0.00200
|
|
04/04/16
|
10/04/16
|
10,000
|
10,000
|
6.00%
|
0.00100
|
|
07/19/16
|
07/19/17
|
4,000
|
4,000
|
6.00%
|
0.00150
|
|
08/24/16
|
02/24/17
|
20,000
|
20,000
|
6.00%
|
0.00100
|
|
03/10/17
|
09/10/17
|
-
|
$10,000
|
6.00%
|
0.00100
|
|
03/14/17
|
09/14/17
|
-
|
$15,000
|
6.00%
|
0.00150
|
|
03/06/18
|
09/06/18
|
6,000
|
-
|
6.00%
|
0.00060
|
|
02/06/18
|
11/07/18
|
6,000
|
-
|
6.00%
|
0.00060
|
|
Balance
|
|
$457,300
|
$470,300
|
|
|
|
|
|
|
|
|
|
F-14
|
Convertible notes payable - related parties, in
default
|
|
|
|
||
|
01/09/09
|
01/09/10
|
$10,000
|
$10,000
|
10.00%
|
0.01500
|
|
01/25/10
|
01/25/11
|
6,000
|
6,000
|
6.00%
|
0.00500
|
|
01/18/12
|
07/18/12
|
50,000
|
50,000
|
8.00%
|
0.00400
|
|
01/19/13
|
07/30/13
|
15,000
|
15,000
|
6.00%
|
0.00400
|
|
07/26/13
|
01/26/14
|
10,000
|
10,000
|
6.00%
|
0.01000
|
|
01/17/14
|
07/17/14
|
31,500
|
31,500
|
6.00%
|
0.00600
|
|
05/27/14
|
11/27/14
|
7,000
|
7,000
|
6.00%
|
0.00700
|
|
07/21/14
|
01/25/15
|
17,000
|
17,000
|
6.00%
|
0.00800
|
|
10/16/14
|
04/16/15
|
21,000
|
21,000
|
6.00%
|
0.00450
|
|
07/14/15
|
01/14/16
|
9,000
|
9,000
|
6.00%
|
0.00300
|
|
01/12/16
|
07/12/16
|
5,000
|
5,000
|
6.00%
|
0.00200
|
|
05/10/16
|
11/10/16
|
5,000
|
5,000
|
6.00%
|
0.00050
|
|
05/10/16
|
11/10/16
|
5,000
|
5,000
|
6.00%
|
0.00050
|
|
05/20/16
|
11/20/16
|
5,000
|
5,000
|
6.00%
|
0.00050
|
|
07/12/16
|
01/12/17
|
5,000
|
5,000
|
6.00%
|
0.00060
|
|
01/26/17
|
03/12/17
|
5,000
|
5,000
|
6.00%
|
0.00050
|
|
02/14/17
|
08/14/17
|
25,000
|
25,000
|
6.00%
|
0.00075
|
|
08/16/17
|
09/16/17
|
3,000
|
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
|
|
Balance
|
|
$341,000
|
$234,500
|
|
|
|
|
|
|
|
|
|
|
Balance - convertible notes payable
|
$830,500
|
$704,800
|
|
|
|
F-15
Notes Payable
The
following table reflects the notes payable as of December 31, 2018
and 2017:
|
Issue Date
|
Maturity Date
|
2018
|
2017
|
Rate
|
|
|
|
|
|
|
|
Notes payable
|
|
|
|
|
|
11/29/17
|
11/29/19
|
$105,000
|
$105,000
|
2.06%
|
|
12/14/17
|
12/14/18
|
-
|
75,000
|
6.00%
|
|
Balance
|
|
$105,000
|
$180,000
|
|
|
|
|
|
|
|
|
Notes payable - in default
|
|
|
|
|
|
04/27/11
|
04/27/12
|
$5,000
|
$5,000
|
6.00%
|
|
06/23/11
|
08/23/11
|
25,000
|
25,000
|
6.00%
|
|
12/14/17
|
12/14/18
|
75,000
|
-
|
6.00%
|
|
03/07/18
|
04/15/18
|
25,000
|
-
|
6.00%
|
|
04/20/18
|
05/04/18
|
21,500
|
-
|
6.00%
|
|
08/21/18
|
09/21/18
|
1,000
|
-
|
6.00%
|
|
Balance
|
|
$152,500
|
$30,000
|
|
|
|
|
|
|
|
|
Notes payable - related parties, in default
|
|
|
||
|
02/24/10
|
02/24/11
|
$7,500
|
$7,500
|
6.00%
|
|
10/06/15
|
11/15/15
|
$10,000
|
$10,000
|
6.00%
|
|
11/02/17
|
12/02/17
|
-
|
11/13/71
|
6.00%
|
|
02/08/18
|
04/09/18
|
$1,000
|
-
|
6.00%
|
|
Balance
|
|
$18,500
|
$43,750
|
|
|
|
|
|
|
|
|
Balance - notes payable
|
$276,000
|
$253,750
|
|
|
Between
January 1, 2018 and December 31, 2018, the Company issued notes
payable and convertible notes payable totaling $277,700. Most of
the notes include interest at 6%. The principal amount of the notes
and interest is payable on the maturity date. The notes and accrued
interest are convertible into common stock at fixed conversion
prices at the lender’s option. The conversion prices and
maturity dates of these notes are detailed in the table in the
preceding page.
The
Company has evaluated the terms and conditions of the notes payable
and convertible notes under the guidance of ASC 815 and other
applicable guidance. The conversion feature of the convertible
notes met the definition of conventional convertible for purposes
of applying the conventional convertible exemption. The definition
of conventional contemplates a limitation on the number of shares
issuable under the arrangement. The note is convertible into a
fixed number of shares and there are no down round protection
features contained in the contracts. Since the convertible notes
achieved the conventional convertible exemption, the Company was
required to consider whether the hybrid contracts embody a
beneficial conversion feature. The calculation of the effective
conversion amount did result in a beneficial conversion
feature.
The
following tables reflect the aggregate allocation as of December
31:
|
|
2018
|
2017
|
|
Face
value of convertible notes payable
|
$
3,000
|
-
|
|
Beneficial
conversion feature
|
(1,401
)
|
-
|
|
Carrying
value
|
$
1,599
|
-
|
|
|
|
|
F-16
|
|
2018
|
2017
|
|
Face
value of convertible notes payable, related parties
|
$
29,200
|
-
|
|
Beneficial
conversion feature
|
(7,588
)
|
-
|
|
Carrying
value
|
$
21,612
|
-
|
|
|
2018
|
2017
|
|
Face
value of notes payable
|
$
105,000
|
$
180,000
|
|
Beneficial
conversion feature
|
(14,943
)
|
(35,844
)
|
|
Carrying
value
|
$
90,057
|
$
144,156
|
The
discounts on the convertible notes arose from the allocation of
basis to the beneficial conversion feature. The discount is
amortized through charges to interest expense over the term of the
debt agreement. For the twelve months ended December 31, 2018 and
2017, the Company recorded interest expense related to the
amortization of debt discounts in the amount of approximately
$139,000 and $80,600, respectively.
At
December 31, 2018 and 2017, combined accrued interest on the
convertible notes payable, notes payable and stockholder loans was
$268,863 and $220,732, respectively, and included in accounts
payable and accrued expenses on the accompanying balance
sheets.
During
the year ended December 31, 2018, the Company issued 16,100,000
shares of the Company’s restricted common stock as loan
origination fees on certain convertible notes payable and notes
payable. The fair value of these shares was determined on the
execution debt of the related loan and totaled $18,430 which was
recorded as a discount and amortized into interest expense over the
related debt. The discount was fully amortized as of December 31,
2018.
An
individual who is both related to the Company’s CEO and a
member of the Company’s Board of Directors agreed to defer
the maturity dates for purposes of the payment financing fees in
the form of shares of the Company’s restricted stock that the
Company would have to pay to the related note holder due to 4
separate promissory notes that went into default during the year
ended December 31, 2018. The related party note holder is entitled
to receive a total of 7,200,000 shares of the Company’s
restricted common stock as financing fees for Company defaulting on
repaying the 4 promissory notes, however the related party note
holder agreed to defer the penalty date for the shares to be owed
to him until May 1, 2019. The related party note holder also agreed
to defer any increase in the interest rate for any of his notes
that went into default during the year ended December 31, 2018
until May 1, 2019.
Convertible Notes Payable and Notes Payable Issued in
2018
During
the year ended December 31, 2018, the Company entered into the
following Convertible Notes Payable and Notes Payable
Agreements:
In
January of 2018, the Company entered into a convertible promissory
note agreement in the amount of $12,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before January 9, 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 $0.0006 per
share.
In
January of 2018, the Company entered into a promissory note
agreement in the amount of $25,000 with a related party. This note
pays interest at a rate of 6% per annum and the principal and
accrued interest were due on or before March 2, 2018. The related
party lender received 2,000,000 shares of the Company’s
restricted common stock as a loan origination fee. The Company
agreed that if the note was not repaid in full by March 2, 2018
then the interest rate on the note would increase to 10% after that
date until the note is paid in full and the Company would be
obligated to pay an additional 1,000,000 shares of the Company
restricted common stock to the related party lender. This note was
repaid and the balance owed at December 31, 2018 was
$0.
In
February of 2018, the Company entered into a convertible promissory
note agreement in the amount of $6,000 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 November 7, 2018. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.0006 per
share. This note is currently in default due to non payment of
principal and interest.
In
February of 2018, the Company entered into a promissory note
agreement in the amount of $1,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 9, 2018. This note was repaid and the balance
owed at December 31, 2018 was $0.
In
March of 2018, the Company entered into a convertible promissory
note agreement in the amount of $6,000 with an individual. This
note pays interest at a rate of 6% per annum and the principal and
accrued interest is due on or before September 6, 2018. The lender
received 500,000 shares of the Company’s restricted common
stock as a loan origination fee. The note is unsecured. This note
is currently in default due to non payment of principal and
interest.
In
March of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before April 15, 2018. The lender received
5,000,000 shares of the Company’s restricted common stock as
a loan origination fee. This note is currently in default due to
non payment of principal and interest. The note is
unsecured.
F-17
In
March of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May14, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 4, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 11, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per share. This
note is currently in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 15, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee and a $1,250 financing fee. This note was
repaid and the balance owed at December 31, 2018 was
$0.
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $40,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 4, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee. This note is currently in default due to
non payment of principal and interest. The note is unsecured. The
Company repaid principal balance of $18,500 and the principal
balance owed was $21,500 at December 31, 2018.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before August 30, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per share. This
note is currently in default due to non payment of principal and
interest.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before July 8, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $3,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 12, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per share. This
note is currently in default due to non payment of principal and
interest.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $500 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 12, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per share. This
note is currently in default due to non payment of principal and
interest.
In
August of 2018, the Company entered into a promissory note
agreement in the amount of $1,000 with an individual. This note
pays interest at a rate of 6% per annum and the principal and
accrued interest were due on or before September 21, 2018. The
lender received 100,000 shares of the Company’s restricted
common stock as a loan origination fee. This note is currently in
default due to non payment of principal and interest. The note is
unsecured.
F-18
In
August of 2018, the Company entered into a convertible promissory
note agreement in the amount of $2,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before February 27, 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 $0.0007 per share. This
note is currently in default due to non payment of principal and
interest.
In
October of 2018, the Company entered into a promissory note
agreement in the amount of $10,000 with an individual. This note
pays interest at a rate of 1% per annum and the principal and
accrued interest were due on or before October 9, 2018. The lender
received 500,000 shares of the Company’s restricted common
stock as a loan origination fee. This note was repaid and the
balance owed at December 31, 2018 was $0.
In
October of 2018, the Company entered into a convertible promissory
note agreement in the amount of $1,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 2, 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 $0.0008 per share. This
note is currently in default due to non payment of principal and
interest.
In
October of 2018, the Company entered into a convertible promissory
note agreement in the amount of $4,200 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 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 $0.0008 per
share.
In
October of 2018, the Company entered into a convertible promissory
note agreement in the amount of $3,000 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 April 29, 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 $0.0006 per
share. This note is currently in default due to non payment of
principal and interest.
In
November of 2018, the Company entered into a convertible promissory
note agreement in the amount of $2,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May 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 $0.0008 per share.
In
November of 2018, the Company entered into a convertible promissory
note agreement in the amount of $8,000 with an individual who is
related to the Company’s CEO. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May 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 $0.0008 per share.
Note Conversions
During
the year ended December 31, 2018, two different lenders converted
their outstanding principal and accrued interest into shares of the
Company’s common stock. Upon these conversions, the Company
issued an aggregate of 16,759,497 for $18,546 of principal balance
and $930 of accrued interest.
Shareholder Loans
At
December 31, 2018, the Company had eight loans outstanding to its
CEO totaling $6,548, consisting of a loan in the amount of $468
with a 6% annual rate of interest, a loan in the amount of $1,500
at 2% rate of interest and an option to convert the loan into
restricted shares of the Company’s common stock at $0.0005,
and the remaining six loans of $4,580 at 1% rate of
interest.
F-19
Convertible Notes Payable and Notes Payable, in
Default
As of
the date of this filing a total of $831,800 convertible notes
payable and notes payable are considered to be in default. Of this
amount $374,500 is with related parties. Certain convertible notes
payable and notes payable that are not paid upon maturity require
the Company to issue restricted common stock as a penalty for
nonpayment. During the year ended December 31, 2018, the Company
issued 36,000,000 and as 10,000,000 shares to be issued of
restricted common stock due to this nonpayment penalty and recorded
additional interest expense of $59,400 for the fair value of the
common stock shares determined on the date of
issuance.
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 it’s 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
In
February of 2018, the Company entered into an agreement with an
individual to join the Company’s advisory council. Under the
terms of 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 agreements is for one year.
In consideration for the performance of the advisory services, the
Company agreed to issue the advisor 4,250,000 shares of the
Company’s restricted common stock valued at approximately
$4,250. Per the terms of the agreement the shares vest at a rate of
1/12th of the amount per month over the term of the
agreement. If the advisor or the Company terminates the
advisory council agreement prior to the expiration of the one year
term, then the advisor has agreed to return to the Company for
cancellation any portion of the shares that have not vested. Under
the advisory council agreements, the Company has agreed to
reimburse the advisor for preapproved expenses.
F-20
In
February of 2018, the Company entered into a consulting agreement
with a consultant to advise the Company regarding certain
technologies. The Company issued 1,000,000 shares of its restricted
common stock to the consultant for the services. The consultant
agreed that all work performed under the agreement including
business and strategic plans and proposals works-made-for-hire
under U.S. copyright law and such works shall be the property of
the Company.
In
February of 2018, the Company entered into a subscription agreement
to sell 10,000,000 shares of restricted common stock to two
individuals in exchange for proceeds of $25,000. The Company also
agreed that the purchaser will be entitled to receive $125,000 of
treasure of their choice after both the Company has recovered a
minimum of $1,750,000 of artifacts/treasure and the State of
Florida has received its full share of treasure per any permits or
agreements. The purchaser will have the right to convert up to a
maximum of $125,000 worth of treasure that they have received into
shares of the Company’s restricted common stock at a discount
of 10% of the average trading price of the Company’s common
stock of the previous five days closing price provided that the
Company’s common stock is trading at or above $0.04 by
providing a written notice to the Company. The conversion option
will expire eighteen months after the Company first locates a
minimum of $1,750,000 worth of treasure. The value of any treasure
recovered will be determined by a mutually agreed upon third party
who is a recognized expert in the valuation of historic
artifacts.
In
March of 2018, the Company entered into an agreement with a
corporation to join the Company’s advisory council. Under the
terms of 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 agreements is for one year.
In consideration for the performance of the advisory services, the
Company agreed to issue the advisor 4,000,000 shares of the
Company’s restricted common stock valued at approximately
$3,600. Per the terms of the agreement the shares vest at a rate of
1/12th of the amount per month over the term of the agreement. If
the advisor or the Company terminates the advisory council
agreement prior to the expiration of the one year term, then the
advisor has agreed to return to the Company for cancellation any
portion of the shares that have not vested. Under the advisory
council agreements, the Company has agreed to reimburse the advisor
for preapproved expenses.
In
April of 2018, the Company extended the term of a previous
agreement with two individuals who are related to the
Company’s CEO tocontinue serving as members of the
Company’s Board of Directors. 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 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 individuals via payment of 23,000,000 restricted
shares of its common stock each, a total of 46,000,000 shares, and
to negotiate future compensation on a year-by-year basis. The
Company also agreed to reimburse the individuals for preapproved
expenses.
In
April of 2018, the Company paid one of its consultants 22,833,000
of its restricted common stock in lieu of $15,983 cash for various
technology consulting services and research into certain
technologies for use in the Company’s
operations.
In
April of 2018, the Company issued 25,000,000 shares of restricted
common stock to one of its consultants. The Company believes that
the consultant has provided services at below market rates of
compensation and on favorable terms to the Company, including a
willingness to defer being paid cash for services for periods of
time. The shares were paid both as a partial adjustment to more
fairly compensate the consultant and as a bonus and inducement for
the consultant to continue to provide services to the Company under
terms that are favorable to the Company.
In
April of 2018, the Company issued 1,500,000 shares of restricted
common stock to one of its consultants. The Company believes that
the consultant has provided services at below market rates of
compensation and on favorable terms to the Company, including a
willingness to defer being paid cash for services for periods of
time. The shares were paid both as a partial adjustment to more
fairly compensate the consultant and as a bonus and inducement for
the consultant to continue to provide services to the Company under
terms that are favorable to the Company.
In
April of 2018, the Company issued a consultant 8,000,000 shares of
restricted common stock for providing various project management
services related to the Company’s shipwreck exploration and
recovery services. The Company believes that the consultant
has provided services at below market rates of compensation and on
favorable terms to the Company, including a willingness to defer
being paid cash for services for periods of time. The shares were
paid both as a partial adjustment to more fairly compensate the
consultant and as a bonus and inducement for the consultant to
continue to provide services to the Company under terms that are
favorable to the Company.
F-21
In
April of 2018, the Company entered into agreements with six
separate individuals to either join or rejoin the Company’s
advisory council. Under the advisory council agreements all of 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 agreements is for one year. In consideration for
the performance of the advisory services, the Company agreed to
issue the advisors shares of the Company’s restricted common
stock including 5,000,000 to one of the advisors, 4,000,000 shares
each to three of the advisors, 2,000,000 shares to one of the
advisors, and 1,000,000 shares to one of the advisors, an aggregate
total of 20,000,000 restricted shares. According to the agreements
each of the advisors’ shares vest at a rate of 1/12 th of the
amount per month over the term of the agreement. If any of the
advisors or the Company terminates the advisory council agreements
prior to the expiration of the one year terms, then each of the
advisors whose agreement has been terminated has agreed to return
to the Company for cancellation any portion of their shares that
have not vested. Under the advisory council agreements, the Company
has agreed to reimburse the advisors for pre approved
expenses.
In
April of 2018, the Company agreed to provide to an individual who
had previously joined the Company’s advisory council an
additional 5,000,000 shares of restricted common stock for
extending the advisory council agreement and for efforts above and
beyond the services agreed to in the original advisory council
agreement.
In
April of 2018, the Company entered into a consulting agreement with
an individual for the purpose of contract management in the fields
of film and media. Under the terms of the agreement the Company
issued 500,000 shares of its restricted common stock to the
consultant for services. The Company also agreed to reimburse the
consultant for pre-approved expenses incurred in conjunction with
the performance of the services.
In
April of 2018, the Company entered into a consulting agreement with
a consultant to advise the Company regarding certain technologies.
The Company issued 2,000,000 shares of its restricted common stock
to the consultant for the services. The consultant agreed that all
work performed under the agreement including business and strategic
plans and proposals works-made-for-hire under U.S. copyright law
and such works shall be the property of the Company.
In
April of 2018, the Company entered extend a previous consulting
agreement with an individual for the purpose of contract management
in the fields of film and media. Under the terms of the agreement
the Company issued 3,500,000 million shares of its restricted
common stock to the consultant for services. The Company also
agreed to reimburse the consultant for pre-approved expenses
incurred in conjunction with the performance of the
services.
In
April of 2018, the Company entered into a consulting agreement with
a consultant to advise the Company regarding certain technology
strategies with regards to the Company’s business. The
Company issued 2,000,000 shares of its restricted common stock to
the consultant for the services. The consultant agreed that all
work performed under the agreement including business and strategic
plans and proposals works-made-for-hire under U.S. copyright law
and such works shall be the property of the Company.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its archeological consultants.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its independent contractors involved in its diving
operations.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its business advisory consultants.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its business advisory consultants.
In June
of 2018, the Company agreed to issue 500,000 shares as a bonus to
one of its advisory council members.
F-22
In June
of 2018, the Company entered into a consulting agreement with a
consultant to advise the Company regarding certain technologies.
The Company issued 6,000,000 shares of its restricted common stock
to the consultant for the services. The consultant agreed that all
work performed under the agreement including business and strategic
plans and proposals are the property of the Company.
In July
of 2018, the Company entered into an assignment of rights agreement
under which an individual agreed to assign all of the patent
rights, including right, title and interest to an original
inventive concept for a system for detecting precious metals buried
beneath the ocean floor to the Company.
In July
of 2018 the Company entered into an independent contractor
agreement with an individual for social media and website
management. Under the terms of the agreement the Company agreed to
pay $25,000 and issue 5,000,000 shares of restricted common stock
to the independent contractor for the services. Additionally the
Company agreed to pay an additional 1,500,000 shares and $1,500 per
month until the fee is paid in full and reimburse the independent
contractor for pre approved expenses. The agreement is effective
until the services are completed as determined by the Company.
During the year ended December 31, 2018, the Company issued the
independent contractor a total of 12,500,000 share its restricted
common stock in conjunction with the independent contractor
agreement.
In
August of 2018 the Company agreed to issue 60,000,000 shares of its
restricted common stock to a private corporation under a share
exchange agreement (see Note 5, Investment in Probability and
Statistics, Inc.).
In
September of 2018 the Company entered into an independent
contractor agreement with a limited liability company for
technology development services. Under the terms of the agreement
the Company agreed to pay $1,500 per month and reimburse the
independent contractor for pre approved expenses. The agreement is
effective until the services are completed as determined by the
Company.
In
October of 2018 the Company issued a total of 6,000,000 shares of
its restricted common stock to a consultant for business consulting
services for government contracting.
During
the year ended December 31, 2018 the Company issued 45,000,000
total shares of its restricted common stock to the holder of a
promissory note dated March 7, 2018 as a financing fee for not
repaying the loan.
In
October of 2018, the Company entered into an agreement with two
individuals to join the its Board of Directors. 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 Directors by providing
written notice to the other party. The 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 individuals via payment of 20,000,000 restricted
shares of its common stock each, an aggregate total of 40,000,000
shares, and to negotiate future compensation on a year-by-year
basis. The Company also agreed to reimburse the individuals for
preapproved expenses.
F-23
In
November of 2018, the Company paid one of its consultants
36,363,363 shares of its restricted common stock valued at $47,272
to settle an invoice for various technology consulting services and
research of design of certain technologies for use in the
Company’s operations.
In
November of 2018, the Company paid one of its independent
contractors 6,942,857 shares of its restricted common stock to
settle invoices in the amount of $4,860 for services rendered for
the Company’s dive operations. These shares were not yet
issued as of December 31, 2018.
In
December of 2018, the Company paid one of its consultants 9,875,000
shares of its restricted common as payment for business consulting
and advisory services.
In
December of 2018 the Company issued a total of 10,250,000 shares of
restricted common stock to six independent contractors who provide
various services relating to the Company’s diving operations.
The shares were issued as retention bonuses as well to induce the
consultants to continue to provide services on favorable terms to
the Company.
In
December of 2018, the Company issued 5,000,000 shares of restricted
common stock to one of its consultants who provides various
strategic and business consulting services, assistance with
financial reporting, IT management and administrative services. The
Company believes that the consultant has provided services at below
market rates of compensation and on favorable terms to the Company,
including a willingness to defer being paid cash for services for
periods of time. The shares were paid both as a partial adjustment
to more fairly compensate the consultant and as a bonus and
inducement for the consultant to continue to provide services to
the Company under terms that are favorable to the
Company.
In
December of 2018, the Company issued 1,000,000 shares of restricted
common stock to one of its consultants who provides administrative
support and business consulting services. The Company believes that
the consultant has provided services at below market rates of
compensation and on favorable terms to the Company, including a
willingness to defer being paid cash for services for periods of
time. The shares were paid both as a partial adjustment to more
fairly compensate the consultant and as a bonus and inducement for
the consultant to continue to provide services to the Company under
terms that are favorable to the Company.
In
December of 2018, the Company issued 2,000,000 shares of restricted
common stock to one of its consultants who provides various
accounting and business consulting services. The Company believes
that the consultant has provided on favorable terms to the Company,
including a willingness to defer being paid cash for services for
periods of time. The shares were paid both as a partial adjustment
to more fairly compensate the consultant and as a bonus and
inducement for the consultant to continue to provide services to
the Company under terms that are favorable to the
Company.
In
December of 2018, the Company issued 1,000,000 shares of restricted
common stock to one of its vendors who provides Edgar filing
services. The Company believes that the vendor has provided on
favorable terms to the Company, including a willingness to defer
being paid cash for services for periods of time. The shares were
paid both as a partial adjustment to more fairly compensate the
consultant and as a bonus and inducement for the consultant to
continue to provide services to the Company under terms that are
favorable to the Company.
In
December of 2018, 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 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 advisor 2,000,000 shares of restricted common stock.
According to the agreements the advisor’s shares vest at a
rate of 166,667 shares per month over the term of the agreement. If
the advisor or the Company terminates the advisory council
agreement prior to the expiration of the one year term, the advisor
has 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 advisor for pre
approved expenses.
During the year ended December 31, 2018 the Company issued a total
of 45,000,000 shares of its restricted common stock valued at
$58,850 to the holder of a promissory note dated March 7, 2018 as a
financing fee for non payment of the loan’s principal
balance. At December 31, 2018 10,000,000 shares of common stock
remain to be issued.
F-24
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
consultant a minimum of $3,000 per month to periodically 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 background research including background checks
and provide investigative information on individuals and companies
as requested by the Company 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 on an as needed basis. The services are provided under the
direction and supervision of the Company’s CEO. During the
year ended December 31, 2018 the Company paid the related party
limited liability consultant $39,100. At December 31, 2018
the Company owed the related party limited liability company
$11,150 for services rendered.
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 year ended December 31, 2018 the Company paid the
related party limited liability consultant $400. At December 31,
2018 the Company owed the related party limited liability company
$4,385 for services rendered.
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 consulting agreement to pay an individual a
minimum of $5,000 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.
During the year ended December 31, 2018, the company issued an
aggregate total of 280,071,363 shares of its restricted common
stock and has 6,942,857 shares to be issued valued at $319,100 for
services.
NOTE 9 – 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.
F-25
NOTE 10 – RELATED PARTY TRANSACTIONS
During
the years ended December 31, 2018 and 2017 the Company has had
extensive dealings with related parties:
In
January of 2017, the Company entered into a convertible promissory
note agreement in the amount of $5,000 with an individual who is
related to the Company’s CEO. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before March 12, 2017. The Company paid the related party
lender a loan origination fee of 1,000,000 shares of its restricted
common stock. The note is not secured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0005 per share. This note is
currently in default due to non payment of principal and
interest.
In
February of 2017, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before August 14, 2017. The note is not secured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.00075 per
share. The related party lender received 33,333,333
warrants to purchase shares of the Company’s common stock at
a price of $0.005.
This
note is currently in default due to non payment of principal and
interest.
In
February of 2017, the Company extended the term of a previous
agreement with two individuals who are related to the
Company’s CEO to continue serving as a member of the
Company’s Board of Directors. Under the agreement, the
Director 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 agreement also terminates
automatically upon the death, resignation or removal of the
Directors. Under the terms of the agreement, the Company agreed to
pay the Director 20,000,000 restricted shares of its common stock
each, 40,000,000 total shares, and to negotiate future compensation
on a year-by-year basis. The Company also agreed to reimburse the
Directs or for preapproved expenses.
In
March of 2017, the Company repaid $4,000 to its CEO in order to
repay a portion of the principal balance of a loan the CEO had
previously provided to the Company.
In
April of 2017, the Company repaid $2,000 to its CEO in order to
repay a portion of the principal balance of a loan the CEO had
previously provided to the Company.
In May
of 2017, the Company repaid $2,000 to its CEO in order to repay a
portion of the principal balance of a loan the CEO had previously
provided to the Company.
In July
of 2017, the Company’s CEO provided a loan to the Company in
the amount of $2,600. The loan pays interest at the rate of 1% per
annum. The loan was due on or before October 12, 2017.
In July
of 2017, the Company’s CEO provided a loan to the Company in
the amount of $3,000. The loan pays interest at the rate of 1% per
annum. The loan was due on or before July 13, 2017.
In
August of 2017, the Company’s CEO provided a loan to the
Company in the amount of $500. The loan pays interest at the rate
of 1% per annum. The loan was due on or before August 25,
2017.
In
August of 2017, the Company’s CEO provided a loan to the
Company in the amount of $400. The loan pays interest at the rate
of 1% per annum. The loan was due on or before August 25,
2017.
In
August of 2017, the Company entered into a promissory note
agreement in the amount of $2,500 with a related party. This loan
paid interest at a rate of 6% per annum and the principal and
accrued interest were due on or before August 16, 2017. The related
party lender received 250,000 shares of the Company’s
restricted common stock as a loan origination fee. This note is
currently in default due to non payment of principal and
interest.
In
August of 2017, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with an individual who is
both a related to party and a member of the Company’s Board
of Directors. This loan pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before September
16, 2017. The note is not secured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0008 per share. This note is currently in
default due to non payment of principal and interest.
F-26
In
October of 2017, the Company entered into a promissory note
agreement in the amount of $2,500 with a related party. This loan
paid interest at a rate of 6% per annum and the principal and
accrued interest were due on or before October 23, 2017. The
related party lender received 200,000 shares of the Company’s
restricted common stock as a loan origination fee. This note is
currently in default due to non payment of principal and
interest.
In
November of 2017, the Company entered into a promissory note
agreement in the amount of $26,250 with a related party. This loan
paid interest at a rate of 6% per annum and the principal and
accrued interest were due on or before December 2, 2017. The
related party lender received 2,000,000 shares of the
Company’s restricted common stock as a loan origination fee.
This note is currently in default due to non payment of principal
and interest.
During the year ended December 31,
2017 the Company had an informal 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 consultant a
minimum of $3,000 per month 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.
During the year ended December 31, 2017 the Company paid related
party limited liability Company $46,000. The consultant provides
the services under the direction and supervision of the
Company’s CEO.
During
the year ended December 31, 2017 the Company had 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 year ended
December 31, 2017 the Company paid the related party transfer
agency $8,561.
In
January of 2018, the Company entered into a convertible promissory
note agreement in the amount of $12,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest is due
on or before January 9, 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 $0.0006 per
share.
In
January of 2018 the Company repaid $26,250 or principal and $505 of
accrued interest to a related party lender in order to satisfy a
convertible promissory note. At December 31, 2018 the principal
balance of the note was $0.
In
January of 2018, the Company entered into a promissory note
agreement in the amount of $25,000 with a related party. This note
pays interest at a rate of 6% per annum and the principal and
accrued interest were due on or before March 2, 2018. The related
party lender received 2,000,000 shares of the Company’s
restricted common stock as a loan origination fee. The Company
agreed that if the note was not repaid in full by March 2, 2018
then the interest rate on the note would increase to 10% after that
date until the note is paid in full and the Company would be
obligated to pay an additional 1,000,000 shares of the Company
restricted common stock to the related party lender. This note was
repaid and the balance owed at December 31, 2018 was
$0.
In
February of 2018, the Company entered into a promissory note
agreement in the amount of $1,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 9, 2018. This note is currently in default due
to non payment of principal and interest. The note is
unsecured.
In
March of 2018, the Company’s CEO provided a loan to the
Company in the amount of $500. The loan pays interest at the rate
of 1% per annum. The loan was due on or before April 6, 2018. This
loan is currently in default due to non payment of principal and
interest.
In
March of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May14, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 4, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
F-27
In
April of 2018, the Company extended the term of a previous
agreement with two individuals who are related to the
Company’s CEO tocontinue serving as members of the
Company’s Board of Directors. 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 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 individuals via payment of 23,000,000 restricted
shares of its common stock each, a total of 46,000,000 shares, and
to negotiate future compensation on a year-by-year basis. The
Company also agreed to reimburse the individuals for preapproved
expenses.
In
April of 2018, the Company’s CEO provided a loan to the
Company in the amount of $400. The loan pays interest at the rate
of 1% per annum. The loan was due on or before May 4,
2018.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 11, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per share. This
note is currently in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 15, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee and a $1,250 financing fee. This note was
repaid and the balance owed at December 31, 2018 was
$0.
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 4, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee. This note is currently in default due to
non payment of principal and interest. The note is
unsecured.
In
April of 2018 the Company repaid $25,000 of principal and $479 of
accrued interest to a related party lender in order to satisfy a
convertible promissory note. At December 31, 2018 the principal
balance of the note was $0.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before July 8, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In May
of 2018, the Company repaid $440 in principal plus $3 in accrued
interest to its CEO in order to repay a loan the CEO had previously
provided to the Company. The loan balance at December 31, 2018 was
$0.
In May
of 2018, the Company repaid $500 in principal plus $4 in accrued
interest to its CEO in order to repay a loan the CEO had previously
provided to the Company. The loan balance at December 31, 2018 was
$0.
In May
of 2018, the Company’s CEO provided a loan to the Company in
the amount of $4,000. The loan pays interest at the rate of 1% per
annum. This loan was repaid and the balance owed at December 31,
2018 was $0.
In May
of 2018, the Company repaid $400 in principal plus $1 in accrued
interest to its CEO in order to repay a loan the CEO had previously
provided to the Company. The loan balance at December 31, 2018 was
$0.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before August, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $3,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 12, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per
share.
F-28
In June
of 2018, the Company’s CEO provided a loan to the Company in
the amount of $200. The loan pays interest at the rate of 1% per
annum. The loan was due on or before July 14, 2018.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $500 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 20, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per
share.
In July
of 2018, the Company’s CEO provided a loan to the Company in
the amount of $800. The loan pays interest at the rate of 1% per
annum. The loan was due on or before August 11, 2018. This loan is
currently in default due to non payment of principal and
interest.
In July
of 2018, the Company’s CEO provided a loan to the Company in
the amount of $480. The loan pays interest at the rate of 1% per
annum. The loan was due on or before August 19, 2018. This loan is
currently in default due to non payment of principal and
interest.
In
August of 2018, the Company entered into a convertible promissory
note agreement in the amount of $2,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before February 27, 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 $0.0007 per
share.
In
September of 2018, the Company’s CEO provided a loan to the
Company in the amount of $600. The loan pays interest at the rate
of 1% per annum. The loan was due on or before October 10, 2018.
This loan is currently in default due to non payment of principal
and interest.
In
October of 2018, the Company’s CEO provided a loan to the
Company in the amount of $200. The loan pays interest at the rate
of 1% per annum. The loan was due on or before November, 2018. This
loan is currently in default due to non payment of principal and
interest.
In
October of 2018, the Company entered into a convertible promissory
note agreement in the amount of $1,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 2, 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 $0.0008 per share. This
note is currently in default due to non payment of principal and
interest.
In
October of 2018, the Company entered into a convertible promissory
note agreement in the amount of $4,200 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 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 $0.0008 per
share.
In
November of 2018, the Company’s CEO provided a loan to the
Company in the amount of $150. The loan pays interest at the rate
of 0% per annum. The loan had no maturity date and was repaid prior
to December 31, 2018.
In
November of 2018, the Company entered into a convertible promissory
note agreement in the amount of $2,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May 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 $0.0008 per share.
In
November of 2018, the Company entered into a convertible promissory
note agreement in the amount of $8,000 with an individual who is
related to the Company’s CEO. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May 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 $0.0008 per share.
On
various dates during the year ended December 31, 2018 the Company
repaid its CEO a total of $20,568 principal and accrued interest
for various outstanding loans.
F-29
During
the year ended December 31, 2018 the Company had 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 consultant a minimum of $3,000 per
month to periodically 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 background
research including background checks and provide investigative
information on individuals and companies as requested by the
Company 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 on an as needed
basis. The services are provided under the direction and
supervision of the Company’s CEO. During the year ended
December 31, 2018 the Company paid the related party limited
liability consultant $39,100. At December 31, 2018 the Company owed
the related party limited liability company $11,150 for services
rendered.
During
the year ended December 31, 2018, 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 year ended
December 31, 2018 the Company paid the related party limited
liability consultant $400. At December 31, 2018 the Company owed
the related party limited liability company $4,385 for services
rendered.
At December 31, 2018 and 2017 the following promissory notes and
convertible promissory notes were outstanding to related
parties:
See
Note 8 convertible notes payable and notes payable - related
parties and related parties in default.
NOTE 11 - SUBSEQUENT EVENTS
Per the
Company’s form 8-K filed on February 19, 2019, on February
15, 2019 the Board of Directors, pursuant to Section 607.0704,
Florida Statutes, with the Board of Directors acting as
shareholders of the Preferred Shares and pursuant to their own
resolution, voted to increase the authorized shares of the
Corporation from 3,900,000,000 common shares to 4,900,000,000
common shares. Such filing was processed to be effective with the
State of Florida on February 15, 2019.
Subsequent
to December 31, 2018 the Company sold or issued shares of its
common stock as follows (
unaudited):
|
(i)
|
sales
of 381,350,001 shares of common stock, used for general corporate
purposes, working capital and repayment of some debt;
|
|
(ii)
|
issuance
of 93,220,616 shares of common stock for services;
|
|
(iii)
|
issuance
of 8,227,795 shares of common stock for conversion and satisfaction
of accounts payable; and
|
| (iv) | issuance of 15,000,000 shares of common stock for loan financing fees. |
F-30
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures.
On
December 19, 2018 Seafarer Exploration Corp. (the Company) was
notified by Daszkal Bolton, LLP (“DB”), the Company's
independent accounting firm at the time, that DB had elected to
cease its services as the PCAOB auditors for the Company. On
January 8, 2019, the Company engaged D. Brooks and Associates
CPA’s, P.A. as its new independent accounting
firm.
Item 9A. Controls and Procedures.
(a) Management’s Annual Report on Internal Control
over Financial Reporting.
Management’s Responsibility for Controls and
Procedures
The
Company’s management is responsible for establishing and
maintaining adequate internal control over the Company’s
financial reporting. The Company’s controls over financial
reporting are designed under the supervision of the Company’s
Principal Executive Officer and Principal Financial Officer to
ensure that information required to be disclosed by the Company in
the reports that the Company files or submits under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
is accumulated and communicated to the Company’s management,
including the Company’s principal executive officer and
principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding
required disclosure.
Evaluation of Disclosure Controls and Procedures
Under
the supervision and with the participation of our principal
executive officer, the Company conducted an evaluation of the
effectiveness of the design and operation of its disclosure
controls and procedures, as such term is defined under Rule
13a-15(e) promulgated under the Exchange Act, as of December 31,
2018. Based on this evaluation, management
concluded that our financial disclosure controls and procedures
were not effective so as to timely record, process, summarize and
report financial information required to be included on our
Securities and Exchange Commission (“SEC”) reports due
to the Company’s limited internal resources and lack of
ability to have multiple levels of transaction
review. However, as a result of our evaluation and
review process, management believes that the financial statements
and other information presented herewith are materially
correct.
Internal Control Over Financial Reporting
As of
December 31, 2018, under the supervision and with the participation
of our management, we conducted an evaluation of the effectiveness
of the design and operations of our internal control over financial
reporting, as defined in Rules 13a-15(f) or 15d-15(f) promulgated
under the Securities Exchange Act of 1934 and based on the criteria
for effective internal control described in
Internal
Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (as revised). Based on our evaluation,
management concluded that our internal control over financial
reporting was not effective so as to timely record, process,
summarize and report financial information required to be included
on our Securities and Exchange Commission (“SEC”)
reports due to the Company’s limited internal resources and
lack of ability to have multiple levels of transaction
review. However, as a result of our evaluation and
review process, management believes that the financial statements
and other information presented herewith are materially
correct.
The
management including its Principal Executive Officer/Principal
Financial Officer, does not expect that its disclosure controls and
procedures, or its internal controls over financial reporting will
prevent all error and all fraud. A control system no
matter how well conceived and operated, can provide only reasonable
not absolute assurance that the objectives of the control system
are met. Further, the design of the control system must
reflect the fact that there are resource constraints, and the
benefit of controls must be considered relative to their
costs.
Because
of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been
detected.
The
Company has limited resources and as a result, a material weakness
in financial reporting currently exists, because of our limited
resources and personnel, including those described
below.
|
*
|
The
Company has an insufficient quantity of dedicated resources and
experienced personnel involved in reviewing and designing internal
controls. As a result, a material misstatement of the interim and
annual financial statements could occur and not be prevented or
detected on a timely basis.
|
|
*
|
We have
not achieved the optimal level of segregation of duties relative to
key financial reporting functions.
|
23
|
*
|
We do
not have an audit committee or an independent audit committee
financial expert. While not being legally obligated to have an
audit committee or independent audit committee financial expert, it
is the managements view that to have audit committee, comprised of
independent board members, and an independent audit committee
financial expert is an important entity-level control over the
Company's financial statements.
|
A
material weakness is a deficiency (within the meaning of the Public
Company Accounting Oversight Board (PCAOB) auditing standard 5) or
combination of deficiencies in internal control over financial
reporting such that there is a reasonable possibility that a
material misstatement of the Company's annual or interim financial
statements will not be prevented or detected on a timely basis.
Management has determined that a material weakness exists due to a
lack of segregation of duties, resulting from the Company's limited
resources and personnel.
Remediation Efforts to Address Deficiencies in Internal Control
Over Financial Reporting
As a
result of these findings, management, upon obtaining sufficient
capital and operations, intends to take practical, cost-effective
steps in implementing internal controls, including the possible
remedial measures set forth below. As of December 31,
2018 we did not have sufficient capital and/or operations to
implement any of the remedial measures described
below.
|
*
|
Assessing
the current duties of existing personnel and consultants, assigning
additional duties to existing personnel and consultants, and, in a
cost effective manner, potentially hiring additional personnel to
assist with the preparation of the Company's financial statements
to allow for proper segregation of duties, as well as additional
resources for control documentation.
|
|
*
|
Assessing
the duties of the existing officers of the Company and, in a cost
effective manner, possibly promote or hire additional personnel to
diversify duties and responsibilities of such executive
officers.
|
|
*
|
Board
to review and make recommendations to shareholders concerning the
composition of the Board of Directors, with particular focus on
issues of independence. The Board of Directors will consider
nominating an audit committee and audit committee financial expert,
which may or may not consist of independent members.
|
|
*
|
Interviewing
and potentially hiring outside consultants that are experts in
designing internal controls over financial reporting based on
criteria established in Internal Control Integrated Framework
issued by Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(“COSO”) (as revised).
|
This
annual report does not include an attestation report of our
registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to
attestation by our registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only
management’s report in this annual report.
(b) Change in Internal Control Over Financial
Reporting
The
Company has not made any change in our internal control over
financial reporting during the year ended December 31,
2018.
Item 9B. Other Information.
None.
24
PART III
Item 10. Directors, Executive Officers and Corporate
Governance.
|
Name
|
Age
|
Position
|
|
Kyle Kennedy
|
59
|
President, CEO, Chairman of the Board
|
|
Charles Branscumb
|
58
|
Director
|
|
Robert L. Kennedy
|
67
|
Director
|
|
Bradford Clark
|
49
|
Director
|
|
Thomas Soeder
|
72
|
Director
|
Kyle Kennedy
President, Chief Executive Officer, Chairman of the
Board
In
2001, Mr. Kennedy co-founded Spartan Group Holdings, Inc., a group
of companies offering security sales and trading and investment
banking services. In 2003, Mr. Kennedy was also one of the founders
of Island Stock Transfer, a securities transfer and processing
company. Prior experience includes: August 1995 to Present –
President of Kennedy and Associates, Business Consultants; March
1998 to December 1998 – Vice President Corporate Finance,
Palm State Equities, Inc.; January 1999 to September 1999 –
Vice President Investment Banking, 1st American Investment Banking;
September 1999 to May 2000 – President and CEO, Nowtrade
Corp. Mr. Kennedy is a senior financial executive, CEO, and
President, with over 28 years of experience in the brokerage
business. He has held the following licenses: Series 3, 4, 5, 7,
52, 63, 24 and 55. He created, built and co-managed over $400
million of assets in money management, with specific focus in
equity analysis. Mr. Kennedy’s public company experience
includes his position as Executive Vice President and ultimately,
acting President, of a public holding company with four diverse
operating entities. He performed the day to day operations of the
company and management. He was directly responsible for the
turnaround of this complex, diverse holding company and
successfully developed and implemented a creditor workout plan,
negotiating with over 100 creditors, collection agencies and
attorneys.
Charles Branscum
Director
Mr.
Branscum has spent most of his professional career working for
Arkansas Steel Associates, LLC (“ASA”). Mr. Branscum is
currently the rolling mill foreman for ASA.
Robert L. Kennedy
Director
Dr. Robert L. "Rob"
Kennedy began his professional career as a mathematics teacher with
Horace Mann Junior High School in Little Rock, Arkansas. Returning
to graduate school, he taught calculus in the mathematics
department as a teaching assistant (TA) at the University of
Nebraska in Lincoln (UNL). Following his work at UNL, he taught
mathematics at Kirkwood Community College in Cedar Rapids, Iowa.
Upon entering a doctoral program at the University of Missouri,
Columbia, he taught undergraduate and graduate courses in
mathematics and statistics as a TA. His Ph.D. was awarded in Higher
Education with majors in Educational Psychology and Mathematical
Statistics. After graduation, Dr. Kennedy taught basic, advanced,
and multivariate statistics in a doctoral education program at the
University of Arkansas at Little Rock. With a move to the
University of Arkansas for Medical Sciences (UAMS), he continued
teaching comparable courses in the Ph.D. nursing program. After
twelve years, Dr. Kennedy retired as a Professor in the Office of
Educational Development of UAMS after serving for a time as
Clinical Professor and Chair of the Department of Nursing Science,
and Director of the Scholarship and Research Center, all with UAMS.
He has worked in the areas of evaluation, research, statistics, and
technology in several universities, including those mentioned
above, as well as Western Kentucky University, the University of
Central Arkansas, and as an adjunct with the University of Central
Michigan and the University of Memphis. He has consulted with
numerous school districts and businesses, done extensive research
and documentation, and is a past president of both the MidSouth
Educational Research Association and the Mid-South Educational
Research Foundation.
Bradford Clark
Director
Mr.
Clark is a six-year veteran of the Air National Guard where he
achieved the rank senior airman. Mr. Clark has owned and operated
several lawn maintenance companies over the past thirty-seven
years. Mr. Clark works with businesses to help them to increase
efficiency and facilitate changes designed to enhance their
business model and encourage growth. Mr. Clark holds a Bachelor of
Business Administration in Management, University of Arkansas
Little Rock.
25
Thomas Soeder
Director
Tom
Soeder has approximately forty-nine years of experience in computer
sales, systems and management responsibilities across all market
segments, most product groups, and the full range of sales
channels. As an Avnet account manager, Mr. Soeder concentrated his
efforts primarily on federal government business working with prime
and subcontractors, winning over thirty new projects. With his
teaming efforts on ECS3, Mr. Soeder brought to Avnet the first
commodities based subcontract worth over $600 billion in hardware
dollars over ten years. Tom achieved Presidents Club two years
running. Mr. Soeder also served Avnet as its Mid Atlantic business
development manager. Additionally, Mr. Soeder also supported the
team as a systems engineer covering Motorola and Intel
designs.
Family Relationships
Charles
Branscum and Robert L. Kennedy are both related to Seafarer’s
CEO, Kyle Kennedy.
Director Positions in Other Public Companies
No
director holds any directorship in a company with a class of
securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934 or subject to the requirements of Section
15(d) of such Act. No director holds any directorship in a company
registered as an investment company under the Investment Company
Act of 1940.
Code of Conduct
As the
Board of Directors only has three directors, no Audit or Strategy
Committee has been established. The Company does not have a
standing nominating committee or any committee performing a similar
function. For the above reasons, the Company has not adopted a code
of ethics although the Company intends to adopt a code of
ethics.
The
Company believes that its future success will depend on the
abilities and continued service of its CEO, Kyle Kennedy, and some
of its consultants. If the Company were to lose the services of Mr.
Kennedy it may be very likely that the Company would be severely
harmed and its business adversely affected. The Company also has
several key consultants who have been very instrumental in the
growth and development of the Company, particularly in the areas of
archeological research and diving operations, corporate financial
consulting, strategic planning and corporate advisory services and
the Company believes that it is very important to its long-term
success to retain the services of these consultants.
Item 11. Executive Compensation.
Officers Summary Compensation Table
|
Name
and Principal Position
|
Period End
|
Salary ($)
|
Bonus ($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Non-qualified
Deferred Compensation Earnings
($)
|
All Other Compensation
($)
|
Total
($)
|
|
Kyle
Kennedy
(1)
|
12/31/18
|
--
|
--
|
--
|
--
|
--
|
--
|
$
1,318
|
$
1,318
|
|
12/31/17
|
--
|
--
|
--
|
--
|
--
|
--
|
$
4,404
|
$
4,404
|
|
|
(1)
|
The Company does not pay a salary, bonus or stock compensation to
Mr. Kennedy. The Company does not accrue any salary, stock based
compensation, benefits or other compensation on behalf of Mr.
Kennedy. Mr. Kennedy did not receive any stock based compensation
during the years ended December 31, 2018 and 2017. The
Company’s Board of Directors has agreed that the Company will
provide a salary and other compensation to Mr. Kennedy at some
future point in time. During the years ended December 31, 2018 and
2017 the Company paid $1,318 and $4,404 respectively in health
insurance premiums for Mr. Kennedy. As a part of his duties as CEO,
Mr. Kennedy is required to travel extensively on Company business
as the Company’s diving operations are located on the East
Coast of Florida and the Company’s headquarters are located
on the West Coast of Florida. The Company determined that it would
be less expensive for Mr. Kennedy to use his personal vehicle to
travel on Company business rather than to lease a car for him. In
lieu of leasing a car for Mr. Kennedy to use for Company business,
Mr. Kennedy uses his own vehicle. The Company provides Mr. Kennedy
with periodic expense advances and reimbursements, including travel
reimbursements for mileage and fuel for the use of his vehicle for
Company business and reimburses him for various other Company
business related expenses. The Company reimbursed or advanced to
Mr. Kennedy $15,753 in 2018 and $9,794 in 2017 for travel related
expenses and other Company expenses. The Company also paid $4,011
in 2018 and $4,037 in 2017 for Mr. Kennedy’s cellular
telephone, text, and wireless data plan.
|
26
Officer Compensation
The Company does not have a formal compensation plan in place for
its officer.
Directors Summary Compensation Table
The
following table shows the fees paid to the Company’s Board of
Directors for the year ending December 31, 2018 and 2017 for their
work as members of the Board of Directors:
|
Name and Principal Position
|
Period End
|
Salary ($)
|
Bonus ($)
|
Stock Awards ($)
|
Option Awards ($)
|
Non-Equity Incentive Plan Compensation ($)
|
Non-qualified Deferred Compensation Earnings ($)
|
All Other Compensation ($)
|
Total ($)
|
|
Kyle
Kennedy
(1)
|
12/31/2018
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|
|
12/31/2017
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Branscum
(2)
|
12/31/2018
|
--
|
--
|
$
23,000
|
--
|
--
|
--
|
--
|
$
23,000
|
|
|
12/31/2017
|
--
|
--
|
$
34,000
|
--
|
--
|
--
|
--
|
$
34,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Robert
Kennedy
(3)
|
12/31/2018
|
--
|
--
|
$
23,000
|
--
|
--
|
--
|
--
|
$
23,000
|
|
|
12/31/2017
|
--
|
--
|
$
34,000
|
--
|
--
|
--
|
--
|
$
34,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradford
Clark
(4)
|
12/31/2018
|
--
|
--
|
$
18,000
|
--
|
--
|
--
|
--
|
$
18,000
|
|
|
12/31/2017
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
Soeder
(5)
|
12/31/2018
|
--
|
--
|
$
18,000
|
--
|
--
|
--
|
--
|
$
18,000
|
|
|
12/31/2017
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|
(1)
|
During
the years ended December 31, 2018 and 2017 the Company did not pay
any Director’s fees to Kyle Kennedy.
|
|
|
|
|
(2)
|
During
the year ended December 31, 2018 the Company paid a fee of
23,000,000 shares of restricted common stock to Mr. Branscum,
valued at $23,000, in exchange for his participation as a member of
the Board of Directors. During the year ended December 31, 2017 the
Company paid a fee of 20,000,000 shares of restricted common stock
to Mr. Branscum, valued at $34,000, in exchange for his
participation as a member of the Board of Directors.
|
|
|
|
|
(3)
|
During the year ended December 31, 2018 the Company
paid a fee of 23,000,000 shares of restricted common stock to Dr.
Kennedy, valued at $23,000, in exchange for his participation as a
member of the Board of Directors. During the year ended December
31, 2017 the Company paid a fee of 20,000,000 shares of restricted
common stock to Dr. Kennedy, valued at $34,000, in exchange for his
participation as a member of the Board of Directors.
|
|
|
|
|
(4)
|
During
the year ended December 31, 2018 the Company paid a fee of
20,000,000 shares of restricted common stock to Mr. Clark, valued
at $18,000, in exchange for his participation as a member of the
Board of Directors.
|
|
|
|
|
(5)
|
During the year ended December 31, 2018 the Company paid a fee of
20,000,000 shares of restricted common stock to Mr. Soeder, valued
at $18,000, in exchange for his participation as a member of the
Board of Directors. Mr. Soeder was also a member of the
Company’s Advisory Council during the years ended December
31, 2018 and 2017. During the years ended December 31, 2018 and
2017 Mr. Soeder received 5,500,000 and 5,000,000 shares
respectively of the Company’s restricted common stock for his
work as a member of the Company’s Advisory Council, the
compensation paid for specifically for his advisory council work
was paid prior to Mr. Soeder joining the Company’s Board of
Directors and is not listed in the table showing fees paid for
being a member of the Company’s Board of
Directors.
|
27
Director Compensation
The
Company does not have a formal compensation plan in place for its
directors.
Employment Agreements
None.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
The
following tables set forth certain information regarding beneficial
ownership of our capital stock as of the date hereof by (i) each
person whom we know to beneficially own more than five percent (5%)
of any class of our common stock, (ii) each of our directors, (iii)
each of the executive officers and (iv) all our directors and
executive officers as a group. Unless otherwise indicated, each of
the persons listed below has sole voting and investment power with
respect to the shares beneficially owned.
Our
total authorized capital stock consists of 4,900,000,000 shares of
common stock, $0.0001 par value per share. As of March 31, 2019,
there were 3,942,094,084 shares of our common stock outstanding,
all of which were fully paid, non-assessable and entitled to vote.
Each share of our common stock entitles its holder to one vote on
each matter submitted to our stockholders.
This
table reflects shares that were issued and outstanding as of March
31, 2019.
|
|
Shares of
|
|
Percentage of
|
|
|
common stock
|
|
common shares
|
|
|
beneficially owned
|
|
beneficially owned
2
|
|
Name and Address of Beneficial
Owners
1
|
|
|
|
|
|
|
|
|
|
Kyle Kennedy - President, CEO and Chairman of the
Board
3
|
35,500,000
|
|
0.90%
|
|
|
|
|
|
|
Charles Branscum - Director
|
100,000,000
|
|
2.54%
|
|
|
|
|
|
|
Dr. Rober L. Kennedy - Director
|
135,690,267
|
|
3.44%
|
|
|
|
|
|
|
Bradford Clark - Director
|
27,443,555
|
|
0.70%
|
|
|
|
|
|
|
Thomas Soeder - Director
|
55,534,787
|
|
1.41%
|
|
|
|
|
|
|
All Directors and Officers as group (5 persons)
|
354,168,609
|
|
8.98%
|
|
(1)
|
Unless
otherwise indicated, the address of each person listed below is c/o
Seafarer Exploration Corp, 14497 North Dale Mabry Highway, Suite
209-N, Tampa, Florida 3618.
|
|
(2)
|
Percentages
are based on 3,942,094,084 shares of common stock issued and
outstanding at March 31, 2019.
|
|
(3)
|
For the
purposes of this table, the share amounts being shown as
beneficially owned by Mr. Kennedy include: 35,500,000
shares legally owned by Credo Argentarius, LLC
(“Credo”), an entity controlled by Mr.
Kennedy’s spouse. This statement shall not be construed as an
admission that Mr. Kennedy is, for the purposes of Section 13(d) or
Section 16 of the Securities Exchange Act of 1934, the beneficial
owner of any of the securities set forth in the preceding
sentence.
|
28
Item 13. Certain Relationships and Related Transactions, and
Director Independence.
During
the years ended December 31, 2018 and 2017 the Company has had
extensive dealings with related parties:
In
January of 2017, the Company entered into a convertible promissory
note agreement in the amount of $5,000 with an individual who is
related to the Company’s CEO. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before March 12, 2017. The Company paid the related party
lender a loan origination fee of 1,000,000 shares of its restricted
common stock. The note is not secured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0005 per share. This note is
currently in default due to non payment of principal and
interest.
In
February of 2017, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before August 14, 2017. The note is not secured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.00075 per
share. The related party lender received 33,333,333
warrants to purchase shares of the Company’s common stock at
a price of $0.005.
This
note is currently in default due to non payment of principal and
interest.
In
February of 2017, the Company extended the term of a previous
agreement with two individuals who are related to the
Company’s CEO to continue serving as a member of the
Company’s Board of Directors. Under the agreement, the
Director 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 agreement also terminates
automatically upon the death, resignation or removal of the
Directors. Under the terms of the agreement, the Company agreed to
pay the Director 20,000,000 restricted shares of its common stock
each, 40,000,000 total shares, and to negotiate future compensation
on a year-by-year basis. The Company also agreed to reimburse the
Directs or for preapproved expenses.
In
March of 2017, the Company repaid $4,000 to its CEO in order to
repay a portion of the principal balance of a loan the CEO had
previously provided to the Company.
In
April of 2017, the Company repaid $2,000 to its CEO in order to
repay a portion of the principal balance of a loan the CEO had
previously provided to the Company.
In May
of 2017, the Company repaid $2,000 to its CEO in order to repay a
portion of the principal balance of a loan the CEO had previously
provided to the Company.
In July
of 2017, the Company’s CEO provided a loan to the Company in
the amount of $2,600. The loan pays interest at the rate of 1% per
annum. The loan was due on or before October 12, 2017.
In July
of 2017, the Company’s CEO provided a loan to the Company in
the amount of $3,000. The loan pays interest at the rate of 1% per
annum. The loan was due on or before July 13, 2017.
In
August of 2017, the Company’s CEO provided a loan to the
Company in the amount of $500. The loan pays interest at the rate
of 1% per annum. The loan was due on or before August 25,
2017.
In
August of 2017, the Company’s CEO provided a loan to the
Company in the amount of $400. The loan pays interest at the rate
of 1% per annum. The loan was due on or before August 25,
2017.
In
August of 2017, the Company entered into a promissory note
agreement in the amount of $2,500 with a related party. This loan
paid interest at a rate of 6% per annum and the principal and
accrued interest were due on or before August 16, 2017. The related
party lender received 250,000 shares of the Company’s
restricted common stock as a loan origination fee. This note is
currently in default due to non payment of principal and
interest.
In
August of 2017, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with an individual who is
both a related to party and a member of the Company’s Board
of Directors. This loan pays interest at a rate of 6% per annum and
the principal and accrued interest was due on or before September
16, 2017. The note is not secured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.0008 per share. This note is currently in
default due to non payment of principal and interest.
In
October of 2017, the Company entered into a promissory note
agreement in the amount of $2,500 with a related party. This loan
paid interest at a rate of 6% per annum and the principal and
accrued interest were due on or before October 23, 2017. The
related party lender received 200,000 shares of the Company’s
restricted common stock as a loan origination fee. This note is
currently in default due to non payment of principal and
interest.
In
November of 2017, the Company entered into a promissory note
agreement in the amount of $26,250 with a related party. This loan
paid interest at a rate of 6% per annum and the principal and
accrued interest were due on or before December 2, 2017. The
related party lender received 2,000,000 shares of the
Company’s restricted common stock as a loan origination fee.
This note is currently in default due to non payment of principal
and interest.
29
During
the year ended December 31, 2017 the Company had an informal
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 consultant a minimum of $3,000 per month 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. During the year ended December
31, 2017 the Company paid related party limited liability Company
$46,000. The consultant provides the services under the direction
and supervision of the Company’s CEO.
During
the year ended December 31, 2017 the Company had 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 year ended
December 31, 2017 the Company paid the related party transfer
agency $8,561.
In
January of 2018, the Company entered into a convertible promissory
note agreement in the amount of $12,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest is due
on or before January 9, 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 $0.0006 per
share.
In
January of 2018 the Company repaid $26,250 or principal and $505 of
accrued interest to a related party lender in order to satisfy a
convertible promissory note. At December 31, 2018 the principal
balance of the note was $0.
In
January of 2018, the Company entered into a promissory note
agreement in the amount of $25,000 with a related party. This note
pays interest at a rate of 6% per annum and the principal and
accrued interest were due on or before March 2, 2018. The related
party lender received 2,000,000 shares of the Company’s
restricted common stock as a loan origination fee. The Company
agreed that if the note was not repaid in full by March 2, 2018
then the interest rate on the note would increase to 10% after that
date until the note is paid in full and the Company would be
obligated to pay an additional 1,000,000 shares of the Company
restricted common stock to the related party lender. This note is
currently in default due to non payment of principal and interest.
The note is unsecured.
In
February of 2018, the Company entered into a promissory note
agreement in the amount of $1,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 9, 2018. This note is currently in default due
to non payment of principal and interest. The note is
unsecured.
In
March of 2018, the Company’s CEO provided a loan to the
Company in the amount of $500. The loan pays interest at the rate
of 1% per annum. The loan was due on or before April 6, 2018. This
loan is currently in default due to non payment of principal and
interest.
In
March of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This note pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May14, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0006 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $3,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 4, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In
April of 2018, the Company extended the term of a previous
agreement with two individuals who are related to the
Company’s CEO tocontinue serving as members of the
Company’s Board of Directors. 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 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 individuals via payment of 23,000,000 restricted
shares of its common stock each, a total of 46,000,000 shares, and
to negotiate future compensation on a year-by-year basis. The
Company also agreed to reimburse the individuals for preapproved
expenses.
In
April of 2018, the Company’s CEO provided a loan to the
Company in the amount of $400. The loan pays interest at the rate
of 1% per annum. The loan was due on or before May 4,
2018.
In
April of 2018, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before June 11, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per share. This
note is currently in default due to non payment of principal and
interest.
30
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 15, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee and a $1,250 financing fee. This note was
repaid and the balance owed at December 31, 2018 was
$0.
In
April of 2018, the Company entered into a promissory note agreement
in the amount of $25,000 with an individual. This note pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before May 4, 2018. The lender received
4,000,000 shares of the Company’s restricted common stock as
a loan origination fee. This note is currently in default due to
non payment of principal and interest. The note is
unsecured.
In
April of 2018 the Company repaid $25,000 of principal and $479 of
accrued interest to a related party lender in order to satisfy a
convertible promissory note. At December 31, 2018 the principal
balance of the note was $0.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before July 8, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In May
of 2018, the Company repaid $440 in principal plus $3 in accrued
interest to its CEO in order to repay a loan the CEO had previously
provided to the Company. The loan balance at December 31, 2018 was
$0.
In May
of 2018, the Company repaid $500 in principal plus $4 in accrued
interest to its CEO in order to repay a loan the CEO had previously
provided to the Company. The loan balance at December 31, 2018 was
$0.
In May
of 2018, the Company’s CEO provided a loan to the Company in
the amount of $4,000. The loan pays interest at the rate of 1% per
annum. This loan was repaid and the balance owed at December 31,
2018 was $0.
In May
of 2018, the Company repaid $400 in principal plus $1 in accrued
interest to its CEO in order to repay a loan the CEO had previously
provided to the Company. The loan balance at December 31, 2018 was
$0.
In May
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $25,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before August, 2018. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0007 per share. This note is currently
in default due to non payment of principal and
interest.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $3,000 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 12, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per
share.
In June
of 2018, the Company’s CEO provided a loan to the Company in
the amount of $200. The loan pays interest at the rate of 1% per
annum. The loan was due on or before July 14, 2018.
In June
of 2018, the Company entered into a convertible promissory note
agreement in the amount of $500 with an individual who is both
related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before September 12, 2018. The note is unsecured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.0007 per
share.
In July
of 2018, the Company’s CEO provided a loan to the Company in
the amount of $800. The loan pays interest at the rate of 1% per
annum. The loan was due on or before August 11, 2018. This loan is
currently in default due to non payment of principal and
interest.
In July
of 2018, the Company’s CEO provided a loan to the Company in
the amount of $480. The loan pays interest at the rate of 1% per
annum. The loan was due on or before August 19, 2018. This loan is
currently in default due to non payment of principal and
interest.
In
August of 2018, the Company entered into a convertible promissory
note agreement in the amount of $2,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before February 27, 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 $0.0007 per
share.
In
September of 2018, the Company’s CEO provided a loan to the
Company in the amount of $600. The loan pays interest at the rate
of 1% per annum. The loan was due on or before October 10, 2018.
This loan is currently in default due to non payment of principal
and interest.
In
October of 2018, the Company’s CEO provided a loan to the
Company in the amount of $200. The loan pays interest at the rate
of 1% per annum. The loan was due on or before November, 2018. This
loan is currently in default due to non payment of principal and
interest.
31
In
October of 2018, the Company entered into a convertible promissory
note agreement in the amount of $1,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 2, 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 $0.0008 per share. This
note is currently in default due to non payment of principal and
interest.
In
October of 2018, the Company entered into a convertible promissory
note agreement in the amount of $4,200 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before April 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 $0.0008 per
share.
In
November of 2018, the Company’s CEO provided a loan to the
Company in the amount of $150. The loan pays interest at the rate
of 0% per annum. The loan had no maturity date and was repaid prior
to December 31, 2018.
In
November of 2018, the Company entered into a convertible promissory
note agreement in the amount of $2,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May 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 $0.0008 per share.
In
November of 2018, the Company entered into a convertible promissory
note agreement in the amount of $8,000 with an individual who is
related to the Company’s CEO. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before May 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 $0.0008 per share.
On
various dates during the year ended December 31, 2018 the Company
repaid its CEO a total of $20,568 principal and accrued interest
for various outstanding loans.
During
the year ended December 31, 2018 the Company had 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 consultant a minimum of $3,000 per
month to periodically 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 background
research including background checks and provide investigative
information on individuals and companies as requested by the
Company 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 on an as needed
basis. The services are provided under the direction and
supervision of the Company’s CEO. During the year ended
December 31, 2018 the Company paid the related party limited
liability consultant $39,100. At December 31, 2018 the Company owed
the related party limited liability company $11,150 for services
rendered.
During
the year ended December 31, 2018, 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 year ended
December 31, 2018 the Company paid the related party limited
liability consultant $400. At December 31, 2018 the Company owed
the related party limited liability company $4,385 for services
rendered.
At December 31, 2018 and 2017the following promissory notes and
convertible promissory notes were outstanding to related
parties:
See
Note 8 convertible notes payable and notes payable - related
parties and related parties in default.
Item 14. Principal Accounting Fees and Services
Audit Related Fees
For the
years ended December 31, 2018 and 2017, the Company paid $0 and $0
respectively, in fees related to services rendered by our principal
accountant for professional services rendered for the audit and
review of our financial statements. For the years ended December
31, 2018 and 2017, the Company paid $31,800 and $33,000
respectively, in fees related to services rendered by our previous
principal accountant for professional services rendered for the
audit and review of our financial statements.
32
Tax Fees
For the
years ended December 31, 2018 and 2017, the Company paid $0 in fees
for professional services rendered fees related to services
rendered by our principal accountant for tax compliance, tax
advice, and tax planning.
All Other Fees
The
Company did not incur any other fees related to services rendered
by our principal accountant for the years ended December 31, 2018
and 2017.
33
PART IV
Item 15. Exhibits
|
(2)
|
Plan of
Acquisition, Reorganization, Arrangement, Liquidation or
Succession
|
|
|
|
|
|
|
|
(3)
|
Articles
of Incorporation and By-laws
|
|
|
|
|
|
|
|
|
|
|
(10)
|
Material
Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
XBRL
Instance Document. *
|
|
|
|
|
101.SCH
|
XBRL
Taxonomy Extension Schema. *
|
|
|
|
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase. *
|
|
|
|
|
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase. *
|
|
|
|
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase. *
|
|
|
|
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase. *
|
* To be
furnished by amendment per Temporary Hardship Exemption under
Regulation S-T.
34
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
|
|
Seafarer
Exploration Corp.
|
|
|
|
|
|
|
|
|
|
|
Date:
April 15, 2019
|
By:
|
/s/ Kyle Kennedy
|
|
|
|
Kyle
Kennedy
President,
Chief Executive Officer, and Chairman of the Board
(Principal
Executive Officer and Principal Accounting Officer)
|
|
Date:
April 15, 2019
|
By:
|
/s/ Charles Branscum
|
|
|
|
Charles
Branscum, Director
|
|
Date:
April 15, 2019
|
By:
|
/s/ Robert L. Kennedy
|
|
|
|
Robert
L. Kennedy, Director
|
|
Date:
April 15, 2019
|
By:
|
/s/ Thomas Soeder
|
|
|
|
Thomas
Soeder, Director
|
|
Date:
April 15, 2019
|
By:
|
/s/ Bradford Clark
|
|
|
|
Bradford
Clark, Director
|
35
TABLE OF CONTENTS
Part IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Mine Safety DisclosuresPart IIItem 5. Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity SecuritiesItem 6. Selected Financial DataItem 7. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial StatementsNote 1 Description Of BusinessNote 2 - Going ConcernNote 3 - Significant Accounting PoliciesNote 4 Capital StockNote 5 Investment in Probability and Statistics, IncNote 6 - Income TaxesNote 7 Lease ObligationNote 8 - Convertible Notes Payable and Notes PayableNote 9 Material AgreementsNote 9 Legal ProceedingsNote 10 Related Party TransactionsNote 11 - Subsequent EventsItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosuresItem 9A. Controls and ProceduresItem 9B. Other InformationPart IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accounting Fees and ServicesPart IVItem 15. Exhibits