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, 2017





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











1





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 whether the registrant has submitted electronically
and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).





Yes
☑ No ☐





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
☑(Do not
check if a smaller reporting 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 15, 2017, there were 2,429,980,249 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, 2017





TABLE OF CONTENTS








PART I:
FINANCIAL INFORMATION
4Item 1.
Financial Statements (unaudited)
5Condensed Balance
Sheets: March 31, 2017 and December 31, 2016
5Condensed
Statements of Operations: Three months ended March 31, 2017 and
2016
6Condensed
Statements of Cash Flows: Three months ended March 31, 2017
and 2016
7Notes
to Condensed Financial Statements
8Item 2.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
23Item 3.
Quantitative and Qualitative Disclosures About Market
Risk
28Item 4T.
Controls and Procedures
28PART
II: OTHER INFORMATION
30Item 1. Legal
Proceedings
30Item 1A. Risk
Factors
31Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds
31Item 3.
Defaults Upon Senior Securities
31Item 4.
Submission of Matters to a Vote of Security Holders
32Item 5. Other
Information
32Item 6.
Exhibits
32SIGNATURES
33












































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








SEAFARER EXPLORATION CORP.


CONDENSED BALANCE SHEETS


(Unaudited)





March
31,
December
31,2017
2016AssetsCurrent
assets:Cash
$62,478
$24,549Prepaid
expenses
102,683
20,606Deposits
750
750Total
current assets
165,911
45,905Property
and equipment, net
45,796
54,292Total
assets
$211,707
$100,197Liabilities and Stockholders' DeficitCurrent
liabilities:Accounts
payable and accrued expense
$341,363
$332,106Convertible
notes payable, net of discounts of $48,352 and $22,423
21,398
27,327Convertible
notes payable, related parties, net of discounts of $18,750 and
$156
6,250
2,244Convertible
notes payable, in default
441,300
444,952Convertible
notes payable, in default - related parties
206,500
196,500Shareholder
loan
17,070
22,270Notes
payable, in default
30,000
30,000Notes
payable, in default - related parties
17,500
17,500Total
current liabilities
1,081,381
1,072,899Commitments
and contingenciesStockholders'
deficit:Preferred
stock, $0.0001 par value - 50,000,000 shares authorized; 67 shares
issuedSeries
A - 7 shares issued and outstanding at March 31, 2017 and December
31, 2016
-
-Series
B - 60 shares issued and outstanding at March 31, 2017 and December
31, 2016
-
-Common stock, $0.0001 par value
2,900,000,000
shares authorized; 2,416,055,632
and2,194,976,061 shares issued and outstanding at March 31, 2017 and
December 31, 2016
241,606
219,498Additional
paid-in capital
11,887,490
11,485,588Accumulated
deficit
(12,998,770)
(12,677,788)Total
stockholders' deficit
(869,674)
(972,702)Total
liabilities and stockholders' deficit
$211,707
$100,197





See notes to unaudited
condensed financial statements.





5





SEAFARER EXPLORATION CORP.


CONDENSED  STATEMENTS OF OPERATIONS


(Unaudited)





2017
2016Revenue
$-
$-Expenses:Consulting
and contractor expenses
121,113
77,454Vessel
Maintenance and Dockage
13,025
-Professional
fees
18,180
20,500General
and administrative expense
32,543
9,010Depreciation
expense
8,496
8,496Rent
expense
13,593
9,448Surveying
and site mapping
15,595
-Travel
and entertainment expense
10,444
16,001Total
operating expenses
232,989
140,909Income
(loss) from operations
(232,989)
(140,909)Other
income (expense):Interest
(expense) income, net
(87,993)
(61,071)Total
other income (expense)
(87,993)
(61,071)Net
loss
$(320,982)
$(201,980)Net
loss per share - basic and diluted
$-
$-Weighted
average common shares outstanding - basic and diluted
1,345,436,472
1,345,436,472





See
notes to unaudited condensed financial
statements.





6





SEAFARER EXPLORATION CORP.


CONDENSED STATEMENTS OF CASH FLOWS


(Unaudited)





2017
2016Operating
activitiesNet
loss
$(320,982)
$(201,980)Adjustments
to reconcile net loss tonet
cash used in operating activitiesDepreciation
8,496
8,496Amortization
of debt discount and interest expense onbeneficial
conversion feature of convertible notes
-
15,575Unrealized
gains/losses on fair value changes in derivatives
(9,742)
29,730Common
stock issued for services
119,700
8,000Non-cash
finance costs
1,200
2,340Decrease
in:Prepaid
expenses
-
12,608Increase
in:Accounts
payable and accrued expenses
9,257
51,873Net
cash used in operating activities
(192,071)
(73,358)Cash
flows from financing activities:Proceeds
from the issuance of common stock
160,000
22,000Proceeds
from the issuance convertible notes payable
40,000
33,000Proceeds
form convertible note payable - related party
30,000
5,000Proceeds
from shareholder loan
-
4,260Proceeds
from note payable
-
17,000Net
cash provided by financing activities
230,000
81,260Net
increase in cash
37,929
7,902Cash
- beginning of year
24,549
5,097Cash
- ending of year
62,478
12,999Supplemental
disclosure of cash flow information:Cash
paid for interest expense
$-
$-Cash
paid for income taxes
$-
$-Noncash
financing activities:Issuance
of Common stock upon conversion ofconvertible
debt and accrued interest
$73,160
$92,572





See notes to unaudited condensed financial
statements.














7





SEAFARER EXPLORATION CORP. AND SUBSIDIARIES


(A Development Stage Company)


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, 2016, filed with the Securities and
Exchange Commission (the “Commission”). The results of
operations for the three month period ended March 31, 2017 are not
necessarily indicative of the results that may be expected for the
entire year ending December 31, 2017 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, and recovery
of historic shipwrecks with the objective of exploring and
discovering Colonial-era shipwrecks for future generations to be
able to appreciate and understand.  Seafarer currently
has two different wreck sites under permit with the State of
Florida, one wreck site in the permit renewal process and one wreck
site under contract with a private party and is working closely
with the Florida Department of Historical Resources and the Florida
Bureau of Archeological Research to research and document these,
and additional, wreck sites.





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 15, 2017.
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.





Accounting Method





The
Company’s condensed financial statements are prepared using
the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of
America.





8


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.





Revenue Recognition





The
Company plans to recognize revenue on arrangements in accordance
with Securities and Exchange Commission Staff Accounting Bulletin
No. 101, “Revenue Recognition in Financial Statements”
and No. 104, “Revenue Recognition”. In all cases,
revenue will be recognized only when the price is fixed or
determinable, persuasive evidence of an arrangement exists, the
service is performed and collectability is reasonably assured. For
the periods ended March 31, 2017 and 2016, the Company did not
report any revenues.





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, 2017 and 2016.





Fair Value of Financial Instruments





Fair
value is defined in the authoritative guidance as the price that
would be received to sell an asset or paid to transfer a liability
in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants at
the measurement date. A fair value hierarchy was established, which
prioritizes the inputs used in measuring fair value into three
broad levels as follows:





Level 1
– Valuation based on unadjusted quoted market prices in
active markets for identical assets or liabilities.





Level 2
– Valuation based on, observable inputs (other than level one
prices), quoted market prices for similar assets such as at the
measurement date; quoted prices in the market that are not active;
or other inputs that are observable, either directly or
indirectly.





Level 3
– Valuation based on unobservable inputs that are supported
by little or no market activity, therefore requiring
management’s best estimate of what market participants would
use as fair value.





In
instances where the determination of the fair value measurement is
based on inputs from different levels of the fair value hierarchy,
the level in the fair value hierarchy within which the entire fair
value measurement falls is based on the lowest level input that is
significant to the fair value measurement in its entirety. The
Company’s assessment of the significance of a particular
input to the fair value measurement in its entirety requires
judgment, and considers factors specific to the asset or liability.
The valuation of the Company’s notes recorded at fair value
is determined using Level 3 inputs, which consider (i) time value,
(ii) current market and (iii) contractual prices.





The
carrying amounts of financial assets and liabilities, such as cash
and cash equivalents, receivables, accounts payable, notes payable
and other payables, approximate their fair values because of the
short maturity of these instruments.





Property and Equipment and Depreciation





Fixed
assets are recorded at historical cost. Depreciation is computed on
the straight-line method over the estimated useful lives of the
respective assets. Property and equipment, net consist of the
following at March 31, 2017 and December 31, 2016:





March 31,
2017
December 31,
2016Diving
vessel
$326,005
$326,005Equipment
32,420
32,420Less accumulated
depreciation
(312,629)
(304,133)$45,796
$54,292





Depreciation
expense for each of the three month periods ended March 31, 2017
and 2016 amounted to $8,496.





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 periods ended March 31, 2017 and
2016.





9





Employee Stock Based Compensation





The
FASB issued SFAS No.123 (revised 2004), Share-Based Payment, which was
superseded by ASC 718-10. ASC 718-10 provides investors and other
users of financial statements with more complete and
neutral financial information, by requiring that the
compensation cost relating to share-based payment transactions be
recognized in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments
issued. SFAS 123(R) covers a wide range of share-based compensation
arrangements, including share options, restricted share plans,
performance-based awards, share appreciation rights and employee
share purchase plans. As of March 31, 2017, the Company has not
implemented an employee stock based compensation plan.





Non-Employee Stock Based Compensation





The
Company accounts for stock based compensation awards issued to
non-employees for services, as prescribed by ASC 718-10, at either
the fair value of the services rendered or the instruments issued
in exchange for such services, whichever is more readily
determinable, using the measurement date guidelines enumerated in
EITF 96-18,  Accounting for
Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services
, which was superseded by ASC 505-50.  The Company has
issued compensatory shares for various services including, but not
limited to, executive, board of directors, business consulting,
corporate advisory, accounting, research, archeological,
operations, strategic planning, corporate communications,
financial, legal and administrative consulting services. As
determined by Management the Company may issue compensatory shares
in the future for these or other services.





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 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.





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. 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.





The
classification of derivative instruments, including the
determination of whether such instruments should be recorded as
liabilities or as equity, is evaluated at the end of each reporting
period.  Derivative instrument liabilities are classified
in the balance sheet as current or non-current based on whether or
not net-cash settlement of the derivative instrument could be
required within 12 months from the balance sheet
date.





Convertible Notes Payable at Fair Value





The
Company elected to account for this hybrid contract under the
guidance of ASC 815-15-25-4.  This guidance allows an
entity that initially recognizes a hybrid financial instrument that
under paragraph  815-15-25-1 would be required to be
separated into a host contract and a derivative instrument may
irrevocably elect to initially and subsequently measure that hybrid
financial instrument in its entirety at fair value (with changes in
fair value recognized in earnings).





The fair value election is also available when a previously
recognized financial instrument subject to a re-measurement event
and the separate recognition of an embedded derivative. The fair
value election may be made instrument by instrument. For purposes
of this paragraph, a re-measurement event (new basis event) is an
event identified in generally accepted accounting principles, other
than the recognition of an other-than-temporary impairment, that
requires a financial instrument to be re-measured to its fair value
at the time of the event but does not require that instrument to be
reported at fair value on a continuous basis with the change in
fair value recognized in earnings. Examples of re-measurement
events are business combinations and significant modifications of
debt as defined in Subtopic 470-50.





10







NOTE 4 - LOSS PER SHARE





Components
of loss per share for the three months ended March 31, 2017 and
2016 are as follows:





For the Three Months Ended
March 31, 2017
For the Three Months Ended
March 31, 2016Net loss
attributable to common stockholders
$(320,982)
$(201,980)Weighted average
shares outstanding:Basic and
diluted
2,262,309,103
1,345,436,472Loss per
share:Basic and
diluted
$(0.00)
$(0.00)





NOTE 5 - CAPITAL STOCK





On
February 24, 2017, the Board of Directors, acting as
shareholders of the Preferred Shares and pursuant to their own
resolution, voted to increase the authorized shares of the
Corporation from 2,500,000,000 to 2,900,000,000 common shares. Such
filing was processed to be effective with the State of Florida on
March 2, 2017.





As a
result, the Company is authorized to issue 2,900,000,000 shares of
$0.0001 par value common stock.





In
January of 2017, the Company entered into a subscription agreement
to sell 17,000,000 shares of restricted common stock to two
individuals in exchange for proceeds of $75,000. The Company also
agreed that the purchaser will be entitled to receive $500,000 of
treasure of their choice after both the Company has recovered a
minimum of $1,200,000 of artifacts/treasure and the State of
Florida has received its full share of treasure per any permits or
agreements. The purchaser will have the right to convert up to a
maximum of $500,000 worth of treasure that they have received into
shares of the Company’s restricted common stock at a discount
of 10% of the average trading price of the Company’s common
stock of the previous five days closing price provided that the
Company’s common stock is trading at or above $0.04 by
providing a written notice to the Company. The conversion option
will expire eighteen months after the Company first locates a
minimum of $1,200,000 worth of treasure. The value of the treasure
will be determined by a mutually agreed upon third party who is a
recognized expert in the valuation of historic
artifacts.





Preferred Stock





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





Series A Preferred Stock





At
March 31, 2017, the Company had seven shares of Series A preferred
stock issued and outstanding. Each share of Series A preferred
stock has the right to convert into 214,289 shares of the
Company’s common stock.  As of March 31, 2017 and
2016, no shares of preferred stock had been converted into 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.





11





Warrants and Options





During
the three month period ended March 31, 2017, the Company issued the
following warrants in connection with the issuances of indebtedness
(see Note 8):





Term
Amount
Exercise Price01/31/17 to 01/31/18
40,000,000
$0.004002/14/17 to 08/14/18
33,333,333
$0.005009/10/17 to 09/10/19
15,000,000
$0.025009/10/17 to 09/10/19
10,000,000
$0.0250Total warrants issued
98,333,333





As of
March 31, 2017, the Company had a total of 220,515,151 warrants
outstanding to purchase common stock with exercise prices ranging
from $0.001 to $0.025 per share.





In
January of 2017, the Company entered into a subscription agreement
to sell 40,000,000 shares of restricted common stock at a price
$0.0005 share to an individual in exchange for proceeds of $20,000.
The Company also agreed that the purchaser will be entitled to
receive warrants to purchase 40,000,000 shares of the
Company’s restricted common stock. The warrants are
exercisable at a price of 0.004 per share for a period of one year
from January 31, 2017.





NOTE 6 - INCOME TAXES





The
items accounting for the difference between income taxes computed
at the federal statutory rate and the provision for income taxes
are as follows:





For the Three Months Ended March
31, 2017
For the Three Months Ended March
31, 2016Income tax at
federal statutory rate
(34.00)%
(34.00)%State tax, net of
federal effect
(3.96)%
(3.96)%37.96%
37.96%Valuation
allowance
(37.96)%
(37.96)%Effective
rate
0.00%
0.00%





Deferred
income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax
purposes.





As of
March 31, 2017 and December 31, 2016, the Company’s only
significant deferred income tax asset was an estimated net tax
operating loss of $12,600,000 and $12,300,000 respectively that is available
to offset future taxable income, if any, in future periods, subject
to expiration and other limitations imposed by the Internal Revenue
Service.  Management has considered the Company's
operating losses incurred to date and believes that a full
valuation allowance against the deferred tax assets is required as
of March 31, 2017 and December 31, 2016. The Company is preparing and reviewing information
for tax returns for past years. Due to the Company’s lack of
revenue since inception, management does not anticipate that there
is any income tax liability for past years. Management has
evaluated tax positions in accordance with ASC 740 and has not
identified any tax positions, other than those discussed above,
that require disclosure.





12





NOTE 7 - LEASE OBLIGATION





The
Company leases 823 square feet of office space located at 14497
North Dale Mabry Highway, Suite 209-N, Tampa, Florida 33618. The
lease expires on June 30, 2017, and calls for base monthly rent of
$1,251.





Operations House





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





NOTE 8 - CONVERTIBLE NOTES PAYABLE AND NOTES
PAYABLE





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





Convertible Notes Payable





The
following table reflects the convertible notes payable at March 31,
2017:





Issue Date:
Maturity Date
2017
Interest Rate
Conversion RateConvertible notes payable:July 19, 2016
July 19, 2017
4,000
6.00%
0.0015August 31, 2016
August 31, 2017
25,750
6.00%
0.0010March 10, 2016
September 10, 2017
15,000
6.00%
0.0010March 10, 2016
September 10, 2017
10,000
6.00%
0.0010March 14, 2016
September 14, 2017
15,000
6.00%
0.0015Unamortized
discounts

(48,352)Balance

21,398Convertible notes payable - related party:February 24, 2017
August 24, 2017
25,000
6.00%
0.0075Unamortized
discounts

(18,750)Balance

6,250Convertible notes payable, in default:August 28, 2009
November 1, 2009
4,300
10.00%
0.0150April 7, 2010
November 7, 2010
70,000
6.00%
0.0080November 12, 2010
November 12, 2011
40,000
6.00%
0.0050October 31, 2012
April 30, 2013
8,000
6.00%
0.0040November 20, 2012
May 20, 2013
50,000
6.00%
0.0050January 19, 2013
July 30, 2013
5,000
6.00%
0.0040February 11, 2013
August 11, 2013
9,000
6.00%
0.0060





13





September 25, 2013
March 25, 2014
10,000
6.00%
0.0125October 04, 2013
April 4, 2014
50,000
6.00%
0.0125October 30, 2013
October 30, 2014
50,000
6.00%
0.0125May 15, 2014
November 15, 2014
40,000
6.00%
0.0070October 13, 2014
April 13, 2015
25,000
6.00%
0.0050June 29, 2015
December 29, 2015
25,000
6.00%
0.0030September 18, 2015
March 18, 2016
25,000
6.00%
0.0020April 04, 2016
October 4, 2016
10,000
6.00%
0.0010August 24, 2016
February 24, 2017
20,000
6.00%
0.0010Balance

441,300Convertible notes payable - related parties, in
default:January 09, 2009
January 9, 2010
10,000
10.00%
0.0150January 25, 2010
January 25, 2011
6,000
6.00%
0.0050January 18, 2012
July 18, 2012
50,000
8.00%
0.0040January 19, 2013
July 30, 2013
15,000
6.00%
0.0040July 26, 2013
January 26, 2014
10,000
6.00%
0.0100January 01, 2014
July 17, 2014
31,500
6.00%
0.0060May 27, 2014
November 27, 2014
7,000
6.00%
0.0070July 21, 2014
January 25, 2015
17,000
6.00%
0.0080October 16, 2014
April 16, 2015
21,000
6.00%
0.0045July 14, 2015
January 14, 2016
9,000
6.00%
0.0030January 12, 2016
July 12, 2016
5,000
6.00%
0.0020May 10, 2016
November 10, 2016
5,000
6.00%
0.0005May 10, 2016
November 10, 2016
5,000
6.00%
0.0005May 20, 2016
November 20, 2016
5,000
6.00%
0.0005July 12, 2016
January 12, 2017
5,000
6.00%
0.0006January 26, 2017
March 12, 2017
5,000
6.00%Balance

206,500Balance, convertible notes
payable

675,448










The
following table reflects the notes payable at March 31,
2017:





Issue Date:
Maturity Date
2017
Interest RateNotes payable, in default:April 27, 2011
April 27, 2012
5,000
6.00%June 23, 2011
August 23, 2011
25,000
6.00%Balance

30,000Notes payable - related parties, in default:February 24, 2010
February 24, 2011
7,500
6.00%October 6, 2015
November 15, 2015
10,000
6.00%Balance

17,500Balance, notes payable

47,500





14





New Convertible Notes Payable and Notes Payable





During
the three month period ended March 31, 2017 the Company entered
into the following Convertible Notes Payable and Notes Payable
Agreements:





In
January of 2017, the Company entered into a convertible promissory
note agreement in the amount of $5,000 with an individual who is
related to the Company’s CEO. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before March 12, 2017. The Company agreed to pay the related
party lender a loan origination fee of 1,000,000 shares of its
restricted common stock. The note is not secured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0005 per share. At March 31, 2017 the
loan was in default due to non-payment of principal and
interest.





In
February of 2017, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest are due
on or before August 14, 2017. The note is not secured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.00075 per share. The
related party lender received 33,333,333 warrants to purchase
shares of the Company’s common stock at a price of
$0.005.


In
March of 2017, the Company entered into a convertible promissory
note agreement in the amount of $15,000 with a corporation. This
loan pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before September 10, 2017. The note
is not secured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.001 per
share. The lender received 15,000,000 warrants to purchase shares
of the Company’s common stock at a price of
$0.025.





In
March of 2017, the Company entered into a convertible promissory
note agreement in the amount of $10,000 with a corporation. This
loan pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before September 10, 2017. The note
is not secured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.001 per
share. The lender received 10,000,000 warrants to purchase shares
of the Company’s common stock at a price of
$0.025.





In
March of 2017, the Company entered into a convertible promissory
note agreement in the amount of $15,000 with a corporation. This
loan pays interest at a rate of 6% per annum and the principal and
accrued interest are due on or before September 14, 2017. The note
is not secured and is convertible at the lender’s option into
shares of the Company’s common stock at a rate of $0.0015 per
share.








Note Conversion





A
lender who had a convertible promissory note outstanding with a
remaining principal balance of $24,402 elected to convert the
principal balance of the note plus accrued interest and late fees
of $2,242 into 36,205,587 shares of the Company’s common
stock. The remaining principal balance of this note was $0 at March
31, 2017.





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.





Shareholder Loans





At
March 31, 2017 the Company had two loans outstanding to its CEO
totaling $17,483, consisting of a loan in the amount of $15,983
with a 6% annual rate of interest and a loan in the amount of
$1,200 at 6% rate of interest and an option to convert the loan
into restricted shares of the Company’s common stock at
$0.002.














15





NOTE 9 – MATERIAL AGREEMENTS





Agreement to Explore a Shipwreck Site Located off of Brevard
County, Florida





On
March 1, 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.





Exploration Permit with the Florida Division of Historical
Resources for an Area off of Melbourne Beach, Florida





On July
28, 2014, Seafarer’s Quest, LLC, received a 1A-31 Permit (the
“Permit”) from the Florida Division of Historical
Resources for an area identified off of Melbourne Beach, Florida.
The Permit is active for three years from the date of
issuance.





Exploration Permit with the Florida Division of Historical
Resources for an Area off of Melbourne Beach, Florida





On July
6, 2016, Seafarer’s Quest, LLC, received a 1A-31 Permit (the
“Permit”) from the Florida Division of Historical
Resources for a second area identified off of Melbourne Beach,
Florida. The Permit is active for three years from the date of
issuance.





Certain Other Agreements





In
January of 2017, the Company entered into a subscription agreement
to sell 17,000,000 shares of restricted common stock to two
individuals in exchange for proceeds of $75,000. The Company also
agreed that the purchaser will be entitled to receive $500,000 of
treasure of their choice after both the Company has recovered a
minimum of $1,200,000 of artifacts/treasure and the State of
Florida has received its full share of treasure per any permits or
agreements. The purchaser will have the right to convert up to a
maximum of $500,000 worth of treasure that they have received into
shares of the Company’s restricted common stock at a discount
of 10% of the average trading price of the Company’s common
stock of the previous five days closing price provided that the
Company’s common stock is trading at or above $0.04 by
providing a written notice to the Company. The conversion option
will expire eighteen months after the Company first locates a
minimum of $1,200,000 worth of treasure. The value of the treasure
will be determined by a mutually agreed upon third party who is a
recognized expert in the valuation of historic
artifacts.





In
January of 2017, the Company entered into a convertible promissory
note agreement in the amount of $5,000 with an individual who is
related to the Company’s CEO. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before March 12, 2017. The Company agreed to pay the related
party lender a loan origination fee of 1,000,000 shares of its
restricted common stock. The note is not secured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0005 per share.  At March
31, 2017 the loan was in default due to non-payment of principal
and interest.





In
January of 2017, the Company entered into a subscription agreement
to sell 40,000,000 shares of restricted common stock at a price
$0.0005 share to an individual in exchange for proceeds of $20,000.
The Company also agreed that the purchaser will be entitled to
receive warrants to purchase 40,000,000 shares of the
Company’s restricted common stock. The warrants are
exercisable at a price of 0.004 per share for a period of one year
from January 31, 2017.





In
January of 2017, the Company amended agreement with an individual
who had previously joined the Company’s advisory council in
2016. Under the amended advisory council agreement the Company
agreed to pay the advisor an additional 2,000,000 shares of
restricted common stock for efforts above and beyond the services
agreed to in the original advisory council agreement, in particular
advice and expertise pertaining to a certain technology that the
Company desired to utilize in its exploration operations. The
2,000,000 were issued to the advisor during the three month period
ended March 31, 2017.





In
February of 2017, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest are due
on or before August 14, 2017. The note is not secured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.00075 per
share.  The related party lender received 33,333,333
warrants to purchase shares of the Company’s common stock at
a price of $0.005.





In
February of 2017, the Company entered into an agreement with a
corporation under which the corporation agreed to provide
consulting services utilizing a technology to assist the Company
with shipwreck site and artifact location and identification. The
consultant agrees to utilize the technology system at a designated
shipwreck site to ascertain and/or verify the presence of valuable
artifacts in a specific area. The Company agreed to pay the
consultant 5% royalty with a cap of $1,500,000 for anything of
value located at the site. The Company also agreed to pay the
consultant a 20% royalty from the recovery of materials located and
verified by the technology in the areas surrounding the designated
site. The Company also paid the consultant of $30,000 for the
utilization of the technology to provide the Company with specific
data under a trial survey as to the approximate location of various
items of value.





16





In
February of 2017, the Company extended the term of a previous
agreement with an individual who is related to the Company’s
CEO to continue serving as a member of the Company’s Board of
Directors. Under the  agreement, the Director agreed to
provide various services to the Company including making
recommendations for both the short term and the long term business
strategies to be employed by the Company, monitoring and assessing
the Company's business and to advise the Company’s Board of
Directors with respect to an appropriate business strategy on an
ongoing basis, commenting on proposed corporate decisions and
identifying and evaluating alternative courses of action, making
suggestions to strengthen the Company's operations, identifying and
evaluating external threats and opportunities to the Company,
evaluating and making ongoing recommendations to the Board with
respect for one year and may be terminated by either the Company or
the Director by providing written notice to the other party. The
agreement also terminates automatically upon the death, resignation
or removal of the Director.  Under the terms of the
agreement, the Company agreed to pay the Director 20,000,000
restricted shares of its common stock and to negotiate future
compensation on a year-by-year basis. The Company also agreed to
reimburse the Director for preapproved expenses.





In
February of 2017, the Company extended the term of a previous
agreement with a second individual who is related to the
Company’s CEO to continue serving as a member of the
Company’s Board of Directors. Under the  agreement,
the Director agreed to provide various services to the Company
including making recommendations for both the short term and the
long term business strategies to be employed by the Company,
monitoring and assessing the Company's business and to advise the
Company’s Board of Directors with respect to an appropriate
business strategy on an ongoing basis, commenting on proposed
corporate decisions and identifying and evaluating alternative
courses of action, making suggestions to strengthen the Company's
operations, identifying and evaluating external threats and
opportunities to the Company, evaluating and making ongoing
recommendations to the Board with respect for one year and may be
terminated by either the Company or the Director by providing
written notice to the other party. The agreement also terminates
automatically upon the death, resignation or removal of the
Director.  Under the terms of the agreement, the Company
agreed to pay the Director 20,000,000 restricted shares of its
common stock and to negotiate future compensation on a year-by-year
basis. The Company also agreed to reimburse the Director for
preapproved expenses.





In
February of 2017, the Company entered into agreements with seven
separate individuals to either join or rejoin the Company’s
advisory council. Under the advisory council agreements all of the
advisors agreed to provide various advisory services to the
Company, including making recommendations for both the short term
and the long term business strategies to be employed by the
Company, monitoring and assessing the Company's business and to
advise the Company’s Board of Directors with respect to an
appropriate business strategy on an ongoing basis, commenting on
proposed corporate decisions and identifying and evaluating
alternative courses of action, making suggestions to strengthen the
Company's operations, identifying and evaluating external threats
and opportunities to the Company, evaluating and making ongoing
recommendations to the Board with respect to the Company's
business, and providing such other advisory or consulting services
as may be appropriate from time to time. The term of each of the
advisory council agreements is for one year. In consideration for
the performance of the advisory services, the Company agreed to
issue the advisors shares of the Company’s restricted common
stock including 5,000,000 shares each to two of the advisors,
4,000,000 shares each to four of the advisors and 3,000,000 shares
to one of the advisors, an aggregate total of 22,000,000 restricted
shares. According to the agreements each of the advisors’
shares vest at a rate of 1/12th of the amount per month over the
term of the agreement.  If any of the advisors or the
Company terminates the advisory council agreements prior to the
expiration of the one year terms, then each of the advisors whose
agreement has been terminated has agreed to return to the Company
for cancellation any portion of their shares that have not vested.
Under the advisory council agreements, the Company has agreed to
reimburse the advisors for preapproved expenses.





In
March of 2017, the Company entered into a Financing and Rights
agreement with a limited liability company. Under the terms of the
agreement the limited liability company agreed to provide financing
for the Company for the exploration, recovery and all other related
requirements necessary for the related permitted offshore
underwater search and recovery for a site located off of Juno
Beach, Florida and several additional sites that have been
identified by a third party to Seafarer as being located off of the
East Coast of Florida in areas that would be subject to Federal
Admiralty claims should opportunities arise for the exploration and
recovery of historic shipwrecks at these sites. The Company has
agreed to enter into a separate agreement with the third party for
the specific location of the potential additional shipwreck sites
and as such the rights to these sites that the Company may receive
due its agreement with the third party are included as a part of
the Financing and Rights agreement. In exchange for the services
and rights to be provided by the Company under its core business
and such applicable rights under such judgments and permits, the
limited liability company agreed to provide project capital for the
Juno Site project in the amount of up to $800,000, within ninety
days of the approval of the recovery permit necessary for such
site. In return for such capital contribution, the Company agreed
to pay to the limited liability company a portion of such division
of artifacts, revenue. In the event that the limited liability
company has contributed capital toward the enterprise in any amount
and treasure and artifacts are found at any time in the future
under the Company or any related party, then the limited liability
company shall be entitled to a percentage of its share of such
artifacts or revenue created from such site, so long as a minimum
funding of $100,000 has been committed in the furtherance of the
recovery effort. In its sole discretion, the limited liability
company may, if it chooses to do so, contribute such necessary
capital for the necessary actions to gain such permit for such
recovery operations on such Juno Site. The limited liability
company agreed to provide the funding in exchange for exclusive
rights to portions of artifacts recovered from such site, or
revenues created from such. The agreement further states that
capital provided to the Company by the limited liability Company
shall be sued exclusively for actions or operations on the Juno
Site, unless another site is mutually agreed upon, for dive
operations, surveys and scanning as necessary, boat and vessel
expenses, compensation and site management expenses, fuel and other
related costs to the Juno Site project. The limited liability
company will have the right to withhold and approve funding if the
funding is not required for recovery operations on the Juno Site.
After a the State of Florida has taken its share of any artifacts
and treasure per any future permits or agreements for the Juno
Site, the limited liability Company will be entitled to receive 20%
of the first $10,000,000 of artifacts/treasure recovered, 15% of
the amount of any artifacts/treasure recovered with a value greater
than $10,000,000 to $50,000,000, 10% of the amount of any
artifacts/treasure recovered with a value greater than $50,000,000
for a period of three years, and 5% of the amount of any
treasure/artifacts recovered with a value greater than $50,000,000
for five years. Additionally, the limited liability company has
been made aware that Seafarer has had negotiations with a separate
third party for the location of several additional shipwreck sites.
The limited liability company will be given exclusive rights to any
sites that the Company gains from the third party with the sites
becoming a part of this agreement. Per the agreement the sites are
unproven, never scanned and presumed to be unsearched and highly
speculative as to whether there are any shipwrecks or shipwreck
material on the sites however such sites are included in the
Financing and Rights agreement. For any of the sites that Seafarer
acquires the rights to from the third party, the limited liability
Company will be entitled to receive 20% of the first $10,000,000 of
artifacts/treasure recovered, 15% of the amount of any
artifacts/treasure recovered with a value greater than $10,000,000
to $50,000,000, 10% of the amount of any artifacts/treasure
recovered with a value greater than $50,000,000 for a period of
three years, and 5% of the amount of any treasure/artifacts
recovered with a value greater than $50,000,000 for five years.
Seafarer and the limited liability company may also agree to
revenue sharing from the sales of artifacts/treasure. If Seafarer
has not previously contracted with any party as to media rights,
then the Company and the limited liability company agreed that the
limited liability company will be allowed to make or cause a media
venture at its own expense. Each party will have portion of the
revenues from such venture from whatever source. Such media rights
are only applicable to the Juno Site and the potential third party
site projects that are subject to the Financing and Rights
agreement.





17





The
Company has a verbal agreement with a limited liability company
that is controlled by a person who is related to the
Company’s CEO to pay the related party consultant $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 occasional assist as an
administrative specialist to perform various administrative duties
and clerical services including reviewing the Company’s
agreements and books and records. The consultant provides the
services under the direction and supervision of the Company’s
CEO. At March 31, 2017, the Company owed the related party limited
liability company $3,000 for services rendered.





The
Company has an ongoing agreement with a limited liability company
that is owned and controlled by a person who is related to the
Company’s CEO to provide stock transfer agency
services. At March 31, 2017, the Company owed the related
party limited liability company $4,226 for transfer agency services
rendered and fees.





The
Company has an agreement to pay an individual a monthly fee of
$1,500 per month for archeological consulting
services.





The
Company has a verbal consulting agreement to pay a limited
liability company a minimum of $5,000 per month for business
advisory, strategic planning and consulting services, assistance
with financial reporting, IT management, and administrative
services. The Company also agreed to reimburse the consultant for
expenses. The agreement may be terminated by the Company or the
consultant at any time.





NOTE 10 – LEGAL PROCEEDINGS





On
March 23, 2016 the Board of Directors signed a universal settlement
agreement with the Plaintiffs in the litigation matters of
Micah Eldred, et al., v. Seafarer
Exploration, et al., Hillsborough County, Florida, Case No.
09-CA-30763, and Micah Eldred v.
Seafarer Exploration Corp., et al., Hillsborough County,
Florida, Case No. 14-CA-5360, and in the matter of
Seafarer Exploration, et al. v.
Micah Eldred, et al., Hillsborough County, Florida, Court of
Appeals Case No. 14-2884, specifically: Micah Eldred, Michael
Daniels, Diane J. Harrison, James Eldred, Mary R. Eldred, Michole
Eldred, Nathan Eldred, Toni A. Eldred, Toni A. Eldred FBO Jordan
Gratton, Toni A. Eldred FBO Justin Gratton, Vanessa A Verbosh,
Oksana Savchenko, Matthew J. Presy, Olessia Kritskaia, Ekaterina
Messinger, Abby Lord, Ioulia Hess, Anna Krokhina, George Linder,
Christine Zitman, Carl Dilley, Heather Dilley, Robert Lizzano,
Elizabeth Lizzano, Karen Lizzano, Susan Miller, Jillian Mally,
Michael Mona, Alan Wolper, Sarah Wolper, Alan Wolper FBO Michael
Wolper, Spartan Securities Group, Ltd., and Am Asia Consulting
entered into the settlement agreement with Seafarer. An earlier
named party, CADEF, The Childhood Autism Foundation, Inc., had
previously entered into a settlement agreement and is no longer a
party in the Litigation.





The
settlement called for both cases to be dismissed, with prejudice,
and the Plaintiffs in case number 09-CA-30763 agreed to surrender
and cancel all of their 32,300,000 shares of restricted common
stock which were returned to the treasury of the Corporation. All
such shares have been returned for cancellation. On March 23, 2016
Seafarer CEO signed the resolution to cancel the 32,300,000 shares
and instructed the transfer agent ClearTrust LLC to cancel the
shares and return them to treasury for the benefit of Seafarer thus
reducing the number of outstanding shares by 32,300,000 shares. At
the present time the dismissal has been filed and the case closed,
with all shares cancelled.





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 cite 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 alleges in their
complaint the expenditure of large amounts of shares and monies for
financing and for delays due to Tulco’s non-performance.
Seafarer seeks 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
working with the State for the renewed permit to be 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 has currently filed an Admiralty Claim
over such sight in the United States District Court which is
pending final ruling. 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, which will occur
during the month of November 2016. The Court subsequently entered
and Order directing the arrest warrant for such site, and such
arrest warrant has been issued by the Clerk of Court. Such warrant
entry is now in process by the Company.





18





On September 3, 2014, the Company filed a lawsuit against Darrel
Volentine, of California. Mr. Volentine was sued in two counts of
libel per se under Florida law, as well as a count for injunction
against the Defendant to exclude and prohibit internet postings.
Such lawsuit was filed in the Circuit Court in Hillsborough County,
Florida. Such suit is based upon internet postings on
www.investorshub.com.
On or about October 15, 2015, the Company and Volentine entered
into a stipulation whereby Volentine admitted to his tortious
conduct, however the stipulated damages agreed to were rejected by
the Court, and the Company is proceeding to trial on damages
against Volentine in a non-jury trial on December 1, 2015. The
Defendant is the subject of a contempt of court motion which was
heard on April 7, 2016, whereby the Court found a violation and
modified the injunction against the Defendant, and imposed other
matters of potential penalties against the Defendant. The Court
also awarded attorney’s fees against the Defendant on behalf
of Seafarer for such motion. The Defendant subsequently attempted
to have such ruling, evidence and testimony attacked through a
motion heard before the Court on October 24, 2016. The Court
dismissed the Defendant’s motion after presentation of the
Defendant’s case at the hearing. The Plaintiff has set the
matter for entry of the attorney’s fees amount due from the
Defendant for hearing in December 2016. As well the Plaintiff has
set for hearing its motion for sanctions in the form of
attorney’s fees for frivolous filing of the October
24th motion, which motion is also set for hearing in
December 2016. The Plaintiff filed a renewed and amended motion for
punitive damages in the case on September 11, 2016, which has not
been set for hearing. The Defendant had also filed a motion for
summary judgment on the matter of notice entitlement pre-suit,
which motion is pending before the Court. The Plaintiff filed a
motion for sanctions against the Defendant for the motion for
summary judgment being frivolous under existing law, and such
motion is pending ruling on the motion. 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
2017.





NOTE 11 – RELATED PARTY TRANSACTIONS





During
the three month period ended March 31, 2017:





In
January of 2017, the Company entered into a convertible promissory
note agreement in the amount of $5,000 with an individual who is
related to the Company’s CEO. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest was due
on or before March 12, 2017. The Company agreed to pay the related
party lender a loan origination fee of 1,000,000 shares of its
restricted common stock. The note is not secured and is convertible
at the lender’s option into shares of the Company’s
common stock at a rate of $0.0005 per share.  At March
31, 2017 the loan was in default due to non-payment of principal
and interest.





In
February of 2017, the Company entered into a convertible promissory
note agreement in the amount of $25,000 with an individual who is
both related to the Company’s CEO and a member of the
Company’s Board of Directors. This loan pays interest at a
rate of 6% per annum and the principal and accrued interest are due
on or before August 14, 2017. The note is not secured and is
convertible at the lender’s option into shares of the
Company’s common stock at a rate of $0.00075 per
share.  The related party lender received 33,333,333
warrants to purchase shares of the Company’s common stock at
a price of $0.005.





In
February of 2017, the Company extended the term of a previous
agreement with an individual who is related to the Company’s
CEO to continue serving as a member of the Company’s Board of
Directors. Under the  agreement, the Director agreed to
provide various services to the Company including making
recommendations for both the short term and the long term business
strategies to be employed by the Company, monitoring and assessing
the Company's business and to advise the Company’s Board of
Directors with respect to an appropriate business strategy on an
ongoing basis, commenting on proposed corporate decisions and
identifying and evaluating alternative courses of action, making
suggestions to strengthen the Company's operations, identifying and
evaluating external threats and opportunities to the Company,
evaluating and making ongoing recommendations to the Board with
respect for one year and may be terminated by either the Company or
the Director by providing written notice to the other party. The
agreement also terminates automatically upon the death, resignation
or removal of the Director.  Under the terms of the
agreement, the Company agreed to pay the Director 20,000,000
restricted shares of its common stock and to negotiate future
compensation on a year-by-year basis. The Company also agreed to
reimburse the Director for preapproved expenses.





In
February of 2017, the Company extended the term of a previous
agreement with an individual who is related to the Company’s
CEO to continue serving as a member of the Company’s Board of
Directors. Under the  agreement, the Director agreed to
provide various services to the Company including making
recommendations for both the short term and the long term business
strategies to be employed by the Company, monitoring and assessing
the Company's business and to advise the Company’s Board of
Directors with respect to an appropriate business strategy on an
ongoing basis, commenting on proposed corporate decisions and
identifying and evaluating alternative courses of action, making
suggestions to strengthen the Company's operations, identifying and
evaluating external threats and opportunities to the Company,
evaluating and making ongoing recommendations to the Board with
respect for one year and may be terminated by either the Company or
the Director by providing written notice to the other party. The
agreement also terminates automatically upon the death, resignation
or removal of the Director.  Under the terms of the
agreement, the Company agreed to pay the Director 20,000,000
restricted shares of its common stock and to negotiate future
compensation on a year-by-year basis. The Company also agreed to
reimburse the Director for preapproved expenses.





In
March of 2017, the Company repaid $4,000 to its CEO in order to
repay a portion of the principal balance of a loan the CEO had
previously provided to the Company.





19





The
Company has a verbal agreement with a limited liability company
that is controlled by a person who is related to the
Company’s CEO to pay the related party consultant $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 occasional assist as an
administrative specialist to perform various administrative duties
and clerical services including reviewing the Company’s
agreements and books and records. The consultant provides the
services under the direction and supervision of the Company’s
CEO. At March 31, 2017, the Company owed the related party limited
liability company $3,000 for services rendered.





The
Company has an ongoing agreement with a limited liability company
that is owned and controlled by a person who is related to the
Company’s CEO to provide stock transfer agency
services. At March 31, 2017, the Company owed the related
party limited liability company $4,226 for transfer agency services
rendered and fees.





At March 31, 2017 the following promissory notes and shareholder
loans were outstanding to related parties:





A
convertible note payable dated January 9, 2009 due to a person
related to the Company’s CEO with a face amount of $10,000.
This note bears interest at a rate of 10% per annum with interest
payments to be paid monthly and is convertible at the note
holder’s option into the Company’s common stock at
$0.015 per share.  The convertible note payable was due
on or before January 9, 2010 and is secured.  This note
is currently in default due to non-payment of principal and
interest.





A
convertible note payable dated January 25, 2010 in the principal
amount of $6,000 with a person who is related to the
Company’s CEO. This loan pays interest at a rate of 6% per
annum and the principal and accrued interest were due on or before
January 25, 2011. The note is not secured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.005 per share. This note is currently in
default due to non-payment of principal and interest.





A note
payable dated February 24, 2010 in the principal amount of $7,500
with a corporation. The Company’s CEO was previously a
director of the corporation. The loan is not secured and pays
interest at a rate of 6% per annum and the principal and accrued
interest were due on or before February 24, 2011. This note is
currently in default due to non-payment of principal and
interest.





A
convertible note payable dated January 18, 2012 in the amount of
$50,000 with two individuals who are related to the Company’s
CEO. This loan pays interest at a rate of 8% per annum and the
principal and accrued interest were due on or before July 18, 2012.
The note is secured and is convertible at the lender’s option
into shares of the Company’s common stock at a rate of $0.004
per share. The note is currently in default due to non-payment of
principal and interest.





A
convertible note payable dated January 19, 2013 due to a person
related to the Company’s CEO with a face amount of $15,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.004 per
share.  The convertible note payable was due on or before
July 30, 2013 and is not secured.  The note is currently
in default due to non-payment of principal and
interest.





A
convertible note payable dated July 26, 2013 due to a person
related to the Company’s CEO and a member of the
Company’s Board of Directors with a face amount of $10,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.01 per
share.  The convertible note payable was due on or before
January 26, 2014 and is not secured.  The note is
currently in default due to non-payment of principal and
interest.





A
convertible note payable dated January 17, 2014 due to a person
related to the Company’s CEO with a face amount of $31,500.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.006 per
share.  The convertible note payable is due on or before
July 17, 2015 and is not secured. The note is currently in
default due to non-payment of principal and interest.





A
convertible note payable dated May 27, 2014 due to a person related
to the Company’s CEO with a face amount of $7,000. This note
bears interest at a rate of 6% per annum with accrued interest to
be paid at the time that the principal balance is repaid or the
note is converted into shares of the Company’s common stock.
The note is convertible at the note holder’s option into the
Company’s common stock at $0.007 per share.  The
convertible note payable was due on or before November 27, 2014 and
is not secured. The note is currently in default due to
non-payment of principal and interest.





A
convertible note payable dated July 21, 2014 due to a person
related to the Company’s CEO with a face amount of $17,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.008 per share.
The convertible note payable was due on or before January 25, 2015
and is not secured. The note is currently in default due to
non-payment of principal and interest.





A
convertible note payable dated October 16, 2014 due to a person
related to the Company’s CEO with a face amount of $21,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0045 per
share.  The convertible note payable was due on or before
April 16, 2015 and is not secured.  The note is currently
in default due to non-payment of principal and
interest.





20





A
convertible note payable dated July 14, 2015 due to a person
related to the Company’s CEO with a face amount of $9,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0030 per
share.  The convertible note payable was due on or before
January 14, 2016 and is not secured.  The note is
currently in default due to non-payment of principal and
interest.





A note
payable dated October 6, 2015 in the principal amount of $10,000
due to a person who is related to the Company’s CEO and a
member of the Company’s Board of Directors. The loan is not
secured and pays interest at a rate of 6% per annum and the
principal and accrued interest was due on or before November 11,
2015. This note is currently in default due to non-payment of
principal and interest.





A loan
in the amount of $19,983 due to the Company’s CEO. The loan
is not secured and pays interest at a 6% per annum and the
principal and accrued interest and was due on or before June 14,
2016. The note is currently in default due to non-payment of
principal and interest.





A
convertible note payable dated January 12, 2016 due to a person
related to the Company’s CEO with a face amount of $5,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0020 per
share.  The convertible note payable was due on or before
July 12, 2016 and is not secured.  The note is currently
in default due to non-payment of principal and
interest.





A loan
in the amount with the remaining principal balance of $1,200 due to
the Company’s CEO. The loan is not secured and pays interest
at a 6% per annum. The lender is entitled to receive 500,000 shares
of the Company’s restricted common stock due to the loan not
being repaid within 90 days from February 10, 2016.





A
convertible note payable dated May 10, 2016 due to a person related
to the Company’s CEO with a face amount of $5,000. This note
bears interest at a rate of 6% per annum with accrued interest to
be paid at the time that the principal balance is repaid or the
note is converted into shares of the Company’s common stock.
The note is convertible at the note holder’s option into the
Company’s common stock at $0.0005 per share.  The
convertible note payable was due on or before November 10, 2016 and
is not secured.  The note is currently in default due to
non-payment of principal and interest.





A
convertible note payable dated May 10, 2016 due to a person who is
related to the Company’s CEO and a member of the
Company’s Board of Directors with a face amount of $5,000.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0005 per
share.  The convertible note payable was due on or before
November 10, 2016 and is not secured.  The note is
currently in default due to non-payment of principal and
interest.





A
convertible note payable dated May 20, 2016 due to a person related
to the Company’s CEO with a face amount of $5,000. This note
bears interest at a rate of 6% per annum with accrued interest to
be paid at the time that the principal balance is repaid or the
note is converted into shares of the Company’s common stock.
The note is convertible at the note holder’s option into the
Company’s common stock at $0.0005 per share.  The
convertible note payable was due on or before November 20, 2016 and
is not secured.  The note is currently in default due to
non-payment of principal and interest.





A
convertible note payable dated July 12, 2016 due to a person
related to the Company’s CEO with a face amount of $2,400.
This note bears interest at a rate of 6% per annum with accrued
interest to be paid at the time that the principal balance is
repaid or the note is converted into shares of the Company’s
common stock. The note is convertible at the note holder’s
option into the Company’s common stock at $0.0006 per
share.  The convertible note payable was due on or before
January 12, 2017 and is not secured. The note is currently in
default due to non-payment of principal and interest.





A loan
in the amount of $15,983 due to the Company’s CEO. The loan
is not secured and pays interest at a 6% per annum.





A loan
in the amount of $1,200 due to the Company’s CEO. The loan is
not secured and pays interest at a 2% per annum. After the loan has
aged for six months from December 16, 2016 the lender has the right
to convert the loan into shares of the Company’s restricted
common shares at a rate of $0.005 per share.





A
convertible loan dated January 26, 2017 due to a person related to
the Company’s CEO with a face amount of $5,000. This note
bears interest at a rate of 6% per annum with accrued interest to
be paid at the time that the principal balance is repaid or the
note is converted into shares of the Company’s common stock.
The note is convertible at the note holder’s option into the
Company’s common stock at $0.0005 per share.  The
convertible note payable was due on or before March 12, 2017 and is
not secured.  The note is currently in default due to
non-payment of principal and interest.





A
convertible note payable dated February 14, 2017 in the principal
amount of $25,000 due to a person who is related to the
Company’s CEO and a member of the Company’s Board of
Directors. This loan pays interest at a rate of 6% per annum and
the principal and accrued interest are due on or before August 14,
2017. The note is not secured and is convertible at the
lender’s option into shares of the Company’s common
stock at a rate of $0.00075 per share.





21





NOTE 12 – SUBSEQUENT EVENTS





Subsequent
to March 31, 2017:





The
Company sold 39,000,000 shares of restricted common stock for
proceeds of $68,000, used for general working capital purposes and
repayment of debt.





















































22





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 to engage in the archaeologically-sensitive
exploration, recovery and conservation of historic shipwrecks. Once
artifacts have been properly conserved, they will be made available
for scientific research and allowed to be displayed for the public.
The Company believes it will 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, there is ongoing education of
personnel involved in operations with the Company. College level
courses in archaeology are being periodically taught by a Ph.D. in
a program to help educate the personnel in context, work
methodology, documentation, and conservation. It is the
Company’s intent to have the highest educated personnel
possible. The Company plans to hire additional archaeologists in
addition to their current archaeologists to further insure 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 locate artifacts or treasure
with significant value, then there is high probability that the
Company will face adverse consequences.





Underwater
recovery operations are inherently difficult and dangerous and may
be delayed or suspended by weather, sea conditions or other natural
hazards. In addition, even though sea conditions in a particular
search location may be somewhat predictable, the possibility exists
that unexpected conditions may occur, and already have occurred,
that adversely affect the Company’s operations. It is also
possible that natural hazards may prevent or significantly delay
search and recovery operations.





In
addition to natural hazards there are constant repair and
maintenance issues with historic shipwreck exploration and recovery
vessels, which tend to be older vessels that were originally used
in other capacities that have been converted for use in historic
shipwreck exploration and recovery operations. The repairs,
maintenance and upkeep of this type of vessel, and in particular
the Company’s main vessel, is time consuming and can be very
expensive and there may be significant periods of vessel down time
that results from needed repairs being made or a lack of current
financing to make repairs to the vessel.





23





There
are very strict international, federal and state laws that govern
the exploration and recovery of historic shipwrecks. While the
Company has been able to obtain some permits, there is no guarantee
that the Company will be able to secure future permits or be able
to enter into agreements with government agencies in order to
explore and salvage 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.





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. In the event that the Company is able to make
a valid claim to artifacts or other items at a shipwreck site,
there is a risk of theft of such items at sea, both before or after
the recovery or while the artifacts are in transit to a safe
destination, as well as when stored in a secured location. Such
thefts may not be adequately covered by insurance. Based on a
number of these and other potential issues the Company could spend
a great deal of time and invest a large sum in a specific shipwreck
project and receive very little or no salvage claim or revenue for
its work. The Company does have plans for security at sea, but may
never implement such plans.





There
are a number of significant issues and challenges including, but
not limited to, government regulation and/or the Company’s
inability to secure permits and contracts, lack of financing, lack
of revenue and cash flow and continued losses from operations that
make the exploration and recovery of historic shipwrecks
a speculative business venture. There is also significant
expense involved in research and ongoing educational programs.
Research expenses involve paying scientists for translations, dues
and fees for various historical entities such as archives, travel
and accommodations, and research materials.





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 high risk.





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 risky and should only be considered
by those investors or lenders who do not require liquidity and who
can afford to suffer a complete and total loss of their
investment.





There
is currently a limited trading market for our securities. We cannot
assure when and if an active-trading market in our shares will be
established, or whether any such market will be sustained or
sufficiently liquid to enable holders of shares of our common stock
to liquidate their investment in our company. The sale of
unregistered and restricted securities by current shareholders,
including shares issued to consultants and shares issued to settle
convertible promissory notes and to settle other loans and debt,
may cause a significant decline in the market price of the
Company’s securities.





An
investor should consider consulting with professional financial
advisers before making an investment in our
securities.





Plan of Operation





The
Company has taken the following steps to implement its business
plan:





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





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





●
Although
the Company has not generated revenues to date, our business goals
continue to evolve. Relationships are being developed with foreign
dignitaries and scientists around the world, as well as with for
profit companies.





24





●
The
Company continues to review revenue producing
opportunities.●
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 has evaluated various opportunities to enter into
agreements or contracts to conduct exploration and recovery
operations at known historic shipwreck locations or potential
locations. The Company has previously spent some of its efforts
exploring what it believes is a historic shipwreck site located off
of Juno Beach, Florida. As previously noted on its form 8-K filed
on May 9, 2011, the Company and Tulco Resources received a 1A-31
Recovery Permit from the Florida Division of Historical Resources.
The Recovery Permit was active through April 25, 2014. The Permit
authorized Seafarer to dig and recover artifacts from the
designated site at Juno Beach, Florida. It will be necessary for
the Company to obtain a renewal to the Recovery Permit for the Juno
Beach shipwreck site in order to continue to perform exploration
and recovery work at the site after April 25, 2014. The potential
renewal permit has not been issued as of the filing of this report
and is currently on hold and cannot be issued until certain legal
requirements including a federal admiralty claim have been
finalized and an updated recovery application has been submitted. A
motion for a federal admiralty claim has been granted and the U.S.
Marshall’s office has been ordered by the federal judge to
arrest the Juno site to Seafarer. The federal judge has also
granted both motions filed by Seafarer to assign the site to
Seafarer in perpetuity and have the Company act as custodian to all
artifacts recovered from the site.





There
is a purported historic shipwreck site in the waters off of
Melbourne Beach Florida that the Company has been investigated. In
February 2013, the Company signed an agreement with a third party
who had previously explored this site for the right to investigate
the site. On March 1, 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. Further actions toward expanding
the permitted area have been taken for such site. 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 this particular
site.





On July
28, 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 is 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 and will likely continue to hamper operations in the
future. 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 additional areas that were formerly permitted
solely by an affiliate of Marine Archeological Partners, LLC. A
Permit for one of the additional areas was given to the Company on
July 6th, 2016 and identified
as Area 1.





The
Company regularly reviews opportunities to perform exploration and
recovery operations at purported historic shipwreck sites. The
Company currently does have some specific plans to perform
exploration and recovery operations at other shipwreck sites in the
future, however these plans are subject to change based on a number
of factors. The Company is actively reviewing other potential
historic shipwreck sites, including sites located internationally,
for possible exploration and recovery. Should the Company decide
that it will pursue exploration and recovery activities at other
potential shipwreck sites, it may be necessary to obtain various
permits as well as environmental permits.





The
Company continually monitors media rights for potential revenue.
The Company has talked to multiple media entities to further
understand the advantages offered. Management believes media can
represent a revenue opportunity for the Company, if the right
circumstances arise.








25





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, 2017, the Company had a working capital deficit of
$915,470. 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 15, 2017.





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.





Results of Operations





The Company’s net loss for the
three month period ended March 31, 2017 was $320,982 as compared to
a net loss of $201,980 during the three month period ended March
31, 2016, an increase of approximately 59%. The increase in the net
loss for the three month period ended March 31, 2017 was primarily
due to an increase in consulting and contractor expenses and
interest expense in 2017. During the three month period ended March
31, 2017 consulting and contractor fees were $121,113 as compared
to $77,454 for the three month period ended March 31, 2016. The
approximate 56% increase in consulting and contractor fees in 2017
was largely a result of increased operating activity as the Company
gears up for the summer diving season and stock based compensation
being paid for various to several consultants for advisory council
services as well as the payment for Board of
Directors’ fees to two of the Company’s
Directors. Interest expense increased
to $87,993 during the three month period ended March 31, 2017 from
$61,071 during the three month period ended March 31, 2016, an
increase of 44%. The Company incurred travel and entertainment
expenses of $10,004 during the three month period ended March 16,
2017 as compared to $16,001 during the three month period ended
March 31, 2016, an approximate 35% decrease on a
quarter-over-quarter basis. The general and administrative expenses
for the period ended March 31, 2017 were $32,543 compared to $9,010
for the period ended March 31, 2015, a quarter-over-quarter
increase of approximately 261%. During the three month period ended
March 31, 2017, professional fees were $18,180 as compared to
$20,500 during the three month period ended March 31, 2016, a
decrease of 11%. Professional fees decreased due to theCompany
paying less for legal fees due to the winding down of issues
pertaining to a lawsuit that was settled in 2016. Surveying and
site mapping expense was $15,595 during the three month period
ended March 31, 2017. Vessel maintenance and dockage was $13,025
during the three month period ended March 31, 2017. The Company did
not incur any significant fees for repairs to the main salvage
vessel during the three month period ended March 31, 2017, there
was some maintenance and light repair work completed however the
Company believes more extensive repairs will be needed in the
foreseeable future on both the main salvage vessel and other
vessels that the Company intends to utilize in its exploration
efforts.





26





Liquidity and Capital Resources





At
March 31, 2017, we had cash in the bank of $62,478. During the
period ended March 31, 2017 we incurred a net loss of $320,982. At
March 31, 2017, we had $165,911 in current assets and $1,081,381 in
current liabilities, leaving us a working capital deficit of
$915,470.





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, 2017. 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.





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, 2016 and 2015 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, 2017 and 2016, we have experienced operating losses
in every year since our inception resulting in an accumulated
deficit. Our financial results as of March 31, 2017 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.





27





The Company has experienced a net loss in every fiscal year since
inception. The Company’s losses from operations were
$232,989 for the three month period ended March 31, 2017 and
$140,909 for the three month period ended March 31, 2016. 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, 2017 and 2016).  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.





Off-balance Sheet Arrangements





None.





Item 3. Quantitative and Qualitative Disclosures About Market
Risk





Not
required for smaller reporting companies.





Item 4T. 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.





28





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, 2017.  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.





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, 2017
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,
2016.





29





Part II. Other Information





Item 1. Legal Proceedings





On
March 23, 2016 the Board of Directors signed a universal settlement
agreement with the Plaintiffs in the litigation matters of
Micah Eldred, et al., v. Seafarer
Exploration, et al., Hillsborough County, Florida, Case No.
09-CA-30763, and Micah Eldred v.
Seafarer Exploration Corp., et al., Hillsborough County,
Florida, Case No. 14-CA-5360, and in the matter of
Seafarer Exploration, et al. v.
Micah Eldred, et al., Hillsborough County, Florida, Court of
Appeals Case No. 14-2884, specifically: Micah Eldred, Michael
Daniels, Diane J. Harrison, James Eldred, Mary R. Eldred, Michole
Eldred, Nathan Eldred, Toni A. Eldred, Toni A. Eldred FBO Jordan
Gratton, Toni A. Eldred FBO Justin Gratton, Vanessa A Verbosh,
Oksana Savchenko, Matthew J. Presy, Olessia Kritskaia, Ekaterina
Messinger, Abby Lord, Ioulia Hess, Anna Krokhina, George Linder,
Christine Zitman, Carl Dilley, Heather Dilley, Robert Lizzano,
Elizabeth Lizzano, Karen Lizzano, Susan Miller, Jillian Mally,
Michael Mona, Alan Wolper, Sarah Wolper, Alan Wolper FBO Michael
Wolper, Spartan Securities Group, Ltd., and Am Asia Consulting
entered into the settlement agreement with Seafarer. An earlier
named party, CADEF, The Childhood Autism Foundation, Inc., had
previously entered into a settlement agreement and is no longer a
party in the Litigation.





The
settlement called for both cases to be dismissed, with prejudice,
and the Plaintiffs in case number 09-CA-30763 agreed to surrender
and cancel all of their 32,300,000 shares of restricted common
stock which were returned to the treasury of the Corporation. All
such shares have been returned for cancellation. On March 23, 2016
Seafarer CEO signed the resolution to cancel the 32,300,000 shares
and instructed the transfer agent ClearTrust LLC to cancel the
shares and return them to treasury for the benefit of Seafarer thus
reducing the number of outstanding shares by 32,300,000 shares. At
the present time the dismissal has been filed and the case closed,
with all shares cancelled.





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 cite 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 alleges in their
complaint the expenditure of large amounts of shares and monies for
financing and for delays due to Tulco’s non-performance.
Seafarer seeks 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
working with the State for the renewed permit to be 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 has currently filed an Admiralty Claim
over such sight in the United States District Court which is
pending final ruling. 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, which will occur
during the month of November 2016. The Court subsequently entered
and Order directing the arrest warrant for such site, and such
arrest warrant has been issued by the Clerk of Court. Such warrant
entry is now in process by the Company.





On September 3, 2014, the Company filed a lawsuit against Darrel
Volentine, of California. Mr. Volentine was sued in two counts of
libel per se under Florida law, as well as a count for injunction
against the Defendant to exclude and prohibit internet postings.
Such lawsuit was filed in the Circuit Court in Hillsborough County,
Florida. Such suit is based upon internet postings on
www.investorshub.com.
On or about October 15, 2015, the Company and Volentine entered
into a stipulation whereby Volentine admitted to his tortious
conduct, however the stipulated damages agreed to were rejected by
the Court, and the Company is proceeding to trial on damages
against Volentine in a non-jury trial on December 1, 2015. The
Defendant is the subject of a contempt of court motion which was
heard on April 7, 2016, whereby the Court found a violation and
modified the injunction against the Defendant, and imposed other
matters of potential penalties against the Defendant. The Court
also awarded attorney’s fees against the Defendant on behalf
of Seafarer for such motion. The Defendant subsequently attempted
to have such ruling, evidence and testimony attacked through a
motion heard before the Court on October 24, 2016. The Court
dismissed the Defendant’s motion after presentation of the
Defendant’s case at the hearing. The Plaintiff has set the
matter for entry of the attorney’s fees amount due from the
Defendant for hearing in December 2016. As well the Plaintiff has
set for hearing its motion for sanctions in the form of
attorney’s fees for frivolous filing of the October
24th motion, which motion is also set for hearing in
December 2016. The Plaintiff filed a renewed and amended motion for
punitive damages in the case on September 11, 2016, which has not
been set for hearing. The Defendant had also filed a motion for
summary judgment on the matter of notice entitlement pre-suit,
which motion is pending before the Court. The Plaintiff filed a
motion for sanctions against the Defendant for the motion for
summary judgment being frivolous under existing law, and such
motion is pending ruling on the motion. 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
2017.





30





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, 2017, the Company issued or
agreed to issue 64,000,000 shares of its restricted common stock to
several consultants for business
advisory consulting services and director’s fees. The
Company also issued 1,000,000 shares of its restricted common
shares as a loan origination fee to a related party lender. The
Company believes that the issuance of the securities was exempt
from registration under the Securities Act of 1933, as amended, in
reliance on Section 4(2) of the Securities Act as a
transaction by an issuer not involving any public offering and
based on the fact that such securities were issued for services to
sophisticated or accredited investors and persons who are
thoroughly familiar with the Company’s proposed business by
virtue of their affiliation with the Company.





On
various dates during the three month period ended March 31, 2017,
the Company entered into subscription agreements to sell
122,555,556 shares of its restricted common stock in exchange for
proceeds of $160,000. The proceeds that were received were used for
general corporate purposes, working capital and the repayment of
debt.





In
January of 2017, the Company entered into a subscription agreement
to sell 17,000,000 shares of restricted common stock to two
individuals in exchange for proceeds of $75,000. The Company also
agreed that the purchaser will be entitled to receive $500,000 of
treasure of their choice after both the Company has recovered a
minimum of $1,200,000 of artifacts/treasure and the State of
Florida has received its full share of treasure per any permits or
agreements. The purchaser will have the right to convert up to a
maximum of $500,000 worth of treasure that they have received into
shares of the Company’s restricted common stock at a discount
of 10% of the average trading price of the Company’s common
stock of the previous five days closing price provided that the
Company’s common stock is trading at or above $0.04 by
providing a written notice to the Company. The conversion option
will expire eighteen months after the Company first locates a
minimum of $1,200,000 worth of treasure. The value of the treasure
will be determined by a mutually agreed upon third party who is a
recognized expert in the valuation of historic
artifacts.





In
January of 2017, the Company entered into a subscription agreement
to sell 40,000,000 shares of restricted common stock at a price
$0.0005 share to an individual in exchange for proceeds of $20,000.
The Company also agreed that the purchaser will be entitled to
receive warrants to purchase 40,000,000 shares of the
Company’s restricted common stock. The warrants are
exercisable at a price of 0.004 per share for a period of one year
from January 31, 2017.





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, 2017, the holder a
promissory notes with a remaining principal balance of $24,402
elected to convert all of the balance of the notes plus accrued
interest into 36,205,587 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.





31





Item 4. Submission of Matters to a Vote of Security
Holders





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.





32





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 15, 2017
By:
/s/ Kyle KennedyKyle
Kennedy
President,
Chief Executive Officer, and Chairman of the Board
(Principal
Executive Officer, Principal Financial Officer and Principal
Accounting Officer)








Date:
May 15, 2017
By:
/s/ Chuck BranscombChuck
Branscomb, Director








Date:
May 15, 2017
By:
/s/ Robert L. KennedyRobert
L. Kennedy, Director





























33