UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q








(Mark
One)


☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934





For the quarterly period ended March 31, 2019





or


☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934





For the transition period from _________ to
__________.





Commission File Number 000-29461








SEAFARER EXPLORATION CORP.





(Exact name of registrant as specified in its charter)





Florida
90-0473054(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification No.)





14497 N. Dale Mabry Highway, Suite 209-N, Tampa, Florida
33618





(Address of principal executive offices) (Zip code)





(813) 448-3577





Registrant’s telephone number





Securities registered pursuant to Section 12(g) of the
Act:


Common Stock, par value $0.0001 per
share





1





Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act.  Yes ☐ No  ☒





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  ☐ No
☒





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  ☒ 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):





Large
accelerated filer
☐

Accelerated
filer
☐Non-accelerated
filer
☒

Smaller
reporting company
☒Emerging
growth company
☐





Indicate by check
mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).  Yes  ☐ No ☒





As of May 14, 2019, there were 4,101,195,587 shares of the
registrant’s common stock, $.0001 par value per share,
outstanding.


















































2





SEAFARER EXPLORATION CORP.


Form 10-Q


For the Quarterly Period Ended March 31, 2019





TABLE OF CONTENTS








PART I:
FINANCIAL INFORMATION
4Item 1.
Financial Statements
5Unaudited Condensed
Balance Sheets: March 31, 2019 and December 31,
2018
5Unaudited
Condensed Statements of Operations: Three months ended March 31,
2019 and 2018
6Unaudited Condensed
Statements of Stockholders’ Deficit: Three months ended March
31, 2019 and 2018
7Unaudited Condensed
Statements of Cash Flows: Three months ended March 31, 2019
and 2018
8Notes
to Unaudited Condensed Financial Statements
9Item 2.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
22Item 3.
Quantitative and Qualitative Disclosures About Market
Risk
28Item 4.
Controls and Procedures
28PART
II: OTHER INFORMATION
30Item 1. Legal
Proceedings
30Item 1A. Risk
Factors
30Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds
30Item 3.
Defaults Upon Senior Securities
31Item 4. Mine
Safety Disclosures
31Item 5. Other
Information
31Item 6.
Exhibits
31SIGNATURES
32














3





Part 1: Financial Information





Statements
in this Form 10-Q Quarterly Report may be “forward-looking
statements.”  Forward-looking statements include,
but are not limited to, statements that express our intentions,
beliefs, expectations, strategies, predictions or any other
statements relating to our future activities or other future events
or conditions.  These statements are based on our current
expectations, estimates and projections about our business based,
in part, on assumptions made by our management.  These
assumptions are not guarantees of future performance and involve
risks, uncertainties and assumptions that are difficult to
predict.  Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in the
forward-looking statements due to numerous factors, including those
risks discussed in this Form 10-Q Quarterly Report, under
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and in other documents
which we file with the Securities and Exchange
Commission.





In
addition, such statements could be affected by risks and
uncertainties related to our financial condition, factors that
affect our industry, market and customer acceptance, changes in
technology, fluctuations in our quarterly results, our ability to
continue and manage our growth, liquidity and other capital
resource issues, compliance with government regulations and
permits, agreements with third parties to conduct operations,
competition, fulfillment of contractual obligations by other
parties and general economic conditions.  Any
forward-looking statements speak only as of the date on which they
are made, and we do not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date of this Form 10-Q Quarterly Report, except as required by
Federal Securities law.

































































4





Item 1. Financial Statements





SEAFARER EXPLORATION
CORP.CONDENSED BALANCE
SHEETS
(Unaudited)March 31,
December 31,2019
2018ASSETSCurrent
AssetsCash
$39,249
$-Prepaid
expenses
81,611
2,060Deposits
and other receivables
750
750Total
Current Assets
121,610
2,810Right
to use asset
19,032Investment
in P & S, Inc.
78,000
78,000TOTAL ASSETS
$218,642
$80,810LIABILITIES AND STOCKHOLDERS' DEFICITCurrent
LiabilitiesBank
overdraft
$-
$2,919Accounts
payable and accrued expenses
426,982
480,951Convertible
notes payable, net of discounts of $9,786 and $1,401,
respectively
4,214
1,599Convertible
notes payable, related parties, net of discounts of $0 and $7,588,
respectively
22,260
21,612Convertible
notes payable, in default
457,300
457,300Convertible
notes payable, in default - related parties
355,000
341,000Notes
payable, net of discounts of $11,072 and $14,943,
respectively
93,928
90,057Notes
payable, in default
105,000
152,500Notes
payable, in default - related parties
18,500
18,500Lease
liability, current portion
14,887
-Shareholder
loan
1,700
6,548Total
Current Liabilities
1,484,884
1,572,986Lease
liability, less current portion
4,223
-TOTAL LIABILITIES
1,503,993
1,572,986Stockholders'
DeficitPreferred
stock, $0.0001 par values - 50,000,000 shares authorized; 67 shares
issued
-
-Series
A - 7 shares issued and outstanding at March 31, 2019 and December
31, 2018
-Series
B - 60 shares issued and outstanding at March 31, 2019 and December
31, 2018
-Common
stock, $0.0001 par value - 3,900,000,000 shares authorized;
3,966,825,185 and 3,518,252,964 shares issued and outstanding at
March 31, 2019 and December 31, 2018, respectively
394,780
350,573Common
stock to be issued, $0.0001 par value, 23,192,857 shares
outstanding at December 31, 2018
2,319
2,319Additional
paid in capital
16,632,755
13,109,751Accumulated
deficit
(15,315,205)
(14,954,819)TOTAL STOCKHOLDERS' DEFICIT
(1,285,351)
(1,492,176)TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
$218,642
$80,810





See
notes to unaudited condensed financial statements.





5





SEAFARER EXPLORATION CORP.CONDENSED STATEMENTS OF OPERATIONSFor the Three Months EndedMarch 31,2019
2018(Unaudited)
(Unaudited)Operating
ExpensesConsulting
and contractor expenses
$227,610
$146,776Vessel
maintenance and dockage
11,355
7,840Professional
fees
31,760
23,595General
and administrative expense
27,764
17,348Depreciation
expense
-
8,496Rent
expense
12,807
8,639Travel
and entertainment expense
14,557
17,430Total
operating expenses
325,853
230,124Net
loss from operations
(325,853)
(230,124)Other
Income (Expense):Interest
expense
(36,033)
(31,139)Dividend
income
1,500
-Total
other expense
(34,533)
(31,139)Net
loss
$(360,386)
$(261,263)Basic
and diluted loss per share
$(0.00)
$(0.00)Weighted
average number of shares outstanding
3,709,707,307
2,806,163,638























See
notes to unaudited condensed financial statements.

















6





SEAFARER EXPLORATION CORP.STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICITAdditionalSeries A Preferred Stock
Series B Preferred Stock
Common Stock
Common Stock to Be Issued
Paid-In
AccumulatedShares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
TotalBalance, 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
-
-
-
-
10,000,000
1,000
-
-
24,000
-
25,000Stock
issued to convert notes payable
-
-
-
-
10,510,000
1,051
-
-
13,949
-
15,000Beneficial
conversion feature
-
-
-
-
-
-
-
-
19,571
-
19,571Stock
issued for services
-
-
-
-
5,250,000
525
-
-
4,725
-
5,250Stock
issued for financing cost
-
-
-
-
8,500,000
850
-
-
6,500
-
7,350Net
Loss
-
-
-
-
-
-
-
-
-
(261,264)
(261,264)Balance, March 31, 2018
7
-
60
-
2,818,577,155
281,858
-
-
12,361,825
(13,938,899)
(1,295,216)





Series A Preferred Stock
Series B Preferred Stock
Common Stock
Common Stock to Be Issued
Paid-In
AccumulatedShares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Deficit
TotalBalance, December 31, 2018
7
-
60
-
3,518,252,964
350,573
23,192,857
2,319.00
13,109,751
(14,954,819)
(1,492,176)Common
stock issued for cash
-
-
-
-
346,066,667
34,607
-
-
327,243
-
361,850Stock
issued to convert notes payable
-
-
-
-
1,284,938
128
-
-
900
-
1,028Beneficial
conversion feature
-
-
-
-
-
-
-
-
10,500
-
10,500Stock
issued for services
-
-
-
-
89,720,616
8,972
-
-
177,361
-
186,333Stock
issued for financing cost
-
-
-
-
5,000,000
500
-
-
7,000
-
7,500Net
Loss
-
-
-
-
-
-
-
-
-
(360,386)
(360,386)Balance, March 31, 2019
7
-
60
-
3,960,325,185
394,780
23,192,857
2,319
13,632,755
(15,315,205)
(1,285,351)





See
notes to unaudited condensed financial statements.


7





SEAFARER EXPLORATION CORP.CONDENSED STATEMENTS OF CASH FLOWSFor the Three Months EndedMarch 31,2019
2018(Unaudited)
(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net
loss
$(360,386)
$(261,263)Adjustments
to reconcile net loss to net cash used in operating
activities:Depreciation
expense
-
8,496Amortization
right of use asset
3,543
-Amortization
of beneficial conversion feature and loan fees
13,634
13,959Common
stock issued for services
106,782
5,250Common
stock issued for closing costs
-
900Common
stock and warrants issued for non-payment of notes
payable
7,500Decrease
in:Prepaid
expenses and deposits
-
24,377Increase
in:
-Accounts payable and accrued expenses
(53,941)
56,422Operating
lease liabilities
(3,466)Net
Cash Used in Operating Activities
(286,334)
(151,859)CASH FLOWS FROM FINANCING ACTIVITIES:Decrease
in bank overdraft
(2,919)
-Proceeds
from the issuance of common stock
361,850
25,000Proceeds
from the issuance of convertible notes payable
11,000
12,000Payments
on convertible notes payable, in default
-
(10,000)Proceeds
from the issuance convertible notes payable, related
party
7,000
37,000Proceeds
from notes payable
-
25,000Payments
on notes payable
(46,500)Proceeds from notes payable, related party
25,000Payments
on notes payable related party
-
(26,250)Proceeds
(payments) on loans to stockholders
(4,848)
1,500Net
Cash Provided By Financing Activities
325,583
89,250NET INCREASE (DECREASE) IN CASH
39,249
(62,609)CASH, BEGINNING OF PERIOD
-
62,609CASH, END OF PERIOD
$39,249
$-Cash
per balance sheet
39,249
--
-Supplemental disclosure of cash flow information:Cash
paid for interest expense
$-
$2,711Cash
paid for income taxes
$-
$-Noncash
operating and financing activities:Convertible
debt and accrued interest to converted to common stock
$1,028
$15,000Beneficial
conversion feature on convertible notes payable
$10,500
$-Stock
issued for prepaid services
$105,950
$-Operating
lease liabilities and right of use asset
$22,575





See
notes to unaudited condensed financial statements.


8


SEAFARER EXPLORATION CORP. AND SUBSIDIARIES


NOTES TO CONDENSED FINANCIAL STATEMENTS


(Unaudited)








The
accompanying condensed financial statements of Seafarer Exploration
Corp. (“Seafarer” or the “Company”) are
unaudited, but in the opinion of management, reflect all
adjustments (consisting only of normal recurring adjustments)
necessary to fairly state the Company’s financial position,
results of operations, and cash flows as of and for the dates and
periods presented. The financial statements of the Company are
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) for
interim financial information.





These
unaudited condensed financial statements should be read in
conjunction with the Company’s audited financial statements
and footnotes included in the Company’s Report on Form 10-K
for the year ended December 31, 2018, filed with the Securities and
Exchange Commission (the “Commission”) on April 15,
2019. The results of operations for the three month period ended
March 31, 2019 are not necessarily indicative of the results that
may be expected for the entire year ending December 31, 2019 or for
any future period.





NOTE 1 - DESCRIPTION OF BUSINESS





Seafarer
Exploration Corp. (the “Company”), formerly Organetix,
Inc. (“Organetix”), was incorporated on May 28, 2003 in
the State of Delaware.





The
principal business of the Company is to engage in the
archaeologically-sensitive exploration, documentation, recovery,
and conservation of historic shipwrecks with the objective of
exploring and discovering Colonial-era shipwrecks for future
generations to be able to appreciate and understand.  The
Company is also actively seeking to partner with revenue producing
companies in order to generate revenue streams to support its
historic shipwreck exploration and recovery
operations.





NOTE 2 - GOING CONCERN





These
condensed 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 May 20, 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 condensed 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 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES





This
summary of significant accounting policies of Seafarer Exploration
Corp. is presented to assist in understanding the Company’s
condensed financial statements. The condensed financial statements
and notes are representations of the Company’s management,
who are responsible for their integrity and objectivity. These
accounting policies conform to accounting principles generally
accepted in the United States of America and have been consistently
applied in the preparation of the condensed 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 were no cash equivalents at March 31, 2019 and December 31,
2018.





9





Revenue Recognition





Effective
January 1, 2018, the Company adopted ASC Topic 606, “Revenue
from Contracts with Customers” (“ASC 606”) and
all the related amendments. The Company elected to adopt this
guidance using the modified retrospective method. The adoption of
this guidance did not have a material effect on the Company’s
financial position, results of operations or cash
flows.





The
core principle of ASC 606 requires that an entity recognize revenue
to depict the transfer of promised goods or services to customers
in an amount that reflects the consideration to which the company
expects to be entitled in exchange for those goods or services. ASC
606 defines a five-step process to achieve this core principle and,
in doing so, it is possible more judgment and estimates may be
required within the revenue recognition process than required under
U.S. GAAP including identifying performance obligations in the
contract, estimating the amount of variable consideration to
include in the transaction price and allocating the transaction
price to each separate performance obligation.





Earnings Per Share





The
Company has adopted the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards
Codification (“ASC”) 260-10 which provides for
calculation of "basic" and "diluted" earnings per
share.  Basic earnings per share includes no dilution and
is computed by dividing net income or loss available to common
stockholders by the weighted average common shares outstanding for
the period.  Diluted earnings per share reflect the
potential dilution of securities that could share in the earnings
of an entity.  Basic and diluted losses per share were
the same at the reporting dates as there were no common stock
equivalents outstanding at March 31, 2019 and 2018.





As of
March 31, 2019, and 2018, the Company’s outstanding
convertible debt and warrants would result in approximately
562,032,480 and 460,942,744 shares of common stock, respectively.
This amount is not included in the computation of dilutive loss per
share because their impact is antidilutive.





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.








10








Impairment of Long-Lived Assets





In
accordance with ASC 360-10, the Company, on a regular basis,
reviews the carrying amount of long-lived assets for the existence
of facts or circumstances, both internally and externally, that
suggest impairment. The Company determines if the carrying amount
of a long-lived asset is impaired based on anticipated undiscounted
cash flows, before interest, from the use of the asset. In the
event of impairment, a loss is recognized based on the amount by
which the carrying amount exceeds the fair value of the asset. Fair
value is determined based on appraised value of the assets or the
anticipated cash flows from the use of the asset, discounted at a
rate commensurate with the risk involved. There were no impairment
charges recorded during the quarters ended March 31, 2019 and
2018.





Use of Estimates





The
process of preparing condensed financial statements in conformity
with accounting principles generally accepted in the United States
of America requires the use of estimates and assumptions regarding
certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as
of the date of the condensed financial statements. Accordingly,
upon settlement, actual results may differ from estimated
amounts.





Convertible Notes Payable





The
Company accounts for conversion options embedded in convertible
notes in accordance with ASC 815. ASC 815 provides comprehensive
guidance on derivative and hedging transactions. It sets forth the
definition of a derivative instrument and specifies how to account
for such instruments, including derivatives embedded in hybrid
instruments. In addition, ASC 815 establishes when reporting
entities, in certain limited, well-defined circumstances, may apply
hedge accounting to a relationship involving a designated hedging
instrument and hedged exposure. Hedge accounting provides an
alternative, special way of accounting for such relationships. ASC
815 also provides guidance on how reporting entities determine
whether an instrument is (1) indexed to the reporting
entity’s own stock and (2) considered to be settled in the
reporting entity’s own stock. Such a determination will
dictate whether an instrument should be accounted for as debt or
equity and the appropriate accounting for the instrument. Finally,
ASC 815 addresses the accounting for non-exchange-traded weather
derivatives. ASC 815 generally requires companies to bifurcate
conversion options embedded in convertible notes from their host
instruments and to account for them as free standing derivative
financial instruments. ASC 815 provides for an exception to this
rule when convertible notes, as host instruments, are deemed to be
conventional, as defined by ASC 815-40. As of March 31, 2019 and
2018, all of the Company’s convertible notes payable were
classified as conventional instruments.





The
Company accounts for convertible notes deemed conventional and
conversion options embedded in non-conventional convertible notes
which qualify as equity under ASC 815, in accordance with the
provisions of ASC 470-20, which provides guidance on accounting for
convertible securities with beneficial conversion features. ASC
470-10 addresses classification determination for specific
obligations, such as short-term obligations expected to be
refinanced on a long-term basis, due-on-demand loan arrangements,
callable debt, sales of future revenue, increasing rate debt, debt
that includes covenants, revolving credit agreements subject to
lock-box arrangements and subjective acceleration clauses, indexed
debt. Accordingly, the Company records, as a discount to
convertible notes, the intrinsic value of such conversion options
based upon the differences between the fair value of the underlying
common stock at the commitment date of the note transaction and the
effective conversion price embedded in the note. Debt discounts
under these arrangements are amortized over the term of the related
debt.











11





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 and recognizes the
value of the award over the service
period.





Fully vested and non-forfeitable shares issued prior to the
services being performed are classified as prepaid
expenses.











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 adopted this
standard on January 1, 2019 and did not have a material impact on
the condensed 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 – STOCKHOLDERS’ DEFICIT





The
Company’s total authorized capital stock consists of
4,900,000,000 shares of common stock, $0.0001 par value per
share.





Preferred Stock





The
Company is authorized to sell or issue 50,000,000 shares of
preferred stock.





Series A Preferred Stock





At
March 31, 2019 and 2018, the Company had seven shares of Series A
preferred stock issued and outstanding. Each share of Series A
preferred stock has the right to convert into 214,289 shares of the
Company’s common stock.





Series B Preferred Stock





On
February 10, 2014, the Board of Directors of the Company under the
authority granted under Article V of the Articles of Incorporation,
defined and created a new preferred series of shares from the
50,000,000 authorized preferred shares. Pursuant to Article V, the
Board of Directors has the power to designate such shares and all
powers and matters concerning such shares. Such share class shall
be designated Preferred Class B. The preferred class was created
for 60 Preferred Class B shares. Such shares each have a voting
power equal to one percent of the outstanding shares issued
(totaling 60%) at the time of any vote action as necessary for
share votes under Florida law, with or without a shareholder
meeting.  Such shares are non-convertible to common stock
of the Company and are not considered as convertible under any
accounting measure. Such shares shall only be held by the Board of
Directors as a Corporate body, and shall not be placed into any
individual name. Such shares were considered issued at the time of
this resolution’s adoption, and do not require a stock
certificate to exist, unless selected to do so by the Board for
representational purposes only.  Such shares are
considered for voting as a whole amount, and shall be voted for any
matter by a majority vote of the Board of Directors. Such shares
shall not be divisible among the Board members, and shall be voted
as a whole either for or against such a vote upon the vote of the
majority of the Board of Directors. In the event that there is any
vote taken which results in a tie of a vote of the Board of
Directors, the vote of the Chairman of the Board shall control the
voting of such shares. Such shares are not transferable except in
the case of a change of control of the Corporation when such shares
shall continue to be held by the Board of Directors. Such shares
have the authority to vote for all matters that require a share
vote under Florida law and the Articles of
Incorporation.





12





Common Stock Issuances
 
 During
the three month period ended March 31, 2019, the Company issued the
following shares of common stock:
 
 We
issued 346,066,667 common stock shares for total proceeds of
$361,850.
 
 We
issued 1,284,938 common stock shares for the conversion of $1,000
of convertible note principal and $28 of accrued interest for a
total of $1,028
 
 We
issued 89,720,616 fully vested and non-forfeitable common stock
shares for services provided by consultants, contractors, advisory
members, board members, and other service providers (see Note 9).
We determined the fair value of the shares issued using the stock
price on date of issuance. Compensation expense is recognized as
the services are provided to the Company. For the three-month
period ended March 31, 2019, we incurred $106,782 of compensation
expense for stock issued for services and have a prepaid expenses
of $81,611 at March 31, 2019 for stock issued prior to services
being performed.
 
 We
issued 5,000,000 common stock shares to one of our convertible note
payable lenders as a penalty for failure to repay the convertible
note when due. The value of these shares was determined to be
$7,500 based on the market price of the stock on date issued in
accordance with the convertible note payable
agreement.
 
 Warrants and Options
 
 The
Company did not issue any warrants or options during the three
month period ended March 31, 2019.


At
March 31, 2019 the Company had warrants to purchase a total of
33,000,000 shares of its restricted common stock
outstanding.





The
following table shows the warrants outstanding at March 31,
2019:





Number of SharesTerm
March 31, 2019
Exercise Price11/10/12 to 11/20/22
4,000,000
0.005009/18/15 to 09/18/20
4,000,000
0.003009/10/17 to 09/10/19
15,000,000
0.025009/10/17 to 09/10/19
10,000,000
0.025033,000,000








NOTE 5 – INVESTMENT IN PROBABILITY AND STATISTICS,
INC.





The
Company entered into a share exchange agreement with Probability
and Statistics, Inc. (“P&S”), a privately held
corporation, in August of 2018.





Under
the terms of the share exchange agreement, the Company agreed to
issue 60,000,000 shares of its restricted common stock to P&S
in exchange for 10,000 common shares of P&S or a 1% interest.
All shares issued by both parties under the agreement have all
rights and entitlements as the common stock of every other
shareholder of such share class.





The
investment in P&S was valued at $78,000. The value of the
investment in P&S was accounted for as the total value of the
Company’s shares issued to P&S on the date of the share
exchange agreement.





NOTE 6 - LEASE OBLIGATION





Operations House





The
Company has an operating lease for a house located in Palm Bay,
Florida. The Company uses the house to store equipment and gear and
to provide temporary work-related living quarters for its divers,
personnel, consultants and independent contractors involved in its
exploration and recovery operations. The term of the lease
agreement commenced on October 1, 2015 and expired on October 31,
2016.  The Company pays $1,300 per month to lease the
operations house. The term of the lease expired in October 2016,
the Company is leasing the operations house on a month-to-month
basis and anticipates continuing to lease the house for the
foreseeable future.





13





NOTE 7 - OPERATING LEASE AND RIGHT-OF-USE ASSETS AND OPERATING
LEASE LIABILITIES





Operating lease right-of-use assets and liabilities are recognized
at the present value of the future lease payments at the lease
commencement date. The interest rate used to determine the present
value is our incremental borrowing rate, estimated to be 6%, as the
interest rate implicit in most of our leases is not readily
determinable. Operating lease expense is recognized on a
straight-line basis over the lease term. During the three months
ended March 31, 2019 and 2018, the Company recorded $3,945 and $0,
respectively as operating lease expense which is included in rent
expenses on the statements of operations.





The Company leases 823 square feet of office space located at 14497
North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. The
Company entered into an amended lease agreement commencing on July
20, 2017 through June 30, 2020 with base month rents of $1,252 from
July 1, 2017 to June 30, 2018, $1,289 from July 1, 2018 to June 30,
2019, and $1,328 from July 1, 2019 to June 30, 2020. Under the
terms of the lease there may be additional fees charged about the
base monthly rental fee.





In adopting ASC Topic 842, Leases (Topic 842), the Company has
elected the ‘package of practical expedients’, which
permit it not to reassess under the new standard its prior
conclusions about lease identification, lease classification and
initial direct costs. The Company did not elect the
use-of-hindsight or the practical expedient pertaining to land
easements; the latter is not applicable to the Company. In
addition, the Company elected not to apply ASC Topic 842 to
arrangements with lease terms of 12 month or less. On January 1,
2019, upon adoption of ASC Topic 842, the Company recorded
right-of-use assets and lease liabilities of $22,575.





Right-of- use assets are summarized below:





March 31,2019(Unaudited)Office lease
(remaining lease term of 15 months)
$22,575Less accumulated
amortization
(3,543)Right-of-use
assets, net
$19,032





Amortization on the right -of -use asset is included in rent
expense on the statements of operations.





Operating Lease liabilities are summarized below:





March 31,2019(Unaudited)Office
lease
$19,110Less: current
portion
(14,887)Long term
portion
$4,223





Maturity of lease liabilities are as follows:





Nine months ended
December 31, 2019
$11,835Year ending
2020
7,968Less: Present value
discount
(693)Lease
liability
$19,110





NOTE 8 - CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE





Upon
inception, the Company evaluates each financial instrument to
determine whether it meets the definition of “conventional
convertible” debt under ASC 470.








14








Convertible Notes Payable





The
following table reflects the convertible notes payable at March 31,
2019:





Date
Due Date
Face Amount
Rate
Conversion RateConvertible notes payable10/29/18
04/29/19
$3,000
6.00%
0.0007001/03/19
07/03/19
$1,000
6.00%
0.0010003/16/19
09/16/19
$10,000
6.00%
0.00100Balance

$14,000Convertible notes payable - related parties10/02/18
04/02/19
$1,000
6.00%
0.0008010/23/18
04/23/19
$4,200
6.00%
0.0007011/07/18
05/07/19
$2,000
6.00%
0.0008011/14/18
05/14/19
$8,060
6.00%
0.0008001/08/19
07/08/19
$7,000
6.00%
0.00080Balance

$22,260


Convertible notes payable - in default08/28/09
11/01/09
$4,300
10.00%
0.0150004/07/10
11/07/10
$70,000
6.00%
0.0080011/12/10
11/12/11
$40,000
6.00%
0.0050010/31/12
04/30/13
$8,000
6.00%
0.0040011/20/12
05/20/13
$50,000
6.00%
0.0050001/19/13
07/30/13
$5,000
6.00%
0.0040002/11/13
08/11/13
$9,000
6.00%
0.0060009/25/13
03/25/14
$10,000
6.00%
0.0125010/04/13
04/04/14
$50,000
6.00%
0.0125010/30/13
10/30/14
$50,000
6.00%
0.0125005/15/14
11/15/14
$40,000
6.00%
0.0070010/13/14
04/13/15
$25,000
6.00%
0.0050006/29/15
12/29/15
$25,000
6.00%
0.0030009/18/15
03/18/16
$25,000
6.00%
0.0020004/04/16
10/04/16
$10,000
6.00%
0.0010007/19/16
07/19/17
$4,000
6.00%
0.0015008/24/16
02/24/17
$20,000
6.00%
0.0010003/06/18
09/06/18
$6,000
6.00%
0.0006002/06/18
11/07/18
$6,000
6.00%
0.00060Balance

$457,300





15





Convertible notes payable - related parties, in
default01/09/09
01/09/10
$10,000
10.00%
0.0150001/25/10
01/25/11
$6,000
6.00%
0.0050001/18/12
07/18/12
$50,000
8.00%
0.0040001/19/13
07/30/13
$15,000
6.00%
0.0040007/26/13
01/26/14
$10,000
6.00%
0.0100001/17/14
07/17/14
$31,500
6.00%
0.0060005/27/14
11/27/14
$7,000
6.00%
0.0070007/21/14
01/25/15
$17,000
6.00%
0.0080010/16/14
04/16/15
$21,000
6.00%
0.0045007/14/15
01/14/16
$9,000
6.00%
0.0030001/12/16
07/12/16
$5,000
6.00%
0.0020005/10/16
11/10/16
$5,000
6.00%
0.0005005/10/16
11/10/16
$5,000
6.00%
0.0005005/20/16
11/20/16
$5,000
6.00%
0.0005007/12/16
01/12/17
$5,000
6.00%
0.0006001/26/17
03/12/17
$5,000
6.00%
0.0005002/14/17
08/14/17
$25,000
6.00%
0.0007508/16/17
09/16/17
$3,000
6.00%
0.0008003/14/18
05/14/18
$25,000
6.00%
0.0007004/04/18
06/04/18
$3,000
6.00%
0.0007004/11/18
06/11/18
$25,000
6.00%
0.0007005/08/18
07/08/18
$25,000
6.00%
0.0007005/30/18
08/30/18
$25,000
6.00%
0.0007006/12/18
09/12/18
$3,000
6.00%
0.0007006/20/18
09/12/18
$500
6.00%
0.0007001/09/18
01/09/19
$12,000
6.00%
0.0006008/27/18
02/27/19
$2,000
6.00%
0.00070Balance

$355,000Balance - convertible notes payable
$848,500Less unamortized discounts
$9,786$838,774











16


Notes Payable





The
following table reflects the notes payable at March 31,
2019:





Date
Due Date
Face Amount
RateNotes payable11/29/17
11/29/19
$105,000
2.06%Balance

$105,000Notes payable - in default04/27/11
04/27/12
$5,000
6.00%06/23/11
08/23/11
$25,000
6.00%12/14/17
12/14/18
$75,000
6.00%Balance

$105,000Notes payable - related parties, in default02/24/10
02/24/11
$7,500
6.00%10/06/15
11/15/15
$10,000
6.00%02/08/18
04/09/18
$1,000
6.00%Balance

$18,500Balance - notes payable
$228,500Less unamortized discounts
$11,072$217,428





New Convertible Notes Payable and Notes Payable





During
the three month period ended March 31, 2019 the Company entered
into the following Convertible Notes Payable and Notes Payable
Agreements:





In
January of 2019, the Company entered into a convertible promissory
note agreement in the amount of $1,000 with an individual. This
loan pays interest at a rate of 6% per annum and the principal and
accrued interest was due on or before July 3, 2019. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.0010 per
share.





In
January of 2019, the Company entered into a convertible promissory
note agreement in the amount of $7,000 with a related party. This
note pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before July 8, 2019. The note is
unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.008 per
share.





In
March of 2019, the Company entered into a convertible promissory
note agreement in the amount of $10,000 with an individual. This
loan pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before September 16, 2019. The note
is unsecured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.0010 per
share.





During
the three month period ended March 31, 2019, the Company recorded a
beneficial conversion feature of $10,500 on the convertible notes
payable issued which was recorded as discount and will be amortized
to interest expense over the related term of the convertible debt.
For the period ended March 31, 2019, the Company recorded
amortization of debt discounts of $13,634.





Note Conversion





A
lender converted the principal and accrued interest for a
convertible promissory note outstanding with a principal balance of
$1,000 into 1,284,938 shares of the Company’s common stock.
The remaining principal balance of this note was $0 at March 31,
2019.








17








Shareholder Loans





At
March 31, 2019 the Company had eight loans outstanding to its CEO
totaling $1,700, consisting of a loan in the amount of $1,500 with
a 2% annual rate of interest and an option to convert the loan into
restricted shares of the Company’s common stock at $0.0005,
and a loan in the amount of $200 at 1% rate of
interest.











Convertible Notes Payable and Notes Payable, in
Default





The
Company does not have additional sources of debt financing to
refinance its convertible notes payable and notes payable that are
currently in default. If the Company is unable to obtain additional
capital, such lenders may file suit, including suit to foreclose on
the assets held as collateral for the obligations arising under the
secured notes. If any of the lenders file suit to foreclose on the
assets held as collateral, then the Company may be forced to
significantly scale back or cease its operations which would more
than likely result in a complete loss of all capital that has been
invested in or borrowed by the Company. The fact that the Company
is in default of several promissory notes held by various lenders
makes investing in the Company or providing any loans to the
Company extremely risky with a very high potential for a complete
loss of capital.





The
convertible notes that have been issued by the Company are
convertible at the lender’s option. These convertible notes
represent significant potential dilution to the Company’s
current shareholders as the convertible price of these notes is
generally lower than the current market price of the
Company’s shares. As such when these notes are converted into
shares of the Company’s common stock there is typically a
highly dilutive effect on current shareholders and very possible
that such dilution may significantly negatively affect the trading
price of the Company’s common stock.





Subsequent
to March 31, 2019 the following convertible notes payable went into
default:





1)
 A convertible note
payable originally due April 29, 2019 with a face amount of
$3,000;


2)
 A convertible note
payable due to a related party originally due April 2, 2019 with a
face amount of $1,000;


3)
 A convertible note
payable due to a related party originally due April 23, 2019 with a
face amount of $4,200;


4)
 A convertible note
payable due to a related party originally due May 7, 2019 with a
face amount of $2,000; and


5)
 A convertible note
payable due to a related party originally due May 14, 2019 with a
face amount of $8,000.





See Note 12 for further subsequent
events.





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).





18





Certain Other Agreements and Commitments





In
January of 2019, the Company extended the term of previous
agreements with four individuals to continue serving as members of
the Company’s Board of Directors. Two of the individuals are
related to the Company’s CEO. Under the agreement, the
Directors agreed to provide various services to the Company
including making recommendations for both the short term and the
long term business strategies to be employed by the Company,
monitoring and assessing the Company's business and to advise the
Company’s Board of Directors with respect to an appropriate
business strategy on an ongoing basis, commenting on proposed
corporate decisions and identifying and evaluating alternative
courses of action, making suggestions to strengthen the Company's
operations, identifying and evaluating external threats and
opportunities to the Company, evaluating and making ongoing
recommendations to the Board with respect for one year and may be
terminated by either the Company or the Director by providing
written notice to the other party. The previous agreement also
terminates automatically upon the death, resignation or removal of
the Directors. Under the terms of the agreement, the Company agreed
to compensate two of the individuals via payment of 22,000,000
restricted shares of its common stock each, and two of the
individuals via payment of 3,666,667 shares of the Company’s
restricted common stock, an aggregate total of 51,333,334 shares,
and to negotiate future compensation on a year-by-year basis. The
Company also agreed to reimburse the individuals for preapproved
expenses.





In
January of 2019 the Company entered into a services agreement with
a limited liability company. Under the terms of the agreement the
limited liability company agreed to provide engineering review and
assessment, systems engineering, program management, technical team
coordination, consultative support, etc. as deemed appropriate by
the Company. The Company agreed to pay the limited liability
company various rates ranging from $35 to $125 per hour depending
on the specific services provided. The term of the agreement is
until January 24, 2020 unless otherwise extended or terminated in
writing by either party.





In
January of 2019 the Company entered into a consulting agreement
with a limited liability company for corporate identity and digital
branding services. Under the terms of the agreement the Company
paid the consultant 5,000,000 shares of its restricted common
stock. The term of the agreement is open ended.





In
February of 2019, the Company issued a consultants 5,300,000 shares
of its restricted common for business consulting and advisory
services.





In
February of 2019 the Company issued 12,500,000 shares of its
restricted common stock for past legal services. The attorney
agreed that the payment of the 12,500,000 shares satisfied all
outstanding debts for legal services owed the law
firm.





During
the three month period ended March 31, 2019, the Company issued a
consultant a total of 3,000,000 share its restricted common stock
in conjunction with a consulting agreement from July 2018 for
social media and website management.





During
the three month period ended March 31, 2019, the Company paid a
issued a total of 7,000,000 share its restricted common stock on
various dates under consulting agreements for assistance with
procuring a marina slip, general business consulting and corporate
communications.





During the three month period
ended March 31, 2019, the Company issued a consultant a total of
3,000,000 share its restricted common stock in conjunction with a
consulting agreement from July 2018 for social media and website
management.





In
March of 2019, the Company issued three independent contractors a
total of 600,000 share its restricted common stock as a bonus for
providing services to the Company on favorable terms including the
willingness to defer cash payments for lengthy periods of
time.





In
March of 2019, the Company entered into an independent contractor
agreement with an individual for technology consulting services.
Under the terms of the agreement the Company agreed to issue
3,500,000 shares of the Company’s restricted common stock.
The agreement is effective until the September 16,
2019.





In
March of 2019, the Company entered into an agreement with an
individual to provide continuing technology consulting services
regarding the development of a submersible device for potential use
in the Company’s operations. The Company agreed to pay the
consultant $7,000 per month for three months plus an additional
$3,000 per month in restricted shares of the Company’s
restricted common stock. The Company issued the consultant 987,282
shares of its restricted common stock. The term of the agreement is
for three months until June 6, 2019.





In
March of 2019, the Company entered into an agreement with two
individuals to join or rejoin the Company’s advisory council.
Under the advisory council agreement the advisors agreed to provide
various advisory services to the Company, including making
recommendations for both the short term and the long term business
strategies to be employed by the Company, monitoring and assessing
the Company's business and to advise the Company’s Board of
Directors with respect to an appropriate business strategy on an
ongoing basis, commenting on proposed corporate decisions and
identifying and evaluating alternative courses of action, making
suggestions to strengthen the Company's operations, identifying and
evaluating external threats and opportunities to the Company,
evaluating and making ongoing recommendations to the Board with
respect to the Company's business, and providing such other
advisory or consulting services as may be appropriate from time to
time. The term of each of the advisory council agreement is for one
year. In consideration for the performance of the advisory
services, the Company agreed to issue the advisors an aggregate
total of 7,000,000 shares of restricted common stock, 5,000,000
shares to one advisor and 2,000,000 shares to the other advisor. If
the advisors or the Company terminates the advisory council
agreement prior to the expiration of the one year term, the
advisors agreed to return to the Company for cancellation any
portion of the shares that have not vested. Under the advisory
council agreement, the Company has agreed to reimburse the advisors
for pre approved expenses.





19





The
Company has an informal consulting agreement with a limited
liability company that is owned and controlled by a person who is
related to the Company’s CEO to pay the related party limited
liability company a minimum of $3,000 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. At
March 31, 2019 the Company owed the related party consultant $0 for
services rendered. The consultant provides the services under the
direction and supervision of the Company’s CEO





The
Company has an ongoing agreement with a limited liability company
that is owned and controlled by a person who is related to the
Company’s CEO to provide stock transfer agency services. At
March 31, 2019 the Company owed the related party limited liability
company $9,839 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 agreement to pay an individual consultant a
minimum of $3,500 per month for administrative and shareholder
support and services.





The
Company has an informal consulting agreement to pay a limited
liability company a minimum of $6,500 per month for business
advisory, strategic planning and consulting services, assistance
with financial reporting, IT management, and administrative
services. The Company also agreed to reimburse the consultant for
expenses. The agreement may be terminated by the Company or the
consultant at any time.





NOTE 10 – LEGAL PROCEEDINGS





On June
18, 2013, Seafarer began litigation against Tulco Resources, LLC,
in a lawsuit filed in the Circuit Court in and for Hillsborough
County, Florida. Such suit was filed for against Tulco based upon
for breach of contract, equitable relief and injunctive relief.
Tulco was the party holding the rights under a permit to a treasure
site at Juno Beach, Florida. Tulco and Seafarer had entered into
contracts in March 2008, and later renewed under an amended
agreement on June 11, 2010. Such permit was committed to by Tulco
to be an obligation and contractual duty to which they would be
responsible for payment of all costs in order for the permit to be
reissued. Such obligation is contained in the agreement of March
2008 which was renewed in the June 2010 agreement between Seafarer
and Tulco. Tulco made the commitment to be responsible for payments
of all necessary costs for the gaining of the new permit. Tulco
never performed on such obligation, and Seafarer during the period
of approximately March 2008 and April 2012 had endeavored and even
had to commence a lawsuit to gain such permit which was awarded in
April 2012. Seafarer alleged in its complaint the expenditure of
large amounts of shares and monies for financing and for delays due
to Tulco’s non-performance. Seafarer sought monetary damages
and injunctive relief for the award of all rights held by Tulco to
Seafarer. Seafarer gained a default and final Judgment on such
matter on July 23, 2014. Seafarer is now in position to receive the
renewed permit in Seafarer’s name and rights only, with Tulco
removed per the Order of the Court. On March 4, 2015, the Court
awarded full rights to the Juno sight to Seafarer Exploration,
erasing all rights of Tulco Resources. The Company filed an
Admiralty Claim over such site in the United States District Court.
On October 21, 2016 a hearing on the Admiralty Claim in the United
States District Court for the Southern District of Florida was
held, where the Court Ordered actions to take place for ongoing
admiralty claim. The Court subsequently entered and Order directing
the arrest warrant for such site, and such arrest warrant was
issued by the Clerk of Court. Such arrest warrant was served by the
United States Marshalls Office in Palm Beach, Florida on July 7,
2017. The United States District Court Judge ordered service on the
claim on August 10, 2017. On November 14, 2017, Judge Kenneth Marra
of the United States District Court awarded Seafarer all rights as
the sole owner of the sunken vessel and any items on such
site.





On
September 3, 2014, the Company filed a lawsuit against Darrel
Volentine, of California. Mr. Volentine was sued in two counts of
libel per se under Florida law, as well as a count for injunction
against the Defendant to exclude and prohibit internet postings.
Such lawsuit was filed in the Circuit Court in Hillsborough County,
Florida. Such suit is based upon internet postings on www.investorshub.com
.. On or about October 15, 2015, the Company and Volentine entered
into a stipulation whereby Volentine admitted to his tortious
conduct, however the stipulated damages agreed to were rejected by
the Court. The Defendant is the subject of a contempt of court
motion which was heard on April 7, 2016, whereby the Court found a
violation and modified the injunction against the Defendant, and
imposed other matters of potential penalties against the Defendant.
The Court also awarded attorney’s fees against the Defendant
on behalf of Seafarer for such motion. The Defendant subsequently
attempted to have such ruling, evidence and testimony attacked
through a motion heard before the Court on October 24, 2016. The
Court dismissed the Defendant’s motion after presentation of
the Defendant’s case at the hearing. The Plaintiff had set
the matter for entry of the attorney’s fees amount due from
the Defendant for hearing in December 2016. As well the Plaintiff
has set for hearing its motion for sanctions in the form of
attorney’s fees for frivolous filing of the October 24th
motion, which motion was also set for hearing in December 2016. The
Plaintiff filed a renewed and amended motion for punitive damages
in the case on September 11, 2016, which has not been set for
hearing. The Defendant had also filed a motion for summary judgment
on the matter of notice entitlement pre-suit, which motion is
pending before the Court. The Plaintiff filed a motion for
sanctions against the Defendant for the motion for summary judgment
being frivolous under existing law, and such motion is pending
ruling on the motion. Discovery is ongoing on such case. On
December 7, 2016, the Court held a hearing on the Defendant’s
motion for sanctions, and essentially attempting to rehear the
motion for contempt against the Defendant. The Court dismissed the
Defendant’s motions, and renewed the ability of the Company
to seek attorney’s fees on such matter, which hearing has not
been set at present. On February 28, 2017, the Court entered an
Order denying the Defendant’s motion for summary judgment.
The Company has a pending motion for sanctions related to the
Defendant’s filing of the motion for summary judgment which
has not been set for hearing. The Company will be attempting to set
such matter for trial during 2019.





20





NOTE 11 – RELATED PARTY TRANSACTIONS





During
the three month period ended March 31, 2019 the Company has had
extensive dealings with related parties including the
following:





In
January of 2019, the Company entered into a convertible promissory
note agreement in the amount of $7,000 with an individual who is
related to the Company’s CEO. This note pays interest at a
rate of 6% per annum and the principal and accrued interest are due
on or before July 8, 2019. The note is unsecured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.008 per share. This note is currently
in default due to non payment of principal and
interest.





On
various dates during the three month period ended March 31, 2019
the Company repaid its CEO a total of $4,848 principal and accrued
interest to repay various outstanding loans.





The
Company has a verbal consulting agreement with a limited liability
company that is owned and controlled by a person who is related to
the Company’s CEO to pay the related party limited liability
company a minimum of $3,000 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. At
March 31, 2019 the Company owed the related party consultant $0 for
services rendered. The consultant provides the services under the
direction and supervision of the Company’s CEO





The
Company has an ongoing agreement with a limited liability company
that is owned and controlled by a person who is related to the
Company’s CEO to provide stock transfer agency services. At
March 31, 2019 the Company owed the related party limited liability
company $9,839 for services rendered.





At March 31, 2019 the
following promissory notes and shareholder loans were outstanding
to related parties:





See
Note 8 convertible notes payable and notes payable - related
parties and related parties in default.





NOTE 12 – SUBSEQUENT EVENTS





Subsequent
to March 31, 2019 the Company sold or issued shares of its common
stock as follows:





(i)
sales
of 79,150,000 shares of common stock under subscription agreements
for approximately $102,200 in proceeds, used for general corporate
purposes, working capital and repayment of debt;(ii)
issuance
of 11,250,00 shares of common stock for services; and(iii)
issuance
of 11,464,220 shares of common stock for conversion and
satisfaction of accounts payable.




















21








Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.





FORWARD LOOKING STATEMENTS





The following discussion contains certain forward-looking
statements that are subject to business and economic risks and
uncertainties, and which speak only as of the date of this annual
report. No one should place strong or undue reliance on any
forward-looking statements. The use in this Form 10-Q of such
words as "believes", "plans", "anticipates", "expects", "intends",
and similar expressions are intended to identify forward-looking
statements, but are not the exclusive means of identifying such
statements. The Company’s actual results or actions may
differ materially from these forward-looking statements 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-Q. 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’s secondary business is to develop revenue streams to
support its historic shipwreck exploration and recovery
operations.





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.





22





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 cost of scientist,
equipment, and laboratories for inventing proprietary technology
will be expensive and will negatively impact the Company. 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.





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.





23





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:





●
To
date, the Company has devoted its time towards establishing its
business to develop the infrastructure capable of researching,
exploring, recovering and conserving historic shipwrecks. The
Company has performed some research, exploration and recovery
activities.





●
Spent
considerable time and money researching potential shipwrecks
including obtaining information from foreign archives.





●
Although
the Company has not generated revenues to date, with the exception
of some nominal revenue from dividends, our business goals continue
to evolve. Relationships are being developed with scientists, as
well as with for profit companies and a local
university.





●
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.●
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.●
The
Company has investigated media opportunities and will continue to
evaluate different media strategies.●
The
Company is actively looking to partner with revenue producing
companies like Probability and Statistics Inc.





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.





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.





24





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. 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. 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.





At
March 31, 2019, the Company had a working capital deficit of
$1,363,274. 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 May 20, 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.


25








Results of Operations





The
Company’s net loss for the three month period ended March 31,
2019 was $360,386 as compared to a net loss of $261,263 during the
three month period ended March 31, 2018, an increase of
approximately 40% year-over-year. The increase in net losses in
2019 was primarily due to an increase in consulting and contractor
expenses. Consulting and contractor expense was $227,610 for the
three month period ended March 31, 2019 versus $146,776 for the
same period in 2018, an increase of nearly 55.1%. The increase in
consulting and contractor expenses in 2019 was largely a result of
stock based compensation being paid to several consultants for
strategy and business consulting, advisory council, technology
consulting, legal fees, operations, and the payment of Board of
Directors’ fees and cash fees paid to various consultants.
Interest expense for the three month period ended March 31, 2019
was $36,033 versus $31,139 for the same period in 2018. The
increase of approximately 15.7% in interest expense was due to the
impact of fair value measurement of various convertible notes.
During the three month period ended March 31, 2019, professional
fees were $31,760 as compared to $23,595 during the three month
period ended March 31, 2018, an increase of nearly 34.6%. During
the three month period ended March 31, 2019, general and
administrative expenses were $27,764 as compared to $17,348 during
the three month period ended March 31, 2018, an increase of 60%.
The Company incurred vessel related expenses of $11,355 during the
three month period ended March 31, 2019 versus $7,840 during the
three month period ended March 31, 2018, an increase of
approximately 44.8%. The increase in vessel related expenses were
primarily due to repairs to the Company’s main salvage vessel
and some additional repairs and dockage for other vessels. 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. The Company incurred travel and
entertainment expenses of $14,557 during the three month period
ended March 31, 2019 as compared to $17,430 during the three month
period ended March 31, 2018, an approximate 16.5% decrease on a
quarter-over-quarter basis. Rent expense was $12,807 during the
three month period ended March 31, 2019 versus $8,639 for the same
period in 2018, an increase of approximately 48.3%.





Liquidity and Capital Resources





At
March 31, 2019, we had cash in the bank of $39,249. During the
period ended March 31, 2019 we incurred a net loss of $360,386. At
March 31, 2019, we had $121,610 in current assets and $1,484,884 in
current liabilities, leaving us a working capital deficit of
$1,363,274.








Lack of Liquidity





A major
financial challenge and significant risk facing the Company is a
lack of liquidity. The Company continued to operate with
significant debt and a working capital deficit during the period
ended March 31, 2019. 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 loaned to 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 onerous, 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 exploration and
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 to no exploration or recovery 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, the Company's business
may fail and our stock price will likely be materially adversely
affected and all capital invested in or borrowed by the Company
will likely be lost.


26








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 significant 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 three month periods
ended March 31, 2019 and 2018, we have experienced operating losses
in every year since our inception resulting in an accumulated
deficit. Our financial results as of March 31, 2019 raise
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 $325,853
for the three month period ended March 31, 2019 and $230,124 for
the three month period ended March 31, 2018. The Company believes
that it will continue to generate losses from its operation for the
foreseeable future and the Company may not be able to generate a
profit in the long-term, or ever. Due to the significance of these
of these matters there is substantial doubt about the
Company’s ability to continue as a going concern. Any
investment in the Company’s securities is very speculative
with a very high chance of a total loss of all invested
capital.





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.





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, Summary of
Significant Accounting Policies, contained in the notes to the
Company’s financial statements for the periods ended March
31, 2019 and 2018).  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 either the Company
or its auditors have made any such changes in accounting
estimates.





27





Off-balance Sheet Arrangements





None.





Item 3. Quantitative and Qualitative Disclosures About Market
Risk





Not
required for smaller reporting companies.





Item 4. Controls and Procedures





Management’s Responsibility for Controls and
Procedures





The
Company’s management is responsible for establishing and
maintaining adequate internal control over the Company’s
financial reporting. The Company’s controls over financial
reporting are designed under the supervision of the Company’s
Principal Executive Officer/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/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) and 15d-15(e) promulgated under the Exchange Act, as of
March 31, 2019.  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.





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.





*
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.*
We have
not achieved an optimal segregation of duties for executive
officers of the Company.





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.





28








Remediation Efforts to Address Deficiencies in Disclosure Controls
and Procedures





As a
result of these findings, management, upon obtaining sufficient
capital and operations, intends to take practical, cost-effective
steps in implementing internal controls, including the possible
remedial measures set forth below.  As of March 31, 2019
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.





(b) Change in Internal Control Over Financial
Reporting





The
Company has not made any change in our internal control over
financial reporting during the period ended March 31,
2019.















































29








Part II. Other Information





Item 1. 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.





Item 1A.  Risk
Factors





Not
required for smaller reporting companies.





Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds





During
the three month period ended March 31, 2019, the Company issued or
agreed to issue 96,220,616 shares of its restricted common stock to
several consultants for board of directors’ fees, legal,
operations, advisory council, website development and maintenance,
technology consulting fees, general business consulting, etc. The
Company also issued 5,000,000 shares of its restricted common
shares to a lender as a penalty fee for the non payment of
principal and interest related to a promissory note that had come
due. The Company believes that the issuance of the securities was
exempt from registration under the Securities Act of 1933, as
amended, in reliance on Section 4(2) of the Securities Act as
a transaction by an issuer not involving any public offering and
based on the fact that such securities were issued for services to
sophisticated or accredited investors and persons who are
thoroughly familiar with the Company’s proposed business by
virtue of their affiliation with the Company.





30





During
the three month period ended March 31, 2019, the Company entered
into a subscription agreements to sell 346,066,667 shares of its
restricted common stock in exchange for proceeds of $361,850 and
additional consideration. The proceeds that were received were used
for general corporate purposes, working capital and the repayment
of debt.





Exemptions from Registration for Sales of Restricted
Securities.





The
issuance of securities referenced above were issued to persons who
the Company believes were either “accredited
investors,” or “sophisticated investors” who, by
reason of education, business acumen, experience or other factors,
were fully capable of evaluating the risks and merits of an
investment in us; and each had prior access to all material
information about us. None of these transactions involved a public
offering. An appropriate restrictive legend was placed on each
certificate that has been issued, prohibiting public resale of the
shares, except subject to an effective registration statement under
the Securities Act of 1933, as amended (the “Act”) or
in compliance with Rule 144. The Company believes that the offer
and sale of these securities was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) under
the Securities Act of 1933 (the “Act”)
thereof, and/or Regulation D. There may be additional
exemptions available to the Company.





Issuance of Securities Due to Conversion of Notes and
Debt





During
the three month period ended March 31, 2019, the holder of a
promissory note with a principal balance of $1,000 elected to
convert all of the balance of the note plus accrued interest into
1,284,938 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.





Item 3. Defaults Upon Senior Securities





See
Part I, Item 2, notes payable and convertible notes payable, in
default, for discussion of defaults on certain debt obligations of
the Company.





Item 4. Mine Safety Disclosures





None.





Item 5. Other Information





None





Item 6. Exhibits





Set
forth below is a list of the exhibits to this quarterly report on
Form 10-Q.





Exhibit Number
Description*31.1
Certification of the Chief Executive
Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
the Securities and  Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*32.1
Certification of the Chief Executive
Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b)
of the Securities and  Exchange Act of 1934, as
amended, and 18 U.S.C. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.*99.1
Temporary
Hardship Exemption**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





* Filed
herewith.


** To
be furnished by amendment per Temporary Hardship Exemption under
Regulation S-T.


31








SIGNATURE





Pursuant
to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly
authorized.








Seafarer Exploration Corp.





Date:
May 20, 2019
By:
/s/ Kyle KennedyKyle
Kennedy
President,
Chief Executive Officer, and Chairman of the Board
(Principal
Executive Officer and Principal Accounting Officer)








Date:
May 20, 2019
By:
/s/ Charles BranscumCharles
Branscum, Director








Date:
May 20, 2019
By:
/s/ Robert L. KennedyRobert
L. Kennedy, Director








Date:
May 20, 2019
By:
/s/ Thomas SoederThomas
Soeder, Director








Date:
May 20, 2019
By:
/s/ Bradford ClarkBradford
Clark, Director














32